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You may have seen letters marked as ‘without prejudice’ if you have ever been involved in a commercial dispute. Put simply, this type of correspondence is ‘off-the-record’ so, if there is a dispute, it cannot be used as evidence in court. This article will discuss the legal basis for without prejudice communications, and when you should be using it.

What Are ‘Without Prejudice’ Discussions?

Without prejudice is terminology which is commonly used in the context of resolving legal disputes. Statements and admissions marked as ‘without prejudice’ are provided with legal privilege. This means they are inadmissible as evidence in court proceedings. 

This prejudice rule is in place because it encourages parties to communicate freely in order to resolve their dispute. Without prejudice discussions enable you to propose creative solutions or make offers of compromise, without the fear that the court will become aware of any of the concessions you have made, or that your words will be used against you.

Put another way, if you mark communications as ‘without prejudice’ they are confidential, off-the-record communications.

When you engage in this type of communication, it is like adding a disclaimer before your statements that “everything I am about to say is being made without prejudice to my legal position, and cannot be used against me in a way that disadvantages my legal case.” 

Normal DIscussions

In contrast, normal (known as ‘open’) discussions and correspondence may prejudice your position. This is because normally things that you say, write or do in the course of a legal dispute may later be submitted to a court as evidence of your: 

  • actions; 
  • intentions; 
  • representations; and
  • liability.

Why You Cannot Submit ‘Without Prejudice’ Communications as Evidence

The rules governing without prejudice communications are a long-standing feature of evidence law. The starting point is that any statement you make can be used in court as evidence against you. If your legal dispute goes all the way to a trial, you should expect that most of your communications relating to the dispute will be submitted to the court in order to help them make decisions regarding the issues, and the outcome. 

However, there are exceptions to that general concept. The law recognises ‘privilege’ for communications which specifically seek to resolve a dispute. They do this in order to support the parties attempts to resolve the matter directly and efficiently. The law states that communications cannot be used in court as evidence against the party that made them if they occur in a genuine attempt to settle a dispute during: 

  • negotiations; 
  • mediation; or 
  • plea discussions. 

How Do You Ensure Communications Are ‘Without Prejudice’?

Written Correspondence

You must label written correspondence clearly to ensure it is without prejudice. This can be as simple as writing ‘WITHOUT PREJUDICE’ at the top of a letter.

It is good practice to keep without prejudice correspondence separate from open correspondence. 

For an example of how this plays out in a legal dispute, lawyers will often send two letters around the same time: 

  1. the first being an open letter, which sets out their legal position, arguments or demands; and 
  2. the second being a ‘without prejudice’ letter, which sets out a commercially positioned settlement proposal. 

If the other recipient agrees to the terms of the settlement proposal, then the parties will have a basis for a formal resolution. If they reject it, then they will still have to consider the issues raised in the open letter.

Verbal Discussions

In the case of verbal discussions, the parties to the exchange must clearly understand the without prejudice nature of the discussion from the outset.

For example, sometimes lawyers will call up their opposing lawyer and ask to have a without prejudice chat. If the other lawyer agrees, they will then have a frank, professional discussion about the technical legal aspects of the matter. 

They may share what kind of compromises their respective clients may be open to, in a genuine attempt to find some middle ground or to progress the matter towards a resolution. The lawyers will not use this discussion later as a basis for any arguments in court.

Is a Correspondence Marked ‘Without Prejudice’ Always Privileged?

Simply labelling a letter or email ‘without prejudice’ may not be sufficient to privilege your communications. Your communications will only be privileged if you meet the criteria of the law, namely it was:

  • made in connection with an attempt to settle or mediate the dispute; and
  • intended to be confidential.

So keep in mind that the simple act of labelling your correspondence as ‘without prejudice’ is not a silver bullet. Your correspondence may contain elements which are not related to settlement discussions. Someone could still provide these elements to the court as evidence (with the aspects discussing settlement removed). This can have strategic implications for your case. 

What is ‘Without Prejudice Save as to Costs?’

Without prejudice save as to costs also commonly labels correspondence in the context of a legal dispute. In short, ‘save as to costs’ means that you can submit correspondence to court as evidence, but only for the purpose of questions relating to costs. This will usually be when the court has decided on the main issues, and is determining the legal costs that the unsuccessful party must pay the winning party. 

For example, unreasonable actions during the settlement correspondence may be a factor in the court’s decision making at this point. 

Key Takeaways 

Settlement discussions are an important part of any legal dispute and something that the law encourages. If you are making efforts to resolve a legal dispute, be sure to mark any correspondence that you would not like to resurface in court as ‘without prejudice’. If you have any questions or concerns regarding a legal dispute, and how best to communicate in relation to it, contact LegalVision’s New Zealand dispute lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What does ‘without prejudice’ mean?

The phrase ‘without prejudice’ may be used in statements or admissions to provide legal privilege. Legal privilege means that the communications will be confidential and cannot be used as evidence in court.

Are ‘without prejudice’ discussions confidential? 

Generally, these discussions are confidential and ‘off-the-record’. This means they cannot be submitted to the court as evidence in circumstances of a dispute. 

What does ‘without prejudice save as to costs’ mean?

This means the communication cannot be submitted as evidence, except for the purpose of questions relating to costs. All other communication will not be permitted.

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