What Does ‘Without Prejudice’ Mean?

In Short

• ‘Without prejudice’ protects settlement negotiations from being used as evidence in court.
• It applies to both written and oral communications intended for settlement.
• The term doesn’t cover general commercial discussions or illegal content in negotiations.

Tips for Businesses
Use ‘without prejudice’ in settlement communications to encourage open discussions without fear of information being used in court. However, ensure it is only used in genuine settlement talks and not general business negotiations, as misuse can remove its protective benefits.

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Table of Contents

• What Does ‘Without Prejudice’ Mean?
• How Do I Use it?
• When Does ‘Without Prejudice’ Not Apply?
• Can Part of a Communication Be ‘Without Prejudice’?
• When Should I Avoid Using ‘Without Prejudice’?
• What Does ‘Without Prejudice Save as to Costs’ Mean?
• What if Another Party Uses ‘Without Prejudice’ Material in Court Against Me?
• Key Takeaways
• Frequently Asked Questions

If you are engaged in a commercial dispute, you may have heard the term ‘without prejudice’ when considering resolution procedures. As a result, it is imperative that you understand what it means and how it affects your dispute. ‘Without prejudice’ is a term used in legal negotiations to help parties reach a settlement without going to court. This article will explain exactly what it means and show how using ‘without prejudice’ can help you when negotiating a legal settlement. 

What Does ‘Without Prejudice’ Mean?

Parties involved in a dispute commonly add ‘without prejudice’ to communications when negotiating a settlement. Communications marked as ‘without prejudice’ cannot be used by the other party as evidence in court. This means that parties can speak openly about the matters in dispute without the risk of the other party using that information against them later. ‘Without prejudice’ material can promote genuinely productive discussion which allows parties to work openly and freely towards a compromise.

Furthermore, it can apply to both written and oral communications between parties. You should clearly state when you intend for it to apply. On the other hand, if you want to be able to use communications in court, you should leave them as ‘open’ communications.

How Do I Use it?

If you want a settlement communication to be ‘without prejudice’, you should:

• write the term clearly at the top of any written correspondence; or
• state it at the start of any oral communication.

It is important to note that this may not always give the communication protection for several reasons. ‘Without prejudice’ only applies to: 

• genuine settlement negotiations made in the course of a dispute between litigants or prospective litigants;
• communications that contain admissions made in good faith for the purpose of achieving settlement, though it is not necessary that the communication itself make a compromise; and 
• dispute resolution options such as mediation or court proceedings.

On the other hand, the protection may apply in some situations even if you do not expressly add it to the letter or state it at the start of a conversation. The protection from ‘without prejudice’ communications will not be lost if the negotiations or the content of discussions are genuinely aimed at settlement. A court will look at the surrounding circumstances when determining whether a communication is ‘without prejudice’. 

For example, if you forget to write it on one email in a chain of emails marked ‘without prejudice’, the protection may still apply to that email.

When Does ‘Without Prejudice’ Not Apply?

In some cases, even when you mark a legal correspondence as ‘without prejudice’, the privilege will not apply. These circumstances include when the communication: 

• includes any illegal or misleading comments made in the course of negotiations; 
• contains material that has already been disclosed with the parties’ consent; and
• includes an express statement that the communication is not confidential. If the parties consent to waive privilege, for example, on the question of costs, then that communication or document can be admitted to calculate legal costs.

Can Part of a Communication Be ‘Without Prejudice’?

You can mark a select part of a written or oral communication ‘without prejudice’. This means the remainder is open, and you can use it as evidence.

For example, a letter may start as an open correspondence but include a ‘without prejudice’ section containing a settlement offer. This is useful in cases where it is persuasive to include open statements about a party’s legal position before making a settlement offer. However, there is a risk that parties may miss the ‘without prejudice’ portion of the communication. As a result, it could end up in court. Therefore, keeping these communications separate from other open communications that you or the other party may use as evidence is generally safer. For example, you could send the open email and the ‘without prejudice’ email in their own separate chains.

When Should I Avoid Using ‘Without Prejudice’?

People often use ‘without prejudice’ where they may not need to or where it does not apply. For example, people misuse it by adding it to: 

• correspondence that is unrelated to settling a dispute; 
• a letter of demand (i.e. a letter where you are not making any concessions or discounting the amount you are demanding); or
• correspondence where you are merely trying to finalise the terms of an agreement. 

It is, therefore, important for you to be aware of relevant exceptions. This avoids potential misunderstandings or issues that may further delay the dispute resolution process. Having a clear understanding will also allow you to be acutely aware of what you can use as evidence during a dispute.

What Does ‘Without Prejudice Save as to Costs’ Mean?

Another commonly used term is ‘without prejudice save as to costs’. This term means that the protection only applies in court until the court hands down a judgment that orders a party to pay damages or some other form of recourse. After the court makes a judgment, it decides how to award costs. Typically, the unsuccessful party must pay the other party’s legal costs, and the court may use communications marked ‘without prejudice save as to costs’ to determine exactly what those costs should be. 

The court will consider whether you and the other party made any attempts to reach a settlement before going to court. This means that ‘without prejudice save as to costs’ can apply pressure on the other side during negotiations. The court may use any unreasonable actions taken during the settlement communications to determine how much is paid in costs.

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What if Another Party Uses ‘Without Prejudice’ Material in Court Against Me?

If your opponent or another party to a dispute attempts to use ‘without prejudice’ material in court, your lawyer should raise an objection as soon as possible. Usually, in practice, parties agree to the bundle of material that they will submit to the court before the trial. Your lawyer should carefully review and determine if your opponent seeks to rely on ‘without prejudice’ material, and can contest the inclusion of it in the trial bundle.

Key Takeaways

Adding ‘without prejudice’ to communications in a settlement negotiation can help to reach a quick and efficient resolution. It lets parties speak freely in a negotiation without worrying that the other party will later use their comments against them in court. As a result, you should be aware of how you can use ‘without prejudice’ in your communications to help your case in a dispute. If not used correctly, it will not provide the protection you may need if the dispute ends up in court. Some of the exceptions to the rule you should know are where the communication is:

• unrelated to settling a dispute; 
• a letter of demand (i.e. a letter where you are not making any concessions or discounting the amount you are demanding); or
• merely trying to finalise the terms of an agreement. 

If you need help using ‘without prejudice’ communications, our experienced dispute resolution lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions