Motorola -v- Hytera: Protecting the sanctity of settlement discussions

In the Commercial Court – the test considered at first instance

Given the parallels which existed between Dora v Simper and the present case, Jacobs J in the Commercial Court found in favour of Motorola, permitting it to adduce the evidence and made a freezing order against Hytera.

In the Court of Appeal: the test of unambiguous impropriety is unambiguous propriety

Hytera appealed the ruling of the first instance court on two grounds: first, that the statements made were not, in fact, evidence of unambiguous impropriety; and second, that the evidential test applied from Dora v Simper was incorrect; it was not enough to simply present a “good arguable case” that the statements had been made.

Males LJ outlined the following problems with Dora v Simper in his judgment: 

Second, the approach diminishes the strength of without prejudice privilege; a key tool in enabling parties to facilitate meaningful settlement discussions. Encouraging settlement is at the heart of the procedural rules which guide adversaries through litigation. Anyone who has participated in these high stakes discussions will recognise Walker LJ’s description of them in Unilever Plc v Procter & Gamble Co as a “mixture of admissions and half-admissions against a party’s interest, more or less confident assertions of a party's case, offers, counter-offers, and statements (which might be characterised as threats, or as thinking aloud) about future plans and possibilities”[4]. Without prejudice privilege provides a safe space for those negotiations. 

The unambiguous impropriety exception is intended to catch those parties who seek to use that privilege as “a cloak for perjury, blackmail or other ‘unambiguous impropriety[5]’”; it is not to catch “colourful or even exaggerated language[6]” used in settlement discussions and it is not to enable parties to strategically pick apart the content of “wide-ranging unscripted discussions during a meeting which may have lasted several hours”[7]. If the exception is widened, undesirable consequences will flow from it namely that “no litigant could be advised to enter into without prejudice discussions without a lawyer at his elbow or a prepared script approved by his lawyer. To allow such admissions in evidence flies in the face of the public policy justification for the without prejudice rule”[8].

Finally, in Dora v Simper, provided there was a good arguable case that the statement had been made, the court effectively assumed that the claimant’s allegation was correct for the purposes of determining impropriety. But at no point would that allegation actually come under scrutiny, since this was all dealt with at the interim stage before trial. Failing to properly scrutinise the allegation means that “there is a danger of the exception to the rule displacing the rule by a process of begging the question” [9]. As Males LJ put it, this position cannot be satisfactory in view of the potential harm to a defendant resulting from a freezing order that ought not have been granted.

Considering all of the above, the Court of Appeal applied a simpler test: does the evidence establish unambiguous impropriety? Examining the arguments afresh, the Court of Appeal found Hytera’s side of the story just as plausible as Motorola’s. While this was enough to reject the freezing order (since there was no actual, undisputable evidence of unambiguous impropriety) the Court of Appeal also noted that, even if Motorola’s side of the story was correct, those statements did not amount to a genuine threat to improperly dissipate assets when considered in the context of protracted and hard fought settlement meetings. 

In light of the above, the Court of Appeal upheld Hytera’s appeal, stating that the material should not have been admitted and therefore set aside the freezing order. The test was restated as follows: “Rather, the position should be that the test remains one of unambiguous impropriety. Nothing less will do.” [10]

The judgment from the Court of Appeal reinforces the principle that what is communicated under the cloak of without prejudice privilege will remain sacrosanct unless it falls within very specific, defined criteria. The judgment acts as a helpful reminder of the following practical points when considering the limits of without prejudice privilege:

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[1] Motorola Solutions Inc. v Hytera Communications Corporation Ltd [2020] EWHC 980 (Comm) 

[2] Motorola Solutions Inc v Hytera Communications Corporation Ltd [2021] EWCA Civ 11

[3] Dora v Simper [1999] 3 WLUK 273

[4] Unilever Plc v Procter & Gamble Co [1999] EWCA Civ 3027, [2000] 1 WLR 2436

[5] Unilever Plc v Procter & Gamble Co [1999] EWCA Civ 3027, [2000] 1 WLR 2436

[6] Forster v Friedland (10th November 1992, unreported)

[7] Berry Trade Ltd. v Moussavi [2003] EWCA Civ 71

[8] Berry Trade Ltd. v Moussavi [2003] EWCA Civ 715

[9] Savings & Investment Bank Ltd v Fincken [2003] EWCA Civ 1630

[10] Motorola Solutions Inc v Hytera Communications Corporation Ltd [2021] EWCA Civ 11