The without prejudice rule makes communications genuinely aimed at settling a dispute inadmissible in evidence. Its purpose, as Lord Griffiths explained in Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, is the public policy of encouraging parties to settle their differences rather than litigate them to a finish.
Two misconceptions cause most of the difficulty. The first is that writing the words at the top of a letter creates the protection. The second is that the protection is absolute. Neither is right, and the gap between what practitioners assume and what the rule actually does is where satellite litigation happens.
What the rule actually requires
Protection attaches to communications that form part of a genuine attempt to settle an existing dispute. Two elements matter, and both are questions of substance.
There must be a dispute. Correspondence before any dispute has arisen, or general commercial negotiation where nothing is in issue between the parties, is not protected however it is headed.
The communication must be a genuine attempt to resolve it. A letter that asserts a position and demands capitulation is not negotiation simply because it carries the label.
The converse also holds, and is the point most often missed. A communication that meets both requirements is protected whether or not it is marked without prejudice. Labelling is evidence of intention, not the source of the protection, and an unlabelled settlement discussion is usually covered while a labelled letter that is not a settlement attempt usually is not.
The protection covers the negotiation as a whole
In Unilever plc v The Procter & Gamble Co [2000] 1 WLR 2436 the Court of Appeal rejected the idea that admissions could be dissected out of without prejudice material so that only they were protected. Robert Walker LJ reasoned that separating admissions from the rest would create serious practical difficulties and would defeat the object of allowing parties to speak freely, observing that parties cannot negotiate candidly if they must monitor every sentence with their lawyers at their shoulder.
The practical consequence is that without prejudice negotiations are normally inadmissible in their entirety, not merely as to the concessions they contain.
The exceptions
The rule is not absolute. In Unilever, Robert Walker LJ set out what he described as the most important instances in which without prejudice material may nonetheless be admitted, while making clear the list was not exhaustive. They include:
- Whether a concluded compromise was reached. Where the issue is whether the negotiations produced a binding settlement, the communications are admissible to answer it, a point Hoffmann LJ had made in Muller v Linsley & Mortimer.
- Setting aside an apparent agreement. Evidence of the negotiations may be given to show that a settlement should be set aside for misrepresentation, fraud or undue influence.
- Estoppel. Where one party made a clear statement intended to be acted on, and the other acted on it, giving rise to an estoppel.
- Unambiguous impropriety. Where excluding the evidence would act as a cloak for perjury, blackmail or other unambiguous impropriety, the expression used by Hoffmann LJ in Forster v Friedland.
- Explaining delay. Evidence of negotiations may be admitted to explain delay or apparent acquiescence, for example on an application to strike out for want of prosecution.
- Without prejudice save as to costs. Offers made on that basis may be put before the court on the question of costs once liability and quantum are decided.
The impropriety exception attracts the most optimistic arguments and succeeds least often. The Court of Appeal warned in Forster v Friedland and again in Fazil-Alizadeh v Nikbin that it applies only in the clearest cases of abuse of a privileged occasion. A party that made a poor admission during negotiation has not committed an impropriety; it has negotiated badly, and the rule exists precisely to protect that.
The House of Lords took a similarly restrictive approach in Ofulue v Bossert, where the argument for widening the exceptions was rejected on the basis that doing so would erode the parties’ freedom to speak openly.
Without prejudice save as to costs
This formulation sits slightly apart from the rest. Recognised in Cutts v Head [1984] Ch 290 and confirmed in Rush & Tompkins, it rests on the express or implied agreement of the parties rather than on public policy alone. The offer is inadmissible on the issues but may be shown to the court when costs are decided.
In civil proceedings much of this ground is now occupied by Part 36, which provides a formal offer regime with prescribed costs consequences. The Calderbank style offer retains a role where Part 36 does not fit the situation, and the choice between the two is a tactical decision rather than a formality. Both operate against the background of the court’s wider discretion to take the parties’ conduct into account on costs.
Where it goes wrong in practice
Four recurring errors.
Mislabelling. Marking a letter without prejudice when it is not a settlement attempt does not protect it, and the practice of heading routine correspondence that way dilutes the label where it matters.
Mixing protected and open material. A letter that both negotiates and makes assertions the party intends to rely on later creates an unnecessary dispute about admissibility. Separate letters are usually the better course.
Assuming the label survives the context. Whether material is protected depends on the substance of the communication in the dispute in which it arose, not on how it was headed.
Confusing it with legal professional privilege. They are different protections with different bases. Legal professional privilege attaches to communications between lawyer and client, or made for the dominant purpose of litigation, and belongs to the client. The without prejudice rule attaches to communications between opposing parties and rests on public policy and the parties’ agreement. A document can be covered by one and not the other.
Why this matters at the pre-action stage
The rule is most often engaged in correspondence before proceedings are issued, which is also where the pre-action protocols require parties to attempt settlement and consider alternative dispute resolution.
That creates a practical tension worth thinking about before writing. The protocols expect parties to engage constructively, and the court can now take a party’s approach to ADR into account when deciding costs. Yet the negotiations themselves are ordinarily inadmissible. The usual answer is to keep protocol compliance and the substance of negotiation in separate correspondence, so that a party can demonstrate it engaged without opening up what was said while engaging.
Employment practitioners work with an additional layer, since pre-termination negotiations carry their own statutory protection under the Employment Rights Act 1996, which operates on different conditions from the common law rule and has its own exclusions. The two do not always cover the same ground in tribunal proceedings.
The discipline the rule imposes
The rule works because parties trust it, and it is worth remembering how it earns that trust. It protects candour, not carelessness. It covers the negotiation rather than isolated admissions within it. And it yields only where the alternative would be to let the protection conceal something the court cannot ignore.
For an advocate the question is rarely whether the label was used. It is whether the communication was a genuine attempt to settle a real dispute, and if a party wants to rely on it later, which of the recognised exceptions it falls within. Those two questions decide almost every application of the rule.
This article is information and analysis, not legal advice. Whether a particular communication attracts without prejudice protection depends on its content and context, and the exceptions are applied restrictively.
Frequently asked questions
What does without prejudice mean?
It indicates that a communication is part of a genuine attempt to settle a dispute and is therefore inadmissible in evidence. The rule rests on the public policy of encouraging parties to settle rather than litigate, as stated in Rush & Tompkins Ltd v GLC [1989] AC 1280.
Does writing without prejudice on a letter make it protected?
No. Protection depends on substance, not on the label. There must be an existing dispute and a genuine attempt to settle it. A letter that meets those conditions is generally protected even without the label, and one that does not is generally not protected despite it.
When can without prejudice communications be used in court?
Where an exception applies. The main ones, set out in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, include whether a concluded settlement was reached, setting aside an agreement for misrepresentation, fraud or undue influence, estoppel, unambiguous impropriety, explaining delay, and offers made without prejudice save as to costs.
What does without prejudice save as to costs mean?
The offer cannot be shown to the court on the issues in dispute, but may be put before it when costs are decided. The formulation was recognised in Cutts v Head [1984] Ch 290, and in civil proceedings much of this ground is now covered by the Part 36 regime.
What is the unambiguous impropriety exception?
It allows without prejudice material to be admitted where excluding it would act as a cloak for perjury, blackmail or similar impropriety. The courts apply it only in the clearest cases of abuse, and a merely unwise admission made in negotiation does not meet the threshold.
Is without prejudice the same as legal professional privilege?
No. Legal professional privilege protects communications between lawyer and client, or those made for the dominant purpose of litigation, and belongs to the client. The without prejudice rule protects settlement communications between opposing parties and rests on public policy and the parties’ agreement.