DEFENCE AND COUNTERCLAIM STRUCK OUT BECAUSE THE DEFENDANT RELIED ON WITHOUT PREJUDICE COMMUNICATIONS

In West v Churchill & Anor [2024] EWHC 940 (Ch) HHJ Keyser KC (sitting as a High Court Judge) struck out a defence and counterclaim that referred to without prejudice negotiations and correspondence.  There had been no agreement reached between the parties and it was not possible for the defendant to argue that they were able to rely on the documents by reason of “estoppel” or other principles.

 

 

“Despite Mr Dickinson’s valiant efforts, the case advanced by the first defendant amounts simply to an effort to make proposals in negotiations binding even though the negotiations did not result in an agreement. Agreements “in principle”, settlement proposals and the August 2011 Proposal” were just that: proposals that never advanced beyond agreements in principle to the point of a concluded agreement. Nothing more than that has been identified. The matters relied on fall squarely within the without prejudice rule and not within any exception to it”

 

THE CASE

This is a dispute between family members about ownership of land following the death of a family member.  There had been negotiations and proposals relating to the dispute, but no binding agreement.  The claimant issued proceedings seeking a declaration as to ownership. The defendant put in a defence and counterclaim.  The defence and counterclaim referred to without prejudice discussions that had taken place between the parties. The claimant applied, successfully, to strike out the defence and counterclaim on the grounds that it was an abuse of process to refer to without prejudice communications.

DISCUSSION OF THE WITHOUT PREJUDICE RULE

There was a detailed examination of the without prejudice rule.

The Without Prejudice Rule

    1. Counsel referred me to a number of authorities on the without prejudice rule. I shall set out extensively some passages dealing with the scope and juridical basis of the rule and the exceptions to it, as they assist proper understanding of the development and scope of the rule and the basis both of the rule and of the exceptions to it. However, discussion of the matter directly in point, the “estoppel exception”, begins at paragraph 20 below.

 

    1. In Rush & Tomkins Ltd v Greater London Council [1989] 1 AC 1280, Lord Griffiths, with whose speech the other members of the Appellate Committee agreed, explained the without prejudice rule as follows:

 

“The ‘without prejudice’ rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver L.J. in Cutts v Head [1984] Ch 290, 306:

‘That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J. in Scott Paper Co v Drayton Paper Works Ltd (1927) 44 R.P.C. 151, 156, be encouraged fully and frankly to put their cards on the table. . . . The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability.’

The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. A competent solicitor will always head any negotiating correspondence ‘without prejudice’ to make clear beyond doubt that in the event of the negotiations being unsuccessful they are not to be referred to at the subsequent trial. However, the application of the rule is not dependent upon the use of the phrase ‘without prejudice’ and if it is clear from the surrounding circumstances that the parties were seeking to compromise the action, evidence of the content of those negotiations will, as a general rule, not be admissible at the trial and cannot be used to establish an admission or partial admission.”

    1. The basis and scope of the without prejudice rule were considered at length by Hoffmann LJ (with whom Leggatt and Swinton Thomas LJJ agreed) in Muller v Linsley & Mortimer [1996] PNLR 74, where in passages at 77 and 79-80 he said this:

 

“Some of the decisions on the without prejudice rule show a fairly mechanistic approach, but the recent cases, most notably the decisions of this court in Cutts v Head [1984] Ch 290, and the House of Lords in Rush & Tompkins Ltd. v Greater London Council [1989] AC 1280, are firmly based upon an analysis of the rule’s underlying rationale. Cutts v Head shows that the rule has two justifications. Firstly, the public policy of encouraging parties to negotiate and settle their disputes out of court and, secondly, an implied agreement arising out of what is commonly understood to be the consequences of offering or agreeing to negotiate without prejudice. In some cases both of these justifications are present; in others, only one or the other. So, in Cutts v Head the rule that one could not rely upon a without prejudice offer on the question of costs after judgment was held not to be based upon any public policy. It did not promote the policy of encouraging settlements … It followed that the only basis for excluding reference to a without prejudice offer on costs was an implied agreement based on general usage and understanding that the party making the offer would not do so. Such an implication could be excluded by a contrary statement as in a Calderbank offer.”

