Diverse employees sit at office desk at meeting brainstorm discuss financial paperwork together, focused businesspeople talk consider company business ideas at briefing, cooperation concept

What does “without prejudice” mean?

Laura Bazouni ||

The term “without prejudice” is one of the most used and abused legal phrases. It is also misunderstood by many which is unsurprising, as the term seems to promise the remarkable ability to prevent statements that are conceded by one party to another from being relied upon in Court proceedings. In actual fact, “without prejudice” is a tool to assist parties to settle their disputes outside of Court.

What does “without prejudice” actually mean?

The law recognises, as a matter of public policy, that parties should be encouraged to settle their disputes without having to go to Court. The term “without prejudice” refers to the legal privilege attached to communication that is specifically used for the purpose of negotiating settlement. It restricts any such communication from being relied upon in Court proceedings – in other words, “without prejudice” communications are inadmissible.

Context is critical

While the above definition may appear straightforward, the mere use of the phrase “without prejudice” does not necessarily mean the communication is privileged. Whether communication is covered depends on whether the communication was solely for the purpose of negotiating settlement. In fact, if the context makes it plain that the communication is intended to be “without prejudice,” it isn’t strictly necessary to include the tagline, although in the interest of clarity it is better to use it than not.

It’s also important to note that a mere reference to settlement negotiations may not be sufficient to attract privilege. In fact, in some cases the Court may determine that privilege only applies to part of a document, and consequently may allow other parts that aren’t for the purpose of negotiating settlement to be submitted as evidence. The decision of CJ Redman Constructions Pty Ltd v Tarnap Pty Ltd [2006] NSWSC 173 sheds some light on the issue of whether privilege is granted. In the case, Justice Campbell found that there must be a sufficient link between the correspondence and a genuine attempt to negotiate a settlement.

Exceptions to the rule

Like so many things in life there are exceptions to the applicability of the “without prejudice” term. The most significant one is that once a settlement agreement has been reached, if one party reneges on the agreement, evidence that was originally “without prejudice” can be admissible in Court to prove that an agreement was reached. For example, if one party agrees on a “without prejudice” basis to accept $10,000 payable in seven days to settle a dispute and the money isn’t paid, the aggrieved party could elect to sue on the “without prejudice” agreement to enforce the bargain.

Other exceptions that might result in “without prejudice” communications turning up in Court include:

When the “without prejudice” offer was induced by fraud, undue influence or misrepresentation and the offended party wants out of any agreement that was struck;
Where there is a need to explain a delay in proceedings there might be a need to disclose “without prejudice” communications by way of explanation;
In some rare instances the “without prejudice” communications may induce a party to do certain things giving rise to an estoppel;
Where the tag “without prejudice” is being used to cover up blackmail or other nefarious dealing; and,
The “Cutts v Head” exception where the communications have been labelled “without prejudice – save as to costs.” This means that the Court can look at the “without prejudice” communications for the purpose of deciding who should pay for the costs of the Court case once the main proceedings have concluded.
The privilege which attaches to the term “without prejudice” can be a vital tool in assisting parties to settle their disputes outside of the Court system, as parties are able to make concessions without fearing that their words will be held against them later in Court. However, as described above, the mere use of the term “without prejudice” outside of a settlement negotiation context may lead to serious complications down the track so it’s crucial to use the term in its applicable context.

If you would like to receive our regular legal updates, please subscribe here. If you have a query with regard to any of the information in this article, please don’t hesitate to get in touch with:

Share:

Send an enquiry

Any personal information you provide is collected pursuant to our Privacy Policy.

Categories
Archives
Author

More posts

A guide to intrafamily adoption

Adoption is the process where a parent’s legal rights for their child are transferred to another person. The formal adoption of a stepchild or close relative is known as intrafamily adoption.

Passenger movement and visa data-matching by the ATO

Heading overseas for work or a holiday? Taxation issues, including tax residency, should be on front of mind when departing from or arriving to Australia. Why? Because the Australian Taxation Office (ATO) can follow your footprints and, if you’re not careful, spring unexpected taxes on you.

Is it really necessary for my executor to have so many powers?

People often question why the executor of their estate needs to have so many powers. Simply put – if your executor isn’t given any additional powers by your Will, then they are limited to what is set out in the Trustee Act. One area that this can lead to issues in, is the family home – particularly if beneficiaries aren’t in agreement.

Essential terms of a commercial lease

A commercial lease is a contract that details the rights and obligations of a tenant and landlord. So, what are the necessary terms of a commercial lease?

Responding to data breaches

In the final part of our four-part series on your business’ responsibilities related to cyber attacks and data breaches, Special Counsel John Bennett how businesses should respond to data breaches, including application and requirements of the Notifiable Data Breaches Scheme.

Security of personal information

Part 3 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches where Special Counsel, John Bennett provides an overview of some court decisions and proceedings where ‘security’ of personal information has come into issue.

Parental alienation in Family Law

The concept, Parental Alienation Syndrome, was initially brought about by American psychiatrist Richard Gardner in 1985. The term parental alienation is used to describe a situation where one parent is involved in psychologically manipulating their child to turn against the other parent.

Are you liable for labour hire workers if they are injured?

Many employers (host employers) engage employees of labour hire companies, particularly in the building and construction, hospitality and manufacturing industries. However, what happens when one of these employees gets injured at the host employer’s work site? Who is liable for the injuries?

The risks with cyber attacks and data breaches

Part 1 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches. Cyber attacks and data breaches are the top business risk in Australia according to Aon’s 2023 Global Risk Management Survey.

© 2024 Coleman Greig Lawyers  |  Sitemap  |  Liability limited by a scheme approved under Professional Standards Legislation. ABN 73 125 176 230