Woodward v Santander UK Plc (Formerly Abbey National Plc) UKEAT/0250/09/ZT
Appeal against decision by ET that the claimant had not been victimised or discriminated against. In particular, the Tribunal ruled that the claimant could not use evidence which formed part of ‘without prejudice’ negotiations, nor could she amend her claim form to introduce an actual comparator to help in her discrimination claim as none had been referred to in previous proceedings. Appeal dismissed.
The claimant was dismissed in 1994 and proceedings following her allegations of sex discrimination and unfair dismissal were settled without admission of liability. The terms of settlement did not include any provision requiring the respondents to provide a reference for the claimant. During the next few years, the claimant applied for various jobs, including a speculative application to her former employer, with limited success. It was the claimant's case that the respondents, either by action or inaction, frustrated or hindered her applications; they either provided a poor reference or they did not provide a reference at all. The Tribunal dismissed her claims and in the process 1) ruled that the evidence on which the claimant wished to rely concerning 'without prejudice' negotiations was inadmissible and 2) refused to allow the claimant to rely on a comparator, holding that she should have identified the comparator in the details of her claim and refused her application for permission to amend her claim.
In the EAT, counsel for the claimant, relying on BNP Paribas v Mezzotero  IRLR 508, submitted that the Tribunal ought to have held that her evidence about the refusal of the respondent to provide a reference fell within the exception for evidence which was of 'unambiguous impropriety'. The Judge rejected this submission that there ought to be a wider exception to the 'without prejudice' rule where discrimination is alleged, saying that they could not see any workable basis for applying such an exception while preserving the parties' freedom to speak freely during negotiations. On the comparator point, the EAT held that the Tribunal was entitled to hold that an amendment was required so that issues may be correctly understood, and also it was entitled to refuse the amendment.
Appeal No. UKEAT/0250/09/ZT
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
At the Tribunal
On 3 February 2010
Judgment handed down on 25 May 2010
HIS HONOUR JUDGE RICHARDSON
SIR ALISTAIR GRAHAM KBE
MR D WELCH
MRS D WOODWARD (APPELLANT)
SANTANDER UK PLC (FORMERLY ABBEY NATIONAL PLC) (RESPONDENTS)
Transcript of Proceedings
For the Appellant MR JEFFREY BACON
Messrs Russell Cooke LLP Solicitors
2 Putney Hill
For the Respondent MR PAUL GOULDING QC
(One of Her Majesty's Counsel)
DLA Piper UK LLP
Victoria Square House
PRACTICE AND PROCEDURE
Admissibility of evidence
1. The Tribunal was correct to exclude evidence which the Claimant wished to adduce concerning an alleged refusal, in the course of without prejudice negotiations, to provide a reference for her. BNP Paribas v Mezzotero  IRLR 508 considered. Rush & Tomkins v GLC  AC 1299, Unilever plc v Proctor & Gamble Company  1 WLR 2436, Savings & Investment Bank Ltd v Fincken  1 WLR 667 and Ofolue v Bossert  2 WLR 749 (House of Lords) applied.
2. The Tribunal did not err in law in holding that the Claimant required permission to amend and in refusing an application, prior to closing submissions, to amend for the purpose of relying on an actual comparator.
3. In any event, these rulings did not affect the outcome of the case. Given its findings of fact, the Tribunal's conclusion was plainly correct and would have been no different if it had ruled in the Claimant's favour on these points.
HIS HONOUR JUDGE RICHARDSON
1. This is an appeal by Mrs Diana Woodward ("the Claimant") against a judgment of the Employment Tribunal sitting in London Central (Employment Judge Auerbach presiding) dated 2 March 2009. She had brought proceedings against her former employers Abbey National plc, now known as Santander UK plc ("the Respondents"). By its judgment, following a hearing extending over 12 days, the Tribunal dismissed all her claims.
2. There are two aspects to the Claimant's appeal, both arising out of rulings made by the Tribunal during the course of the hearing.
3. Firstly, the Tribunal refused to admit certain evidence on which the Claimant wished to rely concerning "without prejudice" negotiations between the Claimant and the Respondents in November 1996. On behalf of the Claimant Mr Jeffrey Bacon argues that the evidence ought to have been admitted; and he places strong reliance on the decision of the Appeal Tribunal in BNP Paribas v Mezzotero  IRLR 508 ("Mezzotero"). He says the "without prejudice rule" which would normally exclude such evidence is inapplicable.
4. Secondly, the Tribunal refused to allow the Claimant to rely on a comparator in respect of her direct sex discrimination claim, holding that she should have identified the comparator in the details of her claim and refusing her application for permission to amend. Mr Bacon argues that the Tribunal erred in principle in requiring an amendment and refusing to grant it.
5. On behalf of the Respondents Mr Paul Goulding QC argues that the Tribunal was correct in its rulings; and he further argues that, even if the Tribunal had ruled in the Claimant's favour in these two respects, it would have made no difference to the outcome, given the Tribunal's overall findings.
6. In this judgment we will begin with an overview of the Claimant's case and the Tribunal's reasons for dismissing it. We will give a short history of the proceedings (which have already been to the Court of Appeal on one occasion – Woodward v Abbey National (No 1)  ICR 1436). This will set the scene for consideration of the two aspects of the Claimant's appeal. Finally we will consider Mr Goulding's argument that even if the Tribunal had ruled in the Claimant's favour it would have made no difference to the outcome.
7. The Claimant was employed by the Respondents between 1991 and 1994. In November 1994 she was dismissed. She brought proceedings alleging unfair dismissal and sex discrimination. Those proceedings were settled without admission of liability in November 1996. The terms of settlement did not include any provision requiring the Respondents to provide a reference for the Claimant.
8. In the years following this settlement the Claimant had limited success in finding alternative employment. The present proceedings concern these years, and arise out of her endeavours to obtain and keep alternative employment.
9. The Tribunal was concerned with seven particular areas of factual dispute. The Claimant applied unsuccessfully for work with (1) Association Cambiste International ("ACI") in about December 1996, (2) the Royal Bank of Scotland ("RBS") in February 2000; and (3) Barclays Bank in March 2000. It was her case that the Respondents, either by action or inaction, frustrated or hindered her applications.
