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Whistlestop Touring the Without Prejudice Principle in Employment Tribunal Litigation
The Without Prejudice Principle was neatly enunciated by the EAT in Faithorn Farrell Timms LLP v Bailey UKEAT/0025/16/RN –
“The principle provides that where there is a dispute between parties, any written or oral communications between them amounting to a genuine effort to resolve the dispute will not generally be admitted in evidence at a subsequent hearing of the claim.”
The principle applies to communications between Parties which concern –
- A dispute; and
- A genuine attempt to resolve the same.
Though a concept of the common law, the principle applies as much to employment tribunals as to any civil litigation before the county and High Courts (Independent Research Services Ltd v Catterall [1992] UKEAT/279/92).
What is ‘A Dispute’ for the Purposes of the Rule?
It is not a condition of the definition of ‘a dispute’ that the Parties be in the throws of litigation. It is sufficient that litigation was within their reasonable contemplation.
Though ‘first shot’ negotiations may still be covered by the principle (see Rochester Resources Ltd v Lebedev [2014] EWHC 2185 (Comm)), failure to provide warning before initiating events said to lead to the dispute may well suggest the Parties are not in fact in dispute (see Mezzotero below).
As such in Portnykh v Nomura International plc [2014] IRLR 251, EAT, HHJ Hand gave a clear ruling that once dismissal has been proposed the parties were in a ‘dispute’ – such that a statement P would be dismissed for misconduct but the respondent would be agreeable to presenting the termination as a resignation engaged the principle.
In BNP Paribas v Mezzotero [2004] IRLR 508, HHJ Richardson considered the parties were not in dispute in circumstances where, during a meeting concerning M’s grievance as to being singled out after return from maternity leave and without warning, she was told the discussion was without prejudice then told her job was no longer viable. At paragraph 28 he said –
“I do not consider that the act of raising a grievance by itself means that parties to an employment relationship are necessarily in dispute. Grievance procedures are well recognised and well used in the workplace. They provide a mechanism whereby an employee who is aggrieved about a particular matter can raise it through appropriate internal channels. It may be upheld, or alternatively dismissed, for reasons which the employee finds acceptable, so that the parties never reach the stage where they could properly be said to be 'in dispute'.”
However, there will inevitably be a point during an escalating exchange whether grievance or otherwise, where the parties are nevertheless properly to be regarded as in a dispute. As stressed by Auld LJ in the Court of Appeal in Barnetson v Framlington Group Ltd [2007] ICR 1439–
“… privilege cannot, in my view, turn on purely temporal considerations. The critical feature of proximity for this purpose, it seems to me, is one of the subject matter of the dispute rather than how long before the threat, or start, of litigation it was aired in negotiations between the parties. Would they have respectively lowered their guards at that time and in the circumstances if they had not thought or hoped or contemplated that, by doing so, they could avoid the need to go to court over the very same dispute? On that approach, which I would commend, the crucial consideration would be whether in the course of negotiations the parties contemplated or might reasonably have contemplated litigation if they could not agree...”
In the Family Division, Bodie J. clarified the principle yet further in BE v DE [2014] EWHC 2318 (Fam) –
“Whilst this clearly does not require the existence of legal proceedings, it must surely mean a reasonably cohate and definable issue or series of issues, not just a number of reciprocal differences or grievances which might or might not prove soluble with reflection...” (para 23).
As such, in A v B & C UKEAT/0092/13 the EAT held that discussions arising post suspension of a teacher facing ‘career ending’ allegations of impropriety were inadmissible despite the decision to issue a final written warning at the end of the disciplinary process.
Genuine Attempt to Settle
The judiciary have on occasion been prepared to accept documents or oral discussion as not engaging a genuine attempt to settle.
In Hudson v Oxford University UKEAT/0488/05/DM the University Registrar wrote to H citing ‘without prejudice’ but stating he saw “no prospect of your returning to work for this University in any capacity. … It would clearly be desirable to find a solution. ... However, this is not, and will not be, possible until and unless you accept that a resumption of the employment relationship is both unrealistic and unworkable”. On appeal, the EAT had little difficulty in determining there was no genuine attempt.
In Mezzotero a differently constituted EAT also felt able to hold there was a lack of genuine attempt to settle –
“It is unrealistic in my judgment to refer to the parties as expressly agreeing at this meeting to speak without prejudice, given the unequal relationship of the parties, the vulnerable position of the applicant in such a meeting as this, and the fact that the suggestion was made by the respondents only once that meeting had begun” (paragraph 30 Mezzotero per Cox J.)
