THE ROLE OF PRIVILEGE

IN ADJUDICATION

A paper based on the second prize entry

in the Hudson Prize essay competition 2012
presented to a meeting of the Society of
Construction Law in London on 9th April 2013

Adrian Bell

April 2013

183

www.scl.org.uk
 THE ROLE OF PRIVILEGE
IN ADJUDICATION

Adrian Bell

Introduction
When it was first introduced nearly fifteen years ago, 1 construction
adjudication was intended to be:
‘... a speedy mechanism for settling disputes in construction contracts on
a provisional interim basis, and requiring the decisions of adjudicators to
be enforced pending the final determination of disputes by arbitration,
litigation or agreement ...’2

In the cut and thrust world of adjudications – where parties try hard to seek
any kind of tactical advantage in the limited timeframe available – gaining
access to confidential communications (which can include details about
perceived weaknesses in a party’s case or its strategy) could be the difference
between winning and losing. Requests for disclosure during adjudications are
on the rise.

Unlike in court proceedings,3 there are no formal rules of evidence or

disclosure obligations that apply to adjudications.4 This is despite the fact that
adjudicators are often provided with an overwhelming amount of evidence in
the form of witness statements, experts’ reports and the like. Although there
have been hundreds of cases through the Technology and Construction Court
(‘TCC’) over the years about various aspects of the Housing Grants,
Construction and Regeneration Act 1996 (‘HGCRA’) and adjudication more
generally,5 there is very little judicial authority on the application of the rules
of privilege to adjudication.

If a communication is privileged, its production cannot be ordered. 6 In

practical terms, this means that it cannot be viewed by an opponent or the

1 By the Housing Grants, Construction and Regeneration Act 1996, with effect from 1st
May 1998.
2 Macob Civil Engineering Ltd v Morrison Construction Ltd [1999] BLR 93, [1999] CLC
739, 64 Con LR 1, (1999) 15 Const LJ 300 (TCC), para [14].
3 See Parts 31 and 32 of the Civil Procedural Rules (‘CPR’).
4 Parties can, however, in some instances utilise their contractual rights to the provision of
documents (such as progress reports and programmes) to the same end.
5 In the year ended 1st October 2009 to 30th September 2010 alone (the last year the TCC
published an annual report), the TCC in London dealt with 90 adjudication enforcement
cases (18% of the total of 502 new claims): see the ‘Technology & Construction Court
Annual Report 2009 – 2010’
<www.judiciary.gov.uk/Resources/JCO/Documents/Reports/tcc-ann-report-2010.pdf>
6 A distinction is drawn between the disclosure of documents and their inspection.
Different objections apply to each. A number of objections to inspection are grouped
together under the heading ‘privilege’.

1
court7 (or arbitral tribunal8). Accordingly, the importance of privilege,
particularly in the context of adjudications where adjudicators are usually
given wide powers9 and encouraged to pursue information which they believe
is important to the issues they are tasked with determining,10 cannot be
overstated. The purpose of this paper is to examine whether the rules of
privilege extend to adjudication.

While many different types of privilege exist, this paper is confined to an

examination of those that most commonly arise in adjudications.11 These are:
legal professional privilege, legal advice privilege, litigation privilege and
‘without prejudice’ privilege.

Legal professional privilege

While lawyers have a duty of confidentiality towards their clients,12 not
everything that they are obliged to keep confidential is also privileged. Legal
professional privilege is a blanket term which encompasses legal advice
privilege and litigation privilege (both of which are discussed further below).

Some commentators have suggested that the rationales for these two types of
privilege are slightly different in that:
‘Legal advice privilege advances the rule of law, by enabling clients to
obtain appropriate legal advice more easily. Litigation privilege
supports access to justice and a fair trial with equality of arms.’13

