Commercial and legal correspondence is often headed "Without Prejudice" in an effort to confer privilege from production on the correspondence. However, there is no magic in the words "Without Prejudice" alone, with the effect that your communications may not be privileged at all. How can you ensure that communications ostensibly made under the cover of privilege don’t end up being used against you in Court?
Both at common law and pursuant to s 131 of the Evidence Act, the "Without Prejudice" privilege extends protection to communications (whether written by the client or their solicitors) in connection with the attempts of the parties or one of them to negotiate a settlement of existing proceedings or a legal dispute.
The privilege protects a party from having potential admissions made in the context of settlement used against them in legal proceedings. In its absence, statements which could otherwise be taken to be admissions in relation to the strength or weakness of a party’s case could be used against them in the dispute.
In C J Redman Constructions Pty Ltd v Tarnap Pty Ltd a communication headed "Without Prejudice Save as to Costs" was sent by the solicitor for the Defendant to the solicitor for the Plaintiff. The body of that communication referred to the
"…possibility of a global resolution to outstanding matters…"
And indicated that the Defendant would
"…refrain from seeking any amendment to the summons until such time as we have heard from you in relation to your client’s instructions [as to settlement]…"
and discussed the next steps to be taken in the event that no settlement could be concluded.
The Plaintiff sought to tender that communication in Court against the Defendant, who objected on the basis of the without prejudice privilege.
The trial Judge overruled the objection, allowing the communication to be used in the hearing.
Upon examining the correspondence, the Court held that the letter did not possess the requisite character of being connected to the negotiation of a settlement to the dispute, stating that the letter showed:
"…no detail of those settlement discussions, and, most importantly, does not involve the writer of the letter either making an admission on behalf of his client concerning the matter of the settlement discussion, or attributing any admission to the recipient of the letter."
The words "Without Prejudice" do not possess any particular magic in and of themselves and will not act to automatically confer immunity on a communication. In all cases, the determining factor will be the relevance of the connection between the statements made and the attempts to negotiate the settlement of a dispute.
This decision reminds us of the need for caution in communications relating to a dispute. The heading "Without Prejudice" is not a cure for the making of sometimes very prejudicial statements in connection with a dispute. Protection does not extend to any communications made in relation to a dispute, but only those in relation to attempts to negotiate the settlement of a dispute. It may be a fine distinction, but it is one worth bearing in mind next time you go to send a document or make a telephone call.
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.
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The NSW Supreme Court has recently given some further guidance on the difficult subject of privilege in a communication.
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