To own or not to own
Date: 24 April 2009
Authors: John Summers & Elizabeth Fitzgerald
Issue: Vol 159, Issue 7366
Categories: Features, Property
It is an important and well known rule of evidence that communications which are expressed to be “without prejudice”, and which are made between parties to a dispute for the purposes of settling the dispute, cannot generally be admitted in evidence.
In Ofulue & Anor v Bossert [2009] UKHL 16, [2009] All ER (D) 119 (Mar) the House of Lords considered the extent to which it was permissible to rely on a “without prejudice” statement written with a view to settling earlier proceedings in the context of an adverse possession claim in which the “without prejudice” statement was said to constitute an acknowledgement of title which stopped time running.
The facts
Mr and Mrs Ofulue had been the registered freehold proprietors of 61 Coborn Road since 1976. In 1981 they went to Nigeria and let the property to tenants. In 1981, Mr Bossert and his daughter were let into occupation by one of the tenants, Ms Osborne. In 1989 Mr and Mrs Ofulue commenced possession proceedings against the Bosserts. The Bosserts defended the claim, admitting that the Ofulues were the owners of the property, but claiming that they had either taken an assignment of Ms Osborne's tenancy or alternatively they were entitled to a 14-year lease.
On 12 August 1991 the Bosserts, through their solicitor, wrote to Mr and Mrs Ofulue's solicitor offering to purchase the freehold of the property. The letter was headed “without prejudice”. The offer was rejected but a further offer to purchase was made on 14 January 1992, again headed “without prejudice”. This second offer was also refused and eventually the negotiations petered out. After this, nothing further happened to the possession claim for 10 years and in 2000 the proceedings were automatically stayed under the Civil Procedure Rules.
In February 2002 the Ofulues applied to lift the automatic stay (by this time Mr Bossert had died) but Ms Bossert successfully opposed the application and the claim was struck out.
On 30 September 2003 fresh proceedings were issued in the Bow county court. Ms Bossert abandoned her earlier defence and claimed that she had obtained title to the freehold of the property by adverse possession. In reply, the Ofulues argued that Ms Bossert had acknowledged their title during the relevant 12-year period by the defence which had been filed in the earlier proceedings and/or by the “without prejudice” letter of 14 January 1992.
Adverse possession
At first instance His Honour Judge Levy QC accepted that Ms Bossert had been in adverse possession and he rejected the Ofulues' contention that the running of time had been interrupted by an acknowledgement. The Court of Appeal dismissed the appeal, as did the majority of the House of Lords.
Ms Bossert's claim to have acquired the freehold title by adverse possession relied on a period of 12 years expiring before the Land Registration Act 2002 came into force and thus her claim was based on the “old law” of adverse possession as it stood under s 15(1) of the Limitation Act 1980 (LA 1980). It had initially been argued that the Ofulue's rights to peaceful enjoyment of their possessions guaranteed by Art 1 of the First Protocol to the Convention for the protection of Human Rights and Fundamental Freedoms (the Convention) had been violated. At the time the appeal was heard by the Court of Appeal, JA Pye (Oxford) Ltd v United Kingdon (2005) 43 EHRR 43 had been decided and held that the old law of adverse possession violated Art 1. However, before judgment had been handed down by the Court of Appeal the Grand Chamber of the European Court of Human Rights (ECtHR) reversed this decision and concluded that although Art 1 was engaged it had not been violated. The Court of Appeal thus applied JA Pye (Oxford) Ltd v United Kingdom (2007) 46 EHRR 1083 and held that where the ECtHR had found that domestic law satisfied the Convention requirements, in the absence of special circumstances, the English court should not depart from that decision.
Following JA Pye (Oxford) Ltd v Graham [2003] 1 AC 419 it is clear that a person who claims to have acquired property by adverse possession need only show that he was in possession without the paper owner's consent and that he intended to possess. Accordingly the fact that the Bosserts may have believed that they were in possession as tenants did not prevent their possession having been adverse. Thus, subject to the effect of the earlier court proceedings and the without prejudice correspondence, it was clear that Ms Bossert had been in adverse possession of the property for more than 12 years.
Acknowledgement of title
Section 29(2) of LA 1980 provides that “if 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 acknowledgement”. Once the right to claim possession has been barred it cannot be revived by an acknowledgement and to be effective, an acknowledgement must be in writing and be signed by the person making it.
The Court of Appeal held that the admission of title in the Bosserts' defence to the first proceedings did not constitute an acknowledgement of title for the purposes of s 29. In the House of Lords it was, however, common ground that the Court of Appeal was wrong on this point so the two live issues which their lordships had to decide were:
● whether this acknowledgement continued beyond the date of the defence (so that it was more that 12 years before the current claim had been brought); and
● whether the 1992 “without prejudice letter” could be relied on as an acknowledgement of title.
Mrs Ofulue argued that the admission in the defence constituted an effective acknowledgement preventing time from running up to the time when the proceedings in which it was served were dismissed. The House of Lords unanimously held that the Court of Appeal was right to reject this argument. There was no reason why a statement made in a statement of case could not amount to an acknowledgement for the purposes of s 29, but the admission in the defence was an acknowledgement of the Ofulues' title only as at the date when the defence was served. To say that the acknowledgement operated beyond this date was inconsistent with the language of s 29 and the policy of LA 1980.