10. The Claimant eventually obtained work with BUPA in August 2000; she alleged (4) that when she applied for this work the Respondents gave her a poor reference or at least failed to respond to a request for a reference.
11. In May 2001 the Claimant went to work for KPMG Consulting. In January 2002, however, KPMG dismissed her as redundant. She alleged (5) that there was some adverse comment from the Respondents which reduced the prospect of her involvement in consulting work with KPMG and contributed to her redundancy.
12. On 10 October 2002 she wrote to Lord Burns, the Respondents' chairman, inter alia complaining of receiving a bad reference when she applied for work at BUPA, and seeking work with the Respondents. She received no reply to this letter; she relied (6) on the Respondents failure to reply to her letter. She wrote again, and was told that there was no suitable position for her. She alleged (7) that these requests to be considered for employment were not properly addressed by the Respondents.
13. These factual allegations were pursued under three heads. The Claimant alleged that the Respondents (1) victimised her, contrary to section 4 of the Sex Discrimination Act 1975, (2) subjected her to detriment contrary to Part IVA of the Employment Rights Act 1996 (commonly known as the "whistleblowing" provisions of the Act), and (3) in the way they dealt with her application to them for employment, discriminated against her directly on the grounds of her sex, contrary to section 6 of the Act.
14. The Tribunal considered these allegations in meticulous detail. There is no challenge to the Tribunal's conclusions except in respect of the two rulings which we have identified. But it is necessary to summarise the Tribunal's conclusions in order to address Mr Goulding's argument that the result would have been the same even if the Tribunal had ruled in the Claimant's favour.
15. ACI. The Tribunal found that the Claimant was one of six applicants shortlisted by ACI's consultants for a post. However, the Tribunal found that ACI offered the post to another applicant, and at no stage intended to offer the post to the Claimant; that neither ACI nor their recruitment consultants sought a reference from the Respondents either orally or in writing; and that the Respondents gave no reference or other feedback in respect of this post. The Tribunal placed particular reliance on the evidence of Mr Torrie Smith, the recruitment consultant who handled the application. The Tribunal rejected evidence from the Claimant that she was told by him that she was to be given the job. See paragraphs 84-109, especially paragraph 109.
16. RBS. The Claimant made a direct approach to the HR department of RBS and was told in March 2000 that they were not recruiting by reason of the recent merger between RBS and Natwest. Her case was, however, that she had also written with her CV directly to Mr Sach, a senior manager, and was invited to meet him. She inferred that after their meeting Mr Sach spoke to the Respondents and took the matter no further for that reason. Mr Sach gave evidence before the Tribunal. He said specifically that he did not contact the Respondents. He said that he was sufficiently interested in the Claimant (who had studied at the same business school) to meet her; but that, against the background of the impending merger, and in its aftermath, matters progressed no further. The Tribunal accepted this evidence, finding that there was no contact between Mr Sach and the Respondents. See paragraphs 110 to 125, especially paragraph 125.
17. Barclays. The Claimant made a speculative application to Barclays in March 2000. The Head of Investor Relations, Mr Roundell, invited her to a meeting in May 2000, knowing that his deputy was considering a move in 6 months time. However, when his deputy left, the vacancy was filled internally. The Claimant inferred that she was unsuccessful by reason of some contact between Barclays and the Respondents. Mr Roundell was called to give evidence. He said that he did not contact the Respondents concerning the Claimant and no-one from the Respondents contacted him; nor did he hear anything about her on the grapevine. The Tribunal accepted this evidence: see paragraphs 126 to 130, especially paragraph 130.
18. BUPA. The Tribunal found that although BUPA prepared a letter dated 6 July 2000 seeking a reference from the Respondents' Mr King, that letter never reached Mr King. The Tribunal heard evidence from BUPA's Mr Fesser that he did not receive a reference from the Respondents and did not chase the matter up – indeed he both employed and later re-employed the Claimant without receiving a reference. The Tribunal heard evidence from the Respondents' Mr King and from his secretary (who produced her workbook) that they had no record or recollection of receiving any application for a reference from BUPA. The Tribunal found that the Respondents neither wrote a bad reference nor failed to write a reference for the Claimant. See paragraphs 144 to 150, especially paragraph 150.
19. KPMG. The Tribunal found that, as the Claimant herself acknowledged, the Respondents provided a good and favourable reference. The Tribunal heard evidence from witnesses at KPMG who had some dealings with the Respondents. The Tribunal found, after a lengthy and thorough consideration of the evidence, that there was no negative feedback of any kind from the Respondents to KPMG; nothing the Respondents said or did impacted on the selection process or the selectors' attitude to the Claimant: see paragraphs 151 to 176, especially paragraph 176.
20. Letter dated 10 October. The Tribunal found that this letter would have been referred by the Chairman's office to the office of the Corporate Resources Director; and that it was accidentally mislaid, so that he did not see or reply to the letter. That was the sole reason for his failure to reply. See paragraphs 177 to 195 and especially 227 to 228.
21. Requests for employment. As regards the request for employment by the Claimant in her correspondence, the Tribunal found that the Respondents dealt with the requests in the way that they usually did – writing to her and placing her CV on file. The Tribunal, after considering and applying statutory provisions on the burden of proof applicable to each cause of action, held that the Respondents had satisfied them that the way the Claimant's correspondence was handled was not by reason of any qualifying disclosure; nor was it victimisation or direct sex discrimination. See paragraphs 177 to 195 and 229 to 245, especially paragraphs 244-245.
22. These, in short summary, were the Tribunal's reasons for dismissing the Claimant's claim.
The history of proceedings
23. The Claimant presented her claim in January 2003. Her claim was heard between 6 and 21 October 2004 by a Tribunal chaired by Mr Solomons ("the Solomons Tribunal"). The Claimant appeared in person. At an early stage during this hearing the Claimant's claim under part IVA of the 1996 Act was struck out, on the ground that the alleged detriment had occurred after the termination of her employment.
