First Caribbbean International Bank vs Chemical Manufacturing and Investment Limited
1
SAINT LUCIA
IN THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
CLAIM NO. SLUHCV 2010/0121
BETWEEN: FIRST CARIBBEAN INTERNATIONAL BANK (BARBADOS) LIMITED
Claimant
AND
[1] CHEMICAL MANUFACTURING AND INVESTMENT LIMITED
[2] THE ROSERIE COMPANY LIMITED
Defendants
Appearances:
Ms. Clemar Hippolyte and Mr. Jonathan McNamara of Counsel for the
Claimant/Respondent

Mrs. Cynthia Hinkson-Ouhla of Counsel for the Defendants/Applicants

2012: February 2nd
2013: September 27th

2014: January 17th May 15th

DECISION
[1] TAYLOR-ALEXANDER, M: This is a striking out action brought by the
defendants in relation to paragraph 1 of the claimant’s reply to defence. The
application is brought under Part 26.3(1) (c) of the Civil Procedure Rules 2000
(CPR) which provides for a statement of case or part of it to be struck out as an
abuse of the process of the court or as likely to obstruct the just disposal of the
proceedings.
2
[2] The defendants’ have advanced two contentions:—
(1) paragraph 1 of the claimant’s reply to defence violates section 110 of
the Evidence Act No. 5 of 2002 (the Act). It seeks to adduce evidence of
communication relating to the negotiation of a settlement of a dispute, in
order to defeat the defence of prescription; and
(2) in so far as the reply relies on such communication it is irrelevant to the
issue of prescription which is triggered only by judicial demand. The
admission of the debt to which paragraph 1 of the reply relates is not
sufficient to amount to civil prescription.
[3] The application is supported by the affidavit of Mr Thomas Roserie the Managing
Director of the defendant companies, who deposed that in reply to the
defendants’ pleading of prescription pursuant to Art 2121 of the Civil Code of the
Revised Laws of St. Lucia Cap 4.01 ( the Civil Code), the claimant
disingenuously and in abuse of process has sought to adduce as evidence of
acknowledgment or admission of the debt claimed, acts of negotiation entered
into by the parties in relation to this action.
[4] Not surprisingly the action is opposed. Submissions were filed by the defendants/
applicant on the 11th November 2010 and by the Respondent on the 25th
November 2010. I directed the filing of authorities in support of the submissions
which were both filed on the 30th January 2012.
Brief Facts
[5] The claimant and the defendants entered into various commercial loan
agreements whereby credit facilities were extended by the claimant to the
defendants under specified terms and conditions.
[6] The claimant asserts that the defendants owe the sum of $ 4918.68 as at 14th
October 2009 and $241,179.34 together with interest accruing thereon being the
3
balance on a Hypothecary Obligation, Mortgage Debenture and Floating Charge
in favour of the claimants dated the 28th August 1995.
[7] The defendants filed an amended defence on the 31st March 2010 asserting inter
alia, that while there were various discussions between the parties on whether
there were outstanding amounts owed, the customer relationship was effectively
terminated on the 28th October 2003 by virtue of correspondence issued by the
claimant on that date. Consequently, the claimant’s cause of action is prescribed
it having commenced after the expiration of a period of six years from when the
cause of action accrued on the 28th October 2003.
[8] By its reply the claimant challenges the allegation of prescription, averring that
the customer relationship continued beyond the stipulated date of the 28th
October 2003. The claimant relies on circumstances of direct acts of
acknowledgement of the debt and the conduct of the parties.
The Issues
[9] The following are the identified issues:—
(a) Whether the reference in the reply to communication of negotiations
between the parties amounts to a violation of section 110 of the Evidence
Act of St. Lucia No. 5 of 2002 which specifically exempts from evidence
certain communication between persons in dispute.
(b) Are the acts of negotiation, in any event, to which the claimant refers in
paragraph 1 of its reply, sufficient to amount to an acknowledgment of the
debt and thus cause an interruption of prescription?
