The words “without prejudice” is some of the most misunderstood and misused words in the legal profession. There is no particular “magic” attached thereto by using the phrase “without prejudice” in any form of communication, and does the phrase not automatically safeguard that communication is of a privileged nature simply by carrying the words “without prejudice” on top of it.

It is however important to understand that the “without prejudice” rule, if it is used for the correct purpose and in the correct context, is one of the most important rules in our legal profession that is specifically designed to provide parties entangled in a dispute with the opportunity to enter into settlement discussions amicably, with the aim to try and avoid litigation and all of the costly expenses in connection therewith.

In Sibeko v Minister of Police the court held that: “the general rule is that, statements which are made expressly or impliedly without prejudice in the course of bona fida negotiations for the settlement of a dispute cannot be disclosed in evidence without prejudice to the rights of the person making the offer if it should be refused.” The court went further and held that: “The exclusion of statements without prejudice is based upon the tacit consent of the parties and the public policy of allowing people to try settle their disputes without the fear that what they have said would be held against them if negotiations should break down.”

In essence, the above means that if a party writes a letter to an opposing party marked with the words “without prejudice” on top of it, that letter and the content thereof cannot be used as proof against the party making the statements at a later stage, on the sole condition that such a letter must form part of bona fida settlement negotiations in an attempt to amicably resolve their respective differences. However, in the event that a letter does carry the words “without prejudice” on top of it, but the content of the letter does not have regard to settlement negotiations, that letter shall be admissible in evidence and is not protected from disclosure.

There is however one very important exception to the general “without prejudice” rule as held in the recent Supreme Court of Appeal case of KLD Residential CC v Empire Earth Investments, where the Court held that: “Where an acknowledgment of indebtedness is made by a debtor to a creditor, even in without prejudice settlement negotiations, the acknowledgment may be admitted in evidence for the sole purpose of interrupting the running of the prescription period in terms of Section 14 of the Prescription Act 68 of 1969”.

With all of the above said, the test when it comes to the “without prejudice” rule remains straightforward, in that you must ensure the content of the letter has regard to the matter and is further part and parcel of settlement negotiations in order to try and amicably settle the dispute at hand.

Without Prejudic