Without prejudice – the legal shield
The principle of without prejudice privilege is a cornerstone of legal negotiation, offering a safeguard to ensure that settlement discussions cannot be used against a party in court. Its purpose is to encourage open, honest dialogue without fear of those words subsequently being turned into submissible evidence. However, like most legal principles, relying on the without prejudice label is not without its risks. Understanding the limits, nuances, and application of without prejudice correspondence is crucial to ensuring that this valuable legal protection does not backfire when you least expect it.
Whilst without prejudice can be used as a protective mechanism, misuse or misunderstanding the principles can quickly turn it from a shield into a liability. Here, we’ll explore how without prejudice works, the potential dangers of using it incorrectly with reference to some recent case law, and how to strike the right balance in your communications.
Purpose
The purpose of without prejudice privilege is to protect genuine efforts made by parties to settle a dispute from being used as evidence against them. When a statement, offer, or discussion is made on a without prejudice basis, it means that it cannot later be introduced in open correspondence or evidence if the case proceeds to trial. In contrast, parties who choose to negotiate openly (namely not under the cloak of without prejudice labels) risk having any related documents, notes, and correspondence disclosed to the court.
It is important for parties to understand the proper application of without prejudice privilege. One cannot simply label correspondence “without prejudice” to conceal non-privileged correspondence from the eyes of the court. Communications will not benefit from without prejudice privilege if the communication is not, in substance, made in a genuine attempt to settle an existing dispute. Conversely, if the without prejudice wording is omitted, but the communication forms part of a genuine attempt to settle the dispute, then without prejudice confidentiality may still apply, if the parties' conduct indicates that the correspondence/communication was intended to be privileged.
Recent case law
The issue of without prejudice privilege arose at an employment tribunal in Meaker v Cyxtera Technology1. In this case, it was determined that the respondent’s letter, which was marked “without prejudice”, was admissible as evidence. Although the letter referenced a settlement agreement, the majority of the letter detailed the termination of the claimant’s employment, which was thought to be mutually agreed at the time. For this reason, the letter was deemed open communication and could not benefit from the doctrine of without prejudice privilege as the letter itself showed that there was no dispute contemplated, a crucial component for communication to be classed as without prejudice.
Whilst it is an essential device in settlement negotiations, this case, along with many others, acts as a warning for parties seeking to hide behind the veil of without prejudice. It is imperative that businesses have a clear checklist before engaging in without prejudice discussions, whether oral or written.
Further, the 2023 case of AZ v BY2 is a cautionary reminder to avoid deploying without prejudice materials, unless both parties have consented to waive the mutually shared without prejudice privilege that may apply.
The original dispute was referred to adjudication where the adjudicator had been presented with without prejudice material. It was held by the Technology and Construction Court that the material was indeed correctly marked, should not have been shared and the adjudicators decision was therefore entirely unenforceable.
Practical checklist
Without prejudice correspondence is essential if you find yourself advising in a dispute. It is important that businesses appreciate that a failure to correctly apply the principles may result in the shield just as easily becoming a double-edged sword. We have listed some practical tips that may help when seeking to rely on without prejudice privilege:
- is there a dispute? Remember, there does not need to be litigation in progress, or even a threat of litigation so long as the parties to a negotiation might reasonably have contemplated litigation if they could not agree terms
- is the dispute genuine? Check that it is not simply a list of differences, it is essential that the parties have a key point of dispute
- remember that the without prejudice rule applies to both oral and written communications so make sure that you are not only labelling written communications as without prejudice, but opening meetings or call with a statement that discussions are proceeding on a without prejudice basis and ensure all attendees are happy to continue on that basis
- is the correspondence a genuine attempt to reach a compromise in a dispute? Ensure that your correspondence is moving towards settling the dispute at large
- be mindful of the wider content and context of communications. If there are parts of your communication that you would like to be ‘open’, separate the correspondence into two pieces, one being on an open basis and the other without prejudice
- any waiver of prejudice must be mutually shared and both parties must consent to waive the without prejudice privilege that may apply.
1 Northamber Plc v Genee World Ltd and others [2024] EWCA Civ 428 2 Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 3 PGF II SA v OMFS 1 Ltd [2013] EWHC Civ 1288
If you would like to discuss anything in this article further, please contact:
Paul Jonson
Emma Haymes
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