Implicit Criminal‑Proceedings Leverage as “Unambiguous Impropriety”: High Court Admits WPSATC Correspondence

QPQ Limited v Schute (Approved) [2025] IEHC 474, High Court of Ireland, Commercial List (Sanfey J)

Introduction

This Commercial Court decision addresses a rarely successful (and possibly first reported in Ireland) application of the “unambiguous impropriety” exception to without prejudice privilege. The defendant, Mr. Gerardus (Geert) Schute, sought to admit a sequence of seven letters exchanged between the parties’ solicitors—four of which were headed “Without Prejudice Save As To Costs” (WPSATC)—on the basis that the correspondence improperly used ongoing Swiss criminal proceedings as leverage to induce a civil settlement.

The plaintiff, QPQ Limited, alleges breaches of a shareholders’ agreement, misappropriation of intellectual property related to a “blockchain solution” known as 1DLT, and related wrongs said to have caused a near-total loss of enterprise value. Mr. Schute denies liability, including copying code or soliciting staff, and says he did not personally invest or enter a shareholders’ agreement. Parallel to the Irish action, Swiss criminal complaints were filed by entities connected to the plaintiff against former R&D staff (not including Mr. Schute), and those proceedings became the flashpoint in the disputed correspondence.

The central issue was whether the plaintiff’s WPSATC letter of 24 October 2024 (and the ensuing exchange) lost without prejudice protection because it invited the defendant to “deal with the Proceedings and the Swiss criminal complaints,” in context suggesting an implicit threat to involve or continue involving the defendant in criminal matters unless he agreed to a financial settlement.

Summary of the Judgment

• The court held that, in principle, the 24 October 2024 letter could be treated as a without prejudice communication even though it contained no formal settlement offer; an “opening shot” in settlement negotiations can be privileged. The use of WPSATC was technically inappropriate here (no Calderbank offer), but that label did not, by itself, forfeit privilege.
• However, the letter’s final section on Swiss criminal proceedings—read objectively in context—amounted to unambiguous impropriety. It exerted improper pressure by implicitly threatening adverse criminal consequences or reputational harm if the defendant did not engage on a proposal to “deal with” both the Irish civil proceedings and the Swiss complaints.
• The court accepted uncontested Swiss law expert evidence that a private complainant can significantly influence the scope and continuation/discontinuation of Swiss criminal proceedings. This made the implicit leverage real and material.
• “A veiled threat is still a threat”: impropriety can be implicit; it need not be explicit to be unambiguous.
• Result: the court admitted all seven letters in the sequence into evidence as open correspondence and listed the matter for mention on 8 October 2025 to address any further orders, including costs.

Analysis

Precedents Cited and Their Influence

• Ryan v Connolly [2001] 1 IR 627 (SC): Reaffirmed the public-policy basis of without prejudice privilege—encouraging settlement by protecting negotiations—and recognised that courts may examine the document to decide if the privilege applies. Here, Sanfey J surveyed the letters and context to determine admissibility.
• Cutts v Head [1984] 1 Ch 290 and Rush & Tompkins Ltd v GLC [1989] AC 1280: Classic authorities on the breadth and policy of the rule. Rush & Tompkins emphasises that genuine settlement negotiations, oral or written, are protected. The court relied on this to accept that the 24 October letter—though not an offer—could be an “opening shot” protected by the rule absent impropriety.
• Forster v Friedland (Unreported, CA, 10 Nov 1992, Hoffmann LJ): Warned that the exception should be confined to “clear cases” and introduced the phrase “unambiguous impropriety.” This high threshold guided the court, which nevertheless found it met here.
• Unilever PLC v Procter & Gamble Co [2000] 1 WLR 2436 (CA): Canonical summary of exceptions; again stresses the need for “clearest cases of abuse.” The decision framed the strictness of the exception that Sanfey J applied.
• Ferster v Ferster [2016] EWCA Civ 717: The touchstone for threats that exceed what is permissible in settlement of hard-fought commercial litigation, including threats of criminal proceedings and publicity to extract a higher payment. Sanfey J analogised: although the threat in QPQ v Schute was implicit rather than explicit, the functional effect and impropriety were comparable.
• Motorola v Hytera [2021] EWCA Civ 11: Cited by the plaintiff in correspondence on ambiguity; where there is a credible dispute as to what was said or meant, unambiguous impropriety may not be made out. The court nonetheless held that, viewed objectively, the inference here was unambiguous.
• Ocean on Land Technology (UK) Ltd v Land [2024] EWHC 396 (IPEC): Reiterated that the exception covers “wholly improper conduct”; ordinary negotiation hardball does not qualify. Sanfey J agreed with that standard but found the conduct crossed the line.
• Morris v Williams [2025] EWHC 218 (KB): Example of where an admission of fundamental dishonesty in a WP letter fell outside protection—illustrative of the “line crossing” concept. The court used it to show privilege yields in exceptional, clear cases.
• Boreh v Republic of Djibouti [2015] EWHC 769 (Comm): Quoted in Ferster for the measure of what is “permissible” in hard-fought negotiations. This provided the qualitative standard for assessing the WPSATC letter’s content.
• Crane World Asia PTE Ltd v Hontrade Engineering Ltd [2016] HKEC 1377: Cited for the proposition that conduct need not be unlawful to be “improper.” The court emphasised impropriety, not illegality, is the touchstone.

