Exceptions to Without Prejudice protection re Mediation documents

Berkeley Square Holdings vs. Lancer Property Asset Management, CA (2021) EWCA Civ 551

Facts:

Berkeley and a number of associated companies had property holdings in London worth £5,000,000,000.  Lancer acted as their asset manager but in 2012 a dispute arose over the amount of fees Lancer was entitled to charge. This was settled after mediation by a payment of £30,000,000 to Lancer.  During 2018 Berkeley allegedly discovered irregular payments to Lancer arranged by their own representative who had negotiated the deal with Lancer, and sought repayment. 

Lancer’s defence was in part that Berkeley had known all about these payments.  It referred to documents in Berkeley’s position statement for the mediation which showed that they had been well aware of the payments before the mediation.  Berkely tried to block reference to documents within the mediation has been covered by the Without Prejudice rule.

The Court of Appeal held:

1. the purpose of the without prejudice rule is to enable negotiations be carried out in confidence in order to compromise the dispute.  Once a settlement compromise has been achieved, there no excluding reference to the contents of those negotiations.
2. Berkeley sought to have the settlement set aside on the basis of fraud, and it was reasonable for either side to refer to the documents generated during the mediation when considering the validity of the settlement, despite their without prejudice status.
3. Accordingly such documents were disclosable and could be referred to in the Defence.

Comment:

It was already established law that without prejudice documents could be used to support an application to set aside an agreement vitiated by mis-representation.  In this case it was not the person who had received the representation relied upon it, but the person who made it.  It was logical to extend that principle.

The Court of Appeal (David Richards LJ) made it clear that this is a very narrow exception to the overarching policy of protecting WP statements.  It certainly does not undermine the vital principle of confidentiality in mediation proceedings.