A recent Employment Appeal Tribunal decision in England has re-affirmed the position in England in regard to the general inadmissibility of "without prejudice" correspondence, but when can it be allowed into evidence in Scotland?
In Swiss Re Corporate Solutions Ltd v Sommer, the respondent sought an order that an earlier settlement offer from their solicitor to the claimant should not be admitted as evidence on the basis it was written "without prejudice". The Employment Tribunal at a Preliminary Hearing had held that the letter despite being labelled "without prejudice" was admissible, on the basis that the allegations contained within it were "grossly exaggerated" and exceeded what was permissible in settlement correspondence. The Employment Appeal Tribunal (EAT) disagreed and held that the correspondence was inadmissible, despite exaggerated allegations made in the letter of potential criminal sanctions for misconduct at work. The EAT found that the exaggerated allegations, although "sailing close to the wind", did not amount to "unambiguous impropriety". It is a matter of public policy that "without prejudice" correspondence is inadmissible and the threats were not sufficient enough to allow the disregarding of the general rule.
As a general rule, in England, correspondence that is stated to be "without prejudice to whole rights and pleas" cannot be founded upon in court and the standard position is that any statements made with a genuine attempt to settle a dispute will not be admissible. There are various exceptions to this rule, including where there has been misrepresentation, fraud, blackmail or in this case "unambiguous impropriety" within the correspondence.
The position in Scotland, however, is that adding "without prejudice" to correspondence offers more restricted protection than in England. The label does not necessarily prevent the entire contents of an email or letter being referred to in litigation and specifically does not cover any part which is a statement of fact from being admissible in evidence. The purpose of labelling communications in this way is to prevent offers made during negotiations being referred to, should the negotiations fail – to encourage out of court settlement - not to stop clear admissions of fact from being relied upon, as in Daks Simpson Group plc v Kuiper 1994 SLT 689. Litigants in Scottish proceedings should therefore approach the EAT judgment in Sommer with caution given that Scottish courts are generally more likely to allow "without prejudice" correspondence into evidence.
It is also worth bearing in mind that, as in England, a court is entitled to look at the terms of such correspondence to decide whether an agreement has been concluded or not, if that is in dispute.