Compensation scheme does not benefit from without prejudice protection

The High Court has determined that a compensation scheme set up to compensate victims of sexual abuse is admissible at trial and can be used as evidence to support a claim of vicarious liability. The court held that, although the scheme was a form of alternative dispute resolution and offers were made without prejudice save as to costs, the scheme was not protected by without prejudice privilege. This will be of concern to anyone who has entered into a scheme for the disposal of liabilities in the expectation that it will be confidential. Anyone in that situation should review the nature of the scheme.

Background

In the recent case of TVZ and others v Manchester City Football Club Ltd 2021 EWHC 1179 QB, eight claimants sought to resolve the issue of whether Manchester City Football Club was vicariously liable for the actions of a former scout.

Each of the claimants had suffered sexual and emotional abuse by the scout in the 1980s whilst he was a coach of the youth football teams for which they played, which acted as “feeder clubs” for the club. The club accepted that each of the claimants were abused by the scout, but denied that it was vicariously liable for his actions.

The club had commissioned a review of its links with the scout in 2016 and had set up the Manchester City Survivors compensation scheme in 2019 for survivors of the abuse. This was a voluntary scheme, set up to provide survivors with an alternative to seeking compensation by litigation.

The claimants applied for an order that the details of the scheme and documents relating to it could be used as evidence at trial and did not benefit from without prejudice protection.

Decision

After careful consideration of the scheme, Cavanagh J came to the conclusion that the scheme documents could not benefit from without prejudice protection and were therefore available tp be used as evidence at trial, for the following reasons:

1. The scheme rules were not headed or stated to be "without prejudice" and or privileged. Apart from the reference to compensation offers being without prejudice save as to costs, there was no reference to the without prejudice principle anywhere in the scheme rules.
2. The scheme was designed to offer compensation to those who played for the teams which the claimants had played for, and which the claimants say were connected to the club through their coach, during the periods to which the claimants’ claims relate.
3. The existence of the scheme was made public by the club, and, indeed, it was central to the scheme's objective that the scheme should be public, because the intention was to draw it to the attention of as many potential scheme claimants as possible.
4. The scheme’s FAQs did not say that the scheme or the scheme rules were legally privileged.
5. The letter sent by the club’s solicitors to invite parties to join the scheme did not state that it was without prejudice.

Comment

Informal schemes such as the one in this case are more commonplace than might be thought. Parties wishing to run similar schemes in the future should be aware of the need to manage the risk of the scheme being used as evidence at a later date. Careful attention will need to be paid to the terms of the scheme, including the extent to which the scheme should be made public or, alternatively, confidentiality provisions included. Parties running existing schemes may wish to review them to assess the extent to which they have been made public and the potential for them to be used in any future proceedings.

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