REF/2008/0321

 

The Adjudicator to Her majesty’s Land Registry

LAND Registration act 2002

 

IN the matter of tHE references from hm land registry

 

BETWEEN

MICHAEL WALTON

Applicant

and

 

KERGUELEN INVESTMENTS LIMITED

Respondent

 

Property Address: part of a watercourse lying to the south of Ponthir Road Newport

 

Title Number: CYM331477

 

Heard at: Field House Breams Buildings London EC4

 

By: Mr Owen Rhys

 

On: 4^th December 2008

 

Applicant representation: Mr Julian Reed of Counsel instructed by City Legal Solicitors

Respondent representation: Mr Jeremy Child of Counsel instructed by Roger James, Clements & Partners Solicitors

 

 

D E C I S I O N

 

1. There is before me an application by the Respondent for permission to exhibit to its Statement of Case some eight letters, forming part of the correspondence passing between the Applicant’s and the Respondent’s solicitors in 2004, for which the Applicant claims privilege. This application comes about in this way.

 

2. On 23^rd January 2007 the Applicant applied to the Land Registry in Form ADV1 to be registered as proprietor of a small parcel of land at Tucking Mill, Ponthir which is currently registered in the name of the Respondent under title number WA788320. The application was made under section 97 and paragraph 1 of Sch 6 to the Land Registration Act 2002 (“the 2002 Act), namely on the grounds of adverse possession. In his Statutory Declaration in support of the application, the Applicant stated that he had been in undisturbed and challenged possession of the land since 1988, when he bought the adjoining title, namely WA405605. The declaration included the following passages:

“1. I make this Declaration in support of my application for title by Adverse Possession of two parcels of land Title to each being registered at HM Land Registry under Titles numbered WA957488 and WA788320 respectively.

3 ………The house was built in 1984 and I believe was fenced around as appears today at that time…….

4. No-one has ever challenged my right to occupy this land…..

6. I also confirm the following: -

(a) there has been no dispute as to my possession of both pieces of land.”

 

3. The Respondent objected to the application, and in the course of the objection it disputed the statement that there had been no challenge to the Applicants’ possession of the land since 1988. Specifically, it alleged that in 2003 the Respondent’s local agent complained about the Applicant’s use of the Disputed Land, and in May 2004, following “various correspondences” between both parties’ solicitors, the Applicant offered to buy the land from the Respondent.

 

4. The dispute was referred to the Adjudicator on 3^rd March 2008 and the Applicant served his Statement of Case on 14^th May 2008. In paragraphs 4 and 5 of this document, which is in effect his pleading for the purposes of these proceedings, he said this:

“4. ……..No-one has ever challenged the boundaries to Tucking Mill in so far as the Applicant is aware.

5. …….Any challenge to the Applicant’s possession and ownership took place during February or March 2004 when the Respondent via its Solicitors claimed ownership of the subject land.”

By its Statement of Case in reply, the Respondent pleaded that the Applicants’ offer to purchase the land in a letter dated 17^th May 2004 amounted to an acknowledgment of title within the meaning of section 29(2)(a) of the Limitation Act 1980, and that accordingly time started running afresh from 2004. In support of this plea, the Respondent exhibited to the pleading a series of letters passing between the parties’ solicitors in 2004, including the letter of 17^th May 2004 referred to in the Statement of Case. All these letters are marked “without prejudice” or “subject to contract” or both. The Applicants objected to these exhibits, claiming that they were written in the course of negotiations to resolve the dispute and are therefore privileged from production or inspection and could not be relied upon or referred to in these proceedings. Deputy Adjudicator Clarke accepted that argument and without a hearing directed that the letters forming exhibits K/EX6-13 were privileged, and ordered the Respondent to amend the Statement of Case so as to delete any reference to the letters. The Respondents appealed the order, and the original order was set aside. The matter has been argued before me in full by Counsel for both parties.

 

5. The Respondents’ position can be summarised as follows. Although it is accepted – indeed, the fact is self-evident – that the correspondence in question is marked “without prejudice”, it is contended that the Applicants are not entitled to maintain the veil of privilege for two principal reasons. First, because despite the “without prejudice” heading to the correspondence, at the time when the letters were written there was no dispute between the parties in existence, and no genuine attempt to compromise it. Accordingly, these letters are not in substance entitled to the protection of privilege, however they may be described. Reliance was placed on the case of Unilever plc v Proctor and Gamble Company [2000] 1 WLR 2436, particularly the following passage from the judgment of Robert Walker LJ at 2448A:

….”without prejudice” is not a label which can be used indiscriminately so as to immunise an act from its normal legal consequences, where there is no genuine dispute or negotiation.”

6. Secondly, even if the letters are in substance written “without prejudice”, in the circumstances of this case the veil of privilege should be lifted to expose the Applicant’s alleged perjury and impropriety. Authorities, including the House of Lords decision in Rush & Tompkins Ltd v GLC [1989] AC 1280, were cited to me in support of the uncontroversial proposition that the veil of privilege may be lifted where the justice of the case demands it. In the admirably pithy words of Lord Justice Robert Walker (as he then was) in the Unilever case cited above (at 2448-9):

“……even in situations in 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”.

