[House of Lords]
[Opinions of the Lords of Appeal for Judgment]
Appellate Committee: Lord Hoffmann, Lord Hope of Craighead,
Lord Walker of Gestingthorpe, Lord Brown of Eaton-under-Heywood & Lord Mance
Bradford & Bingley plc --- Appellants.
versus
Rashid (FC) --- Respondent.
[2006] UKHL 37 on appeal from [2005] EWCA Civ 1080
Justin Fenwick QC & Nicole Sandells (Instructed by Addleshaw Goddard) for Appellant.
Christopher Nugee QC & William Hanbury (Instructed by Williscroft & Co) for Respondent.
Date of hearing: 24th May 2006
LORD HOFFMANN
My Lords,
1. The chief question is whether a letter containing an acknowledgement of a debt for the purposes of section 29(5) of the Limitation Act 1980 is inadmissible on the ground that the letter formed part of a negotiation with a view to the creditor giving the debtor time to pay or accepting a lesser amount. In common with all of your Lordships, I consider that the letter was admissible. But there is some difference of opinion over the reasons and I must therefore state my own. There is also a subsidiary question as to whether the letters contained acknowledgements within the meaning of the Act. They are set out in the speech to be delivered by my noble and learned friend Lord Brown of Eaton-under-Heywood and I agree with him and my noble and learned friend Lord Hope of Craighead that references in the letter of 26 September 2001 to an "outstanding balance" and in the letter of 4 October 2001 to an "outstanding amount" are plain acknowledgements of the existence of a debt. It is clear on the authorities that nothing more is needed.
2. The more complex question is why the letters are admissible. There is no doubt that they formed part of a negotiation. They were written in reply to an invitation from the building society to make them an offer. Judge Hawkesworth QC, sitting in the Bradford County Court and hearing an appeal from the Deputy District Judge, who had admitted one of the letters and given judgment for the building society, regarded this as sufficient to exclude the letters on the grounds that they were impliedly written without prejudice. He said:
"What was in issue was enforcement, and it seems to me there is equally a public policy issue in encouraging the parties to reach agreement as to the repayment of a debt as there is in encouraging them to agree as to the existence of a debt."
3. The Court of Appeal agreed. I doubt whether anyone could object to the general sentiment expressed. Even when the indebtedness cannot be denied, the parties should be encouraged to agree on the method by which it should be discharged, if necessary giving the debtor time to pay. But the question is how this policy can best be given effect and here, it seems to me, the judge and the Court of Appeal took a rather one-sided view of the matter. They looked only at encouraging the debtor to be open with his creditor without fear of what he said being used against him. But it takes two to negotiate and there is also a public policy in encouraging the creditor not to initiate legal proceedings. The acknowledgement rule plays an important part in furthering this policy because it means that a creditor, negotiating on the basis that his debt has been acknowledged, can proceed with the negotiations and give time to pay without being distracted by the sound of time's winged chariot behind him. It is also unfair that a debtor who does not dispute his indebtedness should be able to ask for time and use that indulgence to rely on the statute. A good example is the celebrated case of Spencer v Hemmerde [1922] 2 AC 507, in which a member of the Bar borrowed £1,000 for two months in 1910 and then did not pay it back. In 1915 there was a correspondence in which the creditor pressed for payment and the debtor acknowledged his indebtedness but sought to gain time. In consequence of this correspondence the creditor, as Viscount Cave put it, "stayed his hand". When proceedings were commenced in 1920, the debtor pleaded the statute of limitations. As the law then stood, it was also necessary that there should be not only an acknowledgement but also an inference of a promise to pay. The issue before the House was whether such a promise could be inferred. There was no suggestion that the letters might be excluded as written in the course of negotiations - a significant omission to which I shall in due course return. However, it is difficult to escape the conclusion that the House, in deciding that the letters were sufficient to lift the time bar, was influenced by the injustice of a debtor asking for time to pay an acknowledged debt and then pleading the statute. As counsel for the creditor said (at p. 510), "the debtor…was asking for an indulgence, and by means of those letters he obtained the indulgence which enabled him to set up the statute."
4. The policy of encouraging negotiation therefore requires that the law should give effect to two objectives: first, the objective furthered by the normal without prejudice rule, which allows the parties to speak freely without fear that their statements will be relied upon as admissions if negotiations should break down, and secondly, the objective of the special acknowledgement rule in the Limitation Act, which allows a creditor to give time to negotiate for the payment of an admitted indebtedness without fear that the claim will become statute barred. These two objectives may sometimes appear to pull in opposite directions, although I hope to demonstrate that upon a proper analysis they do not.
