Chang Min Tat FJ

(delivering the judgment of the Court): In this action the plaintiff Bank issued out a writ for money owing to it by the defendant on three over-draft accounts and interest. On July 17, 1970 the Bank signed final judgment in default of defence. It is never suggested that the defendant had any defence to the claim and perhaps for this reason, he did not bother to defend. The judgment was for the sum of $674,539.53 with interest thereon at the agreed rate of 10.8% p.a. with monthly rests from January 1, 1970 to date of judgment and thereafter at 6% p.a. on the decretal sum to date of payment and costs.

Next, so far as the court is concerned, the Bank on December 30, 1978 applied for leave, as required by Order 42 rule 23, Rules of the High Court, 1957 (now Order 46 rule 2(1)(a) Rules of the High Court, 1980), to levy execution, since 6 years had elapsed from the judgment. It did not do so ex parte as it was entitled to do, though of course the court had at all times the power to order service on the defendant. To that inter partes summons, the defendant filed an affidavit in reply.

The matter came up before a Judge of the High Court on May 31, 1979. It was heard in open court and decided promptly enough. After hearing argument, he dismissed the application for leave and gave leave to appeal. Notice of appeal was filed, within time.

The solicitors for the Bank applied, in the usual manner, for the notes of the argument taken by the judge and the grounds of his decision, but after waiting for a reasonable time and finally despairing of ever getting both, filed an appeal record without them. That was on November 4, 1980, that is, more than 17 months after the hearing. Neither counsel filed or submitted his own note of the proceedings which, in the absence of the judge's own notes, would, if agreed between the parties, be of some assistance to us on appeal. But, fortunately, two days or so before the appeal was brought on for hearing on January 12, 1981, a copy of the judge's notes of the argument was made available. It consisted of only 21/2 pages of double-spaced typescript. But no grounds of decision. So we still do not know the reasons for the dismissal of the Bank's application for leave.

It becomes necessary therefore for us at the appeal to note the various submissions made in the High Court and to consider their validity. But first, some of the pertinent and relevant facts.

Briefly, it was the first contention of the defendant that the judgment-debt had been fully settled by the Bank agreeing to accept a sum of $750,000 which he had paid. That had been described by the Bank as a blatant lie. This is but one instance where the affidavits conflict, but the truth can be gathered from the contemporaneous correspondence that passed between the parties through their solicitors.

Quite clearly, after failing to defend the claim and having considerable properties against which the judgment could be executed, and especially in view of the fact that he was at that time bound contractually to sell these properties which formed part of a housing estate developed by him, the defendant had to prevent the execution. The best way would, of course, be to pay off the judgment-debt but lacking the liquidity, another way would be to enter into negotiations with the Bank for time to make the payment and for the payment to be made by instalments. The negotiations were put down in several letters, all, prudently, expressed to be without prejudice.

It is settled law that letters written without prejudice are inadmissible in evidence of the negotiations attempted. This is in order not to fetter but to enlarge the scope of the negotiations, so that a solution acceptable to both sides can be more easily reached. But it is also settled law that where the negotiations conducted without prejudice lead to a settlement, then the letters become admissible in evidence of the terms of the agreement, unless of course the agreement has become in