Societies down the ages have tried to ensure that judges hearing disputes are unbiased and reach their conclusions fairly in accordance with the relevant legal rules.
The extent to which this desirable objective is met depends partly on the personal qualities of the judges and partly on other factors.
A judge in a civil case needs to have the intellectual capability of correctly assessing the evidence presented and determining which party is most likely to be correct about the disputed facts. They also need to be able to ascertain the relevant legal rules and apply them to the facts found, taking account of all facts established which are legally relevant and not being swayed by any other matters which the legal rules say are irrelevant.
As well as the head there is also the heart. A judge must have the motivation to always carry out their legal duty of deciding cases according to their honest assessment of the evidence and in accordance with the legal rules, and not allowing any personal feelings - for example of instinctive like or dislike of the parties before them - to sway their judgment.
So selecting suitable men and women to be judges is very important but no human being is perfect and the attributes of the legal system, and the content of the legal rules, are also important.
Under contract law the legal rules governing whether a legal contract has been created are fairly clear and settled and it is intellectually relatively easy for a judge to decide such a question and to be sure that their own prejudices and biases (and all human beings have prejudices and biases of one kind or another) have not influenced the result.
If a judge is asked to decide whether a decision of a government minister is within the legal powers given to that minister by Parliament it should also be intellectually possible to do that, whatever private political (small p) views the judge may hold because the judge is not being asked to decide whether the decision was a good one or otherwise but only whether it was within the powers set out in the words of the Act of Parliament.
Again if the law is such that the judge is called upon to decide whether the decision of a government minister is irrational in the sense of using a hammer to crack a nut, it should not be difficult for the judge to make that decision with confidence that whatever political (small p) opinions the judge may have, will not have swayed them. On the other hand if it were the legal rule that government decisions could be declared unlawful if they were merely disproportionate - if, to continue the metaphor, the legal rule was that for a decision to be lawful it had to be shown that the nutcraker used to crack the nut was of the right size and strength (not significantly more and not significantly less) it might be more difficult for a judge when making that kind to decision to be sure that they were not being influenced by their own political (small p) opinions on the relative value and importance of matters which are the subject of political debate.
So the content of the legal rules can be important in not requiring judges to make the kinds of decisions which border on political (small p) judgment and which may make it intellectually difficult for the judge to be sure that they are not being swayed by personal opinion .
As well as the rules of the law itself, certain features of the legal system help to protect judges from situations which might cause them to be unsure whether they are being subconsciously influenced by legally irrelevant matters and, equally importantly, also protect judges from the suspicions others might have that they might be subconsciously influenced.
A key and obvious rule in the legal system is that judges do not hear cases where the judge knows any of the parties, or any of the witnesses. It is human nature to instinctively like or dislike some people but if it is only a superficial emotion formed when seeing someone giving evidence in a courtroom it is much easier to put out of mind when evaluating the evidence than if the judge actually knows the person.
The "without prejudice" rule is another rule of the legal system designed to ensure that judges are not subconsciously influenced by legally irrelevant matters. The "without prejudice" rule means that if a party makes an offer to settle litigation (actual or threatened) and that offer is not accepted, so that the litigation proceeds, the judge should not see or be told about the offer. The rationale is that if the judge knew of the offer, particularly if it was a substantial offer (such as an offer of half the sum in dispute), that would indicate to the judge that the party making the offer had been advised by their lawyers that their case was not strong. Logically that knowledge should not influence the judge - it is the judge's evaluation of the evidence and the legal arguments put forward which matters ultimately rather than the provisional view of a lawyer who has not yet seen the evidence of witnesses tested at a final hearing. Nevertheless it is thought that judges can be subconsciously influenced by such knowledge and, equally importantly, litigants are concerned that judges might be subconsciously influenced which means that if the "without prejudice" rule did not exist litigants might be put off making reasonable offers with the result that sensible settlements, which might be in the interests of both parties, would happen less often. It would also increase calls on the public purse as more cases proceeding all the way to a final hearing would lead to a need to appoint more judges.
