The claimant was an equity partner with the respondent firm. He was diagnosed with a serious illness, requiring chemotherapy, returned to work a year later but was further absent soon after with reactive depression.  In the Particulars of Claim the claimant referred to a number of discussions between his legal advisor and representatives of the respondent.  The respondent argued that these passages were inadmissible relying on without prejudice privilege and applied for a PHR to determine the issue to be held in private. The judge made a direction that the matter would be determined at the start of the PHR where she decided that the hearing need not be in private to protect the without prejudice material, partly as they would be protected by the eventual findings of the hearing and partly because the full merits tribunal would be able to disregard any non-admissible material.

In this judgment, Clark HHJ allows the appeal because a) there judge had made no clear finding as to whether they had accepted or rejected the respondent's contention that without prejudice material is, by its nature confidential and falls within Rule 16(1)(b) of the Employment Tribunal Rules and b) there was no finding as to whether the evidence consists of confidential information. The judge could only proceed with the balancing exercise once these questions had been resolved and so he set aside the ruling. He then proceeds to determine the issue and concludes that the the hearing should be in private, accepting counsel for the respondent's point that  as

"the public policy in not treating as admissions by a party at trial things said during protected settlement negotiations goes further than giving that protection to parties, it represents a principle that goes to the interests of justice and thus falls squarely within the proviso to Article 6. It is in the interests of justice that parties to civil disputes may enter into negotiations with a view to resolving such disputes in the knowledge that those negotiations will remain private and confidential."

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Appeal No. UKEAT/0585/11/CEA

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8JX

At the Tribunal

On 29 November 2011

Before

HIS HONOUR JUDGE PETER CLARK (SITTING ALONE)

EVERSHEDS LLP (APPELLANT)

MR C GRAY (RESPONDENT)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
MR T CROXFORD (of Counsel)

Instructed by:
Messrs Eversheds LLP Solicitors
1 Callaghan Square
Cardiff
CF10 5BT

For the Respondent
MS S McKIE (of Counsel)

Instructed by
Miller Beckett and Jackson Solicitors
190 Vincent Square
Glasgow
G2 5SP

**SUMMARY**

PRACTICE AND PROCEDURE

Preliminary issues

Case management

Whether issue as to whether certain communications between the parties are covered by without prejudice legal privilege, to be heard at a PHR, ought to be heard in private under ET Rule 16(1)(b). Employment Judge ruling that it should be in public reversed.

**HIS HONOUR JUDGE PETER CLARK** **Introduction**

1. The parties in this matter, which is proceeding before the London Central Employment Tribunal, are Mr Gray, Claimant, and Eversheds LLP, Respondent. This is the full hearing of an appeal, at the direction of HHJ Hand QC on the paper sift, by the Respondent against the decision of Employment Judge Ms A Stewart, sitting alone at a Pre-Hearing Review (PHR) listed on 12 October 2011, dismissing the Respondent's application for that PHR to be held in private. Her Judgment with Reasons was promulgated on that day. Whether her ruling was, in truth, an order rather than a Judgment is not material for present purposes.

**Background**

1. I take the outline history from the parties' fully pleaded cases. The Claimant is, I infer, a highly experienced solicitor, now aged 48 years, who was recruited by the Respondent firm of solicitors to open their office in Edinburgh. He joined the firm as an equity partner with effect from 14 July 2008.

1. On about 9 March 2009 he went off sick. He was diagnosed with Lupus, an auto-immune disease and a serious condition which required chemotherapy treatment. The Respondent accepts that he is disabled for the purposes of the Disability Discrimination Act 1995 and after 1 October 2010, the Equality Act which came into effect on that date.

1. He was unable to return to work until 12 July 2010 and on 3 September 2010 went off sick again; his General Practitioner then diagnosed him as suffering from reactive depression, said by the Claimant to represent a further disability.

