Categories
Litigation

Without Prejudice Communication in Legal Proceedings-What You Should Know

 

without prejuduce correspondence2

Have you received a letter marked “without prejudice”? Or been made an offer on a “without prejudice basis”? For example, a settlement agreement when you are leaving your job will be marked “without prejudice”, until it is signed by both parties and becomes binding on both parties.

What does this mean, though?

Let’s take a look, shall we?

The Without Prejudice Rule

The Without Prejudice rule/principle is one which states that statements made orally or in writing and marked “without prejudice” with a view to settling a dispute will normally not be admissible in evidence against the party who makes the statement or writes the letter.

It is similar to an “off the record” conversation you may have heard of in various circles eg journalism.

The reason this principle is accepted and encouraged is that it is widely regarded as a good thing that parties to a dispute will attempt to settle their differences rather than going to Court on every occasion. Thus, there is a clear public policy justification for the rule.

Any concession offered in a without prejudice letter cannot be referred to later on if the matter is not settled and it goes ahead to Court. Therefore, if I owe you a disputed debt of €100,000 and you offer, in a without prejudice letter, to accept €70,000 in full and final settlement, and I do not accept this offer you can pursue me for the full €100,000 in Court and I cannot refer to your previous willingness to accept €70,000 as evidence that I do not owe you €100,000.

This liability of €100,000 must be disputed by me, though. If I accepted I owed the €100,000 but was merely looking for a discount then I cannot rely on the Without Prejudice label as there is no dispute about the debt or the amount owed.

Where a party makes a without prejudice the response to that offer, regardless of the content, is also privileged as the entire totality of that correspondence is privileged.

The Without Prejudice Label

Marking your correspondence “without prejudice”, however, does not mean it is truly without prejudice; your letter must have been part of an attempt to settle the dispute and there must have been legal proceedings in being or being contemplated by one of the parties. Using the label will not give any protection if the correspondence is not a genuine attempt to settle a dispute.

Thus, another way to think of without prejudice correspondence, which will have the protection later on, is without prejudice correspondence which makes some type of concession. If it does this then it is clear it is an attempt to settle the dispute.

A without prejudice letter is the opposite of open correspondence.

An open letter may contain an offer, for tactical reasons in litigation, to settle a dispute. This letter will be relied upon in Court to influence the Judge when it comes to awarding costs at the end of the hearing and if such a letter is written it should be made clear that it is open.

Two Without Prejudice Labels

There are two without prejudice labels in use:

  1. Without prejudice
  2. Without prejudice save as to costs

The Without Prejudice save as to costs letter is a Calderbank letter (learn more about Calderbank letters here). This type of without prejudice correspondence can only be referred to when the question of costs is being considered by the Court at the end of the trial.

Exceptions to the Without Prejudice Rule

There are exceptions to the rule:

  • When the communications demonstrate the fact of a concluded settlement agreement
  • To help interpret a settlement agreement
  • To provide evidence to have a settlement agreement set aside on the basis of fraud, misrepresentation
  • Where the communications are evidence of perjury or blackmail or other serious impropriety.

Summary

The rule applies to written and oral communication, and must be a genuine attempt to settle a dispute. It is the substance of the correspondence that counts, not the label, and this will be assessed objectively.

It is open to the parties where there is no dispute, for example in relation to property purchase/sales, that all correspondence will be without prejudice/subject to contract until there is a binding contract in place. This is the practice in conveyancing in Ireland.

Without prejudice correspondence attracts joint privilege which means that it can only be waived with the consent of both parties.

Categories
Litigation

Calderbank Letters and Lodgments-Useful Litigation Compromise Tools

calderbank letter

Going to Court over a dispute or to uphold a legal right or entitlement is all fine and dandy.

You have the opportunity to weigh up your chances of success, obtain professional advice, look at the potential outcomes, estimate the likely legal costs, and decide whether to proceed or walk away.

The decision is yours.

But, what if you are dragged into a potentially costly legal case, one not of your making?

What if somebody, encouraged by friends, family or advisors, or a combination of all three, decides to sue you in the High Court, for example?