“”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. 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. Thus, when the issue is whether without prejudice letters have resulted in an agreed settlement, the correspondence is admissible because the relevance of the letters has nothing to do with the truth of any facts which the writers may have expressly or impliedly admitted. They are relevant because they contain the offer and acceptance forming a contract which has replaced the cause of action previously in dispute. Likewise, a without prejudice letter containing a threat is admissible to prove that the threat was made. A without prejudice letter containing a statement which amounted to an act of bankruptcy is admissible to prove that the statement was made: see In re Daintrey [1893] 2 QB 116. Without prejudice correspondence is always admissible to explain delay in commencing or prosecuting litigation. Here again, the relevance lies in the fact that the communications took place and not the truth of their contents. Indeed, I think that the only case in which the rule has been held to preclude the use of without prejudice communications, otherwise than as admissions, is in the rule that an offer may not be used on the question of costs; a rule which, as I have said, has been held to rest purely upon convention and not upon public policy. This is not the case in which to attempt a definitive statement of the scope of the purely convention-based rule, not least because, as Fox L.J. pointed out in Cutts v Head [1984] Ch 290, 316, it depends upon customary usage which is not immutable. But the public policy rationale is, in my judgment, directed solely to admissions.”

    1. In Unilever Plc v The Proctor & Gamble Co, Robert Walker LJ, with whose judgment Simon Brown LJ and Wilson J agreed, considered these passages and at 2443 suggested the working assumption that the without prejudice rule, if not sacred, “has a wide and compelling effect.” By way of conclusion, at 2448-2449 he said:

 

“… I consider that this court should, in determining this appeal, give effect to the principles stated in the modern cases, especially Cutts v Head, Rush & Tompkins Ltd. v Greater London Council and Muller v Linsley & Mortimer. Whatever difficulties there are in a complete reconciliation of those cases, they make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in the Rush & Tompkins case [1989] AC 1280, 1300: ‘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.’ Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders.

Lord Griffiths in the Rush & Tompkins case noted, at p. 1300c, and more recent decisions illustrate, that even in situations to which the without prejudice rule undoubtedly applies, the veil imposed by public policy may have to be pulled aside, even so as to disclose admissions, in cases where the protection afforded by the rule has been unequivocally abused.”

    1. Earlier in that judgment, at 2444-2445 Robert Walker LJ had identified exceptions to the without prejudice rule. It is the third exception (“the estoppel exception”) that is relevant in this case, but I set out the wider passage for context, omitting some references and explanations:

 

“Nevertheless, there are numerous occasions on which, despite the existence of without prejudice negotiations, the without prejudice rule does not prevent the admission into evidence of what one or both of the parties said or wrote. The following are among the most important instances.

(1) As Hoffmann L.J. noted in Muller’s case, when the issue is whether without prejudice communications have resulted in a concluded compromise agreement, those communications are admissible. …

(2) Evidence of the negotiations is also admissible to show that an agreement apparently concluded between the parties during the negotiations should be set aside on the ground of misrepresentation, fraud or undue influence. …

(3) Even if there is no concluded compromise, a clear statement which is made by one party to negotiations and on which the other party is intended to act and does in fact act may be admissible as giving rise to an estoppel. That was the view of Neuberger J. in Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] F.S.R. 178, 191 and his view on that point was not disapproved by this court on appeal.

(4) Apart from any concluded contract or estoppel, one party may be allowed to give evidence of what the other said or wrote in without prejudice negotiations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguoqs impropriety’ … But this court has, in Forster v Friedland and Faiil-Alizadeh v Nikbin (unreported), 25 February 1993; Court of Appeal (Civil Division) Transcript No. 205 of 1993, warned that the exception should be applied only in the clearest cases of abuse of a privileged occasion.

