Holyoake v Candy & 5 Ors (2016)
A text message threat made during without prejudice negotiations ahead of a commercial trial for damages of over £132 million had not amounted to unambiguous impropriety and was therefore not admissible in evidence. The threat did not amount to an abuse of a privileged occasion; it was no more than the sort of negotiating tactic that the parties to the hard-fought commercial litigation would have expected.
The defendants to a commercial litigation for damages in excess of £132 million applied for some of the statements made during pre-trial negotiations to be admitted in evidence at the trial.
In 2011, the claimants had borrowed £12 million from the defendants to part fund a property purchase. The claimants intended to develop the property and make a profit of over £100 million. They claimed that shortly after they purchased the property, the defendants subjected them to threats, duress and intimidation to coerce them into signing further agreements that were extremely disadvantageous to the claimants and highly advantageous to the defendants. They further stated that in 2014 they had to sell the property at a loss. They filed their claim in 2015 and several hard-fought interim applications followed. In June 2016, the claimants were refused a freezing order and were ordered to provide £5 million to fortify a cross-undertaking in damages. Two days later, the claimants' intermediary sent a text message to the defendants containing a threat that the defendants deemed was designed to frighten them into settlement to avoid the claimants having to provide the £5 million in fortification. Further without prejudice discussions took place by phone five days after the text message was sent, during which the defendants made no mention of the perceived threat. They later asserted that the claimants had reiterated the threat during the phone discussions.
The defendants submitted that the text message and phone discussions should be admissible in the forthcoming trial as the threat amounted to unambiguous impropriety, and so was not protected by the without prejudice privilege.
(1) The unambiguous impropriety exception to the without prejudice rule should be applied only in the clearest case of abuse of a privileged occasion, Unilever Plc v Procter & Gamble Co  1 W.L.R. 2436 and Savings & Investment Bank Ltd (In Liquidation) v Fincken  EWCA Civ 1630applied. It was necessary to undertake a qualitative evaluation of whether any threats had been proven that unambiguously exceeded what was permissible in the attempted settlement of hard-fought commercial litigation. In Ferster v Ferster  EWCA Civ 717 it had been clear that the content of a professionally drafted email amounted to an attempt at blackmail that fell firmly within the unambiguous impropriety exception. By contrast, the intermediary's text message threat in the instant case did not amount to the abuse of a privileged occasion, Ferster considered. It was no more than the sort of negotiating tactic that the defendants would expect the claimants to employ. That was demonstrated by the fact that they were in no way intimidated by the threat, and if it had been perceived as real and illegitimate, they would not have entered into further without prejudice negotiations without even mentioning the matter. If that conclusion was wrong and the status of the intermediary was in issue, it would be for the trial judge to decide whether he had been authorised by the claimants to communicate the threat. The court's non-binding provisional conclusion was that the intermediary was an agent authorised to carry messages between the parties. If the claimants had wanted a definitive conclusion to the contrary, they would have had to have served evidence that addressed and answered the defendants' evidence on that point (see paras 79-83 of judgment).
(2) Given that the unambiguous impropriety exception did not apply to the text message, it did not apply to the phone discussions either. However, even if a different conclusion had been reached regarding the text message, the phone discussions would still have remained entirely and properly without prejudice. The claimants' comments during those discussions had been perfectly innocent and proper, particularly when read in the context of a forceful negotiation in hard-fought and bitter commercial litigation. The discussions were entirely consistent with both sides expressing their understanding of what was likely to happen if the litigation proceeded to a contested trial. To deduce anything unambiguous by way of threats on the part of the claimants would be a nonsense (paras 84-85).