The Defendant’s/ Applicants Submissions
[10] Mrs. Ouhla for the defendants submit that the same policy principles which
underlie the without prejudice rule at common law, has been encapsulated in
Section 110 of the Evidence Act, No. 5 of 2002 (the Act) but it is a wider
provision than the rule at common law. Section 10 (c) (ii) of the Act expressly
4
excludes as evidence, a communication made between persons in dispute,
except when the communication or document began or continued an attempt to
settle the dispute and includes a statement to the effect that it was not to be
treated as confidential. The without prejudice rule is a canon of the common law
which over the years and by the intervention of judicial reasoning has developed
various exceptions. The defendant asserts that these exceptions should not be
used to augment the Act which speaks to its own exceptions.
[11] One of the exemptions to the without prejudice rule, to which the Act refers is
communication or a document that had been prepared in connection with an
attempt to negotiate a settlement of a dispute, where the dispute to which the Act
refers is one for which relief may be given in proceedings. In its ordinary meaning
the defendants submit the definition of a dispute is an argument or disagreement.
[12] The defendants’ submit that the claimant, in commencing an action against the
defendants has acknowledged the existence of a dispute and as such any
communication between the parties in the negotiation of that dispute is excluded
from evidence. Consequently, the claimant’s submission that time began to run
afresh after the negotiations, must be struck out and disclosure of the referenced
documents disallowed.
[13] The defendants further contend that the communication to which the reply refers,
in any event, is incapable of causing an interruption of prescription under Article
2088 of the Civil Code. Article 2088 must be read conjunctively such that
prescription is only interrupted by (i) renunciation of the benefit of the period
elapsed and (ii) acknowledgment by the debtor of the creditor’s right. Acts of
negotiation, submit the defendants is not sufficient to qualify as a renunciation of
time elapsed and as an acknowledgment of the debt.
The Claimant/ Respondent’s Submissions
[14] The claimant contends that Section 110 of the Act largely codifies the common
law rule and is governed by the same basic principles. The common law cases
5
that clarify the common law principle are relevant to and do assist in
understanding the implications of the Act.
[15] The claimant submits that its reply does not offend section 110 of the Act, as the
statement in the reply was in direct response to paragraph 2 of the defence and
goes to show by reference to the conduct of the parties, the continued existence
of the relationship between the parties, well after the 28th of October 2003, as
well as the continued existence of the contract.
[16] In so far as the defendants allege that the claim is prescribed, the claimant
submits that it is entitled to rely on Article 2088 of the Civil Code which provides
for civil interruption. The claimant is entitled to admit any evidence which goes to
the existence of the fact of the acknowledgment of the debt. The correspondence
upon which the claimant intends to reply is open communication designed only to
discuss the repayment of an admitted liability, rather than to negotiate or settle a
disputed liability.
[17] Section 110 of the Act does not restrict the use of a document as an
acknowledgment of a debt under Article 2088 of the Civil Code. It operates to
only lift the procedural bar on the bringing of the action.
Analysis of the Law and Submissions
[18] The Civil Code of Saint Lucia provides for extinctive or negative prescription to
be a bar to any action for the fulfilment of an obligation or the acknowledgment of
a right when the creditor has not preferred his claim within the time fixed by law.
If a debtor successfully raises the defence of extinctive prescription, then the
claim against him or her is made permanently unenforceable. This will be the
case regardless of whether the claim is legally valid in all other respects, or the
creditor enforcing the claim has ample or even irrefutable evidence proving his or
her claim. The defence becomes available as a result of a period of time set out
in the law having passed, since the claim came into being.
6
[19] There are exceptions or causes that interrupt the operation of law provided for in
Articles 2083 to 2092 of the Civil Code.
[20] Article 2083 provides that prescription may be interrupted either naturally or
civilly. Article 2084 to Article 2092 provides for those circumstances that would
operate to create a natural interruption and a civil interruption and the following
articles are instructive:—
“ 2085. A judicial demand in proper form, served upon the person
whose prescription it is sought to hinder, or filed and served
conformably to the Code of Civil Procedure when a personal service is
not required, creates a civil interruption.
Seizures, set-off, interventions, and oppositions are considered as
judicial demands.
No extra-judicial demand, even when made by a notary, and
accompanied with the titles, or even signed by the party notified, is an
interruption, if there be no acknowledgment of the right demanded.
