Framlington Group Ltd v Barnetson – negotiations before litigation begins  EWCA Civ 502
The without prejudice rule can apply to communications made where a dispute has arisen but litigation has not yet begun or been threatened. The crucial consideration is whether in the course of the negotiations the parties contemplated or might reasonably have contemplated litigation if they could not agree. The public policy justification for the rule is to discourage parties from resorting to litigation; this cannot be achieved if the rule is limited to negotiations taking place shortly before litigation begins.
Comment: here the negotiations took place in the context of an employment contract 5 months before litigation was begun. At the first meeting in November 2005, the employers had produced a draft compromise agreement which was marked “without prejudice”, attempting to agree terms upon which Mr Barnetson would cease to be employed by them. In December 2005 Mr Barnetson threatened proceedings, after which he was dismissed, although he did not begin proceedings until April 2006. In these circumstances, the court’s conclusion that the negotiations were without prejudice is not surprising. Stating that the discussions are without prejudice is likely to make this outcome more probable.