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In a case of potentially significant consequence for litigants
and their advisors, the High Court has drawn a stark distinction
between the advice given by claims consultants and that given by
solicitors and barristers when it comes to the disclosure of
documents and legally privileged communications.
In the recent case of Walter Lilly and Company Limited -v-
Mackay and DMW Developments Ltd [2012] the High Court ruled
that advice given by a claims consultant was not privileged and
therefore must be disclosed to the opposing party in a connected
dispute.
The Law of Privilege
So what is legal privilege, and why does it matter? During court
proceedings there will come a point where all parties will usually
have to disclose all the evidence held that is relevant to the
case, whether it supports their position or not. However, if a
document is privileged then a party can withhold this evidence from
the other party and the Court.
Legal is a general term covering both legal advice privilege and
litigation privilege.
In very simple terms, legal advice privilege applies to
confidential communications between a party and their lawyer for
the purpose of giving or receiving legal advice.
Litigation privilege is distinct. Litigation privilege applies
to confidential communications for the purpose of obtaining advice
in relation to a dispute where litigation exists, is pending or at
least is reasonably contemplated at the time and is between:
a party and their lawyer; and
a party or their lawyer and a third party.
Privilege is obviously incredibly important. A party is unlikely
to welcome having to disclose the details of their private
discussions with their lawyers or other parties during proceedings.
Privilege is absolute in its application in that the Court cannot
exercise any discretion as to whether to compel the disclosure of a
privileged document.
Accordingly, the application of privilege is relatively narrow
and has its limits.
Privilege and the Claims Consultant
So does privilege extend to communications between a party and a
claims consultant? The issue of litigation privilege is still up in
the air, but the High Court has now ruled in Walter Lilly and
Company Limited -v- Mackay and DMW Developments Ltd [2012]
that legal advice privilege does not apply to such
communications.
In this case Walter Lilly was engaged by the Defendants to
construct a house and when it became apparent that there was to be
significant delay, the Defendants sought "contractual and
adjudication" advice from Knowles Ltd, a well-known claims
consultant. A dispute then arose in the subsequent proceedings as
to whether the communications between the Defendants and Knowles
attracted legal advice privilege. The Defendants argued that the
advice which was provided by Knowles was from individuals who held
themselves out as lawyers and was legal in nature and therefore was
privileged.
The judge in this case looked at the facts and past authorities
and drew a number of conclusions:
Legal advice privilege only applies to lawyers and no other
professionals save in very specific, exceptional
circumstances.
Although Knowles employed "legally qualified
persons," it did not hold itself out as a legal practice and
was retained to provide "contractual and adjudication
advice", not legal advice. Knowles' terms also included a
provision for the engagement of an external solicitor.
The Defendants engaged Knowles for claims and project handling
advice and the mere fact that two of the people with whom the
Defendants were dealing were 'legally qualified', and
whether the Defendants honestly believed them to be solicitors or
barristers, was immaterial because they were not engaged to provide
the services of solicitors or barristers.
Points to Take Away
Where a consultant is engaged to provide contract, claims or
project handling advice then communications between a party and
that consultant are unlikely to attract legal advice privilege and
therefore may potentially be disclosable in any subsequent court
proceedings. Legal advice privilege is something which is still
very much the preserve of solicitors and barristers practicing as
such.
The only sure-fire way to ensure that your communications
regarding the legal aspects of a dispute are privileged and will
not have to be disclosed is by engaging a solicitor or barrister to
provide that advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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