High Court: ‘Without prejudice save as to costs’ letters admitted into evidence

About this case:

• Citation:
  [2025] IEHC 474
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Mark Sanfey

Delivering judgment for the High Court, Mr Justice Mark Sanfey determined that the plaintiff’s conduct was unambiguously improper, and noted that “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.”

Background

The plaintiff asserted inter alia that the defendant acted in breach of a shareholder’s agreement, solicited its employees to work for RunTime Machines AG and copied its technology, a blockchain solution known as “1LDT”. The plaintiff alleged that it sustained losses of €106,666,667.

The defendant brought an application seeking that the court admit into evidence correspondence between the parties’ solicitors bearing the heading “without prejudice save as to costs” (WPSATC).

The defendant argued that the first letter headed WPSATC and dated 24 October 2024 in the sequence of seven letters, contained an implicit threat from the plaintiff’s solicitors that a failure to make an offer of compensation to the plaintiff would gravely damage his position, good name and reputation, asserting that the defendant had dealings with former members of the plaintiff’s R&D team against whom the plaintiff had instigated criminal proceedings in Switzerland.

The defendant’s solicitors replied inter alia that the plaintiff’s letter was incorrectly headed WPSATC where no offer of settlement had been made, and where the plaintiff was improperly seeking to solicit a payment from the defendant which would not just resolve the proceedings before the High Court, but which could also dispose of the criminal investigation, which could be expanded to target “other persons and/or legal entities”.

The High Court

Having heard the parties’ arguments and the affidavit evidence, Mr Justice Sanfey considered the jurisprudence on the “without prejudice” designation, explaining that the rule evolved due to the public interest in encouraging parties to settle their disputes without resort to litigation.

The judge noted: “If parties were in the position that anything they said or wrote in the course of negotiations, even when expressly stated to be “without prejudice” could subsequently be used against them, they would undoubtedly be seriously inhibited in pursuing such negotiations”, while recognising that the court is nonetheless entitled to look at a document to determine whether it attracts privilege.

Noting that both parties accepted that the appropriate test was whether or not the communication which would otherwise attract without prejudice protection is “unambiguously improper”, exceeding what was “permissible in settlement of hard fought commercial litigation” as per Boreh v Republic of Djibouti [2015] EQHC 769 (Comm).

The court accepted the plaintiff’s contention that the 24 October 2024 letter was an “opening shot” written for the purposes of initiating a negotiation to settle the proceedings, confirming that “such a communication does not lose its without prejudice status just because it does not contain an offer.”

Mr Justice Sanfey opined that the letter should have simply been headed “without prejudice” instead of WPSATC, but did not consider that the use of the latter description or the absence of an actual offer in the letter deprived it of without prejudice protection.

Highlighting the “necessity to protect the integrity of the without prejudice rule by imposing a strict requirement that the impropriety be clearly established”, the court explained that while it would not “rule out” the possibility that affidavit evidence from the author of the impugned correspondence could be relevant as to why certain matters were addressed or phrased in a particular way, “it seems to me that the court must look circumstances in order to decide whether an objective inference can be drawn that some significant element of the correspondence is unambiguously improper.”

The court continued: “If there were room for genuine doubt as to whether an impugned statement is improper, the without prejudice protection must remain in place. However, genuine debate is not created by a post facto rationalisation or subjective explanation of what a statement meant; 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.”

Mr Justice Sanfey pointed out that a difficulty arose in that there was no express statement in the impugned letter which, taken on its own terms and in isolation, could clearly be characterised as improper, but was willing to infer that the plaintiff’s update in respect of the Swiss criminal proceedings and their possible expansion to other parties amounted to an invitation to the defendant to make a payment to the plaintiff in return for which the plaintiff would terminate the High Court and Swiss criminal proceedings.

The judge concluded: “In my view, the inference which the defendant draws from this letter is unambiguous and unavoidable…The somewhat heavy-handed references to the power of the Swiss Police to expand their investigations or “involve” other persons or entities in criminal proceedings initiated by the plaintiff suggest strongly that a failure to advance such a proposal is likely to result in the plaintiff promoting an expansion of the Swiss proceedings to involve the defendant in potential criminal liability and/or personal reputational damage.”

Conclusion

Accordingly, the High Court made an order permitting the sequence of letters to be admitted into evidence and to be treated as open correspondence.

QPQ Ltd v Schute [2025] IEHC 474