Bradford & Bingley Plc v Rashid

The without prejudice rule is not confined to disputes about whether a debt exists or how much is owed. It may protect communications genuinely directed to reaching agreement about repayment, time to pay or forbearance, even where the debtor admits the debt and the communication might amount to an acknowledgment under the Limitation Act 1980. The court must assess the correspondence and surrounding circumstances as a whole; the label “without prejudice” is unnecessary. An admission should not be isolated from the remainder of settlement negotiations. Whether a communication is privileged remains fact-sensitive. The privilege issue may be decided without determining whether the communication constituted a statutory acknowledgment.

This was a second appeal from Bradford County Court concerning a mortgage shortfall. The property had been sold in 1991, leaving a balance due, and proceedings were issued in 2003, more than 12 years after the defendant’s last payment. The defendant relied on section 20(1) of the Limitation Act 1980 and contended that two letters sent in September and October 2001 were without prejudice and inadmissible. A District Judge had treated the September letter as admissible and as an acknowledgment, but Judge Hawkesworth held both letters privileged and dismissed the claim. The central issue was whether correspondence concerning repayment of an undisputed debt could attract without prejudice protection.

Appeal dismissed with costs. The Court of Appeal, comprising Sir Martin Nourse, Lord Justice Latham and Lord Justice Buxton, decided the appeal on the without prejudice issue and left the acknowledgment question unresolved.

1. The parties agreed that, absent an admissible acknowledgment, the claim was statute-barred because it had been brought more than 12 years after the last mortgage payment. The court nevertheless proceeded on the assumption that either letter could otherwise qualify as an acknowledgment under sections 29 and 30 of the Limitation Act 1980.
2. The rule is founded at least partly on public policy. It encourages parties to settle disputes by enabling frank negotiations without fear that statements will later be used against them. The rule applies to negotiations genuinely aimed at settlement and does not depend on the words “without prejudice”. The court rejected the submission that a debtor could not invoke privilege merely because it prevented the court from deciding whether a letter acknowledged the debt.
3. The October letter, offering approximately £500 as a final settlement, was plainly written without prejudice. The September letter contained an admission that the outstanding balance was owed, but its context showed an attempt to negotiate time and forbearance. The relevant difference between the parties concerned repayment and enforcement, not the existence or amount of the debt. The public policy in encouraging agreement about repayment was equally important.
4. The court respectfully doubted an unduly narrow view of the rule confined to admissions against interest. Consistently with Unilever Plc v Procter & Gamble Co [2000] 1 WLR 2436, the communication should not be dissected so as to expose an admission while withholding protection from the surrounding negotiations.
5. The conclusion was fact-sensitive and unlikely to govern many other cases. Since both letters were privileged and inadmissible, it was unnecessary to decide whether either constituted an acknowledgment. The appeal was dismissed, the stay concerning costs was removed, detailed assessment of the respondent’s funding certificate was ordered, and permission to appeal to the House of Lords was refused.

1. Court of Appeal (Civil Division): On 22 July 2005, the second appeal was dismissed with costs. Permission to appeal to the House of Lords was refused.
2. Bradford County Court: On 14 December 2004, Judge Hawkesworth QC allowed the defendant’s appeal from the District Judge, held both letters without prejudice and dismissed the action.
3. Bradford County Court, trial level: Deputy District Judge Heaton held the October letter without prejudice but treated the September letter as admissible and as a valid acknowledgment, giving judgment for the claimant.