25/10/2022

One of the challenges for claimants with claims for construction defects can be that, depending on the nature of the defect, the need to undertake repairs, whether temporary or permanent, can arise before any claim has been settled or determined. 

This is particularly the case with fire defects, where the well-known risks may mean that an urgent remedial solution is required, even if that solution is temporary.

However, this can create challenges with the dissemination of information, and how to maintain privilege. 

This issue was considered in an interim application on Northumbria Healthcare NHS Foundation Trust and another v Lendlease Construction (Europe) Ltd and others [2022], in which the Technology and Construction Court considered the scope of litigation privilege and the extent to which parties may, pursuant to the Disclosure Pilot Practice Direction 51U, be able to withhold the disclosure of documents pertaining to the discussions of a third party group of specialists, on the grounds that such documents attract litigation privilege.

It should be noted that the disclosure pilot scheme referred to has been made permanent as of 1 October 2022 and can now be found in Practice Direction 57AD. The new Practice Direction is substantially in the form of the previous disclosure pilot scheme and the provisions referred to in this case remain as stated.

Background

The main dispute relates to an overarching PFI Project Agreement between Northumbria Healthcare NHS Trust ('Trust') and Northumbria Healthcare Facilities Management Limited ('FMCo'). In 2012, FMCo entered into a contract with Lendlease Construction (Europe) Ltd ('Lendlease') for the design and construction of a specialist emergency care hospital in Northumberland. Practical completion of the works took place in 2015.

The Trust and FMCo subsequently issued proceedings against Lendlease in December 2019, alleging substantial design and construction defects throughout the hospital, including substantial fire defects, and claiming damages to the sum of approximately £140 million.  Lendlease, in turn, joined various sub-contractors into the proceedings.

Roughly half of the damages claimed relate to the cost of erecting a temporary four-storey building as part of a scheme to allow the hospital to operate whilst remedial works are undertaken (the 'Decant Scheme').

The Defendants sought disclosure of documents relating to discussions by a group that had convened to assist in the consideration and development of the Decant Scheme (the 'Small Project Group'). The Small Project Group consisted of a group of the Trust’s clinicians, the Claimants’ legal advisors and the Claimants’ decant expert, Mr Beasley.

The Claimants’ position was that it was entitled to withhold the disclosure or production of such documents on the grounds of litigation privilege.

Judgment 

The principle of litigation privilege serves to protect certain documents from disclosure on the basis that a party to litigation or potential litigation should be free to seek advice or information in connection with the litigation, without being obliged to disclose the same to another party to proceedings.

In response to the Defendants’ application, the solicitor acting on behalf of the Claimants stated that the Small Project Group had initially been formed to respond to a Request for Information ('RFI') raised in 2020 and thereafter meetings had been held “to provide further information and material for the purpose of the pleadings”. Given that discussions had been carried out with the Claimants’ legal advisors and at their request and for the purposes of responding to the RFI and developing the pleadings, the Court confirmed that such discussions and documents produced were “plainly privileged”.

In applying the principles summarised in Three Rivers District Council v Governor and Company of the Bank of England [2004] and Starbev GP Ltd V Interbre Holding BV [2013], the Court concluded that the Small Project Group had been convened for the “express purpose” of responding to the RFIs and formulating the pleading of the Claimants’ case on the Decant Scheme. The plans that had been formulated throughout the discussions were to be used to pursue the claim to obtain damages for the funding of the Decant Scheme and there was no secondary or other dominant purpose for the discussions of the Small Project Group. As such, discussions of the group were clearly for the “sole or dominant purpose” of obtaining information and advice “in connection with conducting litigation” and the Court was satisfied that the Claimants had made a compelling claim for litigation privilege.

As a separate disclosure issue, the Court considered an issue raised by a third party to the proceedings, Keppie Design Limited, regarding the fact that the Claimants’ decant expert, Mr Beasley, had been involved in the Small Project group and may therefore have acquired certain knowledge that might inform his opinion but which would not be available to other experts. The Court did not consider that this affected the privileged nature of the Small Project Group discussions and was not willing to make an order for specific disclosure relating to Mr Beasley’s discussions with the Small Project Group at this stage in the proceedings. However, the Court did use this as an opportunity to affirm that if Mr Beasley did subsequently rely on information from the discussions that had not been made available to the other experts, then that may give rise to an application for specific disclosure that would be met with a “sympathetic ear”.

Whilst not related to the discussion on litigation privilege, the Court also outlined a general criticism of the Defendants’ specific request for disclosure and provided guidance on the facts that the Court will take into account when making their decision. The Court’s criticism fell into two categories:

  1. Firstly, an assumption by the Defendants that the Trust Board must have discussed the issue of decant. The Court was satisfied that this assumption was misplaced; a document at which the decision had been made to decant by the Trust Board had been disclosed, and subsequent discussions around the procedural steps were delegated to the Small Project Group, which had successfully maintained privilege
  2. The timing of the application, given the proximity to trial and the fact that there had been an earlier Case Management Conference in May 2022, where the disclosure application could have been dealt with. Similarly, disclosure had been given in November 2020 where the Claimants had set out the general basis on which privilege had been asserted and no issue had been raised at this stage. Whilst the delays would not be considered a reason for dismissing an application for specific disclosure, the Court considered such delays “a significant fact” that the Court will take into account.

Conclusion

For claimants seeking to maintain privilege whilst undertaking repairs to defects, control around the dissemination of documents is critical.

In particular, it is critical to maintain privilege over any expert reports that have been obtained highlighting the defects. 

The use of the Small Project Group in this case, with legal advisors present for meetings, proved to be a sensible and effective way to do this.

For parties seeking to challenge another party’s disclosure, this case is also a useful reminder that the timing of an application may well be critical.  Parties seeking to challenge disclosure by another party should do so promptly.

This article was co-written by Judith Hopper, Partner and Alexandra Phillips, Trainee Solicitor.

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