This appeal relates to the admissibility of without prejudice communications. For reasons which will become apparent shortly, the case is one in which the Appellant’s anonymity has been preserved by an order prohibiting anyone from publishing anything which might lead to his identification. The Appellant has therefore been called A, and the Respondents B and C.
Appeal No. UKEAT/0092/13/RN
EMPLOYMENT APPEAL TRIBUNAL
FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON EC4Y 8JX
At
the Tribunal
On
10 April 2013
Before
THE
HONOURABLE MR JUSTICE KEITH
(SITTING ALONE)
A APPELLANT
B & C RESPONDENTS
Transcript of Proceedings
JUDGMENT
THE HONOURABLE MR JUSTICE KEITH
1.
This appeal relates to the admissibility of without prejudice
communications. For reasons which will become apparent shortly, the case is
one in which the Appellant’s anonymity has been preserved by an order
prohibiting anyone from publishing anything which might lead to his
identification. The Appellant has therefore been called A, and the Respondents
B and C.
2.
B is a local education authority, and C is the governing body of a
special school for children whose educational progress has been disrupted by
social, economic or behavioural difficulties. A was employed as a teacher at
the school from 1 September 2001 until he was dismissed with effect from 31
March 2012. He brought a claim of unfair dismissal. At a case management hearing
on 1 November 2012, A’s legal team sought a ruling that certain documents could
be produced in evidence even though they formed part of a chain of
correspondence and attendance notes which had begun with an e-mail marked “without
prejudice”, and which had referred to discussions which had been “off the
record”. Employment Judge Brooks ruled that the documents could not be
produced in evidence, and that no reference could be made in evidence to the
contents of the documents or the discussions which they purported to record.
It is from that ruling that A now appeals.
3.
It is necessary to say something about the context in which the ruling
was made. In March 2011, the police disclosed to B and C that A appeared to
have had inappropriate relationships with young female pupils between 2000 and
2004. A’s case is that he was “largely successful in appealing” against those
disclosures, but before the disclosures were corrected, he was required to
attend a disciplinary hearing before a panel of C’s Staff Discipline, Grievance
and Appeals Committee to answer allegations which included an allegation based
on those disclosures that his conduct outside working hours had become
prejudicial to the interests of the school. The disciplinary hearing took
place on 22 September 2011. The panel decided to give A a final written
warning, and it looks from the minutes of the disciplinary proceedings which
the employment judge had that that decision was made that day. A was not told
of the decision there and then. According to the witness statement of the
chair of the panel which the employment judge also had, “this was due solely to
the fact that there were some discussions between the representatives of the
school and [B] and [A’s] union about the possibility of an agreed parting of
the ways, but ultimately this did not transpire”. Those are the discussions to
which the employment judge’s ruling related, and I shall refer to them shortly,
but if the chair of the panel is right, that rather suggests that the
possibility of an agreed parting of the ways had already begun to be discussed.
4.
On 11 November 2011, A was formally notified of the decision to issue
him with a final written warning. However, by then further information about A
had been given to B’s Children’s Planning and Review Team by the police. That
information was that in 2003 a girl known to be involved in prostitution had
been seen getting into a car of which A was the registered keeper, and that in
2009 A had been found in a property which the police had searched in connection
with an investigation into a missing girl. Those allegations were investigated
by the headteacher of the school. Fresh disciplinary proceedings ensued, and
following a further disciplinary hearing on 27 March 2012, A was dismissed.
The panel’s conclusion was that A’s behaviour had caused his professional
judgment to be called into question, and the school needed to be seen to act
decisively to safeguard the welfare of vulnerable young people.
5.
