Without prejudice: Exaggerated allegations did not fall within the “unambiguous impropriety” exception to the without prejudice rule

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Without prejudice: Exaggerated allegations did not fall within the “unambiguous impropriety” exception to the without prejudice rule

Published 10 June 2022

The EAT has held that a without prejudice letter which included exaggerated allegations about an employee’s conduct did not fall within the “unambiguous impropriety” exception to the without prejudice rule, and could not therefore be admitted as evidence in tribunal.   

THE FACTS

Communications made as part of negotiations genuinely aimed at settlement of a dispute are not generally admissible in evidence in litigation. This is the ‘without prejudice’ rule, the aim of which is to encourage litigants to settle their disputes by agreement and enable them to negotiate without fear that what is said during negotiations will be used against them in evidence. 

The ‘without prejudice’ rule will not apply in a case where it would act as a “cloak for perjury, blackmail or other unambiguous impropriety”.  This is the ‘unambiguous impropriety’ exception to the without prejudice rule.  If communications fall within the unambiguous impropriety exception, they will be admissible as evidence in litigation. 

Mrs Sommer was employed as a political risk advisor.  Soon after her return from maternity leave, she was put at risk of redundancy.  She raised grievances which included discrimination and equal pay allegations.  In the context of these grievances, she openly copied emails to her personal email address and blind copied an email to her husband’s email address.  Some of the emails attached documents containing the personal data of other members of staff and confidential client information.   An HR partner wrote to her explaining that she had committed a “low level data breach”, and she was asked to delete the material.  Mrs Sommer explained that she had copied the emails to herself so that she had a copy of the evidence for her grievances and potential tribunal claims, and confirmed that she had deleted them.  An investigator was appointed to establish the facts around these emails.   

Mrs Sommer subsequently issued claims in the employment tribunal.

The employer’s lawyers sent Mrs Sommer a without prejudice letter, offering her £37,000 in settlement.  The without prejudice letter also included allegations that Mrs Sommer had breached her contractual confidentiality obligations, committed a criminal offence, lied to her employer, and might have acted “without integrity” in breach of the Financial Conduct Authority rules.  This, the letter stated, could result in summary dismissal, criminal convictions, fines and in FCA findings which could make it difficult for her to work again in the sector. 

Mrs Sommer argued in the employment tribunal that the without prejudice letter should be admitted into evidence under the unambiguous impropriety exception.  The tribunal judge agreed.  In reaching this decision, the judge considered whether the without prejudice letter “amounted to improper threats and pressure to persuade” Mrs Sommers to accept the offer, commenting on the “striking disparity” between what was known about the alleged misconduct and what was said about it in the without prejudice letter.  The judge also commented on the fact that the employer had always known that Mrs Sommers had copied the grievance emails to herself, that no complaint had been made for several months, and that the data breach had been described as “low level”.  The judge said that “there was no basis at all for the Respondent’s solicitors to assert that what she had done was serious misconduct which fundamentally undermined the employment relationship… or that she had committed one or more criminal offences…”. 

The employer appealed successfully to the EAT which found that the only possible outcome was that the letter was inadmissible as evidence under the without prejudice rule.  In reaching its decision, the EAT considered that the high threshold for unambiguous impropriety could potentially be met in circumstances in which a party had made exaggerated allegations, but exaggeration would not usually pass the threshold without findings on the guilty party’s state of mind.  The EAT doubted that such findings could have been validly made without hearing oral evidence.

WHAT DOES THIS MEAN FOR EMPLOYERS?

This case shows the reluctance of courts to admit without prejudice communications as evidence in tribunal proceedings.  However, employers (and their advisors) should be very careful when threatening criminal or regulatory action against employees in the course of without prejudice correspondence: the EAT commented in this case that this employer had been sailing close to the wind.

Employers should also bear in mind that the “without prejudice” rule will only apply to communications which are part of negotiations aimed at settlement of a dispute.  Whether or not there is a “dispute” in existence at the time of the communications can be a complicated question in the context of an employment relationship – this is another reason for employers to be cautious about what they say during settlement discussions.

Swiss Re Corporate Solutions Ltd v Mrs H Sommer

Authors

Zoë Wigan

Zoë Wigan

London - Walbrook

+44 (0)20 7894 6564

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

Hilary Larter

Hilary Larter

Leeds

+44 (0)113 251 4710

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