I’ve had a few adjudications recently where one of the parties has included a letter or document that was marked “without prejudice”. How the other party and I (as the adjudicator) have reacted is always fact dependent, but it can give rise to a number of issues.
Cases on without prejudice material
Over the years, a number of cases have looked at this issue. For example, in:
- Specialist Ceiling Services Northern Ltd v ZVI Construction (UK) Ltd, (unreported), 20 February 2004, the TCC held that adjudicators are generally commercially aware, will know that offers may be made for sound commercial reasons and do not indicate liability. If the adjudicator can put the without prejudice material out of his mind, then he may proceed with the adjudication; if not, then he should resign.
- RWE Npower plc v Alstom Power Ltd, HHJ Havelock-Allan QC held that the adjudicator had not breached the rules of natural justice by reviewing without prejudice material when he considered a challenge to his jurisdiction.
- Volker Stevin Ltd v Holystone Contracts Ltd, Coulson J held that the adjudicator’s knowledge of a without prejudice offer did not affect his decision. There was no bias, not even unconscious bias.
The issue also came up in Ellis Building Contractors Ltd v Goldstein, where Akenhead J held there was no breach of the rules of natural justice and no apparent bias of the adjudicator. On the facts, it was clear that it was improper for the contractor to have put inadmissible evidence (the without prejudice letter) before the adjudicator, but it did not influence the adjudicator, and it did not give rise to a legitimate fear that the adjudicator was biased.
I particularly like how Akenhead J opened his judgment:
“Issues are raised in relation to possible bias and breaches of natural justice. One aspect of this is a complaint based on without prejudice material being put before the adjudicator. This is not wholly uncommon unfortunately and it is a practice that should be discouraged.”
Akenhead J went further in that judgment than others have. He sought to discourage the practice. However, as my recent experiences demonstrate, he wasn’t entirely successful and parties are still putting this material before adjudicators.
What should the adjudicator do?
I guess it all depends on the facts, but it is important for the issue to be raised early on. In fact, I often find that the other party objects pretty quickly to the document, almost as quickly as the papers are sent through, and I am seldom the first to raise it. Occasionally, the other party will ask me disregard the document – to continue and remove it from my mind. I have even resorted to asking a friend (well Jonathan) to inspect the papers and to remove the offending item.
It is a difficult issue and I am mindful of the potential problems, particularly as you never know whether a judge will decide that there is apparent bias (assuming it is alleged in enforcement proceedings). It is also an issue that may not be a show stopper, but it is distracting and does add cost to the whole process. It is often an unnecessary sideshow to the main issues in dispute.
Generally, I think parties should think long and hard before including without prejudice material in their submissions to the adjudicator. They should bear in mind that it rarely helps.