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 the other party will use their words in court proceedings.
This legal privilege attached to written or verbal communication:
- 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.
The term “without prejudice” is frequently used in legal situations, but it is often misunderstood and used excessively. There is a common misconception that anything expressed under this rule is safeguarded and cannot be used against the speaker in court. However, this belief is not entirely accurate and can result in uncertainty.
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 its proper use 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 the other party cannot use it 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.
Usage of the Concept
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 encourages that the parties should settle their disputes without having to go to Court. Moreover, it is crucial to understand that just saying “without prejudice” doesn’t guarantee confidentiality.
The Court looks at surrounding circumstances when determining whether a communication is “without prejudice.” The coverage of communication is contingent upon whether there is an exclusive intent for the negotiation of a settlement.
In fact, if the context makes it clear that the party intends the communication 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.
More importantly, one must note that a mere reference to settlement negotiations may not be sufficient to invoke the privilege.
It’s worth noting that in certain scenarios, the Court might decide that the privilege solely pertains to a portion of a document. As a result, any other sections that are not related to settlement negotiations could be admissible as evidence.
However, “without prejudice” does not necessarily extend to every word spoken during negotiations. It is not possible to prevent a jury from considering conduct and language that qualifies as criminal by citing that legal 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 the usage of the phrase “without prejudice.” It is important to note that any communication should be solely for the purpose of negotiating a dispute and not for any other reason.
The necessary elements for the privilege include:
- a dispute,
- a genuine attempt to resolve the dispute, and
- the making of assertions in that attempt.
Both parties will have the privilege when these elements are present, and therefore, it requires the consent of both parties to waive the privilege.
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 of 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 aims 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. At their discretion, a judge can admit evidence of settlement negotiations as part of the Court’s inherent jurisdiction. However, the said Section applies to civil matters only, not criminal ones.
Section 131(1)(a) states:
Evidence is not to be adduced of —
- a communication 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) 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 includes a statement that such statement is not confidential,
- Evidence contradicts or qualifies evidence already admitted,
- Evidence aims to enforce an agreement,
- Communication affects a person’s rights, and
- Communication involves fraud or an abuse of power.
Seeking Legal Advice
Including the phrase “without prejudice” in your communication does not necessarily guarantee that the other party will not present such matter as evidence in 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 understand the meaning of “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.
Do you have any more queries on the without prejudice meaning? Contact us today.