24. In due course, in June 2006, the Court of Appeal allowed the Claimant's appeal against the partial striking out of her claim: Woodward v Abbey National plc (No 1). It held, applying the decision of the House of Lords in Rhys-Harper v Relaxion Group plc  ICR 867 and not following an earlier decision of its own in Fadipe v Reed Nursing Personnel  ICR 1760, that the protection afforded by the whistleblowing provisions extended to former employees. Accordingly the Claimant's claim under Part IVA was sent back to the Tribunal for determination.
25. After striking out the claim under Part IVA of the 1996 Act the Solomons Tribunal proceeded to consider and determine the claims of victimisation and sex discrimination. The evidence it heard was limited in the light of its striking out of the whistleblowing claim. The Claimant was unsuccessful. She appealed. On 10 September 2008 the Appeal Tribunal allowed her appeal, and directed that all the Claimant's claims should be heard together at a fresh hearing in the light of all the potentially relevant evidence.
**The "without prejudice" point
26. The Tribunal hearing began on 19 January 2009. Witness statements were exchanged on 15 January. On 16 January the Respondents gave notice to the Claimant's solicitors of an application to exclude material in the Claimant's witness statement which referred to negotiations leading up to the settlement of her earlier Tribunal proceedings in November 1996.
27. The Claimant asserted in her witness statement that during these negotiations she had requested that the settlement terms should include some provision in relation to the giving of a reference for her. Her solicitor was conducting negotiations for her. The Claimant said that when she spoke to her solicitor –
"I said that a reference was absolutely essential but she told me that this had been flatly refused and that there was no legal obligation to provide one"
28. The Claimant referred back to this evidence in a number of subsequent passages in her statement. She sought to draw from the alleged refusal the conclusion that the Respondents had "reprisal in mind" from the time of the negotiations; and she invited the Tribunal to view subsequent events through the lens of that refusal. It would, she later submitted, be a fact on which the Tribunal could rely in deciding what inferences should be drawn from the evidence and in deciding whether any statutory burden of proof shifted to the Respondents.
29. Although, as we have said, witness statements were exchanged on 15 January, the Claimant had also provided a witness statement for the Solomons Tribunal. This witness statement also alleged that there was a refusal to provide a reference during negotiations. No application was made by the Respondents to exclude that piece of evidence. However it does not appear to have figured greatly in the deliberations of the Tribunal, which made no express finding on the question, saying only that there was "no provision for a reference in the settlement".
30. On Monday 19 January the Tribunal decided that it would hear the application to exclude this material on the following day. Although the Claimant had access to solicitors she was representing herself at the hearing. Relevant authorities were provided to her on 19 January.
31. In her submissions to the Tribunal on 20 January the Claimant accepted the existence of a rule prohibiting reference to "without prejudice" communications – ie, communications as part of negotiations with a view to reaching a settlement. Firstly, she said that the rule no longer applied if a settlement was reached. Secondly, she said that there was an exception to the rule in the case of "unambiguous impropriety", which was applicable. As we shall see, there is indeed such an exception. She referred in particular to Mezzotero.
BNP Paribas v Mezzotero
32. The facts of Mezzotero may be summarised as follows. Ms Mezzotero returned to work after maternity leave. She raised a grievance concerning the way she had been treated prior to and on her return from maternity leave. She was asked to attend a meeting to discuss her position. At the start of the meeting her employers said they wanted the discussions to be "without prejudice". They then told her that it was not viable to return to her old job and that no alternative was available. They suggested it would be best for the business and for her if she terminated her employment and accepted a redundancy package.
33. Ms Mezzotero presented a claim alleging direct sex discrimination and victimisation. Her employers asserted in response that no reference could be made to anything said at the meeting since it had been expressed to be "without prejudice" and was therefore subject to legal privilege. This argument was rejected by the Tribunal and, on appeal, by the Employment Appeal Tribunal (Cox J sitting alone).
34. For the "without prejudice" rule to apply there must be a dispute between the parties and the written or oral communications to which the rule is said to attach must be made for the purpose of a genuine attempt to compromise it. The Appeal Tribunal held that in Ms Mezzotero's case there was no extant dispute between the parties as to termination, which the employer's remarks were a genuine attempt to compromise. Accordingly the "without prejudice" rule did not apply to prevent statements made at the meeting being admissible in evidence before the Tribunal: see paragraphs 24 to 31, especially paragraph 31, of the judgment.
35. As Cox J observed, this was sufficient to dispose of the appeal. She therefore dealt more briefly with an alternative submission made on behalf of Ms Mezzotero, to the effect that the employer's conduct fell within the concept of "unambiguous impropriety" in the context of a genuine and legitimate complaint of sex discrimination, and thus as amounting to an exception to the rule.
36. In a passage on which Mr Bacon places strong reliance, she said:
35 In my judgment, Mr Galbraith-Marten's submissions are the more persuasive. What lies at the heart of the issue in this case is that this Applicant alleges direct sex discrimination and victimisation against her employers in seeking to terminate her employment after she had raised a grievance concerning discriminatory treatment following maternity leave. The sex and race discrimination legislation seeks to eradicate what the Court of Appeal have referred to as the "very great evil" of discrimination - see Jones -v Tower Boot  IRLR 168, and I consider that it is very much in the public interest that allegations of unlawful discrimination in the workplace are heard and properly determined by the Employment Tribunal to whom complaint is made, as the appropriate forum under the legislation. Further, it is widely recognised that cases involving allegations of sex and race discrimination are peculiarly fact-sensitive and can only properly be determined after full consideration of all the facts - see Anyanwu -v- South Bank Students Union and South Bank University  IRLR 305, and in particular the speeches of Lord Hope and Lord Steyn.
