Ten myths about without prejudice privilege

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Arguments about whether without prejudice privilege applies, often caused by inappropriate labelling of correspondence, can lead to costly satellite litigation. Test your knowledge with our ten common myths or misunderstandings about this confusing concept.

Without prejudice privilege is a confusing concept.  Inappropriate labelling of correspondence can lead to satellite litigation about the admissibility of evidence.  Arguments about whether the privilege applies can be costly so understanding the concept is crucial.  Test your knowledge with these ten common myths or misunderstandings.

1. Without prejudice privilege is a type of legal professional privilege

Both are common law rules based on case law and affect the admissibility of evidence but without prejudice privilege has nothing to do with legal professional privilege – it is often called the without prejudice rule to avoid this confusion.  Legal professional privilege is a substantive right which a party can assert or waive as they choose.  Without prejudice is a practical rule resulting from the public interest in parties settling disputes and also, in some instances, from an implied agreement between them that neither will refer to settlement negotiations without the other’s consent.  One party cannot waive without prejudice privilege over a communication without the agreement of the other.

2. Mediation privilege is a wider form of without prejudice privilege

Negotiations and correspondence involved in the mediation process are protected by without prejudice privilege.  Some have argued that a separate and greater protection should be given to negotiations at mediation but to date the courts have rejected this idea. If one party believes that the other is unreasonably refusing to mediate then this should be stated in correspondence marked “without prejudice save as to costs” so it can be looked at by a judge ruling on costs.  The usual exceptions to the without prejudice rule apply to mediation, for example where the court needs to determine whether a settlement was in fact agreed (Brown v Rice).

3. You need to put “without prejudice” at the top of documents for them to qualify

If seasoned lawyers correspond with each other and choose not to put “without prejudice” on their communications, that is likely to influence the court, but in general the absence of those words will not prevent the application of the rule if the parties were seeking to compromise an existing dispute. If the letter is written by the party themselves or a foreign lawyer, the absence of “without prejudice” will be much less significant.  And even where lawyers use the caption inappropriately, as in Avonwick Holdings Ltd v Webinvest Ltd where there was no dispute, the court will still look at the reality of the situation.

4. “Off the record” means the same as “without prejudice”

Sometimes solicitors ask their opposite number if they can have an “off the record” exchange about a dispute.  It’s not always clear what they intend.  It may be a without prejudice conversation where the lawyer can discuss the content with their client. Alternatively, what they’re after is a conversation the content of which will not be passed on to the client.  If the information received “off the record” is material to the client's case, the solicitor must be able to disclose it to them. If the solicitor agrees to an “off the record” conversation on the basis that they will not pass on any information disclosed to their client, they will be unable to comply with their professional duties and may have to stop acting for that client.

5. You can refer in court to an admission made at a without prejudice meeting if the maker of the admission may have perjured themselves

An inconsistency between a without prejudice admission and a pleaded case or a stated position does not lose the party making the admission the protection of without prejudice privilege. This is so even if there is a risk that perjury may result.  It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one's stated case (see Savings & Investment Bank v Fincken). If information is revealed in without prejudice conversations or correspondence that you wish to be able to refer to in evidence, you can try doing one or more of the following: ask the relevant question in open correspondence, make a Part 18 request for further information or serve a notice to admit facts under CPR 32.18.

6. Including a confidentiality clause in a mediation agreement means that what is said at the mediation can never be referred to in court

Where the “unambiguous impropriety” exception to the without prejudice rule applies, for example where a party blackmails another party during the mediation process, the fact that the mediation agreement contains a standard confidentiality provision will not protect the blackmailer (Ferster v Ferster). The extent to which a mediation agreement can extend the scope of without prejudice protection isn’t entirely clear – if it is possible, the wording of the clause would have to state this unequivocally.

7. A communication can be partly without prejudice and partly open

In assessing whether a communication is protected by the rule, the court will consider it as a whole and won’t dissect the communication into parts.  This is in contrast to the approach taken to legal professional privilege where documents are often put in evidence with the privileged passages blanked out.  The courts are even less willing to “salami slice” a meeting into parts that are open and parts that are without prejudice (Suh v Mace).

8. Without prejudice privilege applies to negotiations and any resulting settlement agreement

The general rule is that without prejudice negotiations remain privileged even after settlement and cannot be relied on as evidence by other parties to the litigation nor to third parties.  Concluded settlement agreements, on the other hand, are not protected by without prejudice privilege although they are likely to be confidential.  Justice may require the disclosure of confidential details concerning a settlement with only one defendant in a multi-party case, whether to enable a co-defendant to make a settlement offer or to ensure that there is no excess recovery by the claimant (Gnitrow Ltd v Cape Plc).

9. Settlement offers made at a without prejudice meeting can be referred to on the issue of costs

If a meeting is without prejudice, a party wanting to make an offer which might affect costs should put the offer in a subsequent “without prejudice save as to costs” letter. In Marcura Equities FZE v Nisomar Ventures Ltd the parties had a without prejudice settlement meeting but did not discuss whether any offers made should be “without prejudice save as to costs”.  The court was unable to take into account any offers made at the meeting. A Part 36 offer will be treated as being made “without prejudice except as to costs” (CPR 36.16).

10. A party may put without prejudice evidence before the court where it is making an ex parte application

Some disclosure of without prejudice communications may be necessary if it is clear that without it the court could be misled but there is no general entitlement to do so and parties should do so cautiously (Linsen International Ltd v Humpuss Sea Transport PTE Ltd).  Evidence of negotiations may be given in order to explain delay or apparent acquiescence at an interim application but it will often be sufficient - and preferable - to refer only to the existence of without prejudice negotiations and not to their content. 

Any questions?

If you have any questions relating to this topic and would like more information or some advice, you can contact Miranda Whiteley or one of our lawyers in our litigation and arbitration team.

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