What is the meaning behind “without prejudice” correspondence and negotiations?

Published on October 6, 2022

Lawyers and lay-people often use the above phrase on all of their correspondence. Correspondence that is related to legal proceedings are simply marked without prejudice, when it should not be. The reason behind marking correspondence as such is to ensure that same are excluded as evidence in any litigation. The marking of correspondence in this indiscriminate fashion may be regarded as an attempt to conceal information from a court.

As a general rule, negotiations between parties’ which are undertaken with a view to a settlement of their disputes are privileged from disclose. This is regardless or not the negotiations have been stipulated to be without prejudice. (ABSA BANK is HAMMERLE GROUP 2015(5) S.A 215 SCA)

All discussions between parties designed to archive and promote the settlement of a dispute, without having to resort to litigation, are privileged and not open to disclosure. (KLD RESIDENTIAL CC. vs EMPIRE EARTH INVESTMENTS 2017 (6) S.A S5 (SCA) paragraphs 19-29).

The advantage to parties knowing that negotiations are conducted without prejudice is that it affords parties to a dispute an opportunity to explore the possibility of settlement of a matter without the risk of such discussions being placed before court. [Possible concessions during such negotiations or a possible preparedness to pay a certain amount of monies will not be admissionable in court].

It follows from the above that by indiscriminately marking all correspondence our negotiations as being without prejudice is incorrect and may even result in negative cost orders against a party not disclosing all material information from court. It is like painting an elephant green and then denying that it is still an elephant!

The rule is subject to exceptions, namely when such evidence is necessary to establish an act of insolvency or when such evidence is necessary to interrupt prescription. (ABSA BANK, Supra, 215)

The Supreme Court of appeal held that the purpose for which a party desires to adduce a “without prejudice” communication is all important. In exceptional circumstances it may well be admitted in evidence despite the general rule to prove, for instance, that it contains a threat, an act of insolvency or possibly other matters that would be contrary to public policy to protect it from being admissible.

The essence of the above is that even if negotiations are conducted without being marked “without prejudice”, but such negotiations are designed to explore the possibility of a settlement, such negotiations will still be protected against disclosure, whether marked with the phrase or not.

COMMENT BY MW ATTORNEYS.

Make sure about the meaning of the phrase “without prejudice” before appending same to correspondence.

C.M. Weiss
Practicing Consultant