36 It is also widely recognised that proving direct discrimination is not an easy task for any complainant. Before the recent changes to the Sex Discrimination Act, following the EC Burden of Proof Directive, the case law had established that a complainant had to prove primary facts showing less favourable treatment, from which Employment Tribunals could, if they considered it appropriate, and without any, or any adequate explanation being advanced by the Respondent, infer that the less favourable treatment was on grounds of sex. The primary facts from which inferences of unlawful discrimination could be drawn were therefore a vital part of any complaint of direct discrimination before an Employment Tribunal. In my judgment, they remain equally important under the Act as amended, where section 63A(2) now provides:
'Where on the hearing of the complaint, the complainant proves facts from which the tribunal could, apart from this section, conclude in the absence of an adequate explanation that the respondent -
(a) has committed an act of discrimination against the complainant which is unlawful by virtue of Part 2,
the tribunal shall uphold the complaint unless the respondent proves that he did not commit, or, as the case may be, is not to be treated as having committed, that act'
37 In the present case, as Mr Galbraith-Marten points out, the logical result of Mr Davies' submission is that an employer in dispute with a black employee could say during discussions aimed at settlement in a meeting expressed to be being held without prejudice, "we do not want you here because you are black" and could then seek to argue that the discussions should be excluded from consideration by a Tribunal hearing a complaint of race discrimination.
38 Mr Davies immediately says that such a remark would obviously fall under the umbrella of unambiguous impropriety. I agree. However, Mr Davies is then faced with the unattractive task of attaching different levels of impropriety to fact-sensitive allegations of discrimination, in order to submit that the present remarks do not fall under the same umbrella. I do not regard that as a permissible approach. I would regard the employer's conduct, as alleged in the circumstances of the present case, as falling within that umbrella and as an exception to the "without prejudice" rule within the abuse principle, rather than it was as previously described, in terms of prejudice in the case of re Daintrey.
39 I do not regard this case as creating an impermissible extension to the categories of the rule, exceptions which will always fall to be considered within the particular factual context of the case and which, in the present case concerns discriminatory conduct by employers towards one of their employees. For all these reasons this appeal must be dismissed."
**The Tribunal's reasons
**37. The Tribunal first rejected the Claimant's argument that the rule no longer applied once a settlement was reached. There is no appeal against that finding, and we need say no more about it.
38. The Tribunal went on to consider whether the Claimant's evidence came within the exception for evidence of "unambiguous impropriety".
39. In reasons which are detailed and thoughtful the Tribunal gave careful consideration to Mezzotero. It questioned whether in Mezzotero this Appeal Tribunal had intended to widen the category of exceptions to the without prejudice rule. It found some difficulty in discerning whether, in Mezzotero, the Appeal Tribunal was laying down a new or additional category of exception. Eventually the Tribunal concluded:
- Whilst we took on board the EAT's point, forcefully made in Mezzotero, that there cannot and should not be gradations of impropriety, we concluded that nevertheless there does still have to be impropriety to some degree for the exception to apply. At best (for the Claimant) this decision supported the approach that there must be as wide as possible an interpretation of what amounts to impropriety and that Tribunals should, in discrimination cases, set the hurdle of what amounts to impropriety as low as it possibly can. But the contested evidence must still itself be evidence of impropriety.
- We understood the EAT to have reached the conclusion in that case, that ... there was evidence of impropriety, because, although the Claimant's general claim in that litigation went wider, it was part of her case that the specific behaviour alleged on behalf of the Respondent, in the without prejudice discussions in that case, namely suggesting to her that her employment be terminated by mutual agreement after she had raised a grievance about her treatment on return from maternity leave, was itself improper conduct. The EAT appear to have accepted that the making of such a suggestion would itself be improper conduct.
- However, in the present case the scope of the contested evidence was very limited indeed. Setting the bar as low as we could, we still concluded that the mere fact (if it be fact) alone of the Respondent having been asked to make provision for a reference, and firmly refused to do so, was not something that we thought could be described as improper to any degree, by itself. We came to that conclusion having regard to (but taking as liberal a view as we could of) the natural meaning of the word "impropriety" standing alone, even before having regard to the appearance of it in the term "unambiguous impropriety" and the wider phrase as is often referred to: "perjury, blackmail or other unambiguous impropriety"; and to the guidance of the Court of Appeal in Unilever."
40. On behalf of the Claimant Mr Bacon submitted that the Tribunal ought to have held that her evidence about the refusal of a reference fell within the exception for evidence which was of "unambiguous impropriety". In the alternative he submitted that the Tribunal ought to have found that the categories of exception to the rule were not closed; and he submitted that there ought to be a further exception for discrimination cases, especially where the evidence was relevant to the question whether the Claimant had established facts from which the Tribunal could conclude that an act of discrimination had taken place (see, for example, section 63A of the 1975 Act). He relied on Mezzotero, especially at paragraph 35 (Cox J). Drawing on that passage, he submitted that discrimination and victimisation claims were peculiarly fact sensitive and could only be determined after full consideration of all the facts. Given the very great evil of discrimination, no exception should be made for relevant without prejudice communications. He submitted that evidence which bore on the mental processes of the discriminator ought not to be excluded even if it arose during without prejudice discussions. No grades of impropriety could or should be recognised: see Mezzotero at paragraph 38.
41. Mr Bacon made the following additional submissions. Firstly, he submitted that the Claimant's evidence on this question ought to have been admitted because it was already in the public domain, having formed part of her witness statement for the Solomons Tribunal. Secondly, he submitted that the Tribunal erred in law in entertaining the Respondents' application at the start of the hearing. Any such application could and should have been made long before, given that the same evidence was contained in the statement for the Solomons Tribunal. He referred to and relied on dicta of the Court of Appeal in Brunel University v Webster  EWCA Civ 482 at paragraph 32. Thirdly, he submitted that the Respondents had, in the circumstances, waived the right to rely on the privilege attached to "without prejudice" communications.
42. Two of Mr Bacon's submissions were not foreshadowed in the Notice of Appeal – his submissions (1) that an exception to the "without prejudice" rule should be recognised for discrimination cases, and (2) that the Respondents had waived reliance on the rule. He sought permission to amend the Notice of Appeal to introduce these arguments.