The default position is that any communications which are genuinely aimed at settlement of a legal dispute are "without prejudice" and inadmissible and therefore should not be included in an Hearing Bundle of documents presented at a court or other tribunal. And any replies to such letters are inadmissible also. (Of course if the terms of a settlement are definitely agreed and binding then the relevant "without prejudice" correspondence is admissible to prove the fact of the settlement agreement itself but then of course, there will be no final hearing of the dispute and no Hearing Bundle).
So it is common to have two distinct parallel chains of letters/emails between parties, one chain consisting of "open" emails/letters which can be included in an Hearing Bundle if necessary, and the other chain consisting of "without prejudice" emails or letters which cannot be included in a Hearing Bundle. The "open" correspondence might be the ordinary correspondence which occurs in litigation - such as a letter before action (setting out a party's legal case and inviting the other party to acknowledge and act accordingly to avoid the necessity of formal legal proceedings) and subsequent replies. The parallel "without prejudice" correspondence might commence with an offer not to commence formal legal proceedings if the other side makes some acceptable concession which does not go as far as acknowledging the full legal rights asserted in the open correspondence. It is important that such chains are kept separate because in the event that there is no settlement the party which wrote the "open" letter before action will want to be able to show it to the tribunal to demonstrate that they did not issue proceedings prematurely (and they would not be able to show it to the tribunal if it referred to "without prejudice" correspondence and thereby itself became was deemed to be "without prejudice"). There have been very exceptional situations where the tribunals in the past have admitted in evidence a "without prejudice" communication because of something else it contained - for example if it contained some outrageous threat - but these exceptions are very rare so it is important for a party to ensure that anything it might want to rely on later is stated in open correspondence and that that open correspondence does not lose its intended "open" status by referring to something which is "without prejudice".
There are a few situations where someone might want to make an "open" settlement offer which is not "without prejudice" at all, so that it can be included in the Hearing Bundle. For example suppose a party has a good legal case that their neighbour has no right of way at all over their land but they are mainly concerned about vehicular access, and suppose that depriving the neighbour of access on foot would be a serious hardship for the neighbour. A judge is not going to like depriving the neighbour of the access on foot. Of course it is the duty of the judge to assess the evidence impartially and apply the law dispassionately but given that one of the main justifications for the "without prejudice" rule is concern about the judge being subconsciously influenced against the party making the offer if the offer is revealed, there may be equal concern, in a case such as this, about subconscious influence on the judge against the party making the offer if the offer is not revealed. So in a case like this a party may wish to make an open offer of access on foot only, so as to demonstrate that the only reason why formal proceedings had to be pursued is that the neighbour is insisting on vehicular access.
Because the default position is that any communications which are genuinely aimed at settlement of a legal dispute are "without prejudice" and inadmissible and cannot be included in the Hearing Bundle, a party making an open offer will wish to underline the fact that it is an open offer typically by putting the words "OPEN OFFER" at the start of the letter or email. But the words "open offer" can sometimes be ambiguous - they can mean an offer made openly - i.e. not "without prejudice" - or they could just mean an offer (of any kind) which is open for acceptance and has not yet been withdrawn. So the meaning intended is sometimes spelt out by adding words of explanation like this "This is an OPEN offer to settle... which may be referred to at any hearing relating to of this legal dispute ...".
In theory, because the default position is that any communications which are genuinely aimed at settlement of a legal dispute are "without prejudice", it is not necessary to start such communications with the words WITHOUT PREJUDICE, but in practice lawyers nearly always do, just to make sure. It is only communications aimed at settlement of a "legal" dispute which are "without prejudice". A practical offer by a landowner to try to limit certain noisy activities to certain days or times in response to a complaint by a neighbour would not be "without prejudice" if there is as yet no litigation and none is contemplated or anticipated. Simply querying an item on a bill does not mean that there is a legal dispute. Even if you say that an item on a bill is too large and offer to pay half that might not yet mean that the query has hardened into a legal dispute. The exact point in time when a complaint or disagreement becomes a "legal" dispute, and one or both parties start to contemplate the possibility of litigation, may not be easy to determine, hence the general practice of heading "without prejudice" offers with those actual words to indicate that the party considers there to be a legal dispute which it is seeking to settle.
