Powerful voices have called for the recognition of a new type of privilege for mediators – a ‘mediation privilege’. This would be wider than the established without prejudice privilege rule (for example, see Briggs J, as he then was, ‘on the search for a proportionate way of ensuring confidentiality in mediation’ ((2009) NLJ). The opportunity to revisit the issue recently came before the High Court in Pentagon Food Group Ltd v B Cadman Ltd [2024] EWHC 2513 (Comm).
The judge in Pentagon Food Group Ltd found BCL, a party to a settlement agreement reached during a mediation, liable for misrepresentation and breach of the settlement agreement, where it emerged following the mediation that it was not in fact the legal owner of a property that the agreement required it to transfer. He reached his conclusions based on non-privileged material, including the terms of the settlement agreement itself and the parties’ pleadings.
The judge also considered whether to recognise a mediation privilege, especially in light of the growing importance of alternative dispute resolution (ADR) and the Court of Appeal’s landmark decision of Churchill v Merthyr Tydfil County Borough Council [2024] 1 WLR 3827 (CA) which confirmed the court’s powers to compel parties to engage with ADR. However, the judge refused to recognise a mediation privilege because: he found that the case before him could be decided under the existing without prejudice rule, the court could not require the mediator to give evidence, and neither party intended to issue a witness summons to call the mediator. The judge did, however, acknowledge that: ‘It may be in the future that the existence of a distinct mediation privilege will require to be considered by either the legislature or the courts but that is not something which arises for decision now.’
Agreeing with the authors of Phipson on Evidence (20th Edition, 2024), the judge noted that ‘the authorities do not – at least yet – support the view that “mediation privilege” is distinct from “without prejudice privilege”’. He went on to observe that the contractual and formal context of mediation meant that mediation is a particularly clear example of where without prejudice applies. He noted that the protection can be enhanced by the mediation agreement imposing additional duties of confidentiality which ‘can even be raised by the mediator if they are called upon to give evidence, even if the parties both waive “without prejudice privilege”: Farm Assist v DEFRA [2009] EWHC 1102 (TCC).’
The judge also extended the application of the Oceanbulk Trading & Shipping SA v TMT Asia [2010] UKSC 44 exception to without prejudice privilege to apply to the implication of contractual terms. In that case, the Supreme Court held that the facts communicated between parties in the course of ‘without prejudice’ negotiations should be admissible, if they would otherwise be admissible as part of the ‘factual matrix’ to aid contractual construction.
The judge in Pentagon Food Group Ltd explained: ‘In my judgment, justice does clearly demand that implication of terms should be able to draw on the same material as interpretation of terms in the Oceanbulk exception which would avoid not create artificial distinctions and promote not frustrate settlement. Indeed, since the implication of terms must not involve rewriting the contract, but only implication that is necessary to make the contract work (as Lord Neuberger said in BNP Paribas and Lord Hughes repeated in Ali), access to without prejudice material is just as, if not more, likely to enable the court to implement what the parties really agreed by their settlement. That reassurance is more likely to promote settlement and for parties to negotiate freely than anxiety that they must be incredibly precise in their settlement agreement as the court will take a pedantically literal approach to interpretation or implication of its terms.’
This was a rare opportunity for the court to formally recognise a distinct mediation privilege which could also extend to other types of non-adjudicative ADR procedures. Although the authors of Phipson correctly observe that the authorities have not, as yet, recognised a mediation privilege, those observations should not have prevented the judge from appreciating the benefits of a mediation privilege which would also be consistent with the current direction of civil justice reforms in enhancing the role of ADR. It is hoped that, as the case law develops following the decision in Churchill and the very recent amendments to the CPR (see our previous article ‘Churchill and new ADR rules’, 5 November 2024), a future court will finally recognise a distinct mediation privilege.
Masood Ahmed is an associate professor of law at the University of Leicester, and a member of the Law Society’s Dispute Resolution Committee. Lal Akhter is director of Docket Live and an unregistered barrister
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