However, other commentators have suggested that these rationales are

unconvincing and should be reviewed.14

7 CPR Part 31.3(1)(b) provides that a party to whom a document has been disclosed has a
right to inspect that document except where the party disclosing the document has a right
or a duty to withhold inspection of it.
8 Alfred Crompton Amusement Machines Ltd v Customs & Excise Commissioners (No 2)
[1974] AC 405, [1973] 3 WLR 268, [1972] 1 WLR 833, [1973] 2 All ER 1169 (HL).
9 For instance, the Scheme for Construction Contracts (England and Wales) Regulations
1998 No 649, Part 1, paragraph 13, for instance, provides that, ‘The adjudicator may take
the initiative in ascertaining the facts and the law necessary to determine the dispute, and
shall decide on the procedure to be followed in the adjudication. In particular he may –
(a) request any party to the contract to supply him with such documents as he may
reasonably require ...’
10 In the case of Volker Stevin Ltd v Holystone Contracts Ltd [2010] EWHC 2344 (TCC)
Mr Justice Coulson said, ‘If the adjudicator needed further information in order to allow
him to answer [the] question properly, he was entitled, indeed obliged, to ask for it. An
adjudicator should not stand mutely by, hoping that one side or the other gives him the
information that he wants: if he considers that he lacks vital information, he must take
the initiative and ask for it directly.’ (para [14]).
11 It does not therefore discuss other types of privilege such as public interest immunity,
privilege against self-discrimination and diplomatic privilege.
12 See, amongst other things, the Solicitors Regulation Authority Code of Conduct
Chapter 4 <www.sra.org.uk/solicitors/handbook/code>
13 Paul Matthews and Hodge M Malek QC, Disclosure (4th edition, Sweet & Maxwell,
2012), para 11.05.
14 CFH Tapper, ‘Privilege, Policy and Principle’ (2005) 121 LQR 181, cited in Candacal
Pty Ltd v Industry Research & Development Board [2005] FCA 649, Fed Crt Aust.

2
What is clear is that both these types of privilege have been around since long
before adjudication and that in not all cases do adjudications involve legal
advice or litigation (at least, in their traditional sense).

Legal advice privilege

Legal advice privilege is not related to the conduct of litigation. It applies to
communications between a lawyer (in his professional capacity) and his client
to the extent that the communication is made with the purpose of giving or
receiving legal advice15 and is confidential.16

The scope of what constitutes advice is broad.17 Accordingly, it is suggested

that there can be little doubt that, provided it is confidential, any legal advice
given by a lawyer to his client in relation to an adjudication will be protected
from inspection by legal advice privilege.

In principle, it should not matter if the confidential communications between a

lawyer and his client are carried out via third parties. However, it is generally
thought that in order for communications to be protected in this way, the third
party would have to be an agent of the lawyer or his client for the purpose of
communicating with the other party to give or receive legal advice (as opposed
to being a general agent).18

With one exception, the rule also applies to in-house solicitors and barristers
in the same way that it does to solicitors and barristers in private practice
(provided, of course, that the communications are confidential and for the
purpose of giving or receiving legal advice). That exception relates to
infringements of European legislation19 and will not apply in the context of
adjudication.

However, with the exception of auditors and tax advisers in certain

circumstances,20 the legal advice privilege rule does not currently apply to
non-lawyer professionals who may advise on the law. Specifically, in relation
to professionals who frequently (and for good reason) assist clients with the
preparation for and conduct of adjudications, it has been held that neither
communications with architects nor claims consultants are privileged.

15 Wilden Pump Engineering Co v Fusfeld [1985] FSR 159 (CA).

16 Three Rivers District Council v Bank of England (No 4) [2004] UKHL 48, [2005] 1 AC
610, [2004] 3 WLR 1274, [2005] 4 All ER 948, para [24]: ‘Unless the communication or
document for which privilege is sought is a confidential one, there can be no question of
legal advice privilege arising. The confidential character of the communication or
document is not by itself enough to enable privilege to be claimed but is an essential
requirement.’
17 It has been held to include matters such as advice to an interested person at a coroner’s
request (see Three Rivers, note 16, para [115]).
18 Wheeler v Le Marchant (1881) 17 Ch D 675 (CA).
19 The single exception relates to the European Commission’s power to require production
of documents during the course of an investigation into infringements of Articles 85 and
86 of the Treaty of Rome, which relates to competitive practices.
20 Auditors and tax advisers have a limited statutory privilege in relation to documents
belonging to them and created for the purposes of the auditing function or the giving of
tax advice respectively: see the Finance Act 2008, schedule 36, section 23.

3
With respect to the former, it has been said that:
‘Architects ... may incidentally advise or be asked to advise on matters
of planning or building law, or advise on a proposed building project or
development. They have to be registered, and cannot call themselves
architects unless they are registered, and if registered they have to pass
examinations to show their professional competence – but I do not think
anyone would regard architects as a genus of lawyers’ and that ‘...
architects have never been recognised by the legislature as qualified to
advise in law.’21

As far as claims consultants are concerned, in a case in the TCC in 2012,

Walter Lilly v Mackay, the question arose as to whether documents generated
by or for a claims consultant, even one which retains legally qualified
personnel, attract legal professional privilege or legal advice privilege. 22 The
case concerned the application for disclosure of all documents that had been
created by a firm of well-known claims consultants who had been appointed
by the defendant to assist in defending claims for extensions of time and loss
and expense. The defendant resisted the application on the basis that his two
principal contacts at the claims consultants provided him with legal advice and
were understood by him to be qualified, practising barristers or solicitors.

