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Without-prejudice letter cannot defeat claim

posted 13 Mar 2009, 15:33 by Dilwoar Hussain
From The Times
March 13, 2009

House of Lords
Published March 13, 2009
Ofulue and Another v Bossert
Before Lord Hope of Craighead, Lord Scott of Foscote, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe and Lord Neuberger of Abbotsbury
Speeches March 11, 2009

Where an occupier disputing possession proceedings made an offer to the owners to buy the property in a “without prejudice” letter, which was rejected, but later claimed that the title of the propety had passed to her because of 12 years’ adverse possession, the owners could not rely on the letter as evidence that she had acknowledged their title to the property so as to defeat her claim.

The House of Lords so held by a majority, Lord Scott dissenting, in dismissing an appeal by Agnes Ofulue against the dismissal by the Court of Appeal (Lord Justice May, Lady Justice Arden and Sir Martin Nourse) (The Times February 11, 2008; [2008] 3 WLR 1253) of an appeal by Emmanuel Ofulue and Agnes Ofulue against the order of Judge Levy, QC, in Central London County Court declaring that the title to 61 Coborn Road, Bow, London, be amended to show Erica Josephine Bossert as registered proprietor in place of the Ofulues.

In 1981 Ms Bossert and her father had been permitted to occupy the property by a former tenant and took up residence there. In 1987 the Ofulues commenced possession proceedings and the Bosserts counterclaimed for the grant of a lease, which they claimed they had been promised in return for carrying out repairs.

In 1992, with the possession proceedings still pending, the Bosserts by a letter marked “without prejudice” offered to buy the property. The Ofulues rejected the offer but failed to pursue the possession proceedings, which were stayed automatically in 2000.

In 2003 by which time Ms Bossert’s father had died, the Ofulues issued new possession proceedings. Ms Bossert contended for the first time that ownership of the property had passed to her by adverse possession, which the judge accepted.

Mr Richard Wilson, QC and Mr Christopher Jacobs for Mrs Ofulue; Mr Peter Crampin, QC and Mr Simon Williams for Ms Bossert.

LORD NEUBERGER said that the principal issue concerned the extent to which it was 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 statement was said to constitute an acknowledgment of title which stopped time running against the claimant under the provisions of the Limitation Act 1980.

There was a secondary issue, namely whether an admission of the claimant’s title in a defence in the earlier proceedings operated as a continuing acknowledgment for the purpose of the 1980 Act.

His Lordship said that the admission of title in the defence, by the claim for a lease, and the offer to purchase the property in the letter were both capable of amounting to acknowledgments for the purpose of section 29 of the Act, by which time ran from any acknowledgement of title by the person in possession.

However, the defence had been served more than 12 years before the instant proceedings were brought, and the letter was part of “without-prejudice” correspondence.

Hence, Mr Wilson had argued: (a) that the admission in the defence operated as a continuing acknowledgment, and (b) that the letter could be relied on despite it having been sent “without prejudice”.

The principal basis for contention (a) 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 acknowledgment of the Ofulues’ title to the property for the purpose of section 29.

Conceptually and as a matter of language, an acknowledgment could cover a continuing state of affairs. However, particularly where it had to be embodied in a signed document, the more natural meaning of the word would suggest that it arose as at the date of the document.

While it would be wrong to attempt to set out an exhaustive test as to what could or could not constitute a sufficient affirmation of a previous acknowledgement in a defence to amount to a fresh acknowledgment, it would normally require a fresh written and signed document, including an amended defence, or, quite possibly, an act such as reservice of the original defence.

In order to defeat the claim for adverse possession, therefore, Mrs Ofulue needed to establish that she was 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 was that statements made in negotiations entered into between parties to litigation with a view to settling that litigation were inadmissible and could not be given in evidence.

It was indisputable that the letter was written with a view to settling the earlier proceedings, and that the Ofulues could have been in no doubt but that the without-prejudice rule was intended to apply to it.

Mr Wilson, however, said that the implied acceptance of the Ofulues’ title to the property contained in the offer to purchase in the letter could be invoked as an acknowledgment under section 29 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.

However, the fact that the Ofulues’ freehold title to the property was not directly in dispute in the earlier proceedings was not a good ground for admitting the without-prejudice offer into evidence.

The only sentence in the letter on which the Ofulues sought to rely had to be covered by the without-prejudice rule on any view. That sentence, after all, was the one which contained the actual offer to settle the earlier proceedings.

Save perhaps where it was 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 plc v The Procter and Gamble Co ([2000] 1 WLR 2436, 2444-2445).

It would set an unfortunate precedent if their 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.

The second reason was that the admission of title was sought to be invoked as a fact, rather than for the truth of its contents. However, that was a distinction which was too subtle to apply in practice.

The third reason 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.

His Lordship did not consider that there was any significant public policy element in the acknowledgment provisions of the 1980 Act, save in so far as it could be said that any statutory provision carried with it an element of public policy.

Mr Wilson had finally submitted that Mrs Ofulue was entitled to refer to the acknowledgment in the letter because the justice of the case required it.

His Lordship accepted that the without-prejudice rule could not be invoked as a cloak for perjury, blackmail or other unambiguous impropriety as referred to in Unilever (at p2444). However, any reliance on that principle here was misconceived.

There had been no impropriety on the part of Ms Bossert, either generally or in claiming the benefit of the rule.

Further, there was plainly no warrant for overriding the rule simply because many people might think that, in relying on the rule, Ms Bossert was taking an unattractive point, or that, by changing her stance in the two sets of proceedings, she had acted unattractively.

Lord Hope, Lord Rodger and Lord Walker delivered concurring opinions. Lord Scott delivered an opinion concurring on the continuing acknowledgment issue but dissenting on the without-prejudice issue.

Solicitors: Hodge Jones & Allen, Camden Town; RFB.