Adverse possession — Acknowledgement of title — Limitation Act 1980 — Appellant owner of paper title — Appellant seeking possession against respondent — Respondent claiming right to occupy under lease — Offer in without prejudice correspondence to purchase freehold — Proceedings stayed — Respondent later claiming title by adverse possession — Section 29(2) of 1980 Act — Whether necessary period of adverse possession established — Whether acknowledging title of paper owners in earlier proceedings
The appellant and her husband were the registered owners of a property in London, which they let to tenants. In 1981, the then tenant allowed the respondent and her father (B) to occupy the property. In 1989, the appellant and her husband began possession proceedings against the respondent and B, who admitted the appellant’s title but defended the claim on the ground that they had acquired a leasehold interest either in law or in equity. In 1992, in “without prejudice” correspondence between the parties, the respondent and B offered to purchase the freehold, but the offer was rejected. The proceedings were not pursued further and were stayed automatically on B’s death in 2000.
In 2003, following a failed application to lift the stay, the appellant and her husband issued new possession proceedings in the county court. The respondent claimed to have acquired title to the freehold by adverse possession, under sections 15 and 17 of the Limitation Act 1980, by virtue of more than 12 years’ uninterrupted possession as a trespasser before the commencement of the new possession proceedings. The appellant and her husband contended that the respondent’s defences to the earlier possession proceedings and the offer to purchase the freehold in the “without prejudice” correspondence had amounted to an acknowledgement of title within section 29(2)(a) of the 1980 Act, which had stopped time running against them. In the courts below, that argument was rejected and the possession claim was dismissed. The appellant appealed.
Held (Lord Scott dissenting on the third point): The appeal was dismissed. (1) For possession to be “adverse”, all that is normally required is an intention to possess together with actual physical possession. Accordingly, the fact that the respondent and B might have believed that they were in possession as tenants in law or in equity did not prevent their possession for the 12 years prior to the 2003 possession proceedings from being adverse. (2) The admission of title in the defence to the earlier possession proceedings had constituted an acknowledgement of title. Section 29(2) does not require an acknowledgement of a right to immediate possession, but simply an acknowledgement of the paper owner’s title. However, that acknowledgement did not prevent the respondent from acquiring title by adverse possession because it had been made more than 12 years prior to the current possession proceedings. An “acknowledgement” under section 29 cannot be continuing in nature, but arises at the date of the signed document in which it must be embodied: see section 30. The respondent’s reliance on the defence in respect of the appellant’s failed application to lift the stay did not renew the acknowledgement. For renewal to occur, it will ordinarily be necessary to write and sign something that affirms or repeats the acknowledgement. (3) An offer to purchase an interest in land, even expressly subject to contract, will ordinarily amount to an acknowledgement of the offeree’s title to that interest. However, the respondent’s offer to purchase the freehold of the property was not an acknowledgement sufficient to satisfy section 29(2) since it had been in “without prejudice” negotiations to settle the earlier proceedings and was therefore inadmissible. The principles governing the admissibility, in subsequent proceedings, of a statement made in “without prejudice” negotiations to settle an earlier action, should be the same as would govern its admissibility in the earlier proceedings. A statement will be admissible only if it is not connected with the issues in the case that formed the subject matter of the negotiations, or if it falls outside the area of compromise. A statement cannot be admitted as evidence that an admission was made, rather than as evidence of the truth of that admission. Therefore, the appellant could not rely on the 1992 offer as evidence that an acknowledgement of title had been made where it was inadmissible as evidence of the appellants’ ownership. There were no public policy grounds for overriding the “without prejudice” rule in the instant case or any impropriety in the respondent’s conduct, either generally or in relying on the rule.
The following cases are referred to in this report.
Belanger v Gilbert [1984] 6 WWR 474, CA (Canada)
Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] 1 WLR 2066; [2006] 4 All ER 705
Cutts v Head [1984] Ch 290; [1984] 2 WLR 349; [1984] 1 All ER 597, CA
Daintrey, Re, ex parte Holt [1893] 2 QB 116
Edgington v Clark; sub nom Edginton v Clark [1964] 1 QB 367; [1963] 3 WLR 721; [1963] 3 All ER 468, CA
Farrell v Tisdale (1987) 16 BCLR (2d) 230, CA (Canada)
Hodgkinson & Corby Ltd v Wards Mobility Services Ltd (No 2) [1997] FSR 178, Ch
Hoghton v Hoghton (1852) 15 Beav 278
Johnston v Smith [1896] 2 IR 82
Jones v Foxall (1852) 15 Beav 388
Markfield Investments Ltd v Evans [2001] 1 WLR 1321; [2001] 2 All ER 238; (2001) 81 P&CR 33, CA
McDowell v Hirschfield Lipson & Rumney [1992] 2 FLR 126; The Times 13 February 1992, QB
Muller v Linsley & Mortimer [1996] PNLR 74, CA
Norwich Union Life Insurance Society
v Tony Waller Ltd [1984] 1 EGLR 126; (1984) 270 EG 42
Ofulue v Bossert [2008] EWCA Civ 7; [2009] Ch 1; [2008] 3 WLR 1253, CA
Pye (JA) (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419; [2002] 3 WLR 221; [2002] 3 All ER 865; [2003] 1 P&CR 10
Pye (JA) (Oxford) Ltd v United Kingdom 44302/02 [2008] 1 EGLR 111; [2007] RVR 302; (2008) 46 EHRR 45, ECtHR, [2005] 3 EGLR 1; [2005] 49 EG 90; [2006] RVR 188; (2006) 43 EHRR 3, ECtHR
River Steamer Co, Re, sub nom Mitchell’s Case (1871) LR 6 Ch App 822
Rush & Tompkins Ltd v Greater London Council [1989] AC 1280; [1988] 3 WLR 939; [1988] 3 All ER 737, HL |page:98|
South Shropshire District Council v Amos [1986] 1 WLR 1271; [1987] 1 All ER 340; [1986] 2 EGLR 194; (1986) 280 EG 635, CA
Spencer v Hemmerde [1922] 2 AC 507, HL
Tomlin v Standard Telephones & Cables Ltd [1969] 1 WLR 1378; [1969] 3 All ER 201; [1969] 1 Lloyd’s Rep 309, CA
Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436; [2001] 1 All ER 783, CA
Waldridge v Kennison (1794) 1 Esp 143
Walker v Wilsher (1889) LR 23 QBD 335
Whiffen v Hartwright (1848) 11 Beav 111
This was an appeal by the appellant, Mrs Agnes Ofulue, from a decision of the Court of Appeal, dismissing an appeal from a decision of HH Judge Levy QC, sitting in Bow County Court, refusing a claim for possession against the respondent, Ms Erica Bossert, and finding that the respondent had acquired title by adverse possession.
Richard Wilson QC and Christopher Jacobs (instructed by Hodge Jones & Allen) appeared for the appellant; Peter Crampin QC and Simon Williams (instructed by RFB Solicitors) represented the respondent.
Giving the first opinion, Lord Hope of Craighead said:
My lords,
[1] I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Neuberger. I agree with it, and for the reasons that he gives I would dismiss the appeal and make the order that he proposes. I also agree with my noble and learned friends Lord Rodger of Earlsferry and Lord Walker of Gestingthorpe. I wish to add only a few words of my own on the question of whether the offer to purchase the property in the letter of 14 January 1992, which was written on the Bosserts’ behalf by their solicitor, can be relied on by the Ofulues in these proceedings as an acknowledgement.
[2] Sometimes, letters are headed “without privilege” in the most absurd circumstances, as Ormrod J observed in Tomlin v Standard Telephones & Cables Ltd [1969] 1 WLR 1378, at p1384. However, where the letters are not headed “without prejudice” unnecessarily or meaninglessly, as he went on to say at p1385, the court should be very slow to lift the umbrella unless the case for doing so is absolutely plain. The principle that the court should follow was that expressed by Sir John Romilly MR in Jones v Foxall (1852) 15 Beav 388, at p396. If converting offers of compromise into admissions of acts prejudicial to the person making them were to be permitted, no attempt to compromise a dispute could ever be made. The basis for the rule has been explained more fully by Oliver LJ in Cutts v Head [1984] Ch 290, Lord Griffiths in Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 and Robert Walker LJ in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436. With the benefit of those explanations, it may be restated in these terms. Where a letter is written “without prejudice” during negotiations with a view to a compromise, the protection that these words claim will be given to it unless the other party can show that there is a good reason for not doing so.
[3] In this case, there is no doubt that the letter of 14 January 1992 was written in the course of a genuine attempt to settle the proceedings for possession that were then in existence between the parties. It does not contain an admission in so many words that the Ofulues were the owners of the property. However, the offer in the last sentence of the letter to purchase it from them can be construed as an express acknowledgement of this fact. In any event, it was an implied acknowledgement that was sufficient for the purposes of section 29(2) of the Limitation Act 1980 (the 1980 Act). Can this be used to defeat the defence to the proceedings that have now been issued in which the Ofulues seek an order declaring that their title to the property has not been extinguished?
[4] This question would not have arisen had the appellant not allowed her claim for possession to fall asleep following the breakdown of the attempt at settlement. As it is, the Ofulues allowed so much time to pass that they must now challenge Ms Bossert’s assertion that the title has passed to her by way of adverse possession. That is why the present claim has been brought. The letter of 14 January 1992 was written within 12 years of the start of these proceedings. What grounds are there for saying that, notwithstanding the fact that it was written “without prejudice”, it can be founded on as an effective acknowledgement for the purposes of section 29(2) of the 1980 Act?
[5] In Cutts, at p306, Oliver LJ said that the rule that protects without prejudice negotiations from disclosure rests, at least in part, on public policy. As he explained, the public policy justification essentially rests on the desirability of preventing statements or offers made in the course of negotiations from being brought before the court of trial as admissions on the question of liability. At p310E, he said that the public policy protects negotiations from disclosure “whilst liability is still in issue”. In that case, the offer was unacceptable, the case went to trial and the question was whether the offer could be referred to on the issue of costs. The situation in this case is that the negotiations were not successful but the application for possession in the original action has been struck out. So, there is no question of seeking in that action to rely on the letter of 14 January1992 before the court of trial. The question that this formulation of the public policy justification gives rise to is whether the protection from disclosure has any effect beyond the life of the action that the parties were attempting to settle when they entered into the negotiations.
