Without Prejudice, Please!

What does it mean when in the course of negotiating a settlement of a civil dispute, you receive a letter or e-mail marked “WITHOUT PREJUDICE”?

What are the implications of these two simple, innocuous words?

Section 23 of the Evidence Act 1950 governs the rule of “without prejudice” communications and it reads as follows,

“In civil cases, no admission is relevant if it is made either upon an express condition that evidence of it is not to be given or under circumstances from which the court can infer that the parties agreed together that evidence of it should not be …”

The rule relating to “without prejudice” negotiations are used rather widely by parties who are in the midst of genuinely negotiating a settlement.

What this means is simply, in the event negotiations fall through, any admissions or concessions made by parties during the course of that negotiation cannot be used in court.

In short, this privilege applies to any communication between parties genuinely aimed at negotiating a settlement. This includes any documents (e-mails, letters, fax transmissions, courier) prepared and sent out during the course of negotiations.

On the flipside, just because a document is marked “without prejudice” it does not automatically become privileged or protected. How the court determines what can be protected by the without prejudice privilege is a matter of substance over form.

There have been situations where documents marked “without prejudice” have been referred to and used in legal proceedings for various reasons. One of them being, that the purported negotiations for settlement, were not a genuine attempt at settling the matter.

I have also seen letters marked ‘without prejudice’ which are clearly letters of demand asserting a certain claim against another and surely these sort of correspondences cannot be privileged or seen as a genuine attempt to negotiate a settlement.

Practically speaking, it may be rather difficult for such correspondences to fall within the ambit of privilege.

On the other hand, there have been instances where both parties have waived their privilege and agreed for documents marked “without prejudice” to be used in the course of legal proceedings. Here both parties have to agree to mutually waive their privilege.

In this instance, it is a no holds barred sort of situation and all parties involved have full access to those documents to prove their respective cases in Court.

Some general advice:

  • If you have been served with a demand letter or a letter claiming a certain position that is not favourable to you, and you wish to offer a settlement, do mark your correspondences “without prejudice”. This is prudent practice as in the event the matter cannot be settled amicably and parties decide to litigate, your lawyer has the right to oppose the use of such correspondences against you.

  • I usually advise my clients who wish to have a face-to-face meeting with their ‘opponent’ to expressly state at the beginning of the meeting that all discussions during that meeting are on a “without prejudice” basis, just in case, someone is tape recording or video recording the meeting.

  • I would advise you to err on the side of caution and mark any negotiations or discussions on Whatsapp, WeChat or SMS as “without prejudice”.