The principle of "without prejudice" has long been a cornerstone of South African law, allowing parties to negotiate settlements without fear that their communications will be used against them in court. However, recent judgments by the Supreme Court of Appeal (SCA) and the High Court have raised important questions about the limits of this rule, particularly in cases involving bad faith or misrepresentation. 

Understanding the “Without Prejudice” Rule 

The "without prejudice" rule is designed to protect genuine settlement negotiations from being admissible as evidence in court. This principle encourages parties to resolve disputes amicably without the risk of their statements being used against them. For communications to qualify as "without prejudice," they must: 

• Be part of a genuine attempt to settle a dispute. 
• Clearly indicate the intention to invoke the "without prejudice" privilege. 

Recent Judicial Clarification 

Bad Faith and Misrepresentation: Courts have increasingly recognized exceptions to the "without prejudice" rule in cases where communications contain evidence of fraud, misrepresentation, or undue influence. 

Admissibility in Costs Disputes: The High Court has also addressed the admissibility of "without prejudice" communications in determining costs orders. 

Commercial Negotiations: Recent cases have highlighted the importance of assessing the substance of "without prejudice" communications rather than relying solely on the label. Courts have emphasized that the privilege does not apply if the communication is not genuinely aimed at settlement. 

Litigation Strategies 

For legal practitioners, navigating the complexities of the "without prejudice" rule requires a nuanced understanding of its exceptions. Key strategies include: 

• Ensuring that settlement communications are genuinely aimed at resolving disputes. 
• Avoiding admissions of liability that could interrupt prescription or be used in evidence. 
• Leveraging case law to argue for or against the admissibility of "without prejudice" communications.

Conclusion 

The evolving jurisprudence on the "without prejudice" rule reflects the courts' commitment to balancing the interests of encouraging settlement and preventing abuse. As South African law continues to refine this principle, legal practitioners must stay informed about these developments to represent their clients effectively in commercial negotiations and Litigation. 

Written by Anastacia Willemse, Candidate Attorney: Commercial law, SchoemanLaw Inc