[6] In Rush & Tompkins, at p1299, Lord Griffiths said that the effect of the phrase was that, as a general rule, in the event of the negotiations being unsuccessful, the negotiations were not to be referred to at the subsequent trial. At p1300, he said that the rule was not absolute and that resort may be had to the without prejudice material for a variety of reasons when the justice of the case requires it. In that case, the second defendants sought disclosure of correspondence marked “without prejudice” between the plaintiffs and the first defendants that had resulted in those parties reaching a compromise. It was held that admissions made to reach a settlement with a different party within the same litigation were also inadmissible, whether or not settlement was reached with that party. Lord Griffiths said, at p1305, that the wiser course, in multi-party litigation, was to protect without prejudice communications between parties to litigation from production to other parties in the same litigation. In that case, the question of whether the protection would continue to be available in any subsequent proceedings between the same parties with reference to the same subject matter was not in issue.
[7] In Unilever, the claimant sought to rely on the defendant’s alleged threat to take proceedings in the UK in respect of an alleged infringement of a patent, made in the course of a without prejudice meeting with reference to proceedings that had been brought in France, to justify the taking of proceedings for a declaration of non-infringement in this jurisdiction. The claimant was not seeking to make use of the alleged threat in the proceedings that were the subject of the negotiations for settlement. In a sense, it had nothing to do with those proceedings at all. It would not have been relevant to anything that was to be determined at the trial. As Robert Walker LJ noted at pp2444-2445, there are various situations in which the without prejudice rule does not prevent the admission into evidence of what one or both parties had said or written. None of those situations applies to this case. However, the general approach that he recommended provides valuable guidance. At pp2448-2449, he said that to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications would not only create huge practical difficulties but would be contrary to the underlying objective, founded partly in public policy and partly in the agreement of the parties, of giving protection to the parties so that they could speak freely about all issues in the litigation when seeking compromise. These comments show that this is not a situation in which arguments that resort to procedural or linguistic technicalities are appropriate.
[8] The argument that the letter cannot be relied on as an acknowledgement faces two difficulties, which have persuaded my noble and learned friend Lord Scott of Foscote that the rule does apply in this case. The first is the product of a change of circumstances. The issue that is being litigated between the parties now is not the issue that was being litigated when the letter was written in January 1992. In fact, it was not an issue that was in dispute between the parties at that time at |page:99| all. The second is a more subtle aspect of the same point. It is whether the protection that the rule gives in without prejudice negotiations to an admission against interest extends to an acknowledgement of what at the time it was made was an agreed fact.
[9] Normally, when negotiations are entered into with a view to settling a claim that has already been brought, one or other of two things happens: either they result in an agreement or they break down and the claim proceeds to judgment. If they result in agreement, the letter that was written without prejudice is available to show what the agreement was. If the claim proceeds to judgment, the protection remains in place while liability is still in issue, but it ceases to have any purpose when the court has resolved the dispute. This case is unusual because the negotiations did not result in an agreement and the claim did not proceed to judgment. It went to sleep and was then struck out. However, I would hold that this turn of events did not remove the need for protection. The dispute had not been resolved, so there was still a risk that things said in the letter might be used to the Bosserts’ prejudice. The issue that had given rise to the original proceedings had not gone away. Ultimately, of course, if the Bosserts remained in possession and no further steps were taken against them, they would acquire a right of ownership under the provisions of the 1980 Act. However, so long as the Ofulues remained the owners and the dispute was unresolved one way or another there was a risk that things said in the letter might be used against them. The precise way in which they might be used against them is beside the point. The public policy grounds for the rule would be contradicted if the protection was not available in fresh proceedings to replace those that were struck out.
[10] The Ofulues’ title was not in issue when the letter was written, since it was common ground in the original proceedings that they were the owners of the property. The Bosserts had already admitted that the Ofulues were the owners in their defence. Thus, acknowledging that this was so as part of the attempt to achieve a compromise was giving nothing away. It has now become the focus of the fresh proceedings that have been brought. On the other hand, the offer of a compromise did contain within it an implied admission that the Bosserts’ defence to the claim for possession was unsustainable. The question as to whether this makes any difference can be tested in this way. Could the writer of the letter have made the offer that it contains without acknowledging the Ofulues’ ownership? The answer to that question must be “no”. It is obvious that an offer to purchase, which is what this was, could not have been made without that acknowledgement. There is no need in this case to explore the outer limits of the rule that was discussed in Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] 1 WLR 2066. The acknowledgement cannot be said to be unconnected with, or to fall outside the area of, the offer to compromise. It was a necessary part of it.
[11] The argument that the acknowledgement can, following Hoffmann LJ’s reasoning in Muller v Linsley & Mortimer [1996] PNLR 74, at p79, and in Bradford & Bingley, in [16], be viewed simply as a fact independently from any admission that can be spelled out of it faces the same difficulty. How could the writer have avoided this aspect of his communication when he was making his offer to purchase the property? I do not see how he could reasonably have been expected to have said or done anything differently. As Lord Walker says, in [51], by one and the same words he was both admitting the Bosserts’ need to purchase the property if they were to retain possession of it and acknowledging the Ofulues’ ownership. The protection that the rule gives to that admission must apply equally to the acknowledgement. They are two sides of the same coin.
[12] I think that the public policy basis for not allowing anything said in the letter to be used later to her prejudice provides Ms Bossert with all she needs to defeat the argument that the implied admission that it contains can be used as an acknowledgement against her in these proceedings. The essence of it lies in the nature of the protection that is given to parties when they are attempting to negotiate a compromise. It is the ability to speak freely that indicates where the limits of the rule should lie. Far from being mechanistic, the rule is generous in its application. It recognises that unseen dangers may lurk behind things said or written during this period, and it removes the inhibiting effect that this may have in the interests of promoting attempts to achieve a settlement. It is not to be defeated by other considerations of public policy that may emerge later, such as those suggested in this case, that would deny them that protection.
Giving the second opinion, Lord Scott of Foscote said:
My lords,
[13] The litigation that has led to this appeal to your lordships began with a claim form issued on 30 September 2003, whereby the appellant, Mrs Ofulue, and her husband claimed possession of 61 Coborn Road, Bow, London E3, from the respondent, Ms Bossert. Mr and Mrs Ofulue were, and had been since 1976, the registered proprietors of the property. They had not, however, at least since 1981, been in actual possession of the property. In 1981 or 1982, the respondent and her father had been allowed into occupation of the property by a former tenant of Mr and Mrs Ofulue, and the respondent, together with her father until his death in 1996, had occupied the property ever since. It is therefore not surprising to find that her defence to the possession claim is based on a claim to have been in adverse possession of the property for a period in excess of 12 years: see section 15 of the 1980 Act.
[14] The appellant’s response to this adverse possession defence relies on section 29(2)(a) of the 1980 Act:
(2) If the person in possession of the land… in question acknowledges the title of the person to whom the right of action has accrued —
(a) the right shall be treated as having accrued on and not before the date of the acknowledgement …
Section 30(1) of the 1980 Act requires that a section 29 acknowledgement “must be in writing and signed by the person making it”, but subsection (2) enables the acknowledgement to be made “by the agent of the person by whom it is required to be made”.
[15] Two documents are relied on by the appellant as constituting effective section 29 acknowledgements of title. Both documents came into existence in earlier possession proceedings that had been brought by the appellant and her husband against the respondent and her father. The earlier possession proceedings had been commenced in 1989. The statement of claim, served on 26 June 1990, pleaded, in para 1, the appellant’s title to 61 Coborn Road and, in para 2, that the respondents had wrongfully taken possession of the property and were wrongfully retaining possession. The respondent and her father served their defence on 18 July 1990. Paragraph 1 of the defence admitted para 1 of the statement of claim and was accordingly an admission of Mr and Mrs Ofulue’s title to 61 Coborn Road. The defence went on to claim (in para 6) that Mr Bossert had become in equity the tenant of 61 Coborn Road or, alternatively (in para 8), was entitled to remain in possession pursuant to an oral agreement with Mr Ofulue for the grant of a 14-year lease. No adverse possession claim was made, for the Bosserts had not yet been in possession for the requisite 12 years. The three paragraphs of the defence to which I have referred contain, perhaps individually but certainly collectively, a clear acknowledgement of Mr and Mr Ofulue’s title to 61 Coborn Road. The defence, signed by counsel instructed by the Bosserts’ solicitor, is the first of the documents on which the appellant relies as a section 29 acknowledgement. Her problem is that the date of the document, July 1990, is more than 12 years before 30 September 2003, the date on which the current possession proceedings were commenced.
[16] The second document relied on as a section 29 acknowledgement also came into existence for the purposes of the first possession proceedings. On 12 August 1991, Geoffrey Levine & Co, the Bosserts’ solicitor, wrote to Mr and Mrs Ofulue’s solicitor, communicating an offer by its clients to purchase the freehold of 61 Coborn Road from Mr and Mrs Ofulue for £20,000. The letter was headed “Without Prejudice”. The Ofulues’ solicitor replied on 19 December 1991, in a letter headed “Without Prejudice save as to Costs”, indicating that it would advise its clients, whose instructions on the offer it had not yet received, that the £20,000 offered was inadequate. This led to a further letter from the Bosserts’ solicitor, dated 14 January 1992, also headed “Without Prejudice”, increasing to £35,000 the sum offered. |page:100| This revised offer was not accepted, and although in a letter dated 20 January 1992 the Ofulues’ solicitor continued the bargaining, the negotiations ran into the sand.
[17] The letter of 14 January 1992 is the second document relied on by the appellant as a section 29 acknowledgement of her and her husband’s title to 61 Coborn Road. The letter does contain a clearly implied acknowledgement of Mr and Mrs Ofulue’s title to the property and its date is within 12 years of the commencement of the current possession proceedings. The appellant’s problem, however, is that the letter was marked, as the associated correspondence had been marked, “Without Prejudice”, and that marking, it is submitted, bars its admissibility into evidence in the present proceedings.
[18] Before addressing the critical issue of the admissibility into evidence of the 14 January 1992 “Without Prejudice” letter, it is convenient to refer to the fate of the first possession proceedings. Following the service of the defence in July 1990, the case was transferred from the High Court to Shoreditch County Court and a directions hearing took place on 17 July 1991. It appears that lists of documents were shortly thereafter exchanged but that nothing else was done to prosecute the action and, on 26 April 2000, the appellant’s claim became automatically stayed pursuant to the Civil Procedure Rules. On 1 February 2002, an application by the appellant to lift the stay was issued and, on 16 April 2002, the case was struck out. She therefore had to commence fresh possession proceedings at a time when, subject to her ability to pray in aid a section 29 acknowledgement of title, her title was barred under section 15 of the 1980 Act. The 12 years’ adverse possession period would have long since expired.
