IN THE HIGH COURT OF FIJI
WESTERN DIVISION
AT LAUTOKA

[CIVIL JURISDICTION]

Civil Action No. HBC 262 of 2018
BETWEEN: RODNEY RAJEN SHANKARARN T/A ROSHEA WORKS of Nukuloa, Ba.

Plaintiff

AND: ELTECH LIMITED a duly registered company in Fiji having its registered office at Level 2, Airport Central Building, Namaka Lane, Nadi. 

Defendant
 
Before: Master U.L. Mohamed Azhar
Appearance: Mr. V. Chandra for the Plaintiff
The Defendant is absent and unrepresented

Date of Decision: 10th September 2021

DECISION
(Assessment of damages, without prejudice rule and exceptions)

01.	The plaintiff filed the Notice of Assessment of Damages and Interest pursuant to Order 37 rule 1 of the High Court Rules, following the Interlocutory Judgment sealed by his solicitors on 16th of April 2019 against the defendant company. The factual background of this case is that, the plaintiff entered into two separate contracts with the defendant company. One was to provide trucks and machinery for the purpose of logging operation of the defendant company in the island of Kadavu. This agreement was known as “the logging agreement”. Pursuant to this logging agreement, the plaintiff had to have his trucks ready to provide services to the defendant company on his demand. The plaintiff then raised his Invoice No. K 101 dated 22.07.2018 for standby time of 140 hours at the rate of $ 80 per hour, which came to total sum of $ 11,200. The defendant company then negotiated with the plaintiff on the rate applied for an hour of standby. The plaintiff agreed to grant onetime discounted rate of $ 70 per hour. Accordingly, the revised amount of that invoice was $9,800.00. 

02.	The plaintiff’s two trucks were on standby again for a period from 15.08.2018 till 16.10.2018 at the rate of $ 80 per hour and the invoice was for $ 16,800.00. The plaintiff finally made the updated Invoice No. 107 which was for sum of $ 56,332.29. Despite numerous demands by the plaintiff, the defendant company failed and or neglected to pay the total sum on that Invoice.

03.	The second agreement between the plaintiff and the defendant company was for supply of wood fibre. It was entered on 24.09.2018, whereby the plaintiff agreed to supply a weekly volume of 1600 tons of wood fibre. The defendant company agreed to pay the plaintiff a sum of $ 54 VEP per ton on monthly basis for a period of 5 years. The plaintiff was ready to fulfill his obligation under that agreement, having his trucks in Kadavu from 01.08.2018. However, the defendant company verbally terminated that agreement and informed the plaintiff that, it would hire the contractors from Korea at a lower cost. The plaintiff not only lost the benefits of wood fibre agreement, but also lost the revenue, which estimated in total sum of $ 309, 980.00. The plaintiff therefore sued the defendant company for his loss for breach of contracts, general damages, special damages, pre and post judgment interest and cost on indemnity basis.   

04.	The writ was duly served on the defendant company. In the meantime, there was an application by the plaintiff for some injunctive reliefs, which were granted by a judge. It is evident from the record that, the CEO of the defendant company appeared before the judge at the hearing of application for injunctions. However, the defendant company neither filed the Notice of Intention to Defend, nor the Statement of Defence as required by the rules of the High Court. In the meantime, there were several correspondences, in February and March 2019, between the plaintiff and the defendant company to settle the total sum and at one point in time there was a final agreement between them on total sum payable by the defendant. However, the defendant company failed to honour his words and settle the agreed sum. This prompted the plaintiff to seal the interlocutory judgment on 16.04.2019. Despite service of interlocutory judgment, the defendant company continued in his default.  Then the plaintiff took out this Notice of Assessment of Damages and Interest.

05.	The plaintiff was the only witness to testify at hearing this summons. However, there were no suitable dates for hearing due to the heavy workloads and the diary of the court was full. Therefore the court suggested the counsel to file the affidavit of the plaintiff annexing his documents for the evidence in chief and the court further directed that, the notice would be issued on the plaintiff, if the court needs any further clarification. Upon reading the affidavit sworn by the plaintiff for his evidence in chief, and perusing the documents annexed with his affidavit, it revealed that, further evidence by way of viva voce was not necessary in this matter. Therefore, I proceed to make the decision based on the affidavit filed by the plaintiff for evidence in chief and the annexures therewith. 

