Disapplication of Without Prejudice Rules
The House was asked whether a letter sent during without prejudice negotiations which acknowledged a debt was admissible to restart the limitation period. An advice centre, acting for the borrower had written, in answer to a claim by the lender for the sum still due after the sale of the mortgaged property fell short of the debt, that the respondent was not in a position to pay ‘the outstanding balance, owed to you.’
Held: The letter was sufficient to constitute an admission. The lender’s appeal was allowed. ‘the without prejudice rule has no application to apparently open communications, such as those here, designed only to discuss the repayment of an admitted liability rather than to negotiate and compromise a disputed liability.’
Lord Hoffmann said: ‘This limitation on the scope of the without prejudice rule, confining it to admissions which can be construed as made hypothetically rather than without qualification, is not limited to the use of these admissions as acknowledgements under section 29(5) or its Scottish equivalent. It is entirely general. As such . . it goes too far. There is nothing in the modern English authorities to encourage a dissection of correspondence or, still worse, conversations, to ascertain whether admissions of fact were made hypothetically or without qualification.’ and ‘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).’
Lord Brown of Eaton-under-Heywood said: ‘In my opinion the without prejudice rule has no application to apparently open communications, such as those here, designed only to discuss the repayment of an admitted liability rather than to negotiate and compromise a disputed liability. I find it impossible to regard the correspondence here as constituting ‘negotiations genuinely aimed at settlement’ (Lord Griffiths in Rush and Tompkins v GLC [1989] AC 1280 at 1299) or ‘an attempt to compromise actual or impending litigation’ (Sir Robert Megarry V-C in Chocoladenfabriken Lindt and Sprungli AG v Nestle Co Ltd. [1978] RPC 287). Nor does the underlying public policy justification for the rule appear to have any application in circumstances such as these. That justification, as Oliver LJ observed in Cutts v Head [1984] Ch 290 at 306 ‘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’. No ‘statements or offers’ were made here with a view to settling a dispute. Since the debt was admitted, there was no dispute. As Mr Fenwick aptly put it in argument, Mr Rashid was simply asking for a concession; he was not giving one.’
Lord Mance said: ‘The existence of a dispute and of an attempt to compromise it are at the heart of the rule whereby evidence may be excluded (or disclosure of material precluded) as ‘without prejudice’ . . the rule does not of course depend upon disputants already being engaged in litigation. But there must as a matter of law be a real dispute capable of settlement in the sense of compromise (rather than in the sense of simple payment or satisfaction).’
Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood, Lord Mance
[2006] 1 WLR 2066, Times 14-Jul-2006, [2006] UKHL 37, [2006] 4 All ER 705, [2006] 29 EG 132, [2006] 2 All ER (Comm) 951
Bailii
Limitation Act 1980 29(5)
England and Wales
Citing:
Cited – Spencer v Hemmerde HL 1922
A barrister borrowed 1,000 pounds for two months in 1910 but did not repay it. In 1915 the creditor pressed for payment and the debtor wrote to acknowledge the debt but asked for more time. The creditor ‘stayed his hand’. When proceedings were . .
Appeal from – Bradford and Bingley Plc v Rashid CA 22-Jul-2005
The claimant sought recovery of a shortfall having sold the defendant’s house for a sum insufficient to clear the mortgage debt, and produced two letters which they claimed acknowledged the debt and restarted the limitation period running. The . .
Cited – Daks Simpson Group plc v Kuiper 1994
The creditor sought summary judgment for an account for commissions earned. In a ‘without prejudice’ letter the defendant’s director said that he was prepared to accept that he had received such commissions in stated amounts.
Held: Lord . .
Cited – Watson-Towers Ltd v McPhail 1986
The pursuer submitted a motion for summary judgment for the value of goods which had been supplied subject to a reservation of title clause. The pursuer’s evidence consisted of a letter from the defender making an offer expressed to be without . .
Cited – Turner v Railton 1796
Evidence was admitted that the defendant’s former attorney had admitted the debt claimed and made an offer on the defendant’s behalf to pay a certain sum on account. Lord Kenyon said: ‘Concessions made for the purpose of settling the business for . .
Cited – Kirschbaum v ‘Our Voices’ Publishing Co 1971
(Ontario High Court) The court was asked whether discovery of letters written without prejudice should be permitted so that the parties might explore the question whether they contained admissions of fact which could be taken into account at the . .