[19] As my noble and learned friend Lord Neuberger of Abbotsbury has observed in [73] of his opinion, which I have had the advantage of reading in advance of writing my own, there are two live issues that your lordships must decide. The first is whether the admission of title in the defence in the first proceedings can be regarded as a continuing acknowledgement, effective for section 29 purposes until, in April 2002, the case was struck out. On this issue, I am in respectful agreement with Lord Neuberger that, for the reasons he has given (see [80] to [84] of his opinion), it cannot. Section 29(2)(a) refers to “the date of the acknowledgement”, subsection (3) to “the date of the payment” and subsections (4) and (5) to “the date of the payment or acknowledgement”. In my opinion, the scheme of section 29 is as incompatible with an acknowledgement in writing being treated as a continuing acknowledgement extending into the future beyond the date on which it was given, as would be a payment being accorded a continuing effect. Both a section 29 acknowledgement and a section 29 payment start time running from the date on which the acknowledgement or the payment was made. The concept of a continuing acknowledgement is, in my opinion, incompatible with the section. The Bosserts’ defence in the first proceedings constituted, in my opinion, a section 29 acknowledgement on the date on which it was signed, and perhaps again on the date on which it was served, and would have been capable of constituting a further acknowledgement on any subsequent date on which it was, so to speak, republished, for example, by being reserved after an amendment had been made. However, nothing that could constitute a republication ever happened and the defence’s effect as a section 29 acknowledgement was, in my opinion, spent on the expiry of 12 years after it had been served, at the latest.
[20] It follows that, in my opinion, the appellant must rely on the without prejudice letter of 14 January 1992. On this point, Lord Neuberger, and my noble and learned friends Lord Hope of Craighead and Lord Walker of Gestingthorpe, expressed the view that the public policy that encourages the negotiated settlement of actions requires that the 14 January 1992 letter be held inadmissible in evidence in the present action. My lords, I have the misfortune to disagree. I believe that that result of this appeal would represent a marked extension of the without prejudice rule that previous judicial authority does not warrant and that public policy does not require.
[21] The Bosserts’ defence in the first possession proceedings became spent as a section 29 acknowledgement but remains, in my opinion, of importance in providing the context against which the purpose of the 14 January 1992 letter must be assessed. There was no issue between the parties to the first possession proceedings concerning the Ofulues’ title to the property. The Ofulues’ ownership, which was never in issue, was admitted in the defence and was the basis on which the Bosserts’ pleaded claims to be entitled to remain in possession had been formulated and on which the settlement negotiations were throughout conducted. What was suggested in the letter of 12 August 1991 that started off the without prejudice negotiations was the acquisition by the Bosserts of the freehold of 61 Coborn Road in place of their disputed claim to a tenancy or lease. The ensuing negotiations related to the amount that the Bosserts should pay for that enhanced interest, an interest that they could not claim in the then current proceedings. It would, of course, have been out of the question for that correspondence to have been admitted in evidence (otherwise than with the consent of both parties) if the first possession proceedings had progressed to a trial, but not because of any admission regarding the Ofulues’ title.
[22] The early cases, which established the rule that without prejudice settlement negotiations were to be immune from admission into evidence on the trial of the issues sought to be settled, provide no warrant for extending the rule to other actions involving other issues. In Whiffen v Hartwright (1848) 11 Beav 111, Lord Langdale MR upheld an objection to the production of letters passing between the parties’ respective solicitors and written “with a view to an amicable adjustment of the questions in issue in this suit…” (emphasis added). In Hoghton v Hoghton (1852) 15 Beav 278, Sir John Romilly MR said, at p315, that he would disregard “admissions made solely with a view to compromise”. The acknowledgement of title contained in the 14 January 1992 letter cannot be described as an admission made for the purpose of compromise. It was the common ground on the basis of which the Ofulues’ pleaded claim to possession was made and the Bosserts’ pleaded defences were formulated. At p321, the Master of the Rolls said that “communications made with a view to an amicable arrangement ought to be held very sacred; for if parties were to be afterwards prejudiced by their efforts to compromise, it would be impossible to attempt an amicable arrangement of differences”. However, he was not speaking of matters referred to in the communications that were never in issue but were common ground between the parties. In Jones v Foxall (1852) 15 Beav 388, Sir John Romilly MR, at p396, fulminated against attempts to introduce into evidence offers of compromise “made without prejudice to the rights of the parties” (emphasis added). In that case, unlike the present case, the rights protected by the without prejudice label were the contested rights in issue in the case. In Hoghton, the issue had been whether a resettlement of settled estates should be set aside on, essentially, undue influence grounds. The without prejudice communications must have proceeded on the footing that the Hoghton sons or grandsons were legitimate offspring and, therefore, potential beneficiaries of the settled estates. If, subsequently, an illegitimacy issue had arisen and some content of the without prejudice communications, common ground at the time, had become relevant to the illegitimacy issue, why should the communications not have been given in evidence on that new issue? What public policy argument would exclude the evidence? How can the protection of common ground facts and matters on the basis of which compromise negotiations are being conducted be seriously thought to be necessary for the encouragement of such negotiations?
[23] The more modern cases, too, treat the protection afforded by without prejudice negotiation as a protection in respect either of the proceedings or the issues sought to be settled. In Cutts v Head [1984] Ch 290, the question for decision was whether the content of settlement offers made without prejudice could be admitted into evidence for costs purposes. Oliver LJ examined, at p306, the policy justification for the protection afforded by the “without prejudice” label:
That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations… |page:101| may be used to their prejudice in the course of the proceedings… The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.
(Emphasis added.)
He went on, at p307:
Once, however, the trial of the issues in the action is at an end and the matter of costs comes to be argued, this can have no further application for there are no further issues of fact to be determined upon which admissions could be relevant.
Applying these remarks to the present case, the acknowledgement of the title contained in the letter of 14 January 1992 was in no sense “an admission of fact to be determined” in the action. The Ofulues’ title was the basis both of their possession claim and of the Bosserts’ pleaded defence.
[24] Fox LJ, although agreeing with Oliver LJ as to the result, placed the protection to be afforded to the without prejudice offers not only on public policy but also on implied agreement between the parties: see at p314B. In so far as implied agreement is the juridicial basis of protection given to without prejudice offers or negotiations, the protection must, in my opinion, extend as far as, but no further than, the parties can reasonably be taken to have agreed. And I can see no sensible basis on which it can be supposed that the parties’ implied agreement extended to providing immunity from discovery or admission into evidence of factual statements that were common ground between the parties and the basis on which their respective cases in the litigation rested.
[25] In Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, this House examined the scope of the protection afforded by the “without prejudice” label. The plaintiff, Rush & Tompkins, having entered into a building contract with the Greater London Council (GLC), the first defendants, and engaged the second defendant as subcontractor, commenced proceedings against the GLC for, inter alia, a declaration that the GLC was liable to reimburse it the sums for which it might be held liable to pay the second defendant, and against the second defendant for an account and enquiry as to the amount due from it to the second defendant. Without prejudice negotiations between Rush & Tompkins and the GLC led to a compromise under which the GLC paid to Rush & Tompkins £1.2m and Rush & Tompkins undertook responsibility for all claims made by the second defendant. The second defendant then sought an order against Rush & Tompkins for discovery and production for inspection of the without prejudice documents that had led to the compromise agreement with the GLC. Lord Griffiths, with whose opinion each of the other members of the appellate committee agreed, cited, at p1299, with approval, the passages from the judgment of Oliver LJ in Cutts (supra) that I have cited and commented, at p1300C-D, that the “without prejudice” authorities:
all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement.
If that is the underlying purpose of the rule, it can hardly apply in the present case to the acknowledgement of title in the 14 January 1992 letter. The Bosserts’ offer to purchase had certainly been made in an attempt to achieve a settlement, but the acknowledgement of title implicit in the offer cannot possibly be described as an “admission made purely to achieve a settlement”. It was the basis of their own pleaded defence. Be that as it may, Lord Griffiths continued, at p1300E-F, to comment that:
There is also authority for the proposition that the admission of an “independent fact” in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement.
The Ofulues’ title to 61 Coborn Road was in no way connected with the merits of the cause being litigated. After referring to Waldridge v Kennison (1794) 1 Esp 143 with some lack of enthusiasm, Lord Griffiths then said, at p1300F-G, that:
If the compromise fails the admission of the facts made for the purpose of the compromise it should not be held against the maker of the admission and should therefore not be received in evidence.
The acknowledgement of the Ofulues’ title to 61 Coborn Road cannot be described as an “admission… for the purpose of the compromise”. It had been common ground between the parties throughout. At p1301C-D, Lord Griffiths summed up:
I would therefore hold that as a general rule the “without prejudice” rule renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made in a genuine attempt to reach a settlement.
This summary must be read together with the foregoing discussion by Lord Griffiths of the rule and its purposes.
[26] My lords, Lord Griffiths’ remarks in Rush & Tompkins, representing as they do the ratio of the House’s decision in that case, cannot, in my respectful opinion, be taken to permit the extension of the without prejudice rule to cover a statement of fact that, far from being an issue in the litigation, is common to the pleaded cases of both parties. Whether or not such a statement can sensibly be regarded as an “admission”, it cannot be described as an admission against interest: see Unilever plc v Proctor & Gamble Co [2000] 1 WLR 2436, at pp2448H-2449A, per Robert Walker LJ.
[27] Another authority to which I should refer is the judgment of Hoffmann LJ (as he then was) in Muller v Linsley & Mortimer [1996] PNLR 74. The plaintiff sued a solicitor for professional negligence. The damages that he sought to recover related to loss that he suffered when he was dismissed as a director of a private company, leading to a forced sale of his shares in that company. The plaintiff had sued the other shareholders, but the action was settled after without prejudice negotiations. In his action against the solicitor, the plaintiff pleaded that the settlement of his action against the other shareholders had represented a reasonable attempt to mitigate his loss. The solicitor then sought discovery of the without prejudice documents that had led to the settlement. The Court of Appeal allowed the solicitor’s appeal and ordered production of the documents. Leggatt and Swinton Thomas LLJ based their decision on the implied waiver by the plaintiff of the protection from discovery that the without prejudice rule might otherwise have provided. However, Hoffmann LJ based his decision on an analysis of the public policy that underlay the without prejudice rule, and concluded, at p79D, that:
The public policy aspect of the rule is not… concerned with the admissibility of statements which are relevant otherwise than admissions, ie independently of the truth of the facts alleged to have been admitted.
He cited, at p79F, Re Daintrey, ex parte Holt [1893] 2 QB 116 as an example:
A without prejudice letter containing a statement which amounted to an act of bankruptcy is admissible to prove that the statement was made
and, at p80A, expressed the opinion that:
the public policy rationale is… directed solely to admissions.
