Justified privilege?

The recent Court of Appeal decision in Aird v Prime Meridian Ltd [2006] EWCA Civ 1866 overturned HHJ Peter Coulson's TCC decision and, in doing so, decided an important point of principle regarding the privileged status '“ or not '“ of joint statements of expert witnesses, which are initially prepared for the primary purpose of mediation but are later relied upon in court proceedings.

The use of experts in mediation has increased significantly in recent years '“ May LJ observed in Aird that public policy dictates that '... mediation takes the form of assisted 'without prejudice' negotiation and'¦ what goes on in the course of mediation is privileged, so that it cannot be referred to or relied upon in subsequent court proceedings if the mediation is unsuccessful'. Just as anything said in mediation is inadmissible as evidence, so documents generated by or for mediation are ordinarily privileged.However, as the result of the Court of Appeal in Aird, documents prepared with mediation in mind may not be privileged in proceedings, even if the clear intention (of one party at least) was that privilege would attach.

Aird at first instance

The claimants' (C) proceedings against the defendant (D) (for negligence and breach of professional duty in providing architectural services) were stayed for mediation and the parties were ordered to instruct experts who were to provide a joint statement of issues. C stated, prior the order being made, that they would prefer the statement not to be made jointly, but the direction was nonetheless made.

Following a meeting of experts, a draft joint statement was agreed and marked 'without prejudice'. The final version removed the 'without prejudice' reference, following discussion between the experts. At this time, individual expert reports had not been prepared. The judge believed that C's expert clearly intended (due to time and financial constraints) the statement for use at mediation only (as reflected in correspondence between the expert and C's solicitor) and that he would not otherwise have signed the statement.

When mediation failed and proceedings resumed, D objected to C's attempted amendment to their pleadings as inconsistent with views of their expert as expressed in the joint statement. C maintained that the statement had been produced for the mediation and therefore was 'without prejudice' so that no reference could be made to it in the proceedings.

D argued that the statement had been prepared pursuant to CPR35.12 and did not attract privileged status merely because it was first seen at mediation (alternatively, the inconsistencies were so 'grotesque' that any privilege should be forfeited).

While acknowledging that such an experts' statement would ordinarily not be privileged, HHJ Coulson QC considered that this statement had not been created in the usual way and that C had intended it to be used for the purpose of mediation only. He found that the primary function of the statement was to assist in the mediation and that ''¦if the claimants' expert had known that the joint statement was to be used in litigation... he would not have signed it'. It would therefore'be unfair to rule that the statement was not now privileged'.

Court of Appeal

On D's appeal, the Court of Appeal concluded that: the directions order was made in response to D's request for a Part 35 order, the TCC was wrong to qualify the terms and effect of the order and that C's intention was immaterial. Further, the order, construed objectively, was clearly made under CPR r 35.12(3), not least because the court has no power to qualify the order in the way suggested, nor to order the parties to produce a privileged document.

The correct question therefore was: Did the joint statement comply with the order? May LJ decided that ''¦what both experts had prepared was a joint part 35.12(3) statement'¦', having already stated that a statement made pursuant to CPR35 is one ''¦ which, from the very wording of the rule, is available for use in the proceedings. It is not protected by privilege.'

Practice points

• Caution is needed especially when the expert on whom your client wishes to rely agrees a joint statement prior to preparation and exchange of expert reports. An expert may sign a statement which, upon being instructed to prepare a full report, contains concessions from which he may wish to resile.
• Bear in mind the risk that a document - prepared with mediation in mind and which is seen for the first time at mediation - is not automatically cloaked in privilege should the mediation fail.
• Perhaps most importantly, if an order is made for the production of a joint statement by experts for use in mediation, if it is your intention that this statement should not be available for litigation, you should try to reach in advance an unequivocal agreement to that effect and ensure that this is clearly written into the court order. Failing this, you must expect that the statement will be disclosable.