Important considerations in an Offer of Settlement without Prejudice

Family Law Act 1975, more particularly Sect 117C provides the procedure on how parties to a case can make an offer to settle their dispute. In the recent Family Law Rules 2004 – REG 10.02, it was provided that Open and ‘without prejudice’ offer can be made by any party to case before the Court under the following guidelines:

• (1) An offer to settle is made without prejudice (a without prejudice offer) unless the offer states that it is an open offer

• (2) A party must not mention the fact that a without prejudice offer has been made, or the terms of the offer:
   
•  a. In any document filed; or
•  b. At a hearing or trial.
   
• (3) If a party makes an open offer, any party may disclose the facts and terms of the offer to other parties and the court.
   
• (4) Subrule (2) does not apply to:
•  a. An application relating to an offer; or
•  b. An application for costs.

Offer to settle are generally considered as without prejudice, unless otherwise stated in the offer that the same is made with Prejudice. Without Prejudice in the context of an Offer to Settle pertains to the condition that when the Offer is accepted, the rights and privileges of the parties thereto are considered loss and waived. It forms a Res Judicata on the issue of the settlement and it is considered to be final. In effect, they have a free leeway and flexibility in the offer which they can change over time as they may see fit for their respective benefits.

It should be noted that if a party proposes an open offer, they must inform the Court and the other parties of all the important and relevant facts and terms in the offer. This will allow the other party to present his counter offer, if he has any, and to have the counsel of both parties to negotiate the terms of the settlement for the best interest of both parties.

Offer of settlement has an important effect on the allocation of legal costs to both parties. That is why the Court encourages the parties to have a settlement as early as possible to avoid any future expenses on the suit. In some cases, a party may be subject to cost penalties if they fail to accept a reasonable offer of settlement.

As such, settlement proposed by both parties must be reasonable and acceptable according to law and social norms. In this way, an amicable settlement can be attained as early as possible in order.

This eBook provides an introduction to the legal concepts that govern property settlements and spousal maintenance.