What do the words “without prejudice” mean? When we write these words on top of a letter to an employee, union or lawyer, what effect will this have? The Federal Court of Appeal recently considered this issue in Canada (Attorney General) v. Boogaard 2015 FCA 150 (CanLII).
In this case, a staff sergeant in the Royal Canadian Mounted Police (“RCMP”), had been seeking a promotion. He sent letters to the Commissioner of the RCMP. The Commissioner replied by way of a letter marked “without prejudice.” The sergeant considered the letter to be a decision rejecting his requests. The RCMP argued that the letter was privileged as it was a negotiation/settlement communication and, as evidence of that, was clearly marked “without prejudice.
The Federal Court found that the letter was not protected by the privilege over negotiation/settlement communications even though it was marked “without prejudice.” The Attorney General (“AG”) appealed arguing, in part, that the “without prejudice” letter was not a reviewable decision. The Federal Court of Appeal agreed with the Federal Court on this point.
The Federal Court relied on the Alberta Court of Appeal decision in Bellatrix Exploration Ltd. v. Penn West Petroleum Ltd. 2013 ABCA 10 (CanLII) where the complicated issue of “privilege” was reviewed. Although some believe that putting the words “without prejudice” on correspondence will, as if by magic, shield the contents of the letter from production or disclosure in any lawsuit or litigation, that view is overstated. One thing is clear - simply writing the words “without prejudice” (often in italics and bold, sometimes underlined for further effect) means very little in the analysis.
The Court in Bellatrix put the matter as follows:
Settlement privilege is premised on the public policy goal of encouraging the settlement of disputes without the need to resort to litigation. It allows parties to freely discuss and offer terms of settlement in an attempt to reach a compromise. Because an admission of liability is often implicit as part of settlement negotiations, the rule ensures that communications made in the course of settlement negotiations are generally not admitted into evidence. Otherwise, parties would rarely, if ever, enter into settlement negotiations to resolve their legal disputes.
The parties must be permitted to freely “put all their cards on the table” without having to worry that they may be prejudiced should negotiations fall apart and litigation ensues. Courts have consistently maintained that to fall behind the shield of “settlement privilege”, there has to be “at least a hint of potential compromise or negotiation”. Back to Bellatrix:
..... an unconditional assertion of rights without any connection to the possibility of settlement or negotiation do not fall within the scope of the rule Buckinghamshire County Council v Moran,  1 Ch 623,  3 All ER 225 (CA), cited in Hansraj at para 19. Communications of this type do not offer any potential for compromise, which is the interest the privilege is intended to protect.
The notation “without prejudice” is not conclusive in establishing privilege. If the contents of a communication are truly in furtherance of settlement, and therefore privileged, it makes no difference whether the communication is marked “without prejudice” or not. A communication that is not in substance privileged does not become so just because one party places “without prejudice” on it. Likewise, the absence of the words “without prejudice” means nothing if the communication is truly privileged.
If the settlement privilege applies, a party will be precluded from admitting into evidence the document, which might otherwise be relevant to the issues in dispute. The policy reasons behind the privilege are paramount, but courts will be vigilant in ensuring that the communication meets the following criteria (see Costello v Calgary (City), 1997 ABCA 281 (CanLII)):
- the existence, or contemplation, of a litigious dispute;
- an express or implied intent that the communication would not be disclosed to the court in the event negotiations failed; and
- the purpose of the communication must be to attempt to effect a settlement.
In the Boogaard case, the Court concluded that the Commissioners “without prejudice” correspondence denying the promotion was “tantamount to an outright refusal”. In other words, it was, to use the language in Bellatrix, an “unconditional assertion of rights without any connection to the possibility of settlement or negotiation”. Although the letter invited the sergeant to suggest an “alternative course” it was clear to the Federal Court and the Federal Court of Appeal that, looked at as a whole and in context, the letter did not fall within the test of settlement privilege and could not be shielded in the litigation (and in that case, from review).
Things you might take away from this
It is important in our work that we not proceed by rote, without understanding “why” things are as they are. Writing the words “without prejudice” on some correspondence is probably a good practice, but doing so will not have any meaning or implication where the underlying policy considerations are not present. The Boogaard case provides an excellent reminder.