43. On behalf of the Respondents Mr Goulding submitted that the Tribunal had reached the correct conclusion. The alleged refusal to provide a reference could not amount to "unambiguous impropriety" of the kind envisaged by the judgment of Walker LJ in Unilever v Proctor & Gamble. The authorities established that this exception should be confined within narrow limits; and cautioned against the creation of wide exceptions to the without prejudice rule. The further exception for which Mr Bacon argued was not justified, having regard to the nature and purpose of the rule itself. Mr Goulding emphasised that the facts of Mezzotero were very different and that the part of the judgment of Cox J which dealt with the "unambiguous impropriety" rule was obiter. He submitted that she did not intend to create a new category of exception to the without prejudice rule; and if she did so, her approach was wrong and should not be followed.
44. In response to Mr Bacon's other submissions, Mr Goulding argued that the without prejudice rule was not supplanted merely because an alleged fact had come into the public domain. The purpose of the rule was to prevent the deployment of without prejudice communications in subsequent litigation. He submitted that there was no error of law or unfairness in determining the issue at the outset of the hearing. He submitted that there was no evidence of waiver.
45. Mr Goulding also submitted that, to the extent that the Claimant's arguments had not been deployed below, the Appeal Tribunal should not permit them to be advanced for the first time on appeal; and that where the Claimant's arguments were not contained in the Notice of Appeal permission should be refused for any amendment.
46. Counsel took us to the leading modern authorities concerning the without prejudice rule – especially to Rush & Tomkins v GLC  AC 1299 (House of Lords), Unilever plc v Proctor & Gamble Company  1 WLR 2436 (Court of Appeal), Savings & Investment Bank Ltd v Fincken  1 WLR 667 (Court of Appeal) and Ofolue v Bossert  2 WLR 749 (House of Lords). These authorities trace the origins and development of the rule.
47. The without prejudice rule is a rule of evidence which (subject to exceptions) makes inadmissible in any subsequent litigation evidence of communications made in negotiations entered into between parties with a view to settling litigation or a dispute of a legal nature. The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence.
48. The rule is engaged in this case: if, as the Claimant alleged, she asked for a reference and her request was flatly refused, these communications occurred during negotiations for the purpose of settling the existing litigation between the parties. Unless the evidence which the Claimant sought to adduce falls within an exception to the rule, it is inadmissible.
49. The policy underlying the rule is that parties should not be discouraged from settling their disputes by a fear that something said in the course of negotiations may be used to their prejudice in subsequent proceedings. Thus in Cutts v Head  Ch 290 at 306 Oliver LJ said –
"That the rule rests, at least in part, on public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J in Scott Paper Co v Drayton Paper Works Ltd (1927) 44 RPC 151 at 157, be encouraged freely and frankly to put their cards on the table …
The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability."
50. As Walker LJ said in Unilever (page 2449) :
"Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence with lawyers ... sitting at their shoulders as minders"
51. And in Ofulue Lord Hope said (paragraph 12) –
"Far from being mechanistic, the rule is generous in its application. It recognises that unseen dangers may lurk behind things said or written during this period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement. It is not to be defeated by other considerations of public policy which may emerge later ... that would deny them this protection."
52. Thus the rule has a wide and compelling effect. In Unilever Walker LJ said at 2443-2444:
"Without in any way underestimating the need for proper analysis of the rule, I have no doubt that busy practitioners are acting prudently in making the general working assumption that the rule, if not 'sacred' (Hoghton v Hoghton (1852) 15 Beav 278 at 321, 51 ER 545 at 561), has a wide and compelling effect. That is particularly true where the 'without prejudice' communications in question consist not of letters or other written documents but of wide-ranging unscripted discussions during a meeting which may have lasted several hours.
At a meeting of that sort the discussions between the parties' representatives may contain a mixture of admissions and half-admissions against a party's interest, more or less confident assertions of a party's case, offers, counter-offers, and statements (which might be characterised as threats, or as thinking aloud) about future plans and possibilities."
53. The principal exceptions to the rule were listed by Walker LJ in Unilever at 2444-2445. There is in particular an exception if the exclusion of what was communicated in without prejudice negotiations would act as a cloak for perjury, blackmail or other "unambiguous impropriety". Thus Walker LJ said:
"Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other 'unambiguous impropriety' (the expression used by Hoffmann LJ in Forster v Friedland  CA Transcript 1052). Examples (helpfully collected in Foskett's Law & Practice of Compromise (4th edn, 1996) p 153–154 (para 9–32)) are two first-instance decisions, Finch v Wilson (8 May 1987, unreported) and Hawick Jersey International v Caplan (1988) Times, 11 March. But this court has, in Forster v Friedland and Fazil-Alizadeh v Nikbin (1993) Times, 19 March, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion."
54. The requirement for any impropriety to be "unambiguous" must be strictly applied lest the exception overtake the rule and render it of no value. Thus in Fincken Rix LJ, after a review of the authorities, said (para 47) –
"There are in my judgment powerful policy reasons for admitting in evidence as exceptions to the without prejudice rule only the very clearest of cases. Unless this highly beneficial rule is most scrupulously and jealously protected, it will all too readily be eroded"
55. The list of exceptions to the rule is not closed: see Ofolue at paras 38-40 (Lord Rodger) and para 98 (Lord Neuberger). Nevertheless arguments seeking to establish a new exception should be scrutinised with care. Any new exception must be consistent with the overall policy behind the rule: see Ofolue at paragraph 39 (Lord Rodger), paragraph 97 (Lord Neuberger). A new exception should only be recognised if justice clearly demands it: see Ofolue at paragraph 56 (Lord Walker).
56. Against these established principles, we turn to consider Mezzotero.
57. As we have said, the case was decided on the ground that there was no extant dispute as to termination which the employer's remarks were a genuine attempt to compromise. Cox J therefore dealt more briefly with the argument that the employer's remarks came within the exception for "unambiguous impropriety".
58. Reading the judgment in Mezzotero as a whole, we do not think that it establishes any new exception to the without prejudice rule. In paragraph 38 Cox J expressly stated that she would regard the employer's alleged conduct as an exception to the without prejudice rule "within the abuse principle". This had been the Tribunal's conclusion. Speaking for ourselves, we can see why. It was Ms Mezzotero's case that her employers sought to use the cover of "without prejudice" language to announce a course of action which was blatantly discriminatory. The two reasons why the employer's alleged conduct was admissible ran together: there was no genuine dispute to which the without prejudice rule could apply; and the employers sought to engage in a cynical abuse of the without prejudice rule to act in a way which was plainly discriminatory.
