Courts Only Depart From Without Prejudice Rule In Limited Circumstances

The ‘without prejudice’ label at the top of legal correspondence will be familiar to anyone who has ever been engaged in litigation – specifically in attempts to settle the dispute away from court. Put simply the term is designed to encourage parties in legal disputes to resolve their differences in the knowledge that correspondence labelled without prejudice won’t later be used as evidence against them if the case does end up in court.

Sometimes correspondence may be without prejudice even if the words don’t appear – but it’s always advisable to use the label where possible to provide reassurance. A lack of clarity over what is and what is not ‘without prejudice’ can lead to expensive litigation. Also note that in-person and phone discussions can be on a without prejudice basis, but you should always acknowledge this is the case before you start any discussion (and preferably make a note to this effect following the discussions).

What Are The Limits To Without Prejudice Communications?

The without prejudice principle is fundamental to litigation in all areas of law. But bear in mind that the protection it affords is not completely open ended. That’s to say there are several well-established exceptions to the rule which means that in certain circumstances, even if correspondence is labelled without prejudice, it can still be used in court.

Here we look at a 2024 High Court hearing in London which examined some of the principles around the without prejudice rule. In particular, the court was asked to strike out certain pieces of evidence on the grounds that it was without prejudice material.

As we’ll see both sides in the case agreed that the relevant material was without prejudice. The argument of one side – that an exception to the rule applied so the material could still be used at trial – failed. As a result the case is interesting because it shows how courts apply the exceptions to the rule in an extremely narrow fashion.

Ocean On Land and Caribbean Fisheries v Gowland and Land, 2024: Background

In June 2016 the First Defendant (Mr Richard Land) and the Second Defendant (Mr Dennis Gowland) sold their shares in a company called Shellfish Hatchery Systems Limited, a lobster business (later to become Ocean On Land).

The business was transferred by way of two share purchase agreements (the SPAs), one for Mr Land and one for Mr Gowland. The purchaser was Caribbean Sustainable Fisheries Corp The SPAs were accompanied by the assignment of a valuable patent right owned by Mr Land and Mr Gowland.

Subsequently disputes arose in relation to these agreements with Ocean On Land and Caribbean Fisheries claiming breach of contract, trademark infringement and patent infringement.

In the course of these proceedings, argument arose over the alleged use of without prejudice material by the defendants. The disputed material included certain paragraphs of the trial witness statements of both defendants. The claimants (Ocean On Land) asked the court for these paragraphs to be struck out so that they would not play a part in any future trial – because they contained without prejudice material.

The defendants accepted that the material identified by the Claimants was covered by the without prejudice rule. They argued however that it was still admissible because it fell within one or more of the recognised exceptions to that rule. The key exception relied on by the defendants was what’s known as ‘unambiguous impropriety’. Essentially this arises where someone spuriously labels communication as without prejudice when they are really using the label to cover up clear wrongdoing on their part.

The Decision

The court clarified that:

• It is for the party relying on an exception to the without prejudice rule to establish that the material is within the exception; and
• The very reason for the without prejudice rule means that exceptions must be narrowly applied

The material which the defendants wanted to keep as part of their evidence on the basis that it came within the unambiguous impropriety exception included what they said were unfair threats by the Claimants and potential perjury. However the judge having reviewed all that material in its context, concluded that none of the material was covered by the unambiguous impropriety exception. In the judge’s opinion the material went no further than would be expected when seeking to settle a dispute.

Other exceptions the claimants sought to rely on including the so-called ‘waiver’ exceptions and the ‘interpretation exception’ were similarly found not to apply in the facts of this case.

Comment

The practical effect of the decision was that the defendants were required to amend their witness statements to remove without prejudice material ahead of trial.

The without prejudice rule is fundamental to how litigation is conducted in a wide range of international legal jurisdictions. It stands to reason that it can only be chipped away at in very limited exceptions, The High Court ruling we’ve discussed serves as a useful reminder of this.

Contact Us

For advice from our litigation solicitors please feel free to reach out to us at ParrisWhittaker for an initial, no-obligation discussion.