Privileged communication is defined in the in the law.com dictionary as "statements and conversations made under circumstances of assured confidentiality which must not be disclosed in court". It has been established that the phrase "Without Prejudice", written at the head of correspondence identifies it as being privileged. It is a far too little known fact, however, that the simple act of typing the words "Without Prejudice" at the top of a letter does not endow it with the magical power of invisibility. You will, for example, inevitably be disappointed if you write those words at the head of an insulting letter to your erstwhile spouse expecting that letter to be omitted from evidence. A document is not privileged because you label it as such. Rather, the privilege relates to the character of the document. This means that not all letters labelled "Without Prejudice" are as advertised. It also means that some letters are privileged without being branded.
The law of privilege is well reviewed in the Alberta case of Leonardis v. Leonardis, 2003 CarswellAlta 940. There are three major types of privilege that parties to a family action might encounter: The first is privilege enjoyed by communication relating to legal advice between solicitor and client. This is most clearly embodied in correspondence between a lawyer and her client. The second is the privilege attached to documents that have been created primarily to further litigation. A little less defined than the first, this applies to such documents as expert reports. The third type of privilege attaches to communications in furtherance of settlement, including verbal and written discussions, offers and proposals. The first two forms of privilege belong to the one party in the litigation partaking in the communication or obtaining the documentation. The third form, however - that of settlement communication - belongs to both the parties. This means that while the privilege of an expert report can be waived by a party wanting to use that report in court, the privilege attached to settlement negotiations can only be waived by both parties. Because labelling something "Without Prejudice" does not change its privilege status, make sure you know what that status is before you mail the letter or hit the send button.