What does 'without prejudice' mean on a demand letter in Ontario?

"Without prejudice" is a legal label that signals a communication is being made in an attempt to settle a dispute and should not be introduced in court as evidence of liability or admission. In Ontario civil proceedings, genuine without-prejudice communications made for settlement purposes are generally inadmissible as evidence of a party's legal position.

The concept protects open settlement discussions. If both sides can communicate freely without worrying that every word will be used against them, they are more likely to negotiate honestly and reach a resolution. Courts want to encourage settlement, and the without-prejudice rule supports that goal.

However, marking a letter "without prejudice" does not automatically make it protected. Courts look at the substance and context — was the communication actually made for the purpose of settling the dispute, or is the label being misused to make a threat or tactical statement that the writer hopes to shield from scrutiny? A demand letter that asserts your legal rights and demands payment is typically an open (not without-prejudice) communication. A counter-offer or compromise proposal in an ongoing exchange is more naturally a without-prejudice communication.

A lawyer can advise you on when to use the label and when to leave it off, since applying it incorrectly can create confusion about your legal position.