Cited – Dungate v Dungate CA 1965
A claim was made against the widow and administratrix of the deceased’s estate by his surviving brother. The widow wrote to the creditor: ‘Keep a check on totals and amounts I owe you and we will have account now and then . . .Sorry I cannot do you . .
Cited – Phillips v Rogers 1945
The creditor argued that the limitation period was extended anew when the debtor wrote: ‘Re your correspondence re Mr C H Phillips claim $1300 which he is prepared to settle November 1st for $700. Please thank Mr Phillips for the kind offer. I have . .
Cited – In Re Daintrey, Ex Parte Holt QBD 8-May-1893
The court was asked whether a letter could be admitted in evidence and relied upon as an act of bankruptcy. The letter was sent by the debtor to the creditor at a time when there was no dispute, headed ‘without prejudice’. It contained an offer of . .
Cited – Subramaniam v Director of Public Prosecutions PC 1956
(Malaysia) The defendant sought to advance a defence of duress under a section of the Penal Code of the Federated Malay States which provided that, with certain exceptions, ‘nothing is an offence which is done by a person who is compelled to do it . .
Cited – Unilever plc v Procter and Gamble Company CA 4-Nov-1999
The defendant’s negotiators had asserted in an expressly ‘without prejudice’ meeting, that the plaintiff was infringing its patent and they threatened to bring an action for infringement. The plaintiff sought to bring a threat action under section . .
Cited – Muller and Another v Linsley and Mortimer (A Firm) CA 8-Dec-1994
The plaintiff sued his former solicitors for professional negligence. The damages he sought to recover related to loss he suffered when dismissed as a director of a private company leading to a forced sale of his shares in the company. The plaintiff . .
Cited – Surrendra Overseas Ltd v Government of Sri Lanka 1977
A debtor can only be held to have acknowledged the claim if he has in effect admitted his legal liability to pay that which the plaintiff seeks to recover. An acknowledgement of part only of a debt cannot operate to acknowledge more.
Kerr J . .
Cited – Chocoladefabriken Lindt and Sprungli AG and another v The Nestle Co Ltd 1978
Megarry V-C said that the mere failure to use the expression ‘without prejudice’ is not decisive of whether the letter is such. The question is whether the letters were written in an attempt to compromise actual or pending litigation and, if so, . .
Cited – Cutts v Head and Another CA 7-Dec-1983
There had been a trial of 35 days regarding rights of way over land, which had proved fruitless, and where some orders had been made without jurisdiction. The result had been inconclusive. The costs order was now appealed, the plaintiff complaining . .
Cited – Savings and Investment Bank Ltd (In Liquidation) v Fincken CA 14-Nov-2003
Parties to litigation had made without prejudice disclosures. One party sought to give evidence contradicting the dsclosure, and the other now applied for leave to amend based upon the without prejudice statements to be admitted to demonstrate the . .
Cited – Jones v Foxall CA 27-Mar-1852
Romilly MR deplored attempts to convert offers of compromise into admissions of acts prejudicial to the party making them, saying: ‘I find that the offers were in fact made without prejudice to the rights of the parties; and I shall, as far as I am . .
Cited – Richardson v Quercus Limited IHCS 24-Dec-1998
The pursuer owned a flat on the second and top floors of a building damaged by renovation works carried out by the defenders to the basement and ground floor of the same building. He relied on a letter by the defenders’ loss adjusters confirming . .
Cited – Kapeller v Rondalia Versekeringskorporasie van Suid-Afrika Bpk 1964
(South Africa) A clear admission by an insurer of liability in the course of without prejudice negotiations about quantum was sufficient to restart the limitation period. . .
Cited – Good v Parry CA 1963
A letter discussed first the writer’s proposed purchase of the house (offering andpound;1,350 subject to contract), and continued: ‘The question of outstanding rent can be settled as a separate agreement as soon as you present your account.’
Cited – Ratten v The Queen PC 1-Jul-1971
Res Gestae to admit circumstances of complaint
(Victoria) Evidence had been admitted under the res gestae rule, that a woman making a telephone call was in a hysterical state.
Held: It was properly used. Where a statement is made either by the victim of an attack or by a bystander, which . .