I return, then, to the discussions in 2011 “about the possibility of an
agreed parting of the ways”. The discussions were between Bridget Dolan, a
regional officer of A’s trade union, and Chris French who worked in B’s Human
Resources Department. Ms Dolan sent Ms French an e-mail on 13 October 2011
marked “without prejudice” in which she referred to C’s willingness to offer
£20,000 “in a compromise agreement, with no reference”. For the reasons which
Ms Dolan set out in that e-mail, the offer was rejected. On 27 October 2011,
Ms Dolan spoke to Ms French on the telephone. Ms Dolan’s attendance note of
that call is the next relevant document. It referred to the two of them
speaking “off the record”. Ms French told Ms Dolan that the panel had wanted
to dismiss A, but that she had had to advise it that there were no grounds for
dismissal, which was why the panel had decided to issue A with a final written
warning instead. The attendance note went on to say that Ms Dolan has asked if
there was any prospect of an increased offer, to which she was told that C
could go up to £30,000 with B’s help, but that there was no prospect of
anything above that being available.
6.
The next document is Ms Dolan’s attendance of her call to A the same day,
in which she expressed the opinion that it “may” be better for him to accept
the offer. On 14 November 2011, Ms Dolan sent an e-mail to Ms French in which
she confirmed that A was “prepared to accept an increased offer of £30,000 to
terminate his contract by way of a compromise agreement”, and she talked of a
reference limited to the dates of A’s employment at the school and the subjects
he taught. Ms Dolan spoke to Ms French again on 24 November 2011, and the
final document is her attendance note of that call. Ms French referred to the
fact that information about A had been given by the police to what she
described as B’s “child protection people”, and the police had agreed for that
information to be released to A and C. It is now common ground that the employment
judge should not have ruled that this last document should be immune from
production, and it has been agreed that the appeal should be allowed to that
extent at least.
7.
The document which A’s legal team really want the tribunal which hears
the case to see is the attendance note of 27 October 2011. They wish to be
able to point out to the tribunal that that shows that even before the second
set of disciplinary proceedings got under way, the panel had expressed a wish
to dismiss A. A wants to argue that the ultimate decision to dismiss him was
based, in part at least, on the panel’s unfulfilled earlier wish for A’s
employment to be terminated. For that reason, A was prepared to compromise the
appeal on the basis that he was permitted to rely on what the attendance note
of 27 October 2011 said about that. B and C were not prepared to agree to that
course, and of course I do not hold that against them. But if all five
documents are admissible, A’s legal team will no doubt want the Tribunal which
hears A’s claim to know that B and C were prepared to pay A as much as £30,000
to get him to go quietly. It will be said, no doubt, that they were prepared
to pay that much because they realised that if he were to be dismissed his
dismissal might be of questionable fairness.
8.
It was originally contended on behalf of A that even if these documents
would otherwise have been privileged, and therefore immune from production,
that privilege had been waived. That argument was rejected by the employment judge,
and there is no challenge to that finding. A’s case is that the employment judge
erred when he came to apply the “without prejudice” rule.
9.
The law about communications which are expressed to be “without
prejudice” or “off the record” is tolerably clear. Communications which are
made for the purpose of a genuine attempt to compromise an existing dispute and
to avoid litigation arising from it will, generally speaking, not be admissible
in evidence. The underlying policy behind the rule was expressed by Oliver LJ (as
he then was) in Cutts v Head [1984] 1 Ch 290 at p.306C-G.
“It is that parties should be encouraged so far as possible to
settle their disputes without resort to litigation and should not be
discouraged by the knowledge that anything that is said in the course of such negotiations
… may be used to their prejudice in the course of the proceedings. They should
… be encouraged fully and frankly to put their cards on the table … The public
policy justification … essentially rests on the desirability of preventing
statements or offers made in the course of negotiations for settlement being
brought before the court of trial as admissions on the question of liability.”
10.
It is important to note that calling your communications “without
prejudice” or “off the record” is not necessarily decisive. The absence of
words of that kind does not automatically mean that your communications will be
admissible. If it is clear from all the circumstances that you are genuinely
trying to compromise the dispute without resort to litigation, the normal rule
will apply. Similarly, there are some circumstances in which the words
“without prejudice” or “off the record” are used, but where the communications
are nevertheless admissible. That commonly occurs where the communications set
out the parties’ respective cases but not for the purpose of attempting to
settle the dispute without resort to litigation.
11.