[28] If Hoffmann LJ’s view as expressed in Muller is correct, this appeal must be allowed. The acknowledgement of title contained in the 14 January 1992 letter was not an admission by the Bosserts. It was, as I have repeated, I fear ad nauseam, the basis on which their pleaded defence was based.
[29] The final authority to which I should refer is Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] 1 WLR 2066, in which this House had to consider whether a letter from a debtor containing an offer to pay “as a final settlement” a considerably lesser amount than the outstanding amount due could constitute an acknowledgement of the debt for the purposes of section 29(5) of the 1980 Act. The letter had not been marked “without prejudice”. The appellate committee was in agreement that the letter constituted a clear acknowledgement. The majority concluded that the without prejudice privilege did not apply to open correspondence that did not form part of compromise |page:102| negotiations, but Lord Hoffmann, repeating the views he had expressed in Muller concerning the scope of the public policy rationale for the without prejudice rule, said, in [16], at p2072E, that:
the without prejudice rule, so far as it is based upon general public policy and not upon some agreement of the parties, does not apply at all to the use of a statement as an acknowledgement for the purposes of section 29(5)
and, at p2072G, that:
All that an acknowledgement does under section 29(5) is to allow the creditor to proceed with his case. It lifts the procedural bar on bringing the action.
[30] My lords, I must now try to draw the threads together. This is not a case in which an issue of discovery arises. The appellant has the 14 January 1992 letter in her possession. The issue is whether that letter can be admitted in evidence as an acknowledgement of title for section 29 purposes. The only basis on which the letter could be excluded would be by the application of the without prejudice rule, and there are two alternative bases on which that rule might have to be applied, namely public policy and implied agreement. Both were discussed by Fox LJ in Cutts (supra) and by Hoffmann LJ in Muller.
[31] I would, for my part, rule out implied agreement as a possible basis for applying the without prejudice rule in this case. The extent of the implied agreement between the parties that can be spelt out of the without prejudice label under which the 1991-92 settlement correspondence was conducted was that the correspondence would not be admissible at the trial of the then pending action, or in any other proceedings in which the issues in that action were live issues. To give any greater extent than that to the agreement than can be implied from the correspondence would surely divorce the application of the rule from any reasonable consensual basis. Why should the parties be thought to have had anything in mind other than that the correspondence was without prejudice to their respective cases in the pending litigation? If the without prejudice rule is to be applied so as to exclude the 14 January 1992 letter from admission into evidence in the present case as an acknowledgement of the appellant’s title, the justification for that application must, in my opinion, be public policy.
[32] The public policy justification for refusing to allow a without prejudice communication in the course of compromise negotiations to be given in evidence is that to do so might inhibit parties to a dispute from settling their dispute without recourse to litigation or, if litigation were already pending, without recourse to a trial or, if a trial were in progress, without troubling the judge. These are important public policy considerations, but they are not the only ones. The policy approved by parliament and enacted in section 29 of the 1980 Act is that title to land should not be lost if, within the 12-year limitation period prescribed by section 15, the party in adverse possession has made a written acknowledgement of the title of the owner of the land. In Cutts, Oliver and Fox LJJ both came to the conclusion that the public policy underlying the without prejudice rule did not, after the conclusion of the trial, bar the admissibility of without prejudice communications for the purpose of decisions as to what costs orders should be made.
[33] In Matthews & Malek’s Disclosure (3rd ed) 2007, in paras 11.127 to 11.132, the authors deal with the extent of the without prejudice evidential rule and, in para 11.129, are listed a number of situations in which without prejudice communications have been admitted into evidence in subsequent litigation for other purposes. These include: constituting an act of bankruptcy (Re Daintrey), a severance of a joint tenancy (McDowell v Hirschfield Lipson & Rumney, The Times, 13 February 1992*), a trigger for a rent review clause (Norwich Union Life Insurance Society v Tony Waller Ltd (1984) 270 EG 42†, disapproved on another point in South Shropshire District Council v Amos [1986] 1 WLR 1271‡), seeing whether the negotiations give rise to an estoppel (Hodgkinson & Corby Ltd v Wards Mobility Services Ltd (No 2) [1997] FSR 178) and for the purpose of explaining delay when resisting a laches defence or a strike out for want of prosecution application. All these examples, and the others referred to in para 11.128, have in common that the purpose of admitting the without prejudice communication into evidence was not to assist in establishing the case of the party in question on any of the disputed issues that the without prejudice communications had been attempting to settle. The purpose, independent of the issues in dispute, was to establish some independent fact.
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* Editor’s note: Reported at [1992] 2 FLR 126
† Editor’s note: Also reported at [1984] 1 EGLR 126
‡ Editor’s note: Also reported at [1986] 2 EGLR 194; (1986) 280 EG 635
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[34] In the present case, the fact sought to be established by the admission into evidence of the without prejudice 14 January 1992 letter is that on that date the respondent acknowledged the appellant’s title to 61 Coborn Road. That fact was not only a fact not in dispute in the proceedings sought to be settled but was the common-ground basis on which each side had pleaded its case. How can it sensibly be argued that the possibility of admission into evidence, in future litigation that neither party could have had in mind, of letters recording the acknowledgement of common-ground facts could act as an inhibitory factor, discouraging attempts to settle the then current action? A public policy rule should not be allowed to extend further than the public policy in question requires, and to apply the rule mechanistically, without regard to the limits that the purpose underlying the rule should dictate, cannot, in my respectful opinion, be right.
[35] It may be that Lord Hoffmann is right in the view he expressed in Rashid (in [16]), that the without prejudice rule, in so far as it is based on public policy, does not apply to the use as a section 29 acknowledgement of a statement contained in a without prejudice letter. In the present case, however, that result can be justified, more securely and perhaps less contentiously, by the proposition that the public policy rule does not apply where the statement in question is common ground between the parties, is the basis on which they have pleaded their respective cases and the absence of the protection afforded by the rule cannot sensibly be thought to be apt to inhibit their attempts at compromise. There has been no previous case in which the without prejudice rule has been held to apply to a statement with those characteristics. There is no reason of policy that I can discern why your lordships should extend the rule so as to cover such a statement, and there are, in my opinion, reasons of statutory policy, evident in section 29, why your lordships should not. I would allow this appeal.
Giving the third opinion, Lord Rodger of Earlsferry said:
My lords,
[36] I have had the advantage of considering in draft the speech to be delivered by my noble and learned friend, Lord Neuberger of Abbotsbury. I agree with it and, for the reasons that he gives, I too would dismiss the appeal. I add a few observations on the general issue raised by the without prejudice letter of 14 January 1992.
[37] In Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, the plaintiff, Rush & Tompkins, was the main contractor for a building project. It sued its employers, the Greater London Council, as first defendants, and one of their subcontractors as second defendant. Rush & Tompkins and the council entered into negotiations that led to the settlement of the claim against the council. The subcontractor then sought discovery of the pre-settlement correspondence between the plaintiff and the council in order to use it in defence of the continuing claim by the plaintiffs against them. This House held that although the correspondence contained relevant material, the subcontractor was not entitled to recover it. The decision is important because it establishes that not only the parties to the correspondence but third parties also are prevented from making use of the contents of without prejudice correspondence. This in turn shows that although part of the justification for excluding reference to what was said is to be found in the understanding of the parties to the relevant correspondence or negotiations, the rule is actually a privilege that forms part of the general law of evidence and is based on public policy. So, unless the parties make some agreement to narrow or broaden its effect, the scope of the privilege is a matter of general law and is not based on the supposed boundaries of a notional agreement between the parties. |page:103|
[38] Over the years, the courts have recognised certain exceptions to the privilege that are made when the justice of the case requires it. They were helpfully summarised in the judgment of Robert Walker LJ in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, at pp2444-2445. As Lord Griffiths noted in Rush & Tompkins, at p1300D-G, there is also some authority to the effect that an admission of an “independent fact”, lying outside the area of the offer to compromise, is admissible. That approach has been developed in the Court of Session in cases that were discussed by my noble and learned friend, Lord Hope of Craighead, in Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] 1 WLR 2066, at pp2075-2077, in [26] to [30].
[39] Undoubtedly, it would be possible to carve out an exception along those lines. The question is whether creating such an exception would be consistent with the overall policy behind the rule. Pretty clearly, Lord Griffiths thought not. In Rush & Tompkins, at p1300F-G, he went out of his way to emphasise that the exception in Waldridge v Kennison (1794) 1 Esp 143 “should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts”. In my view, there must indeed be a significant danger that allowing in evidence admissions of “independent facts” would undermine the effectiveness of the rule as an encouragement to parties to speak freely when negotiating a compromise of their dispute. As was said many years ago:
If the proper basis of the rule is privilege, is there any logical theory under which the court can, by methods akin to chemistry, analyze a compromise conversation so as to precipitate one element of it as an offer of settlement and the other as an independent statement of fact? Would not the layman entering into a compromise negotiation be shocked if he were informed that certain sentences of his conversation could be used against him and other sentences could not?
See JE Tracy, “Evidence — Admissibility of Statements of Fact Made During Negotiation for Compromise” (1935-36) 34 Michigan Law Review 524, at p529. In Bradford & Bingley, at p2071, in [13], Lord Hoffmann argued along essentially similar lines that the approach in the Scottish decisions should not be followed in England. At the hearing of the present appeal, Mr Richard Wilson QC did not rely on the Scottish decisions and so it is unnecessary to come to any concluded view on the point. I accordingly go no further than to say that the approach in the Scottish cases appears to be inconsistent with the general approach endorsed by this House in Rush & Tompkins.
[40] In much the same way as with admissions of “independent facts”, it would be technically possible to say that the exclusion rule should not apply to statements in correspondence or negotiations that were to be treated not as admissions but as “acknowledgements” for the purposes of section 29(2)(a) of the 1980 Act. Lord Hoffmann developed an argument to that effect in the Court of Appeal in Muller v Linsley & Mortimer [1996] PNLR 74 and later in Bradford & Bingley, at pp2072-2073, in [16] to [18]. No other member of the House adopted his reasoning on that occasion. My noble and learned friend, Lord Walker of Gestingthorpe, now elaborates his concerns about the viability, in this context, of a distinction between admissions and acknowledgements.
[41] The present case illustrates some of the difficulties in applying such a distinction, especially to something like the offer to purchase that no one at the time would have had occasion to see as either an acknowledgement or an admission. In Bradford & Bingley, at p2072, in [16], Lord Hoffmann argued that when a statement is used as an acknowledgement for the purposes of section 29(5) of the 1980 Act, it is not used as evidence of anything: it is not evidence of acknowledgement but the acknowledgement itself. He went on to say that if the action proceeded, however, it might also be evidence of an indebtedness at trial.