2088. Prescription is interrupted civilly by renouncing the benefit of a
period elapsed, and by any acknowledgment which the possessor or
the debtor makes of the right of the person against whom the
prescription runs.”
[21] Renunciation may be either express or tacit. Article 2048 and 2049 of the Civil
Code is instructive:—
“2048. Prescription cannot be renounced by anticipation. That
acquired may be renounced, and so may also the benefit of any time
during which it has been running.
2049. Renunciation of prescription is express or tacit. Tacit
renunciation results from any act by which the abandonment of the right
acquired may be presumed.”
[22] Evidently prescription can be interrupted civilly only by (1) judicial demand or (2)
an express or tacit renunciation of the benefit of the elapsed period and with an
acknowledgment which the possessor or the debtor makes of the right of the
person against whom the prescription runs.
7
Is the communication and negotiation to which the reply refers sufficient to
interrupt prescription.
[23] A fundamental feature of this application is the communication whose privilege is
questioned and an investigation of the preliminary questions of whether the
communication traversing between the parties in 2004 and following was
sufficient to interrupt prescription would require my examination of the
communication and its impact. I note with surprise, that neither of parties saw it
fit to disclose the correspondence as part of the application. Even if it is the
allegation of the defendant that the correspondence is entitled to discovery from
disclosure, it is an issue incapable of resolution unless I had sight of the
correspondence. My ruling would have had the effect if in the defendant’s favour
of removing the document entirely from the record and from disclosure under the
trial process and of any reference thereto to the trial judge. But without the
communication being exhibited, or its content disclosed, attempting to gather an
appreciation of its effect is an exercise in futility, and detrimental to the
application of the defendant.
[24] The defendants refer to a number of American authorities of Vavuris v Pinelli
[147 Cal. App 2d 390], Milkulecky v Marriot Corporation No. 87-3600 and
Whitney National Bank v Demarest No. 91-3029, and the claimant to the
authorities of Arkansas Louisana Gas Co. v Thompson et al No. 40511,
Marathon Insurance Company v Warner No. 11557 and Mitchell Kalichman v
Feldman and Sanger 2010QCCQ 3069 none of which are useful to me at this
time when I have not had the benefit of sight of the challenged correspondence. I
therefore make no order on the question of whether the documents referred to in
the reply operated as a civil interruption.
Is the reference in the reply to correspondence and discussions had
between the parties an abuse?
[25] Rule 26(3) (c) provides that the court may strike out a statement of case or part
of a of case if it appears to the court that —
8
“(c) the statement of case or the part to be struck out is an abuse of
the process of the court or is likely to obstruct the just disposal of the
proceedings;…. “
[26] The defendant submits that the action of the claimant referencing privileged
correspondence in support of its pleading of express or tacit acknowledgment
and renunciation of the benefit of the period of time that had elapsed is adducing
evidence of communication between the parties that is subject to privilege,
indicative of abuse, which warrants the court’s sanction of striking out the
offensive part of the reply. Section 110 of the Evidence Act although of some
length warrant reciting to assess its impact on the application:—
“EXCLUSION OF EVIDENCE OF SETTLEMENT NEGOTIATIONS
(1) Evidence may not be adduced of—
(a) a communication made—
(i) between persons in dispute, or
(ii) between one or more persons in dispute and a third party,
being a communication made in connection with an
attempt to negotiate a settlement of the dispute; or
(b) a document that has been prepared in connection with an
attempt to negotiate a settlement of a dispute, whether or not the
document has been delivered.
(2) Subsection (1) does not apply where—
(a) the persons in dispute consent to the evidence being
adduced or, if one of those persons has adduced the
communication or document in evidence in some other
proceedings, all the other persons so consent;
(b) the substance of the evidence has been disclosed with the
express or implied consent of all the persons in dispute;
(c) the communication or document—
(i) began or continued an attempt to settle the dispute, and
(ii) included a statement to the effect that it was not to be
treated as confidential;
(d) the communication or document relates to an issue in dispute
and the dispute, so far as it relates to that issue, has been settled, and
the document forms part of the chain of events which led to the
settlement;
9
(e) the evidence tends to contradict or to qualify evidence that has
already been admitted about the course of an attempt to settle the
dispute;
(f) a party to the dispute knew or ought reasonably to have known
that the communication was made, or the document prepared, in
furtherance of a deliberate abuse of a power conferred by or under an
enactment;
(g) the communication was made, or the document prepared, in
furtherance of the commission of—
(i) an offence, or
(ii) an act that renders a person liable to a civil penalty; or
(h) a party to the dispute knew or ought reasonably to have known
that the communication was made, or the document prepared, in
furtherance of a deliberate abuse of a power conferred by or under a
law in force in Saint Lucia.