This submission is based on the contents of the Applicant’s Statutory Declaration made in support of the original application, quoted above. This of course states without qualification that there has been no challenge to the Applicant’s “right to occupy this land” and “no dispute as to my possession of both pieces of land”. The Respondent points out that this is untrue, since there was a complaint made in 2003, and a formal challenge to the Applicant in 2004, resulting in his offer to buy the land from the Respondent. The Respondent says that the Applicant must have perjured himself in his Statutory Declaration, and furthermore there has been impropriety by the Applicant and his solicitor in putting forward a case of adverse possession against the background of the complaint and challenge. Therefore, in order to set the record straight, and to prevent the Applicant from using the veil of privilege to disguise the true history of the matter, the letters in question (K/EX6-13) should be available to the Tribunal.

 

7. Before reaching any conclusion on the Respondent’s arguments it would be helpful to describe the material contents of the correspondence. The first letter (Exhibit K/EX1) in the entire series of 13 letters was written on 1^st February 2004 by solicitors instructed by the Respondent, and reads as follows:

“We understand that you are acting on behalf of [the Applicant] in connection with his sale of The Tucking Mill, Ponthir.

Our client, Kerguelen Investments Limited advises us that your client has encroached onto Kerguelen’s land at the rear of the property and has in fact constructed a patio and pergola on that land.

In view of your client’s proposed sale of the land our client feels that this matter should now be rectified as a matter of urgency.

Please let us know your client’s proposals in this respect.”

This letter was headed “Subject to Contract and Without Prejudice”. The Applicant’s solicitors responded by asking for a plan “showing clearly where your client feels that our client allegedly encroached onto his land”. No letters of substance are written until that of 29^th March 2004 (K/EX6), when the Applicant’s former solicitors wrote as follows:

“We feel that if our client has encroached on your Client’s land, that he does have a claim under the land registration act 2002 in relation to adverse possession.

We would be grateful if your Client would confirm whether they are wiling to transfer the property into our Clients name where the alleged encroachment has said to have occurred.”

This letter was headed “Without Prejudice”. There then followed a series of letters whereby the parties sought to negotiate a price for the sale of the Disputed Land to the Applicant, culminating in the Applicant’s letter dated 17^th May 2004 to which reference has already been made. Mr Jeremy Child, for the Applicant, argues that the correspondence subsequent to 29^th March 2004, at the latest, comprises an attempt to compromise a dispute between the parties, and is therefore entitled to protection as being privileged.

 

8. I agree. I consider that the Respondent’s submissions on this point are quite untenable. The position was as follows. The Applicant was in factual possession of land registered to the Respondent. In the course of a proposed sale, his possession of the Disputed Land was challenged – it was alleged that he was encroaching onto the registered title. Through his solicitors, he put forward a claim to adverse possession in these words – “We feel that if our client has encroached on your Client’s land, that he does have a claim under the land registration act 2002 in relation to adverse possession.” Although perhaps less than elegant in the form of words used, the sense is entirely clear. Having asserted the claim, however, the Applicant then pursued a negotiation whereby he would take a transfer of the Disputed Land for an agreed payment to the Respondent. If this agreement had been reached, the claim to adverse possession would not need to have been litigated at all, and no doubt much legal expense, delay and uncertainty would be avoided. It is not surprising that the solicitors on both sides should have written “without prejudice” on the top of the letters since they were engaged in a negotiation intended to resolve the dispute which had arisen, namely the Respondent’s allegations of “encroachment” i.e trespass, and the Applicant’s counter-allegation of adverse possession. These negotiations were of course without prejudice to the parties’ stated positions. I entirely reject the argument that the correspondence does not qualify for protection. It is for precisely this type of correspondence that the privilege was evolved to protect.

 

9. There remains the Respondent’s second argument. Since I have found that the correspondence is entitled to be protected by the veil of privilege, is this one of those cases in which “the veil imposed by public policy may have to be pulled aside” in the interests of justice? The Respondent makes much of the contents of the Statutory Declaration, and the incorrect statement that there had been no challenge or dispute to the Applicant’s possession of the Disputed Land prior to the date of the application. The contents of this document do indeed give cause for concern. It is clear that it contains a significant untruth: there was a formal challenge to his occupation, no later than the date of the first letter in the series, namely that dated 1^st February 2004 and set out in paragraph 7 above. The Applicant does not seek to protect this letter. Indeed, he has himself pleaded the challenge, at paragraph 5 of the Statement of Case, as I think he was obliged to do having regard to the terms of the Respondent’s objection. At all events, the Adjudicator will be able to have regard to the correspondence in which the Respondent alleges encroachment as early as February 2004. The challenge, and the letter in which it is made, will be part of the evidence. The question is whether the correspondence which continued after 29^th March 2004 – in which negotiations were pursued – should also be disclosed and should form part of the evidence.

