Report No. 185

Section 23

Section 23 deals with the question as to 'admissions in civil cases, when relevant.'

It states that: "In civil cases no admission is relevant, if it is made either upon an express condition that evidence of it is not to be given, or under circumstances from which the Court can infer that the parties agreed together that evidence of it should not be given".

It contains an Explanation which reads as follows:

"Explanation: Nothing in this section shall be taken to exempt any barrister, pleader, attorney or vakil from giving evidence of any matter of which he may be compelled to give evidence under section 126."

The policy here is that if during some negotiations to settle the dispute, some concessions are made but the negotiations fail, the concession should not be admissible.

The section deals with the principle of 'offers without prejudice'. Taylor on Evidence (p.795, cited in Woodroffe) (see para 9.77 of 69th Report) explains this as follows:

"Confidential overtures of pacification and any other offer or proposition between litigating parties, expressly or impliedly made without prejudice (see re River Steamer Co. (1871) LR 6. Ch. 822) are excluded on ground of public policy. Now, if a man says his letter is without prejudice, that is tantamount to saying: "I make you an offer which you may accept or not, as you like; but if you do not accept it, the having made it is to have no effect at all". As has been said do not "without prejudice" mean 'I make you an offer; if you do not accept it, this letter is not to be used against me'."

The scope of the Explanation below section 23 is that if an advocate is consulted by an accused and the information is used for committing a crime or if an advocate discovers that a crime or fraud has been committed by his client after his employment as an advocate, the said advocate could disclose, as a witness, what his client had told him or what he (the advocate) had disclosed. The client would not be able to say that there was an express or implied agreement against the disclosure.

We shall first refer (I) to the recommendation in the 69th Report and then (II) to certain latest developments in the law, discussed extensively in Phipson (15th Ed. 2000, paras 21.10 to 21.17).

(I) In the 69th Report, it was pointed out that section 23 does not deal with 'all statements made' during negotiations but only admissions which are expressly made or which can be implied from the circumstances. It would be fair to provide that statements made with a view to, or in the course of negotiations for a settlement should always fall within the section. The Commission referred to the views of Denning L.J. (as he then was) in Me Taggart v. Mc Taggart 1948(2) All ER 754 and to Mole v. Mole 1950(2) All ER 328 and suggested (see para 9.85), addition of a second Explanation as follows:

"Explanation 2: Where an admission is made for the purposes of or in the course of negotiation of a settlement or compromise of a disputed claim, the parties shall be deemed to have agreed together that evidence of that admission shall not be given".

We agree respectfully that such a provision is necessary but that instead of an Explanation, the following words can be added in the section itself after the words "upon an express condition that evidence of it is not to be given" and the words, "or if it is made for the purposes of or in the course of a settlement of compromise of a disputed claim." We may also refer to the observation in the 69th Report that this Explanation does not affect the operation of Order 23 R 3, Code of Civil Procedure 1908, since the compromise in writing can be proved.

(II) Recent developments in English law may now be noticed. In Cutts v. Head 1984 Ch. 290, Oliver L.J. referred to the principle of public policy and said that the object was to encourage parties to settle disputes peacefully without resort to litigation. This could lead to concessions for purchase of peace and these could not be treated as admissions and proved.

The following new aspects need consideration:

(a) Whether (see Sarkar, 15th Ed., 1999 p.411) a privilege can be unilaterally waived at the behest of the party entitled to the privilege or whether, it can be waived only with the consent of both parties to the correspondence, Rush & Thompkins v. G.L.C. 1989 AC 1280. (This aspect is to be considered.) (The better view appears to be that both parties must consent.)

(b) The other aspect is the three party situation which arose in Rush & Thompkins v. GLC 1989 A.C. 1280. There, the main contractors settled proceedings arising from a building contract with the principal (i.e. employer, the GLC). The proceedings continued between Rush & Thompkins and their subcontractors, the latter sought disclosure of the 'without prejudice communications' between Rush & Thompkins and the GLC anticipating that there might be some discussion of the strength of the case of the subcontractor and admissions by Rush & Thompkins.

The Court of Appeal took the view that once the proceedings between the main contractor and GLC concluded, the correspondence therein must be available in the sub-contractor's proceedings. But the House of Lords reversed this view and held that the public policy basis for the privilege would be weakened if a party negotiating with one defendant could not express his views openly for fear that if he reached a compromise with that defendant, admissions made in those negotiations would be admissible either in the same action or in another action against another party. (This is an aspect to be considered.)

