You may have heard the term ‘without prejudice‘ but what does it actually mean, and how can it help you? This article will demystify the legal jargon and answer both of these questions.
What Does ‘Without Prejudice’ Mean?
Without prejudice encourages parties to a dispute to try and reach a settlement. It allows parties and/or their legal advisers to speak freely and openly. This way, parties can make concessions or compromises without the risk that what they say can be used against them later in Court if the negotiations fail. Section 131(1) of the Evidence Act 1995 (Cth) reflects this, stating that any communication between the disputing parties during negotiation cannot be used as evidence in Court. Without prejudice can apply to written correspondence or in oral communications between parties.
How Does Without Prejudice Work?
Simply writing ‘without prejudice’ on a letter or a document is not enough to attract without prejudice privilege or protection. The Court, where necessary, will look at the circumstances surrounding the communication. Without prejudice privilege only protects parties who are engaging in genuine settlement negotiations in an attempt to settle legal proceedings, or where other dispute resolution avenues have commenced. Mere involvement in commercial negotiations will not attract without prejudice privilege.
Without prejudice privilege will still apply even where parties have not expressly stated this in their communications. The Court will look to whether the parties intended to negotiate to resolve their dispute and reach a settlement. Similarly, the protection can apply to a chain of correspondence, even if not all pieces have been clearly marked to be ‘without prejudice’.
When Shouldn’t You Use the Term ‘Without Prejudice’?
The term without prejudice is used too often by people where they do not intend the correspondence to attract that protection. Examples where people misuse the term include:
- correspondence which is unrelated to settling a dispute;
- Letters of Demand where you are not making any concessions or discounting the amount you are demanding; and
- correspondence where you are merely trying to finalise the terms of an agreement.
Although there may be some negotiation or compromise, it is important to remember that ‘without prejudice’ privilege only attracts where there is a dispute or litigation between the parties. It does not apply where you and the opposing party are engaging in purely commercial negotiations.
Without Prejudice Save as to Costs
Another commonly used term used is ‘without prejudice save as to costs’. This simply means that without prejudice protection applies until the Court hands down a judgment. At which point, the Court then turns to the question of awarding costs to the successful party, and is entitled to look at the without prejudice communications. In this context, without prejudice communications can assist by applying pressure to the other side during negotiations.
Remember, if you are engaging in discussions with another party and want your communications used in Court, you need to label them as ‘open’ communications.
Without prejudice privilege or protection can be a vital tool for parties to use in dispute resolution. It is important though that it is used in the correct context to avoid unnecessary legal arguments.
LegalVision’s experienced litigation and dispute resolution lawyers would be pleased to assist you with your negotiations. Should you have any questions about your dispute, please get in touch with us on 1300 544 755 or contact us using the form on this page.