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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Midgeley v Oakland Glass Ltd [2009] EWHC 1100 (QB) (21 May 2009) URL: http://www.bailii.org/ew/cases/EWHC/QB/2009/1100.html Cite as: [2009] EWHC 1100 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LEEDS DISTRICT REGISTRY

		Leeds Combined Court 1 Oxford Row Leeds LS1 3BG
		21/05/2009

Mr Justice Tugendhat :

1. The first application for permission to appeal relates to four letters ("the disputed letters") which have been included in the bundle prepared for a trial listed for later this week ("the without prejudice application"). The first two, and the fourth, letters are from the solicitors for the Respondent ("OGL") and are dated 7 May, 29 July and 4 August 2003. The third is a reply from the Appellant's ("Mr Midgeley") solicitors dated 29 July. Mr Midgeley contends that the letters are without prejudice and should not have been included in the bundle. On 20 January 2009 HHJ Belcher ("the judge") held that the letters were not without prejudice, and refused to order their removal from the bundle. She refused permission to appeal. The application for permission has been listed with a direction that the appeal will follow if permission is granted. I reserved judgment.
2. Immediately after hearing the application in relation to the letters I heard a second application for permission to appeal by Mr Midgeley. This was against an order of DJ Flanagan relating to the admission of expert evidence ("the expert evidence application"). I refused permission at the hearing, saying I would give my reasons later.
3. In 2001 OGL sued Staywarm Windows, described as a firm, for a sum of about £17,000 on unpaid invoices. OGL obtained judgment following a trial in June 2002. Mr Midgeley did not attend the trial and took no part in those proceedings. Evidence for Staywarm Windows was given by a Mr Eggleston. OGL subsequently took steps to enforce the judgment against Mr Midgeley on the footing that, although not named as a defendant in that action, he was liable as a partner in the firm trading under that name. OGL sought a charging order on the Mr Midgeley's property. On 1 October 2002 DJ Jordan made an interim charging order and on 25 November 2002 DJ Fairwood made a final charging order. OGL issued an application for an order for the sale of the property. Following that, on 1 December 2006 Mr Midgeley applied to set aside that order on the basis that he denied ever having been a partner. That is the issue that is listed for trial this week.

THE WITHOUT PREJUDICE APPLICATION

4. The first three of the disputed letters read as follows:
7 May 2003

"Thank you for your letter dated 28^th April. Our Client is not prepared to make any further agreements. Payment is due under the terms of the Court Order and there is no good reason for payment to be withheld. Under no circumstances would a discount be applied.

We understand that your Client is already pursuing litigation against his former partner Mr Eggleston and it is a matter for him to introduce any further arguments into that course of litigation if he considers it appropriate to do so.

Our Clients have not recovered any part of the debt and we are now instructed to issue an Application for sale of your Clients property unless payment is received in full by close of business on 9^th May 2003.

28 July 2003

We refer to previous correspondence. Our Clients have not received any payments from Stuart Midgley. For the avoidance of doubt, provided that payment is made in full, our Client would not have any objection to assigning the debt to your Clients son so that he can pursue your Clients former partner Mr Eggleston as appropriate. However, our Client could not become a party to any proceedings brought by your Client against Mr Eggleston.

Unless a satisfactory response is received by close of business on Thursday 31^st July we have instructions to make the Application for sale of your Clients property.

29 July 2003

We write to acknowledge safe receipt of your faxed letter of 28^th of July. We must say that we are astonished by its contents. Our Mr Green last spoke to your Mr Moyser some 6 weeks ago. Your Mr Moyser agreed to go away and produce an interest calculation so that our client would know exactly how much is outstanding to your client and would therefore be in a position to put forward proposals to settle the indebtedness. We have not heard from you since. You have now sent us a letter effectively giving our client 3 days to respond without the interest calculation having been produced. We must say that we consider this approach to be most unreasonable and we would be in difficulty in any event responding by 31^st of July not least because our client is presently away on holiday and not due to return until Tuesday 12^th August. We suggest the way to proceed is for you as promised to produce the interest calculation so that we can take our client's instructions upon his return from holiday on 12^th of August and therefore be in a position to put forward proposals to settle the said indebtedness. We reserve the right to refer the contents of this letter and previous telephone conversations between our Mr Green and your Mr Moyser in relation to both your proposed application and on the issue of costs pursuant to CPR44.3 should your client decide to proceed regardless of the contents of this faxed letter."