1. In setting out his case in his Particulars of Claim the Claimant refers to a number of discussions between representatives of the Respondent and his legal advisor. He contends that those discussions do not attract without prejudice legal privilege.

1. In their grounds of resistance the Respondent devotes a final section (paragraphs 77 to 85) to a submission that certain specified passages in his Particulars of Claim ought to be ruled inadmissible at a hearing of his various claims of disability discrimination, relying on without prejudice privilege. It is important to record, at this stage, a measure of agreement between counsel that this without prejudice issue is at least arguable on both sides, whilst of course each asserts that their position is correct.

1. By letter dated 3 August 2011 the Respondent applied for a PHR to determine the without prejudice issue and for that PHR to be held in private. A direction was given at a Case Management Discussion (CMD) held on 18 August that a PHR be held: the question as to whether or not that was to be held in private or in public was to be determined at the outset of that hearing.

1. The matter came before Employment Judge Stewart on 12 October. The Respondent's application for the hearing to be in private, opposed by the Claimant, was considered and rejected by the judge; hence this appeal.

**The Employment Judge's ruling**

1. In her Reasons, the judge directed herself as to Rule 16(1)(b) of the Employment Tribunal Rules of Procedure 2004, which provides:

"16. (1) A hearing may be conducted in private for the purpose of hearing from any person evidence or representations which in the opinion of the Employment Judge is likely to consist of information -

(b) which has been communicated to him in confidence, or which he has otherwise obtained in consequence of the confidence placed in him by another person."

1. As I have noted, it is anticipated that at the PHR the judge will hear live oral evidence from four witnesses in addition to receiving documentary evidence and submissions.

1. The judge noted the Respondent's submission that without prejudice material is confidential information (paragraph 4) and observed (paragraph 5) that in general the private duty of confidence will not alone, that is of itself, prevent relevant material being brought before the Employment Tribunal as evidence in a case. She referred to commercial secrets, sensitive financial information or intimate personal details, frequently leading to applications for a private hearing on the grounds (there are three of them, including ground (b) with which I am concerned) contained in Rule 16(1).

1. Having directed herself as to the public policy behind without prejudice discussions (paragraph 6), she also correctly directed herself as to the competing principles of open justice (paragraph 7). Her reasoning, leading to her conclusion that the Respondent's application failed, appears at paragraphs 8 to 10. I should set those passages out in full:

"8. In this case the Tribunal's decision is that the fundamental reason for protecting without prejudice communications will be preserved by the findings and eventual Judgment of this Pre-hearing Review ordering the exclusion of any material which is found to be without prejudice from the consideration of the Tribunal at the Full Merits Hearing. That will be a differently constituted Tribunal to the present Tribunal and will not see any without prejudice material disputed at this Pre-Hearing Review.

9. This Tribunal is not persuaded that the holding of the Pre-hearing Review in private is necessary for the purposes of the protection of without prejudice material. The Full Merits Hearing Tribunal would, in any event, be well able to disregard any non-admissible material and if necessary application can be made in relation to the Promulgation or temporary withholding of the Judgment from the Pre-hearing Review from the file in order to ensure that the Tribunal at the Full Merits Hearing do not have sight of it.

10. Further, the Tribunal is not persuaded that private confidence in the material in dispute in this case is sufficient to warrant ordering that the Hearing be held in private."

**The appeal**

1. It is axiomatic that appeals to the EAT, including appeals against interlocutory rulings, which this appears to me to be, lie only on a question of law. Although, in the best traditions of Appellants before this Tribunal, Mr Croxford includes a perversity ground in his Notice of Appeal, I first look to see whether this Respondent has made out an error of approach in law by the Employment Judge.

1. Although I have been referred to a number of authorities, none is directly in point. I therefore turn to the Employment Tribunal Rules of Procedure 2004.

