PC Ltd is a firm of accountants which provided advice and se…
PC Ltd is a firm of accountants which provided advice and services to Nadiya in respect of her personal income tax liability. It charged Nadiya a fee of £1,500 for this work. Nadiya disputed the amount of the fee and also asked for time to pay. In an attempt to settle the matter, PC Ltd and Nadiya exchanged a number of letters (“the Correspondence”). Eventually, they agreed that Nadiya would pay £1,000 by ten equal monthly instalments of £100 commencing on 1 June 2021. The outstanding balance would become due, and payable immediately, in the event of a failure to pay any instalment. This agreement was recorded in the Correspondence, although none of the letters was expressed to be written on a ‘without prejudice’ basis. Nadiya failed to pay the first instalment, saying that, on reflection, she felt that £1,000 was still an excessive amount to pay for the services provided. What is the correct advice to give PC Ltd as to whether the Correspondence is admissible in evidence? It is admissible in evidence if there is an issue as to whether the negotiations resulted in an agreed settlement of the dispute. It is not admissible because it represents communications genuinely aimed at settlement during the course of negotiations. It is admissible as the Correspondence was not expressly stated to be made on a ‘without prejudice’ basis. It is admissible because, although made during negotiations, the ‘without prejudice’ protection has been lost because Nadiya has reneged on the agreement.