Addleshaws case queries ‘without prejudice’ rule

Addleshaw Goddard has won a House of Lords case with significant implications for the ‘without prejudice’ rule.

Litigation associate Adam Wilson led the case for building society Bradford & Bingley in its appeal to the Lords against a July 2005 decision of the Court of Appeal. The society was trying to recover losses which occurred after the sale of a mortgaged property.

It was relying on letters from an advice centre which, it said, acknowledged that the property owner, a Mr Rashid, was in debt and could not repay the shortfall owed. Four New Square’s Justin Fenwick QC, for Bradford & Bingley, said the letters were not protected by the without prejudice rule, and that therefore the society’s claim was not time-barred.

The Lords upheld the society’s appeal, ruling that the letters were an acknowledgement of Rashid’s debt. However, the five Lords disagreed on the without prejudice issue.

Lord Hoffmann said the rule has no application to letters which are acknowledgments. Lord Brown of Eaton-Under-Heywood, in his leading judgment, said the rule should not be extended to acknowledgement letters in this kind of situation. Lords Mance and Walker of Gestingthorpe agreed with Brown. Lord Hope of Craighead suggested that Scottish authority should be followed.