The ‘without prejudice’ rule is a rule of evidence which (subject to limited exceptions) renders inadmissible in any subsequent litigation evidence of communications between parties to a dispute during negotiations aimed at achieving a settlement. The rule exists so that parties can proceed with attempts at a settlement whilst preserving their respective rights and positions and without the fear that something they say or fail to say, either verbally or in writing, during the course of the negotiations may later be used against them if the matter goes to court.
The principal exception to the without prejudice rule is when the exclusion of what was communicated would ‘act as a cloak for perjury, blackmail or other unambiguous impropriety’.
In Woodward v Santander UK plc, the Employment Appeal Tribunal (EAT) has confirmed that it is only in very limited circumstances that an exception to the without prejudice rule will be made.
Mrs Woodward was dismissed by what was then the Abbey National building society in 1994. At that time, claims she made of unfair dismissal and sex discrimination were settled by way of negotiation, without any admission of liability on the part of her employer. Since that time, she has struggled to find regular work and subsequently brought further claims against Santander, including claims under the Sex Discrimination Act 1975. She wished to include evidence regarding a refusal on the part of her employer to provide her with a reference, which she alleged had occurred during the without prejudice negotiations prior to the settlement of her earlier claim. It was her contention that this refusal showed that her employer had ‘reprisal in mind’ from that time onwards and had discriminated against her by refusing to provide a reference or giving her a poor reference when approached. Santander wished to prevent the evidence from being used.
The Employment Tribunal refused to allow the admission of evidence concerning the without prejudice negotiations and the EAT dismissed an appeal on this point. In its view, the requirement that any impropriety should be ‘unambiguous’ must be strictly applied so as not to be eroded. It could see no basis for finding that the alleged refusal to provide a reference fell within this exception. Nor was there any basis for recognising a new exception to the rule because justice demanded it.
Mrs Woodward’s further contention that there ought to be a wider exception to the without prejudice rule where discrimination is alleged was also rejected as not being consistent with the policy behind the rule. The EAT could see ‘no workable basis for applying such an exception while preserving the parties’ freedom to speak freely in conducting negotiations’.
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