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In a recent judgment1, the High Court granted an application to admit into evidence that the contents of correspondence marked "without prejudice save as to costs" should be admitted into evidence on the basis that the correspondence contained an implicit threat which amounted to an 'unambiguous impropriety'. This is the first recorded judgment of its kind in Ireland. Arthur Cox LLP acted for the successful applicant.
Background
In the proceedings, the plaintiff alleges that the defendant breached a shareholder' agreement, solicited its employees to work for a competing company and misappropriated intellectual property. As a result, it is claimed that the plaintiff's business has effectively lost all of its value, which it quantifies at over €106 million. These claims are being fully defended by the defendant.
After the pleadings in the case had closed, and the discovery phase had just commenced, the plaintiff's solicitors issued a lengthy letter marked "Without Prejudice Save as to Costs" which referenced an ongoing criminal investigation in Switzerland and invited the defendant to make a proposal to "deal with" both the civil proceedings in Ireland and the Swiss criminal proceedings (the "WP Letter").
The defendant took the view that the WP Letter contained an improper threat against him, particularly as the plaintiff itself had initiated the Swiss criminal proceedings and was able to influence them. As such, the clear implication of the WP Letter from the defendant's perspective was that the plaintiff had the ability to bring the criminal proceedings to an end if a satisfactory settlement payment was made and alternatively, that the plaintiff had the ability to expand those proceedings to target the defendant if it did not receive an acceptable financial settlement. In the circumstances, the defendant took the view that the WP Letter had lost its privileged status and that its contents were admissible. The plaintiff denied that this meaning could be drawn from the WP Letter.
Decision
The Court considered the rationale of without prejudice privilege generally, commenting that this form of privilege is rooted in the policy of encouraging parties to settle their differences rather than litigating them to a finish2 and that without prejudice communications should only be lifted in exceptional circumstances3.
The Court examined several English judgments which establish that the without prejudice rule is not absolute and is subject to a number of exceptions, including what the English courts have labelled as the "unambiguous impropriety" exception.
The judgment observed that this exception has been applied "if the exclusion of the evidence would act as a cloak for perjury, blackmail or other "unambiguous impropriety"4. Central to the Court's analysis was the English Court of Appeal's ruling in Ferster v Ferster which reasoned that "what is involved here is an evaluation of whether the threats unambiguously exceeded what was "permissible in settlement of hard fought commercial litigation"5. Applying these principles, Mr Justice Sanfey summarised the relevant test as follows: "the court must assess whether the impugned statement or document, viewed from the perspective of the recipient, was objectively improper such that it should not attract without prejudice protection"6.
The Court then commented that "[a] party to litigation is entitled to write to the opposing party without prejudice, and outline the adverse consequences which will ensue for that party if they do not settle the case" but went on to note that "in the present case, the Plaintiff goes further"7. The Court found that the inference which the defendant drew from the WP Letter is "unambiguous and unavoidable"8. This was supported by the Court's observation that the uncontested affidavit evidence of the defendant's Swiss law expert confirmed that Swiss criminal complainants obtain party status and may substantially influence the course of criminal proceedings.9
The Court determined that the WP Letter sought to put pressure on the defendant to settle civil proceedings by making an implicit threat of involving him in criminal proceedings to which he is not a party should he fail to make a satisfactory settlement proposal. In this regard, the Court ruled that the actions of the offending party do not have to be unlawful, it is sufficient that the conduct is improper – namely, the actions exceed what is "permissible in hard fought commercial litigation".10 Importantly, the judgment concluded that to fall within the 'unambiguous impropriety' exception a threat does not need to be exerted expressly or overtly, noting that "[a] veiled threat is still a threat"11.
The Court ultimately held that the WP Letter and subsequent related correspondence had lost any privileged status and could be admitted into evidence.
Conclusion
This seminal judgment establishes the 'unambiguous impropriety' test in Ireland for the purpose of lifting without prejudice privilege by reason of an improper threat.
The judgment makes clear that to fall within the exception, a threat can be implicit and need not rise to the level of being unlawful so long as it is improper. As such, it is an important judgment for practitioners and litigants to be aware of when considering how to approach without prejudice communications.
Footnotes
1 em>QPQ v Schut [2025] IEHC 474.
2 Id at [72].
3 em>Id at [92].
4 Id at [55] quoting Unilever PLC v The Procter & Gamble Co [2000] 1 W.L.R. 2436.
5 Ferster v Ferster [2016] EWCA Civ 717 at [23] citing Boreh v Republic of Djibouti [2015] EQHC 769 (Comm)at [132] per Flaux J.
6 Id at [80].
7 Id at [87].
8 Id at [88].
9 Id at [85].
10 Id at [89] and [65].
11 Id at [91].
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
