Without Prejudice: The Rule That Protects Settlement Talks (And When It Doesn't)

Every experienced litigator has seen it: a client forwards a stream of text messages, emails and letters that say things like "I'll pay you £20,000 to make this go away" or "you and I both know the contract is a mess". The client then asks whether the other side can rely on those messages at trial. The answer depends on one of the most important — and most misunderstood — rules of evidence in common law systems: the without prejudice rule.

Used properly, "without prejudice" lets the parties talk frankly about settlement without fear that anything said will later be used against them. Used badly, or misunderstood, it becomes a source of expensive arguments about what is and is not admissible.

This guide explains what the rule actually does, when it applies, when it doesn't, and how to use it properly — across Hong Kong, England & Wales, Singapore, Australia, and (to the extent there is an equivalent) the United States.

What "without prejudice" means

The without prejudice rule is a rule of evidence. It says that communications made in a genuine attempt to settle a dispute are not admissible in court as evidence against the party that made them. The House of Lords explained the rationale in ***Rush & Tompkins Ltd v Greater London Council* [1989] AC 1280**:

The rule is based on the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is founded partly on the express or implied agreement of the parties that communications in the course of negotiations should not be used in subsequent litigation should the negotiations fail.

In simpler terms: if parties could not try to settle without every word being thrown back at them later, they would not try. The courts want people to settle, so they protect the conversations in which settlement might happen.

The rule is recognised in materially identical form in Hong Kong, Singapore and Australia. The United States has a similar but not identical rule in Federal Rule of Evidence 408.

The two elements

For the rule to apply, two things must be present:

1. There must be an existing dispute.

The parties must be in dispute — meaning there is a real issue between them capable of being resolved by litigation. A letter demanding payment of an invoice is not itself "without prejudice" unless the other side has actually disputed liability or quantum. Courts have been strict: the dispute has to be real, not hypothetical. In ***Bradford & Bingley plc v Rashid* [2006] UKHL 37***, the House of Lords held that statements made during discussions about how a debtor would repay an admitted debt were not protected because there was no dispute — there was only a discussion about payment of an acknowledged liability.

2. The communication must be made in a genuine attempt to settle.

Marking an email "without prejudice" does not, on its own, make it without prejudice. Nor does the absence of those words destroy protection where the content is clearly part of settlement discussions. The court looks at the substance.

That said, marking matters at the margins. If it is genuinely unclear whether a communication is settlement correspondence, the "without prejudice" heading tips the balance in favour of protection. Use it whenever you are making any concession, floating any settlement figure, or discussing the weaknesses of either side's case.

What the rule protects

The rule covers:

• Written offers and counter-offers of settlement.
• Oral discussions at settlement meetings and mediations.
• Admissions made during negotiations — for example conceding that a particular document is genuine, that a particular event happened, or that a defence is weak.
• Correspondence about the conduct of negotiations themselves.
• In most jurisdictions, documents created specifically for the purpose of a mediation (although mediation privilege is now a separate, slightly wider doctrine in some places — most notably since the HK Mediation Ordinance and the Singapore Mediation Act).

The protection extends not only between the two parties to the negotiation but also against third parties who later want to rely on the correspondence. That was one of the key points decided in Rush & Tompkins: a party cannot subpoena without-prejudice correspondence between two other parties to a multi-party dispute.

What the rule does not protect

This is where most self-represented litigants (and quite a few lawyers) get into trouble. The without prejudice rule has a growing list of exceptions.

Threats, blackmail and "unambiguous impropriety"

If a party uses the cover of without prejudice to make threats, demand money to which they are not entitled, or otherwise act improperly, the correspondence can be admitted. This is the exception recognised in ***Unilever plc v The Procter & Gamble Co* [2000] 1 WLR 2436*** ("unambiguous impropriety"). The bar is high — "unambiguous" means what it says — but if one party writes, "pay me £100,000 or I'll tell your wife about the affair", that is not protected. The exception is most often invoked in high-pressure commercial litigation — for example where without-prejudice correspondence is alleged to threaten or leverage interim relief such as a freezing order (Mareva injunction) — and the court will look closely at whether the alleged impropriety is truly unambiguous before lifting protection.

