Factual and Procedural Background
This appeal and cross-appeal arise from a decision of an Employment Tribunal in Watford concerning the admissibility of evidence related to 'without prejudice' settlement discussions in race discrimination claims brought by two employees (the Respondents) against their employer, a University (the Appellants). The Tribunal ruled that the oral 'without prejudice' settlement discussions at the initial hearings were inadmissible, but that the written reports of the University's Grievance Panel, which included references to those discussions, were admissible. The Appellants appealed to exclude parts of the Grievance Panel report, while the Respondents cross-appealed to admit both the report and the original discussions.
The Respondents, employees of the University, had made separate race discrimination complaints in 2003, represented by their Union. Settlement discussions occurred immediately before the Tribunal hearings in March 2004 but did not result in settlement. The 'without prejudice' privilege was acknowledged as normally protecting such discussions. Subsequent grievance procedures were conducted by an independent University committee, which considered the nature of the settlement discussions and the phrase "unwanted demands for money" used in a University newsletter. Both grievances were rejected by the committee.
The grievance reports were appended to the Appellants' Grounds of Resistance in the Tribunal proceedings. Evidence included witness statements referencing the settlement discussions and the grievance process. The Employment Tribunal ruled on the admissibility of evidence, concluding that the oral 'without prejudice' discussions were inadmissible but that the grievance reports were admissible due to waiver and the risk of severe prejudice to the Respondents if excluded.
Legal Issues Presented
- Whether the 'without prejudice' settlement discussions at the initial Tribunal hearings are admissible as evidence in subsequent victimisation claims.
- Whether the written reports of the Grievance Panel containing references to those 'without prejudice' discussions are admissible.
- Whether exceptions to the 'without prejudice' rule apply, specifically waiver of privilege or abuse of the rule due to severe prejudice or unambiguous impropriety.
Arguments of the Parties
Appellants' Arguments
- The oral 'without prejudice' settlement discussions are protected by privilege and should be inadmissible.
- The references to those discussions in the Grievance Panel reports should likewise be excluded as they breach the privilege.
- The 'without prejudice' rule is of high public policy importance, encouraging candid settlement negotiations and should only be overridden in cases of unambiguous impropriety, which is not present here.
- There was no waiver of privilege since there was no specific agreement to waive, and the grievance procedure was a statutory requirement rather than a voluntary disclosure.
- Allowing evidence from the grievance reports but excluding direct evidence of the negotiations is illogical and prejudices the Appellants' ability to explain the settlement discussions.
Respondents' Arguments
- The grievance reports and the original 'without prejudice' discussions should be admissible because the Appellants waived privilege by referring to those discussions during the grievance procedure without objection.
- The use of the phrase "unwanted demands for money" in the University's newsletter and contrasting evidence from the settlement discussions amount to an abuse of the privilege and unambiguous impropriety.
- Excluding the evidence would severely prejudice their victimisation claims, preventing them from rebutting allegations made publicly by the Appellants.
- Public policy considerations favour disclosure in discrimination cases to ensure truth and justice, outweighing the protection of 'without prejudice' privilege in this context.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Chocoladefabriken Lindt v Nestle [1978] RPC 287 |
Definition and scope of 'without prejudice' privilege; privilege applies irrespective of label if discussions are for settlement. |
Confirmed that privilege applies to genuine settlement negotiations regardless of formal labeling. |
| Rush & Tomkins v GLC [1989] AC 1280 |
'Without prejudice' communications are protected even after proceedings end, unless privilege is abused. |
Supported the principle that privilege protects settlement discussions post-proceedings unless abuse occurs. |
| Savings & Investment Bank Ltd (in liquidation) v Fincken [2004] 1 WLR 667 |
Exception to 'without prejudice' privilege for unambiguous impropriety; privilege not lost by mere inconsistency or differing statements. |
Applied the high threshold for losing privilege, requiring clear abuse rather than mere contradiction. |
| PNB Paribas v Mezzotero [2004] IRLR 508 |
Considered exceptions to 'without prejudice' rule including severe prejudice and abuse; allowed evidence where exclusion would severely prejudice party. |
Guided the Tribunal in balancing privilege against the need to avoid severe prejudice in discrimination claims. |
| Wilson v Boston Deep Sea Fisheries Ltd [1987] IRLR 232 |
Limits on raising new points of law on appeal; new issues require no new evidence and clear applicability. |
Referenced to restrict arguments on waiver to those raised before the Tribunal. |
| Unilever Plc v Procter and Gamble [2001] WLR 2436 |
'Without prejudice' rule applies only where genuine dispute or negotiation exists; no privilege if no dispute. |
Supported the principle that privilege does not attach to communications absent genuine dispute. |
| Jones v Tower Boot [1997] IRLR 168 |
Recognition of the serious evil of discrimination; importance of full fact-finding in discrimination cases. |
Emphasized public interest in thorough adjudication of discrimination claims, relevant to balancing privilege. |
| Anyanwu v South Bank Students Union and South Bank University [2001] IRLR 305 |
Fact-sensitive nature of discrimination cases requiring full evidence consideration. |
Supported the need for admitting relevant evidence despite privilege concerns in discrimination claims. |
Court's Reasoning and Analysis
The court carefully examined the scope and exceptions to the 'without prejudice' rule, emphasizing its public policy purpose to encourage candid settlement negotiations without fear of disclosure. It acknowledged that privilege applies even after proceedings conclude, barring abuse such as unambiguous impropriety or serious prejudice.
The court considered the Employment Appeal Tribunal's guidance in PNB Paribas v Mezzotero, recognizing that exclusion of evidence in discrimination cases may severely prejudice claimants, potentially preventing claims from being properly adjudicated. The court found that the Appellants, by introducing the grievance procedure and related reports into the litigation and calling evidence concerning the settlement discussions, had effectively waived the 'without prejudice' privilege as to those grievance reports.
Further, the court held that excluding direct evidence of the original settlement discussions while allowing indirect references through grievance reports would be illogical and unfair. The Appellants' conduct in publicly raising the issue and not objecting to the grievance panel's consideration of the 'without prejudice' discussions amounted to a waiver of privilege. The court also found that the Respondents would be severely prejudiced if unable to rely on evidence of the discussions to rebut allegations made by the Appellants.
The court rejected the Appellants' argument that the privilege remained intact absent an explicit agreement to waive, noting that waiver can be implied from conduct inconsistent with maintaining confidentiality. The grievance panel's thorough investigation and the parties' participation demonstrated such conduct. The court thus concluded that both the waiver and abuse exceptions to the 'without prejudice' rule applied, permitting the evidence in question.
Holding and Implications
The court DISMISSED the Appellants' appeal and ALLOWED the Respondents' cross-appeal.
This decision confirms that in discrimination cases, the protection of 'without prejudice' privilege may be overridden where refusal to admit evidence would severely prejudice the claimants or where the privilege has been waived by conduct, including through grievance procedures. The ruling underscores the importance of balancing the policy objectives of encouraging settlement negotiations with the need to ensure justice in discrimination claims. The direct effect is that evidence from both the grievance reports and the original 'without prejudice' settlement discussions is admissible in these proceedings. No new precedent beyond the application of established exceptions to the 'without prejudice' rule was set.