Minding Your W's and P's: The Spectre of Without Prejudice Privilege  

January, 2017 - Thio Shen Yi, SC, ALEXANDER PANG

November 2016: In the recent Singapore High Court decision of The Enterprise Fund II Ltd v JongHee Sen [2016] SGHC 259, Judicial Commissioner Hoo Sheau Peng (the "Judge") considered whether “withoutprejudice” privilege ("WP Privilege")applied to certain communications between the parties and, consequently,whether those communications could be received into evidence.

In summary, the Judge overturned the Assistant Registrar’s first instancedecision, holding that the communications in question were subject to WPPrivilege, even though those communications were not expressly marked as such.It appears from the judgment, electronicallyavailable on Singapore Law Watch here (the "Judgment"), that an appeal has been filed against the Judge'sdecision.

The decision serves as a cautionary tale that WP Privilege may ariseeven where this was not intended. In the present case, the plaintiff’ssolicitor’s letter of demand was held, as a matter of fact, to contain aninvitation to enter into settlement negotiations. Consequently, the defendant’sresponse and subsequent proposal were held as being cloaked by WP Privilegewith the consequence that they could not be referred to or disclosed in thelitigation between the parties.


A.The Law

1.As a preliminary observation, it is well established that the common lawprinciple of WP Privilege forms part of Singapore jurisprudence. As noted bythe then Judicial Commissioner (and present Chief Justice) Sundaresh Menon in SinLian Heng Construction Pte Ltd v Singapore Telecommunications Ltd [2007] 2SLR(R) 433 at [1]:-

The “without prejudice” privilegeis well recognised by the courts and in legislation. Its object is to ensurethat parties to disputes are not discouraged from making genuine attempts atpeaceful resolution of their disputes for fear that their communications duringnegotiations may be used to their prejudice in subsequent proceedings. Thepolicy has always been to encourage such parties to try to settle theirdisputes as far as possible without resorting to litigation. Free anduninhibited communications are seen as vital to this end, and, accordingly,communications made in the course of negotiations are privileged and, as ageneral rule, cannot be referred to or relied upon in subsequent proceedings…”

2.Statutory recognition of the common law principle may be found inSection 23(1) of Singapore’s Evidence Act (Cap. 97, 1997 Rev Edn), which deemsadmissions not to be “relevant” – andconsequentially not receivable in evidence in civil cases – where the admissionis made either:-

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

(b) upon circumstances from which thecourt can infer that the parties agreed together that evidence of it should notbe given.

3.It is also accepted that WP Privilege may cloak documents,communications and exchanges, even where such documents, communications orexchanges are not expressly marked or made on a “without prejudice” basis. Provided the preconditions for WPPrivilege are met (discussed below at paragraph 11), the privilege may arise.

4.This is precisely what occurred in the present case. Consequently, the specific text of thecommunications in question bear reproduction, given the finding that thecommunications gave rise to WP Privilege as a matter of law, even though notexpressly marked as such.

B.The Communications

5.In this respect, the plaintiff’s solicitor had issued a letter of demand(the “Demand Letter”) which providedinter alia as follows:-

4. Without prejudice to ourclient’s rights, we are now instructed to and do hereby write, on behalf ofour client, to request your written proposal to resolve the aforesaid claim,for our client’s due consideration, within no later than five (5) days fromthe date of this letter.

5. TAKE NOTE that if you fail tocomply with the aforesaid request, our client reserves the right to proceed asit may deem fit to enforce its claim, without further reference to you,including commencing legal proceedings, in which event our client will furtherlook to you for the costs of such proceedings.”

[emphasis added]

6.Upon the defendant’s receipt of the Demand Letter, he responded viaemail to request a meeting to discuss a “firmpayment plan” (the “Reply Email”).The meeting duly took place and the defendant subsequently wrote to theplaintiff’s lawyers with a written proposal to pay a lower sum than thatdemanded so as to resolve the plaintiff’s claim (the “Proposal”).

7.No final agreement was in fact reached, and the plaintiff consequentlycommenced legal proceedings against the defendant to enforce its rights.

8.In response, the defendant filed an application to strike out certainportions of the plaintiff’s statement of claim and to expunge two affidavitsfiled by the plaintiff on the basis that those pleadings, documents and/orexhibits had disclosed information cloaked by WP Privilege.

9.At first instance, the defendant’s application was dismissed by anAssistant Registrar.

C.The Decision

10.On appeal, the Judge reversed theAssistant Registrar’s decision and held that the Reply Email and Proposal wereprotected by WP Privilege. The reference to the Demand Letter in theplaintiff’s pleadings was permitted to stand on the basis of the parties’agreement.

11.Insofar as the principles concerningWP Privilege are concerned, the Judge summarized the position as follows (see[20] and [21] of the Judgement]:-

20 To sum up, I considered therelevant principles in the present case to be as follows:

(a) “Without prejudice” privilegewould apply to the communications if they were part of a course of settlementnegotiations. Whether they should be considered part of a course of settlementnegotiations depended on both their context and their content.

(b) If the communications containeda clear admission of liability such that no dispute remained, they could not beconsidered to be part of a course of settlement negotiations.

(c) However, if thecommunications contained a clear admission that some liability existed, but adispute remained as to the quantum of the liability, they could still beconsidered to be part of a course of settlement negotiations and thus protectedby “without prejudice” privilege.

21 I should also add that “it iswell established that the principle of waiver is applicable in the context ofcommunications for the purpose of settlement” (Jeffrey Pinsler SC, Evidence andthe Litigation Process (LexisNexis, 5th Ed, 2015) at para 15.024). In otherwords, parties may agree to waive the protection accorded by “withoutprejudice” privilege.”

[emphasis added]

12. Central to the Judge’s decision waswhether the Demand Letter was a pure demand or if it included an invitation toenter into settlement negotiations. In the latter scenario, any settlementproposal given in response could be protected by WP Privilege even though theinvitation itself was not.

13. The Judge held that the DemandLetter, considered objectively, invited proposals from the defendant, includingsettlement proposals. Consequently, the Reply Email and the Proposal, beingpart of the course of settlement negotiations between the parties, attracted WPPrivilege.

D.The Lesson

14. The Judgment draws into sharp focusthe spectre of WP Privilege unintentionally arising in the course ofnegotiations to settle a dispute and, consequently, the (in)ability of a partyto subsequently disclose and/or rely on such negotiations in legal proceedingsor arbitration.

15. The other critical issue is theextent to which a party may rely on an admission made by the other party toargue that WP Privilege does not (and cannot) apply, since a pre-condition ofsuch privilege is that a dispute exists between the parties. The rationale ofthis argument is that where a claim is wholly admitted by one party, it cannotbe said that a dispute continues to subsist, with the consequence that WP Privilegecannot arise.

16. It appears from the Judgment though,that such situations will be very rare indeed as only an unequivocal admission(both as to liability and quantum) amounting to a “white flag of surrender” - as distinguished from a “flag of truce” (see Sin Lian Heng Construction PteLtd v Singapore Telecommunications Ltd [2007] 2 SLR(R) 433 at [44] and[45]) – would suffice.

17. As an aside, it is entirelyforeseeable that the principles laid down in the Judgment may be exploited tosurreptitiously invoke WP Privilege. Whilst such gamesmanship is to be frownedupon, knowledge is ultimately power and practitioners and professionals alikewould be well served by examining the technical points of the Judgment.

(This article is jointly written by Thio Shen Yi, SC, Joint Managing Director and Alexander Pang, Associate Director, TSMP Law Corporation)





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