(5) Evidence of negotiations may be given (for instance, on an application to strike out proceedings for want of prosecution) in order to explain delay or apparent acquiescence. …

(6) In Muller’s case (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether· the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders. Hoffmann L.J. treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications. The other members of the court agreed but would also have based their decision on waiver.

(7) The exception (or apparent exception) for an offer expressly made ‘without prejudice except as to costs’ was clearly recognised by this court in Cutts v Head, and by the House of Lords in Rush & Tompkins [ 1989] AC 1280, as based on an express or implied agreement between the parties. It stands apart from the principle of public policy … There seems to be no reason in principle why parties to without prejudice negotiations should not expressly or impliedly agree to vary the application of the public policy rule in other respects, either by extending or by limiting its reach. …

(8) In matrimonial cases there has developed what is now a distinct privilege extending to communications received in confidence with a view to matrimonial conciliation …”

    1. The House of Lords considered the scope of the without prejudice rule and the exceptions to it in Ofulue v Bossert [2009] UKHL 16[2010] 1 FLR 475. The registered owner of premises brought a possession claim against the occupier. The occupier defended the claim on the basis of his adverse possession of the premises for over 12 years. During the 12-year period, however, the occupier had acknowledged the registered owner’s title in the course of negotiations to settle previous proceedings. The House of Lords held (Lord Scott of Foscote dissenting) that the acknowledgment was privileged by the without prejudice rule and was therefore inadmissible in evidence against the occupier. I restrict myself to the speech of Lord Neuberger of Abbotsbury, which commanded the agreement of the other members in the majority, who delivered concurring speeches. He referred to Lord Griffiths’ speech in the Rush & Tomkins case and Robert Walker LJ’s judgment in the Unilever case and at [86] observed that none of the exceptions identified by Robert Walker LJ was of direct assistance in that case. At [89] he commended the passage in Robert Walker LJ’s judgment at 2448-2449, which I have set out above.

 

    1. At [94ff] Lord Neuberger considered an argument, based on the passage set out above from Hoffmann LJ’s judgment in Muller v Linsley & Mortimer, that the acknowledgment was outside the scope of the without prejudice rule because it was being relied on to show that an admission was made and not to show the truth of the fact admitted (that is, it was relied on as an acknowledgment of title and not as evidence of title). At [95] Lord Neuberger said:

 

“95. Despite the very great respect I have for any view expressed by Lord Hoffmann, and the intellectual attraction of the distinction which he draws, I am inclined to think that it is a distinction which is too subtle to apply in practice; I consider that its application would often risk falling foul of the problem identified by Robert Walker LJ in the passage quoted above. In any event, the observation appears to be limited to the public policy reason for the rule, and says nothing about the contractual reason, which plainly applies here. Over and above this, even if the distinction is valid in principle, in any event, I do not consider that it would assist Mrs Ofulue in the present context: the distinction between an acknowledgement and an admission is not one which can be satisfactorily drawn, in my opinion, at least in the context of identifying exceptions to the without prejudice rule.

97. I share Lord Walker of Gestingthorpe’s difficulty, as expressed in Bradford & Bingley plc v Rashid [2006] UKHL 37[2006] 1 WLR 2066, at para [42], as expanded in paras [51]and [52] of his opinion in this case, in distinguishing between an admission and an acknowledgement. To invoke a statement in without prejudice negotiations as an acknowledgement seems to me to be as inconsistent with the protection afforded to such negotiations, and the policy behind it, as invoking such a statement as an admission of the truth of what is stated. …”

All four members of the majority considered that, although the House of Lords could recognise further exceptions to the without prejudice rule, beyond those identified by Robert Walker LJ, it ought not to do so, at least as regards the circumstances of the case before them. Lord Neuberger remarked at [98] that to do so “would severely risk hampering the freedom parties should feel when entering settlement negotiations.”

