Using “Without Prejudice” Correctly

You may often hear or read the term “Without Prejudice” or “WP” in legal correspondence or litigation. The purpose of the term is to encourage parties to a dispute to enter into negotiations which allows them, and their legal representatives, to speak freely without fear of their words being used against them in court should they fail to reach settlement.

However, often it can be used incorrectly and create confusion as to whether the information qualifies as non-prejudicial if it would otherwise appear to be significant or detrimental to a party’s claim or defence.

Recently, in acting for an employee, FC Lawyers reviewed settlement negotiations which purported to issue an offer accompanied by a Deed of Settlement & Release on a “Without Prejudice” basis, noting that should the employee fail to agree to the terms, the employee would be subjected to disciplinary action (note: the particulars of any show cause had not been provided nor any investigation conducted with respect to any alleged misconduct). This raised the question: Was the Employer’s communications protected?

When does Without Prejudice apply?

To qualify as “without prejudice”, any communications (written or oral) purported to be protected must be made in the context of genuine settlement negotiations. The mere assertion that a document or email is without prejudice would not in itself be protected. It cannot be used as ‘blanket protection’ from any legal consequences if it is not in pursuit of genuine negotiations. Even if a document does not expressly state “without prejudice” it may be subject to its protection if such document forms part of compromise negotiations (we do not recommend relying on such implied practices). In the case of an email chain, provided that all communications relate to the same negotiations, the protection may be afforded for the entirety of the email chain. However, if the communications have been broken and it is evident that they are intended to be on an open basis, the protection falls away.

Can it be used?

Without prejudice communications are not immune to disclosure or production and may be used for a number of reasons should the justice of a case require it. Some examples include:

1. (Acceptance of settlement offer) if the terms and conditions of settlement are disputed after the parties have agreed during without prejudice negotiations, the content of such communications are admissible for the purpose of determining whether a settlement agreement has been reached and the essential terms thereof.
2. (Mutual Waiver) parties to a dispute may agree to jointly waive the protection afforded or admit such communications into evidence.
3. (Misrepresentation, fraud or undue influence) without prejudice communications may be admissible if the words used would demonstrate that a party is pursuing a dishonest case or committing a fraudulent act. If without prejudice communications would reveal that a party has pleaded facts which are blatantly untrue or made false statements, protection will not be afforded. Such communications may also be used to prove misrepresentations made by another party in order to declare an agreement void.
4. (Impropriety) the courts have demonstrated that they are prepared to allow a party to admit without prejudice communications where the exclusion thereof would cloak any perjury, blackmail or other unambiguous impropriety. This will only apply where it is clear that a party has acted in an oppressive, dishonest or dishonourable way.
5. (Costs) where a documents states “Without Prejudice, Save as to Costs”, the protection applies until such time a court deliver judgement. In determining costs, the court typically turn to the conduct of the losing party and may assess without prejudice communications for the limited purpose of determining the extend of costs to be awarded. A party may seek to rely on “Without Prejudice, Save as to Costs” communications to apply pressure on the other side in order to argue a more favourable costs award.
6. (Delays) without prejudice communications could be disclosed to explain any delays in progressing litigation or acquiescence.

As is usual, each case must be assessed on its merits before using without prejudice documents to further an allegation or defence.

If you have any questions about the above or need any legal assistance, please don’t hesitate to contact our team.