"Without prejudice" correspondence is not admissible (save in exceptional circumstances) in subsequent proceedings between the same parties.

This was confirmed by the House of Lords in Ofulue & another v Bossert which is a case that reported on in our February 2008 banking update. The claimants were the registered freehold owners of a property. The defendant occupied the property in 1981. In 1989, the claimants commenced possession proceedings. The defence, served in 1990, admitted the claimants' title but denied their right to possession. The defendant also offered to buy the property in a without prejudice letter in 1992. The letter amounted to an implied acknowledgement of the claimants' title. The proceedings were struck out in 2002 but fresh possession proceedings were commenced in 2003 which were defended on the basis of adverse possession pursuant to s15 Limitation Act 1980 (the LA).

The claimants argued that the running of time for adverse possession had been interrupted by the defendant's acknowledgment of the claimants' title in the defence in the earlier proceedings and in the without prejudice letter. Therefore, a fresh accrual of action pursuant to s29 LA had arisen at the time of the defence and then again when the without prejudice letter was written. As a result, the requisite 12 year period had not expired at the time of the issue of the 2003 possession proceedings.

The House of Lords held that a statement in a pleading could amount to an acknowledgement for the purposes of s29 LA and the defendant's admission of the claimants' title in the earlier defence did amount to such an acknowledgment as at the date the defence was served. However, that was more than 12 years before the current proceedings had been issued. The acknowledgment was not a continuing acknowledgment and it could only be treated as renewed if, for example, it was contained in a fresh signed document or the original document was re-served. Merely taking a step in an action would not suffice. It could not therefore be relied on as 12 years had expired before the 2003 claim was issued.

Further, the general rule was that, save in exceptional circumstances, statements made between parties to litigation with a view to settling claims were inadmissible. This rule applied equally to negotiations between the parties in earlier proceedings save potentially where they were wholly unconnected with the issues in the proceedings. The without prejudice letter could not be relied on as evidence of acknowledgment of title for the purposes of s29LA.

As a result of the above, the defendant acquired title to the property by adverse possession.

Things to consider

Time limits should always be borne in mind and possession claims carefully diarised accordingly to ensure that steps are taken before an adverse possession defence can be run. As to without prejudice communications, so long as they are truly aimed at attempts to negotiate settlements of claims, the courts will uphold the sanctity of the privilege save in exceptional circumstances.