Case Studies

Daily Archives: September 20, 2021

Hard Bargaining or Extortion: Using Threats in Negotiations.

At the Fair work Commission negotiating outcomes for your unfair dismissal or general protections claim is a way of life.

You as an employee want as much as your can get and the employer wants to pay you the least amount possible.

Negotiation is an integral part of dispute resolution and reaching settlement agreements. When negotiation, it is important to acknowledge when conduct could cross the line between aggressive and zealous advocacy and extortion. Utilising sensitive information to blackmail, extort or compel your employer to pay you out, will not be highly regarded should the matter be heard before a Court or Tribunal. Further, parties cannot defend their coercive or threatening behaviour by relying on the privilege attached to “without prejudice” negotiations.

Coercing and Threatening an Employee to Withdraw Their Fair Work Claim

In Bethune v Strategic Lawyers Pty Ltd,[1] the employer sent the employee a letter stating that “… should this matter not settle in accordance with this letter that we intend to refer to the CCTV (and three formal complaints) to the Legal Services Commission concerning whether your client’s conduct … .is fitting conduct for a legal services professional …”.

The employee argued that the employer sought to coerce her to abandon her claim under the Fair Work Act 2009 (Cth), by threatening to refer her conduct to the Legal Services Commission. In order to demonstrate an intent to coerce, the employer must have intended to exert pressure to negate choice and negating choice requires something more than influence or persuasion and implies a high degree of compulsion.[2] Secondly, the coercive act must involve conduct that is unlawful, illegitimate and unconscionable.[3]

Further, the employee argued that the threat was unlawful in that section 17 of the Federal Circuit Court Act 2001 confers upon the Court the power to punish a person for contempt where their action interferes with the course of justice. The employee argued that contempt includes actions that have a tendency to improperly pressure a party to withdraw from court proceedings and a contempt will still have occurred notwithstanding that the party elects to continue with their claim.[4] Further, an improper threat intended to induce settlement[5] or threatening to report a legal practitioner to a professional disciplinary body, may also constitute a contempt.[6]

With respect to whether coercive conduct can amount to professional misconduct, it has been held that the making of a similar threat to induce settlement was found to be professional misconduct within the meaning of section 419 of the Legal Profession Act 2007 (Qld).[7]

Negotiate with a smile on your face

“Without Prejudice Save as to Costs” – No Automatic Privilege

The employer defended the alleged coercive conduct by claiming privilege with respect to the content of the letter, given that the words “Without Prejudice Save as to Costs” were stated on it. The employer argued they were entitled to make a without prejudice attempt to compromise the dispute and that protection cannot be abrogated by a simple assertion on an interlocutory basis that the offer of compromise somehow contravenes legislation or is conduct giving rise to an offence.

In general, “without prejudice” communications are privileged from disclosure and cannot be shown to the Court or a third party, unless the parties agree to waive the privilege. The purpose of the “without prejudice” rule is to encourage parties to reach settlement and thus to try and avoid court action.

The term “without prejudice save as to costs” rule extends the basic “without prejudice” rule. It maintains the same privilege but, should the matter go to Court, the parties can disclose communications when the Court comes to decide the issue of costs. Nevertheless, these communications remain privileged until after the matter has been settled or decided by the judge.

In Ferster v Ferster & Ors,[8] the Court has highlighted that there can be a fine line between proper and improper leverage in negotiations.  Where the line is overstepped, the “without prejudice” protection of the communication can be lost, leaving the maker of the statement vulnerable to the communication being used as evidence in front of the court.

When determining whether the “without prejudice” communications are privileged, the Court observed that “it may be readily accepted that the mere insertion of the words ‘without prejudice’ does not of itself necessarily clothe correspondence with the character asserted any more than the absence of those words would deny a privilege attaching to correspondence which is truly engaged in for the purpose of effecting a settlement or compromise”.[9]

Further, a “without prejudice” privilege does not apply to cloak improper conduct.[10] A party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety.[11]

Thus, privilege does not apply where one party exerts unfair pressure upon the other during negotiations and the Court will admit evidence of such pressure and the privilege ordinarily attaching to ‘settlement’ negotiations in these circumstances cannot be relied on.[12] Where statements are made in the nature of admissions not with a view to seeking compromise but rather in the nature of an ultimatum to the other side privilege will not attach.[13]

Consequently, Judge Tonkin held that the employer exerted unfair or illegitimate pressure upon the applicant within the context of settlement negotiations to accept an offer and the “without privilege” claim by the Respondents cannot be relied on in that regard.[14] It was held that the letter contains communications that were made in furtherance of the commission of an act rendering a person liable to a civil penalty (such as coercion) or a communication affecting a right of the employee.[15] Thus, the “without prejudice” communications did not attract privilege and were held to be discoverable.

I hope the above has been helpful to you, sometimes knowledge can be power, sometimes a little bit of knowledge can be dangerous. At A Whole New Approach Pty Ltd we are not lawyers but extremely skilled and experienced negotiators, want help in resolving your workplace dispute?, give us a call. We can also represent you in lodging a unfair dismissals claim or general protections claim. Your welcome to get free advice on 1800 333 666


[1] [2021] FedCFamC2G 6.

[2] Ibid at [24].

[3] Ibid.

[4] Harkianakis v Skalkos (1997) 42 NSWLR 22 at [28] and [29].

[5] Y v Z v W [2007] 70 NSWLR 377 per Ipp JA

[6] Harkianakis v Skalkos (1997) 42 NSWLR 22 at [30].

[7] Jensen v Legal Services Commissioner [2017] QCA 189.

[8] [2016] EWCA Civ 717.

[9] Apotex Pty Limited v Les Laboratoires Servier (No 5) [2011] FCA 1282 at [25].

[10] Bethune v Strategic Lawyers Pty Ltd [2021] FedCFamC2G 6 at [49].

[11] Unilever Plc v The Procter & Gamble Co [2000] 1 WLR 2436 at 2444.

[12] Dataquest (Australia) v Dataquest Inc [1996] FCA 1685.

[13] Dataquest (Australia) v Dataquest Inc [1996] FCA 1685.

[14] Bethune v Strategic Lawyers Pty Ltd [2021] FedCFamC2G 6 at [55].

[15] Ibid [56].

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