DISCUSSIONS TO SELL LAND WERE WITHOUT PREJUDICE AND COULD NOT BE RELIED UPON AT HEARING: THE WITHOUT PREJUDICE RULE EXAMINED
In Windmill Holdings SPV Ltd v Adams & Anor (LAND REGISTRATION – ADVERSE POSSESSION – evidence)  UKUT 228 (LC) The Upper Tribunal (Lands Chamber), Judge Elizabeth Cooke, upheld the decision of the First-tier tribunal excluding certain evidence on the grounds that it was without prejudice.
The respondents purchased property in 1993. It was a strip of land that used to be a railway siding. The appellant company brought the remainder of the title in 2018. An issue arose as to whether the respondents had possessory title to two strips of land which they had used for 10 years. The FTT decided that the respondents had been adverse possession of the land for ten years and found in their favour. The appellant appealed on the basis that the FTT had been wrong to exclude notes of a telephone conversation and certain emails relating to the appellant’s proposed sale of the strip to the defendants.
THE DISPUTED EVIDENCE
The excluded evidence related to the appellant telling the respondents that the strips were for sale and their responses.
11. I can summarise the content of the excluded correspondence as follows. First, on 12 April 2018 Mr Peter Whitehead, the director of the appellant, emailed Mr and Mrs Adams (whom he had known and with whom he had had dealings for some years) saying:
“Tony, as part of ongoing negotiations of land at Ribchester Road, we’ve acquired two parcels which I understand are adjacent to your house. If you and Maria would like to purchase these from us, would you let me know fairly quickly please?”
12. Mr Adams replied asking Mr Whitehead to call, and Mr Whitehead emailed again on the same day saying that they could have the two parcels for £25,000 if they moved forward quickly,
13. There follows Mr Whitehead’s note, which he says he made at the time:
“Note of a telephone conversation with Tony Adams on 18th April 2018.
Tony stated that the family had encroached on to the two parcels in question knowing that they were not in his and Maria’s ownership.
In a previous conversation on 13th April, Tony had said that the Land Registry had “cocked up” in not recording the two parcels in his and Maria’s names when they were originally purchased.
During this conversation (on 18th April), Tony Adams acknowledged that the previous statement (above) was a lie and having spoken to their solicitor they wanted to acquire the two plots.
The sum of £10k was offered and I said that the asking price was £25k. Tony then asked what ‘the bottom line’ was.
I stated that I would consider and revert.”
14. The emails then re-commence in the morning of 19 April with Mr Whitehead indicating a bottom line of £19,375; Mr Adams replied that afternoon suggesting “£18k subject to contract” and asking when he wanted to complete. That evening Mr Whitehead replied to say that the bottom line remained £19,375 but that he would discount it to £18,750 if completion occurred on or before 18 May; and he asked who Mr and Mrs Adams’ solicitor would be. On 20 April 2018 Mr Adams replied with his solicitor’s details. On 23 April Mr Whitehead email to say that the solicitor seemed unaware of the transaction and warning that the price would go up if the purchase did not occur by 15 May; Mrs Adams replied on the same day asking him to use a different email address.
15. That is the end of the excluded correspondence. On the 10th May 2018 the Respondent emailed claiming to have found proof of purchase of the two plots, and on 18 May 2018 Mr and Mrs Adams’ solicitors, Napthens, wrote to the appellant’s solicitors stating that their clients had bought the south strip and the north plot in 1993, and their clients only became aware that they did not have a registered title to them when the appellant “demanded ransom monies”, that their clients were horrified, and that they had honestly believed all along that they owned the south strip and the north plot as well as the plot for number 34.
THE WITHOUT PREJUDICE RULE
The judgment considered the without prejudice rule, in particular at what stage in a dispute it could be said to apply.
18. There is no dispute between the parties as to the purpose of the “without prejudice” rule or its extent. It is trite law that without prejudice material, with some exceptions which are not relevant here, must not be put in evidence, in order to encourage settlement and to enable the parties to speak freely and frankly in their attempts to settle; both Mr Newman and Mr Habteslasie quote Phipson on Evidence, 19th edition, paragraph 24.13. Without prejudice material need not be labelled as such. It is not necessary for the parties to be already engaged in litigation, and they may be in a contractual or other relationship (such as employer and employee as in Barnetson v Framlington Group Ltd  EWCA Civ 502). What is critical is the proximity of the subject matter of the negotiations to the subject of the litigation. At paragraph 34 in Framlington the Court of Appeal (Auld LJ) said:
“the crucial consideration [is] whether in the course of negotiations the parties contemplated or might reasonably have contemplated litigation if they could not agree.”
19. In Bradford & Bingley Plc v Rashid  1 WLR 2006 Lord Mance said at paragraph 81]:
“The existence of a dispute and of an attempt to compromise it are at the heart of the rule whereby evidence may be excluded (or disclosure of material precluded)… The rule does not of course depend upon disputants already being engaged in litigation. But there must as a matter of law be a real dispute capable of settlement in the sense of compromise (rather than in the sense of simple payment or satisfaction).”
THE DECISION IN THE CURRENT CASE: THESE WERE WITHOUT PREJUDICE DISCUSSIONS
The decision of the FTT judge was upheld. These discussions fell within the without prejudice rule.