Privileged exception

Brodie v Nicola Ward t/a First Steps Nursery

When parties are in dispute, the law says they can rely on the “no prejudice” rule. In Brodie v Nicola Ward t/a First Steps Nursery (IDS 854), the Employment Appeal Tribunal (EAT) said that the rule still applies even if it forms the core of a constructive dismissal claim.

“Without prejudice” rule

The point of the “without prejudice” rule is to encourage parties to settle their disputes without resorting to litigation. In order to do so, the courts have said they “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… ”

There is, however, a limited exception to the rule so that, where appropriate, courts have access to all the relevant information to arrive at a just conclusion. The exception involves dishonesty or some other misuse of the rule by one or both of the parties. The exception was again partly extended in the discrimination case of Brunel University v Vaseghi (Weekly LELR 20) on the basis that it can often be difficult to prove victimisation if the general rule applies in full.

Basic facts

Ms Brodie resigned from her post as a teacher with the nursery in January 2007 over a dispute about contractual sick pay and claimed constructive unfair dismissal. She said that it was the “last straw” when she received a “without prejudice” letter from the school’s solicitors on 25 January proposing to settle her sick pay claim if she agreed to resign.

The school argued that, as it had not breached her contract of employment in any way, there could not have been a dismissal. It admitted sending the solicitor’s letter but said it was protected by privilege. And the tribunal agreed with the school, saying that the solicitor’s letter was indeed protected by the “without prejudice” rule.

Grounds of appeal

Ms Brodie appealed, this time arguing that although she accepted that the rule applied to the letter, it fell into the exception of either dishonesty or “unambiguous impropriety”. She said that if she could not give evidence about the solicitor’s letter, other than the fact it had been sent, she would not be able to argue that the “last straw” rule applied and therefore her case would be fatally damaged. It was important, she said, that the rule should not be used to suppress evidence as in this situation.

EAT decision

The EAT, however, upheld the tribunal’s decision. It said that the school had done nothing dishonest by sending a solicitor’s letter to Ms Brodie in order to try to resolve the dispute between them. Relying on the guidance in the case of Independent Research Services Ltd v Catterall, it said there was no danger in this case of allowing a dishonest case to go ahead if the “without prejudice” material was suppressed.

As for the argument about “unambiguous impropriety”, the EAT dismissed this by saying that the solicitor’s letter of 27 January 2007 could not “possibly be construed as unambiguous impropriety in the sense of fraud, blackmail or perjury or indeed as impropriety of any kind.” It was not a “broad and flexible rule” and there was therefore no justification for extending it to cover this case.

The EAT pointed out that the judge in Savings & Investment Bank Ltd (in Liquidation) v Fincken was clear that although it might be distasteful for a court “to avert its eyes” from an incriminating admission made by one of the parties to the dispute, protecting the privilege of without prejudice discussions must hold sway “unless the privilege is itself abused on the occasion of its exercise.”

Finally, the EAT refused to extend the exception identified in Vaseghi any further in order to apply it to a constructive dismissal claim.