Article by :Durban Attorney: Fawzia Khan
Without prejudice communications are not admissible as evidence and generally cannot be used in litigation proceedings. Attorneys often mark certain letters or other communications with their opponents on a “without prejudice” basis, thus making that communication privileged. It’s proven to be an extremely useful mechanism with many benefits as it allows parties to explore alternatives in a pending dispute, with a view to settling a matter and thereby also avoiding or limiting legal costs.
In South Africa we follow the same common law rule regarding “without prejudice” correspondences as exists in England. Essentially the English courts have held that the rule relating to without prejudice correspondences is based on policy grounds: namely that “parties to disputes should be encouraged to avoid litigation, which usually entails expense, delay, hostility and inconvenience, by resolving their disputes amicably in frank discussions without the fear that if negotiations fail, admissions made by them in the course of negotiating may be used against them subsequently”. However this without prejudice rule is not an absolute one and even if a letter or correspondence is marked “without prejudice”, it will be admissible in law and thus lose its right of privilege, if the matter relates to insolvency. In June 2017, the Supreme Court of Appeal was asked to rule whether or not a letter which was written by an attorney and marked “without prejudice”, could nevertheless be regarded as admissible and used for another purpose namely whether or not the without prejudice letter interrupted prescription (and for no other reason). The Court was asked to rule on whether or not the exception to the without prejudice rule could be extended on the issue of prescription. Prescription is a defence, which renders a claim invalid, if summons has not been instituted within the correct time period. In its judgment the Supreme Court of Appeal ruled (with a dissenting judgment by Schippers J) that sufficient grounds existed in that case to allow for the without prejudice letter to be used for purposes of interrupting prescription. The Court said that the reason for the exception to the “without prejudice rule” was to protect a creditor and to prevent abuse of the rule. The court said that where acknowledgments of liability are made such that, by virtue of section 14 of the Prescription Act, they would interrupt the running of prescription, such acknowledgments should be admissible, even if made without prejudice during settlement negotiations, but solely for the purpose of interrupting prescription. The court was at pains to note that the exception itself was not absolute and said that each case will depend on the facts of matter.
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