 

10. In my judgment, it should not. If and insofar as the Applicant and/or his solicitor has been guilty of perjury and/or improper conduct – and I felt that these very serious allegations were rather too readily made by the Respondent – this can only relate to the terms of the Statutory Declaration. Since the Applicant himself now accepts that there was a challenge to his occupation in 2004, and since the letter containing that challenge will be before the Tribunal, disclosure of the subsequent correspondence cannot in any way assist the Tribunal in assessing that issue. I have no doubt that the inconsistency between the Statutory Declaration and the letter of 1^st February 2004 (and any previous challenge to his occupation) will be put to the Applicant in cross-examination with a view to damaging his credibility. He will have much explaining to do, and rightly so. However, I do not think that the proper approach is to remove the protection from all the correspondence as a punishment for the Applicant’s earlier lack of candour. By all means, the protection should be lifted to prevent the Applicant from misleading the Tribunal or other parties, but as I have said there is no longer any issue about the challenge in 2004 – all the cards are on the table. The privileged correspondence does not relate to that issue in any event – it merely contains a genuine attempt on both sides to resolve the dispute as to title that had arisen. Accordingly, there are no grounds, in my view, for withdrawing the public policy protection from the letters identified as K/EX6 to K/EX13 inclusive. There might be an argument that K/EX6 itself should be disclosed, since this does not contain an offer to buy the land (it asks for a transfer with no mention of a price), but that may be too subtle a distinction, and I am content that this letter should be regarded as part of the protected series.

 

11. The Respondent’s Skeleton Argument includes the assertion that the House of Lords decision in Bradford & Bingley Plc v Rashid [2006] 1 WLR 2066 held that the without prejudice rule “does not apply to the use of a statement as an acknowledgment for the purposes of Section 29 of the Limitation Act 1980”. As Mr Child for the Applicant pointed out, however, this view was expressed by Lord Hoffman alone, Lords Hope, Walker and Brown expressly disagreeing with it, with Lord Mance leaving the question open. It is certainly not the law as it currently stands. Even if the statement is an acknowledgment, therefore, the normal protection applies.

 

12. I must also mention a further point, which arose late in the course of the hearing, but in some ways is quite fundamental to the argument. As I have said, the Respondent relied on the “without prejudice” correspondence to support the plea of acknowledgment of title under section 29(2)(a) of the LA 1980. I gave the Respondent an opportunity to address me on this issue in writing, since it appeared to me – and to Mr Child on behalf of the Applicant – that the law relating to acknowledgments may not apply at all to a claim made under section 97 and Sch 6 of the 2002 Act. Schedule 6 contains a new and self-contained code for claims based upon adverse possession of registered land. The use of the expression “adverse possession” in Schedule 6 necessarily imports the previous jurisprudence in regard to this branch of the law, which arose out of the application of the various statutes of limitation to claims for the possession of land. However, section 96 of the 2002 expressly disapplies Section 15 to a claim made under Schedule 6. In other words, the twelve-year limitation period imposed by Section 15 is superseded by the new ten-year period. Schedule 6 contains its own provisions with regard to a squatter’s claim to registered land which are not reflected in the Limitation Act 1980. They are two entirely separate codes.

 

13. In my judgment, the disapplication of Section 15 necessarily results in the disapplication of Section 29. The wording of Section 29 clearly relates to the limitation period imposed by Section 15: it makes no sense at all when applied to the separate code provided in the 2002 Act. Mr Child, for the Applicant, has cited passages from the three leading textbooks on the subject, which universally agree that Section 29 has no direct application to claims made under the 2002 Act. The references are in Megarry and Wade “The Law of Real Property” (7^th ed.) at 35-073, “Adverse Possession” by Stephen Jourdan at 22.20, and Harpum and Bignell’s Registered Land (2004). However, an acknowledgment may be relevant, insofar as it negates the necessary element of animus possidendi. Since a squatter must be in “adverse possession” to qualify under Schedule 6 – and adverse possession requires the element of animus possidendi – it follows that an “acknowledgment” will still be relevant to a consideration of a Schedule 6 claim. The difference is that a Section 29 acknowledgment automatically stops time from running, whereas a Schedule 6 acknowledgment has merely evidential value as indicating a lack of animus possidendi.

 

14. However, whether or not the plea of acknowledgment of title is available in a Schedule 6 case, the fact is that the correspondence containing the alleged “acknowledgment” in this case is protected by the plea of privilege for the reasons that I have given. I very much doubt, in any event, whether the correspondence would have amounted to an acknowledgment if this had been a Limitation Act case. The offer of money in exchange for a transfer of the land (from the registered proprietor) was made against the background of a claim to adverse possession, and, as already stated, represented an attempt to resolve the dispute without further expense and delay.

 

Dated this 22^nd day of December 2008

 

 

 

 

 

BY ORDER OF THE ADJUDICATOR TO HM LAND REGISTRY