When can representations at mediation be disclosed?

High Court decision gives food for thought in Pentagon Food Group Ltd and Others v B Cadman Ltd

The High Court decision in Pentagon Food Group Ltd and Others v B Cadman Ltd [2024] looked at when a representation in a mediation might be available to the court. The case concerned damages for alleged misrepresentation and breach of a settlement agreement. It raised questions about express and implied terms in settlement agreements and liability for representations made during mediation and their admissibility as exceptions to the ‘without prejudice rule’.

The matter concerned a settlement, and this had arisen after a mediation. Whilst the parties agreed some parts of the mediation were inadmissible, they both accepted that the terms of the settlement were admissible, as were some details of what was said at mediation. The mediation agreement was considered, and the term that obliged the parties to keep confidential all information arising from the mediation was referenced in the judgment.

The judge therefore tackled some important questions, the core of which concerned statements in litigation and/or mediation and what was admissible. The judge considered cases on ‘witness immunity’, better known as ‘judicial proceedings immunity’, but more importantly, he looked at the cases on privilege and the without prejudice rule. The judge referred to what he called the leading modern case on the rule in the House of Lords, Rush & Tompkins v GLC [1989] AC 1280, where Lord Griffiths explained:

“The ‘without prejudice rule’ is a rule governing the admissibility of evidence and is founded on the public policy of encouraging litigants to settle their differences, rather than litigate them to a finish.”

Exceptions to the rule

However, there are exceptions, summarised in the case of Unilever v Procter & Gamble [2000] 1 WLR 2436:

“[T]here are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. The following are among the most important instances.

(1) [W]hen the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible.

(2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud, or undue influence …”

The judge also considered whether there is such a thing as ‘mediation privilege’ and the recent changes to the ADR arena following the Churchill case (read a summary here). The judge was aware of the then intended changes to the Civil Procedure to promote ADR (which have now come into effect). The judge concluded there is no separate mediation privilege, and the exemptions from the case law could apply without prejudice privilege. Flowing from the Unilever case of 2000 through to the case in 2021 of Berkeley Square Holdings v Lancer Property, it is clear there is an exemption that – “[E]vidence of negotiations is also admissible to show an agreement apparently concluded between the parties during the negotiation should be set aside on grounds of misrepresentation, fraud or undue influence.”

Ultimately the judge found that justice demanded that materials needed to interpret implied terms could be considered from a mediation. Therefore, where a party to a settlement agreement reached at mediation was accused of misrepresentation and breach of the agreement, evidence of what occurred at the mediation could be relied on, under one of the exceptions to accessing evidence of a without prejudice nature.

The overall position remains that it is a narrow exception to permit evidence from mediation. Essentially, without prejudice negotiations will be respected, and confidentiality of mediation will be respected, but if there is an agreement and a dispute over it, the positions taken in mediation may, in narrow exceptions, be admissible in evidence.

If you have questions about ADR, please contact James Tumbridge.