CSO v CSP & Anor

Facts

CSO supplied equipment to CSP, the main contractor on a project, under a supply contract. CSO gave CSP a performance guarantee issued by CSQ, a bank, while CSP procured a letter of credit to pay CSO, with 7% retention money payable within 30 days of provisional acceptance. The parties disagreed about whether provisional acceptance had occurred. Around 18 March 2022 CSP called on the guarantee. CSO applied in HC/OS 268/2022 to restrain payment and obtained an interim injunction.

CSO's supporting affidavit argued that the call was unconscionable because CSP had not tried to extend the letter of credit and had not objected to the retention money being released, which CSO said showed CSP accepted provisional acceptance had occurred. In reply, CSP exhibited five emails from 17 to 21 February 2020 headed "Settlement/Gentlemen Agreement", in which it had proposed extending the letter of credit pending settlement talks, CSO had refused unless a contract amendment was agreed, and CSP had disputed the remaining payments. CSO applied to strike out the emails and related paragraphs as "without prejudice". An assistant registrar refused, holding that CSP could use them and that the relied-on portions were never privileged. CSO appealed in Registrar's Appeal No 219 of 2022.

Issues

1. Whether CSP could rely on the emails to rebut CSO's assertions under the exception for explaining delay or apparent acquiescence
2. Whether "without prejudice" privilege protects the whole of settlement communications or only admissions, given s 23 of the Evidence Act
3. Whether the relied-on portions were statements of fact unconnected with the negotiations and so never privileged

Holding

Andre Maniam J dismissed CSO's appeal, but limited the parts of the emails CSP could rely on to those relevant to rebutting CSO's two assertions; the rest remained privileged. Unlike the registrar, he held the emails were privileged in the first place but fell within the delay or acquiescence exception. Both parties obtained permission to appeal.

Reasoning

On the exception, the court accepted the exceptions set out in Unilever Plc v Procter & Gamble Co [2000] 1 WLR 2436, endorsed by the Court of Appeal in Quek Kheng Leong Nicky and another v Teo Beng Ngoh and others and another appeal [2009] 4 SLR(R) 181, including the use of without prejudice material to explain delay or apparent acquiescence. Delay includes complete inaction, such as not extending the letter of credit. The exception is not limited to the fact and dates of negotiations; fuller evidence may be needed to give a fair picture. Since CSO had blamed CSP for the non-extension and said CSP had not objected, CSP could show that it proposed an extension, that CSO refused, and that CSP disputed the payments. These statements mattered for the fact they were made, not their truth, so admitting them did not undermine the policy of encouraging settlement.

On scope, the court held that the common law protects the whole of without prejudice communications, not just admissions, because parties cannot negotiate freely if every sentence must be monitored. Section 23(1) of the Evidence Act, which speaks only of admissions, does not exclude this, because it shares the same settlement rationale and, following Mariwu, the common law fills the gaps. The Court of Appeal's decision in Ernest Ferdinand, which requires a communication to "constitute or involve" an admission, supports rather than precludes this approach.

On CSP's alternative argument, the relied-on passages stated the parties' positions in the negotiations rather than objective facts, and were closely tied to the settlement talks. Even on a narrow, admissions-only approach, they would have been privileged.

From the judgment