Without Prejudice?

In its decree delivered on 2 March 2020 in the names of Aspider Solutions Malta Limited v. Redtouch Fone Limited, the First Hall of the Civil Court, presided over by Mr. Justice Robert Mangion, considered that documents marked by a party (or parties) as being “without prejudice” should not necessarily be considered inadmissible as evidence in judicial proceedings across the board.

In brief, the pertinent facts of the case are as follows.

On 3 June 2019, the plaintiff company submitted a note to the Court consisting of a number of documents showing an exchange of correspondence with the defendant company. It so happened that the vast majority of documents produced had been exchanged on a “without prejudice” basis. Some months later, the defendant company presented an application to the Court for the purpose of disallowing the production of the documents in question by the plaintiff company. These principally consisted of legal letters sent by the defendant company, and the plaintiff company’s replies thereto. The former maintained that the content of the legal letters at issue was particularly sensitive, while the latter held that said legal letters did not contain any privileged information regarding offers and/or negotiations between the parties.

In its considerations, the Court deemed it necessary to analyse whether correspondence marked by the parties as being “without prejudice” ought to be considered as privileged across the board, and therefore inadmissible as evidence in the course of judicial proceedings. In this vein, the Court made reference to Av. Dr. Henri Mizzi pro noe et v. Telestarr Limited (Ref No.

451/2007 AL). In its decision, the Court in this case reproduced that held by the Chamber of Advocates in its ‘ Guidelines on the use of the term Without Prejudice’ (originally published in January 2010). Summarily, this publication underlines the basic precept that the amicable settlement of a dispute ought to be universally encouraged, and that in order to reach such an amicable settlement, the parties must be allowed to negotiate freely, and without fear of said negotiations compromising their position before the court.

In this sense, the Court in the above-cited case further analysed the legal bases for inadmissibility of documents marked as being “without prejudice” and held that these are two-fold, in that (i) public policy in itself encourages the settlement of contentious disputes, and (ii) the understanding between the parties should be considered to constitute law inter se. Furthermore, the Court noted that the state has always recognised the importance of compromise, as evidenced via various aspects of the law, including for instance the fact that compromise not only enjoys the effect of contract between the parties, but also, the effect of res judicata (i.e. once a compromise has been agreed to, the matter may no longer be pursued by the parties to the dispute). Such is the importance of safeguarding even the mere potential of reaching a compromise that in Joseph Grech et v. John u Filippa konjugi Amato et (First Hall, Civil Court – 31/01/2001),

the Court held that even though “without prejudice” correspondence produced as evidence by the plaintiffs effectively showed that the defendants had accepted responsibility for the cause of the dispute, it was not in a position to consider said acceptance of responsibility as proof.

Reference was also made to British jurisprudence on the matter, with the Court in Cutts v. Head and Another stating:

“That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) …may be used to their prejudice in the course of the proceedings. They should... be encouraged fully and frankly to put their cards on the table... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.”

This said, the “without prejudice” exemption should not be considered an absolute rule. In this regard, the Court cited Chef Choice Limited v. Raymond Galea et (Ref No. 2590/1999 JRM), whereby it was expressly stipulated that exceptions to the rule do exist.

Based on the above, the Court considered that, in the course of analysing the applicability of the “without prejudice” exemption, one ought to always consider the contents of the document being produced as evidence. In this respect, the Court cited a speech delivered by British barrister David Nicholls, who stated as follows:

“The label ‘ Without Prejudice’ can be useful but it is not determinative. It is the substance that counts and this is assessed objectively.”

In other words, not every document or exchange marked by the parties as being “without prejudice” necessarily contains information meriting such a privileged status. In fact, in the case at issue, the Court noted that while some of the legal letters produced as evidence to the Court contained documentation relating to an offer being negotiated by the parties (thus enjoying a privileged status), others merely outlined the procedure to be followed by the defendant company for termination of the service agreement which it had entered into with the plaintiff company. In this respect, the Court thought it apt to make a distinction between (i) exchanges and negotiations for the purpose of compromise, and (ii) exchanges in the context of a dispute regarding the implementation (or otherwise) of a particular contract. In terms of the former, the Court considered that any such negotiations do not enjoy probative value and should therefore not be included in the court file. Conversely, documents which delineate the mechanics of a particular contract may not be said to reveal any information which is not already readily available by virtue of said contract. Hence, the Court saw no problem with these being admitted as evidence in the course of the judicial proceedings.

On this basis, the Court ordered that those documents submitted by the plaintiff company which contained information regarding a particular offer being negotiated by the parties be considered inadmissible at law. Any and all remaining documents pertaining solely to the regulation of the underlying contract were considered admissible.