Is The Advice You Receive From Your Claims Consultant Protected By Privilege?

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...