Without Prejudice Communication

It is not uncommon for a document to be labeled as “without prejudice”, with the intention of preventing the recipient from using the document as evidence in court. The label is slapped on without any discrimination on the type of document being labeled thus.

But will the label hold?

The Law

A “without prejudice” communication is inadmissible as evidence in court. This is to encourage the parties to communicate freely towards settling their dispute, without fearing that whatever they said or wrote would be used against them.

Legally speaking however, a document and/or communication would only be protected under the “without prejudice” rule if and only if they are made in the course of a negotiation to settle a dispute. Two common features must be present in before the privilege can be claimed:

(a)    some individuals must be in dispute and that dispute led them to negotiate with one another; and

(b)   the communication between the parties must contain suggested terms that would finally lead to the settlement of the dispute

The rule does not apply when there is no dispute or no negotiation to settle the dispute.

Beyond the Label

Thus, even if the document and/or communication are labeled “without prejudice”, the court will look into the surrounding circumstances to determine if there is any dispute between the parties and if there are any terms offered to settle the dispute. If there is none, the document and/or communication will not be protected under the “without prejudice” rule.

Conversely, even if the document and/or communication are not labeled as being made “without prejudice”, such document and/or communication would be precluded from being adduced as evidence if the requirements are satisfied.

Admitting A Debt and Merely Asking for Time to Pay

It is noteworthy that where a person admits his debt and asks for time to pay (i.e. offering repayment terms), the “without prejudice” rule does not apply.

For example, Mr. A wrote to Mr. B that Mr. B owed him RM500.00 and demanded Mr. B to pay. Mr. B replied to say he was very sorry to have delayed the payment, and could only pay in 5 equal installments.

The whole series of communication is not protected by the “without prejudice” rule.

At first glance, this appears to fly in the face of the whole without prejudice rule.

However, if one were to examine the issue closely, there is no dispute on the fact that Mr. B owed Mr. A money. There is also no dispute that the sum owed is RM500.00. There is further no dispute on the fact that the RM500.00 is already due and payable.

As there is no dispute at all, the “without prejudice” rule does not apply. The fact that Mr. B asked for the sum to be paid in installments is not enough for the communications to be protected by the “without prejudice” rule.

Exceptions to Without Prejudice Rule

Without prejudice communications may be admissible to prove that a negotiation did take place. The communications may also be admissible as a proof of the terms of the settlement agreement.

Extra Precaution in Communication

The difference in communications protected under the “without prejudice” rule and those that are not is very small. A few bad choices of word may render the communications to be opened.

This article is written by our Partner, Loke Yuen Hong