Privileges are a type of legal rights that operate to exempt persons from compulsory disclosure of documents and information. Privileges protect confidentiality within certain special relationships, or are designed to promote the efficient administration of the legal system and dispute resolution processes. In order to be privileged, the relevant documents or information must be confidential. However, confidentiality by itself is not sufficient to establish privilege. The requirements of the relevant category of privilege must still be met for the privilege to apply.
“Without prejudice” is a type of privilege that is most relevant to litigation and dispute resolution. The term seems to often be misused and not clearly understood. This article gives a very brief overview of when without prejudice privilege may apply and what protection it gives.
Without prejudice privilege prevents written or oral statements made in a genuine attempt to settle an existing dispute from being disclosed to the court as evidence of admissions against the interest of the party that made them. It is generally preferable to encourage parties to civil litigation, or parties to a dispute that may become litigious, to reach their own negotiated settlements without continuing to the conclusion of litigation as this reduces the administrative burden on the court system. However, if the content of settlement negotiations is able to be disclosed to the court, parties will be less likely to offer concessions to reach a settlement. Each party may fear that the other side will say that any concession offered is an admission and use it against the party making the concession in litigation proceedings. In preventing the disclosure of genuine settlement negotiations, without prejudice privilege therefore encourages parties to a dispute to negotiate freely and openly if they choose to try to agree a settlement.
When does without prejudice privilege apply?
Without prejudice privilege will only apply to communications (whether written or oral) that are made in the context of genuine settlement negotiations. Simply labelling a document “without prejudice” will not be sufficient to make it privileged if the content of the document is not a part of settlement negotiations. The surrounding circumstances must be looked at to decide whether the privilege should apply. Further, without prejudice privilege is not relevant or applicable to any communications other than those made for genuine settlement negotiations. Labelling a document that is not part of settlement communications as “without prejudice” has no legal purpose or effect.
The protection of without prejudice privilege can potentially still apply to communications that are not expressly labelled “without prejudice” if they are part of negotiations that are genuinely aimed at settlement. However, it is advisable to expressly label or preface relevant correspondence or communications with the expression “without prejudice”.
“Without privilege save as to costs”
Where civil litigation proceedings are concluded, the court will usually make a costs award against the party that lost the proceedings requiring that party to pay a significant portion of the winning party’s legal costs. Settlement negotiation communications are often labeled “without prejudice save as to costs”. In this context, “save as” is somewhat old-fashioned English that effectively means “except in relation to”. Where without prejudice privilege is qualified as being “save as to costs”, the party making that qualification is expressly reserving the right to disclose the settlement negotiations if they become relevant to the making of a cost award by the court. This can occur if, for example, party A makes a settlement offer to party B which party B rejects, the issue proceeds to the conclusion of litigation and party B wins, but the amount awarded to party B by the court is less than the rejected settlement offer made by party A. In this circumstance, party A may want to alert the court to the fact that party B would have achieved a better result if it had accepted party A’s settlement offer, and therefore claim that costs should be awarded against party B (even though it won the litigation) because it effectively wasted the court’s and party A’s time by proceeding with litigation instead of accepting party A’s offer.