The House of Lords did not, however, reach a unanimous view in relation to the acknowledgement in the 1992 without prejudice letter. The majority (Lord Neuberger, Lord Hope and Lord Walker) expressed the view that the public policy which encouraged the negotiated settlement of actions required that the without prejudice letter be held inadmissible in evidence in the current action. Lord Scott dissented, believing that this result would “represent a marked extension of the without prejudice rule that previous judicial authority does not warrant and that public policy does not require”.
The without prejudice rule
As Lord Griffiths said in Rush & Tompkins Ltd v Greater London Council [1989] AC 1280: “The 'without prejudice' rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish.”
Lord Justice Robert Walker in Unilever Plc v Proctor & Gamble ([1999] All ER (D) 1166) said that the rule was “…founded partly in public policy and partly in the agreement of the parties and that the protection of admissions against interest is the most important practical effect of the rule”. He noted, however, that there were numerous exceptions where the without prejudice rule did not prevent the admission into evidence of what one or other of the parties wrote and he gave examples of eight instances when this would be so.
One of the reasons as to why the Ofulues said that the without prejudice rule did not apply to the 1992 letter was the fact that the acknowledgement related to something that was not in issue in the earlier proceedings.
Lord Scott, in his dissenting judgment referred to Lord Griffiths's comments in Rush & Tompkins: “If the compromise fails the admission of the facts made for the purposes of the compromise should not be held against the maker of the admission and should therefore not be received in evidence”. He concluded that the relevant authorities treated the protection afforded by the without prejudice rule as a protection in relation to the actual proceedings or to the issues sought to be settled by the parties. The acknowledgement of title in the 1992 letter was in no sense “an admission of fact to be determined” in the action. The Ofulues' title had been common ground between the parties throughout and was the basis both of their possession claim and of the Bosserts' pleaded defence.
Lord Scott also considered whether the implication of the rule could be justified on the basis of an implied agreement between the parties but thought that there was no sensible basis on which it could be supposed that the parties' implied agreement extended to providing immunity from 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.
Lord Scott thus concluded that if the without prejudice rule was to apply then it must be because of public policy reasons. However, he thought that the ratio of the House of Lords in Rush & Tompkins could not be taken to permit the extension of the without prejudice rule to cover a statement of fact that is not an issue in the litigation, and which is common to the pleaded cases of both parties.
The majority, however, did not consider the fact that the rule was being invoked in relation to negotiations involving earlier proceedings involved any new extension of the rule.
Lord Hope explained that normally when negotiations are entered into with a view to settling a claim, either the negotiations result in an agreement or they break down and result in a judgment. In this case neither happened: no agreement was reached and the claim was eventually struck out. Lord Hope, however, thought 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 the letter might be used to the Bosserts' prejudice. “The public policy ground for the rule would be contradicted if the protection was not available in fresh proceedings to replace those which were struck out.”
Lord Hope concluded that the public policy basis for not allowing anything said in the letter to be used later to her prejudice provided Ms Bossert with all she needed to defeat the argument that the implied admission that it contained could be used as an acknowledgment against her in these proceedings.
The Ofulues also argued that the without prejudice rule did not apply because the 1992 letter was being relied on to establish the fact that an admission had been made and not for the truth of the admission itself. Alternatively, it was said that there should be a special exception to the without prejudice rule in the case of an acknowledgement for the purposes of s 29.
In Muller v Linsley & Mortimer [1996] PNLR 74 Hoffmann LJ had said that the public policy rationale of the without prejudice rule was directed to admissions and was 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”. Lord Hoffmann took this reasoning further in Bradford & Bingley plc v Rashid [2006] 1 WLR 2066, [2006] 2 All ER (Comm) 951, when he said that, when a statement is used as an acknowledgment for the purposes of s 29(5) of LA 1980, it is not used as evidence of anything: it is not evidence of acknowledgment but the acknowledgment itself.
Lord Rodger recognised, as Lord Walker had explained in Unilever, that the courts had recognised exceptions to the without prejudice rule and that there was some authority to the effect that an admission of an “independent fact” lying outside the area of the offer to compromise, is admissible. He recognised that in much the same way as with admissions of “independent facts” it would be technically possible to say that the without prejudice exclusion rule should not apply to statements in which were to be treated not as admissions but as “acknowledgements” for the purposes of s 29(2)(a) as Lord Hoffmann had argued. Lord Rodger, however, noted the difficulties with the distinction and questioned whether the law should make such a distinction.
Lord Walker regarded this point as “a troublesome point” and like Lord Neuberger, had difficulties in distinguishing between an admission and an acknowledgement. Lord Neuberger though that despite the “intellectual attraction” of the distinction it was one which was too subtle to apply in practice. Lord Walker said: “To my mind there is no great difference between the natural meaning of 'admission' and the natural meaning of 'acknowledgment'.”
The House of Lords thus declined to create a further category of exceptions to the without prejudice rule to cover the sort of admissions in this case: there was no public policy reason to do so. The purpose of the rule is to protect parties and ensure that they have the freedom to enter into settlement negotiations and as a matter of principle the rule should not be restricted unless justice clearly demanded it. The recognition of an exception for an acknowledgement under s 29 of LA 1980 would whittle down the protection given to the parties to speak freely.
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