Legal Reasoning

1) The status of the 24 October letter as “without prejudice” despite no offer

While the defendant argued that the “WPSATC” label was inapt because the letter made no settlement offer (Calderbank context), the court distinguished between costs consequences and privilege. A communication can be without prejudice even if it is an “opening shot” without terms, because it is still genuinely aimed at settlement. The court cited authoritative commentary and applied Rush & Tompkins to uphold that principle. In short, mislabelling (using “save as to costs”) did not destroy underlying without prejudice character; the real question remained whether the exception applied.

2) Objective assessment, context and the significance of Swiss law

• The court emphasised an objective lens: how would the recipient reasonably understand the letter, considering the surrounding circumstances?
• Critical context included: (a) the defendant had just refused mediation the previous day; (b) the plaintiff’s letter pressed for “compensation” and for the defendant to “deal with the Proceedings and the Swiss criminal complaints”; (c) the plaintiff had initiated the Swiss complaints and, according to expert evidence, could influence their course.
• Uncontested expert evidence (Dr Claudio Bazzani) established that private complainants in Switzerland can obtain party status, access the case file, influence expansion, and sometimes prompt discontinuation, including via declarations of disinterest. This made the implicit leverage concrete, not hypothetical.

3) Implicit threats can be unambiguous

Although the letter did not expressly say “pay or we will expand the Swiss proceedings to implicate you,” the court held that the final section’s language—advising the defendant to “limit potential reputational damage” and to “engage…on a proposal to deal with the Proceedings and the Swiss criminal complaints”—objectively conveyed improper pressure. The emphasis on the Swiss authorities’ actions, seizures, and the District Attorney’s consideration of “other persons and/or legal entities” underscored a veiled ultimatum. Sanfey J crystallised the point: “A veiled threat is still a threat.”

4) Why this exceeded legitimate settlement pressure

• It was not merely a prediction of adverse civil litigation outcomes or costs—a permissible feature of robust negotiation. Instead, it suggested the plaintiff could and would use its position as a Swiss complainant to affect criminal processes and public scrutiny.
• Drawing on Ferster, the court reasoned that leveraging criminal processes (or reputational harm from their publicity) to compel a civil settlement crosses the boundary of permissible tactics. Unlawfulness is not required; impropriety suffices.
• The plaintiff’s later explanations could not “cure” the objective meaning. The court declined to rely on post hoc rationalisations or the absence of affidavit from the original author; the test is how the recipient would reasonably understand the contemporaneous communication.

5) Remedy and scope

Because the letters formed a connected sequence and the impropriety inhered in how the exchange unfolded, the court admitted all seven letters into evidence as open correspondence. The matter is listed for mention to address consequential orders, including costs.

Impact

A. A watershed for the “unambiguous impropriety” exception in Ireland

• This judgment appears to be the first reported Irish decision to successfully apply the unambiguous impropriety exception to strip without prejudice protection—signalling that the high bar, while real, is not insurmountable where criminal-process leverage is used.
• It clarifies that implicit threats can satisfy the exception; impropriety need not be express to be “unambiguous” when read objectively in context.

B. Settlement practice: bright lines around criminal leverage

• Parties should avoid tying civil settlement proposals to the initiation, expansion, management, or discontinuation of criminal complaints. Even if the criminal venue is foreign and even if complainants’ influence is “lawful,” using that influence as bargaining capital is improper.
• Disclaimers that “we do not control criminal proceedings” will not protect communications if the context and language objectively signal that civil settlement will affect the complainant’s posture in criminal matters.

C. Use of “WPSATC” and opening offers

• The court confirmed that an “opening shot” without terms can still be without prejudice. However, practitioners should label accurately: “without prejudice” if there is no offer; reserve “WPSATC” for true Calderbank offers intended to be shown on costs only.
• Misuse of “WPSATC” will not, by itself, defeat privilege—but content still rules the day.

