Costs and the ‘without prejudice’ rule

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Costs and the ‘without prejudice’ rule
  • Costs determination and the ‘without prejudice’ rule
  • Position where one party wishes to rely on ‘without prejudice’ communications
  • Correspondence marked ‘without prejudice save as to costs’ (Calderbank offer)
  • Discussions on a ‘without prejudice save as to costs’ basis
  • Failure to refer to settlement communications as ‘without prejudice, save as to costs’
  • Split trials and ‘without prejudice save as to costs’

Costs and the ‘without prejudice’ rule

Costs determination and the ‘without prejudice’ rule

An issue for practitioners is whether correspondence marked ‘without prejudice’ can be used against a party when the court comes to determine the issue of costs. The Court of Appeal in Walker v Wilsher (1889) held that without prejudice correspondence or conversations cannot be taken into consideration so as to deprive the successful litigant of their costs. Bowen LJ said this:

‘In my opinion it would be a bad thing and lead to serious consequences if the Courts allowed the action of litigants, on letters written to them without prejudice, to be given in evidence against them or to be used as material for depriving them of costs. It is most important that the door should not be shut against compromises, as would certainly be the case if letters written without prejudice and suggesting methods of compromise were liable to be read when a question of costs arose.'

The general rule as to whether ‘without prejudice’ communications can be referred to when dealing with costs has subsequently been considered and reiterated in two Court of Appeal decisions:

  1. Unilever v Proctor & Gamble (2000) stated that the general rule is that ‘without prejudice’ correspondence is not admissible on the question of the costs—the Court of Appeal had considered the authorities on the ‘without prejudice’ rule

  2. Reed

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