5. The Court of Appeal, as I have said, did not recognise any possibility of conflict because they gave no weight to the policy of the acknowledgement rule. In fact, I think that the decision of the Court of Appeal would largely destroy that rule. In the nature of things, most acknowledgements will be coupled with attempts to obtain time to pay or remission of part of the debt. As Lord Sumner said in Spencer v Hemmerde [1922] 2 AC at p. 526:
"as a rule the debtor who writes such letters has no intention to bind himself further than he is bound already, no intention of paying so long as he can avoid payment, and nothing before his mind but a desire, somehow or other, to gain time and avert pressure."
In other words, he intends to initiate or pursue a negotiation as to how and how much of the debt should be paid. It is of course possible that a debtor in arrear might write an acknowledgement unaccompanied by any suggestion that he should be allowed time to pay. But, looking at the examples of acknowledgements which have been admitted and construed as such in the past, I think that such cases would be unusual. Certainly in Spencer v Hemmerde there was material upon which counsel for the debtor, if the thought had occurred to him, could have argued that his client's letters formed part of an attempt at negotiation. Likewise in Dungate v Dungate [1965] 1 WLR 1477, the debtor's letter saying:
"Keep a check on totals and amounts I owe you and we will have account now and then….Sorry I cannot do you a cheque yet. Terribly short at the moment"
bears a strong family resemblance to the letters in this case. The same is true of the acknowledgement in the Canadian case of Phillips v Rogers [1945] 2 WWR 53, 56:
"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 no idea where I am going to get $700 and meet your demands by November 1st unless I rob a bank and I really don't think a case of this kind warrants such drastic action on my part. If Mr Phillips or yourself have any ideas how I can get that amount of money, honestly I shall be pleased to consider them."
6. These three letters must be typical of those written by hard pressed debtors since time immemorial and they all either respond to invitations to negotiate terms of payment or attempt to initiate such negotiations. If the acknowledgements they contain are excluded by the without prejudice rule, that will be an end of the rule.
7. In the Court of Appeal, Sir Martin Nourse did not accept this. He said (at paragraph 29):
"each of these cases depends in the end on its own facts and it is difficult to believe that this case will serve as a precedent for any other."
8. This seems to me to make things worse rather than better. The Court disavows any statement of principle by which the correspondence in cases like Spencer v Hemmerde [1922] 2 AC 507, Dungate v Dungate [1965] 1 WLR 1477 and Phillips v Rogers [1945] 2 WWR 53 can be distinguished. This would be bound to lead to fine distinctions and a good deal of litigation.
9. It is therefore necessary to find a principle which would preserve the acknowledgement rule without doing damage to the without prejudice rule. The solution proposed by my noble and learned friend Lord Hope of Craighead, based on Scottish authority, is to deny altogether the application of the without prejudice rule to unqualified admissions, even if made in the course of negotiations for a settlement. In Scotland, this is based upon a fairly recent line of authority going back to the decision of Lord Wylie in Watson-Towers Ltd v McPhail 1986 SLT 617.
10. Watson-Towers was 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 prejudice but which attached a schedule listing the goods in its possession. Lord Wylie held that the schedule was admissible because it was, on the true construction of the letter, not a "hypothetical admission or concession for the purpose of securing a settlement" but a statement of fact.
11. This case was followed by Lord Sutherland in Daks Simpson Group plc v Kuiper 1994 SLT 689, another motion for summary judgment in a claim against a director for an account of secret commissions. In a letter expressed to be without prejudice, the director had said that he was prepared to accept that he had received such commissions in stated amounts. Lord Sutherland said (at p. 692):
"I see no objection in principle to a clear admission being used in subsequent proceedings, even though the communication in which it appears is stated to be without prejudice."
12. In support of this view, Lord Sutherland referred not only to Watson-Towers Ltd v McPhail 1986 SLT 617 but also to the Canadian case of Kirschbaum v 'Our Voices' Publishing Co [1971] 1 OR 737, in which also the judge had distinguished between whether an admission in a letter without prejudice was "to concede a fact hypothetically, in order to effect a settlement, or to declare a fact really to exist." He might have added a reference to Lord Kenyon in Turner v Railton (1796) 2 Esp 474:
"Concessions made for the purpose of settling the business for which the action is brought, cannot be given in evidence; but facts admitted I have always received."
