Never Ever Admit Anything in Settlement Negotiations.
It Could Just Be A Trap & Could Be Used Against You.
The Supreme Court of South Africa in the decision KLD RESIDENTIAL CC - v- EMPIRE EARTH INVESTMENT 17 (PTY) LTD, Civ Appeal 1135/ 2016, decided on quite a novel interpretation of a point of law we have always taken as trite and established.
Delivering its judgment as per judges Lewis JA (Tshiqi JJA, Mbah JJA, and Fourie AJA concurring) the court found that: -
. . . where an acknowledgement of indebtedness is made by a debtor to a creditor, even in without prejudice negotiations, the acknowledgement may be admitted in evidence for the sole purpose of interrupting the running of the prescription period in terms of Section 14 of the Prescription Act (No 68 of 1979) . . .
There and then our understanding of settlement privilege rules changes, and many lawyers, advocates and, with due respect, some, if not a lot of judges, do not know this.
Those of us who were listening during Law of Evidence lectures in Law School have always understood that everything admitted during settlement negotiation, whether marked as "without prejudice"; or not, was privileged and inadmissible in future trials should the arties fail to reach settlement in the dispute.
What the Supreme Court did was give a deeper jurisprudential analysis of the competing public policy interest between, on the one hand, the policy underlying section 14 of the Prescription Act and on the other hand the policy underlying the without prejudice principle.
On the one hand is the need to promote certainty and finality in disputes by limiting a creditor's right to claim a historical debt in cases where memories may have faded, documents and receipts lost or witness dead, by imposing a time limit on the existence of the debt. (see MURRAY & ROBERT & S - v- UPINGTON MUNICIPALITY 1984 (1) SA 571 (A)).
On the other hand is the need to promote settlement of disputes without resort to litigation and by having the parties discuss and consider settlement possibilities in full and frank discussions without fear that if negotiations fails then what they would have admitted may be used against them. (see NAIDOO - v- MARINE & TRADE INSURANCE CO 1979 (3) SA 666(A).)
In KLD - v- EMPIRE ESRTH INVESTMENTS the SCA sought to balance the two interests by relying on Lord Walker & pronouncement in BRADFORD & BINLEY PLC - v- RASHID (2006) UKHL 37: (2006) 4 All ER 705 where the Lord wrote: -
. . . there is the interest in encouraging the settlement of disputes so as to avoid litigation (or at least shorten) litigation... but it is also in the public interest that a debtor who acknowledge his debt, and so induces his creditor not to immediately resort to litigation, should not then be able to claim that the debt is statute-barred because the creditor held his hand. . .
With that our understanding of settlement privilege rules changes and the books on Law of Evidence and Ethics ought to be revised.
The dissenting judgment by Schippers AJA does however raise a keen question, where the judge referred to an article by JE Tracey, where the following was posed:
. . . if the proper basis for the rule is privilege, is there any logical theory under which the court can, by methods akin to chemistry, analyze a compromise conversation so as to precipitate one element of it as an offer of settlement and the other as an independent statement of fact? Would not a layman entering into a compromise negotiation be shocked if he were informed that certain sentences of his conversation could be used against him and others sentences could not . . .
We live in interest jurisprudential times. And for sure, never ever admit anything in settlement negotiations least part of it be used against you.
Seek competent legal advice and be competently guided.
By Counsel : Adv I Mureriwa.
+27 71 151 9000
advmureriwa@yahoo.com
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