A’s case before the employment judge was that the “without prejudice”
rule did not apply to the communications between Ms Dolan and Ms French because
there was at that stage no question of there being any litigation between A on
the one hand and B and C on the other. In Barnetson v Framlington Group
Ltd [2007] ICR 1439, the Court of Appeal considered the application of
the “without prejudice” rule to communications which came into existence before
the commencement of proceedings. Having reviewed a long line of authorities and
having concluded that the rule was not restricted to communications made in the
course of litigation, Auld LJ posed this question at [32]:
“[H]ow proximate, if at all, must unsuccessful negotiations in a
dispute leading to litigation be to the start of the litigation to attract the ‘without
prejudice’ rule?”
Auld LJ answered that question at [34] in this way:
“… the crucial consideration would be whether in the course of
negotiations the parties contemplated or might reasonably have contemplated
litigation if they could not agree.”
There is one other principle at play here. There must be a real
dispute which has come into existence and which is “capable of settlement in
the sense of compromise (rather than in the sense of simply payment or
satisfaction)”. That is what Lord Mance said in Bradford & Bingley
Plc v Rashid [2006] 1 WLR 2066 at [81].
12.
There were originally two grounds of appeal. The first was that the employment
judge did not apply the right test. The second was that even if he did, there
could have been only one answer on the facts, which was that litigation could
not reasonably have been contemplated by the parties even if their dispute was
not compromised. The first ground of appeal is no longer pursued, and the
second ground of appeal which has been modified by Mr Daniel Dyal who came into
the case recently because A’s previous counsel was unable to appear today, goes
like this. The negotiations to which it is said the “without prejudice” rule
applies took place before the second set of disciplinary proceedings had
commenced. They had taken place at the time of the first set of disciplinary
proceedings after the panel had decided what the outcome of the disciplinary
proceedings should be, but before it had been publicly announced. Until the
panel had announced the decision publicly, or at the very least until A had
been notified of the decision even privately, there was no dispute between the
parties which could have led to litigation.
13.
I do not agree. A did not know what the outcome of the disciplinary
proceedings would be for quite a while. For all he knew, he might be
dismissed. If he was, the only way in which he could vindicate himself was by
bringing a claim for unfair dismissal which would examine the reasonableness of
any conclusion which the panel might have reached about his suitability to
remain as a teacher at the school. The way of avoiding such an outcome was to
leave his employment in circumstances in which no finding could be made about
his suitability as a teacher, and with a sum sufficiently large for him to be
able to put a suitable “spin” on it.
14.
That was, in effect, what the employment judge found in para. 14 of his reasons.
He said:
“It is plain to me that at the time these negotiations commenced
[A] believed himself to be faced with the real possibility of dismissal, that
those acting on his behalf took his instructions as to an acceptable sum and
that these negotiations were well advanced. It might well be that [A] did not,
at that stage, have a clear idea of what his cause of action might be, however
I have no doubt that the potentially catastrophic consequences of his
employment being terminated by reason of the allegations made against him in
the first disciplinary would have, been obvious to him. Such an outcome would
have been effectively ‘career ending’ and if so terminated then it would be
reasonable that he would at least be considering litigation as a possible route
back to respectability, indeed he is here today litigating the effects of the
second disciplinary which also involved gravely serious allegations.”
The employment judge returned to the topic in para. 15 of his
reasons when he said:
“At the relevant time [A] was undoubtedly concerned that the
outcome of the disciplinary might have been not merely unfavourable to him, but
potentially destructive of his career … [A] would have had considerable
motivation for seeking to avoid what he would reasonably have seen as the
possibility of his employment coming to an end in a career damaging way. It
seems to me that is precisely why the Parties entered into settlement
negotiations. [A] to avoid, so far as he was able, adverse and potentially
career damaging consequences, and [B and C] to avoid possible Employment
Tribunal proceedings.”
That last point is important. It shows that the employment judge
found that it was not just A who thought that litigation was at least a
possibility if a compromise could not be reached. B and C thought that as
well.
15.
