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The ability to communicate ‘without prejudice’ is an invaluable tool when negotiating and trying to settle a dispute. It means that anything you say to your opponent in a dispute, which you specify to be said without prejudice, cannot be used to your disadvantage or prejudice as evidence in any court proceedings. For it to be considered valid, it is important that it is used correctly.
‘The use of the wording ‘without prejudice’ is essential in allowing negotiation to move forward, so that a case can be settled outside of court without fear of accidentally saying the wrong thing or admitting liability,’ says George Masefield, Bracher Rawlins’ dispute resolution solicitor. ‘But if you don’t use it correctly, it can do more harm than good, and can even be used against you in court proceedings.’
George looks at what it means, when it should be used, and how to use it strategically to be effective in your negotiations for settling a dispute.
What does without prejudice mean?
UK law encourages parties to take steps to resolve any dispute between them and to avoid the need for court intervention where possible.
One of the ways to encourage the spirit of negotiation is to allow parties to have genuinely open discussions where they can explain their position and propose a way forward with a view to reaching an agreement and hopefully avoiding court proceedings.
However, for this type of discussion to be worthwhile, both parties need to be able to speak openly without the fear that what they say could be used against them in evidence if they cannot reach a settlement.
Without prejudice is a term that is used by parties to a dispute when they want to be able to talk freely in order to resolve that dispute. Anything that is declared as being without prejudice, cannot later be used by either party in court proceedings to prove admission or knowledge.
For example, a retailer who owes a debt and is in a commercial dispute with their product supplier approaches them and offers to pay, say, 60 per cent of the claim in order to stop the matter going to court. If that supplier refuses the offer, the supplier cannot then use that early offer to pay as evidence that the retailer admits liability, or even 60 per cent liability.
When and how is without prejudice used?
Without prejudice is most often used by lawyers when wanting to have an off-the-record discussion with their opponent in order to try to settle a dispute.
Without prejudice discussions can cover both written and oral discussions.
While the main reason for using it is to stop any admissions from being used in later court proceedings, for reasons of practicality, once it is agreed by the parties that they are writing or speaking ‘without prejudice’, all communication that fall under that banner cannot be used later. Therefore, any information that sits within an email that is stated to be without prejudice, is excluded from being used in evidence unless it is clearly already in open correspondence elsewhere.
It is important to ensure that when you wish to speak or write without prejudice, that you clearly state this before starting a dialogue, or in any written communication, to ensure that this information is not used in the future. While it can be inferred from the circumstances that communication is without prejudice, it is far better for it to be clearly stated to avoid any confusion later on. Lawyers are used to starting phone calls with ‘can we speak without prejudice?’ when discussing a settlement. Equally any written communication will be headed ‘without prejudice’.
What requirements are necessary for a communication to be without prejudice?
For a communication to be genuinely without prejudice, there needs to be an existing dispute between the parties, and for the without prejudice discussions to be carried out in a serious attempt to find a resolution.
If communication is made in a genuine attempt to settle a dispute without involving the court, then not only will any ‘admissions’ made in the course of such discussions be protected, but so are any statements made that are not in the party’s interests generally.
It should be made very clear before any negotiation that it is to be ‘without prejudice’.
What does ‘without prejudice save as to costs’ mean?
Where a statement is made purely ‘without prejudice’, then it cannot be referred to at all in court proceedings.
However, if it is marked ‘without prejudice save as to costs’, it is possible to be brought to the attention of the court when the court is deciding who is to pay the costs following the court’s decision.
The reason behind this is to ensure that settlement negotiations are conducted reasonably. If you made a reasonable offer to settle a case, but this was rejected and the claimant pushed forward to court where they technically ‘won’ the case, but did not get awarded more money than you had offered in your without prejudice discussions, then the court will consider that this dispute should not have come to court at all. The unreasonableness of the claimant, in not accepting your offer, meant that everyone had to go to court and incur the costs of doing so when they need not have done so.
In these circumstances, you would be allowed to show the court that you had already offered the sum the claimant was awarded, by disclosing the without prejudice communications stating the same. Had the claimant accepted it then, you would not have incurred your costs, and the claimant would not have incurred theirs. Therefore, although you have to pay the award by the court, it is likely that the court will order that you do not have to pay the claimant’s legal costs.
A good example of this is the case of William Roache v The Sun.
William Roache won a libel case against The Sun newspaper, and the court ordered that he be awarded £50,000 damages. However, when considering who should pay the legal costs of the claim, The Sun disclosed certain communications to the costs judge, showing that some time ago William Roache had been offered £50,000 to settle the matter which he had refused. This refusal meant that The Sun had to spend a considerable amount in legal fees in defending their position in court, only to get the same outcome that they offered months before. Consequently, William Roach was ordered to pay £120,000 of The Sun’s legal fees.
Because of the potential penalties on costs, the use of the term ‘without prejudice save as to costs’ will usually ensure that an offer is very carefully considered before being ignored.
How we can help
Without prejudice negotiations can be a great tool in litigation and can encourage parties to settle a dispute that would otherwise end up in court, saving them a lot of time, effort and money.
It is important that it is used correctly to ensure you do not inadvertently divulge information that you do not want a court to see.
Our litigation solicitors have many years of experience in this area. For further information and assistance, please contact George Masefield in the dispute resolution team on 020 7404 9400 or email george.masefield@bracherrawlins.co.uk.
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