    1. The Supreme Court considered the rule in Oceanbulk Shipping and Trading SA v TMT Asia Ltd [2010] UKSC 44[2011] 1 AC 662. The parties had reached a settlement agreement in respect of a dispute. When the claimant brought a claim alleging that the defendants were in breach of the settlement agreement, the defendants pleaded reliance on the without prejudice negotiations to support a particular interpretation of the relevant terms of the settlement agreement. The claimant applied for an order striking out those parts of the defence and counterclaim that relied on the without prejudice negotiations. The defendants resisted the application and applied for permission to amend their defence and counterclaim to plead that the claimant was estopped from denying the interpretation the defendants put on the settlement agreement. The Supreme Court restored the decision of the judge to refuse the claimant’s application and grant the defendants’ application. The six other Justices agreed with the judgment of Lord Clarke of Stone-Cum-Ebony. He referred to the earlier judgments that I have mentioned above and remarked at [22] that Robert Walker LJ had “set out the position with great clarity” in the Unilever case. At [25]-[26] he set out the passages from Robert Walker LJ’s judgment at 2443-2444 and 2448-2449 to “show that the rule is not limited to admissions but now extends much more widely to the content of discussions such as occurred in this case”, and he continued:

 

“27. The without prejudice rule is thus now very much wider than it was historically. Moreover, its importance has been judicially stressed on many occasions, most recently perhaps in Ofulue v Bossert [2009] AC 990, where the House of Lords identified the two bases of the rule and held that communications in the course of negotiations should not be admissible in evidence. It held that the rule extended to negotiations concerning earlier proceedings involving an issue that was still not resolved and refused, on the ground of legal and practical certainty, to extend the exceptions to the rule so as to limit the protection to identifiable admissions.”

    1. Turning to the exceptions to the rule, Lord Clarke set out with evident approval Robert Walker LJ’s summary of those exceptions, noting additionally at [33] that “another of the exceptions to the rule is rectification.” None of the recognised exceptions applied to the case before the Supreme Court. However, the Court accepted the defendants’ submission that a further “interpretation exception” should be recognised: that facts which are communicated between the parties in the course of without prejudice negotiations, and which form part of the factual matrix of the eventual settlement agreement, and which (but for the without prejudice rule) would be admissible as an aid to the construction of the settlement agreement, should be admissible as an aid to construction notwithstanding the without prejudice rule. Lord Clarke said:

 

“41. The parties entering into such negotiations would surely expect the agreement to mean the same in both cases [i.e. whether or not the without prejudice rule applied]. I would not accept the submission that to hold that the process of interpretation should be the same in both cases would be to offend against the principle underlying the without prejudice rule. The underlying principle, whether based in public policy or contract, is to encourage parties to speak frankly and thus to promote settlement. As I see it, the application in both cases of the same principle, namely to admit evidence of objective facts, albeit based on what was said in the course of negotiations, is likely to engender settlement and not the reverse. I would accept the submission made on behalf of TMT that, if a party to negotiations knows that, in the event of a dispute about what a settlement contract means, objective facts which emerge during negotiations will be admitted in order to assist the court to interpret the agreement in accordance with the parties’ true intentions, settlement is likely to be encouraged not discouraged. Moreover this approach is the only way in which the modern principles of construction of contracts can properly be respected.

42. Any other approach would be to introduce an unprincipled distinction between this class of case and two others which have already been accepted as exceptions to the without prejudice rule. I have already expressed the view that the rectification exception is correctly accepted because no sensible line can be drawn between admitting without prejudice communications in order to resolve the issue whether they have resulted in a concluded compromise agreement, which was the first exception identified by Robert Walker LJ in Unilever [2000] 1WLR 2436, 2444, and admitting them in order to resolve the issue what that agreement was. There is also no sensible basis on which a line can be drawn between the rectification case and this type of case.

