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A sobering case on when the Unambiguous Impropriety rule may deprive a party of the protection of without prejudice privilege.

Floyd L.J said,

’18 Again, I find myself unable to accept these submissions. It would have been entirely possible for [X] and [Y] or their advisors to make an increased offer for the sale of their shares by reference to what they regarded as their increased value… or because of what they perceived as the consequences for them personally as a result of increased prospects of the company succeeding in the company’s action.

That is, however, not the offer which they chose to make.

Instead, a fair reading of the email is that they wanted more for their shares because they had learned of their ability to cause the company to take the steps identified. Thus the offer was increased “ because we have become aware of further wrongdoings by [A] ” and because “ [A] is in very serious trouble.” The “ very serious trouble” would also “ have implications for ” [A’s] family “ by reason of [A’s] actions .” For that reason the offer would be “ beneficial to [A] and [his partner]. ”

The email went on to make a thinly-veiled threat that, if the offer was not accepted within 48 hours, the allegations being made would be made public. Acceptance of the offer would obviate “ the need of further steps such as committal proceedings. ” T

he email goes on to draw attention to the criminal consequences of giving false evidence, including perjury, perverting the course of justice and likely imprisonment. [A’s] “credibility and reputation will be destroyed barring him out of the online gaming business in the future. ”

19 It is quite unrealistic in my judgment to read this email as being based on an appreciation of an increased value of the company in the light of the undisclosed bank account.

To put it bluntly, [X] and [Y] believed that they had alighted on a way of frightening [A] into paying more for their shares. That is what the judge meant, as I understand her judgment, when she said that it was clear that the increase in price had nothing to do with any increase in the value of the shares…

23 In the end…what is involved here is an evaluation of whether the threats unambiguously exceeded what was “permissible in settlement of hard fought commercial litigation” ( Boreh v Republic of Djibouti [2015] EQHC 769 (Comm) at [132] per Flaux J). I

n the absence of any error of principle by the judge I should be extremely cautious before coming to the conclusion that the judge’s evaluation was wrong. However, I agree with the judge that the threats here did unambiguously exceed what was proper, essentially for the reasons she gave.

Firstly, the threats went far beyond what was reasonable in pursuit of civil proceedings, by making the threat of criminal action, (not limited to civil contempt proceedings).

Secondly, the threats were said to have serious implications for [A’s] family because of [A’s] wrongdoings.

Thirdly, the threats were of immediate publicity being given to the allegations. It is nothing to the point in this connection that [X] and [Y] may have believed the allegations to be true. The threat to publicise allegations of extreme severity against [A] and his partner, and within such a short timescale, placed quite improper pressure on [A].

Fourthly, the purpose of the threats was to obtain for the brothers an immediate financial advantage arising out of circumstances which should accrue, if they had basis in fact, to the benefit of the company.

Finally, there was no attempt to make any connection between the alleged wrong and the increased demand.’

 

Text edited for ease of reading.

See also Without Prejudice Privilege and Unambiguous Impropriety: Forster v Friedland [1992] here.

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