The Dekagram: 10th February 2025

This week we look at two decisions, both of which will be of critical importance to practitioners in pursuance of contested litigation. In one, unusually, without prejudice correspondence was admissible in a case involving fundamental dishonesty; whilst in the other, the court reviewed the authorities on making costs orders in costs budgeting hearings. We can foresee both decisions being widely referred to in the months to come.

Can ‘Without Prejudice’ correspondence be admissible in evidence? A summary of Morris v Williams [2025] EWHC 218 (KB)

The claimant brought a personal injury claim following a road traffic accident in July 2018, when he was riding a motorcycle and was hit by a vehicle driven by the defendant. Liability was not in dispute, and it was plain that the claimant had suffered some injuries. However, the defendant was running a case of fundamental dishonesty, on the basis that the claimant had seriously exaggerated his injuries, relying on surveillance footage. Proceedings are progressing in the High Court.

The defendant made an interim application in December 2024 seeking an order that the claimant respond to a Part 18 request and that a letter written by the claimant’s former solicitors to the defendant’s solicitor, marked as ‘Without Prejudice – save as to costs’, be adduced as evidence. The letter was sent in an attempt to reach a settlement between the parties and thus would normally attract privilege. Judgment was handed down on the 5^th February 2025.

The defendant argued that the contents of the letter contained within the proposed terms of a settlement a promise to admit something (i.e. that some representations in respect of his claim were fundamentally dishonest) in the future if it is contained within a non-disclosure agreement. Therefore, they argued there was a clear acceptance by the claimant that he had been, at least in part, fundamentally dishonest when presenting his claim. The claimant to the contrary argued that the letter did not contain such an admission.

The Judge found that the letter did contain a clear admission that the claimant has been fundamentally dishonest, whilst it was written in the future tense it was essentially a promise to pay back sums received by way of an interim payment and make a contribution to the defendant’s costs.

Having determined this the Judge then went out to consider whether the letter could be admitted as evidence.

As set out at paragraph 7 of the judgment:

“The starting point is, of course, that without prejudice correspondence is inadmissible. The rule was explained by Lord Griffiths in Rush & Tompkins Limited v Greater London Council [1989] AC 1280 at 1289:

“The “without prejudice” rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver L.J. in Cutts v. Head [1984] Ch 290, 306:

“That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co. v. Drayton Paper Works Ltd. (1927) 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table…. The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.”

The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. A competent solicitor will always head any negotiating correspondence “without prejudice” to make clear beyond doubt that in the event of the negotiations being unsuccessful they are not to be referred to at the subsequent trial. However, the application of the rule is not dependent upon the use of the phrase “without prejudice” and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission. I cannot therefore agree with the Court of Appeal that the problem in the present case should be resolved by a linguistic approach to the meaning of the phrase “without prejudice.” I believe that the question has to be looked at more broadly and resolved by balancing two different public interests namely the public interest in promoting settlements and the public interest in full discovery between parties to litigation.”

However, the ‘without prejudice’ rule is not absolute and there are exemptions. Relevant to this case was the ‘unambiguous impropriety’ exemption. The defendant argued that the letter plainly demonstrates an acceptance by the claimant that he had been fundamentally dishonest in relation to some aspects of his claim, and so he should not be allowed to pursue a case where he disputes that he has been fundamentally dishonest. Thus it could be argued that excluding this letter would act as a ‘cloak for perjury, blackmail or other “unambiguous impropriety”’, as per Unilever PLC v The Proctor & Gamble Company [2000] 1 WLR 2436.

The Judge agreed and held that if the letter was excluded there was more than a risk of the claimant perjuring himself. Furthermore, the claimant’s pleaded case would be being put forward on a false basis, which was sufficient to bring the exception into play.

Interestingly, the letter was annexed to the judgment and in my view, it was unequivocal in admitting fraud: https://www.bailii.org/ew/cases/EWHC/KB/2025/218.html

This is a real lesson about the perceived absolute protection of ‘Without Prejudice’ inter-partes correspondence. Litigators should be particularly cautious in admitting salient facts about disputed trial issues.

About the Author

Called in 2018, Francesca Kolar accepts instructions over all of chambers’ practice areas, including most particularly personal injury and clinical negligence. Prior to pupillage she spent two years teaching debating to students in inner-London secondary and primary schools, for the social mobility charity Debate Mate.

‘There is no reason why the costs order on a CCMC must always be costs in the case’

The usual order for the costs of a costs and case management conference (“CCMC”) is costs in the case. The court nevertheless retains its wide discretion in CPR rule 44.2 to make a different order. When will it do so?

