The phrase “without prejudice”, or longer versions, often appear in letters that concern disputes and litigation. The aim of without prejudice (WP) correspondence is to allow parties to a dispute to try to settle a dispute before having to go to court, safe in the knowledge that anything that they have said during the negotiations cannot be used in court against them. The parties should be “encouraged fully and frankly to put their cards on the table” (Cutts v Head, 1983 WL 216802, pg. 7).
The roots of WP correspondence may be traced back to public policy, and the agreement of the parties to the correspondence (Unilever Plc v The Procter & Gamble Co [2000] 1 WLR 2436, at 2448). Indeed, owing to the public policy argument, correspondence need not even be marked WP in order to qualify for the protections afforded to WP communications – subject to the following explanation and exceptions.
Sometimes the WP label is used inappropriately – by solicitors and party litigants alike. This article aims to provide a very brief overview of the law in this area.
The words ‘without prejudice’ have been held to mean that the terms of a letter are “without prejudice to the position of the writer of the letter if the terms he proposes are not accepted.” (Walker v Wilsher (1889) 23 QBD 335, at 337.)
It is important to bear in mind that the WP rule is only engaged where “there is a dispute and parties are genuinely attempting to resolve it” (Rush and Tompkins Limited v GLC [1989] AC 1280, at 1297).
The first stage of this test is that there actually is a live dispute – for instance, has the defender in a court action admitted liability for a debt, or accepted that he told an employee she was fired because she was pregnant, but in a letter marked WP? If so, depending on the surrounding circumstances, it may well be that this letter can be put before a court (Bradford & Bingley PLC v Rashid (FC) [2006] UKHL 37). In those instances, it can be argued that there is no dispute as to liability.
The second stage is that the parties are genuinely attempting to resolve the dispute – it would therefore be pointless to add the WP docquet to a letter denying all liability.
There are other exceptions to the WP rule, the list of which is still being added to (e.g. Oceanbulk Shipping & Trading SA v TMT Asia Limited and Ors [2010] UKSC 44).
An example of the exception to the WP rule is where evidence is to be lead from a WP letter, for instance, to disrupt “perjury, blackmail or other unambiguous impropriety” (Unilever, at 2444).
A further important exception is any qualifications that the writer of a letter may have added to the WP docquet. A common example is the phrase “without prejudice except as to costs”. This caveat to the WP rule, based on agreement between the parties, serves to allow reference to be made to WP correspondence. This may arise, for instance, if a party makes a reasonable offer to settle a matter and wishes to reserve their right to refer to the offer should it be unreasonably rebuffed. A party’s failure to so caveat the WP docquet will invariably mean that a court will not be interested in the terms of the offer, and accordingly whether the other party has acted unreasonably in not accepting same (Reed v Reed [2004] EWCA Civ 887 at para. 26 ad 27).
Generally, one party to WP correspondence cannot unilaterally waive privilege. Both parties would have to agree, which could damage (or assist) both sides’ cases. However, on the basis that part of the underlying rationale for the WP rule is the agreement of the parties, it seems likely that this could be varied by agreement (Unilever, at 2446).
In summary, where a party is seeking to settle a dispute and in so doing makes admissions or proposes an offer, this is likely caught by the public policy element of the WP rule, whether or not the correspondence actually has the WP docquet. However, in order to avoid arguments about whether this is admissible, it would seem prudent to ensure that the correspondence is clearly marked.
Equally, some correspondence simply does not require to be marked as WP, and if one tried to later refer to same it could prove to be a self-imposed problem. The same argument applies regarding ensuring that the WP rule is qualified to allow for reference back to it in the question of costs, should this be relevant.
Notwithstanding the protections afforded to WP correspondence, parties should not simply treat the WP docquet as an ‘invisibility cloak’, on the assumption that nothing that is said can be relied upon. If nothing else, proper use of the WP rule will avoid parties being sidetracked into an argument that is not relevant to the central dispute, thereby saving everyone time and expense.
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If you would like advice on when WP correspondence should be used, or its effect on any communications that you have been a party to, please get in touch with our Litigation solicitors.
This article is for general information only. Nothing in this article should be taken as legal advice. If you have any queries on the content of this article please contact us.