The primary arguments therefore revolved around whether the consultants

were engaged as solicitors or barristers (there being no suggestion that as a
firm the consultants were qualified or certified to provide legal advice) and
whether a client who mistakenly believes the person he instructs is a qualified
solicitor or barrister and then receives legal advice from them is entitled to the
protection of privilege.

Having reviewed the relevant authorities, Mr Justice Akenhead said that, on

the facts, it appeared that the firm had been retained to provide ‘contractual
and adjudication advice’ and was notably not retained to provide legal advice
as such, despite the fact that the consultants concerned had some legal
experience. He said it was clear from the firm’s terms that it was careful not
to offer the services of a solicitor or barrister and that there was no evidence
before the court that either of the individuals concerned had been legally
qualified at the relevant time. As such, he held that neither legal professional
nor legal advice privilege applied, and otherwise disclosable documents
should therefore have been disclosed.

It follows from these cases that the scope of legal advice privilege in the
context of adjudications extends only to advice given by properly qualified
and practising solicitors or barristers whether they be employed in private
practice or in-house. The protection will not be available to those who provide

21 See Wilden Pump Engineering, note 15, page 166 (Lord Justice Dillon), which was cited
with approval in R (on the application of Prudential Plc) v Special Commissioner of
Income Tax [2010] EWCA Civ 1094, [2011] QB 669, [2011] 2 WLR 50; [2011] 1
All ER 316.
22 Walter Lilly & Co Ltd v Mackay [2012] EWHC 649, [2012] BLR 249, 141 Con LR 102,
[2012] CILL 3149 (TCC).

4
services to other professionals to assist with the preparation for, or conduct of,
adjudications.

Having drawn this conclusion, there are two further important points to note:
first, the limited application of the scope of the rule concerning legal privilege
in communications between clients and their non-legal advisers has been
recently confirmed by the Supreme Court. In the case of R (on the application
of Prudential Plc) v Special Commissioner of Income Tax the issue arose as to
whether, following receipt of a statutory notice from a tax inspector to produce
documents in connection with its tax affairs, a company is entitled to refuse to
comply on the ground that the documents are covered by legal advice
privilege, in a case where the legal advice was given by accountants in relation
to a tax avoidance scheme.23 The issue, of course, had wider relevance
because it related to the question of whether legal advice privilege extends, or
should be extended, so as to apply to legal advice given by someone other than
a member of the legal profession, and, if so, how far legal advice privilege
thereby extends, or should be extended.

In reaching a majority decision (five to two), the Supreme Court held that:
‘If we were to allow this appeal, we would therefore be extending [legal
advice privilege] beyond what are currently, and have for a long time
been understood to be, its limits. Indeed, we would be extending it
considerably, as the issue cannot simply be treated as limited to the
question whether tax advice given by expert accountants is covered by
[legal advice privilege]. While that is the specific question between the
parties, it is just a subset, no doubt an important subset, of a much larger
set. To concentrate on tax advice given by accountants would be wrong,
because it would ineluctably follow from our accepting Prudential’s
argument that legal advice given by some other professional people
would also be covered.’24

Secondly, in Walter Lilly Mr Justice Akenhead was keen to stress that his
decision was limited to the question of legal profession and legal advice
privilege. He said that:
‘It does not deal with litigation privilege and there remains an
outstanding possible issue as to whether or not advice and other
communications given by claims consultants in connection with
adjudication proceedings are privileged. There is little authority on this
latter issue and consideration might have to be given to issues of policy
if and when this argument arises on another case.’25

The issue of the applicability of litigation privilege to adjudication is explored

further below.

23 R (on the application of Prudential Plc) v Special Commissioner of Income Tax [2013]
UKSC 1, [2013] 2 WLR 325.
24 Prudential, note 23, para [37].
25 Walter Lilly, note 22, para [20].

