Does the phrase “without prejudice” in a letter constitute privilege?

In this jurisdiction privilege is not determined by the presence or absence of the words “without prejudice”. In Denovan v. Lee (1990), CarswellBC 506, 40 C.P.C. (2nd) 54 (B.C.S.C.) the court adopted this quote from Sopinka and Lederman, The Law of Evidence in Civil Cases at pp. 198 - 199: A litigious dispute must be in existence or at least contemplated before this privilege can become effective. In addition, the communication must have been made with the intention that should the negotiations fail, it would not be disclosed without consent. Communications made in this context will be protected whether they are oral or in writing. Usually, the intention to claim privilege with respect to written negotiations is indicated by inserting the phrase “without prejudice” at the head of the correspondence. The insertion of these words, however, does not serve to invoke the privilege automatically. The letter must have been written truly for the purpose of attempting to effect a settlement, and if the circumstances reveal otherwise, then no privilege can arise with respect to the letter, notwithstanding it was expressed to have been made “without prejudice.” Although this phrase is not conclusive of the intention, it may constitute some evidence of it and thus its use is of value. By the same reasoning, the absence of this expression from the correspondence does not necessarily vitiate the privilege. It may be implicit in the circumstances, and accordingly, the words would be superfluous. Moreover, in the course of negotiations, if a letter has been written by one party “without prejudice,” those words will suffice to cover the whole of the correspondence of which the letter forms a part. Thus, if a reply to a letter, which contained the phrase, is not stated to have been written “without prejudice,” it will be implied that it was written on the same understanding. All letters, whether made before or after the one which is expressly stated to be “without prejudice” and which form a part of the negotiations between the parties, will be privileged. In addition, an enclosure referrable to, and accompanying a letter marked “without prejudice,” will be protected from production. The privilege is reposed in both parties and no disclosure of the communication may be made without their consent. Not only are “without prejudice” letters and negotiations between solicitors inadmissible as against the parties without consent, but they are also inadmissible as evidence against the solicitors should they become parties to an action.

At para. 14 of the Denovan v. Lee decision the court stated: ... All the correspondence relating to the negotiations is privileged and, whether marked “without prejudice” or not, it should remain so unless both parties agree that the privilege be waived. ...