S Garrod v Riverstone Management Limited

Without-prejudice privilege can protect pre-action settlement communications where an existing dispute is the subject of a genuine attempt to settle and the parties contemplated, or reasonably might have contemplated, litigation if agreement failed. A grievance does not automatically establish a dispute. Its content and the circumstances in which it was raised must be assessed.

The exception for unambiguous impropriety is narrow. A genuine proposal for consensual termination does not meet that threshold merely because it may be said to support an inference of discrimination or victimisation. Relevant evidence may properly be excluded to protect the public policy favouring settlement. A costs order based on untruthful evidence requires consideration of its nature, gravity and effect; untruthfulness alone is not determinative.

The claimant returned from maternity leave, later raised a detailed grievance alleging pregnancy and maternity discrimination, harassment and breaches of statutory maternity rights, and attended a meeting with the respondent's adviser. The adviser proposed a without-prejudice discussion and an offer of financial terms for consensual termination.

Her Employment Tribunal claims included statutory maternity-rights detriment, discrimination, harassment and, following resignation, constructive unfair dismissal. The Tribunal ruled that the settlement content of the meeting was protected by without-prejudice privilege and ordered its removal from the pleadings and evidence. It subsequently ordered the claimant to pay £3,400 costs because untruthful evidence had substantially increased the length and complexity of the preliminary hearing.

The claimant appealed both decisions. The central issues were whether there was an existing dispute capable of engaging without-prejudice privilege, whether the impropriety exception applied, and whether the costs order was lawful.

1. Both appeals were dismissed. The Employment Judge was entitled to find that, when the meeting occurred, an existing dispute had arisen from the detailed grievance and that the subsequent Tribunal claim concerned that same dispute. The grievance referred to alleged infringements of legal rights, ACAS mediation and Early Conciliation. Those matters were clear indicators that litigation was contemplated if the matter could not be resolved.

2. A grievance does not by itself establish a dispute. Its nature and the circumstances in which it is raised must be examined. Here, the Tribunal did not treat the grievance as conclusive. It made a fact-sensitive assessment and was entitled to conclude that the communications at the meeting were genuine settlement negotiations. A proposal for termination on agreed financial terms was a conventional and permissible way of attempting to compromise the employment dispute.

3. The claimant's Tribunal claim was materially different from the claim considered in BNP Paribas v Mezzotero [2004] IRLR 508 EAT. The meeting was not pleaded as an unlawful act founding a substantive head of claim. Its settlement content was therefore inadmissible in the litigation concerning the pre-existing dispute.

4. The exception for unambiguous impropriety did not apply. The Tribunal had found that the respondent's adviser behaved politely and professionally. A consensual termination proposal, even if it might be relied on as suggestive of discriminatory attitudes, fell far short of the very clear and serious wrongdoing required to displace the without-prejudice rule. The possible relevance of the evidence could not outweigh the policy of enabling parties to negotiate freely.

5. The costs appeal also failed. Untruthful evidence does not automatically justify a costs order. The nature, gravity and effect of the evidence must be considered. The costs Judge did so and was entitled to find that the claimant's knowingly untruthful case had very substantially complicated the preliminary issue, requiring additional evidence, cross-examination and submissions. The order for £3,400 costs therefore stood.

• Employment Appeal Tribunal: Both appeals against the Employment Tribunal's without-prejudice ruling and consequential costs order were dismissed.
• Employment Tribunal: Employment Judge Harrington ruled that the settlement content of the 8 November 2019 meeting was protected by without-prejudice privilege. Employment Judge Jones QC ordered the claimant to pay £3,400 costs. Reconsideration applications were dismissed.