Zavorotnii v. Malinowski [2025] EWHC 260 (KB), a judgment of HHJ Walden-Smith sitting as a Deputy High Court Judge at the Peterborough District Registry, explores the circumstances in which the court will consider making a different order in circumstances where a party’s costs budget is significantly reduced at the CCMC. The judge did make the usual order, but made clear that she had come “very close” to departing from the general approach.

The claim arose from a road traffic collision. The Defendant drove into a stationary vehicle, with the result that the Claimant, a front-seat passenger, sustained serious injuries. The Defendant brought, and settled, a Part 20 claim against the driver responsible for the stationary vehicle, which was said to have been parked on the roadside overnight without lights. By the time of the CCMC, judgment had been entered for the Claimant against the Defendant.

The Claimant lacked capacity to litigate and had a litigation friend. Another particular feature of the case was that both the Claimant and his litigation friend had limited command of English and translation of all documents and interpretation of all oral communication.

At the CCMC, most of the allocated time was taken to deal with the directions and the hearing was adjourned for costs budgeting of three phases: disclosure, witness statements and experts. The Claimant claimed £511,125.30 for those phases and the Defendant offered £261,374.30. The claim was said to be worth several million pounds. At the adjourned hearing, the court allowed a total of £308,909.30 for the three phases in issue, or 18.2% over the Defendant’s offer and 40% below what the Claimant sought.

The Defendant sought an order for the Claimant to pay the Defendant’s costs of the adjourned hearing. In considering the appropriate costs order, HHJ Walden-Smith took account of several factors, including:

(i) the court’s wide discretion;

(ii) the fact that the usual order was for costs in the case, given the necessity for the court to manage a case to trial, including costs budgeting;

(iii) the overriding objective’s requirement for the court to deal with cases justly and at proportionate cost and the requirement on the parties to help the court further that objective; and

(iv) the particular features of the case including its value, its importance to the Claimant (but no wider significance) and the complexity involved in the quantum assessment.

The judge considered two decisions of Master Thornett in the King’s Bench Division: Worcester v. Hopley [2024] EWHC 2181 (KB); and Jenkins v. Thurrock Council [2024] EWHC 2248 (KB).

In Worcester, a claimant had achieved approval of a budget only 3.58% higher than the defendant’s offer, with the result that the budget was less than half of that originally sought. Master Thornett described the budget as “unreasonable and unrealistic”, such that the resulting “polarised approach” required a separate hearing for budgeting, involving “fundamental deconstruction” of the claimant’s proposals. With reference to Reid v. Wye Valley NHS Trust [2023] EWHC 2843 (KB), in which it was held that rule 44.2 “enabled the court to depart from any assumed default position on costs if it considers the facts justify the court in so doing” (per HHJ Walden-Smith’s summary), he ordered that the claimant pay the defendant’s costs of the further hearing.

In Jenkins, the same Master said that “[p]arties are not in principle immune from costs considerations in costs management hearings”, including where “time and resources had instead been expended, by both the court and opposing parties, unravelling an unreasonable or unrealistically ambitious budget despite material and justified concerns having been expressed in advance” by the opposing party.

HHJ Walden-Smith, bearing in mind Lord Woolf’s general principle in AEI Rediffusion Music Ltd v. Phonographic Performance Ltd [1999] 1 WLR 1507 that the CPR was intended to impose higher discipline on litigating parties, focussed on the key rules in the CPR: rule 1.1 and rule 44.2.

The judge noted that both sides could claim to have been successful at the budgeting hearing: the Claimant had beaten the Defendant’s offer (and by rather more than the 3.58% in Worcester); and the Defendant had reduced the Claimant’s budget by over £200,000. She found that the Claimant had “continue[d] with an overly ambitious costs budget which verge[d] on the edge of being described as ‘unrealistic’” and had in fact increased the sums sought in the course of the adjournment. Those points notwithstanding, however, the judge determined that “the fact that the claimant achieved 60% of that which it sought, and obtained approval to expend costs which were 18% above that offered by the defendant, mean[s] it cannot be said that the claimant was entirely unrealistic”. She ordered costs in the case – but recorded that the Claimant had “come very close” to a finding of having taken an unrealistic position.

Practitioners can look forward to this decision, and those of Master Thornett from which it quoted, being cited at future CCMCs to argue that the court should depart from the usual order of costs in the case. The reality, however, is that, whilst the court always retains a discretion, the bar remains high. There will have to be substantial justification for an “overly ambitious” budget to be found to be “unreasonable” or “unrealistic”, adjectives which are euphemisms for relatively serious criticisms of the lawyers who have advanced it.

About the Author

William Dean has a busy personal injury practice involving both domestic and foreign accidents. He is a contributor to the Butterworths Personal Injury Litigation Service, in which he is the author of the “Foreign Accidents” section. He also acts in tribunal claims against the Criminal Injuries Compensation Authority, including in cases involving foreign jurisdictions, and is a contributor to the leading textbook in that field.