Real property – Admissibility – Limitations – Without prejudice communications

Ofulue & Anor v Bossert: HL (Lords Hope of Craighead, Scott of Foscote, Rodger of Earlsferry, Walker of Gestingthorpe, Neuberger of Abbotsbury): 11 March 2009

The appellants (O) appealed against a decision ([2008] EWCA Civ 7, [2009] Ch 1) that the respondent (B) had acquired the freehold title of their property by adverse possession. O were the registered freehold owners of a property.

In 1981, B had been permitted to occupy the property by O’s tenant. Eight years later, O began possession proceedings against B. B’s defence, served in 1990, admitted O’s title but denied their right to possession. In a without prejudice letter written the following year, B offered to buy the property. The proceedings were struck out in 2002. A year later, O issued fresh possession proceedings, which B defended on the basis of adverse ­possession, pursuant to section 15 of the Limitation Act 1980. O relied on section 29 of the act, arguing that the running of time for adverse possession had been interrupted by B’s acknowledgment of their title in her defence in the earlier proceedings and in the without prejudice offer.

The judge at first instance upheld B’s contention and the Court of Appeal dismissed O’s appeal, finding that the admission of title in the defence did not constitute an acknowledgment for the purposes of section 29; that in any event, the defence had been served more than 12 years before the second proceedings and any acknowledgment did not continue beyond the date of the defence; and that the without ­prejudice offer could not be relied on. The issues to be determined were: 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; and whether the admission of title in the defence operated as a continuing acknowledgment for the purposes of the act.

Held: (Lord Scott dissenting) (1) The normal rule was that statements made in negotiations between parties to litigation with a view to settling were inadmissible. The fact that in the present case the rule was being invoked in relation to negotiations in earlier proceedings involved no new extension of it, Rush & Tompkins Ltd v Greater London Council [1989] AC 1280 HL, Unilever Plc v Procter & Gamble Co [2000] 1 WLR 2436 CA (Civ Div), and Muller v Linsley & Mortimer [1996] PNLR 74 CA (Civ Div) considered. It was strongly arguable that the principles governing the admissibility in subsequent proceedings, of a statement made in without prejudice negotiations to settle earlier proceedings, should be the same as those which would govern its admissibility in the earlier proceedings, and there was no basis for exempting the without prejudice offer in the present case from that rule.

The fact that O’s freehold title had not been directly in dispute in the earlier proceedings was not a ground for admitting the without prejudice offer. Save perhaps where it was wholly unconnected with the issues between the parties, a statement in without prejudice negotiations was not to be admissible other than in exceptional circumstances. Nor did it assist that O sought to admit the offer as a fact rather than to establish the truth of the admission. The distinction between those purposes, drawn by Lord Hoffman in Muller, was too subtle to apply in practice and was contrary to the underlying objective of without prejudice protection. Though he applied the same distinction in Bradford & Bingley Plc v Rashid [2006] UKHL 37, [2006] 1 WLR 2066, none of the other opinions in that case were based on the same reasoning, and some doubts were expressed about it, Rashid considered.

Section 29 of the act did not contain any significant public policy element, so it could not be said that the public policy in section 29 outweighed the public policy of not admitting in evidence what was said in without prejudice negotiations.

(2) There was no reason why a statement in a pleading could not amount to an acknowledgment for the purposes of section 29. B’s admission of O’s title in the defence operated as such an acknowledgment as at the date on which it was served. It did not, however, continue to operate as an acknowledgment beyond that date, Johnstone (Johnstone’s Trs) v Smith Clark (1896) 4 SLT 180 OH considered. While an acknowledgment could cover a continuing state of affairs, where it was embodied in a signed document, the more natural meaning of ‘acknowledgment’ suggested that it arose as at the date of the document. Moreover, the fact that the defence had been relied on by B in 2002 in response to an application by B did not mean that the acknowledgment could be treated as having been renewed. Though it would be wrong to attempt to set out an exhaustive test as to what would constitute a renewal of an acknowledgment, it would normally require a fresh signed document, or an act such as reservice of the original. Merely taking steps in the action would not do.

(3) (Per Lord Neuberger) (Obiter) B had conceded that the appeal court had been wrong to conclude that the admission of title in the first defence did not constitute an acknowledgment for section 29, and the point was not therefore in issue. Nonetheless, the appeal court’s conclusion that section 29 required an acknowledgment of a right to immediate possession as opposed to an acknowledgment of title was wrong.

Appeal dismissed.

Richard Wilson QC, Christopher Jacobs (instructed by Hodge Jones & Allen) for the appellant; Peter Cramplin QC, Simon Williams (instructed by RFB Solicitors) for the respondent.