Jones v Tracey & Ors (Re Costs)

[2023] EWHC 2256 (Ch)

During submissions on costs, the third defendant wanted to refer to a letter dated 7 June 2023 from her solicitors to the claimant’s solicitors, which was marked “without prejudice”. The claimant said that the letter remained subject to without prejudice privilege, unlike other letters that were relied upon by the parties which were either open or marked “without prejudice save as to costs”. 

The third defendant’s solicitors said that they were not able to explain why the letter in question had been marked “without prejudice” and, given its contents, there was no reason for the letter to have been marked either “without prejudice” or “without prejudice save as to costs”. The letter was not, despite its marking, a without prejudice communication because the letter did not contain an offer to settle and was not written in an attempt to settle the claim.

Master Marsh reviewed the letter in the context of the other relevant communications between the parties which included letters making offers and discussing ADR. Here, Master Marsh observed that neither party had been specific about the form of ADR that was proposed: “Although it is common to conflate ADR with mediation, it is not right to do so because ADR encompasses a range of approaches including Chancery FDR, ENE and conventional negotiations at a round-table meeting, or otherwise, as well as mediation.”

Master Marsh noted that the starting point was the manner in which the letter was drafted, and to consider how a reasonably minded recipient would regard the letter. The Master noted that: “commonly: a letter which is not marked ‘without prejudice’ that falls within a chain of communications in the context of settlement negotiations will be treated as being without prejudice unless the opposite intention is obvious. The converse may also be true.”

Here, the letter of 7 June 2023 was in reply to an open letter which raised the possibility of ADR. It referred to an earlier open email and formed part of a chain of communications dealing with the possibility of some form of ADR. All those communications were open and obviously intended to be open. Master Marsh noted that it will usually be preferable for both parties to be able to rely upon such communications. Further, the letter did not contain an offer and did not relate to communications about a specific offer. It related to the use of ADR. It was right, therefore, to have regard to it.

The third defendant suggested that a failure by the Claimant to respond to an offer to mediate should be treated as a refusal to mediate. Here, the Master noted that:

(i) The claimant had made offers to settle well before the claim was issued to which there was no substantive response.

(ii) The third defendant’s conduct of the claim was very unsatisfactory.

(iii) The claimant raised the question of ADR first. This was followed by a further offer that would have had significant benefits to the third defendant had it been accepted. Critically, the third defendant chose not to engage with the offer. The claimant was entitled to know what view the third defendant took of the offer before committing himself to a form of ADR. 

(iv) The merits of the claim were weighted heavily in favour of the claimant. 

That said, the Master commented that the claimant’s failure to engage: “more positively with ADR … without providing any explanation is surprising.” However, it was not conduct: “such as to warrant a deduction from his costs.”  In particular, the Master referred to (a) the fact that the claimant made most of the running in relation to settlement, (b) the third defendant’s behaviour in her conduct of the claim, (c) the strong merits of the claim which either were known or should have been known to the third defendant, and (d) the late stage at which the third defendant expressed a willingness to engage in ADR. 

“Although the claimant did not explain his position in April and May 2023, it would not have been unreasonable to have concluded that the additional cost of mediation was not warranted. I do not consider that, on the facts of this case, it can be said that silence on the part of the claimant amounted to a refusal to undertake mediation (or some other form of ADR).”

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