Sailing Close To The Wind: 'Without Prejudice' And The Thresholds Of 'Unambiguous Impropriety'

• Published date: 24 June 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Employment Litigation/ Tribunals, Trials & Appeals & Compensation
• Law Firm: Reed Smith (Worldwide)
• Author: Mr David Ashmore and Jonathan Lord

The outcome of Swiss Re Corporate Solutions v Sommer [2022] EAT 78, (which we reported in this month's newsletter) provides an interesting illustration of the scope of the 'without prejudice' privilege rules in the context of settling an employment tribunal claim.

The 'without prejudice' rule (the 'Rule') allows parties to have a full and frank exchange of views about a dispute or litigation, and even to make concessions about weaknesses in their own case, when discussing settlement. The parties can do this safe in the knowledge that anything said or done will be 'without prejudice' and therefore cannot be relied on and would not be disclosable if settlement is not achieved and the matter goes to court/tribunal. The courts recognise that without prejudice privilege is important for the efficient operation of the legal system, as it facilitates parties to resolving disputes outside of court/tribunal.

There are only a small number of narrow exceptions to this Rule and the Sommer case is a good illustration of that. One exception is that the Rule cannot be abused or weaponised as a disguise or excuse for 'perjury, blackmail or other unambiguous impropriety'. Case law has established that this 'unambiguous impropriety' exception should be construed narrowly - it should only be applied in the clearest cases of abuse. In 2021 the Court of Appeal ruled it would only be lost in 'truly exceptional' circumstances.

In Sommer, the tribunal had found that the employer's actions amounted to unambiguous impropriety when, in proposing the settlement of a tribunal claim, its solicitors sent a letter to Mrs Sommer containing 'exaggerated allegations' of serious misconduct with potential criminal and/or regulatory consequences. The tribunal found in doing so the employer forfeited the protection of without prejudice privilege rendering the employer's settlement proposal admissible as evidence. The employer appealed and the EAT overturned the tribunal's decision, finding that although the employer had 'sailed close to the wind', its actions had not amounted to 'unambiguous...