The High Court has refused an application by a plaintiff to strike out certain aspects of a defendant’s affidavit on the grounds that it exhibited without prejudice correspondence. The parties had previously engaged with a view to resolving a contractual dispute in advance of litigation and the plaintiff had retrospectively sought to mark the correspondence as without prejudice.
Delivering judgment in the case, Ms Justice Siobhán Phelan determined that the material was not privileged and could be relied upon in the case. Although the court was satisfied that the correspondence was directed towards negotiating a compromise, there was no mention of without prejudice privilege attaching to any correspondence until several weeks later.
As such, the actions of the defendant were not consistent with the contention that the parties understood that the relevant exchanges were privileged and could not be disclosed if negotiations were unsuccessful, the court said.
Background
The plaintiff had been engaged in 2019 by the GAA to assist in achieving a change in ticketing services for the association. The GAA was contracted with Tickets.ie but wished to move ticketing functions internally.
Although it was common case that the plaintiff was retained by the GAA to carry out work for the intended transfer of function, the parties were not agreed on the terms of the engagement. The plaintiff maintained that it was engaged on a multiyear contract to provide ticketing services while the GAA claimed that the agreement was a retainer contract to provide preparatory work and make resources available for a transfer in the event that an agreement was reached with Ticketmaster.ie.
Further, it was said that the plaintiff’s understanding of the contract was wholly dependent on an agreement being reached with Tickets.ie for use of ticketing software rights which was ultimately not achieved.
The GAA subsequently decided to engage in a tender process for ticketing services and advised the plaintiff of this in January 2020. In April and May 2020, the parties engaged in email and telephone correspondence. The initial email of 24 April 2020 presented the plaintiff’s view of the contract which was disputed by the defendant. At this time, it was also outlined that the plaintiff was not successful in the tender process.
On 1 May 2020, the plaintiff identified a minimum sum as being acceptable in respect of what the plaintiff characterised as an early agreed termination of the contract. Following on from this email, on 11 May the plaintiff raised the issue of engaging on a “without prejudice” basis in a telephone call.
After taking legal advice, on 18 May the defendant wrote to the plaintiff referencing an email from 12 May and confirmed that “all subsequent and related correspondence is and remains on a “without prejudice basis.”
The parties failed to reach a settlement and litigation began. In an application for security for costs, the defendant exhibited the email of 1 May 2020. The plaintiff objected to this, stating that this was without prejudice material.
In response, the defendant outlined that it was not believed that the parties were in a dispute and contemplating litigation on 1 May. Rather, the 1 May email was understood to be commercial positioning by the plaintiff. It was only when the issue of without prejudice discussions were raised on 11 May by the plaintiff that the defendant understood there was a dispute.
Accordingly, the defendant outlined that, in confirming on 18 May that “all subsequent and related correspondence” was without prejudice, the defendant was referring to all correspondence from 11 May.
High Court
Ms Justice Phelan began by outlining the issues in the case. It was necessary to decide whether the material was captured by without prejudice privilege either on public policy grounds or by reason of agreement between the parties. In deciding whether the material was privileged, the court was required to determine whether the email represented a bona fide attempt to settle the dispute and whether it was intended that it could not be disclosed if negotiations failed (see McGrath on Evidence (3rd ed. 2020)).
There was little dispute in respect of the applicable legal principles to the application. The court noted that a heavy weight was ordinarily attaching to without prejudice correspondence and that there were strong public policy grounds for allowing parties to pursue settlement without the knowledge of the court.
The court also quoted from QRD Development Company No.3 DAC [2022] IEHC 498 in identifying the relevant principles. However, although the case law had identified general principles, they did not conclusively determine the present case (see QRD; Moorview Developments Ltd. v. First Active PLC [2009] 2 IR 788; Purcell v. Central Bank of Ireland [2016] ECA 50).
The court held that a crucial consideration was whether the parties contemplated litigation in the event they could not agree in negotiations (see Barnetson v Framlington Group Ltd [2007] 1 WLR 2443). The court had no difficulty in finding that the 1 May email was a genuine attempt to agree how much money was owed to the plaintiff under the contract.
The court was also satisfied that litigation was in contemplation if a resolution was not achieved. This was clear from the language of the email, which included the plaintiff expressly reserving its legal rights. As such, the court was satisfied that a dispute existed at the relevant time.
The court moved to consider whether the parties intended that the correspondence would not be referred to in litigation. The court noted that without prejudice correspondence could be made open and open negotiations may subsequently be rendered without prejudice (see Marron v Louth County Council [1938] 72 I.L.T.R 101). In this regard, the intention of the parties was decisive.
While the absence of the words “without prejudice” in the 1 May email was not determinative, it was significant that no mention of without prejudice privilege occurred until 11 May, the court said. Further, the court could not ignore that the plaintiff had sought to rely on the contents of the email in open correspondence between the solicitors.
As such, the court was not satisfied that the 1 May email was sent on the understanding/intention that it could not be referred to in evidence if the matter went to litigation. Although the negotiations subsequently continued on a without prejudice basis, the court could not conclude that they started on such basis.
The court also considered whether the email was privileged based on the agreement of the parties. The court held that the defendant only intended for the correspondence after 12 May to be privileged based on a “plain English” assessment of the without prejudice agreement. As such, there was no agreement that the 1 May email was privileged.
Conclusion
The court refused the application to strike out the affidavit or the relevant paragraph of the affidavit.
Acorn Wave Limited v. Ó Riain [2023] IEHC 448
