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Construction disputes: send it to the lawyer

There are now a variety of claims consultants and advisers available for construction industry professionals to consult with on disputes, legal or otherwise.  The vast majority of these provide excellent advice and can be equally competent as practising solicitors when advising on construction claims and disputes.  However last month’s ruling by Mr Justice Akenhead in the Technology and Construction Court in the matter of Walter Lilly & Co Ltd v MacKay and DMW Developments Ltd does throw up an interesting dilemma for those using claims consultants in preference to a lawyer.

The judgment handed down concerned an application for disclosure of documents by a well-known firm of claims consultants, Knowles, created for the purposes of advising Mr MacKay. The facts are relatively straightforward: Walter Lilly were employed by Mr MacKay’s contractor, DMW Developments Ltd, to construct a substantial house in London.  Work started in 2004 with works to be completed within 18-20 months, but there were significant delays.  The architect felt the delays were justified and believed Walter Lilly & Co were entitled to an extension of time. Mr MacKay became increasingly disillusioned with the architect and asked Knowles for assistance.  It is Walter Lilly’s position that Mr MacKay (and DMW), on the advice of Knowles, undermined the architects.  Walter Lilly claim it was then and manoeuvred into a position whereby they could be held liable for the delays. This point has yet to be determined.

Disclosed correspondence

Preceding the trial, however, some of the correspondence that passed between Knowles and DMW had been disclosed. The vast majority of it was held back during the disclosure process, on the grounds that it attracted legal professional privilege. Indeed, solicitors for DMW felt the correspondence had been mistakenly disclosed and should not have been in the trial bundle at all.  On the other side, Walter Lilly felt that they should be able to see it all. The parties could not agree and so Walter Lilly made the application upon which Mr Justice Akenhead gave judgment.  Mr MacKay suggested in his witness statement to the court that Knowles were providing legal advice and were understood to be qualified and practising barristers or solicitors.  He said he already had a contract administrator, an employer’s agent and a project manager, and what he needed from Knowles was a lawyer.  In effect, Mr MacKay and DMW felt all of the correspondence disclosed between Knowles and the defendants should not seen by the trial judge.

The argument put forward by Mr MacKay and DMW, was that believing they had instructed qualified solicitors or barristers to advise, they were entitled to the legal professional privilege that such instructions would attach to any documents created.

Terms & conditions

In deciding, Mr Akenhead referred to R (Prudential Plc and/or Another) v Special Commissioner of Income Tax [2010], a Court of Appeal matter, in which a claimant had obtained legal advice from an accountant on tax law.  In that case, Lord Justice Lloyd said: “I consider that this Court is bound to hold that legal professional privilege does not apply, at common law, in relation to any profession other than a qualified lawyer: a solicitor or barrister, or an appropriately qualified foreign lawyer […] Even if we were not so bound, I would conclude that it was not open to the Court to find that LPP applies outside the legal profession.”

Knowles did not present itself as a firm of solicitors or barristers: within their terms and conditions it was stated that they had been retained to provide “contractual and adjudication” advice. They also stated that they could liaise with any solicitors that might be used. This suggested legal practitioner services were not covered by the initial retainer and Mr Justice Akenhead duly found that they were not.  Knowles’ consultants were not shown to be practising barristers or solicitors and Mr Justice Akenhead was not prepared to attach legal professional privilege to their advice.

Clear decisions

The judge also ordered the other discloseable documents that Walter Lilly and Co wanted to see to be produced. Mr Justice Akenhead limited disclosure to those documents relating to legal professional or legal advice privilege, and not litigation privilege. However, it is clear from the judge’s decision that, if someone instructs a consultant and does not ask them to provide legal advice, then they run the risk of any advice that they do give having to be disclosed to the other side in future disputes.

The moral of this story is: if you are uncertain as to exactly what advice you require, but you think that it might be legal in nature, make sure you either instruct your consultant to give you legal advice (making sure in advance that they are qualified to do so) or just send the instruction to a lawyer in the first place.

For more information on any of the matters raised in this article, or for general advice on contract disputes, contact 0117 904 6000.

Posted on May 11th, 2012 by Lyons Davidson