06.	It is settled law that, the special damages have to be pleaded and proved (Lord Goddard in British Transport Commission v Gourley [1956] AC 185). The necessity of pleading and proving special damages was further elaborated by  Bowen L.J. in Ratcliffe v Evans [1892] 2 Q.B. 524 at pages 532 and 533 as follows: 

The necessity of alleging and proving actual temporal loss with certainty and precision in all cases of the sort has been insisted upon for centuries: Lowe v.Harewood W.Jones.196; Cane v. Golding Sty.176; Tasburgh v. Day Cro.Jac. 484; Evans v.Harlow 5 Q.B.624.But it is an ancient and established rule of pleading that the question of generality of pleading must depend on the general subject-matter: Janson v.Stuart 1 T.R.754; Lord Arlington v Merricke 2 Saund. 412, n.4; Grey v. Friar 15 Q.B.907; see Co.litt 303d.Westwood v.Cowne 1 Stark. 172; Iveson v. Moore 1 Ld.Raym. 486. In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.  

07.	The plaintiff pleaded two contracts he entered into with the defendant company in his statement of claim. He deposed the same facts in his affidavit and annexed copied of both agreements. The provisions of the agreements correspond with the pleadings and the brief evidence that the plaintiff deposed in his affidavit. The plaintiff sought judgment in sum of $ 56,332.29 being the amount due under the logging contract. This amount corresponds with amount pleaded in his statement of claim. Conversely, he claims a sum of $ 220,000.00 for breach of second contract. However, his original claim for breach of second contract as per his pleadings was a sum of $ 309, 980.00. The plaintiff did not give detailed evidence, in his affidavit, as to how such amount was calculated, details of the transactions under the second contract and what are the breaks up of the amount etc. Instead, he simply annexed several correspondences between his solicitor and the defendant company and deposed that, it was an agreement between him and the defendant company that, a sum of $ 220,000.00 would be paid for breach of second contract. He completely relies on those correspondences which he tendered in evidence. Apparently, there had been several correspondences between the plaintiff’s solicitor and the defendant company after filling this action, and especially between February and March of 2019. These correspondences were followed by the interlocutory judgment entered on 16.04.2019 by the plaintiff against the defendant company. 

08.	On perusal of those correspondences, it reveals that, there was continuous negotiation to amicably settle the amount involved in this case. As a result the plaintiff and the defendant company agreed to the total amount ($ 56,332.29) claimed for breach of first contract, and to a lesser amount ($ 220,000.00) than the actual claim made by the plaintiff for the loss caused by breach of second contract by the defendant company. It is based on that agreement, the plaintiff sought judgment in his favour in total sum of 276,332.29. However, it is evident that, all the letters were written by them on “Without Prejudice” basis. Now the question is whether these correspondences on “Without Prejudice” basis are admissible in this proceeding? 

09.	The "without prejudice" rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish (per: Lord Griffiths in Rush & Tompkins v Greater London Council [1989] AC 1280, 1299). This common law rule provides a legal privilege to the parties who freely negotiate the disputes to genuinely settle them outside the court. The effect of this rule is that communications and correspondences made by the parties in a genuine attempt to settle disputes are prevented from being referred to in a court or tribunal as evidence of admission made by such parties. The rationale for the rule is that parties should not be discouraged from having full and frank settlement discussions by the fear that any admissions or prejudicial comments that they make will be used by the other side to their detriment. The ultimate purpose of the rule is to encourage settlement without the involvement of the court. Oliver LJ in Cutts v Head [1984] Ch.290, stated at page 306 that: 

"That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. 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 (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J in Scott Paper Co v Drayton Paper Works Ltd [1927] 44 RPC 151, 156, be encouraged fully and frankly to put their cards on the table ... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability."

10.	Sometimes the expression “Without Prejudice Save as to Costs” used by the parties and it means that the correspondence can only be shown to the court at the end of the trial to assist the court when determining liability for costs between the parties, once the judgment has been given. Lindley LJ in Walker v Wilsher (1889) 23 QBD 335 asked what was the meaning of the words "without prejudice" in a letter written "without prejudice" and answered the question as follows at page 337:

I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted. If the terms proposed in the letter are accepted a complete contract is established, and the letter, although written without prejudice, operates to alter the old state of things and to establish a new one.
11.	The English courts have significantly developed the ‘without prejudice rule’ over the past years through various decisions. Recently, the UK Supreme Court had acknowledged this development in Oceanbulk Shipping SA v TMT Ltd [2010] UKSC 44) and succinctly explained the rule and its effect at paragraph 19 in this way:  

Thus the without prejudice principle, or, as it is usually called, the without prejudice rule, initially focused on the case where the negotiations between two parties were regarded as without prejudice to the position of each of the parties in the event that the negotiations failed. The essential purpose of the original rule was that, if the negotiations failed and the dispute proceeded, neither party should be able to rely upon admissions made by the other in the course of the negotiations. The underlying rationale of the rule was that the parties would be more likely to speak frankly if nothing they said could subsequently be relied upon and that, as a result, they would be more likely to settle their dispute.