1. Before going to Rule 16(1)(b), with which I am directly concerned, Mr Croxford draws my attention to Rule 17, which provides that CMDs shall be held in private, although any determination of a person's civil rights or obligations shall not be dealt with at a CMD, and no strike-out order under Rule 18(7) may be made at a CMD. In either of those circumstances a PHR is appropriate. Interesting questions might have arisen as to whether the without prejudice issue in this case could have been dealt with at a CMD. On balance I think that the answer to that question is probably no, but it matters not, because the issue has been set down for a PHR and there is no appeal against that case management ruling.

1. Looking at Rule 16(1)(b) it requires the following questions to be answered by the Employment Judge:

(1) Will evidence or representations be heard at this PHR. The answer is yes, four live witnesses are to be called by the parties.

(2) Is that evidence likely to consist of information identified in sub-rule (b)

(3) That is to say, is it information which has been communicated to the witness in confidence or which he has otherwise obtained in consequence of the confidence placed in him by another.

(4) If Rule 16(1)(b) is engaged in these circumstances, ought the Employment Judge to exercise her discretion in favour of ordering a public or private hearing?

1. Returning to the Employment Judge's Reasons, it seems to me that there are two material gaps in her reasoning process: first, there is no clear finding as to whether the judge accepted or rejected the Respondent's primary contention referred to at paragraph 4, that without prejudice material is, by its nature confidential and falls within Rule 16(1)(b). Secondly, there is no finding as to whether it is likely that the evidence will consist of sub-rule (b) confidential information.

1. Those omissions strike me as material errors of approach in law because it is only once those questions are answered that the judge can determine whether Rule 16(1)(b) is engaged and if so, to then carry out the balancing exercise between the public policy considerations of the need for a public hearing, so that justice may be seen to be done, and the need for confidentiality in without prejudice negotiations, designed to resolve existing or contemplated proceedings. For these reasons I shall allow this appeal and set aside the judge's ruling.

**Disposal**

1. Ms McKie, in her written skeleton argument, asks me to exercise my powers under s.35(1) of the Employment Tribunals Act 1996 if I allow the appeal and decide the question of a private or public PHR hearing myself, rather than to remit it back to the Tribunal for that purpose. I did not understand Mr Croxford to take any different position. I shall accede to that suggestion.

1. Dealing with the two questions left unanswered by the Employment Judge, it is common ground that true without prejudice discussions are confidential. I agree. Offers, if any, made by A to B with a view to settling existing or contemplated litigation, are confidential to the parties. Secondly, in determining whether it is "likely" that any of the discussions in issue will be found to be genuinely without prejudice, the issue to be determined finally at the PHR, I have formed the view, based on the detailed rival contentions in the pleadings, that the Respondent passes that hurdle. In reaching that conclusion I adopt the test applied to the word "likely" in, for example, s.129 of the Employment Rights Act 1996, the interim relief provision (see Taplin v Shippam. Accordingly I am satisfied that Rule 16(1)(b) is engaged in this case.

1. In carrying out the balancing exercise to which I have earlier referred, I do not for a moment underestimate the importance of public hearings (see Storer v British Gas. Nor do I disregard the Article 6 right to a fair and public hearing. However, against that important principle of public policy, I accept Mr Croxford's point that the public policy in not treating as admissions by a party at trial things said during protected settlement negotiations goes further than giving that protection to parties, it represents a principle that goes to the interests of justice and thus falls squarely within the proviso to Article 6. It is in the interests of justice that parties to civil disputes may enter into negotiations with a view to resolving such disputes in the knowledge that those negotiations will remain private and confidential.

1. My conclusion, balancing those competing policy interests, is that this PHR be held in private. I am comforted in reaching that conclusion by the fact that if the Claimant is right and the discussions in issue are not covered by without prejudice protection, that will be made clear in the PHR Judgment and that material will be admissible at the full hearing held in public. Conversely, if the Respondent is right, then it is proper that such confidential discussions should remain private.

1. I shall allow this appeal and substitute a direction that the PHR be held in private.