5. The first of the four letters refers to an earlier letter dated 28 April, but that letter has been lost. None of the letters is marked "without prejudice".
6. The letters are not referred to in the pleadings. Their relevance (if any) is said by Mr Ilyas to be that they go to credit.
7. Mr Pennock for Mr Midgeley submits that the letters plainly refer to negotiations between the parties to settle a dispute, and so are without prejudice.
8. Mr Ilyas for OGL submits that at the time the letters were written Mr Midgeley had not disputed the claim (although it is common ground that he did so shortly afterwards, in a letter dated 15 August). In the absence of a dispute, submits Mr Ilyas, the letters cannot be without prejudice. The judge accepted this submission.
9. Mr Ilyas referred to a witness statement of Mr Midgeley which the judge referred in para 12 of her judgment as follows:

"Mr Ilyas, who appears for Oakland Glass Limited, submits that there simply was no dispute between these parties at the time of those disputed letters. He referred me to Mr Midgley's first witness statement, the relevant part of which is at page 38 of the bundle, paragraph 9, in which Mr Midgley says that all he received was a charging order absolute after it was made and only his wife received a copy of it. He says, 'As soon as that was received I contacted my then solicitors, Eatons, to write to the claimant solicitors. This they did immediately. They entered into correspondence with the claimant solicitors in order to buy time as I was not well and he set out ill-health earlier in the paragraph, 'and both I and my wife were concerned we were going to lose our home if further action was taken by the Claimant's solicitors. I also wanted to make sure that there was no liability for me and if there was to resolve matters amicably.' That witness statement was made on 1^st December 2006 in support of his application to discharge the charging order".

10. The parties invited the judge to take the law from the judgments in the House of Lords in Bradford & Bingley v Rashid [2006] UKHL 37; [2006] 1 WLR 2066. That case concerned the application of the Limitation Act 1980. As Lord Brown expressed the issues in para [44]:

"A debtor's written acknowledgment of his debt or other liquidated pecuniary claim starts time running afresh under the Limitation Act 1980 (the 1980 Act). Such is the effect of sections 29 (5) and 30. In what circumstances, however, can an acknowledgment be rendered inadmissible in evidence pursuant to the without prejudice rule? That critically is the issue before your Lordships. A subsidiary issue arises as to whether either or both of the documents relied upon by the appellants in the present case in fact constitutes an acknowledgment of their claim within the meaning of the 1980 Act."

11. In Rashid liability was admitted: para [59], [79]. The issue was as to whether the admission was an acknowledgement of the claim for the purposes of the 1980 Act. It was held that acknowledgements for that purpose are not confined to admissions of debts which are indisputable as to quantum as well as to liability: para [60].
12. There is no issue in the present case under the Limitation Act. As already noted, the letters are not part of the pleaded case of OGL. However, at trial OGL will wish to cross-examine Mr Midgeley to the effect that the letter from his solicitors is an acknowledgement or admission of a debt. Whether it is, or is not, an admission is not an issue that I have to decide. That will be for the trial judge. The judge is expected to be the trial judge. It appears that her view in January was that the letters were unlikely to be of critical importance at the trial, because at the end of her judgment she said:

"Having said that, I merely comment that if that is likely to result in an appeal and further delay, then Oakland may wish to consider whether those four letters should come out in any event".

