1    This is a judgment of the TCC that, owing to there being live matters between the parties to which ongoing issues of privilege are relevant, was published in an anonymised and redacted form only. Therefore, the identities of the parties involved, the project subject to the dispute, details of the contract between the parties and the value of this dispute are redacted.

2    The case concerns two separate claims under Part 7 and Part 8, but heard together by order of O’Farrell J. The Claimant in the Part 7 proceedings (and the Defendant in the Part 8 Proceedings) is referred to as AZ. AZ brought the Part 7 proceedings to enforce an Adjudicator’s decision dated 7 June 2023. 

3    The Claimant in the Part 8 proceedings (and the Defendant in the Part 7 Proceedings) is referred to as BY. BY contended that material deployed by AZ in the adjudication proceedings was subject to without prejudice privilege. Accordingly, BY brought the Part 8 proceedings seeking declarations from the Court that these materials were subject to without prejudice privilege, and that as the Adjudicator’s decision was unenforceable as a result of the inadmissible material.

4    The subject matter of the parties’ dispute is a set of works to replace the stair core pressurisation systems to a building. These works were intended to be let to AZ as contractor, with BY as the employer. There is a separate ongoing issue between the parties as to whether the contract between the parties was finalised, though the Adjudicator held that this was the case for his purposes, and the Judge declined to make a declaration either way. 

5    The facts of the dispute that arose between the parties and was resolved in AZ’s favour by way of adjudication are largely redacted. However, it is known that a dispute arose between the parties on a contractual point in 2021 and communications occurred between the parties from 2021 to 2023 in unsuccessful attempts to resolve the dispute on both open and without prejudice bases. AZ referred the dispute to adjudication in 2023, and BY raised objections on the inclusion of the above communications in AZ’s submissions, serving its Response under protest. In his decision dated 7 June 2023, the Adjudicator materially ruled in favour of AZ’s contractual position, inter alia deciding that the materials put before him by AZ were not privileged. In the Adjudicator’s view there was no evidence that the purpose of the communications was to reach a commercial settlement on the whole Contract; rather, the communications were of a general technical and commercial nature.

6    Accordingly, AZ’s argument in bringing the Part 7 proceedings is relatively straightforward; that the Adjudicator’s decision is valid and enforceable. As discussed above, BY’s position in the Part 7 proceedings is interconnected with its arguments in the Part 8 proceedings. BY asserted that if the communications relied on by AZ in its adjudication submissions are subject to without prejudice privilege, the Adjudicator would be at risk of bias, which would render his Decision unenforceable. 

7    This argument bases itself on BY’s argument in the Part 8 proceedings, that the communications relied on by AZ in the adjudication formed part of negotiations between the parties regarding their dispute on points of contract and were inadmissible for use in adjudication as prejudicial material supporting AZ’s position, as opposed to set up a binding agreement replacing the underlying dispute. For this reason, BY argued that these communications were inadmissible. AZ opposed this argument, though due to redactions large parts of its argument have not been reproduced. However, it can be inferred that one of its primary arguments was that for the Adjudicator’s decision to be unenforceable, BY must demonstrate that the decision was 'primarily based' upon the without prejudice material.

8    Constable J came to the following conclusions;

8.1    In respect of whether the communications relied on by AZ in the adjudication proceedings were privileged, they were subject to without prejudice privilege. This conclusion was reached on the basis of the nature of the communications, which had the purpose of coming to a settlement of a dispute between the parties. Constable J declined to make a declaration as to their general admissibility in proceedings, as this would depend on the nature of the proceedings themselves, but did make specific findings about specific documents in the body of his judgment.

8.2    Concerning the admissibility of the communications in the adjudication, Constable J concluded that they were inadmissible due to the manner in which they were deployed. AZ relied on the communications not to argue that a binding agreement had been reached that superseded the underlying dispute, which would have been permissible, but instead to raise an inconsistency in BY’s contractual position by corroborating facts that were purportedly admitted, which was not a legitimate purpose for which without prejudice communications may be deployed.

8.3    Notwithstanding the issue of admissibility of the without prejudice communications, Constable J also concluded that a fair-minded and informed observer considering all of the circumstances of this case would conclude the Adjudicator was at real risk of unconscious bias, having seen these communications. This was because AZ had relied heavily on these communications and because these contained implicit admissions by BY relating to central issues in the dispute that were inconsistent with BY’s open position. Accordingly, there was an inevitable “question mark” about whether the results of the adjudication were influenced by the Adjudicator’s knowledge of BY’s concessions. Accordingly, it was in the interest of natural justice that the decision not be enforced.

9    Therefore, Constable J dismissed the Part 7 claim for enforcement of the adjudication proceedings and allowed the declarations sought in the Part 8 claim, to the extent identified in the body of his judgment.

10    This case illustrates the complexity surrounding the use of without prejudice communications. As much as the nature of the communication itself, the context of the proceedings in which it is deployed is important. If it is deployed, for example, as evidence of parties coming to an agreement or a settlement, this may be legitimate. However, where it is used in a prejudicial manner, such as in support of a party’s purported admission, its use will generally be illegitimate.