59. We doubt whether Cox J intended to say that it was unnecessary, in a discrimination case, to find unambiguous impropriety. We appreciate that paragraph 38 of her reasons, in which she refers to "the unattractive task of attaching different levels of impropriety to fact sensitive allegations of discrimination", can be read in that way. But Cox J went on to say that she regarded the employer's alleged conduct as "within the abuse principle".
60. We would observe that the policy underlying the "without prejudice" rule applies with as much force to cases where discrimination has been alleged as it applies to any other form of dispute. Indeed the policy may be said to apply with particular force in those cases where the parties are seeking to settle a discrimination claim.
61. Discrimination claims often place heavy emotional and financial burdens on claimants and respondents alike. It is important that parties should be able to settle their differences (whether by negotiation or mediation) in conditions where they can speak freely. A claimant must be free to concede a point for the purposes of settlement without the fear that if negotiations are unsuccessful he or she will be accused for that reason of pursuing the point dishonestly. A respondent must be free to adhere to and explain a position, or to refuse a particular settlement proposal, without the fear that in subsequent litigation this will be taken as evidence of committing or repeating an act of discrimination or victimisation. And it is idle to suppose that parties, when they participate in negotiation or mediation, will always be calm and dispassionate. They should be able, within limits, to argue their case and speak their mind.
62. What are the limits? To our mind they are best stated in terms of the existing exception for impropriety. This exception, as we have seen, applies only to a case where the Tribunal is satisfied that the impropriety alleged is unambiguous. It applies only in the very clearest of cases. A court or Tribunal is therefore required to make a judgment as to whether the evidence which it is sought to adduce meets this test. Words which are unambiguously discriminatory will of course fall within the exception: see the example given by Cox J at para 37 of Mezzotero.
63. It may at first sight seem unattractive, given the fact sensitive nature of discrimination cases, to exclude any evidence from which an inference of discrimination could be drawn. But it would have a substantial inhibiting effect on the ability of parties to speak freely in conducting negotiations if subsequently one or other could comb through the content of correspondence or discussions (which may have been lengthy or contentious) in order to point to equivocal words or actions in support of (or for that matter in order to defend) an inference of discrimination. Parties should be able to approach negotiations free from any concern that they will be used for evidence-gathering, or scrutinised afterwards for that purpose.
64. We therefore reject Mr Bacon's submission that there ought to be a wider exception to the without prejudice rule where discrimination is alleged. We do not think such an exception is consistent with the policy behind the rule. We cannot see any workable basis for applying such an exception while preserving the parties' freedom to speak freely in conducting negotiations.
65. In this case the Tribunal was, to our mind, plainly correct to conclude that the evidence which the Claimant sought to adduce was barred by the without prejudice rule. We can see no basis for contending that it fell within the exception for unambiguous impropriety.
66. Before we leave this part of the case, we should say that if we had been in favour of the Claimant we would not have shut out her case on the ground that the point had not been argued below or that an amendment to the Notice of Appeal was required. The Claimant's argument before the Tribunal and in the Notice of Appeal was squarely based on Mezzotero. The point that Mezzotero might justify a new or additional category of exception was clearly before the Tribunal: see paragraph 25 of its reasons. An amendment to the Notice of Appeal, if we had required it on this point, would have been a formality.
67. We can deal more briefly with Mr Bacon's remaining submissions. He argued that the Tribunal ought to have admitted the evidence because it was in the public domain. This, however, is to misunderstand the purpose of the without prejudice rule. It is not the sole or main purpose of the rule to protect confidentiality – although there may also be an express or implied agreement by the parties to maintain the confidentiality of negotiations. The without prejudice rule does not cease to be applicable to a communication merely because it has in some way come into the public domain.
68. Mr Bacon also argued that the Respondents had waived reliance on the privilege which the rule affords. He accepted that it must be possible to point to some unequivocal act on the part of the Respondents expressly or impliedly waiving privilege. We can see no evidence of any such act. The point was not taken below; it was not taken in the Notice of Appeal; and we see no sound basis for allowing the point to be taken now.
69. Nor do we think the Tribunal erred in law in hearing the application, as Mr Bacon argued. We think it would have been better if the parties had identified this potential issue at a case management discussion well in advance. But the Tribunal has a wide discretion in matters of case management; and we see no error of law in its decision to hear the application at the start of the hearing.
70. Mr Bacon placed reliance on a dictum of Smith LJ delivering the judgment of the Court of Appeal in Brunel University v Webster. In that case, on facts which Smith LJ described as most unusual, the Court of Appeal held that there had been a bilateral waiver of privilege in respect of without prejudice negotiations. It had also been argued that the negotiations ought to have been admitted under the unambiguous impropriety exception. The Court of Appeal declined to rule on that submission, since anything it said on the question would be obiter. In para 32 Smith LJ said –
"..analysis in this court of the dicta in Mezzotero should only take place in a case where one of the parties has made it clear at an appropriate early stage that it seeks to exclude any reference to 'without prejudice' discussions."
71. We do not think that the Court of Appeal was intending to lay down any rule of law as to the time at which an application to exclude evidence under the without prejudice principle should be entertained by a Tribunal. Rather, we read this dictum as specific to the facts of Brunel University v Webster, emphasising that it was inappropriate for the Court of Appeal to engage in analysis of Mezzotero in a case where, the parties having waived reliance on the without prejudice rule, the application to exclude evidence was too late. Therefore we do not think this dictum assists the Claimant.
The comparator point
72. By a ruling given after conclusion of the evidence, and before the commencement of submissions, the Tribunal held that the Claimant required permission to amend her claim to advance a claim of direct discrimination by reference to an actual comparator, Mr Gary Brown. The Tribunal refused permission.
**73. The Claimant's claim form was amended and re-amended prior to the hearing by the Solomons Tribunal. For the most part her claim was said to rest upon victimisation contrary to section 4 of the Sex Discrimination Act 1975 or an act or deliberate failure amounting to a detriment on the grounds that she had made protected disclosures, contrary to section 47B(1) of the Employment Rights Act 1996.