13. However, OGL have not taken that course, and Mr Midgeley seeks permission to appeal, so I must reach a decision on that application.
14. Even if the letters do contain an admission, it does not follow that that takes them outside the scope of the without prejudice rule. As Mr Pennock submits, the point of the rule is to prevent the use in court of admissions made in circumstances covered by the without prejudice rule. Lord Brown put it this way:

65. The mere fact, of course, that the communications in question constituted acknowledgments does not mean that they necessarily fall outside the protection of the without prejudice rule…. Rix LJ in the Court of Appeal in Savings and Investment Bank Ltd v Fincken [2004] 1 WLR 667, reviewing recently the many authorities on the "unambiguous impropriety" exception, concluded (at para 57):

"It is not the mere inconsistency between an admission and a pleaded case or a stated position, with the mere possibility that such a case or position, if persisted in, may lead to perjury, that loses the admitting party the protection of the privilege . . . It is the fact that the privilege is itself abused that does so. It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one's case. That, after all, is what the without prejudice rule is all about, to encourage parties to speak frankly to one another in aid of reaching a settlement: and the public interest in that rule is very great and not to be sacrificed save in truly exceptional and needy circumstances."

15. But the House of Lords made a number of statements as to the need for there to be some difference between the parties before the rule can apply.
16. Lord Brown said at para [72]-[76]:

"72. If the without prejudice rule is to apply not merely to attempts to resolve a dispute over the existence or extent of a liability but also to discussions as to how an admitted liability is to be paid, that would seem to me a very substantial enlargement of its scope….

73. In my opinion the without prejudice rule has no application to apparently open communications, such as those here, designed only to discuss the repayment of an admitted liability rather than to negotiate and compromise a disputed liability. I find it impossible to regard the correspondence here as constituting "negotiations genuinely aimed at settlement" (Lord Griffiths in Rush & Tompkins v GLC) or "an attempt to compromise actual or impending litigation" (Megarry V-C in the Lindt case). Nor does the underlying public policy justification for the rule appear to have any application in circumstances such as these. That justification, as Oliver LJ observed in Cutts v Head (see para 62 above) "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". No "statements or offers" were made here with a view to settling a dispute. Since the debt was admitted, there was no dispute. As Mr Fenwick QC aptly put it in argument, Mr Rashid was simply asking for a concession; he was not giving one….

75. As I have explained, acknowledgments may well leave issues of quantum outstanding and negotiations designed to resolve these to my mind should qualify for without prejudice protection. In these cases the policy underlying the without prejudice rule seems to me to outweigh the countervailing policy reason for lengthening the period in which the creditor must issue proceedings. There are, after all, sound policy reasons for having limitation periods in the first place: disputes, if eventually they need to be litigated, should be litigated before they become too stale.

76.  In short, therefore, some acknowledgments will indeed attract without privilege protection. But these will be cases where the extent of the liability is genuinely in dispute and the parties are attempting to settle that difference. Had Mr Rashid, for example, in fact been seeking to question the sufficiency of the sum obtained from the mortgagee's sale of the property and had the correspondence been devoted to resolving that particular issue, without prejudice protection might well have applied. But that simply was not the case. The correspondence treated the debt as an undisputed liability and dealt only with whether, when and to what extent Mr Rashid could meet that liability. The question before your Lordships is whether in those circumstances the without prejudice rule should be extended at the expense of the statutory provision for acknowledgments. For the reasons given I would hold not."

17. Lord Mance said:

 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) as "without prejudice". This is clear from the passage which Lord Brown has in paragraph 62 cited in full from Lord Griffiths' speech in Rush & Tompkins Ltd. v. Greater London Council [1989] AC 1280 at page 1299D, commencing:

"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".

As to disclosure, Lord Griffiths concluded at page 1305D-E that:

"….. the general public policy that applies to protect genuine negotiations from being admissible in evidence should also be extended to protect those negotiations from being discoverable to third parties."

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)".

