In dealing with matters on behalf of clients you still find that professional advisers want to speak “off the record”.
There is no such thing. Everything is “on the record” and can be referred to at a later date, unless a conversation or correspondence is “without prejudice”.
If parties are making a genuine effort to resolve their dispute then any oral or written communication made between them should be marked “Without Prejudice”.
If it is properly labelled in this way it will be privileged. This means it cannot be produced as evidence of admissions against the party who made the statement and consequently will not be seen by any judge or arbitrator.
Its rationale is part of the courts’ policy to encourage settlement. If parties can communicate frankly and without worrying about the repercussions then they are more likely to put their cards on the table which will, in turn, facilitate a deal.
This is used in negotiations where there is a prospect of court proceedings or an arbitration, where the judge or arbitrator will be asked to make a decision on costs.
Marking correspondence in this way means that it will only be considered by the arbitrator or the judge at the point when they come to consider the question of costs.
At this stage they will be able to consider the chain of correspondence which is labelled in this way and consider any submissions about the conduct of a party.
Unfortunately the label is often widely misused by professionals. A proper “without prejudice” communication is one that is made in the context of genuine settlement negotiations.
Do not assume that simply marking a letter “without prejudice” will automatically give it privileged status. If it is challenged then the court will look at the substance of the communication to identify whether it has been made in the context in genuine settlement negotiations.
Conversely, if the communication is not labelled “without prejudice” but is intended to be part of genuine settlement negotiations then it can still be privileged.
If the letter or email is in response to a communication which is marked “without prejudice” then the response will be deemed to be without prejudice even if it is not marked as such. That said, it is best to avoid any potential for further dispute and use the label in the appropriate context.
As the “without prejudice” rule also applies to oral communications, it is critical that the parties agree at the outset of any telephone call or meeting that the discussion is to be conducted on a “without prejudice basis”. That must then be recorded in the attendance note and that conversation or discussion can only be referred to in subsequent “without prejudice” communications.