In order to reach a settlement as part of a negotiation, one party may make an offer on terms that are 'without prejudice', meaning that the offer cannot be admitted in evidence in any subsequent court proceedings. In Swiss Re Corporate Solutions Ltd v Sommer, the EAT held that, just because the allegations made by the company were exaggerated, they were not automatically admissible in evidence as part of tribunal proceedings brought by Ms Sommer.
Basic facts
Ms Sommer, a political risk underwriter, sent a series of work emails to her own address and that of her husband in October and November 2020. On 6 January 2021, the company pointed out to her that the emails contained confidential information. She explained that she had sent them because she wanted evidence to support a grievance and potential tribunal case. Nevertheless, she deleted the items as requested. A disciplinary investigation was started on 19 January 2021 for what was described as a “low level [data] breach”, which concluded that the company should only take informal action against her.
Ms Sommer brought claims of race, sex and pregnancy/maternity discrimination and equal pay on 22 January 2021. On the same day her employer’s solicitors sent her a 'without prejudice' (WP) letter alleging that, by sending the emails in October and November 2020, she had breached the Conduct Rules of the Financial Conduct Authority, which could result in summary dismissal and a criminal conviction. The letter contained a settlement agreement offering her £37,000 in exchange for termination of her employment.
On 28 April she lodged further tribunal claims of discrimination and unfair dismissal. In advance of the full merits hearing, she sought a ruling from the tribunal that the WP letter should be admitted as evidence.
Tribunal decision
The judge found that there was no basis for the company’s solicitors to assert that Ms Sommer’s conduct was serious enough to merit summary dismissal or constituted a criminal offence. Instead, they had “grossly exaggerated the severity of what she had done in order to put pressure on her to accept what they proposed”.
The judge therefore held that making “those threats in those circumstances was an abuse of the privilege and that they unambiguously exceeded what was permissible in settlement of hard fought litigation”.
As the WP letter “amounted to improper threats and pressure to persuade [Ms Sommer] to accept” the settlement offer, it fell within the exception of 'unambiguous impropriety' and was therefore admissible in evidence. The company appealed on the basis that the judge had set the bar too low to meet the test of 'unambiguous impropriety'.
EAT decision
Relying on the decision of the Court of Appeal in Ferster v Ferster, the EAT held that the crucial issue was the type of threat that had been made. Unlike the impropriety in Ferster, which involved a threat of criminal or quasi-criminal proceedings as a lever for settling a civil dispute, this case involved allegations which were just 'grossly exaggerated'. In effect, they amounted to no more than the kind of threat which was entirely normal for parties to make when negotiating with one another.
Nor was there was any decided case in which the WP privilege had been lifted because one of the parties had made exaggerated allegations. Something more was therefore required, such as evidence of dishonesty or extortion.
Given that there was some basis for the allegations made in the WP letter, there was no 'valid route' to a ruling that unambiguous impropriety had been established. That was not to say that the WP letter was free from any impropriety but rather that it had just “sailed close to the wind”.
The EAT therefore ruled the WP letter inadmissible at the full merits hearing.