Can We Speak without Prejudice?
When a dispute arises, parties will often correspond and discuss matters “without prejudice”. What does without prejudice mean, and why is it used?
Generally, the “without prejudice” rule prevents statements made (orally or in writing) in a genuine attempt to settle an existing dispute from being known by the Court. Where the rule applies, such a statement can’t be used as evidence of an admission against the interest of the party making the statement. They are what is called not admissible. Where the statements are “without prejudice save as to costs” they are not admissible in the substantive dispute but are admissible when costs are decided.
Encouraging parties to litigation to settle their disputes out of court is one of the main reasons for the without prejudice rule. The rationale being that settlement discussions are better facilitated when parties can speak more freely safe in the knowledge what has been said will not later be used against them. In essence parties can “put their cards on the table”. Often, “without prejudice” discussions can be a good way for the parties to narrow the issues between them and break any perceived impasse.
In the recent case of Jones v Tracey, a party sought to prevent reliance on a letter marked “without prejudice” proposing Alternative Dispute Resolution (ADR). The Judge, in concluding without prejudice privilege did not apply, held that to determine the true nature of the document depends on how it would be understood by a reasonable recipient. Thus, whilst the label “without prejudice” is a factor, it’s not determinative. The content and context of the correspondence must be looked at to establish intention.
This case is demonstrative of the increasing view that engaging in ADR is not to be viewed as prejudicial to a party’s case but is instead to be encouraged as part of the litigation process. On that basis, there would be no need to protect correspondence discussing the possibility of ADR, though ADR itself will be “without prejudice”.
Therefore, whilst any statement made in writing or orally intending to contain a genuine attempt to settle or narrow/resolve the issues in a dispute should be marked “without prejudice” or “without prejudice save as to costs” to attract the protection, it is possible that correspondence concerning, for example the possibility of ADR, may not be regarded as “without prejudice”. This may be relevant where a party has refused to engage in mediation in “without prejudice” correspondence and the party who proposed it wishes to rely on that refusal on the question of costs.
In practical terms, this means that a party engaging in correspondence, sometimes at the early stage of a dispute, should not think that simply by using the words “without prejudice” will of itself mean the communication will attract privilege, particularly when the substance of the communication does not seek to settle the claim. Of course, there may also be occasions when the correspondence sent at the outset should be open and “on the record” so it can be relied upon in court at a future date.
The Commercial Litigation team at BRM are experienced in commercial dispute resolution and can provide you with tailored advice to help resolve disputes. If you have any queries or comments concerning the issues raised by this blog, please contact Kirsty Coggin, Senior Associate at BRM at kirsty.coggin@brmlaw.co.uk.
Please note this blog is not intended to constitute legal advice. You should always take specific legal advice that relates to your circumstances.
