What does Without Prejudice mean?
If you write to somebody with whom you are in dispute and you label your communication “without prejudice” this generally means that this letter will not have to be produced to a court if your dispute ends up in a Trial and the Judge will never know that it has been written.
The rule has been designed to encourage parties in a dispute to negotiate with each other and try and settle their differences rather than go to court. The thought process when the rule was being developed was that parties may be reluctant to say things in correspondence, even when trying to negotiate a settlement, for fear of the statement coming back to bite them in the future.
For the communication to be protected by the without prejudice rule, it has to be made in a genuine attempt to facilitate the settlement of the dispute. Immediately therefore you should be aware that it is not necessarily the existence of the words “without prejudice” on your communication that offer the protection, but the substance of the communication combined with the label. If the substance or the label is missing, then there is every possibility that the communication will find its way in front of the Judge.
You may think that provided your communication is a genuine attempt to settle the dispute that is in existence, and you label it “without prejudice” that you are always protected but you would be wrong because whilst the starting point is that you do have protection, there are a number of recognized exceptions that have been developed by the judiciary where such communications can be brought to the Judge’s attention.
When do I lose the without prejudice protection?
It is easy to understand that this is an especially important question and in 2000, the Court of Appeal provided a non-exhaustive list of some of the most important exceptions. Some of these are legally quite complex but a lot of them are actually borne out of common sense and fairness.
One very important exception is when the without prejudice communications have resulted in an agreement being reached but then one party tries to resile from the agreement. In such circumstances a court will be allowed to look at the without prejudice communications to decide for itself whether an agreement was actually reached.
Another exception arises if one party to a concluded settlement comes across information which then indicates that they have agreed a settlement based upon facts which have been misrepresented to them, or because of fraud or undue influence. Again, in such circumstances a court will be allowed to consider all the without prejudice communications to help it decide whether misrepresentation, fraud or undue influence does exist such that the agreement that has been reached should be set aside.
A quite common exception is where the communications are marked “without prejudice except as to costs”. This means that once the case has been concluded whether by at settlement or at trial, and the question of costs is being considered, the court will be allowed to look at the without prejudice correspondence to help it decide who should be paying the costs of the case.
Sometimes when without prejudice negotiations discussions are taking place and a settlement is reached one party looks at the settlement agreement and comes to the conclusion that what the agreement says is not what they were agreeing to. If the matter cannot be resolved between the parties, then a court will have to step in to decide whether indeed what is recorded in the documented agreement was actually what was agreed between the parties and it will be entitled to look at the without prejudice communication.
It is not uncommon for clients to instruct me in cases where they have already been in communication with the other side and when I ask if this has happened usually the client tells me not to worry because they have labelled their letters or emails “without prejudice”. I then must give them the bad news that the mere use of the label does not necessarily mean that what they have written will not come in front of the Judge if the case goes to Trial.
The moral of the story therefore is to remember that use of the label does not automatically give you complete protection.
If you need advice regarding a dispute please get in touch.