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Without prejudice privilege

05 October 2007

We often find that those involved in a legal dispute are unaware of ‘without prejudice privilege’ or how to use it to their advantage.

Associate Paul Gordon has prepared some basic guidance along with an indication of how the courts are approaching the issue.

Communication, concessions and tactics

Without prejudice privilege is a benefit granted to both sides in the dispute, ensuring that  certain communications will not come before the court and therefore cannot be seen to affect either side’s case, certainly until liability has been determined.

Communications that are not privileged are often referred to as ‘open’ correspondence’. In other words, they may come before the court. Not surprisingly, disputing parties tend to set out their best case and the best outcome they could achieve. They therefore do not to want to make too many concessions in open correspondence in case the other side later try to take advantage of this in court.

Nevertheless, it is usually the case that parties are prepared to settle for less than they would otherwise seek if forced to pursue matters through the court or other formal means. They may, perhaps, recognise some weakness in their own case or have pressing commercial needs for an early resolution. Whatever the reasons, parties may be prepared to make allowances for them in an offer.

Without prejudice privilege can assist with this and, if used correctly, can allow parties to communicate freely without fear of the potential impact on their case if no settlement is reached.

How to communicate effectively in settlement negotiations

  • To qualify for without prejudice privilege, the communications must convey a genuine attempt to settle the dispute, or some aspect of it.
  • Parties can only waive privilege if they both agree.
  • Communications before and after the issue of court proceedings may be privileged.
  • Try to separate ‘open’ correspondence (where settlement issues are not dealt with) from ‘without prejudice’ communications (where they are). If they are mixed, it can often prove to be a problem eg if court proceedings are issued later and you want to rely on that document, or if the settlement negotiations are accidentally brought to the court’s attention.
  • Oral as well as written communications can be privileged. It is therefore sensible to keep detailed attendance notes of any telephone calls or meetings in which settlement issues are discussed.
  • Communications do not necessarily need to be identified at the time as ‘without prejudice’ in order to qualify for the privilege but it is sensible to make the intended status clear.
  • You should state when you intend to talk on a ‘without prejudice’ basis, and when you wish to return to speaking openly.
  • You may want to follow up any oral communications with a written confirmation.
  • It is advisable that all correspondence involving settlement issues be marked ‘without prejudice’ at the top.

The courts’ approach

The underlying aim of this privilege is to encourage parties to settle their disputes, without the need for litigation. The importance of this was emphasised by the courts in Framlington Group Plc and AXA Framlington Group Limited -v- Ian Barnetson 2007.

In this case, the appeal court had to consider the extent to which privilege could apply to documents produced before proceedings had been issued. A key question was how close negotiations had to be before the start of litigation in order to attract privilege.

The court held that the crucial consideration was whether, during the course of the negotiations, the parties had contemplated, or might reasonably have contemplated, litigation. It seems therefore that – providing they can be established – even historic communications, before proceedings are issued, will be privileged.

As always, if you need commercial and pragmatic legal advice, we’re here to help so please get in touch.

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