12.	Some of the English decisions that contributed to development of this rule are Cutts v Head [1984] Ch 290, Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, Muller v Linsley & Mortimer [1996] PNLR 74, Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436 and Ofulue v Bossert [2009] UKHL 16, [2009] AC 990.

13.	The above decisions, along with others, emphasize that, if the compromise fails the admission of the facts made for the purpose of the compromise should not be held against the maker of the admission and should not therefore be received in evidence. Equally, they demonstrate that rule is not absolute and resort may be had to the without prejudice material for a variety of reasons when the justice of the case requires it. Lord Griffiths in Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, held at page 1300 that:

Nearly all the cases in which the scope of the without prejudice rule has been considered concern the admissibility of evidence at trial after negotiations have failed. In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations. These cases show that the rule is not absolute and resort may be had to the without prejudice material for a variety of reasons when the justice of the case requires it. It is unnecessary to make any deep examination of these authorities to resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement. Thus the without prejudice material will be admissible if the issue is whether or not the negotiations resulted in an agreed settlement, which is the point that Lindley L.J. was making in Walker v. Wilsher (1889) 23 QBD 335 and which was applied in Tomlin v. Standard Telephones and Cables Ltd. [1969] 1 W.L.R. 1378.

14.	The decision in Court of Appeal in Unilever plc v The Procter & Gamble Co (supra) considered being an illuminating decision in this regard. Robert Walker LJ (with whom Simon Brown LJ and Mr. Justice Wilson agreed) whilst setting out the general principles on the rule, has identified certain circumstances on which the rule does not prevent the admission into evidence of what one or both parties said or wrote in the course of without prejudice negotiations. Robert Walker LJ listed some of exceptions at pages 2444 and 2445 as follows:

Nevertheless there are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. The following are among the most important instances.

(1) As Hoffmann LJ noted in the first passage set out above, when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible. Tomlin v Standard Telephones and Cables [1969] 1 WLR 1378 is an example.
(2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence. Underwood v Cox (1912) 4 DLR 66, a decision from Ontario, is a striking illustration of this.
(3) Even if there is no concluded compromise, a clear statement which is made by one party to negotiations, and on which the other party is intended to act and does in fact act, may be admissible as giving rise to an estoppel. That was the view of Neuberger J in Hodgkinson & Corby v Wards Mobility Services [1997] FSR 178, 191, and his view on that point was not disapproved by this court on appeal.
(4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other "unambiguous impropriety" (the expression used by Hoffmann LJ in Foster v Friedland, 10 November 1992, CAT 1052). Examples (helpfully collected in Foskett's Law & Practice of Compromise, 4th ed, para 9-32) are two first-instances decisions, Finch v Wilson (8 May 1987) and Hawick Jersey International v Caplan (The Times 11 March 1988). But this court has, in Foster v Friedland and Fazil-Alizadeh v Nikbin, 1993 CAT 205, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion.
(5) Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence. Lindley LJ in Walker v Wilsher (1889) 23 QBD 335, 338, noted this exception but regarded it as limited to "the fact that such letters have been written and the dates at which they were written". But occasionally fuller evidence is needed in order to give the court a fair picture of the rights and wrongs of the delay.
(6) In Muller (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders. Hoffmann LJ treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications. The other members of the court agreed but would also have based their decision on waiver.
(7) The exception (or apparent exception) for an offer expressly made 'without prejudice except as to costs' was clearly recognised by this court in Cutts v Head, and by the House of Lords in Rush & Tomkins, as based on an express or implied agreement between the parties. It stands apart from the principle of public policy (a point emphasised by the importance which the new Civil Procedure Rules, Part 44.3(4), attach to the conduct of the parties in deciding questions of costs). There seems to be no reason in principle why parties to without prejudice negotiations should not expressly or impliedly agree to vary the application of the public policy rule in other respects, either by extending or by limiting its reach. In Cutts v Head Fox LJ said (at p.316) "what meaning is given to the words 'without prejudice' is a matter of interpretation which is capable of variation according to use in the profession. It seems to me that, no issue of public policy being involved, it would be wrong to say that the words were given a meaning in 1889 which is immutable ever after".
(8) In matrimonial cases there has developed what is now a distinct privilege extending to communications received in confidence with a view to matrimonial conciliation: see Re D [1993] 2 AER 693, 697, where Sir Thomas Bingham MR thought it not
"fruitful to debate the relationship of this privilege with the more familiar head of 'without prejudice' privilege. That its underlying rationale is similar, and that it developed by way of analogy with 'without prejudice' privilege, seems clear. But both Lord Hailsham and Lord Simon in D v National Society for the Prevention of Cruelty to Children [1977] 1 All ER 589 at 602, 610 [1978] AC 171 at 226, 236 regarded it as having developed into a new category of privilege based on the public interest in the stability of marriage."
15.	The UK Supreme Court in Oceanbulk Shipping SA v TMT Ltd (supra) further elaborated these exceptions. It is evident from the above analysis that, The “Without Prejudice Rule” is founded on the public policy 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 (Oliver LJ in Cutts v Head). However the rule is not absolute and resort may be had to "without prejudice" material for a variety of reasons when the justice of the case requires it (Lord Griffiths in Rush & Tompkins). The exceptions listed by Lord Justice Robert Walker in Unilever plc v The Procter & Gamble Co (supra) are not exhaustive. The court may admit ‘without prejudice materials ‘if it is of view that, the court will be misled at trial if those materials are not admitted, and admitting those materials will not risk undermining the public policy that justifies the protection under without prejudice rule (Berkeley Square Holdings and others v Lancer Property Assets Management Ltd and others [2020] EWHC 1015 (Ch)).

