“Without Prejudice” – will these magic words protect my documents?

Many documents produced in commercial dealings are marked “without prejudice”, often appropriately but sometimes not.  When used correctly, these words mean that the document cannot be used in legal proceedings against the party who produced the document, nor indeed can that party use the document themselves.

This can be frustrating as people often make comments and disclose information on a without prejudice basis which would be very useful in a legal claim.  That is, of course, the whole point of the protection given to without prejudice communications.  The law encourages parties to resolve their disputes through settlement discussions rather than incurring time and expense and, significantly, taking up valuable Court time by going to trial.  Settlements are more likely to be achieved where parties are given a safe-haven in which to discuss their disputes without fearing that statements or admissions they make will be used against them in future or ongoing legal proceedings. This is sometimes where mistakes are made as simply heading a document “without prejudice” will not automatically protect that document against being used in legal proceedings. Crucially, the content of the document must qualify for “without prejudice” protection.  That means that the document must be produced for, the purpose of, settling a dispute.

“Simply heading a document “without prejudice” will not automatically protect that document against being used in legal proceedings.”

Merely using the words “without prejudice” in a document setting out your claim or criticising your opponent’s behaviour will generally not work.  There must be something positive in the document which is intended to lead to the settlement of an existing dispute for the words to work.  In fact, failing to mark a document “without prejudice” is not fatal if the substance of the communication makes it clear that the party is trying to achieve a settlement of a dispute.  Of course, it is always better to use the correct words as that reduces the risk you will need to prove that the document should be given without prejudice protection in later Court proceedings.

It is because the information in without prejudice communications is often very valuable we regularly see Court challenges to the scope of the rule.  Generally, the Court is very protective of without prejudice communications, although there are some well-established exceptions which are mentioned below.

“Merely using the words “without prejudice” in a document setting out your claim or criticising your opponent’s behaviour will generally not work”

Two recent challenges to without prejudice communications have both failed.  In R (on the application of Wildhur) v Ministry of Defence [2016] EWCH 821, an individual suing the Ministry of Defence (MOD) wanted to criticise the MOD for failing to participate in a mediation with them.  This was potentially very valuable information as refusing to attend a mediation, which is a type of structured settlement meeting, is something the Court takes a very dim view of.  In this case, however, all the communications about the mediation were on a without prejudice basis.  The Court ruled that this information about the MOD was inadmissible in the proceedings due to the without prejudice rule even though the information involved was a failure to respond to a without prejudice offer of mediation, rather than a specific document created by the MOD.

In the other case, Ravenscroft v Canal & River Trust [2016] EWHC 2282, the Claimant, Mr Ravenscroft, wanted to appoint a “McKenzie Friend” to assist him with his case.  A McKenzie Friend is usually an individual without legal qualifications who a party involved in legal proceedings can appoint, with the permission of the Court, to help with the case without incurring professional costs of a qualified legal adviser.   The Defendant, the Canal and River Trust, objected to Mr Ravenscroft’s choice of McKenzie Friend, Mr Nigel Moore, because he was known already to them as someone with an agenda against them.   Significantly, this was an interim hearing about the appointment of the McKenzie Friend not a full trial of Mr Ravenscroft’s claim.  The Canal and River Trust argued that this factor meant they should be able to rely upon information about the proposed McKenzie Friend which they only knew from without prejudice communications.  The Court rejected this argument, ruling that the protection given to without prejudice communications applies equally to trials and interim hearings.

As mentioned above, although the Court is generally very protective of without prejudice documents, they have developed a number of well-established exceptions where such documents can be used in legal proceedings.

1. To establish whether without prejudice communications resulted in the parties agreeing a binding settlement of their dispute. If the parties have genuinely settled their claim, the Courts will not allow one party to prevent this being proved by hiding behind the without prejudice rule.
2. To determine the reasonableness of the settlement payment or other terms. If a party agrees a settlement then seeks to obtain a contribution towards that settlement from a third party, the Court will generally allow that third party to use the without prejudice communications to challenge whether the settlement paid was too high and therefore unreasonable.
3. To explain a delay in proceedings. If the parties have put their dispute on hold to try and settle the Court will not allow a party then to take advantage of that delay to criticise the other party or even strike out their case by withholding without prejudice information which explains that delay.
4. Where the without prejudice information involves fraud, misrepresentation or undue influence. If an agreement is entered following false information or undue influence, the evidence of which is contained in without prejudice communications, that information will be admissible in subsequent legal proceedings to set the agreement aside.
5. Similarly, the without prejudice rule cannot be used to withhold communications which demonstrate that a party is lying in Court (perjury), involved in blackmail or otherwise involves some unambiguous wrongdoing.
6. Finally, there is a “half-way house”, which allows parties to mark their documents “without prejudice save as to costs”. Although information in those documents cannot be relied upon in the trial itself, the Court will admit this evidence when deciding which party should pay the professional costs of the dispute.

For advice on effective strategies for resolving your disputes, please contact Clarkslegal’s dispute resolution team.