13. 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, I think that, with all respect to the Scottish judges, including my noble and learned friend Lord Hope, 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. It has frequently been said that the purpose of the rule is to encourage parties engaged in settlement negotiations to express themselves freely and without inhibition. It is well established that the rule applies to any genuine attempt at negotiation, whether or not the communications are expressly said to be without prejudice, and I think it would be most unfortunate if the law introduced a new requirement that the parties should preface anything they said with a standard disclaimer that any admissions of fact were to be taken to be hypothetical and solely for the purposes of the negotiation.
14. It is true that the adoption of such a rule would preserve the acknowledgement rule, because an acknowledgement would by definition be an unqualified admission of liability. But I think that such a remedy would be to throw out the baby with the bathwater and that a more precisely targeted principle is needed.
15. Another possible solution is to say that negotiations over the mode of payment of an admitted debt are not really negotiations for the purposes of the without prejudice rule. The debtor is seeking an indulgence rather than a compromise. This is in some ways an attractive solution and I would be willing, if pressed by there being no other, to adopt it. But I feel somewhat uneasy about it because, first, it also has wider implications than saving the acknowledgement rule and secondly, it may in some cases be ineffective to do so. For example, it is clear from the authorities that an admission of indebtedness in general terms, as in this case, is sufficient to constitute an acknowledgement. The procedural bar against bringing the action is lifted and the creditor is free to prove his debt in the ordinary way. But assume that this acknowledgement is made in the course of negotiations about both the amount of the debt and the mode of payment. It would be difficult to say that there was no genuine negotiation to settle the question of the amount for which the debtor was liable. If the negotiations break down and the amount of the debt is later contested in court, one would expect any admissions as to the amount made in the course of negotiations to be excluded by the without prejudice rule. But would the acknowledgement be admissible for the purposes of section 29(5)? If the test is whether the parties were genuinely negotiating over liability rather than the concession of an indulgence, it would have to be excluded. And this would be the case even if the dispute over liability was relatively trivial. It would be hard to distinguish cases on such uncertain grounds. But the public policy of encouraging such negotiations to proceed, once liability has in principle been conceded, without putting the creditor at risk of finding himself time-barred also seems to me a strong one.
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 acknowledgement 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 the party concerned thought he had a weak case and so forth. But when a statement is used as an acknowledgement for the purposes of section 29(5), it is not being used as evidence of anything. The statement is not evidence of an acknowledgement. It is the acknowledgement. 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 acknowledgement 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.
17. The distinction between adducing a statement as evidence of something expressly or impliedly asserted in the statement and simply as evidence that the statement was made is well known in the law of evidence ( see Subramaniam v. Public Prosecutor [1956] 1 W.L.R. 965) and was the basis upon which the Court of Appeal in Muller v Linsley and Mortimer [1996] 1 PNLR 74 decided that without prejudice correspondence was admissible to prove that a party was acting reasonably in settling a claim against a third party. In a judgment with which Swinton Thomas and Leggatt LJJ agreed, I said:
"Many of the alleged exceptions to the rule will be found on analysis to be cases in which the relevance of the communication lies not in the truth of any fact which it asserts or admits, but simply in the fact that it was made."
I gave as examples letters used to prove a settlement reached as a result of negotiations, a statement amounting to an act of bankruptcy (Re Daintrey [1893] 2 QB 116) and correspondence used to explain delay in commencing or prosecuting litigation.
18. After a detailed examination of the cases in Unilever plc v Procter & Gamble Co [2000] 1 WLR 2436, 2446 Robert Walker LJ expressed some doubt as to whether the "large residue of communications which remain protected [as being outside the recognised exceptions to the without prejudice rule] can all be described as admissions." I would certainly accept that the without prejudice rule is capable of excluding statements which are not being used as evidence of the truth of what they expressly or impliedly admit. For example, I do not think that a litigant could be cross-examined to credit on without prejudice correspondence to show that he has made previous inconsistent statements. And I have no doubt that the Unilever case was rightly decided. It was obvious to everyone in that case that the alternative to settlement of the patent dispute was litigation. The without prejudice meeting was held with a view to discussing settlement and the notion that any reference to the consequences of failure should be admissible as a threat of litigation contrary to section 70 of the Patents Act 1977 was absurd. But, as I pointed out in Muller's case, the thread which runs through most of the alleged exceptions to the without prejudice rule is that the statement is not being used as evidence of the truth of anything expressly or impliedly asserted or admitted. The fact that acknowledgements used for the purposes of the Limitation Act fall within the same category, combined with the public policy of preserving the acknowledgement rule, seem to me to provide strong grounds for holding that the without prejudice rule does not apply to them. That produces a clear rule, easy to apply and having no side-effects, which preserves the acknowledgement principle without otherwise restricting the scope of the normal without prejudice privilege. It is of course open to the parties to agree that whatever they say in negotiations will not be capable of being used even as an acknowledgement for the purposes of section 29(5), but in such a case the creditor will be alerted to the fact that the debtor intends to rely upon the statute.
