The limits of without prejudice correspondence
Settlement of English litigation depends on the ability to speak on a 'without prejudice' basis. This means that the communication is made on the basis that it cannot be shared with the court. Sometimes these communications are 'save as to costs' which means that the only circumstances in which they can be shared is in relation to the court determining the amount of any award for legal costs.
A recent judgment in a dispute over whether a letter was without prejudice provides a helpful reminder of the key criteria for without prejudice communication. The letter was sent from by the solicitors representing the third defendant to those acting for the claimant in a dispute over a will.
The court found in favour of the claimant in the main judgment in July this year. The judge, Master Marsh, subsequently had to rule on costs. In the submissions on costs, there was reference to a letter from the third defendant’s solicitors, EA Neary, which was marked “without prejudice”. It was dated 7 June 2023.
The claimant argued that the court should not consider the letter as it was sent without prejudice, but EA Neary claimed that the letter should not have been marked as without prejudice and, if it was privileged, then their client waived privilege.
The letter was sent in the context of communications between the parties that sought to resolve the dispute before the trial. Its contents were therefore likely to be relevant to the assessment of costs awarded to the claimant.
Not without prejudice
The judge concluded that that the 7 June letter “was not in fact sent on a without prejudice basis despite being marked as such and it is open to the third defendant to reply upon it”.
In reaching this conclusion, the judge took into account the manner in which the letter was drafted, the context, how a reasonably minded recipient would regard it and its intention.
A key point was that the letter formed part of a chain of communications dealing with the possibility of ADR. The judge said:
“All those communications were open and obviously intended to be open. Communications between parties about the possibility of, for example, participating in a mediation do not need to be 'without prejudice' and it will usually be preferable for both parties to be able to rely upon such communications. They are more likely to be open than without prejudice.”
He added that the letter did not contain an offer or relate to communications about a specific offer: “It seems to me that it was plainly not a letter that was intended to be 'without prejudice' and this would have been obvious to the reasonably minded recipient.”
The third defendant relied on the content of the 7 June letter for her claim that the claimant had failed to engage in mediation and the costs award should be reduced. However, taking into account all the circumstances, the judge declined to reduce the costs. He also said it was not unjust to apply the effects of CPR rule 36.17, and awarded the claimant costs, interest and an additional 10%.
What does this mean?
The judgment makes it clear that in determining whether a communication is without prejudice, the court will look at it in context and take into account the relevant circumstances. Even if something is marked as without prejudice, the facts may indicate otherwise.
In this case, the judge emphasised that communications about ADR or mediation do not need to be without prejudice – unlike offers of settlement.
It is always advisable to take great care – and seek legal advice – when considering sending a without prejudice or without prejudice save as to costs letter.