46. For these reasons I would hold that the interpretation exception should be recognised as an exception to the without prejudice rule. I would do so because I am persuaded that, in the words of Lord Walker in the Ofulue case [2009] AC 990, para 57, justice clearly demands it. In doing so I would however stress that I am not seeking either to underplay the importance of the without prejudice rule or to extend the exception beyond evidence which is admissible in order to explain the factual matrix or surrounding circumstances to the court whose responsibility it is to construe the agreement in accordance with the principles identified in the ICS case [1998] 1 WLR 896 and the Chartbrook case [2009] AC 1101. In particular nothing in this judgment is intended otherwise to encourage the admission of evidence of pre-contractual negotiations.”

    1. In this context, I turn relatively briefly to the third of the exceptions identified by Robert Walker LJ in the Unilever case, namely the “estoppel exception”. The judgment referred to by him was that of Neuberger J. in Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] F.S.R. 178, at 190-191, where Neuberger J said:

 

“The second argument raised by the plaintiffs is that it would be wrong for the defendant to be able to hide behind the cloak of the correspondence being ‘without prejudice’ in circumstances where the defendant put forward suggestions or statements upon which the plaintiffs relied and reasonably relied in acting as they did. As a matter of principle, it seems to me that, even where a party can in principle rely upon correspondence being ‘without prejudice’ on contractual as well as public policy grounds, the court will not allow him to do so if it is satisfied that it would be unconscionable. So far as the public policy ground is concerned, it seems to me self-evident that, just as much as it is in the public interest that parties should feel completely free to negotiate under the cloak of ‘without prejudice’, so it is in the public interest that they should not be able to use the protection of ‘without prejudice’ for the purpose of ‘unambiguous impropriety’ (an expression to be found in two unreported decisions of the Court of Appeal, Forster v Friedland and Fazil-Alizadeh v Nikbin both helpfully summarised in Foskett and Hodge on The Law and Practice of Compromise (4th ed., at 154-56)). Equally, so far as the contractual ground is concerned, a contractual right to ‘without prejudice’ privilege should not be upheld or enforced where it is invoked for an improper purpose. However, mere inconsistency, in the absence of dishonesty will not do—see Independent Research Services Ltd v Catterall [1993] I.CR. 1.

By analogy with this line of authority, there is, to my mind, a powerful

argument for saying that if a clear and unambiguous statement is made by one party in ‘without prejudice’ correspondence, and the statement is acted on, and reasonably acted on, by the other party, an objection by the first party to the correspondence being put in evidence by the second party in order to justify the step taken by the second party would be plainly unconscionable and would not be upheld by the court. There is another reason for reaching that conclusion. In Tomlin v Standard Telephones & Cables Ltd [1969] 1 W.L.R. 1378, it was held that ‘without prejudice’ correspondence could be looked at by the court to see if the negotiations therein contained resulted in a settlement. Although, of course, contract and estoppel are quite separate concepts, it appears to me logical and consistent that, if ‘without prejudice’ correspondence can be looked at to see if it gives rise to a contract, then such correspondence can also be looked at to see if it gives rise to an estoppel. However, I do not suggest that there is an absolute rule to that effect.

The plaintiffs’ case, particularly in light of the way it is put in their solicitor’s affidavit, does seem to be based on estoppel. In my judgment, however, that case does not, on analysis, succeed.”

APPLYING THIS TO THE CURRENT CASE

 

    1. The passages in the defence and counterclaim that are set out above identify the following alleged representations, assurances or, perhaps, expressions of common ground:

 

1) An “agreement in principle” by the claimant (at all times representing herself and her siblings) in December 2002 to forgo any interest in the deceased’s estate and to enter into a deed to confirm that the entire estate was to be the first defendant’s (sub-paragraph 4.6);

2) A representation by the claimant that the first defendant was entitled to the entirety of the deceased’s estate (Representation 1), which is said to be inferred from or implied by the “agreement in principle” on 25 July 2005 to compromise the first defendant’s 1975 Act claim (sub-paragraphs 4.14 and 4.15);

3) An acknowledgment and representation by the claimant in March 2006 that the first defendant was the beneficial owner of all the land in the deceased’s estate (Representation 2), which is said to be implied by or inferred from the claimant’s proposal to take a lease of land in the deceased’s estate from the first defendant (sub-paragraph 4.18);

