Confidentiality and without prejudice in mediation.

Why mediation needs a safe space.

No one will negotiate honestly if their offers and admissions can be read back to them at a hearing. If a defendant offering ten thousand dollars to settle feared that offer being used as proof they owed the money, they would never make it. Confidentiality and the without prejudice rule remove that fear. They let the parties speak openly at the mediation, knowing that what is said there stays there if the case does not settle.

This is general information, not advice on your matter. The protections are strong but not absolute, and their exact scope depends on the forum and the circumstances. The safe working assumption is that genuine settlement discussions are protected, but that you should still be careful about what you say and put in writing, because the limits do matter in some cases.

What does confidentiality cover in mediation?

Confidentiality means what is said and done at the mediation is private and is not to be disclosed outside it. For court-referred mediation in NSW, the Civil Procedure Act protects the confidentiality of the process, and private mediations are usually governed by a confidentiality clause in the mediation agreement the parties sign at the start. Between them, these keep the discussions, offers and documents created for the mediation out of the public domain.

The point of confidentiality is candour. Parties can explore compromise, test ideas, and make concessions to see if a deal is possible, without fear that a rival, a regulator, or the press will hear about it. It also protects commercial information exchanged to resolve the dispute. Confidentiality is one of the reasons parties often prefer mediation to a public court hearing, especially in business disputes.

What is the without prejudice rule?

The without prejudice rule keeps genuine settlement discussions out of evidence. If parties are trying to settle a dispute, what they say and write in that attempt cannot later be used in court to prove the claim. That is why settlement letters are marked without prejudice, and why offers made at a mediation cannot be produced at the hearing if the mediation fails. The rule exists so that trying to settle cannot be turned into an admission.

The protection covers genuine attempts to resolve a dispute, not everything a party ever says. A statement made in a real negotiation is protected; a threat or an admission made outside any settlement attempt may not be. The rule is reflected in the Evidence Act, which limits the admissibility of communications made in connection with an attempt to settle. Our guide on what mediation is explains how this lets the shuttle negotiation work.

What are the limits of the protection?

The protections are not absolute. Without prejudice protection can be lost where both parties agree to waive it, and a without prejudice offer can be used on the question of costs after judgment, which is how Calderbank offers work, penalising a party who rejected a fair offer. Confidentiality can also give way where disclosure is required by law, where there is a threat to safety, or where the terms of settlement themselves need to be enforced.

There are also things the rules do not hide. A document does not become privileged just because it is shown at a mediation; a contract or invoice that exists independently is still discoverable in the court case. And the rules do not protect against everything said in the room; a genuine threat, or conduct amounting to a crime, is not shielded. Knowing where the protection ends is as important as knowing that it exists.

Can what you say at mediation be used later?

As a general rule, no. Genuine settlement discussions at a mediation cannot be used at a later hearing to prove the claim, and the confidentiality of the process keeps them private. If the mediation fails, the case proceeds as if the discussions never happened, and neither side can point to the other's offers or concessions as admissions. This is the core protection that lets parties negotiate honestly.

The main exception people meet in practice is costs. A without prejudice offer can be revealed to the court after the decision, on the question of who pays costs, to show that a party rejected a reasonable offer and did worse. That is a deliberate feature, not a loophole, and it is why offers are a powerful tool. Our guide on costs explains how offers shift the costs risk.

How should you use these protections?

Use them to negotiate openly, but do not treat them as a licence to say anything. Mark genuine settlement correspondence without prejudice so its purpose is clear. Keep your negotiations focused on resolving the dispute, because that is what the protection covers. And remember that the terms of settlement themselves, once agreed, are meant to be enforceable, so the final signed deal is not confidential in the way the negotiation was.

If confidentiality of the outcome matters to you, say so and build a confidentiality clause into the terms of settlement. Business parties often want the fact and amount of a settlement kept private, and that has to be agreed as a term, not assumed. Handled well, these protections let you explore a deal freely and then lock in an outcome you can rely on, which is exactly what mediation is for.

Primary sources: the confidentiality of court-referred mediation is protected by Part 4 of the Civil Procedure Act 2005 (NSW), and the admissibility of settlement communications is limited by section 131 of the Evidence Act 1995 (NSW). Community mediation confidentiality arises under the Community Justice Centres Act 1983 (NSW). NSW decisions on without prejudice privilege are searchable on JADE.

Common questions

Is mediation confidential in NSW?

Yes. What is said and done at a mediation is private. Court-referred mediation is protected by the Civil Procedure Act, and private mediations are usually governed by a confidentiality clause the parties sign at the start. Between them, these keep the discussions, offers and documents created for the mediation out of the public domain, which is what lets parties negotiate candidly.

What does without prejudice mean?

The without prejudice rule keeps genuine settlement discussions out of evidence. What parties say and write in a real attempt to settle cannot later be used in court to prove the claim. That is why settlement letters are marked without prejudice and why offers at a mediation cannot be produced at the hearing if it fails. Trying to settle cannot be turned into an admission.

Can what you say at mediation be used against you?

As a general rule, no. Genuine settlement discussions cannot be used at a later hearing to prove the claim, and the confidentiality of the process keeps them private. The main exception is costs: a without prejudice offer can be revealed to the court after the decision, on the question of who pays costs, to show a party rejected a reasonable offer and did worse.

Are there limits to mediation confidentiality?

Yes. The protections are not absolute. Without prejudice protection can be waived by agreement and can be used on costs after judgment. Confidentiality can give way where disclosure is required by law, where there is a threat to safety, or where the terms of settlement need to be enforced. Documents that exist independently, like a contract, remain discoverable even if shown at the mediation.

Does confidentiality cover the settlement itself?

Not automatically. The negotiation is protected, but the terms of settlement are meant to be enforceable, so the signed deal is not confidential in the same way. If you want the fact or amount of the settlement kept private, that has to be agreed as a confidentiality term in the terms of settlement, not assumed.

To speak to a litigation lawyer, call Aaron Kernaghan on 0421 717 019.

This article is written by Aaron Kernaghan, Special Counsel at Good Legal Lawyers, as at 30 August 2026. It is general information and reflects the personal opinion of the author only. It is not legal advice, it is not a substitute for advice on your own matter, and it does not purport to be accurate or complete. The law changes and procedure varies from case to case. For advice on a specific matter, contact Aaron Kernaghan on 0421 717 019 or contact the firm.

More commentary by Aaron Kernaghan.

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