16.	The correspondences between the solicitors of the plaintiff and the defendant company are marked as “B”, “C”, “D”, “E” and “F” and annexed with the affidavit of the plaintiff. Letters sent by the solicitors for the plaintiff are clearly expressed to be “without prejudice”. However the letters sent by the defendant company has not such express wording. The protection under the ‘without prejudice rule’ is given not only to the particular letter written under “without prejudice”, but also to all subsequent parts of the same correspondence on both sides, even if they are not expressed to be “without prejudice”, unless there is a clear break in the chain of correspondence to show that the subsequent letters are open. Moreover, it has been held to cover an open letter, followed by another from the same party to the effect that their communications were intended to be “without prejudice” (Halsbury’s Law of England, 4th Edition, Vol 17 para 212 at pages 151 and 152). Therefore the issue here is not the absence of express wording ‘without prejudice’. All the letters between the parties here form part of the negotiation on without prejudice basis, even though the letters of the defendant do not express it, as they are of same chain and there is not break of chain.

17.	However, it is evident from all these correspondences by both parties, even though they were meant to be without prejudice basis, that they have resulted in a concluded compromise agreement between them in relation to the amount due from the defendant company to the plaintiff out of two contracts they entered into. Both the plaintiff and the defendant company agreed to a lesser amount than what was originally claimed by the plaintiff in his writ. The defendant company not only admitted to that lesser amount, but also sought time to make the full payment. Thus those communications fall under the first exception identified by Lord Justice Robert Walker in Unilever plc v The Procter & Gamble Co (supra) and they are admissible in this case as admission of debt.  It is the settled law that; admitted facts need not to be proved. Therefore, the plaintiff is entitled for a judgment to the lesser amount admitted and agreed by the defendant company during their negotiation.

18.	The plaintiff claimed post judgment interest at the rate of 5% on the judgment debt. The rate applicable for post judgment interest was a gray area in Fiji until 2011. The Law Reform (Miscellaneous Provisions) (Death and Interest) (Amendment) Act No. 46 of 2011 was passed inserting section 4 to the original legislation Cap 27.  Accordingly, every judgment debt shall carry interest at the rate of four cents per centum per annum from time of entering up the judgment until the same shall be satisfied. The Fiji Supreme Court upheld this position in Shell Fiji Ltd v Chand [2012] 2 FLR 214 (7 August 2012). I award interest at the rate of 4% on judgment debt until fully settled and satisfied. Further I award a summarily assessed cost for this entire proceeding in sum of $ 2000 to be payable within a month from date of this judgment.

19.	In result, I make the following awards in favour of the plaintiff;

a.	Total damages in sum of $ 276,332.29 for breach of both contracts,

b.	Post Judgement Interest at the rate of 4% on Judgment Debt till it is fully settled and satisfied, and

c.	Summarily assessed costs in sum of $ 2000 payable within a month from today.

U.L Mohamed Azhar
 Master of the High Court
At Lautoka
10.09.2021