[42] In the present case, it is agreed that, but for the without prejudice point, the offer to purchase would constitute an acknowledgement of the appellant’s title for purposes of section 29(2)(a) of the 1980 Act. Moreover, in one way, Mr Peter Crampin QC was right to say that this was because, by making the offer, the Bosserts were impliedly admitting that Mr and Mrs Ofulue owned the house. So, he said, evidence of the offer should be excluded as being evidence of an admission made in the course of negotiations to settle the earlier action. However, it is an unusual kind of admission since, if the present action went ahead, it would not actually assist the claimants in establishing title to the house: the Bosserts’ extra-judicial view on that matter would count for nothing. So, even without the privilege relating to without prejudice correspondence, evidence of the admission would presumably be excluded as being irrelevant.
[43] Despite the difficulties, I would be prepared to assume that the law could make the distinction favoured by Lord Hoffmann. However, should it do so? His argument that it should really depended on his view that the main purpose of the privilege is “to prevent the use of anything said in negotiations as evidence of anything expressly or impliedly admitted…”: see Bradford & Bingley, at p2072E, in [16]. Although that may well be the most common application of the rule in practice, its rationale appears to be wider: it is that parties and their representatives that are trying to settle a dispute should be able to negotiate openly, without having to worry that what they say may be used against them subsequently, whether in their current dispute or in some different situation. If that is right, there is no obvious justification for drawing a line between admissions and acknowledgements. In the words of Robert Walker LJ in Unilever, at pp2448H-2449C, the modern cases:
show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in the Rush & Tompkins case [1989] AC 1280, 1300: “to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts.” Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders.
In my respectful view, these considerations justify the application of the rule so as to exclude reference to the offer to purchase in the present case. There is nothing to suggest that the appellant and her husband failed to press ahead with their original action or delayed in starting the present action because they understood that, by making the offer, the Bosserts had been acknowledging their title. Indeed, there is nothing to suggest that, having been promptly rejected, the offer entered into their consideration at all. In these circumstances, I do not consider that the justice of the case requires an exception to be made to the privilege.
[44] For these reasons, and in agreement with the majority of your lordships, I conclude that the appellant should not be allowed to rely on the offer in the letter of 14 January 1992 as an acknowledgement of title for the purposes of section 29(2)(a) of the 1980 Act.
Giving the fourth opinion, Lord Walker of Gestingthorpe said:
My lords,
[45] I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Neuberger of Abbotsbury, and I gratefully adopt his summary of the facts and issues. On the first issue (whether the admission in the defence in the first action was not merely an acknowledgement but also a continuing acknowledgement), I am in full agreement with Lord Neuberger and have nothing to add. I am also in agreement with Lord Neuberger and with my noble and learned friend Lord Hope of Craighead on the second issue (the without prejudice letter of 14 January 1992). However, it is to my mind a troublesome point and I wish to add a few observations of my own on this issue.
[46] When a party to litigation seeks to adduce in evidence the other party’s letters written (expressly or impliedly) without prejudice, it generally wishes to rely on admissions that the other party has made against its interest. In the leading case in this House, Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, at pp1299-1300, |page:104| Lord Griffiths approved Oliver LJ’s statement of the principle (in Cutts v Head [1984] Ch 290, at p306) as concerned with excluding admissions, and Lord Griffiths himself (with the concurrence of the rest of the House) also stated the principle in terms of admissions.
[47] In Muller v Linsley & Mortimer [1996] PNLR 74, at p79, Hoffmann LJ referred to those passages and commented:
If one analyses the relationship between the without prejudice rule and the other rules of evidence, it seems to me that the privilege operates as an exception to the general rule on admissions (which can itself be regarded as an exception to the rule against hearsay) that the statement or conduct of a party is always admissible against him to prove any fact which is thereby expressly or impliedly asserted or admitted. The public policy aspect of the rule is not in my judgment concerned with the admissibility of statements which are relevant otherwise than as admissions, ie independently of the truth of the facts alleged to have been admitted.
[48] Lord Hoffmann took forward this line of reasoning in Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] 1 WLR 2066, in [16]:
The solution which I would therefore favour, and which I think is in accordance with principle, is that the without prejudice rule, so far as it is based upon general public policy and not upon some agreement of the parties, does not apply at all to the use of a statement as an acknowledgment for the purposes of section 29(5). That, I would infer, is what everyone thought in Spencer v Hemmerde [1922] 2 AC 507. It is in accordance with principle because the main purpose of the rule is to prevent the use of anything said in negotiations as evidence of anything expressly or impliedly admitted: that certain things happened, that the party concerned thought he had a weak case and so forth. But when a statement is used as an acknowledgment for the purposes of section 29(5), it is not being used as evidence of anything. The statement is not evidence of an acknowledgment. It is the acknowledgment. It may, if admissible for that purpose, also be evidence of an indebtedness when it comes to deciding this question at the trial, but for the purposes of section 29(5) it is not being used as such. All that an acknowledgment does under section 29(5) is to allow the creditor to proceed with his case. It lifts the procedural bar on bringing the action. Questions of evidence to prove the debt will arise later.
[49] In Rashid, the House allowed an appeal against the Court of Appeal’s exclusion of certain letters (not expressly written without prejudice) that (if admitted) amounted to an acknowledgement within section 29(5) of the 1980 Act. Their lordships’ reasons differed, but the majority considered that the letters were merely seeking indulgence in respect of an admitted liability and were not aimed at the compromise of any dispute. In my respectful opinion, that was also the case with the debtor’s letters in Spencer v Hemmerde [1922] 2 AC 507, which is why no issue of without prejudice was raised at any stage in that litigation. In this appeal, by contrast, your lordships cannot avoid the issue of whether a written statement, expressly made without prejudice, can be admissible as an acknowledgement within section 29(2) of the 1980 Act, even though it is or may be inadmissible as an admission against interest.
[50] In Rashid, I felt considerable difficulty about this proposition (see [42]), as did Lord Hope (see [35]) and Lord Brown of Eaton-under-Heywood: see [66] to [68]. Lord Mance (see [93]) reserved his opinion. Having given the matter further thought, I still feel the same difficulty.
[51] To my mind, there is no great difference between the natural meaning of “admission” and the natural meaning of “acknowledgement”. The former expression naturally conveys the sense of accepting the truth of something that is or may be detrimental to the interest of the person making the communication, whereas the latter expression is (in this context) concerned with recognising the rights or status of the party addressed. However, if the two parties are debtor and creditor or tenant and landlord, that may be a distinction without much of a difference. By one and the same form of words, the debtor (or tenant) may admit his disadvantaged or inferior position and acknowledge the superiority of the position of his creditor (or landlord).
[52] Lord Hoffmann observed (in [16] of his opinion in Rashid, quoted above) that an acknowledgement is not evidence of anything; it simply is an acknowledgement (his emphasis). That is no doubt correct. However, equally, an admission can, it seems to me, be made in a way that is not evidence of anything; it is simply an admission (for instance, a litigant might write, either in an open or in a without prejudice letter, “I do not dispute your version of our oral agreement”). The truth of an admitted fact is often presumed rather than proved.
[53] The clearest case of the without prejudice rule being inapplicable because of the fact rather than the content of a communication is Re Daintrey, ex parte Holt [1893] 2 QB 116. The sending of the without prejudice letter was an act of bankruptcy, and its character could not be altered simply by affixing a without prejudice label to it.
[54] An acknowledgement under section 29 of the 1980 Act does not seem to be a close parallel to an act of bankruptcy. The two situations might be equated if there were strong policy reasons for doing so. However, in In re Daintrey, the creditor was liable to be prejudiced whether or not he accepted the offer made to him, as Vaughan Williams J noted. In the present case, by contrast, Mr and Mrs Ofulue’s difficulty arose out of their own failure to press on with their claim for possession. There is no reason to suppose that they consciously recognised the letter of 14 January 1992 as an acknowledgement of their title for the purposes of the 1980 Act and held their hands in reliance on it. Ms Bossert’s abrupt switch from claiming to be a tenant to claiming to be a squatter may be unattractive, but it did not amount to “unambiguous impropriety” (and Mr Wilson, for the appellant, did not contend otherwise, relying instead on a wider and looser principle of what the justice of the case required).
[55] I would add that, so far as the without prejudice rule depends on the agreement of the parties as well as on policy considerations, there is nothing in the 1980 Act to outlaw an agreement varying its effect. Standstill agreements are common, although they operate to suspend the running of time. Similarly, there is no reason why the parties should not, by agreeing to engage in without prejudice negotiations, keep time running despite something that would otherwise count as an acknowledgement.
[56] There is very little authority on whether an acknowledgement can be given in without prejudice correspondence. Apart from the recent dicta in Rashid, counsel’s researches have found one 19th century English dictum against that proposition (Mellish LJ in Re River Steamer Co (1871) LR Ch App 822, at pp831-832, dating from a time when the requirements for an acknowledgement were more onerous) and two conflicting Canadian dicta on “confirmation” of a cause of action in without prejudice correspondence: see Lambert JA in Belanger v Gilbert [1984] 6 WWR 474, at p476 and Taggart JA in Farrell v Tisdale (1987) 16 BCLR (2d) 230, at pp241-242. Your lordships have to decide this appeal as a matter of principle.
[57] As a matter of principle, I would not restrict the without prejudice rule unless justice clearly demands it. In England, the rule has developed vigorously (more vigorously, probably, than in other common law jurisdictions, and more vigorously than some overseas scholars, notably JH Wigmore, approved: see Wigmore, Evidence in Trials at Common Law (1972 ed) vol 4, at pp34-36). The distinction formerly drawn between conditional and unconditional assertions has largely disappeared. Sir John Romilly MR was particularly firm in disapproving of attempts to cut down the scope of the rule: see Jones v Foxall (1852) 15 Beav 388, at p396 and Hoghton v Hoghton (1852) 15 Beav 278, at p321. The Court of Appeal in Walker v Wilsher (1889) 23 QBD 335 was also strongly in favour of upholding the width of the rule: see Lord Esher MR, at pp336-337, Lindley LJ, at pp337-338 and Bowen LJ, at p339, all quoted by Oliver LJ in Cutts, at pp302-304.
