The legal scope, of the “without prejudice” maxim, and as to when it can be challenged, including, the ambit of what is known as the ambit of the unambiguous impropriety exception.
These principles were clearly set out by Hoffmann J. in Forster v. Friedland (November 10, 1992, Court of Appeal transcript 1052).
It concerned a dispute about a contract for sale of a substantial shareholding in a quoted company, the claimant sought to put in evidence tape recordings of discussions, which he had had with the defendant. The defendant contended that they were inadmissible as without prejudice communications, but against that it was said that there was no real dispute as to whether a binding contract had been entered into. It was also said that the defendant was threatening to advance a defence, which he knew to be false and a sham. The judgment of Hoffmann L.J. covers both the general scope of the protection and the exception.
On the first point Hoffmann L.J. said:
“It seems to me, that there is no basis in authority or in principle for limiting the rule to negotiations aimed at resolving the legal issues between the parties. There must be many without prejudice negotiations, which do not address the issues at all. They are attempts to find an agreed solution, which will make it unnecessary for the issues to be debated either in negotiation or in court”.
What is required is that negotiations must be genuinely aimed at settlement, that is, the avoidance of litigation. Provided that this criterion is met, the nature of the proposals put forward or the character of the arguments used to support them, are irrelevant. One party may ask another for more time, or a reduction in what he has to pay. In support of such a proposal he may urge the weakness of the plaintiff’s case or his own lack of money, or their friendly business relations in the past. The communication will be protected if there is an intention to speak without prejudice followed by a genuine proposal or genuine negotiations aimed at avoiding litigation.
The Without Prejudice maxim is designed to encourage parties to express themselves freely and without inhibition.