The fact that negotiations happened

The rule protects what was said, not the fact that there were negotiations. If a party needs to prove that settlement discussions occurred — for example to explain delay or to resist a strike-out for want of prosecution — the fact of the negotiations can be referred to, even if the content cannot.

Interpretation of a settlement agreement

Once a settlement is reached, the without prejudice correspondence can be admitted to prove the terms of the settlement, to rectify it, or to resolve disputes about what was agreed. The whole point of the rule — encouraging settlement — would be defeated if parties could not prove the settlement they reached.

Misrepresentation and fraud

Statements made in without prejudice negotiations that amount to misrepresentation or fraud can be relied on to prove those torts or to set aside a resulting settlement.

Estoppel

If one party makes a clear representation in without prejudice correspondence and the other party relies on it, the rule does not necessarily prevent the representation being used to found an estoppel.

Costs

This is the most important and most useful exception for strategic litigators — see "Without Prejudice Save as to Costs" below.

Criminal proceedings and regulatory investigations

In most jurisdictions the without prejudice rule gives way to the public interest in criminal enforcement. Admissions made in civil settlement discussions may be admissible in subsequent criminal proceedings depending on the jurisdiction. Regulatory bodies often have disclosure powers that override the rule.

"Without Prejudice Save as to Costs" — the Calderbank offer

The most strategically important variant of the rule is the "without prejudice save as to costs" letter, named after ***Calderbank v Calderbank* [1976] Fam 93***.

A Calderbank offer works like this: you make an offer of settlement that the other side cannot mention at trial (because it is without prejudice), but that you can put before the judge after judgment on the question of costs. If you offered more than the claimant eventually obtained at trial, or less than the defendant was ordered to pay, you can use the offer to shift the costs regime — typically recovering your costs from the date the offer should have been accepted, and potentially on the indemnity basis. The mechanics of how the court then translates a beaten offer into a costs award — standard versus indemnity basis, summary versus detailed assessment, interim payments on account — are covered in our guide to costs orders.

In most jurisdictions a formal procedural equivalent has developed:

• England & Wales: CPR Part 36 offers (a statutory scheme with specific costs consequences, more powerful than a generic Calderbank).
• Hong Kong: Sanctioned offers and sanctioned payments under RHC O.22.
• Singapore: Offers to Settle under ROC 2021 O.22.
• Australia: Offers of compromise under the relevant court rules (e.g. UCPR (NSW) Part 20, FCR r.25.01).

Where a formal scheme exists, use it if possible — the costs consequences are more certain. Where it does not apply or you want flexibility, the Calderbank letter still works.

The key discipline: if you want costs protection later, mark the letter clearly "Without Prejudice Save as to Costs" (or, in US practice, the equivalent wording under Federal Rule of Evidence 408 and any applicable state rule). Do not mark it just "Without Prejudice" or you lose the costs benefit.

How to use "without prejudice" properly

Use it deliberately, not defensively

Marking every piece of correspondence "without prejudice" is a common mistake. It devalues the label and, worse, can prevent you relying on statements you want to rely on later. Use the label only when you are genuinely discussing settlement.

Do not mix open and without prejudice material in the same document

If a single letter contains both settlement proposals and statements you want on the record, the entire letter may be unusable. Separate them into two documents.

Be explicit in oral discussions

At the start of a settlement meeting or a phone call, say clearly: "Can we agree that this conversation is without prejudice?" Get audible agreement. Make a note immediately afterward. Courts have refused protection where one party argued the conversation was without prejudice and the other had never agreed.

Do not take notes out into the open

If you agree a without prejudice meeting, the notes and documents prepared for it are also protected. But if you then use those notes in open correspondence or at an open hearing, you may waive privilege. Keep the categories separate.

Understand what happens if settlement fails

The correspondence remains protected. You do not get to read the without prejudice letters to the judge at trial. You do get to read them at the costs stage if they were marked "save as to costs".

Waiver

Privilege can be waived — but only with the consent of both parties. Without prejudice is a joint privilege: it belongs to both sides of the negotiation. Unlike legal professional privilege, which belongs to the client alone, without prejudice protection cannot be unilaterally abandoned. If one party refers to the correspondence in open court and the other party objects, the reference is inadmissible and the judge should disregard it.