5
Litigation privilege
Documents which qualify for protection from inspection because they are
covered by legal advice privilege do not need to be considered for this
purpose, as they are covered by privilege from production in any event. What
is examined in this section is whether documents that fall outside the scope of
legal advice privilege can be protected from inspection in adjudication because
they fall under the separate umbrella of litigation privilege. In other words, if
a document is produced for the purposes of an adjudication but is not deemed
to be legal advice, must the party who produced it allow the other party to
inspect it?

Litigation privilege can be sub-divided into two categories, namely:

o communications passing between a solicitor (acting in his/her
professional capacity) and a third party; and
o communications between the party and a third party.

In respect of both categories, it is broadly the case that a document will only
be privileged from production and inspection if:
o it is confidential; and
o the communication is made for the dominant purpose of litigation
and the litigation must be pending, reasonably contemplated or
existing when the communication is made.

Examples of documents that may come within this head of privilege are an
expert’s report obtained by a solicitor with a view to advising his client about
existing or contemplated litigation; or a witness statement obtained by a party
from a third party (such as an employee) for the purpose of existing or
contemplated litigation. Both experts’ reports and witness statements are
common documents in adjudications.

The pertinent question, therefore, is whether documents produced in

contemplation of or concurrent to adjudication should be treated in the same
way as those prepared for litigation.

There is currently no direct English authority that says whether documents are
privileged from production and inspection on the basis that they come into
existence after adjudication – as opposed to formal litigation – is
contemplated.

Accordingly, to determine the answer to the question posed above, it is

necessary to examine what issues of policy26 and rules apply, and how these
are likely to relate to adjudication.

26 Which it seems will be relevant from the comment of Mr Justice Akenhead in the Walter
Lilly case (see note 22 and linked main text).

6
The position in Australia27

As a starting point, it is helpful to review an Australian case on the subject. In

Dura (Australia) Constructions v Hue Boutique Living, the Supreme Court of
Victoria held in September 2011 that litigation privilege attaches to documents
prepared for the purposes of the adjudication process under the Building and
Construction Industry Security of Payment Act 2002 (Vic) (‘the Security of
Payment Act’).28 In this case, Dura had objected to allowing inspection of
certain categories of documents. One of the categories was documents created
for the purpose of an adjudication process under the Security of Payment Act.
The issue related to a limited sub-set of documents only, as many were
prepared by third parties so that lawyers could give legal advice in relation to
the adjudication and were therefore already covered by legal advice privilege.

In relation to the remaining documents, the judge had to consider the origins
of the rules on litigation privilege, section 119 of the Evidence Act 2008,29 and
the purpose and procedure of statutory adjudication,30 in order to decide the
scope of the doctrine. Having reached the conclusion that because an
adjudicator is not bound to apply the laws of evidence he does not qualify as
an ‘Australian court’, the judge then went on to consider whether an
adjudicator was authorised by the Security of Payment Act to ‘hear, receive
and examine evidence’. The judge said that:

27 The case described in the section below is a case from the State of Victoria but cases
concerning the adjudication legislation from a particular State are generally persuasive
authorities in other States with similar regimes.
28 Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477.
The Building and Construction Industry Security of Payment Act 2002 (Vic) follows the
corresponding New South Wales legislation (the Building and Construction Industry
Security of Payment Act 1999 (NSW)) to a large extent. The NSW legislation is based
loosely on the HGCRA: see Julian Bailey, Construction Law (Informa, 2011), paras 6.87
and 6.110.
29 In this case, section 119 of the Evidence Act 2008 (Vic) (the ‘Evidence Act’), which
protects confidential communications and the contents of confidential communications
made or prepared ‘for the dominant purpose of the client being provided with
professional legal services relating to an Australian or overseas proceeding in which the
client is, or may be, or was or might have been, a party’. The expression ‘Australian or
overseas proceeding’ is defined in the dictionary to the Evidence Act as meaning ‘a
proceeding (however described) in an Australian court or foreign court’. In turn, an
‘Australian court’ is defined to mean any of the Federal, State or Territory courts or (i) a
judge, justice or arbitrator under Australian law; or (ii) a person or body authorised by an
Australian law, or by consent of parties, to hear, receive and examine evidence; or (iii) a
person or body that, in applying a function under Australian law, is required to apply the
laws of evidence.
30 The judge said that ‘The adjudication process consisted in the claimant lodging with the
adjudicator a written adjudication application setting out the claim, the respondent would
reply with a written adjudication response and then the adjudicator was required to
provide a written determination within ten days. The adjudicator did not have to be a
lawyer but a person who by qualification and experience was appropriate. Other than
receiving written submissions, the adjudicator could call a conference between the
parties and have an inspection of the relevant site. The written determination had to state
the reasons and the basis of the determination.’ (para [43]).