[58] Finally, there is the important speech of Lord Griffiths in Rush & Tompkins. He noted, at p1300, that the rule is not absolute, and that there are exceptions when the justice of the case requires it. He mentioned In re Daintrey as a notable exception, and continued, at p1300E:
There is also authority for the proposition that the admission of an “independent fact” in no way connected with the merits of the cause is admissible even if made in the course of negotiations for a settlement. |page:105|
It is unnecessary to consider that exception here, since the letter of 14 January 1992 was undoubtedly connected with the possession proceedings that the parties were trying to settle. Then, Lord Griffiths referred to Waldridge v Kennison (1794) 1 Esp 143 and continued:
I regard this as an exceptional case and it should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts. If the compromise fails the admission of the facts made for the purpose of the compromise should not be held against the maker of the admission and should therefore not be received in evidence.
[59] In my opinion, the recognition of an exception for an acknowledgement under section 29 of the 1980 Act would whittle down the protection given to the parties to speak freely. For these reasons, as well as for the reasons given by Lord Hope, Lord Rodger and Lord Neuberger, I would dismiss this appeal.
Giving the fifth opinion, Lord Neuberger of Abbotsbury said:
My lords,
[60] The principal issue on this appeal concerns the extent to which it is permissible for one party to rely on a statement made by another party in without prejudice correspondence written with a view to settling earlier proceedings between the same parties. The particular statement in this case is said to constitute an acknowledgement of title that stopped time running against the appellant under the provisions of the 1980 Act. There is a secondary issue, namely whether an admission of the appellant’s title in a defence in the earlier proceedings operated as a continuing acknowledgement for the purpose of the 1980 Act.
Factual history
[61] Mr and Mrs Ofulue purchased 61 Coborn Road, Bow, London E3 (the property), in 1976, and were registered at HM Land Registry as the proprietors of the freehold on 26 August 1976. Thereafter, they went to Nigeria, and let the property to tenants. In 1981, Mr Bossert and his daughter were permitted to occupy the property by one of those tenants, Ms Osborne. Thereafter, there were meetings and discussions between the parties but, on 15 June 1989, the Ofulues began possession proceedings against the Bosserts in the High Court.
[62] In their statement of claim, the Ofulues asserted that they were “the owners and entitled to possession of the property” and that the Bosserts were trespassers. In their defence and counter-claim (the defence), served on 18 July 1990, the Bosserts admitted the Ofulues’ title but denied their right to possession on two alternative grounds. First, they said that they had taken an assignment of Ms Osborne’s tenancy. Additionally, they claimed that they had carried out substantial work to the property on the understanding that they would be granted a 14-year lease. Accordingly, the Bosserts contended either that they had a protected tenancy or that they were entitled to a 14-year lease of the property. They counter-claimed a declaration as to “extent and nature of” their interest in the property. The Ofulues served a reply and defence to counter-claim in December 1990, and the proceedings were transferred to Shoreditch County Court in February 1991. Thereafter, during 1991, further and better particulars of the case of each of the parties were provided and lists of documents were exchanged.
[63] Meanwhile, in a letter dated 12 August 1991, headed “WITHOUT PREJUDICE”, the Bosserts, through their solicitor, wrote to the Ofulues’ solicitor referring to earlier correspondence, stating that the Bosserts were prepared to buy the property for £20,000. This offer was rejected, and further correspondence ensued. In a letter of 14 January 1992 (the letter) with the same heading, the Bosserts’ solicitor stated that the Ofulues would “at the most… be entitled to six years’ arrears of rent”, and they then set out their assessment of the value of the property and of the work carried out to it. The letter concluded with this sentence: “In these circumstances, our client would be willing to make an offer of £35,000 to your client for the purchase of the property.” This offer was promptly rejected by the Ofulues’ solicitor.
[64] Nothing then happened in respect of those proceedings for almost 10 years. In the meantime, on 8 August 1996, Mr Bossert died and, on 26 April 2000, the proceedings were automatically stayed under the provisions of the Civil Procedure Rules. On 1 February 2002, the Ofulues applied to lift the automatic stay. That application was opposed by Ms Bossert and, on 16 April 2002, District Judge Lightman refused the application and consequently struck out the proceedings.
[65] On 30 September 2003, the Ofulues issued fresh proceedings in Bow County Court for possession of the property against Ms Bossert; statements of case were exchanged in the normal way. Although other points were ventilated in her defence and counter-claim, Ms Bossert’s only relevant contention for present purposes was her claim that she had obtained title to the freehold of the property by adverse possession. This was claimed on the basis that any claim that she and her father had had any legal or equitable interest in the property was abandoned and that she (together with her father until August 1996) had been in uninterrupted possession, as trespassers, for more than 12 years before the instant proceedings for possession had been initiated. Although other arguments were raised in the reply, the only relevant answer to this contention was that Ms Bossert had acknowledged their title during that 12-year period in the defence in the earlier proceedings, and/or in the letter of 14 January 1992.
Relevant law of adverse possession
[66] Section 15(1) of the 1980 Act provides that “[n]o action shall be brought… to recover any land after the expiration of twelve years from the date on which the right of action accrued…”. Schedule 1, which is incorporated by section 15(6), provides, through paras 1 and 8, that time runs under section 15(1) so long as someone is in possession “adverse” to the owner of the paper title. Section 17(1) states that, where section 15 applies in a case in which the title is registered at the Land Registry, “the title of [the registered proprietor] shall be extinguished”. (The effect of section 15 has been very considerably emasculated in respect of registered land by the Land Registration Act 2002, but the provisions of that Act came into force only in 2004 and do not apply to cases such as this, where the 12 years had already expired by the time the 2002 Act came into force.)
[67] The concept of adverse possession was considered and explained by your lordships’ House in JA Pye (Oxford) Ltd v Graham [2002] UKHL 30; [2003] 1 AC 419. The effect of the reasoning in that decision on the facts of this case is that, subject to the effect of the earlier proceedings and the correspondence in 1991 and 1992, Ms Bossert was indeed in adverse possession of the property for more than 12 years, namely from some time before June 1989, when the earlier proceedings were started, until 30 September 2003, when the instant proceedings were started. In particular, the fact that the Bosserts may have believed that they were in possession as tenants, in law or equity, of the Ofulues does not prevent their possession having been “adverse”. The decision in Pye made it clear that (provided that there is no other reason to defeat the claim) all that is normally required to make good a claim that section 15 applies is an intention to possess coupled with actual physical possession.
[68] Subsequent to the decision of this House in Pye v Graham, proceedings were brought in the European Court of Human Rights challenging the compatibility of section 15 of the 1980 Act with Article 1 of the First Protocol to the European Convention on Human Rights (Article 1), at least in respect of registered land. Although that challenge succeeded before a Chamber of the former Fourth Section of the court, the decision was reversed by the Grand Chamber: see JA Pye (Oxford) Ltd v United Kingdom 44302/02 (2006) 43 EHRR 43* and (2008) 46 EHRR 45†. In brief, the Grand Chamber decided that, although Article 1 was engaged, the legislation was within the margin of appreciation afforded to the UK government. |page:106|
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* Editor’s note: Also reported at [2005] 3 EGLR 1; [2005] 49 EG 90
† Editor’s note: Also reported at [2008] 1 EGLR 111
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[69] Section 29(2)(a) of the 1980 Act provides that “[i]f the person in possession of the land… acknowledges the title of the person to whom the right of action has accrued… the right shall be treated as having accrued on and not before the date of the acknowledgment”. However, section 29(7) states that once the right to claim possession has been barred by section 15(1), it cannot be subsequently revived by an acknowledgement. Section 30 of the 1980 Act says that “[t]o be effective… an acknowledgment must be in writing and signed by the person making it”, and it is made clear by subsection (2) that an effective acknowledgement can be made by an authorised agent.
[70] The effect of abortive proceedings for possession on the running of time under section 15 was considered by the Court of Appeal in Markfield Investments Ltd v Evans [2001] 1 WLR 1321. In that case, the paper title owners had brought a claim for possession against the occupier of the land, and those proceedings were dismissed for want of prosecution. They then brought a fresh claim, and the occupier contended that the claim was barred under section 15. The plaintiff paper title owners argued that time did not run under section 15 while the first set of proceedings was on foot. That argument was rejected, in my view rightly. As Simon Brown LJ said, in [21], “there is no question of the issue of a writ ‘stopping time from running’” against the plaintiffs, although, of course, it would have had that effect if it had led to a judgment that expressly or impliedly confirmed their title. In that case, unlike in this case, there was no basis for arguing that the defendant had acknowledged the title of the paper title owners in the first set of proceedings.
Course of the instant proceedings
[71] The instant proceedings came before HH Judge Levy QC in October 2005. He accepted Ms Bossert’s contention that she had been in adverse possession of the property for the requisite period, and rejected the Ofulues’ contention that the running of time had been interrupted by any acknowledgement, as they contended. The Ofulues appealed this decision to the Court of Appeal: see [2008] EWCA Civ 7; [2008] 3 WLR 1253. In a carefully reasoned judgment (with which May LJ and Sir Martin Nourse agreed), Arden LJ explained why, in her view, the appeal should be dismissed. This appeal to your lordships’ House is brought by Mrs Ofulue alone.
[72] The Court of Appeal decided the following points:
(a) The Grand Chamber in Pye should be followed, so that, subject to section 29, the adverse possession claim was established.
(b) The admission of title in the defence in the first proceedings did not constitute an acknowledgement for the purposes of section 29.
(c) If that admission was an acknowledgement, it did not continue beyond the date of the defence, so it was more than 12 years before the instant claim was brought.
(d) The letter could not be relied on as an acknowledgement because it was written without prejudice with a view to settling the earlier proceedings.
(e) If the letter could be relied on, it would have been an effective acknowledgement because it was sent less than 12 years before the instant proceedings were brought.
[73] The only issues in play on this appeal are points (c) and (d), where the Court of Appeal’s conclusions are challenged by Mrs Ofulue. There is no challenge on behalf of Mrs Ofulue to the Court of Appeal’s decision on point (a), and it is conceded on behalf of Ms Bossert that the Court of Appeal was wrong on point (b) and right on point (e). Those concessions are, in my view, realistic and correct. Before turning to the two issues that have to be resolved, I should none the less consider the latter two issues, not least because I disagree with the Court of Appeal on point (b).
Two issues no longer in dispute
[74] The Court of Appeal concluded that the admission in the defence in the first proceedings did not amount to an acknowledgement within section 29 because it was only an acknowledgement of the Ofulues’ title to the freehold, and not an admission of their right to immediate possession. So far as that conclusion involved interpreting the defence in the earlier proceedings, it was plainly correct. However, the conclusion that section 29 requires an acknowledgement of a right to immediate possession, as opposed to an acknowledgement of title, is, in my judgment, wrong for two separate reasons, which may be shortly stated.
