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Protection from disclosure in court
Published August 2007
Court of Appeal provides clarity
A recent Court of Appeal decision has clarified when discussions between an employer and employee, which may take place some time before litigation is started or even threatened, may be protected from subsequent disclosure in court.
An employee brought an action for damages for wrongful dismissal against his employer. The company had sought to terminate his employment early, as it was entitled to do under his contract, on making certain payments in lieu of notice. But it had already indicated its intentions six months before the action was started.
The employee wished to rely on the negotiations that had taken place six months earlier, as part of his evidence that he had been wrongfully dismissed, but the company argued that those were ‘without prejudice’ and therefore should not be allowed as evidence.
The ‘without prejudice’ rules says that offers made as part of negotiations when a dispute is underway and genuinely aimed at settlement of the dispute, are not generally admissible in evidence if negotiations fail and the parties end up going to court. The aim is to encourage offers that might result in settlement by removing the fear that they will subsequently be used against you.
The judge at first instance decided that the ‘without prejudice’ rule did not apply, because litigation had not yet started or been threatened; however, the Court of Appeal overturned that decision, stating that the subject matter of the negotiations, and not the timing of them, was the determining factor; the issue was whether the parties would have been clearly conscious of the potential for litigation if they could not resolve the dispute by those negotiations.
Businesses conducting long-term negotiations with employees should consider carefully whether there is potential for litigation if the negotiations fail. If there is any doubt, take advice on whether they are ‘without prejudice’.
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