7
 ‘Assuming, as I do, that the regime of privilege is intended to ensure
fairness between participants in the conduct of litigious processes, I
would not give that expression a narrow meaning.’31

He went on to state that:

‘The adjudication occurs in a patently adversarial setting. It is
determined upon the basis of evidence presented in documentary form,
and upon written submissions. ... Despite the fact that the adjudication
may not ultimately determine the parties’ rights if, in a subsequent court
proceeding, the parties’ entitlements are litigated, the adjudication result
is enforceable at law and is binding upon the parties unless and until a
subsequent court order changes that outcome. I think that the nature of
adjudications is such that preserving the confidentiality of
communications, made for the dominant purpose of enabling the
provision of legal services to participants in the adjudication, would
promote the object of fairness for and between those participants.
Bearing those matters in mind, I conclude that the provisions of the
[Security of Payment Act] do authorise the adjudicator to “hear, receive
and examine evidence” as I would construe that expression. I therefore
construe the definition of “Australian court” to embrace an adjudicator
under the Security of Payments Act, and an adjudication as an
“Australian proceeding” within the meaning of section 119 of the
Evidence Act.’32

It is likely that the ‘issues of policy’ to which Mr Justice Akenhead referred in

Walter Lilly33 were similar to those expressed by the judge in Dura (Australia)
Constructions, namely that privilege is intended to ensure fairness and that the
adjudication process is similar in many ways (especially in terms of process,
albeit in an expedited way) to court proceedings.

Are the English courts likely to follow the same principles?

As well as to arbitrations,34 the scope of litigation privilege in England and
Wales has been held to extend to a ‘tribunal exercising judicial functions’.35
Amongst other things, this has been deemed to include employment
tribunals.36

31 Dura (Australia) Constructions, note 28, para [48].

32 Dura (Australia) Constructions, note 28, paras [49] and [50].
33 Walter Lilly, see note 22 and linked main text.
34 Assuming they are subject to English procedural law.
35 See Parry-Jones v The Law Society [1969] 1 Ch 1, [1968] 2 WLR 397; [1968] 1 All ER
177 (CA), in which Lord Justice Diplock held that, ‘So far as Mr Parry-Jones’ point as to
privilege is concerned, privilege, of course, is irrelevant when one is not concerned with
judicial or quasi-judicial proceedings because, strictly speaking, privilege refers to a right
to withhold from a court, or a tribunal exercising judicial functions material which would
otherwise be admissible in evidence’. (page 9).
36 In the case of Scotthorne v Four Seasons Conservatories (UK) Ltd (Employment Appeal
Tribunal, unreported, 14th May 2010, UKEAT/0178/10/ZT), the EAT judge stated that
when deciding whether certain documents had to be disclosed, that since all but one of
the staff were not qualified lawyers, a claim of legal advice privilege would be ‘fraught

8
However, as Matthews and Malek explain:
‘... there are several kinds of inquisitorial or non-adversarial proceedings
before English courts … These do not so much amount to a contest
between two or more parties, but rather to a fact-finding inquiry with a
view to a ‘public interest’ decision being made. Moreover, such
proceedings usually do not apply the strict rules of evidence, of which
legal privilege was considered to form merely a part. Thus, for example,
it has been held that litigation privilege cannot be claimed in order to
protect from disclosure a report prepared for use in non-adversarial
proceedings.’37

Reference is made in a footnote to the above passage to the case of Re L which

concerned reports that were prepared in support of a mother’s application to
the county court pursuant to the Children Act 1989 to have an emergency
protection order over her child lifted. In that case, the House of Lords held
that the documents were not to be afforded the status of litigation privilege
since proceedings under this particular statute were investigative and non-
adversarial in nature. Lord Jauncey said (in a statement that was approved by
a majority of three to two despite there being a strong dissenting judgment)
that ‘litigation privilege is an essential component of adversarial procedures
and thus cannot exist in the context of non-adversarial proceedings’.38

In essence, this case decided that litigation privilege is essentially a creature of

adversarial proceedings and thus cannot exist in the context of non-adversarial
proceedings. The case of Re L illustrates the court’s historical reluctance to
allow the extension of the rule of privilege to inquisitorial proceedings,
including inquests, wardships, Children Act cases and patent extensions. The
court’s reasoning behind this can be explained largely due to the fact that these
types of enquiries take on more of a fact-finding role rather than a contest
between two or more parties.