(3) ……………
(4) …………….
(5) A reference in this section to—
(a) a dispute is a reference to a dispute of a kind in respect of
which relief may be given in proceedings;
(b) an attempt to negotiate the settlement of a dispute does not
include a reference to an attempt to negotiate the settlement of a
criminal proceedings or anticipated criminal proceedings; and
(c) a party to a dispute includes a reference to an employee or
agent of such a party.” (emphasis added)
Were the parties in dispute at the time of the communication and/or
negotiation?
[27] The principle covered by the Act has its genesis in the common law principle traditionally
referred to as “without prejudice rule” which protects from disclosure offers of compromise
bona fide entered into for the settlement of disputes. The classic description of that
privilege is set out in Phipson on Evidence, (16th edition) at paragraph 24-14. It
provides:—
“Written or oral communications which are made for the purpose of a genuine
attempt to compromise a dispute between the parties may generally not be
admitted in evidence.”
10
[28] The Applicants caution reliance on the common law principles to interpret or otherwise to
augment the act, especially where the exceptions to the common law differ or are more
flexible than the act. This they caution may ultimately encourage the import into the
statute of an interpretation unintended by its mischief. The submission is well reasoned
and it is with some circumspection that I draw reference to the common law principles. But
certainly in so far as the principles share similarity in its wording as does the general
principle, I am satisfied that I can, in reasoning the application of the statute, have
recourse to the guidance of the common law principles.
[29] In this case a necessary preliminary consideration to the application of the rule must be
whether the rule applies at all. The Applicant states that the correspondence and
documents to which the reply refers at paragraph 1 offends section 110, the implication
being that the documentation arose out of negotiations to settle a dispute. At the time of
the communication, a cause of action of the defendant had accrued but there had been no
proceedings yet commenced for recovery. I have not been guided on whether there had
been any demand issued. Legitimately, I question whether the parties were in dispute.
[30] The act offers some assistance in the definition of a dispute as being of a kind for which
relief may be given in proceedings. The Oxford English Dictionary, provides the following
ordinary definition:— “a disagreement or argument” The Applicant submits that the fact
the claimant has now brought proceedings against the defendant is indicative of the fact
that the parties were disputing. I disagree with that reasoning. The use of the word dispute
in the Act refers to the character of the discussions which the parties were having at the
time of the communication and/or discussions. It may well have been, that at that time,
there was no disagreement or argument but merely discussions with a view to a noncontentious
settlement of the Applicants’ accounts.
[31] In Re Daintrey ex p Holt [1893] 2 QB 116, Vaughan Williams J reasoned the
approach under the common law as follows:—
11
“In my opinion, the rule which excludes documents marked “without prejudice”
has no application unless some person is in dispute or negotiation with another,
and terms are offered for the settlement of the dispute or negotiation…”
[32] In The Modern Law of Evidence (6th edition) by Keane, the author at page 664 says:—
“The essential pre-condition for a claim to without prejudice privilege is the
existence of a dispute. The privilege, therefore, will not protect correspondence
designed to prevent a dispute arising.”
[33] I find that reasoning to be sound and equally applicable to the section 110 of the Act. I
adopt the view expressed, that the rule cannot apply in the absence of an existing dispute
between the parties to the communication in question. I accept that the Act affords a
broader construction of the word which does not limit it to situations in which litigation has
either been commenced or threatened, but despite this there is nothing in this case to
suggest that there was an actual dispute between the parties at the time the
correspondence came into being.
Conclusion
[34] I rule dismissing the application to strike out paragraph 1 of the reply of the claimant and
award the claimant’s costs on the application in the sum of $750.00.
V. GEORGIS TAYLOR-ALEXANDER
HIGH COURT MASTER
12