It is obvious that all those involved in civil litigation need to understand the operation of the “without prejudice” rule, be they insurance claims handlers, paralegals, solicitors, costs lawyers, etc.
The recent decision of Chief Master Marsh in Ravenscroft v Canal & River Trust  EWHC 2282 (Ch) considered whether an exception to this rule existed in relation to interlocutory hearings. As part of that judgment the judge observed:
“The boundaries of the exclusionary aspect of the without prejudice rule are not entirely clear”
The boundaries of exceptions to the rule are no doubt not 100% clear but it is alarming the extent to which some lawyers appear to have failed to grasp even the most rudimentary basics of the rule.
I recently had to make an application against a well-known firm of personal injury solicitors to strike out Replies which made express reference to the existence and amount of a Part 36 offer made during negotiations over costs. By the time the matter reached court, all matters except for the costs of the application had been agreed. Costs Judge Master James dealt with the matter on paper and the short written decision covers the relevant facts:
“I have read the Application and both sides’ version of events.
The decision to refer (in the original Replies) to the amount of a Part 36 offer is an extraordinary step.
Post Halsey it is much more likely than not, that the parties will have attempted some form of ADR (whether it be by way of Part 36, Calderbank offer or otherwise).
However, it is extremely trite law that the Court may be embarrassed to hear a matter, if it is made aware of the existence and in particular of the quantum of any Part 36 offers.
In the worst case scenario, a Master reading the original Replies on the morning of the Hearing could have said ‘I must now recuse myself from this case and it will have to be adjourned until another Master can hear it. That is likely to be several months off. The party responsible for this is the Receiving Party who will therefore now have to bear the costs of this adjournment.’
When the Paying Party pointed this issue out, the Receiving Party’s response was to remove reference to ‘Part 36’ but to leave in the reference to the existence of their offer, to the sum of their offer, and to the Paying Party’s rejection of their offer. To my mind this risked the same mischief as in the foregoing paragraph and whilst it must be said that most Masters (myself included) would likely press on, they would then have regard to the Receiving Party’s extraordinary conduct when dealing with the Costs of Assessment. Since it has been resolved before that point, what is to become of those costs?
I therefore ask myself, whose fault was it that the Paying Party made the Application? The Receiving Party would have me rule that it was an attempt to undermine the Provisional Assessment procedure, but I do not agree. I think that the Paying Party was entitled to pursue the Application, having given the Receiving Party due notice that it would do so if the Replies were not revised to remove the offending reference to the offer (whether described as a Part 36 offer or not).
As such the Paying Party is entitled to its costs of the Application.”