Without Prejudice Privilege – When Are Communications Truly Protected? 

 

1.  What constitutes “without prejudice privilege”? 

 

 

Without prejudice privilege applies to communications, whether oral or written, made for the purpose of settling a dispute. Being privileged, such communication is inadmissible in Court (Section 23 of the Evidence Act 1950). The without prejudice rule is grounded in public policy and reinforces the protection afforded to settlement negotiations to encourage parties to settle their differences freely without fear that any concessions made in such discussions may later be used against them in legal proceedings.

 

 

Two common features must be present for the privilege to apply: –

 

• There must be a genuine dispute between parties leading them to enter into negotiations.

• The communications between the parties must contain suggested terms aimed at resolving that dispute.

 

 

2. What are the exceptions to the without prejudice rule? 

 

The Courts have recognised certain exceptions to the without prejudice rule when the justice of the case requires it, examples of which include the following:-

 

• To prove the existence of a settlement agreement – Where the existence of a settlement agreement is disputed, the Court may refer to the relevant communications leading to the alleged agreement to determine whether a binding settlement was in fact concluded.

• To prove the existence of a fact to prevent deceit – Without prejudice negotiations will be admissible if the exclusion of such evidence would cloak perjury. In other words, this exception allows for the admission of without prejudice communications to establish the falsity of testimony, or to demonstrate fraud or misrepresentation, as the without prejudice privilege should not be misused to curtail a fair trial.

 

 

3. What is the effect of the label of “without prejudice” placed upon correspondence? 

 

It is prudent practice to ensure that any correspondence aimed at negotiating a settlement to resolve a dispute between parties is accompanied with a label of “without prejudice” upon it. This reduces any ambiguity as to parties’ intentions to freely negotiate a resolution to their dispute. 

 

Nevertheless, the application of the without prejudice privilege is not dependent upon the use of the “without prejudice” label upon such correspondence if it is clear from the surrounding circumstances that the parties were seeking to compromise on their dispute. If there is a dispute between parties on the without prejudice nature of such correspondence, the Courts will still fall back on the fundamental question of whether the same formed part of a genuine attempt to settle a dispute irrespective of whether the “without prejudice” label accompanies the correspondence.

 

 

 

4. Does the without prejudice privilege apply to admitted liability?

 

The privilege does not extend to negotiations on an admitted liability. The privilege has no application to apparently open communications, such as those designed only to discuss the repayment of an admitted liability rather than to negotiate and compromise a disputed liability.

 

 

 

5. What happens if a series of without prejudice communication result in a binding agreement?

 

If a series of without prejudice communication culminates in a binding agreement, the privilege that ordinarily protects those communications may no longer apply to the extent necessary to establish the existence and terms of the agreement. This would ensure that the without prejudice rule is not misused to deny the existence of a settlement or to avoid enforcement of its terms.

 

 

 

6. Can the without prejudice privilege be waived, and if so, under what circumstances? 

 

The privilege may be waived by the party who has the right to assert protection under the same (the “privilege holder”). However, any waiver of the privilege must be clear and unequivocal. Instances where the privilege is waived includes where the privilege holder references the contents of such privileged communications during trial or voluntarily discloses the privileged communications to prove the existence of a fact or an agreement reached.

 

 

 

7. What are the consequences if a party discloses without prejudice communications as part of their pleadings or affidavits? 

 

If the privilege holder pleads such without prejudice communications in his pleadings or affidavits, such disclosure may result in a waiver by the privilege holder to assert the application of the “without prejudice rule”. However, merely pleading the existence of without prejudice communication does not, by itself, constitute a waiver, provided that it is expressly stated that such communication is without prejudice and the substance or content of the communication is not disclosed.

 

 

Conversely, if a party discloses the existence of without prejudice communications in pleadings and affidavits which violates the without prejudice privilege held by their counterparty, such counterparty may make an application to Court to strike out or expunge references to such without prejudice communications in the pleadings or affidavits so as to ensure that these communications may not be admitted into evidence. Any application to strike out or expunge references to without prejudice material must be made promptly as a failure to act with due promptitude in preserving the privilege may be viewed by the Court as a waiver of privilege or an acquiescence to the disclosure.

 

 

 

8. Are “off the record” meetings considered protected by without prejudice privilege?

 

In Malaysia and some Commonwealth jurisdictions, there is recognition that referring to a discussion or meeting as being “off the record” reflects the parties’ intention to keep their communications confidential. If such discussions are directed at resolving a genuine dispute, the phrase “off the record” has been treated by the Courts as having the same effect as the “without prejudice” label. Ultimately, whether communications attract without prejudice privilege will depend on the two key elements outlined in Question 1 above.

 

 

 

9. What are the risks of using the ‘without prejudice’ label indiscriminately, and whether any other privilege may be considered? 

 

When used without proper basis, the “without prejudice” label can create confusion and may lead to disputes over the admissibility of such communications for the purpose of legal proceedings. It may also weaken the credibility of other communications which are truly protected by the without prejudice privilege.

 

 

For instance, some letters issued as between parties are perhaps marked as “without prejudice” based on a party’s understanding that the contents of such letter are in reservation of any and all other position that they may have in respect of the subject matter of the communications. Being marked as such does not give rise to an application of the without prejudice privilege, unless the two elements as outlined in Question 1 above are evident within such communications.

 

 

Aside from the without prejudice privilege, there are other forms of privilege which may be considered to protect communications as between parties. For instance:

 

• Legal advice privilege (Section 126 of the Evidence act 1950) – This privilege applies to communications between solicitor and client, whether or not litigation is contemplated or pending. For legal advice privilege to apply, there must be a client-solicitor relationship, and such communication must be related to the solicitor’s duty in giving advice.

   

• Litigation privilege (Section 129 of the Evidence Act 1950) – This privilege arises when litigation is anticipated or ongoing, and where litigation is the dominant purpose for which the document in question was prepared. Litigation privilege offers broader protection than Section 126 of the Evidence Act 1950 where it extends to communications with third parties.

   

 

 

10. What are the key considerations in relying on or applying the without prejudice privilege?

 

• Knowing when the privilege applies – The without prejudice privilege only applies when there is a genuine dispute and genuine effort in resolving it. It is important for corporations to be aware that not all sensitive or strategic correspondence will be protected by the privilege, as only those aimed at settlement discussions qualify for protection.

   

   

• Consider the substance of your communications – Marking communications as “without prejudice” indicates such parties’ intention to negotiate freely and in confidence. However, the labelling or marking alone does not guarantee privilege. Courts will examine the substance and context of the communications to determine whether the without prejudice privilege applies. It therefore matters when or how correspondence is issued to deny liability and to concurrently negotiate a settlement of such dispute. Legal advice may be sought on the appropriate use of the “without prejudice” label and to address the contents of any correspondence to not only ensure that these communications may be protected if they involve settlement negotiations but to also preserve the admission into evidence of any substantive denials against liability in the event of legal proceedings.

   

   

• Be vigilant with references to and disclosures of without prejudice communications in legal proceedings – It is prudent to stay alert when without prejudice communications are referenced in pleadings or affidavits or if attempts are made by a counterparty to admit the same as evidence. If such reference or disclosure is intended to reveal the substance of such privileged communications, there is a risk of the without prejudice privilege being waived based on a failure to act against its reference or disclosure. Early intervention ensures that a privilege holder’s rights are protected and that opportunities to preserve without prejudice privilege are not lost.