Mon 11 Dec 2017

When is correspondence actually 'without prejudice'?

The phrase "without prejudice" is commonly used in solicitors' letters with the intention of making that correspondence inadmissible in any future litigation based on the same subject matter as the correspondence. 

 There are however cases where the courts have considered that correspondence with is expressed as being "without prejudice" may still be admissible.

A dispute about whether correspondence marked as "without prejudice" could be admitted in proceedings arose relatively recently in the sheriff court case of Geraldine Williams v Richard Russell (the Williams case).  There the sheriff determined that the correspondence was admissible and, when doing so, provided a brief but useful summary of some of the authorities in this area. The summary of the law provided at paragraph 45 of the judgment is particularly helpful and the following points can be taken from it:

  • In general terms, the scope and purpose of the "without prejudice rule" can be described as excluding "all negotiation genuinely aimed at settlement whether oral or in writing from being given in evidence".
  • It is the concessionary purpose of the correspondence rather than the expression "without prejudice" that attracts the privilege.
  • The effect of the words "without prejudice" requires to be judged on the facts of each situation, which may include the terms of other correspondence and the issue to which the evidence is relevant.
  • The "without prejudice rule" is not absolute; the rule does not apply to render inadmissible evidence of communications designed to act as "a cloak for perjury, blackmail or other unambiguous impropriety".

The first of the above points was discussed by the Supreme Court in the case of Oceanbulk Shipping & Trading SA v TMT Asia Limited & Others [2010] UKSC 44 (the Oceanbulk case).  In that case the parties had entered into settlement negotiations following the failure of one party to make a payment which had become due. The settlement discussions were said to be without prejudice and a settlement agreement was subsequently prepared setting out the terms of the settlement.  The respondents brought a claim for breach of the settlement agreement and the question for the court was whether things said or written in the course of the settlement discussions could be referred to in order to assist with the interpretation of the settlement agreement.

In the Oceanbulk case Lord Clarke, with whom the other judges agreed, considered that the scope of the "without prejudice" rule had widened over the years.  It had originally focused on negotiations between two parties to provide that neither could rely on admissions made by the other in the course of negotiations.  However it was no longer as limited.  It now applied to make inadmissible, in subsequently litigations connected by the same subject matter, any admissions made with a genuine intention to reach a settlement agreement. It also applied to admissions made to reach settlement with a different party within the same litigation regardless of whether settlement was reached with that party.

In the Williams case one of the reasons that the Sheriff considered that reasons why the correspondence was admissible, despite the defender referring to it as "without prejudice" correspondence, was that correspondence was not aimed at any genuine attempt to negotiate settlement.

So it is clear that what is important is the substance of the correspondence rather than the use of the words "without prejudice".  Whilst the scope of what will be considered inadmissible as "without prejudice" correspondence has broadened over the years, if the subject matter of the correspondence is not genuinely aimed at settlement then the addition of the words "without prejudice" will not necessarily prevent the correspondence being referred to in future proceedings.


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