[75] First, the conclusion reached by the Court of Appeal is inconsistent with the wording of section 29(2), which refers in clear terms to acknowledging “the title” of the person whose claim is said to be time-barred. Second, in any event, the concept of “possession” is more subtle than the reasoning of the Court of Appeal appears to have assumed. The effect of the defence in the earlier proceedings was to acknowledge the Ofulues’ right to possession, albeit subject to the Bosserts’ rights as tenants (in law or equity). This analysis also accords with common sense. The current dispute is whether the Ofulues effectively lost the freehold interest in the property to Ms Bossert, so it would be strange if a plain acknowledgement by Ms Bossert of their ownership of that very interest was not a sufficient acknowledgement for the purposes of section 29. It would also be strange if the Bosserts’ contention that they held, or were entitled to the grant of, an interest in premises from the Ofulues did not operate as an acknowledgement by them of the Ofulues’ title.
[76] On the other hand, I agree with the Court of Appeal on the issue of whether the offer to purchase the freehold of the property, as contained in the letter, was an acknowledgement sufficient to satisfy section 29, subject to the fact that it formed part of without prejudice negotiations. Although any statement has to be construed by reference to its context, an offer to purchase an interest, even if made expressly “subject to contract”, will, at least in the absence of special facts, amount to an acknowledgement of the offeree’s title to that interest. The decision in Edgington v Clark [1964] 1 QB 367 was, in my view, correct on this point. I should add that it is a little difficult to reconcile the Court of Appeal’s correct decision on this point with their view as to the effect of the admission of title in the defence in the earlier proceedings.
[77] As a result of this discussion, it follows that: (a) the admission of title in the defence; and (b) the offer in the letter were both capable of amounting to acknowledgements for the purpose of section 29. However: (a) the defence was served more than 12 years before the instant proceedings were brought, and (b) the letter was part of “without prejudice” correspondence. Hence, Mrs Ofulue’s arguments that: (a) the admission in the defence operated as a continuing acknowledgement; and (b) the letter can be relied on despite it having been sent “without prejudice”. I turn to those two arguments.
Admission of title in the defence as a continuing acknowledgement
[78] Mr Wilson, on behalf of Mrs Ofulue, contended that the admission in the defence constituted an effective acknowledgement that prevented time running for the period up to the time the proceedings in which it was served were dismissed. The principal basis for this contention was that, by maintaining her case in the defence from the date it was served until the first proceedings were dismissed in 2002, Ms Bossert was affirming her acknowledgement of the Ofulues’ title to the property for the purpose of section 29(2).
[79] I can see no reason why a statement in a pleading or statement of case, or in any other court document, cannot amount to an acknowledgement for the purposes of section 29. Accordingly, the admission in the defence in this case, as I see it, operated as such as an acknowledgement of the Ofulues’ title as at 18 July 1990, the date on which it was served. Indeed, although the point was in issue below, the contrary was not argued by Mr Crampin, for Ms Bossert.
[80] However, in my opinion, the argument that the admission continued to operate as such an acknowledgement beyond 18 July 1990 was rightly rejected by the Court of Appeal. It is inconsistent both with the language of the relevant provisions and with the policy of the 1980 Act. Conceptually, and as a matter of language, I accept that an “acknowledgement” could cover a continuing state of affairs. However, particularly where it has to be embodied in a signed document, the more natural meaning of the word would suggest that it arises as at the date of the document — most naturally the date on which the document |page:107| is provided to the party to which the acknowledgement is made. The requirement in section 30(1) that an acknowledgement must be in writing and signed was no doubt intended to minimise the room for argument as to whether and when it was made.
[81] The effect of section 15 of the 1980 Act is that a formal record, such as a conveyance or entry on the register, which appears to establish the paper title owner’s title against the world, cannot be relied on after 12 years of adverse possession have passed. In those circumstances, it would seem very odd if an informal written acknowledgement could be relied on under section 29 of the same Act, where the adverse possession has thereafter continued for a longer period. If Mr Wilson’s argument were correct, an offer to purchase that remained open for acceptance because it was not time-limited and not rejected would presumably continue to operate as an acknowledgement for a potentially indefinite period. That appears surprising, inconvenient and inconsistent with the purpose of the 1980 Act. Further, it seems clear that an act that could be said to refer to the future, namely a payment of rent in advance, will stop time running only up to the date it actually occurs: see para 5(2) of Schedule 1 to the 1980 Act.
[82] The only authority cited in support of the proposition that the defence operated as a continuing acknowledgement was an Irish case: Johnston v Smith [1896] 2 IR 82. On analysis, it seems to me that that case does not assist at all. It is true that O’Brien J (in his rather intemperate judgment) decided that an originating notice of motion issued in 1881 operated as an acknowledgement for limitation purposes in 1883. However, that decision was based on the fact that it was in 1883 that the notice was amended by the court and “used” by the person claiming adverse possession (see at p90), and not on the notion that, so long as the proceedings in question were on foot, an admission of title in the notice operated as a continuing acknowledgement. Further, Holmes and Gibson JJ (who concurred in the result for other reasons given by O’Brien J) expressly left the point open: see at pp91 and 92 respectively. Since O’Brien J said that he “had some difficulty” with the point (see at pp82 and 90) and did not appear to think that the notice operated as some sort of continuing acknowledgement, it seems to me that, if anything, the decision is positively unhelpful to Mrs Ofulue’s case.
[83] Mr Wilson had an alternative argument, namely that the defence was relied on by Ms Bossert in 2002, at the hearing of the Ofulues’ application to lift the automatic stay on the earlier proceedings. That argument, which was quite rightly advanced briefly, has no merit. It seems to me that before an acknowledgement in a defence or other statement of case could be treated as renewed for the purposes of section 29, it would normally be necessary for the defendant, or other relevant party, to write and sign something that affirmed or repeated the acknowledgement. This would usually involve an act such as amending and reserving the defence or other statement of case or confirming its contents in a signed affidavit or witness statement.
[84] Although it would be wrong to attempt to set out an exhaustive test as to what can or cannot constitute a sufficient affirmation of a previous acknowledgement in a defence to amount to a fresh acknowledgement, it appears to me that it would, at least normally, require a fresh written and signed document (including an amended defence) or, quite possibly, an act such as re-service of the original defence. On any view, merely taking steps in the action, even though it can be said that such steps affirm the defendant’s reliance on the contents of her defence, will not do for the purposes of section 29, particularly as section 30 requires any acknowledgement to be in writing and signed Many, indeed most, steps taken by a defendant in an action can be said to be taken pursuant to her defence; yet they often will not be in writing, let alone signed, and even those that are will not normally amount to acknowledgements for the purposes of section 29. On any view, opposing the lifting of the stay and seeking a consequent dismissal of the claim cannot conceivably operate as a written affirmation of any acknowledgement in the defence.
Without prejudice rule
[85] In order to defeat the claim for adverse possession, therefore, Mrs Ofulue needs to establish that she is entitled to rely on the offer in the letter, notwithstanding that it was written expressly “without prejudice”, with a view to settling the earlier proceedings. The normal rule is, of course, that statements made in negotiations entered into between parties to litigation with a view to settling that litigation are inadmissible and therefore cannot be given in evidence. In Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, at p1299D, Lord Griffiths explained that the rule was “founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish”. As stated by Robert Walker LJ in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, at p2442C-D, the rule also rests on “the express or implied agreement of the parties themselves that communications in the course of their negotiations should not be admissible in evidence”.
[86] As Robert Walker LJ went on to point out, at p2444C, “there are numerous occasions on which… the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote”. At pp2444D-2445G, he then set out and explained eight of “the most important instances”. Apart from agreement (for example, where the negotiations are “without prejudice, save as to costs”), the principal occasions that he identified were where the negotiations are said to have resulted in a contract, an estoppel or a misrepresentation, or where they are said to include an impropriety or an explanation for delay. It is common ground that none of those instances is of direct assistance in this case.
[87] In the present case, it is indisputable that the letter was written with a view to settling the earlier proceedings, and that the Ofulues can have been in no doubt but that the without prejudice rule was intended to apply to it. Nor is there any question of Ms Bossert’s reliance on the rule amounting to some sort of abuse. Further, the fact that the rule is being invoked in respect of negotiations involving earlier proceedings involves no new extension of the rule: see both the facts and the reasoning in Rush & Tompkins, the observations in Unilever and the reasoning in Muller v Linsley & Mortimer [1996] PNLR 74. I have had the benefit of reading in draft the opinion of my noble and learned friend Lord Hope of Craighead, who considers this aspect more fully. In my view, it is strongly arguable that the principles that govern the admissibility in subsequent proceedings of a statement made in without prejudice negotiations to settle earlier proceedings should be the same as those that would govern its admissibility in the earlier proceedings. Indeed, I find it hard to see how the contrary could even be argued in a case such as this, where the two sets of proceedings involve the same parties and very closely connected issues, namely in each case whether the Bosserts had any interest in or right to possession of the property.
[88] None the less, it was said by Mr Wilson that the implied acceptance of the Ofulues’ title to the property contained in the offer to purchase in the last sentence of the letter can be invoked as an acknowledgement under section 29, essentially for four reasons. First, the admission of title did not go to any issue in the earlier proceedings: indeed, the Ofulues’ title was not merely undisputed, it was specifically admitted in the defence. Second, the admission of title is sought to be invoked as a fact, rather than for the truth of its contents. Third, an acknowledgement that satisfies the requirements of section 29 is an exception to the normal without prejudice rule. Fourth, the Bosserts’ conduct entitles Mrs Ofulue to override the rule. The first three arguments overlap to some extent, but each of the four arguments is most conveniently considered separately.
[89] Before considering these arguments, it is worth quoting a passage from Robert Walker LJ’s invaluable judgment in Unilever, which, in my opinion, makes a point that should always be borne in mind by any judge considering a contention that a statement made in without prejudice negotiations should be exempted from the rule. After considering a number of authorities, Robert Walker LJ said, at pp2448H-2449B, that the cases that he had been considering:
make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not |page:108| only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties… to speak freely about all issues in the litigation… Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers… sitting at their shoulders as minders.
This approach is entirely consistent with the approach of your lordships’ House in Rush & Tompkins and with that of the courts in the 19th century, mentioned by my noble and learned friend Lord Walker of Gestingthorpe in [57] of his opinion, which I have had the benefit of seeing in draft.