One of the most recent and well-known examples of the courts having to
consider the scope of privilege is in the Three Rivers v Bank of England series
of cases (arising out of the collapse of BCCI). In Three Rivers, Lord Scott
gave the following obiter comment (having first referred to the description
given by Lord Jauncey in Re L of litigation privilege as ‘essentially a creature
of adversarial proceedings’):
‘The Bingham Inquiry [into the supervision of BCCI] could not have
been described as adversarial. It was, as inquiries invariably are, an
inquisitorial proceeding. It was no doubt with in Re L in mind that the

with difficulty’ (para [19]). However, he did rule that the documents should not be
disclosed because litigation privilege did apply, saying ‘There is no doubt that from [the
date of the altercation] but not before litigation was the dominant purpose of the
approach by the Respondent to RBS Mentor and its advice’ (para [21]) and ‘It would not
surprise me that advice was taken at that stage for the dominant purpose of avoiding
litigation or about how to handle matters which could well lead to litigation’ (para [20]).
37 Matthews and Malek, Disclosure, note 13, para 11.38.
38 Re L (a minor) [1997] AC 16, [1996] 2 WLR 395, [1996] 2 All ER 78 (HL).

9
 Bank did not claim that the documents of which disclosure was being
sought were entitled to litigation privilege.’39

The key question that therefore remains to be considered is whether

adjudications amount to adversarial or non-adversarial proceedings.

Are adjudications adversarial or non-adversarial proceedings?

As stated above, arbitrations are not distinguished from court proceedings for
the purposes of litigation privilege. Although it is appreciated that there are
differences between arbitrations and adjudications in terms, in particular, of
formality and procedure, most adjudications are conducted adversarially and
in accordance with a procedure which sees them take an inquisitorial form in
much the same way as arbitrations. This view appears to be consistent with
that of the judge in Dura (Australia) Constructions.40

However, before simply concluding that adjudications are therefore

adversarial proceedings to which litigation privilege would apply, it is sensible
to review any relevant aspects of recent TCC cases that concern adjudication.
There are two cases in particular that warrant consideration in this context.

Straume v Bradlor Developments concerned an application for a determination

of whether the leave of the court was needed by Straume to commence an
adjudication in circumstances where Bradlor was in administration.41 The
Insolvency Act 1986 requires that:
‘During the period for which an Administration Order is in force no
other proceedings and no execution or other legal process may be
commenced or continued, and no distress may be levied, against the
company or its property except with the consent of the administrator or
the leave of the court and subject (where the court gives leave) to such
terms as aforesaid.’42

The court therefore had to consider whether adjudication constituted ‘other

proceedings’. In doing so, the court was referred to the Court of Appeal case
of Bristol Airport v Powdrill and, in particular, the judgment of the Vice-
Chancellor Sir Nicholas Browne-Wilkinson, as he then was, where he
considered the meaning of the words ‘other proceedings’ and said that the
natural meaning was that the proceedings in question were either legal
proceedings or quasi-legal proceedings such as arbitration.43

The question for the court was therefore whether adjudication is a quasi-legal
proceeding such as arbitration. The judge held that:

39 Three Rivers, note 16, para [10].

40 Dura (Australia) Constructions: note 28.
41 A Straume (UK) Ltd v Bradlor Developments Ltd [2000] BCC 333; also (2000) 2 TCLR
409 (Ch D).
42 Insolvency Act 1986, section 11(3)(d).
43 Bristol Airport Plc v Powdrill [1990] Ch 744, page 748; also [1990] 2 WLR 1362,
[1990] 2 All ER 493, [1990] BCC 130 (CA).

10
 ‘... I have come to the clear conclusion that the adjudication procedure
under section 108 of the Act and/or clause 41 is quasi-legal proceedings
such as an arbitration within the classification of Browne-Wilkinson V-
C in Re Paramount Airways [Bristol Airport v Powdrill]. It seems to me
that it is, in effect, a form of arbitration, albeit the arbitrator has a
discretion as to the procedure that he uses, albeit that the full rules of
natural justice do not apply. The fact that it needs to be enforced by
means of a further application does not stop it from being an arbitration.
It is the precursor to an enforceable award by the court. It seems to me
that it is “other proceedings” within section 11(3) and in my judgment
accordingly leave is required.’44