19. For those reasons I would allow the appeal and restore the decision of the Deputy District Judge.
LORD HOPE OF CRAIGHEAD
My Lords,
20. I agree with all my noble and learned friends, whose speeches I have had the advantage of reading in draft, that the appeal should be allowed. But my reasons are not entirely the same as theirs. So I should like to explain in my own words why I have reached the same conclusion as they have done.
21. I have no difficulty in regarding the letter of 26 September 2001 as an acknowledgment of the appellants' claim within the meaning of section 29(5) of the Limitation Act 1980. In Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 WLR 565, 575E-F Kerr J said that the 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. But his acknowledgment need not identify the amount of the debt. As Diplock LJ said in Dungate v Dungate [1965] 1 WLR 1477, 1487E-F, his acknowledgment will be sufficient if the amount for which he accepts legal liability can be ascertained by extrinsic evidence.
22. In its letter of 26 September 2001 the Advice Centre stated that the respondent was not in a position to pay "the outstanding balance, owed to you." It seems to me that the plain meaning of those words is that the respondent was admitting that he owed the appellants a sum of money which for the time being he was unable to pay. There could not be a clearer way of acknowledging that the respondent was under a legal liability to pay the outstanding balance. It is not disputed that the amount of the balance was capable of being determined by extrinsic evidence. In Dungate, at p 1487H, having construed the letter on which the plaintiff relied which referred to "amounts I owe you" as an acknowledgment under the Act, Diplock LJ said that this did not seem to him to differ from the statement which was held to be an acknowledgment in Spencer v Hemmerde [1922] 2 AC 507. The wording of the letter of 26 September 2001 is no less clear, and I think that the same result must follow. The wording of the letter of 4 October 2001 is slightly different. It refers to "the outstanding amount". But the key to the meaning of that phrase lies in its use of the definite article. This indicates that there is an amount representing the respondent's present state of indebtedness which is readily ascertainable. I think that this letter too was an acknowledgment within the meaning of the statute.
23. The more difficult issue is whether these acknowledgments are protected by the "without prejudice" privilege. As Megarry V-C said in Chocoladefabriken Lindt & Sprungli AG and another v The Nestlé Co Ltd [1978] RPC 287, 288, the mere failure to use that expression does not conclude the matter. The question is whether the letters were written in an attempt to compromise actual or pending litigation and, if so, whether it can be inferred from their terms and their whole context that they contained an offer in settlement for which the party who made the offer can claim privilege which prevents the acknowledgments from being relied upon for the purposes of the Act. In the present case the context in which the letters were written offers little, if anything, by way of guidance on this issue. The first letter was not written in response to an invitation to negotiate as to what, if anything, was due. It was written in response to an invitation to say how the amount due was to be repaid. So everything, it seems to me, turns on the wording of the letters themselves and the meaning that is to be attached to them.
24. The guiding principle is that parties should be encouraged so far as possible to resolve their dispute without resort to litigation, and that they should not be discouraged by the knowledge that anything that is said in the course of such negotiations may be used to their prejudice in the course of the proceedings: Cutts v Head [1984] Ch 290, 306, per Oliver LJ. In Savings & Investment Bank Ltd v Fincken [2004] 1 WLR 667, 684, para 57 Rix LJ observed that the public interest in encouraging parties to speak frankly to one another in aid of reaching a settlement is very great and ought not to be sacrificed save in truly exceptional and needy circumstances. As to how this rule is to be applied in practice, in Jones v Foxall (1852) 15 Beav 388, 396 Romilly MR deplored attempts to convert offers of compromise into admissions of acts prejudicial to the party making them. In Unilever Plc v Procter & Gamble Co [2000] 1 WLR 2436, 2448 Robert Walker LJ said that, while the protection of admission against interest is the most important practical effect of the rule, it would be contrary to the underlying objective of giving protection to the parties to dissect out identifiable admissions and withhold protection from the rest. This approach directs attention to the question whether the writer of the letter was seeking a compromise and, if so, what was the issue between the parties that he was seeking to resolve. If the admission was within the scope of the subject matter of the compromise, it is to be given the benefit of the privilege.
