Pride and Prejudice: How to Conduct Settlement Talks Without Prejudicing Your Position

Pride prevents you from speaking to one another. Assuming you have overcome pride, there is also the risk of Prejudice if you do take the step of trying to settle a matter before going to trial. What are the general principles to apply when conducting settlement talks to avoid prejudicing your position?

Purpose and Effect of the Without Prejudice Rule

Most, if not all, settlement talks are conducting on a “without prejudice”, or a without admission of liability, basis. In other words, as a general rule, nothing written or said during such settlement negotiations may be used as evidence during Court proceedings (assuming settlement cannot be reached) to imply or to prove any admission of liability made by a party during such negotiations. This is to encourage parties to speak freely during settlement negotiations without fear that it may be used against them eventually, which in turn achieves the policy objective of having as many matters settled out of Court as possible.

This is why settlement negotiations or correspondence are almost always preceded with a label “Without Prejudice” or a reminder that the conversation is to proceed on such basis.

Exclusions

Third, and this is the least known exception, the without prejudice rule does not cover negotiations for the repayment of an admitted liability.

That being said, there are exceptions to the general rule that without prejudice negotiations or correspondence cannot be referred to during Court proceedings to imply or prove admissions of liability. First, the fact that settlement talks have taken place (but not what was discussed) may be freely disclosed. Second, without prejudice negotiations and correspondence may be referred to, or even produced as evidence in Court, to prove that a settlement has been reached or to prove the terms of the settlement.

Third, and this is the least known exception, the without prejudice rule does not cover negotiations for the repayment of an admitted liability. For example, a debtor who confirms repeatedly that he owes money to the claimant, but is only negotiating the repayment schedule, cannot label all his correspondence, begging for more time to pay, with the phrase “Without Prejudice” just so to exclude strong evidence of his liability and to prevent Judgment being made against himself if the matter does not get settled.

This makes sense because the without prejudice rule is not meant to help otherwise clearly liable defendants avoid being made liable at the earliest possible way. If this were otherwise, it would be a travesty of justice. However, the fact that correspondence is marked “without prejudice” raises an inference or even a possible assumption that they may not be disclosed. In such cases, the party who seeks to disclose or rely on such correspondence during Court proceedings bears the burden of convincing the Court that they may indeed be disclosed or referred to as an exception to the without prejudice rule.

Conclusion

As a general rule, when entering into settlement talks, be sure to reiterate, both in writing and face to face, that they are made on a without prejudice basis. Conversely, if you are dealing with a debtor who clearly owes you money but is merely negotiating a longer repayment scheme, you ought to clarify that all correspondence and negotiations are made on an open (and not on a without prejudice) basis. Otherwise, you may end up being taken by that debtor for a long ride in Court despite his otherwise clear admissions of liability.

The usual disclaimer: All opinions expressed on www.singaporelitigationlawyer.com are entirely my own. Importantly, my opinions do not constitute legal advice and you should definitely formally engage a lawyer to confirm, vary or refute my views.

To Sue or Not to Sue: Demystifying Litigation in Singapore @ www.singaporelitigationlawyer.com © Dominic Chan, a Singapore litigation lawyer. All rights reserved.

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