4) A further acknowledgment and representation by the claimant that the first defendant was the beneficial owner of all the land in the deceased’s estate (Representation 3), which is said to be implied by or inferred from the claimant giving instructions with the claimant for the assent of land from the deceased’s estate to the claimant in line with one of the terms of the agreement in principle in July 2005 (sub-paragraph 4.19);

5) The reinforcement of Representations 1, 2 and 3 on 9 December 2009, by the making of an agreement “subject to contract” for inter alia the leasing of land in the deceased’s estate and the claimant’s instruction of an agent to negotiate the terms of a lease (sub-paragraphs 4.22 and 4.23);

6) The further reinforcement of Representations 1, 2 and 3 in August 2011, by the claimant putting forward “‘proposals for settlement of matters’ on a subject to contract basis” (sub-paragraph 4.25).

    1. Mr Dickinson accepted that, subject to any exception that might apply, all these matters fell within the scope of the without prejudice rule. The “agreements in principle” in December 2002 and July 2005 were with a view to setting the first defendant’s claim under the 1975 Act, which had been intimated by the earlier date and was subsisting by the later date. The discussions in March 2006 were by way of a continuation of the earlier negotiations, as no concluded agreement had been reached and the proceedings under the 1975 Act had not been compromised but only stayed. The position is a little different as regards the giving of instructions for an assent: it is common ground that there was a concluded agreement that part of Dinas Isaf would be transferred to the claimant, and no privilege is asserted in respect of that agreement; however, the first defendant relies on it as being an act in pursuance of the agreement in principle in July 2005, and it is the making of this connection that engages the without prejudice rule. The “agreement ‘subject to contract'” in December 2009 was by way of resumption of the previous negotiations, as was the making of proposals for settlement in August 2011.

 

    1. It is not suggested that there was ever a concluded agreement in settlement of the claim under the 1975 Act. Mr Dickinson accepted that there was no such agreement.

 

    1. Mr Dickinson submitted that the without prejudice communications relied on in the defence and counterclaim fell within the estoppel exception to the without prejudice rule. As he put it in his skeleton argument: “The first defendant and her children including the claimant had agreed in principle that the first defendant was entitled to the entire estate and need not pursue a claim she had brought against the estate under the Inheritance (Provision for Family and Dependants) Act 1975. It is the defendant’s (sic) case that a proprietary estoppel interest arises for the first defendant to have the entire interest in the estate. Such proprietary interest or estoppel arises from representations being made as set out in the defence and counterclaim, those representations being reasonably relied upon by the first defendant in her acting to her detriment and it being unconscionable for the claimant to go back on the same.”

 

    1. For the claimant, Mr Cockburn did not accept that the estoppel exception existed. I regard that as a hopeless position. First, Neuberger J’s reasoning in the passage just cited seems to me (with great respect) to be compelling. Of the estoppel exception, it may be said: “justice clearly demands it” (see the Oceanbulk Shipping case, per Lord Clarke at [91], citing the words of Lord Walker of Gestingthorpe in Ofulue v Bossert). Second, I do not agree with Mr Cockburn that the reasoning in the Hodgkinson & Corby Ltd case was obiter. Neuberger J held that there was an estoppel exception but that the matters relied on did not fall within it. That was a substantive reason for the decision. Third, whether they were obiter or not, Neuberger J’s observations have been cited with approval by Robert Walker LJ in his judgment in the Unilever case, which in turn has been cited with approval (as regards exceptions among other matters) by the House of Lords in Ofulue v Bossert and by the Supreme Court in the Oceanbulk Shipping case. Moreover, in Ofulue v Bossert Lord Neuberger, with whose speech the majority expressed agreement, said at [99] that “Hodgkinson and Corby Ltd v Wards Mobility Services Ltd [1994] 1 WLR 1564 involved the well-established exception of estoppel, as explained in Unilever plc v Proctor & Gamble Co [2000] 1 WLR 2436, at 2444E–F.” Fourth, even if it were possible to mount an argument that the estoppel exception does not exist, it would be inappropriate to purport to determine it on an application for strike-out or summary judgment.