18. Mr Pennock submits that the judge fell into error when she restricted her considerations of whether or not there was a dispute to events after the time when OGL had obtained the charging order. He submits that she should have had regard to the litigation that had already taken place between OGL and the firm, the fact that OGL had not named an individual partner as defendant, and had only subsequently named Mr Midgeley, and that when he had been named, he had not paid.
19. All of these, and no doubt other matters, are matters from which it might have appeared possible, or even likely, that a dispute between Mr Midgeley and OGL would emerge, as eventually it did. But they do not mean that such a dispute had in fact come into existence. Whether it had or not is to be considered in the light of the disputed letters. Other letters immediately preceding the disputed letters might have been relevant, if they had existed or survived. But I was not referred to any earlier letters by either party.
20. Looking at the disputed letters, I see nothing in them which can be said to disclose a dispute between the parties. It can be inferred from the first letter that Mr Midgeley might have asked for a discount. But asking for a discount is not a dispute. It can be inferred from the second letter that Mr Midgeley might have asked for some benefit in the form of an assignment. But that is not a dispute. The letter of 29 July refers twice to "the indebtedness" and asks for an interest calculation. That is not a dispute. The possible characterisations of that letter are either that it was an admission (as OGL submit) or that it was simply neutral (as Mr Midgeley submits) that is to say, neither an admission nor a dispute.
21. Accordingly, I can see no error on the part of the judge.
22. In deference to the argument of counsel I think it right to grant permission to appeal in this case, but to dismiss the appeal.

THE EXPERT EVIDENCE APPLICATION

23. The application is for permission to appeal from an order of the District Judge made on 21 April 2009 whereby he dismissed Mr Midgeley's application for relief from the sanction imposed upon him by an earlier order of the District Judge made on 3 April 2009. By the earlier order the District Judge had directed that any expert evidence on which Mr Midgeley wished to rely had to be served by 4pm on 17 April 2009. In default an application he had made, which was adjourned to 21 April, was to be dismissed. The adjourned application was an application to adduce evidence from a second handwriting expert, Dr Giles.
24. I need deal with this matter only very briefly. There is to be an issue in the trial as to whether certain documents bear Mr Midgeley's signature. Mr Midgeley disputes certain alleged signatures, and does not admit others.
25. SM Gough, MChem, MSc, RFP was jointly instructed to give an opinion in relation to two documents. She was provided by OGL with a number of documents for the purposes of comparing signatures. Ten of these documents were ones which Mr Midgeley did not admit. He objected to OGL having provided those documents to Ms Gough. Accordingly she recorded in her report dated 22 September 2008 that she had not referred to these documents during her examination. She concluded, in relation to one of the documents, that there is strong evidence to show that Mr Midgeley produced the signature, and in relation to the other that it had not been possible to determine whether or not it was produced on the date indicated.
26. Mr Midgeley received a report from Dr Giles on 21 April, but has not disclosed it. OGL had sent to Dr Giles the same documents as had been sent to Ms Gough, and had so informed Mr Midgeley's solicitors. This fact was not noticed at the time, and was only noticed by Mr Midgeley when Dr Giles reported. Since he has not disclosed her report, it is impossible to know what, if any, consequences that had on the terms of her report.
27. Mr Pennock submits that the District Judge failed to address the matters set out in CPR 3.9. The District Judge considered that the instructions to Dr Giles were entirely in the control of Mr Midgeley's solicitors, and since the report had not been disclosed, he declined to give any extension of time. The District Judge considered that it was too late to give any further extension of time to Mr Midgeley.
28. There is no doubt that if further time were to be given now, the trial date would have to be vacated. This need not have been the case. Mr Midgeley could have asked Dr Giles to review her report in the light of further instructions relating to the ten documents. He has not done so.
29. The District Judge clearly intended to convey that he considered the interests of the administration of justice were against any extension of time. He was entitled to take that view. He also intended to convey that there was no good explanation for the failure of Mr Midgeley to disclose the report by the time set on 3 April, and that any failure was caused by him, or his representatives. He also intended to convey that the effect of Mr Midgeley's failure upon him was impossible to assess on the material put before him by Mr Midgeley. There was no suggestion that the application for relief was not made promptly, or that Mr Midgeley's failure to comply was intentional, so the District Judge did not need to mention these. For the same reason there was no need for him to mention that Mr Midgeley had not been in default in other respects.
30. In my judgment the District Judge was entitled to come to the conclusion he did for the reasons he gave and an appeal would have no prospect of success.