What is 'without prejudice' privilege?
'Without prejudice' privilege (
"…the public interest in encouraging settlement to be extremely strong. Litigation is very expensive and even the eventual winner may find himself out of pocket. Litigation to the bitter end can often cause real hardship. It is therefore in the interests of justice that parties should be encouraged to settle their differences at as early a stage as possible."
In general terms, a document (construed very widely so as to include emails, letters, manuscript notes, etc) which attracts
Importantly,
When attempting to settle a dispute, it is not unusual for parties to adopt a tandem approach whereby they send an open (non-privileged) letter which is typically robust and hard-hitting, with a second, more conciliatory 'without prejudice' letter designed to reach a compromise. The first open letter will be disclosable to the Court in legal proceedings. The second letter (on the basis that it is truly 'without prejudice') will not be unless it is expressed to be 'save as to costs', discussed further below.
'Without prejudice' and commercial pressure
In addition to being able to liaise with the other side in a more open manner and without fear of what is being said being provided to the Court or other parties, there is a second reason for using 'without prejudice' correspondence, but with 'save as to costs' tagged on.
In summary, a 'without prejudice save as to costs' (WPSATC) letter can be provided to the Court when it determines how the parties' legal costs should be dealt with. This is usually after the Court has made a decision. In practical terms, a WPSATC letter is generally used to try and show that the other side has been unreasonable and should be penalised in costs.
A classic example is where a WPSATC offer has been made to a party previously which is in excess of what that party ultimately recovers in Court. The paying party would be able to present the previous (higher) WPSATC offer to the Court and make representations as to why its legal costs, at least from the date of the WPSATC letter, should be paid by the other side (as, had the offer been accepted, those costs would not have been incurred). The Court retains a complete discretion when dealing with costs, but tactfully deployed WPSATC correspondence can influence the outcome.
Simply heading up a document 'without prejudice' does not make it so. A document must form part of a genuine attempt at settling an existing dispute. Conversely, even if a document is not expressly labelled 'without prejudice', the
In X v
Exceptions to 'without prejudice' privilege
Although the Court held that the attendance note was not covered by
Reliance and estoppel
The Court noted the dicta in the English case of
This exception is geared towards avoiding a party intentionally making clear statements in 'without prejudice' discussions, which the other party relies or acts upon to their detriment, but then cannot raise with the Court because of
A cloak for fraud, perjury, blackmail or other clear impropriety
Unsurprisingly, a party cannot hide behind
The Court has noted that it is not uncommon for statements to be made in 'without prejudice' discussions which are inconsistent with the case being advanced at trial and that most of the time public policy in support of maintaining
A binding agreement
Where a party alleges that a binding agreement has been reached in 'without prejudice' correspondence and seeks to rely upon it, the Court can consider the evidence as to whether this is the case (by looking at the documentation, but as narrowly as possible).
Documentation can be headed 'subject to contract' (on the basis that a separate binding contract will need to be entered into) to militate against the risk of a misunderstanding between the parties in this regard.
Court supervision
Where a liquidator or trustee is seeking directions or a blessing from the Court, it will need to be given the full information so that it can make an informed decision. It follows that the Court, when being asked to make an order in relation to contemplated or ongoing legal proceedings, will need to see the content of any relevant 'without prejudice' discussions.
Mutual waiver
As mentioned above,
Conclusion
There are other exceptions to
Parties who use
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
Collas Crill
JE1 4XD
JERSEY
Tel: 1534601700
Fax: 1534601702
E-mail: Sophie.ferbrache@collascrill.com
URL: www.collascrill.com
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