‘Privilege’ is a status which is applied to certain documents which have been created during the course of a court case. The most common form of privilege is legal professional privilege which protects correspondence and legal advice between solicitor and client from being viewed by other parties, even under subpoena.
In order to allow people to negotiate freely when attempting to settle a dispute, many documents and statements are made ‘without prejudice’. This means that the information cannot be used as evidence which encourages both sides to engage in a more frank attempt to reach an agreement. For example, a person can make a ‘without prejudice’ offer to pay a sum of money to settle the dispute without that offer being used against them as evidence, even if they admit in the offer they are in the wrong.
‘Without prejudice’ documents are subject to privilege in relation to the case in which they are created. A question which arose in a recent case was whether or not such documents are also protected by privilege in relation to any cases which come later. The answer is not necessarily.
In a recent case in the Supreme Court of New South Wales, a commercial dispute arose between two parties over misleading information given by a person to a potential employer in order to secure a job. The employer in this case issued a subpoena to the company where the employee was previously employed to obtain documents relating to the circumstances in which the employee left that job.
The employee objected to the documents being produced, claiming that they were protected by privilege as they had been prepared without prejudice for the purposes of the settlement of a dispute with his previous employer.
However, the Court did not consider the documents to be privileged as there was an insufficient connection between the dispute with the old employer which the documents were prepared for and this dispute with his new employer. The Court stated that the protection of privilege applied only to any admissions people made in the course of a case but did not extend to documents that establish facts in a dispute
As a result, the employee’s objection to the documents being available to his new employer was dismissed.
If you are involved in settlement negotiations in a dispute and you think there could be a further case in the future, it is critical that you consider the following:
It is prudent not to rely too heavily on privilege expecting that it will apply to any without prejudice documents created and to assume that protection will extend only to the current dispute.
In the event that a later case is foreseen you should seek your lawyer’s advice on how any statement you propose to make in settlement negotiations may affect your position in future cases.
Case: Martin Patrick Dowling -v- Ultraceuticals Pty Ltd  NSWSC 386