 

    1. However, I do not consider that the first defendant has shown a properly arguable case for reliance on without prejudice communications on the basis of a proprietary estoppel.

 

    1. A party seeking a remedy on the grounds of proprietary estoppel is required to establish: (i) that a sufficiently clear and unequivocal representation or promise was made or assurance given to her by another (the promisor) in relation to identified property owned, or to be owned, by the promisor; (ii) that she relied on the representation, promise or assurance and did so reasonably; and (iii) that she suffered detriment in consequence of her reliance. See, for example, Thorner v Major [2009] UKHL 18[2009] 1 WLR 776, at [18], [29], [56], [61]. If those three requirements are met, the court must consider what if any remedy ought to be granted. The principle that has been said to permeate the different elements of the doctrine of proprietary estoppel is that equity is concerned to prevent unconscionable conduct. For this reason, the analytical framework of the doctrine is not intended to divide the elements of proprietary estoppel into watertight compartments. The court must look at the matter in the round and take a holistic approach. See Gillett v Holt [2001] Ch 210 at 225c-d; Davies v Davies [2014] EWCA Civ 568 at [58].

 

    1. The basic problem for the first defendant in the present case is that the “representations” or “assurances” on which she relies, even if they can be described in those terms, were positions in the course of negotiations that did not lead to a settlement. I entirely accept that in the course of unsuccessful settlement negotiations one party may make promises or give assurances that, despite the absence of a concluded agreement, can reasonably be relied on by the other party and thereby give rise to an estoppel. But the first defendant’s pleaded case shows nothing of the sort. Despite Mr Dickinson’s valiant efforts, the case advanced by the first defendant amounts simply to an effort to make proposals in negotiations binding even though the negotiations did not result in an agreement. Agreements “in principle”, settlement proposals and the August 2011 Proposal” were just that: proposals that never advanced beyond agreements in principle to the point of a concluded agreement. Nothing more than that has been identified. The matters relied on fall squarely within the without prejudice rule and not within any exception to it.

 

    1. Nothing relied on by the first defendant constituted a clear and unequivocal representation, promise or assurance. This follows from what has been said already. What is relied on as Representation 1 is said to be an agreement in principle that could not be put into a consent order, as had been envisaged, because settlement was not reached. Representation 2 was a suggestion that did not result in settlement. What is said to be Representation 3, the assent of land at Dinas Isaf from the estate to the claimant, simply effected what was acknowledged to be the deceased’s intention (see paragraph 33 above[4]); the fact that it effected something that corresponded to a single proposal in a suite of proposals that were never agreed or put into effect cannot possibly turn it into an unequivocal representation such as is alleged. If the original proposal was privileged by the without prejudice rule, the cross-reference to the original proposal is impermissible. Further, the document signed by the claimant, her siblings and the first defendant (paragraph 37 above) is inconsistent with a construal of the assent as an unequivocal acknowledgment of the first defendant’s beneficial entitlement to the entire estate.

 

    1. It is also not arguable that the first defendant reasonably acted in reliance on the matters she now refers to. She says that, in reasonable reliance on the three Representations and their reinforcement, she acted to her detriment by not reinstating her 1975 Act claim. I regard that as an impossible contention. No settlement had been reached and both she and her solicitor knew it, both at the date of the general stay (29 September 2005) and at all times thereafter. That is why, after Representation 1 and the stay, proposals and counter-proposals were still being made in 2011, long after Representation 3. The parties did not then or later reach a concluded agreement. The matters on which the first defendant relies as things on which she could reasonably rely were simply proposals that never resulted in agreement.

 

 

 

Conclusion

    1. The application succeeds.

 

  1. The main substantive result of my determination is that the first defendant’s counterclaim for a declaration that the entire beneficial interest in the estate and the farm is held on bare trust for her will be dismissed.