74. However, the Claimant additionally alleged sex discrimination contrary to section 6 of the Sex Discrimination Act 1975 as regards the allegation that, following her correspondence in late 2002, the Respondents made no or no adequate attempts to seek alternative employment. Even as re-amended, no detail was given of the basis on which the allegation of sex discrimination was made. There was no reference to an actual comparator.
75. Prior to the hearing by the Solomons Tribunal there was a case management discussion. Both parties were represented. The discussion identified the issues to be determined by the Tribunal. These issues included, in respect of the correspondence requesting employment, whether there were acts or failures to act by the Respondents which amounted to discrimination contrary to section 6 of the Sex Discrimination Act 1975. But there was no further indication as to how the case was put.
76. The Claimant first raised an issue concerning Gary Brown at the hearing by the Solomons Tribunal. That Tribunal recorded the following, in paragraph 45 of its reasons.
"The Tribunal should also record that on 14 October, eight days into the hearing of the case, and right at the end of the Claimant's case she sought leave to amend her sex discrimination case in relation to the Lord Burns part of the case so as to compare herself with treatment received by a Gary Brown whom it was alleged by the Claimant was a whistleblower in 1997 and had been re-employed by the Respondent. The case which the Claimant wished to put forward was in effect that a male whistleblower, Mr Brown, had been treated differently to her a female whistleblower and that less favourable treatment amounted to direct sex discrimination. The Claimant contended that she only discovered this fact about one week before the Tribunal hearing commenced. Nevertheless she did not raise the matter at the commencement of the hearing and waited until the very end of her case halfway through the 15 day hearing to raise the matter and to seek leave to amend her claim in that regard. The Tribunal considered the Selkent principles and refused the Claimant's request to amend her claim in this regard taking the view that the request was made far too late in the day at a time when the Claimant's case was closing at a time when the Respondents, the issues having been identified many months prior to the commencement of the hearing, were not in a position to either take instructions or deal with the matter adequately during the course of the hearing and in those circumstances bearing in mind the Claimant's case was a very substantial one in any event in terms of the extent of it and the number of allegations made the Tribunal considered that the balance of hardship indicated that the Claimant's application should be refused."
77. There the matter rested. We are told that some months prior to the re-hearing at the Tribunal in 2009 there was a case management discussion. There was no application to amend the claim to make reference to Mr Brown. Nor was there any reference to the matter in correspondence from solicitors who were assisting the Claimant to prepare her case. The Claimant's proposed bundle contained a small number of pages relating to Mr Brown; but the Respondents' solicitors expressly stated that the bundle contained "documents which we consider to be peripheral and as such not directly relevant to the substantive issues arising for determination."
78. However, in her lengthy witness statement served on 15 January the Claimant included two brief paragraphs under the heading "the Hearing in October 2004". These paragraphs stated:
"261. During the Tribunal I submitted another article concerning a male whistleblower, Gary Brown ... He was reemployed by Abbey National having been forced to leave following whistle blowing activities at the Respondent.
- The reemployment of Mr Brown is evidence that I was not offered a new job for a discriminatory reason"
The Tribunal's reasons
79. The Tribunal, noting that neither the claim form nor the original case management discussion had given any detail of the allegation of sex discrimination, asked the Claimant prior to the commencement of submissions whether such a claim was in fact pursued. The Claimant then stated that she wished to advance the claim by reference to Gary Brown as an actual comparator. The Tribunal, after hearing argument, held that this did not form part of her existing pleaded case, and refused an application to amend. The Tribunal did, however, consider the claim of sex discrimination based on a hypothetical comparator.
80. The Tribunal's reasoning was as follows.
"36. .... the Claimant's pleading was less than clear as to whether she was claiming direct discrimination, in addition to victimisation, at all. Further neither the pleading, nor the CMD minute, nor the correspondence from the Claimant's solicitors, identified that she wished to rely on Mr Brown as an actual comparator.
- We decided, as recorded in our decision, that the claim of direct discrimination nevertheless could and should be considered by reference to a hypothetical comparator. The Respondent had had to answer to a claim of victimisation in relation to the same matter, which in any event had put in issue the reasons for its actions. It had no need to adduce any other evidence in relation to a direct discrimination claim, if the comparator were merely hypothetical.
- However, to seek to refer to an actual comparator in the shape of Mr Brown would introduce a new limb to the Claimant's case, at a point when the Tribunal had completed hearing of all the witness evidence. That the Claimant wished to rely on Mr Brown as a specific comparator for the purpose of a sex discrimination claim was not sufficiently flagged up by the presence of a reference to him in the Claimant's witness statement, and of documentation relating to him in the bundle. There had been ample opportunity, at earlier stages in the litigation, when the Claimant had advice and representation, to consider and raise the matter in terms.
- The Respondent could not now be expected fairly to answer the point, when it had not had fair warning, so as to enable it to prepare and present specific evidence of its own, in relation to Mr Brown's circumstances and treatment, at this hearing. In all the circumstances, we concluded that the raising of this matter did require an application to amend and that, weighing the interests of justice to both sides, it was not proportionate or justified for that application to be granted"
**81. There is an appeal to the Employment Appeal Tribunal only on a point of law. It is therefore necessary for the Claimant to identify an error of law in the Tribunal's reasons. The Claimant must demonstrate that the Tribunal acted upon a wrong legal principle, or that the Tribunal took into account a factor which was irrelevant in law, or disregarded a factor which the law required the Tribunal to take into account; or that the Tribunal's decision was outside the parameters within which reasonable disagreement was possible.
82. Mr Bacon submits that the Tribunal misapplied the decision of the Appeal Tribunal in Selkent Bus Co v Moore  IRLR 661. In this well known decision the Appeal Tribunal (Mummery P presiding) stated general principles applicable to amendment of claims before Tribunals. It was said –
"(4) Whenever the discretion to grant an amendment is invoked, the tribunal should take into account all the circumstances and should balance the injustice and hardship of allowing the amendment against the injustice and hardship of refusing it.
