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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 acknowledgment of title for the purposes of section 29(2)(a) of the Limitation Act 1980.

LORD WALKER OF GESTINGTHORPE

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 acknowledgment, but also a continuing acknowledgment) 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). But 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, he generally wishes to rely on admissions which the other party has made against his interest. In the leading case in this House, Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, 1299-1300, Lord Griffiths approved Oliver LJ’s statement of the principle (in Cutts v Head [1984] Ch 290, 306) 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, 79, 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, i.e. 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] 1 WLR 2066, para 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 a 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) which (if admitted) amounted to an acknowledgment within section 29(5) of the Limitation Act 1980. The House’s 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 acknowledgment within section 29(2) of the Limitation Act 1980, even though it is or may be inadmissible as an admission against interest.

50.  In Rashid [2006] 1 WLR 2066 I felt considerable difficulty about this proposition (para 42), as did Lord Hope (para 35) and Lord Brown of Eaton-under-Heywood (paras 66-68). Lord Mance (para 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 “acknowledgment". The former expression naturally conveys the sense of accepting the truth of something which 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. But 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 para 16 of his opinion in Rashid, quoted above) that an acknowledgment is not evidence of anything; it simply is an acknowledgment (his emphasis). That is no doubt correct. But 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 In re Daintrey; Ex p 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 acknowledgment under section 29 of the Limitation Act 1980 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. But 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 acknowledgment of their title for the purposes of the Limitation Act 1980, 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 QC 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 Limitation Act 1980 to outlaw an agreement varying its effect. Standstill agreements are common, though 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 acknowledgment.

56.  There is very little authority on whether an acknowledgment 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 In re River Steamer Co (1871) LR Ch. App 822, 831-832, dating from a time when the requirements for an acknowledgment were more onerous) and two conflicting Canadian dicta on “confirmation” of a cause of action in without prejudice correspondence (Lambert JA in Belanger v Gilbert [1984] 6 WWR 474, 476 and Taggart JA in Farrell v Tisdale (1987) 16 BCLR (2d) 230, 241-242). 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 J H Wigmore, approved: see Wigmore, Evidence in Trials at Common Law, 1972 edition, vol. 4, 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, 396 and Hoghton v Hoghton (1852) 15 Beav 278, 321. 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 pp 336-337, Lindley LJ at pp337-338 and Bowen LJ at p339, all quoted by Oliver LJ in Cutts v Head [1984] Ch 290, 302-304.

58.  Finally there is the important speech of Lord Griffiths in Rush & Tompkins [1989] AC 1280. 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 [1893] 2 QB 116 as a notable exception, and continued:

“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.”

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 142 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 acknowledgment under section 29 of the Limitation Act 1980 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.

LORD NEUBERGER OF ABBOTSBURY

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 acknowledgment of title which stopped time running against the claimant under the provisions of the Limitation Act 1980. There is 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.

61.  Mr and Mrs Ofulue purchased 61 Coborn Road, Bow London E3 (“the property”) in 1976, and were registered at H.M. 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 Counterclaim (“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 counterclaimed a declaration as to “extent and nature of” their interest in the property. The Ofulues served a Reply and Defence to Counterclaim in December 1990, and the proceedings were transferred to the 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 solicitors, wrote to the Ofulues’ solicitors, 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’ solicitors 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’ solicitors

64.  Nothing then happened in relation to those proceedings for nearly ten years. In the mean time, 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 the 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 Counterclaim, 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 twelve 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 twelve year period in the Defence in the earlier proceedings, and/or in the Letter of 14 January 1992.

66.  Section 15(1) of the Limitation Act 1980 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 relation to registered land by the Land Registration Act 2002, but the provisions of that Act only came into force in 2004, and do not apply to cases such as this, where the twelve 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 [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 v Graham [2003] 1 AC 419 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 [2003] 1 AC 419, 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 relation to 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 (2005) 43 EHRR 43and (2007) 46 EHRR 1083. In brief, the Grand Chamber decided that, although article 1 was engaged, the legislation was within the margin of appreciation afforded to the United Kingdom government.

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 acknowledgment. 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 acknowledgment 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 at [2001] 1 WLR 1321, para 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 which expressly or impliedly confirmed their title. In that case, unlike 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.

71.  The instant proceedings came before His Honour 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 acknowledgment as they contended. The Ofulues appealed this decision to the Court of Appeal - [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 v UK 46 EHRR 1083 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 acknowledgment, it did not continue beyond the date of the Defence, so it was more than twelve years before the instant claim was brought.

(d)  The Letter could not be relied on as an acknowledgment, 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 acknowledgment, as it was sent less than twelve 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 which have to be resolved, I should nonetheless consider the latter two issues, not least because I disagree with the Court of Appeal on point (b)

74.  The Court of Appeal concluded that the admission in the Defence in the first proceedings did not amount to an acknowledgment within section 29, because it was only an acknowledgment 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. But the conclusion that section 29 requires an acknowledgment of a right to immediate possession, as opposed to an acknowledgment of title, is, in my judgment, wrong for two separate reasons, which may be shortly stated.

75.  First, the conclusion reached by the Court if 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. Secondly, 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 acknowledgment by Ms Bossert of their ownership of that very interest was not a sufficient acknowledgment 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 acknowledgment by them of the Ofueles’ 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 acknowledgment sufficient to satisfy section 29, subject to the fact that it formed part of without prejudice negotiations. While 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 acknowledgment of the offeree’s title to that interest. The decision is 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.