Without Prejudice privilege

The term “Without Prejudice” is often added to correspondence sent in a commercial setting without considering whether “privilege” actually attaches.  It’s possible that correspondence clearly marked as being “Without Prejudice” is actually admissable as evidence and alternatively that documents that omit the statement are actually subject to privilege because they are in the course of negotiating a settlement.

What is the “Without Prejudice Privilege”

Communication between two people that is Without Prejudice is generally thought of as being  inadmissible as evidence in a Court.  In commercial negotiations it is also thought to mean that communications are not intended to ‘prejudice’ a parties rights.  Communications which are Without Prejudice are not admissible as evidence in a Court.

What is the source of the law?

Section 131(1) of the Evidence Act 1995 (Cth) provides that evidence of settlement negotiations is not to be adduced.  Specifically section 131(1) provides that:

Evidence is not to be adduced of:

(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or

(b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute”.

Exceptions

The common law exceptions are largely codified in section 131(2) and include:

  • where the persons in dispute consent;
  • the substance of the evidence has been disclosed with the express or implied consent of all persons in dispute;
  • the communication or document expressly communicated that it was admissible as evidence;
  • the evidence tends to contradict or to qualify evidence that has already been admitted about the course of an attempt to settle the dispute; or
  • where the non-admission of the evidence is is likely to mislead the court because of an inference made unless evidence of the communication is
  • evidence that has been adduced in the proceeding, or an inference from evidence that has been adduced in the proceeding, is likely to mislead the court unless evidence of the communication or document is adduced to contradict or to qualify that evidence; or
  • where the communication or document is relevant to determine liability for costs;
  • where making the communication or preparing the document affects a right of a person; or
  • the communication or document was prepared, in furtherance of the commission of a fraud or an offence or the commission;
  • where the document was prepared in furtherance of a deliberate abuse of a power.

View the complete section at 131(2).

The common law

Perhaps the most authoritative decision on Without Prejudice privilege is provided in the judgement of Dixon C.J.,Webb, Kitto and Taylor JJ in  Field v Commissioner for Railways (NSW) [1957] HCA 92.  The case which was on appeal from the New South Wales Supreme Court, concerned the admissibility of evidence from a medical practitioner and whether the communication was privileged because is was in the course of “Without Prejudice” negotiations:

“As a matter of policy the law has long excluded from evidence admissions by words or conduct made by parties in the course of negotiations to settle litigation. The purpose is to enable parties engaged in an attempt to compromise litigation to communicate with one another freely and without the embarrassment which the liability of their communications to be put in evidence subsequently might impose upon them. The law relieves them of this embarrassment so that their negotiations to avoid litigation or to settle it may go on unhampered. This form of privilege, however, is directed against the admission in evidence of express or implied admissions. It covers admissions by words or conduct. For example, neither party can use the readiness of the other to negotiate as an implied admission. It is not concerned with objective facts which may be ascertained during the course of negotiations. These may be proved by direct evidence. But it is concerned with the use of the negotiations or what is said in the course of them as evidence by way of admission”.

In both case law and statute the common theme is that the privilege attaches to the communication where there is an attempt to negotiate a settlement of a dispute.  The policy reason for the privilege of the communications is clear, the application in some instances can become more problematic.  Attaching the heading “Without Prejudice” does not necessarily mean that the document cannot be adduced as evidence.

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

 

Malcolm Burrows 100  100

Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
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