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Many myths and misunderstandings surround the issue of without prejudice communications.
What is a without prejudice communication?
Without prejudice communications are commonly exchanged in relation to the settlement of disputes.
When attempting to negotiate a settlement proposal, parties can make without prejudice offers in writing or orally. In order for a communication to be truly ‘without prejudice’, the without prejudice offer must be made in a genuine attempt to settle a matter.
If the without prejudice ‘label’ is attached to communications that have nothing to do with settlement, the label will have no effect and the communication will remain admissible as evidence.
If a settlement agreement is not reached and the matter is heard at court, any written or oral communication that has been genuinely made on a without prejudice basis is not allowed to then be used as evidence in court.
Both parties must be in agreement before any without prejudice communication can be made public.
Why is it important to be able exchange material on a without prejudice basis?
There is a strong public policy argument for encouraging parties to try to negotiate the settlement of a dispute rather than become embroiled in litigation. The best way to achieve this public policy objective is to allow parties to be able to exchange communications in confidence and in the knowledge that a trial judge will not be presented with evidence of what is said or written on a without prejudice basis.
When can the without prejudice protection be applied?
If someone states in a settlement conversation that it is a ‘without prejudice’ conversation then the details of that conversation will not be admissible as evidence in court. The same principle applies in relation to written correspondence. By stating ‘without prejudice’ at the top of the correspondence that concerns settlement negotiations, you will ensure that this correspondence is not admissible as evidence. But be warned that the communications must relate to settlement and concern, in some form or other, the issue of compromise.
Are there exceptions?
There are several exceptions which allow without prejudice communication to be admissible in court.
One exception applies when there is a dispute about the terms of a settlement offer. If parties fall out about the terms of a particular settlement deal, then the court will expect to see the communications leading up to the settlement in order that it can resolve the dispute.
Another exception is when one party considers that the rule is being used to conceal unacceptable behaviour. In such a case, the offending party is not allowed to hide behind the ‘without prejudice veil’. The court will want to know what has been going on in order that it can determine whether a party has been acting reasonably or not.