This is not a fight of your choosing, and you are told that when it comes to legal costs in litigation in Ireland it is a case of “winner takes all”.

What if the other party is being assisted by his legal team in bringing the case on a “no win, no fee” basis, though, and may not, therefore, be as mindful of costs as you are?

And, finally, the person who is suing you is not a “mark”. In other words, if you successfully defend the case and have your costs awarded you are unlikely to be able to give this practical effect because the person suing you is a “man of straw”.

In plain English, you are not going to be paid, even though you are legally entitled to recover your costs.

What can you do?

There are two devices you can use to try to protect your position and keep your legal costs down:

  1. A Calderbank letter
  2. A Lodgment.

The purpose of these devices is to attempt to force a plaintiff to seriously consider settling the case, rather than going ahead to the high risk, high cost venue of the High Court, or any Court for that matter.

The Lodgment

The Rules of the Superior Courts allow a defendant to pay into Court a sum of money to satisfy a claim. The money is lodged into the Courts office in cases other than personal injuries cases. (In personal injuries cases an insurer can make a similar offer called a tender which has a similar effect, but the money does not have to be actually paid into the Court office.)

If the plaintiff does not accept the lodgment the case goes ahead to trial.

However, if the plaintiff does not win an award greater than the lodgment penal costs provision are applied.

This means that the plaintiff will have to pay the defendant’s costs from the time of the lodgment. These costs will include the cost of the trial, barristers’ fees, solicitors’ fees, experts’ fees etc.

They can be eye watering, quite frankly.

For this reason, the plaintiff would be strongly advised to consider the lodgment sum to settle the case.

The rules of the superior Courts state that the lodgment must be made at specific times in the proceedings; this can make it difficult to gauge the lodgment amount accurately because you may not have all the necessary information to make an accurate, informed decision.

Also, the Courts are reluctant to allow a lodgment outside the times laid down in eh rules.

So, is there anything else that can be done to overcome this limitation?

This is where the Calderbank letter is useful.

The Calderbank Letter

The Calderbank letter derives from an English family law case, Calderbank v Calderbank. In this case, an offer was made “without prejudice except as to costs”.

The purpose of this wording was that reference could be made to the letter in respect of costs if the offer was not accepted. Otherwise, the contents of the letter would enjoy the normal “without prejudice” status, that is, they would not be disclosed to the Court.

The Calderbank letter does not need to follow any particular structure or layout; the Courts can consider any offer in writing in deciding the reasonableness of the parties in their willingness to settle and general approach.

(a) The Supreme Court, in considering the awarding of the costs of any appeal or any application in respect of an appeal, may, where it considers it just, have regard to the terms of any offer in writing sent by any party to any other party or parties offering to satisfy the whole or part of that other party’s (or those other parties’) claim or counterclaim the subject of the appeal, or application.

(b) The High Court, in considering the awarding of the costs of any action (other than an action in respect of a claim or counterclaim concerning which a lodgment or tender offer in lieu of lodgment may be made in accordance with Order 22) or any application in such an action, may, where it considers it just, have regard to the terms of any offer in writing sent by any party to any other party or parties offering to satisfy the whole or part of that other party’s (or those other parties’) claim, counterclaim or application.

(c) The High Court, in considering the awarding of the costs of any appeal from the Circuit Court, may, where it considers it just, have regard to the terms of any offer in writing sent by any party to any other party to the appeal offering to satisfy the whole or part of that other party’s (or those other parties’) claim or counterclaim the subject of the appeal. (S.I. No. 12/2008 – Rules of the Superior Courts (Costs) 2008)

Unlike with a lodgment the time allowed to serve a Calderbank letter is open, and can be done so right up to trial.

The differences between Calderbank letters and lodgments

So, the significant differences between a Calderbank letter and a lodgment revolve around

  1. Timing-when they can be used, and
  2. The degree of discretion the Courts have in relation to penalising a party, as to costs, who will not settle or is unreasonable-wide in relation to Calderbank letters, none in relation to lodgements which are not exceeded by the plaintiff’s subsequent award, if any.

The Calderbank letter and the lodgment are useful tools to help settle a case, and ensure costs are kept on a tight rein.