If a communication is WITHOUT PREJUDICE EXCEPT AS TO COSTS that means that it is "without prejudice" as far as the final hearing is concerned (and so cannot be included in the Final Hearing Bundle) but once the judge, after the final hearing, has decided which party wins and what order to make, and notified the parties, the communication can then be referred to when arguments are subsequently made about who should be ordered to pay costs. The idea is that if a party wins in part, but does less well than a WITHOUT PREJUDICE EXCEPT AS TO COSTS offer they had previously turned down, the losing party who made the offer has an argument that they should not have to pay costs, or not all the costs, of the partially-winning party (or even have some of their costs paid by the partially-winning party) because, in retrospect, it can be seen that the partially-winning party ought to have accepted the offer, and the costs incurred by both parties after the offer was turned down were, as it turns out, incurred unnecessarily.
"Without prejudice except as to costs" offers used to be called Calderbank Letters or Calderbank Offers and you sometimes still find this terminology being used. Sometimes the expression "Without prejudice save as to costs" is used which means the same thing. Part 36 of the Civil Procedure Rules 1998 sets out a detailed scheme which can be used to make and respond to settlement offers made in cases in the High Court and County Court (or, if litigation has not yet commenced, in disputes which could end up in either of those courts) and a Part 36 offer is also regarded as being "without prejudice except as to costs".
The expressions "Without prejudice except as to costs", Part 36 Offer, etc. are specifically legal phrases which have a specific legal meaning. But the simple words "without prejudice" standing alone may be ordinary English words and may not always mean "without prejudice" in the lawyer's sense. For example an employer might write to an employee saying "During the current transport strike we will generally allow you to start work not later than 10.00 am but this is without prejudice to our right to require you to attend at your contractual start time of 09.00 am where pressure of work makes this necessary." In this example the employer is obviously not making an offer to settle a legal dispute but merely using the ordinary English expression "without prejudice" to emphasise and make clear the limited and qualified nature of a unilateral concession.
Likewise sometimes non-lawyers will head what is essentially a letter before action with the words "Without Prejudice" not to indicate that they are making a settlement offer but rather to indicate that they might eventually take things further - i.e. litigation - if the letter does not produce the desired results. So such a letter, if it does not contain a settlement offer, might not be "without prejudice" in the lawyer's sense even though it is headed "without prejudice". It is complications such as these which can lead to disputes between the parties about what documents can be included in the Hearing Bundle.
You can visualise correspondence as being at three levels. At the top level is OPEN correspondence which can be shown to a judge at any time and which can be included in the Hearing Bundle if either party thinks it relevant.
Below that, at the middle level is WITHOUT PREJUDICE EXCEPT AS TO COSTS correspondence. This cannot be shown to the judge before the judge has reached their decision on who wins the case. Thereafter it can be shown to the judge when the parties are making arguments about costs.
At the bottom level is WITHOUT PREJUDICE correspondence. This can never be shown to the judge.
Correspondence at each level can reply to or refer to other items of correspondence at the same level, or refer to correspondence at a high level (refer to but should not be worded as a direct reply to) but cannot refer to nor reply to correspondence at a lower level. So, for example, open correspondence cannot refer to any correspondence at a lower level, whereas WITHOUT PREJUDICE correspondence can refer to WITHOUT PREJUDICE EXCEPT AS TO COSTS correspondence and to OPEN correspondence.
If each item of correspondence has been written by a lawyer then each item should be correctly labelled and the above rules should have been observed. Unfortunately this is not always the case which can lead to mistakes and arguments about what can be included in the eventual Hearing Bundle. For example if a party refers, in correspondence labelled OPEN, to correspondence correctly labelled WITHOUT PREJUDICE EXCEPT AS TO COSTS, that supposedly OPEN correspondence will be deemed to be WITHOUT PREJUDICE SAVE AS TO COSTS and the party who wrote it, who hoped to be able to have it included in the Hearing Bundle, will be disappointed. But if the other party then replied to that "open" correspondence with their own "open" correspondence they might be held to have waived their privilege in the first letter with the result that all three items of correspondence are then deemed "open" correspondence!
Courts and tribunals often encourage parties to try formal mediation and an open letter by a party simply proposing mediation (without outlining any specific settlement proposals) is normally held to have retained its open status. The same applies to a letter written after an unsuccessful mediation: as long as it simply notes that mediation has been unsuccessful, without saying anything about what happened in the mediation, then it does not lose its OPEN status.
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