Citation: [2025] EWHC 540 (TCC)
Background
The claimants were contracted to supply the defendant with COVID-19 lateral flow test kits. The defendant subsequently rejected the 68.4 million tests supplied, alleging breaches of Chinese labour law in the factory where the testing kits were manufactured. The claimants brought three claims, two of which alleged breaches of the Public Contracts Regulations, with the other challenging the alleged wrongful rejection of the tests. This judgment concerned the claimants’ application for a declaration that an audit report that was compiled as a result of the parties’ without prejudice negotiations was not itself protected by without prejudice privilege.
In its application, the claimants contended that the audit report was not protected by without prejudice privilege because it did not fall within the scope of the public policy justification (which only applies to the contents of the negotiations) and there was no express or implied agreement extending the scope of the without prejudice rule to include the report. The defendant argued that as the report was created under the umbrella of the parties’ without prejudice negotiations, it was subject to the public policy rule and that there was an implied agreement that the Intertek Audit Report was without prejudice.
Decision
Joanna Smith J granted the claimants’ application and made an order declaring that the Intertek Audit Report was not protected by without prejudice privilege.
The defendant’s argument regarding the public policy justification was rejected because the audit report was not a statement or offer made in the course of the parties’ negotiations, nor was it a record of the negotiations of themselves. It was an independent report commissioned by a third party which did not contain statements from either party that might be subject to the without prejudice rule.
The court also rejected the defendant’s argument that there was an implied agreement as there was no evidence to this effect. The fact that the parties discussed the report in without prejudice negotiations did not amount to an implied agreement that the report would also be protected by without prejudice privilege.
Sarah Hannaford KC and Ben Graff appeared for the Claimants, instructed by Eversheds Sutherland (International) LLP.
The judgment can be found here.