This has a practical consequence. You cannot simply "declassify" your without prejudice letter and put it in evidence when it suits you. You need the other side to agree — or you need to fall within one of the recognised exceptions.

Jurisdictional notes

Hong Kong

The rule is applied as at common law, reinforced by Hong Kong Civil Procedure commentary. The exceptions from Unilever are recognised. Mediation communications additionally have statutory protection under section 8 of the Mediation Ordinance (Cap. 620), which is broader than the without prejudice rule and covers even communications that would not meet the common law test.

England & Wales

The leading modern statement is ***Ofulue v Bossert* [2009] UKHL 16, reaffirming the breadth of the rule, and Oceanbulk Shipping & Trading SA v TMT Asia Ltd* [2010] UKSC 44***, which added an "interpretation" exception allowing WP communications to be used to resolve ambiguity in a resulting settlement.

Singapore

The Court of Appeal has endorsed the Unilever framework in cases including ***Greenline-Onyx Envirotech Phils Inc v Otto Systems Singapore Pte Ltd* [2007] 3 SLR(R) 40***. The Mediation Act 2017 adds statutory protection for mediation communications.

Australia

The High Court's decision in ***Field v Commissioner for Railways for New South Wales* (1957) 99 CLR 285 established the rule. It has been developed in subsequent cases including Barrett v Queensland Newspapers Pty Ltd* [1999] QCA 167***. Most Australian jurisdictions have also codified the rule in their evidence legislation — for example s.131 of the Evidence Act 1995 (Cth) and the equivalent state Acts in NSW, Victoria and Tasmania. The statutory version lists its own exceptions, which largely track the common law.

United States

The US has no general "without prejudice" doctrine. The closest equivalent is Federal Rule of Evidence 408, which makes inadmissible:

• Furnishing, promising or offering — or accepting, promising to accept, or offering to accept — a valuable consideration in compromising or attempting to compromise the claim.
• Conduct or statements made in compromise negotiations.

Rule 408 applies only to prove or disprove the validity or amount of a disputed claim or to impeach by prior inconsistent statement. It does not apply when the evidence is offered for another purpose — for example proving bias, negating a contention of undue delay, or proving obstruction of a criminal investigation.

Importantly, Rule 408 is narrower than the English rule: it protects offers and conduct during negotiations to prove liability or damages, but not necessarily admissions of fact for collateral purposes. State law varies. Most states have an equivalent of Rule 408, and some go further. Practitioners in the US should not assume the English common law position applies.

Common mistakes

• Marking a demand letter "without prejudice". A letter before action is not without prejudice — there is (yet) no dispute, and you want to rely on it at trial on costs. Mark it "Open" or leave it unmarked.
• Putting a settlement offer in an open email thread. If the offer is caught up in the same chain as open correspondence, the other side may argue the whole chain is open. Use a clean, separately-labelled email.
• Making admissions in "without prejudice" correspondence and then panicking. If the correspondence is genuinely without prejudice, the admissions cannot be used against you at trial. Don't compound the problem by repeating them in open correspondence.
• Thinking the label alone protects you. The court looks at substance. A letter that makes no attempt to settle, or is pure threat, will not be protected by the label.
• Waiving by carelessness. Quoting the other side's without prejudice letter in your open skeleton argument is a waiver — and because it is a joint privilege, the judge may also see the exchange that preceded it.

The bottom line

The without prejudice rule is one of the most valuable tools in civil litigation. It lets parties explore settlement without turning their candour into a weapon that can be used against them. But the rule has exceptions, it can be waived, and it does not apply to everything marked with the magic words.

If you are an SRL trying to resolve a dispute, use "without prejudice" — and its costs-protecting variant "without prejudice save as to costs" — deliberately. Keep open and protected correspondence separate. Get express agreement before any oral settlement discussion. And understand that the rule protects genuine settlement attempts — not threats, not blackmail, and not statements about facts that have nothing to do with resolving the dispute.

Used well, the two words "without prejudice" can be the difference between a dispute that settles and a trial that goes badly.

This guide covers the general common law position and statutory variations across five jurisdictions. The application of the without prejudice rule is heavily fact-specific, and exceptions continue to develop. If privilege is likely to be contested on particular correspondence, get advice before using or disclosing it.