In my opinion, it was reasonably open to the employment judge to find
that A thought that litigation was at least a possibility if a compromise could
not be reached. I am less convinced that it was reasonably open to the employment
judge to find that B and C thought that as well. Unlike A, they knew that A
was not going to be dismissed, but that he would only be getting a final
written warning. What were the “possible Employment Tribunal proceedings”
which they were seeking to avoid? The employment judge did not spell that out,
but that does not matter, because the employment judge found in para. 13 of his
reasons that for the “without prejudice” rule to apply, it was sufficient for
just one of the parties to the negotiations to have been negotiating because
they might reasonably have contemplated litigation if a compromise could not be
reached. There has been no suggestion that such a view was erroneous in law.
16.
That deals with the period up 27 October 2011, in other words with the
period in which the e-mail of 13 October 2011 was written. But different
considerations apply to the period from and including 27 October 2011. Ms
Dolan’s attendance note of her call to Ms French that day referred, as I have
said, to Ms French telling Ms Dolan that the panel had wanted to dismiss A, but
that she had had to advise them that there were no grounds for dismissal, which
was why the panel had decided to issue A with a final written warning instead.
From then on, A’s advisers – and A himself when he was given this information
later that day – knew that his dismissal was not being contemplated, at least
not at that stage. To the extent that the negotiations continued thereafter,
what was the litigation which any of the parties might reasonably have
contemplated would be commenced?
17.
The answer to that question could lie in what Ms Dolan said when she
telephoned A that day to bring him up to speed on what Ms French had told her.
It is necessary here to spell out what she said in her attendance note of that
conversation with A. The attendance note reads:
“I informed him that the school had decided to issue a final
written warning and outlined the basis of that warning, as I had been informed
by Chris French. He said he was very surprised at this. I said that if he
decided not to take their offer and wanted to return to the school then we
would of course appeal against this decision but I said that I was not
optimistic about an appeal being successful. He would therefore be returning
under a final written warning, which is normally for two years and it may be
that the school would try to find other grounds to bring further disciplinary
or capability proceedings after he returns. I said that we would of course
represent him should that happen but it could be very difficult for him to
return and it is quite clear that the school does not want him back. He has
already told me that he is now on anti-depressant medication and I said he
should consider the possible effects on his health. He said he might prefer to
wait to get the letter before saying whether or not he accepts the offer. I
said that it was his decision but my opinion was that it may be better for him
to take the offer as I think it would be very difficult for him to return to
the school. I asked him to get back to me on Monday to let me have his views.
I said that I thought we ought to try to get back to the school next week to
respond to the offer.”
So at that stage Ms Dolan thought that it was at least possible
that if A returned to work, the school would try to find other grounds to bring
disciplinary or capability proceedings against A after he returned. Although
she did not say so in so many words, she unquestionably had in mind the
possibility that those proceedings might result in his dismissal. If that
happened, there would have been a dispute about the fairness of his dismissal
which, if not compromised, could have resulted in the lodging of a claim for
unfair dismissal.
18.
But the critical question is whether such a dispute had come into
existence by the time of those negotiations. I do not think that it had. It
might in the future, but it had not done so then. It follows that although the
“without prejudice” rule applied to the e-mail of 13 October 2011, it did not
apply to the attendance note of 27 October 2011 or the subsequent documents.
19.
In the circumstances, I propose to allow the appeal. Although the e-mail
13 October 2011 may not be admitted in evidence, the subsequent documents can
be. However, the attendance note of 27 October 2011 and the e-mail of 14
November 2011 will need editing because otherwise the tribunal will be alive to
what was in the e-mail of 13 October 2011. I leave it to the parties to come
up with suitable suggestions, but subject to what they have to say, I suggest
that instead of the third paragraph of the attendance note of 27 October 2011,
there should be something along these lines in square brackets so that it does
not purport to be what Ms Dolan actually said:
“There was then a discussion about whether the school would be
prepared to pay A to leave his employment. Ms French said that the school
simply had no money left and were only able to offer £30,000 with the
assistance of the local authority. There was therefore no prospect of anything
above £30,000.”
And when it comes to the e-mail of 14 November 2011, it seems to
me that the word “increased” in the first line should be redacted, so the
effect of the redactions would be to prevent the tribunal knowing that there
had been a previous offer of £20,000, and that that offer had been rejected which
is what was said in the e-mail of 13 October 2011, which I have ruled is immune
from production.