D. Cross-border litigation strategy

• Where civil litigation and foreign criminal complaints proceed in tandem, solicitors must maintain strict separation in settlement communications. Referencing criminal proceedings to predict civil risk may be legitimate; implying that settlement will “deal with” criminal complaints, especially where complainants have leverage, is perilous.
• Expert evidence on foreign procedural law can be decisive in showing the real influence a party holds, sharpening the inference of impropriety.

Complex Concepts Simplified

• Without Prejudice (WP): A rule preventing statements made in genuine settlement talks from being used in court. It protects open, candid negotiations.
• Without Prejudice Save As To Costs (WPSATC): A “Calderbank” variant. The offer is invisible for liability but may be shown on costs at the end. Use only when making a concrete settlement offer with cost implications.
• Unambiguous Impropriety: A narrow exception to WP privilege. It covers clear abuses of the privileged occasion, such as blackmail, perjury cloaking, or improper threats—now confirmed to include implicit leveraging of criminal proceedings to coerce a civil settlement.
• Objective test: The court asks how a reasonable recipient would understand the words in context, rather than relying on subjective intent or later explanations.
• Swiss private complainant status: In Switzerland, an injured party who constitutes itself as “private claimant” gains party status, access to the file, and can influence expansion or discontinuation of proceedings, including by declarations of disinterest. That influence can matter greatly in WP assessments.

Practice Pointers

• Keep civil and criminal tracks separate in settlement letters. Do not suggest that civil terms will prompt complainant action to expand, contract, or discontinue criminal matters.
• Use accurate headings: “without prejudice” for exploratory overtures; “WPSATC” only for genuine offers intended to engage costs consequences under s.169 LSRA 2015 and O.99 RSC.
• Assume that foreign procedural realities can be proven by expert evidence; draft with the expectation that a court will consider the actual leverage your client has.
• Remember: a veiled threat is still a threat. If a reasonable reader could take it as criminal-process leverage, it risks crossing the impropriety line.
• If challenged, later “clarifications” will not rescue objectively improper content. The court looks at the contemporaneous message and context.

Potential Wider Effects and Open Questions

• Chilling effect v. clarity: The court was careful to protect the WP rule’s utility, emphasising the high threshold. But the decision also sharpens a red line against criminal leverage, which should guide practitioners without chilling ordinary robust negotiation.
• Appeal prospects: Appellate scrutiny (if any) would likely focus on whether an implicit threat can be “unambiguous” and whether the objective inference was the only reasonable reading. The uncontested Swiss law evidence strengthens the trial court’s inference.
• Discovery/costs dynamics: With the letters now “open,” they may feature in costs arguments and in factual disputes going to conduct, motive, and credibility as the main action proceeds.

Conclusion

QPQ Limited v Schute is a significant development in Irish privilege jurisprudence. The High Court reaffirmed the breadth and importance of the without prejudice rule—including protection for preliminary “opening shot” communications—but held that privilege yields where the communication contains unambiguous impropriety. Crucially, the court confirmed that an implicit threat can be as improper as an explicit one: leveraging influence over criminal proceedings (even foreign and even lawfully held) to induce a civil settlement crosses the line.

For litigators and clients, the message is clear. Robust settlement advocacy remains protected, but not when it suggests that a party will wield criminal process to secure civil advantage. Accurate labelling (WP vs WPSATC), careful separation of civil and criminal tracks, and an appreciation of how objective context shapes meaning are now essential compliance points. On current reports, this appears to be the first Irish case to successfully deploy the unambiguous impropriety exception to admit without prejudice correspondence, and it will likely stand as a touchstone for future challenges at the intersection of civil settlements and criminal complaints.

Key Authorities Referenced

• Ryan v Connolly [2001] 1 IR 627 (SC)
• Cutts v Head [1984] 1 Ch 290
• Rush & Tompkins Ltd v GLC [1989] AC 1280 (HL)
• Forster v Friedland (Unreported, CA, 10 Nov 1992)
• Unilever PLC v Procter & Gamble Co [2000] 1 WLR 2436 (CA)
• Ferster v Ferster [2016] EWCA Civ 717
• Motorola v Hytera [2021] EWCA Civ 11
• Ocean on Land Technology (UK) Ltd v Land [2024] EWHC 396 (IPEC)
• Morris v Williams [2025] EWHC 218 (KB)
• Boreh v Republic of Djibouti [2015] EWHC 769 (Comm)
• Crane World Asia PTE Ltd v Hontrade Engineering Ltd [2016] HKEC 1377
• Legal Services Regulation Act 2015, s.169
• Rules of the Superior Courts, Order 99