Without Prejudice Family Law Rule

In the course of settlement discussions or during the ADR process, parties often wish to speak sincerely and make a good faith attempt to settle. This is because, in most circumstances, reaching a settlement means compromising on some hard positions. It may even mean admitting that the other party was right in certain respects. 

But such admissions or compromises can be harmful to your case if you eventually decide to proceed to court. This is why there are certain rules that protect the rights of parties and prevent their admissions from being used against them in court. The “without prejudice” rule is one of these rules. 

What does the rule mean and how does it apply during the ADR process (aka Mediation) ? This article explains all you should know about the rule. 

“Without prejudice” is a legal term that essentially means “without loss of any rights”. It is a declaration by one party that what they are saying, doing or agreeing to do is not intended to affect their full legal rights later on, should they decide to insist on them. 

You may see these words marked at the top of a letter or mentioned at the start of negotiations to resolve a pending dispute. Apart from the personal intention of a party leveraging on this rule, the law also gives effect to the rule. 

When a letter is marked, or discussions are understood to take place, “without prejudice”, it prevents the substance of the letter or discussions from being used in a later case on the issue. This means if settlement negotiations fail and a lawsuit is filed, neither party can give evidence on the “without prejudice” discussions in court. 

The rule exists to give people confidence and trust in the ADR settlement process. Due to the relatively high cost and time-consuming nature of litigation, it is desirable for people to settle their differences amicably. For them to effectively do this, they must be able to speak and discuss candidly, with a genuine attempt to settle. 

Sometimes, achieving a settlement may mean acknowledging that you may have been wrong in certain respects. This is called an “admission” in law and it can be damaging to a person’s case is the issue eventually gets to court. To encourage people to settle amicably and avoid the consequences of such admissions, the “without prejudice” rule protects the negotiations from being given as evidence. 

There are specific conditions for the rule to apply in settlement discussions in Canada though. These are as follows: 

• There must be a dispute between the parties, in the form of an existing or contemplated lawsuit; 
• The communication that is marked “without prejudice” must have been made in order to try and settle the dispute; and 
• The intention must have been to expressly exclude the communication from financial disclosure in any later lawsuit. 

Generally, the “without prejudice” rule is not just about words. It is the content of the communication that determines if the rule applies. If the communication forms part of a genuine attempt to settle, and there is a clear intention to exclude financial disclosure, then the rule may still apply. It would not matter that the party failed to expressly mention that it was “without prejudice”. 

The opposite also applies though. Marking a document as being “without prejudice” does not necessarily mean the rule will apply. As mentioned above, what matters most is the content of the document and the intention behind the communication. 

While failing to include the words will not necessarily deprive you of the benefit of the rule, it can lead to even more disputes. It may cause confusion as to the true intent behind the communication, and the other party may insist they have a right to give evidence on those matters in court. 

As a result, it’s often best to include the rule outright or any other variations if you intend to exclude the financial disclosure. 

Yes, there are many different ways a party can take advantage of the rule. A common variation is “without prejudice save as to costs” – also called a Calderbank Offer. When this is used, it means that the party intends to exclude financial disclosure of the communication or any admissions made pursuant to it. But the party also reserves the right to refer to those communications when the court is making a decision as to costs. 

Costs refer to an order usually made by a court at the end of a lawsuit. It is common for a court to order a party to pay the costs of litigation of another party. This is usually the case where one party had a really bad case and should not have gone to court, or where they unnecessarily prolonged the lawsuit. The court awards costs in order to compensate the innocent party for bearing the inconvenience of the lawsuit. 

When a document is marked “without prejudice save as to costs”, it means a party wishes to be able to show the court that they were willing to settle. They can use the communication to persuade the court that they acted reasonably, either to persuade the court not to award costs against them or to make an award in their favour. 

There are other variations that parties may use. This can include a reservation of rights, notices, or other variations in rights. There is no real requirement as to a definite form, so long as the intention is clear and it was made as part of a genuine attempt to settle.