Without prejudice correspondence can be a fantastic tool to meaningfully move a dispute forwards. It provides opponents with a safe space to explore commercial outcomes to a dispute, and to put forward potential solutions without fear of jeopardising their open position.
However, parties can overlook the potential pitfalls of marking correspondence as “without prejudice”. A common mistake is parties taking it as a given that any correspondence marked with this will be treated as off the record/behind closed doors. There are in fact various circumstances in which correspondence or documents which are marked as without prejudice can lose that intended privilege and become visible to the court in the course of a dispute. The recent High Court TCC case of BNP v Forrester serves as a timely reminder in relation to this.
The decision in BNP v Forrester
In the BNP v Forrester case, the Claimants obtained surveys to identify asbestos materials and disclosed these to the Defendant on a without prejudice basis. This included providing a link to the Defendants’ solicitors with a covering letter stating that by the Defendants accessing the link, they were confirming their agreement to treat those documents as without prejudice and not rely on them at trial. The Defendants responded to note that they did not accept these conditions, and that they would proceed with accessing the documents anyway. After reviewing these, the Defendants made their own determination that the reports were not privileged and sought to rely on them at trial.
The Judge agreed that the survey reports were not subject to without prejudice privilege and could be relied on at trial:
“Where a party to an ongoing dispute unilaterally commissions a third party to carry out a survey, communications with that third party do not qualify for WPP. That is so even if the party’s purpose in commissioning the survey was to promote, assist or inform interparty settlement negotiations.”
This serves a timely reminder that merely describing a document as subject to without prejudice privilege has no guaranteed legal effect. The court will still consider whether a document truly meets the criteria and if not, it will be disclosable and potentially relied on at trial.
Top tips for without prejudice correspondence:
1. Always make sure there is also an open response to the issue. Otherwise, if the matter does ever reach court, it will look like you failed to respond to an alleged claim.
2. There must be an existing dispute in contemplation, even if no formal court proceedings are yet issued. For example, if a party fully accepts liability to pay a sum then offering a payment plan due to affordability is unlikely to attract without prejudice privilege.
3. There must be a genuine attempt to resolve the dispute. Adding “without prejudice” does not allow parties to make any statement they wish beyond the sight of the court.
4. The same without prejudice rule does not bind regulatory matters such as referrals to an Ombudsman (e.g. the Financial Ombudsman Service, the Communications Ombudsman etc).
5. Be clear about the words used. Whilst there are various colloquial phrases used for an “off the record” chat, it is preferable to use the exact phrase “without prejudice” or “without prejudice save as to costs” if that is what is intended. The difference between the two is that without prejudice correspondence remains privileged throughout the dispute, whereas without prejudice save as to costs can come to the court’s attention when deciding issues such as who should pay costs and to what extent.
6. Joint interest/common interest privilege is commonly referred to, but it is not a standalone privilege. It is a potential extension to without prejudice, litigation, or legal advice privilege.
7. Per BNP v Forrester, be mindful as to whether the attachments to without prejudice correspondence are also privileged. Consider whether it is appropriate to mutually agree to commission a report to facilitate settlement discussions.
Getting legal advice early on in a dispute can be critical to not only preserve your position, but also ensure you are making the best use of any without prejudice negotiations.
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Disclaimer
This information is intended for general informational purposes only and does not constitute legal advice. We recommend seeking professional advice before taking any action on the information provided. If you would like to discuss your specific circumstances, please feel free to contact us on 0800 2800 421.
