What is "without prejudice" meaning under Australian law? Parties use this term in legal negotiations to reach a settlement without going to court. The "without prejudice" privilege allows parties to make compromises without fear that their words will be used later in court proceedings. This legal privilege attached to written or verbal communcation:
- Allows the parties to speak openly about their matters in dispute without the risk of the other party using that information against them should negotiations fail.
- Restricts any communication from being relied upon in court proceedings; in other words, "without prejudice" communications are inadmissible.
Because of its effect, the "without prejudice" term is one of the most used and abused legal phrases. It is often misunderstood, as the term seems to possess a remarkable ability that just about anything said under the rule remains untouchable by the Court.
In some cases, even when you mark a legal correspondence as 'without prejudice', the privilege will not apply. These cases include when the communication:
- Includes any illegal or misleading comments made in the course of negotiations;
- Contains material that has already been disclosed with the parties' consent; and
- Includes an express statement that the communication is not to be treated as confidential.
This article discusses the without prejudice meaning and how it is properly used when negotiating a legal settlement.
Without Prejudice Meaning Under Australian Law
Parties involved in a dispute add "without prejudice" to communications when negotiating a settlement so that it cannot be used by the other party as evidence in court.
For instance, you added the term "without prejudice" to a letter that includes an offer to accept half the amount of what you first claimed, in hopes of reaching a settlement agreement.
Suppose the other party rejects your offer and the matter proceeds to court. In that case, the other party cannot use the letter as evidence that you were willing to accept a lesser amount.
How Is the Concept Used?
The rule applies to both written and oral communications between parties. A party must clearly state when they intend for it to apply. If you want a settlement communication to be "without prejudice", you should:
- Write the term clearly at the top of any written correspondence, or
- State it at the start of any oral communication.
It is important to note that this concept only applies to:
- Genuine settlement negotiations, and
- Dispute resolution options such as mediation.
This means that the without prejudice meaning does not apply in general commercial negotiations.
Without Prejudice Meaning and Context
The law recognises that parties should be encouraged to settle their disputes without having to go to Court. However, the mere use of the phrase "without prejudice" does not necessarily mean the communication is privileged. The context of its usage must be taken into consideration.
The Court looks at surrounding circumstances when determining whether a communication is "without prejudice". Whether the communication is covered depends on whether the communication was solely for the purpose of negotiating settlement.
In fact, if the context makes it clear that the communication is intended to be "without prejudice," it is not strictly necessary to include the term, although for the sake of clarity, it is always better to clearly specify the term. Importantly, one must note that a mere reference to settlement negotiations may not be sufficient to invoke the privilege.
In fact, in some cases, the Court may determine that the privilege only applies to a part of a document, and consequently allow other parts that are not for the purpose of negotiating a settlement to be submitted as evidence.
However, "without prejudice" does not necessarily extend to every word spoken during negotiations. Words and conduct that constitute criminal conduct cannot be kept from a jury by invoking that doctrine.
Case Study
In CJ Redman Constructions Pty Ltd v Tarnap Pty Ltd [2006] NSWSC 173, the Court ruled that there must be a sufficient link between the correspondence and a genuine attempt to negotiate a settlement.
Thus, the test for determining when the privilege applies is how the phrase "without prejudice" is used. The communication must be made solely in connection with an attempt to negotiate a dispute, and for no other purpose. The necessary elements for the privilege include:
- a dispute,
- a genuine attempt to resolve the dispute, and
- the making of assertions in that attempt.
The presence of these elements results in the application of the privilege to both parties; as a consequence, consent is required from both parties for the privilege to be waived.
Without Prejudice Meaning and Exceptions
It is possible that the privilege does not apply even when you mark a legal correspondence as "without prejudice." Australia has recognised the following exceptions:
- If one party backs out on the agreement (evidence that was presented without prejudice can be admissible in court to prove an agreement was reached),
- The "without prejudice" offer was induced by undue influence or misrepresentation and the offended party wants to exit the agreement made,
- There is a need to explain a delay in proceedings, or
- The "without prejudice" term is used to hide blackmail or other criminal dealings
Without Prejudice Meaning and Legislation: Evidence Act 1995
Section 131 of the Evidence Act 1995 mirrors the "without prejudice" privilege available at common law. A judge, at their discretion, can admit evidence of settlement negotiations as part of the Court's inherent jurisdiction. However, the said Section applies to civil matters only and not criminal matters. Section 131(1)(a) states:
Evidence is not to be adduced of -
- 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
- a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of an existing dispute.
Section 131(2) states further exceptions to the "without prejudice" rule, including when the:
- Parties consent,
- Substance of the communication or document has already been partly or wholly disclosed with consent,
- Communication included a statement that it was not to be treated as confidential,
- Evidence contradicts or qualifies evidence already admitted,
- Evidence is sought to be used to enforce an agreement,
- Communication affects a person's rights, and
- Communication involves fraud or an abuse of power.
Seeking Legal Advice
Inserting "without prejudice" in your correspondence does not automatically prevent that correspondence being shown to the court. Furthermore, if you want to raise any objections on "without prejudice" material, you must raise it as soon as possible. Hence, a party involved must grasp a deeper understanding of the "without prejudice" meaning.
JB Solicitors has a leading team of experienced lawyers that can help with your specific case and help you understand your rights in regard to "without prejudice" material. We offer legal services including legal advice tailored to your needs, and alternative dispute resolution services.
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.