(c) The further new aspect is that though the admission in negotiation are not admissible as admissions in relation to the validity of the claim by the party against the other yet, when the reasonableness of the settlement is in question later, the negotiations will be admissible, a view taken by the Court of Appeal in Muller v. Linsley & Mortimer: 1996(1) P.N.L. R 74 = 1995 vol. 92(3) L.S.G. 38 (CA). This view of Hoffman LJ (as he then was) was accepted by two other Judges of the Court of Appeal but they also relied on waiver of privilege.

But recently, the Court of Appeal in Paragon Finance v. Freshfields 1999(1)WLR 1183 however felt that they were not able to derive any principle from the above judgment. Phipson says (para 21.15 it is doubtful whether the Hoffmann LJ's view will be fully accepted. (In Unilever v. Procter & Gamble : 1999(2) All ER 691.) (This aspect, therefore, need not be considered)

(d) The fourth aspect (see Phipson, 15th Ed., 2000, para 21.15) concerns certain exceptions to this privileg.- in other words, situations where the admissions during negotiations may be received in evidenc.-

(i) To ascertain whether parties concluded agreement Tomlin v. Standard Telephone : [1969] 1 WLR 1378(CA). (This aspect can be considered).

(ii) To explain dela.- where the opposite party files an application to strike out a plea on ground of delay, e.g. delay in amending a patent under the Patents Act or any plea of laches (Walker v. Wilsher (1889) 23 Q.B.D.335; Family Housing Assn (Manchester) v. Michael Hyde & Partners 1993(1) WLR 354; Redifusion Simulation v. Link Miles Ltd. 1992. F.S.R. 195; Simaan General Contracting Company v. Pilkington Glass : 1987(1) WLR 516 (This aspect can be considered)

(iii) To draw or rebut inferences on an application without notice (The Giovanna) 1999(1) Lloyd's Rep 86.- e.g. an application for an asset freezing injunction or where an offer of security has been made 'without prejudice basis' and there it may be relevant to rebut inferences that the defendant is likely to dissipate assets. (This need not be considered.)

So far asthe first aspect is concerned, we are of the view that a further provision can be added at the end of section 23, to the following effect: "unless the party who made the admission and the party in whose favour the admission is made agree that evidence be given". So far as the second aspect is concerned, the admission would not be relevant in issues between the person who made the admission and a third party. The third aspect referred to above need not be taken note of. So far as the fourth aspect is concerne.- the following words can also be added at the end "evidence as to the admission becomes necessary to ascertain if there was at all a settlement or to explain delay where a question of delay is in issue".

We have recommended insertion of a new section 132A for disclosure of source of information contained in a publication. According to this proposed provision, a person in certain circumstances may be required to disclose source of information contained in a publication. There is a need to exempt provision of section 23, in case a person who made a publication, from giving evidence of any matter of which he may be required to give evidence under proposed section 132A. In this regard, reference may be made to the discussion made under proposed section 132A.

Therefore we recommend that section 23 should upon such amendments, read as follows:

"23 Admission in civil cases when relevant.- (1) In civil cases, no admission is relevant:

(a) if it is made either upon an express condition that evidence of it is not to be given; or

(b) if it is made for the purposes of or in the course of a settlement of compromise of a disputed claim; or

(c) under circumstances from which the Court can infer that the parties agreed together that evidence of it should not be given, unless the party who made the admission and the party in whose favour the admission is made agree that evidence be given, or evidence as to the admission becomes necessary to ascertain if there was at all a settlement or compromise or to explain any delay where a question of delay is raised;

(2) Such an admission which is not relevant under subsection (1) may be relevant in so far as it touches upon an issue between the person who made the admission and a third party to the admission.

(3) Nothing in this section shall exempt;

(a) any legal practitioner from giving evidence of any matter of which he may be compelled to give evidence under section 126; or

(b) a person who made a publication, from giving evidence of any matter of which he may be required to give evidence under section 132 A.

Explanation I: 'legal practitioner' as used in this section shall have the meaning assigned to it in Explanation 2 to section 126.

Explanation II: 'publication' as used in this section shall have the meaning assigned to it in para (a) of the Explanation to section 132 A."