Ofulues’ title was not in issue in the earlier proceedings
[90] The fact that the Ofulues’ freehold title to the property was not directly in dispute in the earlier proceedings is not, in my judgment, a good ground for admitting the without prejudice offer to purchase into evidence. I reach that conclusion for two reasons; one is rather specific to this case, while the other is more general. The first reason is that the only sentence in the letter on which the Ofulues seek to rely must, as I see it, be covered by the without prejudice rule on any view. That sentence, after all, is the one that contains the actual offer to settle the earlier proceedings. It appears to me that even if an admission of title in the letter could be admissible because it went to a point that was not in issue in the earlier proceedings, a sentence that implies or contains such an admission could not be admissible if that sentence contains the offer to settle those proceedings. After all, there can be nothing in a without prejudice letter or conversation that is more clearly within the scope of the rule than the actual sentence containing the offer to settle the proceedings in question.
[91] Quite apart from this, it appears to me that, save perhaps where it is wholly unconnected with the issues between the parties to the proceedings, a statement in without prejudice negotiations should not be admissible in evidence, other than in exceptional circumstances such as those mentioned in Unilever at pp2444D-2445G. It is not only that the offer contained in the relevant sentence of the letter was connected with the issue between the parties in the earlier proceedings. It is also that the title to the property was in issue in the earlier proceedings, in the sense that the Ofulues claimed the unencumbered freehold, whereas the Bosserts were contending that the freehold was subject to their legal or equitable interest. Bearing in mind the point made in the passage quoted above from Robert Walker LJ, at pp2448-2449, it seems to me that it would set an unfortunate precedent if your lordships held that an admission of the claimants’ title in a without prejudice letter was sufficiently remote from the issues in a possession action relating to the same land as to be outside the rule.
[92] I leave open the question of whether and, if so, to what extent a statement made in without prejudice negotiations would be admissible if it was “in no way connected” with the issues in the case the subject of the negotiations. That point was mentioned by Lord Griffiths in Rush & Tompkins, at p1300F, where he referred to Waldridge v Kennison (1794) 1 Esp 143, in which a without prejudice letter was admitted solely as evidence of the writer’s handwriting. That was a factor wholly extraneous to the contents of the letter, and Lord Griffiths described it as “an exceptional case [which] should not be allowed to whittle down the protection given to the parties to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts”.
[93] I note also that, in obiter observations, Lord Hope suggested in Bradford & Bingley plc v Rashid [2006] UKHL 37; [2006] 1 WLR 2066, in [25], that “[a]n admission which was made in plain terms is admissible, if it falls outside the area of the offer to compromise”. There is no reason to think that this amounts to a different approach from that adopted by Lord Griffiths in Rush & Tompkins when discussing Waldridge. In any event, it is unnecessary to consider the precise ambit of “the area of the offer to compromise” on the facts of this case. Even if one gives the rule a relatively circumscribed effect, the offer in the letter fell within “the area of… compromise”, as I have explained.
Offer is relied on as such, and not for the truth of what was said
[94] I turn to the argument that the offer in the letter is admissible because it is being relied on to establish that an admission was made as a matter of fact, as opposed to the truth of the admission. In other words, it is said that the offer is admissible as evidence that the Bosserts acknowledged the Ofulues’ title to the property, although it would not be admissible as evidence of the fact that the Ofulues were the owners of the property. Some apparent support for this contention may be found in the judgment of Hoffmann LJ in Muller, at p79C-D. Having stated that “the privilege operates as an exception to the general rule on admissions (which can itself be regarded as an exception to the rule against hearsay)”, he then said that “[t]he public policy aspect of the rule is not… concerned with the admissibility of statements which are relevant otherwise than as admissions, ie independently of the truth of the facts alleged to have been admitted”.
[95] Despite the very great respect that I have for any view expressed by Lord Hoffmann and the intellectual attraction of the distinction that he draws, I am inclined to think that it is a distinction that is too subtle to apply in practice; I consider that its application would often risk falling foul of the problem identified by Robert Walker LJ in the passage quoted above. In any event, the observation appears to be limited to the public policy reason for the rule and says nothing about the contractual reason, which plainly applies here. Over and above this, even if the distinction is valid in principle, in any event I do not consider that it would assist Mrs Ofulue in the present context: the distinction between an acknowledgement and an admission is not one that can be satisfactorily drawn, in my opinion, at least in the context of identifying exceptions to the without prejudice rule.
[96] It is true that in Rashid, in [16] to [18], Lord Hoffmann applied this distinction to an acknowledgement under section 29(5) of the 1980 Act, which for present purposes is in the same terms as section 29(2), and concluded that an acknowledgement that would satisfy section 29 was admissible, even if it was made in without prejudice correspondence. However, none of the other opinions in Rashid was based on this reasoning: the other four members of committee based their conclusion on the fact that the correspondence in which the acknowledgement was made was neither expressly nor impliedly without prejudice. However, Lord Walker expressed doubt about Hoffmann LJ’s distinction in [41] and [42], and Lord Hope agreed with those doubts in [35], as did Lord Mance in [93]. Moreover, in [67], Lord Brown of Eaton-under-Heywood said that, in contrast with Muller, “[i]n acknowledgement cases… the statements are sought to be adduced in evidence as admissions”. Consequently, he concluded that the principle expressed by Hoffmann LJ did not apply to an acknowledgement for the purposes of section 29.
[97] I share Lord Walker’s difficulty, as expressed in Rashid in [42], and expanded in [51] and [52] of his opinion in this case, in distinguishing between an admission and an acknowledgement. To invoke a statement in without prejudice negotiations as an acknowledgement seems to me to be as inconsistent with the protection afforded to such negotiations, and the policy behind it as invoking such a statement as an admission of the truth of what is stated. As for Re Daintrey, ex parte Holt [1893] 2 QB 116, I also agree with Lord Walker’s analysis. Vaughan Williams J said, at p120, that a person could not invoke the rule in respect of “a document which, from its character, may prejudice the person to whom it is addressed if he should reject the offer”, a principle that plainly does not apply to the letter.
[98] Since preparing this opinion, I have had the privilege of reading in draft the characteristically trenchant opinion of my noble and learned friend Lord Scott of Foscote, in which he comes to a different conclusion. I entirely agree with my noble and learned friend Lord Rodger of Earlsferry, whose opinion I have had the benefit of reading in draft, that it is open to your lordships to create further exceptions to the rule and, in particular, the sort of admission identified by Lord Hoffmann in Rashid in [13], and by Lord Scott in this case. However, I also agree with him, and indeed with Lord Hope and Lord Walker, that it would be inappropriate to do so for reasons of legal and practical certainty. To uphold such an exception in this case would |page:109| run counter to the thrust of the approach of Lord Griffiths in Rush & Tompkins and of Robert Walker LJ in Unilever, and would severely risk hampering the freedom that parties should feel when entering into settlement negotiations.
[99] I do not consider that the 19th century cases Lord Scott cites in [22] really bear on the issue that your lordships have to decide. They emphasise the need for the rule so as to ensure that parties to negotiations feel free and uninhibited in their settlement discussions, and there is no reason to think that they embody a different approach to the 19th century cases cited by Lord Walker in [57]. The same is true of the more recent decision in Cutts v Head [1984] Ch 290, which was, of course, relied on in Rush & Tompkins and Unilever. As for the more modern cases cited in [33] by Lord Scott, McDowell v Hirschfield Lipson & Rumney [1992] 2 FLR 126 can be explained by the fact that privilege was waived, in Norwich Union Life Insurance Society v Tony Waller Ltd (1984) 270 EG 42 the “without prejudice” heading to the letter concerned was inappropriate so the rule did not apply, and Hodgkinson & Corby Ltd v Wards Mobility Services Ltd (No 2) [1997] FSR 178 involved the well-established exception of estoppel, as explained in Unilever, at p2444E-F.
Does public policy justify an acknowledgement overriding the rule?
[100] The third ground on which it was contended that the offer in the letter could be admitted was that the public policy embodied in section 29 effectively trumped the public policy of not admitting in evidence what was said in without prejudice negotiations. This argument derives some support from what Lord Hoffmann said towards the end of [18] in Rashid. It was argued that it also derived support from what Lord Hope said in that case, in [34] and [35], but, as I read those paragraphs, they were primarily directed to a case in which, in without prejudice correspondence, statements were made by the defendant to induce the claimant not to issue proceedings, as a result of which the claimant desisted from issuing his claim; this is also, I think, the effect of what Lord Mance meant in [93]. In agreement with Lord Hope, it seems to me that such statements could be relied on by the claimant in such a case as founding an estoppel — one of the exceptions identified in Unilever at p2444E-F.
[101] Apart from this, the argument that there is a special exception to the without prejudice rule for acknowledgements for the purpose of section 29 derives no support from any of the other opinions expressed in this House in Rashid. For my part at any rate, I do not accept that the argument is justified. I do not consider that there is any significant public policy element in the acknowledgement provisions of the 1980 Act, save in so far as it can be said that any statutory provision carries with it an element of public policy. As Lord Brown (with whom Lord Walker agreed (see in [43]) said in Rashid, in [75]) “the policy underlying the without prejudice rule seems to me to outweigh the countervailing policy reason for lengthening the period” of limitation through a written acknowledgement.
[102] It may well be that the decision in Re Daintrey can be distinguished from the present case on this ground as well. An acknowledgement under section 29 operates only as between the parties to and by whom the acknowledgement is made (and their privies), whereas a person’s act of bankruptcy has an effect on all the creditors and potential creditors of that person. Although not mentioned in the judgment of Vaughan Williams J, it appears to me that there is therefore a pretty strong case for saying that the public interest in ensuring that an act of bankruptcy can be referred to and acted on as such, should outweigh the public interest in the without prejudice rule being observed.
Alleged misconduct
[103] Finally, Mr Wilson submitted that Mrs Ofulue was entitled to refer to the acknowledgement in the letter because the justice of the case required it. I accept that the without prejudice rule cannot be invoked “as a cloak for perjury, blackmail or other ‘unambiguous impropriety’”: see Unilever, at p2444F. However, any reliance on that principle in this case is, in my view, misconceived. There has been no impropriety on the part of Ms Bossert, either generally or in claiming the benefit of the rule. Further, there is plainly no warrant for overriding the rule simply because many people might think that, in relying on the rule, Ms Bossert is taking an unattractive point, or that, by changing her stance in the two sets of proceedings, she has acted unattractively.
Conclusion
[104] For these reasons, I would dismiss this appeal, and uphold the determination of Judge Levy, to the effect that the Ofulues’ title to the property was barred by the time of the issue of the instant proceedings, and that the proprietorship register of the property should be amended to show Ms Bossert as the registered proprietor.
Appeal dismissed.
