Can emails between the parties negotiating the value of an interim application be shown to the adjudicator?

RMP Building and Civil Engineering Limited v UK Construction Limited [2016] EWHC 241 (TCC)

RMC Building and Civil Engineering Limited (RMC), a subcontractor, made an interim application for payment no.8 (Application 8) to UK Construction Ltd (UKC), the main contractor. UKC did not serve a payment notice or a pay less notice so RMC claimed that it was entitled to payment of the sum claimed in Application 8 under the Construction Act. Apart from a small payment on account, the sum stated in Application 8 was not paid. After four or five months of negotiations RMC commenced adjudication.

The adjudicator ordered UKC to pay to RMC the sum claimed. UKC refused to pay and RMC commenced enforcement proceedings in the TCC.

UKC raised several jurisdictional challenges including an allegation that RMC had withdrawn its Application 8 as a result of the negotiations which had taken place between the parties prior to RMC commencing adjudication. If Application 8 had been withdrawn this would have meant that there was no dispute at the time when RMC issued its Notice of Adjudication and the Adjudicator would not have had jurisdiction to deal with the matter.

During the adjudication UKC showed some of the email negotiations between the parties to the Adjudicator. RMC argued during the adjudication that UKC should not have done this because the emails were all without prejudice, as they had been sent in an attempt to resolve the dispute between the parties.

UKC argued that whilst RMC might have sent their emails with a view to negotiating a settlement, UKC was not seeking to settle the application, and was instead trying to obtain sufficient information to calculate the true value of RMC’s account.

In particular, UKC relied heavily on an email from RMC which stated:

“I have reviewed your assessment and where I agree I have amended our latest Application…accordingly.”

UKC said that this was an admission that the sums referred to as amended were correct, with the result that RMC could no longer rely on the sum stated in Application 8, as the sum that was due.

The TCC rejected this argument and said that the exchanges between the parties were classic examples of the type of discussions that are protected by the without prejudice rule. The discussions were an attempt to resolve the dispute and the emails should not have been put before the Adjudicator.

RMC did not refer to the emails in their Notice of Adjudication or in the Referral Notice so they had not waived the without prejudice privilege that these documents attracted.
Comment

This case demonstrates the courts’ desire that all parties be able to speak freely with a view to resolving disputes so that formal adjudication or court proceedings can be avoided. Without prejudice correspondence such as email negotiations should not be shown to an adjudicator.

In order to ensure that an email regarding a disputed valuation attracts without prejudice privilege, parties should make sure that it is clearly marked ‘without prejudice,’ such that there can be no scope for dispute as to the parties’ intentions when the email was sent.

This article was written and published on the internet by Walker Morris in April 2016.

This article is intended to provide general information about legal topics. Nothing in this article or in the documents available through it, is intended to provide legal advice. You should not rely on any information contained in this article, or in the documents available through it, as if it were legal advice.

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