Barrister Professor Rudi Klein considers the circumstances in which the phrase ‘without prejudice’ should be used.
We often throw the phrase ‘without prejudice’ into our correspondence without fully appreciating when it should be used. For example, it has been used in contract negotiations where the parties are inching their way to finalising a contract. But is this the right context for making use of it?
Without prejudice: What does it mean?
In the event of a disputed claim that is heading for the courts, all correspondence between the parties – however prejudicial to one side or the other – must be revealed in a process known as ‘disclosure’. But to encourage parties to settle their differences as early and as quickly as possible, the law allows them to adopt negotiating positions in their correspondence that will not be revealed in any subsequent legal proceedings.
It is generally the case that, in order to achieve a settlement, parties will put forward possible compromises but would want to re-assert their claimed entitlements in the event there is no settlement. In legal parlance, such compromises are said to be ‘privileged from disclosure’.
In the case of Rush & Tompkins v Greater London Council (1986), the court made clear that ‘without prejudice’ privilege would “exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence”.
Simply attaching ‘without prejudice’ to any correspondence (including negotiations to finalise a contract) will not make the correspondence immune from disclosure in legal proceedings. The relevant communications must be part of a process “genuinely aimed at settlement”.
Without prejudice and adjudication
So far, reference has been made to ‘without prejudice’ in legal proceedings, but will it work for adjudication? In principle, the advantage of having ‘without prejudice’ privilege in adjudication is the same as for legal proceedings, but occasionally adjudicators do get to see ‘without prejudice’ communications.
This happened in the legal case of Ellis Building Contractors Ltd v Vincent Goldstein. Solicitors for one of the parties had sent a ‘without prejudice’ letter to the other which offered to pay a certain amount to settle the dispute. The party in receipt of the letter revealed its contents to the adjudicator. An adjudicator is required to act impartially and the court was of the view that that impartiality had not been compromised. The adjudicator’s decision was enforced.
Other types of privilege
Whilst discussing ‘without prejudice’, it may be helpful to round this off by referring to two other types of privilege.
The first is ‘legal advice’ privilege. This exists between a client and his/her lawyer where the client is seeking or receiving legal advice. It is vitally important that a client should be able to divulge all facts – including prejudicial mater – to his/her lawyer without such facts becoming known to the other side. This may also lead to a settlement of a dispute, particularly in circumstances where the lawyer’s advice is that his/her client’s case is weak. A word of caution. This legal advice privilege does not apply to non-lawyers such as quantity surveyors or claims by consultants.
The second type of privilege is ‘litigation’ privilege. This also applies to communications and documents created between a client, his/her lawyer and certain other parties (such as an expert) for the dominant purpose of being used in litigation.
- When negotiating to settle a dispute, make sure your communications are marked ‘without prejudice’ or ‘privileged and confidential’.
- It is always best to clearly identify in the business the person(s) having the authority to negotiate on behalf of the business.
- Ensure that your legal adviser has access to all relevant communications when negotiating.