Expert Witness Journal Issue 63 October 2025 - Flipbook - Page 83
A Veiled Threat Is Still a Threat:
High Court Clari昀椀es Limits of
Without Prejudice Privilege
by Christian Carlyle
The High Court’s recent decision in QPQ Limited v Schute[1] o昀昀ers important guidance on
the admissibility of settlement correspondence and the boundaries of the “without prejudice”
rule, especially where implicit threats are used to exert pressure in commercial litigation.
Background
The judgment makes clear:
The dispute centred on allegations by the Plainti昀昀
of breach of a shareholders’ agreement, employee
poaching, and misappropriation of blockchain
technology (“1DLT”), with claimed losses exceeding
€106 million. The Defendant denied all wrongdoing.
•
The WPSATC heading was technically
inappropriate in the absence of a settlement
o昀昀er, but this did not deprive the letter of
privilege.
•
An “opening shot” in negotiations can be
protected, even without a formal o昀昀er.
•
The key issue is whether the correspondence
was “unambiguously improper.”
As the litigation progressed, a sequence of seven
letters between the parties’ solicitors became the
focus of an application to admit them into evidence,
despite being headed “without prejudice save as to
costs” (WPSATC).
The Court’s Findings
Sanfey J. found that, while the letter did not contain
an express threat, its references to Swiss criminal
proceedings and reputational harm amounted to
improper pressure. He stated:
The Controversial Correspondence
The 昀椀rst WPSATC letter, sent by the Plainti昀昀’s
solicitors, referenced ongoing Swiss criminal
proceedings against former employees and
suggested that the defendant’s reputation could
su昀昀er if the matter was not resolved. The letter
urged the Defendant to consider compensating the
plainti昀昀, linking the resolution of both the Irish
proceedings and the Swiss criminal complaints.
“I do not think it can be the case that improper
pressure can only be exerted expressly or overtly. A
veiled threat is still a threat.”
The Court concluded that the Plainti昀昀’s conduct
exceeded what is permissible in settlement
negotiations. The pressure exerted was unambiguous
and improper, justifying the admission of the
correspondence as open evidence.
The Defendant argued that this amounted to an
implicit threat: settle or risk reputational and
criminal consequences. Expert evidence on Swiss
law con昀椀rmed that complainants could in昀氀uence
the scope and continuation of criminal proceedings,
adding weight to the Defendant’s concerns.
Practical Takeaways
•
Drafting Settlement Letters: Solicitors must
avoid any suggestion - explicit or implicit - of
coercion or improper pressure, especially
where criminal proceedings are referenced.
•
Privilege Is Not Absolute: The “without
prejudice” rule will not protect
communications that cross the line into
impropriety, even if the threat is veiled.
•
Objective Assessment: The court will assess
impropriety from the recipient’s perspective,
not based on subjective explanations or post
facto rationalisations.
Legal Principles
Mr Justice Sanfey reviewed the rationale for the
“without prejudice” rule, noting its public policy
purpose of encouraging settlement. However, he
emphasised that privilege is not absolute and may
be set aside in cases of “unambiguous impropriety” a test drawn from Ferster v Ferster [2016] EWCA Civ
717 and Boreh v Republic of Djibouti [2015] EWHC
769 (Comm).
EXPERT WITNESS JOURNAL
81
OCTOBER/NOVEMBER 2025