25. The cases that have been decided on this issue in Scotland indicate that the judges there have adopted the same guiding principle as that described by Oliver LJ in Cutts v Head [1984] Ch 290, 306. But they take a more pragmatic approach to the question how it is to be applied in practice. They are more willing to find that admissions in a document which contains an offer to compromise are to be treated as admissible. Offers, suggestions or concessions made in the course of negotiations are, of course, given the benefit of the privilege. But they are distinguished from clear admissions or statements of fact which, although contained in the same communication, did not form part of the offer to compromise. On such admissions or statements, if they can be clearly identified as such, the other party is entitled to rely. Another important difference in the practice which is adopted in Scotland is that professional advisers who wish to take advantage of the without prejudice rule are expected to say so expressly, and invariably do so. Authority is lacking on the question whether the rule can be invoked where the letter in question omits these words. There has been no discussion of the extent of the protection that the rule gives in that situation. The Scottish cases to which your Lordships have been referred must be understood in the light of this background. They are all cases where the standard phrase was used, and they all proceed on the basis that its use is not conclusive. Scrutiny of the communication is permitted to determine the extent of the protection that was being claimed. An admission which was made in plain terms is admissible, if it falls outside the area of the offer to compromise.
26. In Watson-Towers v McPhail, 1986 SLT 617, the pursuers sought summary decree, relying on a letter which had been written on the defenders' behalf offering to settle the claim for payment of goods supplied to them. The offer was said to be made without prejudice. The pursuers had supplied a quantity of steel and aluminium plates to a company which later went into receivership. The letter proposed a sum in settlement of the pursuers' claim, which was based on a reservation of title clause. But attached to it was a schedule which specified the amount of the plates that were held in stock on the date of the offer by the joint receivers of the company. Lord Wylie found that the schedule was not part of the offer to compromise. He said that the reference to the plates in stock as specified in the schedule was simply a statement of fact. It was not a hypothetical admission or a concession for the purpose of securing a settlement. He held that the without prejudice privilege did not attach to it, and that the pursuers were entitled to rely upon it as an admission for the purposes of their motion for summary decree.
27. Daks Simpson Group plc v Kuiper, 1994 SLT 689, was another case in which the pursuers who were seeking summary decree founded on a letter which had been written by the first defender's solicitor expressly without prejudice. The sums in question were amounts of commission which the first defender had obtained in secret from the pursuers' customers. The letter contained a statement that the first defender was prepared to accept that the first four commission payments stated in a draft settlement agreement listing a number of commission payments paid to him were correct. The total of these four payments was the amount for which the pursuer sought summary decree. Lord Sutherland rejected the first defender's argument that the whole contents of the letter were covered by the privilege and granted summary decree for that amount. Among the authorities to which he was referred were Watson-Towers v McPhail, 1986 SLT 617 and Cutts v Head [1984] Ch 290. His attention was also drawn to the Canadian case of Kirschbaum v "Our Voices" Publishing Co [1972] 1 OR 737, where the Court said that the question to be considered is what was the view and intention of the party in making the statement: whether it was to concede a fact hypothetically in order to effect a settlement or to declare a fact really to exist.
28. Lord Sutherland accepted the general principle as described by Oliver LJ in Cutts v Head. He then summarised his approach in these words:
" 'Without prejudice' in my view means, without prejudice to the whole rights and pleas of the party making the statement. If, however, someone makes a clear and unequivocal admission or statement of fact, it is difficult to see what rights or pleas could be attached to such a statement or admission other than perhaps to deny the truth of the admission which was made. I see no objection in principle to a clear admission being used in subsequent proceedings, even though the communication in which it appears is stated to be without prejudice. I would adopt what is said by Lord Wylie in Watson-Towers and the Canadian view expressed in Kirschbaum."