In B v A[1], in which this author acted for the claimant, B was dismissed by letter marked ‘without prejudice’ which also noted a settlement agreement would follow. Rejecting the suggestion the letter was a ‘first shot’, the tribunal held the purpose of the letter, rather than a genuine attempt to settle, was to draw the employment relationship to an end. A passing reference to a possible future settlement agreement and heading ‘without prejudice’ was on the facts insufficient to engage the principle.
Failure to Apply the Label
Whilst it will be known to any practitioner that application of the rule does not depend on insertion of the phrase ‘without prejudice’ to a document, the authorities make clear that a competent solicitor will always use the label where appropriate and the court may put the onus to rebut the inference that it is an open piece of correspondence on a party claiming an unlabeled document nevertheless is entitled to protection under the without prejudice principle, (see Cadle Co v Hearley [2002] 1 Lloyd’s Rep 143, paragraph 29).
Exceptions
Where a dispute and genuine attempt to settle exist, exceptions remain narrow. The Court of Appeal in Unilever plc v The Procter & Gamble Co [1999] EWCA Civ 3027 set out the exceptions to the without prejudice rule under the modern law –
- Evidence as to whether the without prejudice communications have resulted in a concluded settlement agreement.
- Evidence of a statement by one party on which the other party is intended to act, giving rise to an estoppel.
- Evidence of misrepresentation, fraud or undue influence.
- Evidence of perjury, blackmail or other unambiguous impropriety.
- Evidence to explain delay or apparent acquiescence.
- Evidence in relation to an application for costs, where correspondence is marked “without prejudice save as to costs” (a Calderbank letter).
Indeed, a exception perceived to have been established by the EAT in Mezzotero that evidence of discrimination would automatically circumvent the rule as an unambiguous impropriety was doubted in Woodward v Santander UKEAT/0250/09/ZT–
“[60] We would observe that the policy underlying the “without prejudice” rule applies with as much force to cases where discrimination has been alleged as it applies to any other form of dispute. Indeed the policy may be said to apply with particular force in those cases where the parties are seeking to settle a discrimination claim
[61] Discrimination claims often place heavy emotional and financial burdens on Claimants and Respondents alike. It is important that parties should be able to settle their differences (whether by negotiation or mediation) in conditions where they can speak freely. A Claimant must be free to concede a point for the purposes of settlement without the fear that if negotiations are unsuccessful he or she will be accused for that reason of pursuing the point dishonestly. A Respondent must be free to adhere to and explain a position, or to refuse a particular settlement proposal, without the fear that in subsequent litigation this will be taken as evidence of committing or repeating an act of discrimination or victimisation. And it is idle to suppose that parties, when they participate in negotiation or mediation, will always be calm and dispassionate. They should be able, within limits, to argue their case and speak their mind.” (per HHJ Richardson)
To the above exceptions, one should strictly speaking add waiver. Whilst requiring the agreement of both Parties, such agreement may be implied from conduct (Brunel University and anor v Vaseghi and anor 2007 IRLR 592, CA.
A further exception was identified by the Supreme Court in Oceanbulk Shipping & Trading SA v TMT Asia Ltd and others [2010] UKSC 44, deciding that what is said in without prejudice settlement negotiations is in principle admissible where a dispute arises as to the interpretation of the settlement agreement.
An ‘unambiguous impropriety’ arises where privilege is abused to a sufficiently serious level. Though a fluid concept and highly fact dependent, the following are of note –
- The without prejudice rule is only to be set to one side if “truly exceptional and needy circumstances” lead to an unambiguous impropriety (Savings and Investment Bank Ltd v Fincken [2004] 1 All ER 1125);
- Mere inconsistency between an admission and a pleaded case is not of itself unambiguous impropriety (though it may lead to perjury) – Fincken;
- A threat in nature of blackmail, if unequivocally proven, would engage the exception (Unilever) as would perjury (Catterall);
- Evidence of an admission or evidence of discrimination is not of itself an unambiguous impropriety, though overt discrimination may be – Woodward (the Court providing the specific example – "I won't give you a reference because you are black")
Whilst tribunals have been content to engage with much of the common law surrounding the without prejudice principle, estoppel had until recently remained something of an outlier. However, in Cole v Elders Voice [2021] ICR 601, the EAT held an estoppel could be mounted in the following circumstances providing an exception to the rule –
“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.””
An example of the application of the estoppel exception arose in B v A. B’s dismissal letter informed him of his effective date of termination but it also instructed not to attend the workplace. When B was invited to subsequent disciplinary hearing for not attending the workplace and dismissed when he would not attend the meeting citing his prior dismissal, the Tribunal had no difficulty finding, had the without prejudice principle engaged, the estoppel exception would have applied.
A case which I have deliberately annonomysed
