Legitimate commercial pressure to compromise or blackmail? How far can you go?
In UUU v BBB  EWHC 3190 (QB), the English High Court ordered the continuation of interim restraining relief against a Defendant who had been seeking to blackmail the Claimant into settling a contractual dispute.
The Claimant and the Defendant had been longstanding friends. A contractual dispute had arisen between the two and the Defendant sent the Claimant a pre-action letter alleging that the Claimant had failed to provide the Defendant with an agreed share in a company. The Defendant followed up the letter with an email to say that if the Claimant did not honour the disputed contract or propose a realistic settlement, the Defendant would “fully advise” certain organisations and individuals of various specified matters personal to the Claimant. The Defendant sent subsequent emails threatening to “proceed with the litigation and associated course of action”. The Defendant also emailed the Claimant’s business associates indicating that he was “postponing” acting further in the hope of reaching an agreement with the Claimant. Except for the original letter before action, all of the Defendant’s other correspondence was marked “without prejudice”.
The Claimant contended that the threats of the Defendant constituted blackmail, contrary to section 21 of the Theft Act 1968, and that if carried out these threats would amount to harassment contrary to s.1(1) of the Protection from Harassment Act 1997. This was an interim hearing, rather than a full trial of the case, so the issue for the Court was whether an interim injunction against the defendant should be continued to trial.
The court ruled that the threats, made under cover of without prejudice correspondence, went far beyond what was proper or permissible in hard fought commercial litigation. The Defendant had clearly intended the Claimant to recognise that such revelations would be damaging to him personally and to his business. The purpose of the threats had been to obtain an immediate financial advantage for the Defendant in the form of a share of the company or monetary payment. Irrespective of the Defendant claiming that the allegations were true and that he only sought that to which he was entitled, the Court held that the threats had placed the Claimant under improper pressure and that there had been no attempt to make any connection between the allegations (which were the subject of the threats), and the Defendant’s demand for settlement of his contractual claim. The Court therefore ordered that the interim restraining relief be extended over to a final hearing, since the Claimant had demonstrated that the Defendants’ emails would likely be found at trial to constitute blackmail.
The case is an interesting illustration of the limits to parties’ conduct in settlement negotiations, and a reminder that there can be consequences, if a party crosses the line between reasonable commercial pressure and simple blackmail.