Without prejudice – the policy of the without prejudice rule
Woodward v Santander UK Plc (Formerly Abbey National Plc) (2010)
EAT 25 May 2010
Summary
The overall policy of the without prejudice rule is that parties should be free to
attempt to negotiate settlement without the fear of details used during those
negotiations potentially being used to their detriment in any subsequent contested
proceedings. Any exception to the without prejudice rule must be consistent with
that policy.
Facts
The appellant, W, had been dismissed by her employer, S and brought proceedings
against them alleging unfair dismissal and sex discrimination. Following without
prejudice negotiations, those proceedings settled without admission of liability in
November 1996. The terms of settlement did not include any provision requiring S
to provide a reference for W. W later brought further proceedings arguing that the
lack of reference from S hindered her further employment options. W’s witness
statement before the employment tribunal included reference to the fact that there
was a refusal to provide a reference during the negotiations. The tribunal ruled that
evidence inadmissible as it did not fall within the unambiguous impropriety exception
to the without prejudice rule.
W, relying on BNP Paribas v Mezzotero (2004) IRLR 508 EAT, appealed on the basis
that the without prejudice rule in her case was inapplicable as it applied to
negotiations over the provision of a reference as it fell within the unambiguous
impropriety exception. In the alternative, W submitted that the tribunal should have
found that the categories of exception to the without prejudice rule were not closed
and in particular that there ought to be a further exception for discrimination cases
where the evidence was relevant to the questions of whether the claimant had
established facts from which the tribunal could conclude an act of discrimination had
taken place.
Decision
The tribunal was correct to exclude the evidence of the without prejudice
negotiations as there was no basis to argue it fell into the unambiguous impropriety
exception.
The without prejudice rule is a rule of evidence which makes evidence of all genuine
settlement negotiations (written or oral) between parties inadmissible in any
subsequent litigation.
The policy behind the rule is that parties should not be
discouraged from settling their disputes by fear that something said in the course of
negotiations might be used to their detriment in subsequent proceedings.
There are exceptions to the rule, including when information communicated in
without prejudice negotiations could be construed as a cloak for blackmail, perjury or
other unambiguous impropriety. Although the list of exceptions to the rule is not
closed, any argument seeking to establish a new exception must be scrutinized with
care and must be consistent with the overall policy behind the rule. BNP Paribas v
Mezzotero did not establish a new exception.
Comment
The ability to communicate “without prejudice” with your opponent in order to
negotiate settlement is one of the most important tools open to a litigator. This
ruling upholds the importance of previous decisions preserving the protection
afforded by the rule to genuine parties engaged in negotiations which do not settle
and end up in contested litigation.
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