In Austin Hall Building v Buckland Securities, the TCC was asked to consider
whether an adjudicator was a ‘public authority’ for the purposes of the Human
Rights Act 1998 (‘the HRA’)45. When considering the issue, the His Honour
Judge Bowsher QC said that he found the definitions to be of little help. He
did, however, identify that in more than one section the HRA provides that the
term ‘court’ includes a ‘tribunal’. Moreover, the definition in section 21
provides that ‘Tribunal means any tribunal in which legal proceedings may be
brought’.
The judge observed that:
‘Applying the definition of “tribunal” in section 21 of the HRA in the
light of the decisions to which I have referred, I do not regard an
adjudicator under the 1996 Act [the HGCRA] as a person before whom
legal proceedings may be brought. Legal proceedings result in a
judgment or order that in itself can be enforced. If the decision at the
end of legal proceedings is that money should be paid, a judgment is
drawn up that can be put in the hand of the Sheriff or Bailiff and
enforced. That is not the case with an adjudicator. The language of the
1996 Act throughout is that the adjudicator makes a decision. He does
not make a judgment. Nor does he make an “award” as an arbitrator
does though he can order that his decision be complied with.
Proceedings before an arbitrator are closer to court proceedings because
an award of an arbitrator can in some circumstances be registered and
enforced without a judgment of the court. But the decision of an
adjudicator, like the decision of a certifier, is not enforceable of itself.
Those decisions, like the decisions of a certifier, can be relied on as the
basis for an application to the court for judgment, but they are not in
themselves enforceable.’46

Having reached this view, the judge held that:

‘The matter is finely balanced, but I find that an adjudicator exercising
functions of the sort required by the 1996 Act is not a public authority
and is not bound by the HRA not to act in a way incompatible with a
Convention right subject to the limitation provided by section 6(2) of the

44 Straume, note 41, page 336.

45 Austin Hall Building Ltd v Buckland Securities Ltd [2001] BLR 272, (2001) 3 TCLR 18;
80 Con LR 115; (2001) 17 Const LJ 325 (TCC).
46 Austin Hall, note 45, para [35].

11
 HRA. Proceedings before an adjudicator are not legal proceedings.
They are a process designed to avoid the need for legal proceedings.’47

The two cases referred to above seem to contradict each other to some extent
as far as the status of an adjudicator’s decision is concerned. In Straume, the
adjudicator’s decision was afforded a higher status and adjudication was
deemed to be a quasi-legal proceedings and akin to arbitration.48 By contrast,
in Austin Hall, His Honour Judge Bowsher QC gave an interesting insight into
how he thought the adjudication process should be viewed, namely that the
decision of an adjudicator has a different status to a judgment of the court or
an award of an arbitrator, in that it requires a further step in the judicial
process to become enforceable.

To the extent that there is any conflict, it is submitted that the decision in
Straume should be preferred. Either way, neither case seems to affect the
preliminary conclusion that was reached at the start of this section: that an
adjudication is an adversarial proceeding and therefore covered by the scope
of litigation privilege despite it being different to litigation or arbitration.
Further, the Straume decision lends support to such a conclusion.

Without prejudice privilege

The without prejudice rule will usually operate to stop statements that are
made by one party to another (in writing or orally) as part of a genuine attempt
to settle a dispute from being disclosed to a court as evidence of admissions.
Without prejudice privilege shares many similarities with the other types of
privilege discussed earlier in this paper but there are also some key
differences. The purpose of this paper is not to review these in detail but to
focus instead on the application of the rule to adjudication.

In Volker Stevin v Holystone Contract, there had been a without prejudice

meeting prior to the commencement of the adjudication, which Holystone
referred to in its response and in a separate letter to the adjudicator. 49 Volker
objected to the references to the without prejudice meeting. When considering
points raised about jurisdiction and natural justice during enforcement
proceedings, Mr Justice Coulson said that the relevant issue was whether the
adjudicator’s knowledge of the fact that a without prejudice offer had been
made by Holystone to Volker meant that, however unconsciously, he was
biased towards them. He held that there was no bias as it was obvious to any
fair-minded and informed observer that the adjudicator’s written decision
made it clear that he was wholly unconcerned with the fact that an offer had
been made and that he had treated his knowledge of the fact of the offer as
irrelevant.

