Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7

Rush & Tompkins, a main contractor, settled with GLC but faced a subcontractor's claim. The subcontractor sought discovery of 'without prejudice' settlement correspondence. The House of Lords held that without prejudice communications are protected from discovery by third parties in connected litigation to encourage settlement negotiations.

Facts

Rush & Tompkins Ltd entered into a building contract with the Greater London Council (GLC) in December 1971 to construct dwellings. In January 1973, they engaged P.J. Carey Plant Hire as sub-contractors for ground works. Significant delays occurred, and Careys submitted claims for loss and expense against Rush & Tompkins between 1976 and 1979.

Rush & Tompkins commenced proceedings in August 1979 against both the GLC and Careys. However, before trial, Rush & Tompkins settled with the GLC in October 1981 for £1,200,000, accepting direct responsibility for all sub-contractors’ claims. The terms were disclosed to Careys, but the valuation attributed to Carey’s claim within the global settlement was not revealed.

Careys counterclaimed for £150,582.86 and sought discovery of the ‘without prejudice’ correspondence between Rush & Tompkins and the GLC, believing it would reveal how their claim was valued during settlement negotiations.

Issues

Primary Issue

Whether ‘without prejudice’ correspondence between parties who have reached a settlement can be disclosed to third parties in subsequent or continuing litigation connected with the same subject matter.

Secondary Issue

Whether the protection afforded by the ‘without prejudice’ rule ceases once a settlement has been concluded.

Judgment

The House of Lords unanimously allowed the appeal, restoring the official referee’s decision to refuse discovery. Lord Griffiths delivered the leading judgment.

The Without Prejudice Rule

Lord Griffiths affirmed that the rule is founded upon public policy encouraging settlement. He quoted Oliver L.J. in Cutts v. Head [1984] Ch 290:

“That the rule rests, at least in part, upon public policy is clear from many authorities… It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations… may be used to their prejudice in the course of the proceedings.”

Extension Beyond Failed Negotiations

Lord Griffiths rejected the Court of Appeal’s view that protection ends once settlement is reached:

“The main contractor might well be prepared to make certain concessions to settle some modest claim which he would never make in the face of another far larger claim. It seems to me that if those admissions made to achieve settlement of a piece of minor litigation could be held against him in a subsequent major litigation it would actively discourage settlement of the minor litigation and run counter to the whole underlying purpose of the without prejudice rule.”

Discovery and Admissibility

Lord Griffiths held that protection should extend to discovery, not merely admissibility:

“I have come to the conclusion that the wiser course is to protect without prejudice communications between parties to litigation from production to other parties in the same litigation. In multi-party litigation it is not an infrequent experience that one party takes up an unreasonably intransigent attitude that makes it extremely difficult to settle with him. In such circumstances it would, I think, place a serious fetter on negotiations between other parties if they knew that everything that passed between them would ultimately have to be revealed to the one obdurate litigant.”

Implications

This case established the important principle that ‘without prejudice’ communications are protected not only from admissibility at trial but also from discovery by third parties in connected litigation. The decision recognises that effective settlement negotiations require parties to speak freely without fear that concessions or admissions will be used against them in other proceedings.

The judgment provides significant protection in multi-party litigation, particularly in construction disputes where main contractors may settle with employers whilst disputes with sub-contractors remain unresolved. It encourages frank negotiation by ensuring that strategic concessions made to settle one claim cannot be exploited by other parties.

Verdict: Appeal allowed. The Order of the Court of Appeal was set aside and the Order of Judge Esyr Lewis Q.C. refusing discovery was restored. Rush & Tompkins was not required to disclose the ‘without prejudice’ correspondence with the GLC to Careys.

Source: Rush & Tompkins Ltd v Greater London Council [1988] UKHL 7