Hot on the heels of Brunel University & Schwartz v Webster & Vaseghi (see case of the week, Personnel Today, 12 June), which dealt with the circumstances in which the ‘without prejudice’ rule can be set aside, comes a second Court of Appeal case – Framlington Group Ltd and Axa Framlington Group Ltd v Barnetson.
Written or oral communications made in a genuine attempt to resolve a dispute will generally be protected by the without prejudice rule. This means that those communications cannot be used as evidence in court proceedings in relation to that dispute.
It is well established that where settlement negotiations occur in the context of litigation, or threatened litigation, those negotiations will be covered by the without prejudice rule. However, in the 2004 case of BNP Paribas v Ms A Mezzotero the EAT restricted the operation of the rule and said that it would only apply where litigation was likely and not before that point.
Framlington follows on from Mezzotero, and considers, for the first time, whether discussions that took place months before litigation started, or was even likely, will be covered by the rule.
Facts
In early 2005, Mr Barnetson started employment as chief operating officer at Framlington Group Ltd. He was told that his orally agreed terms and conditions would be confirmed in writing at a later date. However, when Barnetson pursued this written confirmation, a difference of opinion arose as to the terms that had been agreed. Discussions around his terms took place until the end of October 2005, at which point Framlington told Barnetson it intended to dismiss him at the end of the year.
Further negotiations ensued, during which a compromise agreement was produced and Barnetson set out the terms on which he would be prepared to settle. These discussions broke down and on 20 December 2005, Barnetson was given notice that his employment would terminate.
Barnetson brought proceedings for damages for wrongful dismissal in April 2006. Framlington alleged that certain parts of Barnetson’s witness statement in support of his claim should not be allowed because they related to without prejudice discussions that had taken place between the end of October and 20 December 2005. The High Court judge rejected this argument. Framlington appealed.
Decision
The Court of Appeal held that, once Framlington had told Barnetson it intended to dismiss him, the discussions that followed were without prejudice and could not, therefore, be used as evidence in the court proceedings.
There was a public policy consideration underlying the without prejudice rule namely, to encourage people to settle their disputes without resorting to litigation. In light of this aim, it was not appropriate to set a time limit prior to litigation before which any discussions would not be protected. Rather, courts should determine the point at which, during the course of negotiations, the parties contemplated, or might reasonably have contemplated, litigation if they could not reach agreement.
Key implications
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This case clarifies the circumstances in which discussions with staff will be covered by the without prejudice rule:
- There is no need for litigation to be threatened or underway for negotiations to be protected. If it is clear that the parties understood that litigation might result if the negotiations failed, then such discussions are likely to be protected.
- The discussions in this case were only protected from the point at which Barnetson was told of his employer’s intention to dismiss him. Discussions during internal grievances are unlikely to be protected.
By Laura Green, assistant solicitor, Lovells’ Employment Group