In Ellis Building Contractors v Vincent Goldstein, issues were also raised in

relation to possible bias and breaches of natural justice arising from, amongst
other things, without prejudice material being put before the adjudicator. Mr

47 Austin Hall, note 45, para [40].

48 Straume: note 41.
49 Volker Stevin: note 10.

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Justice Akenhead commented that, ‘This is not wholly uncommon
unfortunately and it is a practice that should be discouraged’.50

Further strong disapproval of the reliance on without prejudice material was

provided later in the judgment:
‘The improper deployment of “without prejudice” material in
adjudication is something which happens in adjudication as in court
although this Court has at least anecdotally seen an increase in this
behaviour in adjudication. This often arises because parties represent
themselves or are represented by consultants who are not legally
qualified, and, perhaps, they do not fully understand that truly “without
prejudice” communications are privileged and should not be referred to
in any legal or quasi-legal proceedings, including adjudication. Whilst if
“without prejudice” communications surface in a court, the judge being
legally qualified and experienced can usually put it out of his or her
mind, it is a more pernicious practice in adjudication because most
adjudicators are not legally qualified and there will often be a greater
feeling of unease that the “without prejudice” material may have really
influenced the adjudicator. This Court can only strongly discourage
parties from deploying ‘without prejudice’ communications in
adjudication.’51

The position regarding disclosure of without prejudice correspondence in

adjudications is therefore much more clear-cut than some of the other issues
discussed in this paper. The approach of the courts is clearly to discourage the
reliance on such material. The fact that a party is not legally qualified, or fails
to properly understand the meaning of ‘without prejudice’, will not change
this.

Conclusion
Gaining access to confidential communications (which can include details
about perceived weaknesses in a party’s case or its strategy) could be the
difference between winning and losing an adjudication. Parties do not have to
produce documents that are protected by privilege. Despite the amount of
adjudication case law, there is hardly any guidance from the courts about the
extent to which privilege applies in adjudications.

What is clear is that communications will be protected by legal advice

privilege if they are between a lawyer (in his professional capacity) and his
client and provided the communication is confidential and for the purpose of
giving or receiving legal advice. This would therefore provide protection to
clients who engage lawyers to assist them in the preparation for and conduct
of an adjudication. Walter Lilly confirmed that documents produced by claim

50 Ellis Building Contractors Ltd v Goldstein [2011] EWHC 269, [2011] CILL 3049
(TCC), para [1].
51 Ellis Building, note 50, para [25].

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consultants acting in an adjudication would not be covered by legal advice
privilege.52

It is also clear from recent judgments that without prejudice privilege applies
in adjudications and that the courts will look dimly on parties who flout those
rules.

What is less clear is the extent to which litigation privilege provides protection
for documents that are not covered by legal advice privilege. Litigation
privilege encompasses documents that come into existence after litigation is
contemplated or commenced and documents created with a view to the
litigation, either for the purpose of obtaining or giving advice or for obtaining
evidence.

The scope of litigation privilege in England and Wales has been held to extend
beyond litigation to arbitration and other tribunals exercising judicial
functions. The Australian courts go further and have been willing to find that
litigation privilege extends to statutory adjudication in Australia. However, in
seeking to determine whether the courts in England and Wales would adopt a
similar approach, it is necessary to consider the approach adopted by the
courts for extending the scope of litigation privilege beyond litigation.

The answer to this seems to be rooted in the question of whether or not the
proceedings can be described as adversarial or non-adversarial in nature.
Parties generally refer disputes to adjudication because it is an adversarial
method for resolving disputes and it follows a set procedure than involves the
provision of written (and sometimes oral) submissions and the adjudicator
making a reasoned decision. It is then often unnecessary to take separate steps
to enforce the decision.

It is suggested that litigation privilege would extend to adjudications. If this

were the case, documents produced in contemplation of adjudication by third
parties (such as claims consultants) that would not otherwise be protected by
legal advice privilege would be protected, provided they satisfied the usual
tests for litigation privilege. This conclusion is consistent with the reference
by Mr Justice Akenhead in Walter Lilly to ‘issues of policy’ and the fact that
litigation privilege is generally regarded as supporting access to justice and a
fair trial with equality of arms.53

Adrian Bell BA (Hons) is a senior associate and solicitor advocate at CMS

Cameron McKenna LLP in London.

© Adrian Bell and Society of Construction Law 2013

The views expressed by the author in this paper are his alone, and do not necessarily
represent the views of the Society of Construction Law or the editors. Neither the
author, the Society, nor the editors can accept any liability in respect of any use to
which this paper or any information or views expressed in it may be put, whether
arising through negligence or otherwise.

52 Walter Lilly: note 22.

53 Walter Lilly: note 22.

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