(5) What are the relevant circumstances? It is impossible and undesirable to attempt to list them exhaustively, but the following are certainly relevant:
(a) *The nature of the amendment
*Applications to amend are of many different kinds, ranging, on the one hand, from the correction of clerical and typing errors, the additions of factual details to existing allegations and the addition or substitution of other labels for facts already pleaded to, on the other hand, the making of entirely new factual allegations which change the basis of the existing claim. The tribunal have to decide whether the amendment sought is one of the minor matters or is a substantial alteration pleading a new cause of action.
(b) *The applicability of time limits
*If a new complaint or cause of action is proposed to be added by way of amendment, it is essential for the tribunal to consider whether that complaint is out of time and, if so, whether the time limit should be extended under the applicable statutory provisions, eg, in the case of unfair dismissal, s.67 of the 1978 Act.
c) *The timing and manner of the application
*An application should not be refused solely because there has been a delay in making it. There are no time limits laid down in the Rules for the making of amendments. The amendments may be made at any time – before, at, even after the hearing of the case. Delay in making the application is, however, a discretionary factor. It is relevant to consider why the application was not made earlier and why it is now being made: for example, the discovery of new facts or new information appearing from documents disclosed on discovery. Whenever taking any factors into account, the paramount considerations are the relative injustice and hardship involved in refusing or granting an amendment. Questions of delay, as a result of adjournments, and additional costs, particularly if they are unlikely to be recovered by the successful party, are relevant in reaching a decision."
83. Mr Bacon first submits that a claimant who has put forward a discrimination claim as part of his claim does not seek to add a new cause of action merely because he identifies and seeks to rely on an actual comparator. We are inclined to agree with him, and will readily assume that this submission is correct. Mr Goulding did not argue the contrary. It has been held that in equal pay cases that the addition of a new comparator constitutes the addition of a new cause of action; but section 1(2)(a) of the Equal Pay Act 1970 requires the identification of a man employed on like work in the same employment. There is no such requirement in discrimination legislation; a claim may be based on an actual or hypothetical comparator.
84. Mr Bacon then submits that the Tribunal misunderstood the nature of the allegation being made. He submits that the Tribunal must have regarded the allegation as being an amendment to add a new cause of action. Therefore, he submits, the Tribunal took the wrong starting point when deciding whether an amendment was required and whether, in the exercise of its discretion, the Tribunal should grant the amendment.
85. At this point we part company with Mr Bacon. We do not think the Tribunal considered that an amendment was required to add a new cause of action. We see no indication in the Tribunal's reasoning that it took this position. Rather we read the Tribunal as considering that an amendment was required in order to put the Respondents on notice that the Gary Brown point was part of the Claimant's case which it had to meet.
86. A claim form is required to set out in writing "the details of the claim": paragraph 1(1) of the Employment Tribunal Rules of Procedure. If a claimant in a discrimination claim intends to rely on an actual comparator in addition to a hypothetical comparator, this is an important detail of the claim. A Tribunal is entitled to expect it to be set out in writing, so that the issues may be correctly understood and the respondent on notice of the case it has to meet.
87. We therefore see no error of principle in the way in which the Tribunal approached the question whether an amendment was required and whether leave to amend should be granted. We can see no other error of law in the Tribunal's reasoning. In our judgment the Tribunal was entitled to hold that an amendment was required; and entitled to refuse the amendment.
Would the outcome have been the same?
88. We turn finally to Mr Goulding's submission that, even if the Tribunal had ruled in favour of the Claimant in the two respects of which she complains, the result would have been the same. Since we have rejected the Claimant's appeal in respect of those rulings our views on this submission will not be decisive; but we have reached a clear view, which we think we should express.
89. The relevance of this submission is as follows. If, notwithstanding an error of law, the Tribunal's ultimate conclusion (given the facts it has found) is plainly and unarguably correct, the Appeal Tribunal may uphold the decision: see Dobie v Burns International Security  ICR 812 at 818G.
90. We have reached the conclusion that, given the findings of fact which the Tribunal reached concerning the seven heads of allegation which the Claimant made, it would have made no difference if it had found as a fact that the Claimant had asked for a reference during the settlement negotiations and the Respondents had flatly refused to provide a reference.
91. As regards ACI, RBS, Barclays and KPMG the Tribunal expressly found, after considering the evidence of relevant witnesses from those employers, that the Respondents were not asked for and did not give any reference or feedback. The position as regards BUPA is almost identical; although the BUPA wrote a letter seeking a reference, the Tribunal found that it was not received by the addressee; and that the Respondents neither wrote a bad reference nor failed to respond to a reference they had received. Given these findings, even if the Tribunal had concluded from the refusal to give a reference that the Respondents had reprisal in mind (as the Claimant contended), the conclusion would have had no impact on the result.
92. As regards failure to respond to the letter dated 10 October 2002, the Tribunal found that the letter was accidentally mislaid. This letter did not seek a reference. By the time this letter was sent the Respondents had provided a satisfactory reference when requested to do so. As regards the Claimant's requests to be considered for employment, the Tribunal found that the Respondents dealt with these in the way they usually dealt with such requests. It is fanciful to suppose that the Tribunal's findings on these matters would have been different even if it had found that, six years previously, the Respondents had refused to provide a reference in the course of settlement negotiations.
93. We have also reached the conclusion that it would have made no difference if the Tribunal had considered the allegation that Mr Gary Brown was an actual comparator. The Claimant put forward limited information concerning Mr Brown. On her information, however, the Respondents had re-employed Mr Brown in 1998, some five years prior to the Claimant's request for employment. He did not write speculatively in the way the Claimant wrote; he was invited to return following a commendation from a Judge and the payment of a reward by the Respondents themselves. Where a comparison is to be made between persons of a different sex for the purposes of the sex discrimination legislation, the comparison must be such that the relevant circumstances in one case are the same or not materially different in the other: section 5(3) of the 1975 Act. We do not think it can realistically be said that this was the position in Mr Brown's case.
94. For these reasons the appeal will be dismissed.
Published: 26/05/2010 13:24