29. The claims in Watson-Towers v McPhail, 1986 SLT 617, and Daks Simpson Group plc v Kuiper, 1994 SLT 689, were both brought within the relevant time limit. So the court was not concerned in those cases with the question which arises here, which is whether the debt has been acknowledged for the purpose of prolonging the limitation period. But that was one of the questions which came before the Inner House in Richardson v Quercus, 1999 SC 278. In that case the pursuer was the owner of a flat on the second and top floors of a building which had been 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 dated 2 June 1992 which confirmed that they had no objection to the pursuer instructing the necessary remedial works to his property but which stated that it was written "without prejudice to liability". This letter, taken together with previous correspondence, was held to amount to a relevant acknowledgment within the meaning of section 10(1) of the Prescription and Limitation (Scotland) Act 1973 of the subsistence of an obligation to make reparation which would otherwise have been extinguished by the five year negative prescription. That subsection provides that in order to constitute a relevant acknowledgement there must be an unequivocal written admission clearly acknowledging that the obligation still subsists.
30. It was accepted in Richardson v Quercus that the principles set out in Daks Simpson Group provided the appropriate test. The principal issue was whether the letter was of sufficient substance to overcome the without prejudice docquet. Lord Prosser dealt at pp 283H-284C with the question whether the letter of 2 June 1992 had to be looked at for this purpose in isolation, as the defenders contended, or under reference to extraneous facts or prior correspondence:
"It is clear that what was said in Daks was not intended to cover all possible situations, and it appears to me that each situation must be judged upon its own facts. As will appear from what I say in relation to the two principal grounds of appeal, I am satisfied that in considering the issues raised by section 10(1)(a) and (b) it is not appropriate to look at individual letters or individual events in isolation only. If, looking at them in conjunction and taking this letter into account, it appears that there is no clear indication, or no clear acknowledgment by written admission, that the obligation still subsists, then it may well be that along with a conclusion to that effect, one might conclude that the terms of this letter lacked sufficient substance to overcome the words 'without prejudice to liability'. But if overall the substance of this letter, taken with the substance of prior events or writings, could be seen as satisfying the conditions set out in section 10(1), it would in my opinion be quite wrong to have decided a priori that the terms of this letter were of insufficient substance to overcome the docquet. If the terms of this letter, whether alone or with other material, are sufficient to satisfy either of those conditions in section 10(1), then in my opinion they are sufficient to render the docquet ineffectual."
31. The South African case of Kapeller v Rondalia Versekeringskorporasie van Suid-Afrika Bpk 1964 (4) SA 722 (T) to which Lord Mance has drawn our attention seems to me to be entirely consistent with Richardson v Quercus. In Kapeller a clear admission by an insurer of liability in the course of without prejudice negotiations about quantum was sufficient to restart the limitation period. That in a nutshell is exactly what the Court of Session decided in Richardson's case. In the Canadian case of Kirschbaum v "Our Voices" Publishing Co [1972] 1 OR 737 to which Lord Sutherland referred in Daks Simpson Group plc v Kuiper Haines J sitting in the Ontario High Court adopted the same approach. The question in that case was 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 trial. Answering that question in the affirmative, the judge said at pp 738-739 that contrary to popular belief the proposition that the shibboleth "without prejudice" written on a letter protects it from subsequent use as an admission was not accurate:
"[T]he question to be considered is, what was the view and intention of the party in making the admission; whether it was to concede a fact hypothetically, in order to effect a settlement, or to declare a fact really to exist."
32. In The Law of Evidence in Canada, Sopinka, Lederman and Bryant, 2nd ed (1999), para 14.204 the authors summarise the competing theories discussed in 4 Wigmore, Evidence (Chadbourn rev, 1972), para 1061. They state that the proposition that all admissions in the course of negotiation towards settlement are without prejudice whether those words are used or not and are not admissible in evidence is clearly the one that is accepted in Ontario. But Kirschbaum's case has not been overruled or disapproved, so the proposition to which the authors refer must be read subject to the qualification that is set out in that case. This brief comparative exercise shows that, while there may be room for some difference of view as to the application of that qualification in particular cases, the general approach which is taken to this issue in Scotland is far from unorthodox. It cannot be said to be out of line with that which is taken elsewhere.
33. How then do the letters of 26 September 2001 and 4 October 2001 stand up to examination? Neither of them contained the words "without prejudice", so the issue is whether they are protected by the public policy rule. It seems to me that the first letter does two things. It contains a clear admission that there is a balance of debt that is still outstanding and then there is a request for time to pay. The Court of Appeal agreed with the judge that it was written as part of an attempt
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