“Without Prejudice” – Safe harbour or meaningless text?
The use of without prejudice communications in litigation is vital for, amongst other purposes, the ability of parties to communicate meaningfully with an eye towards settlement. However, the application of without prejudice privilege (WPP) is not unlimited in scope, and is commonly misunderstood to apply to communications simply because they are marked ‘without prejudice’. Rather, they apply to communications (either written or oral) made in a genuine attempt to settle a dispute (although this does not necessarily need to be at the stage of litigation). The use of the label, while helpful, is not determinative. Indeed communications may be seen as without prejudice to a party’s position even if not marked as such if it is clear from the context that such privilege was intended to apply, and vice versa.
In this vein, the High Court in the recent case of Jones v Tracey & Ors [2023] EWHC 2256 (Ch) examined the question of whether, in the circumstances, a letter marked as without prejudice would retain WPP because of its being marked as without prejudice and being sent amidst ongoing without prejudice communications, or if instead it could be relied upon in costs submissions in the context of a Part 36 offer not having been accepted. The Claimant in this case argued that the letter, sent by the Third Defendant’s solicitors to the Claimant’s, should be without prejudice and not able to be relied on for the purpose of costs, while the Third Defendant argued that the letter was intended to be open despite its markings and could therefore be relied on.
The claim arose following the death of a third party in August 2017. The Claimant, a close friend of the deceased, sent a letter of claim to the Third Defendant, the deceased’s estranged sister, in March 2021, seeking a grant of probate after he was left property by the deceased in his will. The Third Defendant responded in April 2021, disputing the Claimant’s entitlement to a grant based on the copy will. During the course of correspondence between solicitors for the Claimant (Russell-Cooke LLP) and solicitors for the Third Defendant (EA Neary), a number of letters were exchanged both open and marked as without prejudice, including a Part 36 offer and a separate offer for alternative dispute resolution (ADR).
When examining the correspondence between the Third Defendant’s solicitors and the Claimant’s, Master Marsh, sitting in retirement, considered it was not always clear which letters were being responded to, including the letter in question being sent in response to an open letter. However, having reviewed the relevant communication in its context, Master Marsh concluded that the letter in question, despite being marked as without prejudice, was not sent on a without prejudice basis. This conclusion was reached after considering that:
- The starting point for the court is the manner in which the letter is drafted, including whether it is clear from the context that a letter was intended to be open, without prejudice or without prejudice save as to costs;
- In some cases, the true nature of the letter will be obvious, for example if falling within a chain of communication of a certain type;
- The true nature of the communication must be established objectively without regard to evidence of subjective intention, and the right approach is to consider how a reasonably minded recipient would regard the letter;
- In the present case EA Neary for the Third Defendant submitted that:
- They were unable to explain the marking on the letter; and
- It was an error because the writer did not understand the difference between without prejudice and without prejudice save as to costs.
While these submissions were seen as inconsistent, Master Marsh found that they were both admissible.
- The letter was sent in reply to an open letter, raising the possibility of ADR. It was part of a chain of communications dealing with the possibility of some form of ADR, which were all open and clearly intended to be. Communications regarding ADR do not need to be without prejudice and most often are not.
- The letter did not contain an offer, and did not relate to communications about a specific offer.
Master Marsh found that these factors would have led a reasonably minded recipient to conclude that it was not intended to be without prejudice. This judgment underscores the importance of objective assessment and the content and context of communications in determining whether WPP will apply to communications marked as such. The potential for WPP to be asserted on unsuitable correspondence is a danger which practitioners must keep in mind when drafting correspondence, and care must be taken to ensure that ‘without prejudice’ labels are only placed on correspondence which genuinely seeks to settle a dispute
Alec Cairney
