“Without Prejudice”– Not A Catch-All Confidentiality Term

The courts in Australia recognise the importance for individuals to be able to negotiate and mediate disputes in a confidential setting and to do so should they choose, without fear that what they say will be used against them later in court proceedings.

Such a setting of “confidentiality” can be important inducement for people to participate in forms of alternative dispute resolution. It allows for free and honest exchange between parties of a kind that can encourage resolution without the cost and anxiety of recourse to the courts; it provides an efficient and cost-effective route to justice.

One method in particular that facilitates elements of confidentiality are without prejudice communications. But does labelling “without prejudice” do what you think it does? Read on to see what protections the without prejudice privilege can provide.

What is a “Without Prejudice” Communication?

A “without prejudice communication” to gain protection is one made during genuine negotiations that are conducted with a purpose of settling an existing dispute. Without prejudice communications facilitate confidentiality within negotiations. At least to the degree that they cannot be admitted into evidence without the consent of both parties to the communication.

There are three essential elements to such communications before they can be classed as being without prejudice:

  1. There must either be a current litigious dispute between the parties, or the parties must be at least contemplating one;
  2. The communication must be made with the intention (either express or implied) that it would not be disclosed to the court if negotiations fail; and
  3. The negotiation must be held with a purpose to attempt to affect a settlement.

How Are “Without Prejudice” Claims Made?

In order to claim that a communication is without prejudice, this must be expressed or implied at the time of the communication.

Because of this requirement, it is common for lawyers to commence all written correspondence to the other party with the words “without prejudice”.  In verbal correspondence between parties, discussions can be commenced with a statement declaring that the conversation is without prejudice.

Can All Communications Be Subject To “Without Prejudice” Privilege?

Not all communications can be kept “confidential” by the magical words “without prejudice”. Common law has imposed several limitations on when communications cannot be protected by without prejudice privilege, this includes if:

  • The communication is not objectively part of the negotiations for settlement, or concerns a different subject matter than that of the negotiation;
  • The statement is an unqualified admission concerning objective facts;
  • The communication creates an offer, and the offer is accepted thereby creating a contract;
  • The communication forms criminal or tortious conduct;
  • The communication shows that a party was pleading patently untrue facts or making false statements;
  • The communication reveals involving conduct which is in some way “oppressive, or dishonest, or dishonourable”; or
  • The communication is preventing the court from being misled.

Is The Without Prejudice Privilege Represented in Legislation?

The Evidence Act 1995 (Cth) has “codified” the common law protection of “without prejudice privilege” over certain communications and provides that certain communications and documents cannot be adduced for evidence.  That falls short of protecting the communication as being “confidential”, nor does it remove the practical effect of the “springboard” effect of learning something that can then be independently established (or proven “wrong”).

Section 31 (1) of the Evidence Act 1995 (Cth) states:

(1)  Evidence is not to be adduced of:

(a)  a communication that is made 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

(b)  a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.

Most States and Territories have passed the Evidence Act and with it the section 131 (1) provisions as to without prejudice privilege. However, we note that the codification of without prejudice privilege in the Acts does not replace the common law doctrine of without prejudice privilege, and there are certain limitations to the statutory without prejudice privilege, where evidence can be adduced.

Whilst “without prejudice” is not synonymous with “confidential” it has a similar practical effect when needed in a court. Yet “without prejudice and confidential” might afford you a broad base of protection.

If you have any questions or wish to discuss your circumstances with a lawyer, please contact the BAL Lawyers Business & Commercial team or the Litigation and Dispute Resolution team on 02 6274 0999.

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