Check Your Privilege In Settlement Discussions – WP Or Not WP, That Is The Question

Legal privilege is currently a fast-moving area in common law jurisdictions, including the Cayman Islands. This month, the Cayman Islands Grand Court handed down a judgment on without prejudice (or “WP”) privilege (Balls v Shewraj and Saxon Motor & General Insurance Company Ltd, The Hon. Justice Carter (Actg.), unreported 2 March 2020 (“Saxon”)). This follows in the wake of a recent decision of the English Court of Appeal (BGC Brokers LP and others v Tradition (UK) Limited and others [2019] EWCA Civ 1937) considering the same subject matter (and of persuasive authority here).

This article: (i) starts with a reminder on the principles of WP privilege; (ii) examines the recent Cayman Saxon decision; (iii) briefly summarises the English BGC v Tradition decision; and (iv) sets out some practical points for parties involved in settlement discussions to keep in mind.

(i) What is WP privilege?

By way of a reminder, WP privilege attaches to written or oral communications made for the purpose of a genuine attempt to compromise a dispute between parties. The effect of this rule is that such communications are generally not admissible in evidence.

The policy behind this has been explained in Cutts v Head [1984] Ch 290 at 306, where Oliver LJ explained 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… may be used to their prejudice in the course of the proceedings". So the rule is aimed at encouraging the parties to "fully and frankly put their cards on the table", because any statements or offers made by one of the parties in settlement negotiations cannot (in normal circumstances) be later brought before the court as an admission on the question of liability.

(ii) What happened in Saxon?

Saxon, was a personal injury matter relating to a road traffic accident. The Plaintiff was the person injured in the accident, the First Defendant was another driver, and the Second Defendant was the insurance company of the First Defendant.

Facts of Saxon and the application in question

The Plaintiff in Saxon had sworn an affidavit which said that the issue of liability was confirmed as having been accepted by the Defendants, and then exhibited to that affidavit some communications between the Plaintiff and the insurance company's independent loss adjustor.

The Defendants then applied under the Grand Court Rules Order 41, rule 6 for the Plaintiff's affidavit to be struck out on the ground that it was 'scandalous, irrelevant or otherwise oppressive', on the basis that the affidavit introduced communications expressly marked 'without prejudice', and which the Defendants said was subject to privilege applicable to settlement negotiations (ie WP).

In the relevant communications, the Plaintiff had enquired whether the loss adjustor could confirm that liability for the matter was not in dispute, and the loss adjustor had replied by saying that there was no need to discuss responsibility for the crash and that there only needed to be a discussion on the extent of the...