Sure, ‘without prejudice’ seems like a real legal term. But what is it, exactly?
The traditional meaning of ‘without prejudice’ it is to allow communications between parties without worrying that those communications, like letters or emails, will be used in court against the writer. However, it’s a term often misused by lawyers.
It should be used to preface settlement discussions. Some courts have taken it to mean, and rightfully so, that the communication contains a concession in order to achieve a settlement. However, simply putting ‘without prejudice’ at the top of a letter doesn’t automatically mean the content is in fact without prejudice. The content of the correspondence, the nature of the letter or its purpose, not the use of the words themselves, will dictate whether it is not to be used against the writer or the writer’s client.
A pre-litigation proposal
Often a demand is made before litigation that a person is willing to pay more or to receive a lesser amount than would be expected if the matter went to court. To avoid court, a premium may be applied to the payment proposal without an admission that the greater amount by the payor or the lesser amount by the recipient is due.
However, if the matter then goes to court, you don’t want opposing party to say “See, the other side even admits that he owes money, because s/he made an offer to settle this matter earlier.” A judge should refuse that submission on the premise that the information was without prejudice and should never have reached the judge’s eyes or ears until after a final decision is made.
Essentially, ‘without prejudice’ is a request not to use the concession or information detrimental to the writer against the writer. Conversely, it shouldn’t be used to paint the writer in a positive manner before judgment.
It doesn’t only apply to the core of settlement discussions. A party can agree to a certain procedure, like a court order, without giving up a right to take a step to defeat that order or to further something adverse to that order.
For example, defendants may agree to an amendment of a claimÂ without admitting the truth of the content of the amendment or the entitlement to the claim. The defendants therefore admitted, without prejudice to their rights to challenge the allegations in the new pleading, that the amendment was procedurally proper.
Conversely, with prejudice means that the contents are intended to be used against the other party. In practical terms, it constitutes a threat that the information will be used against the receiving party and to paint the offering party in positive manner before judgment. It would be used in the case of meeting a demand in full and having the absence of a concession used in favour of the offering party.
For instance, if a payment is due and owing, be it for a good or service rendered or in satisfaction of a legacy payable to a beneficiary under a Will, the payment can be made with prejudice in order to put the full amount and a particular issue to rest forever and a day, even if there are other issues or payments to settle. Settlement of one issue, therefore, is not tied to the settlement of another issue.
The bottom line
‘Without prejudice’ can be used in a pre-settlement offer, but if the matter goes to court, it cannot be used to influence proceedings.
This is not intended as legal advice. Please consult a professional licensed in Ontario to provide legal advice as specific facts may affect your particular circumstances.