Cited – West Bromwich Building Society v Wilkinson HL 30-Jun-2005
The Society had taken possession of a property in 1989. It located the defendants many years later and sought payment of the excess after deduction of the proceeds of sale, and for interest. The borrowers claimed the debt was expired by limitation . .
Cited – Thomson v Austen 1823
Evidence of an admitted cross-debt was in part excluded: ‘We also think that the evidence which was refused was not indicative of any intention to make a compromise, for if it had been so, he would have offered some concession, some sacrifice for . .
Cited – Rush and Tompkins Ltd v Greater London Council and Another HL 1988
Use of ‘Without Prejudice Save as to Costs”
A sub-contractor sought payment from the appellants under a construction contract for additional expenses incurred through disruption and delay. The appellants said they were liable to pay the costs, and were entitled to re-imbursement from the . .
Cited – Foakes v Beer HL 16-May-1884
Mrs Beer had obtained judgment against Dr Foakes for andpound;2,090 19s. He asked for time to pay and they agreed with him, acknowledging the debt, and paying part immediately and undertaking to pay the balance over a period of time. In . .
Cited – D and C Builders Ltd v Rees CA 1966
The plaintiff builders had been chasing payment of their undisputed invoice. Knowing that the builders were in financial difficulties, the defendant offered rather less, saying that if it was not accepted, she would pay nothing. She made the payment . .
Cited – Cory v Bretton 1830
The provision in a letter that it was ‘not to be used in prejudice of my rights . . .’ was read as meaning that an apparent acknowledgement of indebtedness in the same letter was ‘clearly a conditional statement’. . .
Cited – In re River Steamer Company 1871
A without prejudice letter was written by a person claiming adverse possession of land to the paper owner offering to purchase the land. The paper owner said this was an acknowledgment of his title.
Held: The letter was written in the context . .
Cited – Oliver v Nautilus Steam Shipping Co Ltd 1903
Where an employee was injured at work, but by an outside person, section 6 of the 1897 Act provides that the worker could ‘at his option, proceed, either at law against that person to recover damages, or against his employer for compensation under . .
Cited – Unsworth v Elder Dempster Lines Ltd HL 1940
Shippers of cargo on a chartered ship brought an action against the shipowners for damage caused to the cargo by bad stowage, for which the shipowners were responsible. The cargo was shipped under charterers’ bills of lading, so that the contract of . .
Cited – Cook v Swinfen 1966
. .
Cited – In re Brisbane City Council and White 1981
The use of the the phrase ‘without prejudice’ was ‘futile’ in the context of an originating process. . .
Cited by:
Cited – Amwell View School v Dogherty EAT 15-Sep-2006
amwell_dogherty
The claimant had secretly recorded the disciplinary hearings and also the deliberations of the disciplinary panel after their retirement. The tribunal had at a case management hearing admitted the recordings as evidence, and the defendant appealed, . .
Cited – Framlington Group Ltd and Another v Barnetson CA 24-May-2007
The defendant had sought an order requiring the claimant to remove from a witness statement elements referring to without prejudice discussions between the parties before litigation began.
Held: The defendant’s appeal succeeded. The test for . .
Cited – Ofulue and Another v Bossert HL 11-Mar-2009
The parties disputed ownership of land, one claiming adverse possession. In the course of negotations, the possessor made a without prejudice offer to purchase the paper owner’s title. The paper owner claimed that this was an acknowledgement under . .
Cited – Williams v Hull ChD 19-Nov-2009
The parties had bought a house together, but disputed the shares on which it was held. The appeal was on the basis that a without prejudice letter had been redacte and then wrongly admitted as not in fact without prejudice, an as an unambiguous . .
Applied – Shepherd Construction Ltd v Berners (BVI) Ltd and Another TCC 25-Mar-2010
The defendants sought a release from an asset freezing order, saying that there was no good reason to anticipate any dissipation of assets. An action between the parties had been settled on terms, but the defendant had not met payments. The . .
Cited – Avonwick Holdings Ltd v Webinvest Ltd and Another ChD 10-Oct-2014
Application by the claimant that certain correspondence between the parties and their solicitors in April-May 2014 should be admissible as evidence, notwithstanding that most of it was headed ‘without prejudice and subject to contract’. The . .
Lists of cited by and citing cases may be incomplete.
Limitation, Litigation Practice
Leading Case
Updated: 10 December 2021; Ref: scu.243079