High Court Analyzes Admissibility and Exceptions to Without Prejudice Rule in Contract Dispute

Introduction

In the case of Ocean On Land Technology (UK) Limited & Anor v Richard Land & Ors, the High Court of Justice’s Business and Property Courts of England and Wales tackled several pivotal issues concerning trial witness evidence. The case elucidates key legal principles, notably the application of the without prejudice rule and its exceptions, as well as the admissibility and relevance of evidence in contractual disputes. The judgment offers a comprehensive exploration of these legal doctrines, their practical limits, and the discretion available to courts in managing complex interim hearings within the confines of the Intellectual Property Enterprise Court (IPEC).

Key Facts

1. The case arose from a business transaction involving the sale of shares and assignment of patent rights accompanied by a subsequent Settlement Agreement.
2. Disputes related to breach of contract, trademark infringement, and patent infringement.
3. There were three applications concerning the admissibility of trial witness evidence that included references to without prejudice communications, allegations of expert evidence, and purportedly irrelevant material.

Legal Principals

Without Prejudice Rule and Exceptions

The without prejudice rule shields communications made during dispute resolution negotiations from being admitted as evidence. Exceptions to this rule were scrutinized, including:

• Unambiguous Impropriety: Privilege is defeated when the protection is being used to cloak perjury, blackmail, or some other ‘unambiguous impropriety’.
• Waiver: Privilege may be waived if a party relies upon without prejudice materials to advance its case.
• Oceanbulk Interpretation Exception: Admits objective facts from without prejudice communications necessary for constructing the contract.

Admissibility and Relevance of Evidence

The principles concerning the admissibility and relevance of evidence included:

• Contractual Interpretation: It is an objective exercise, barring evidence of parties’ subjective intentions.
• Pre-contractual Negotiation: Not ordinarily admissible except for ‘genesis’ or ‘aim’ of the transaction.
• Costs Benefit Test: Emphasized in IPEC, where evidence must be relevant to specific issues, helpful to the court, and meet a cost-benefit threshold.

Outcomes

• Portions of witness statements deemed irrelevant or prejudicial to the trial were struck out.
• The Defendants’ applications to include reply evidence over allegations in Mr. Cadman’s statement were dismissed.
• The Claimants’ applications to exclude paragraphs of the Defendants’ trial witness statements as expert evidence were rejected.
• The Court dismissed the Defendants’ applications regarding the exceptions to the without prejudice rule, finding that the Defendants had not established that the challenged material fell within the recognized exceptions.
• All elements of the Defendants’ witness evidence on the without prejudice rule were excluded, as no exception applied.
• Costs were reserved to be dealt with by the trial judge at the conclusion of the trial.

Conclusion

The judgment in Ocean On Land Technology (UK) Limited & Anor v Richard Land & Ors meticulously applies well-established legal principles to the questions of admissibility and relevance of evidence, especially in terms of contractual disputes and the without prejudice rule within the streamlined framework of IPEC. It underscores the necessity of a cautious approach when granting exceptions to the without prejudice rule and reaffirms the objective nature of contractual interpretation in English law. The decision also reminds practitioners of the importance of congruence between interim applications and their relevance to trial issues, further highlighting the active role of the court in managing proceedings in a way that ensures justice is both served and efficient.