MAC Hotels Ltd v Rider Levett Bucknall UK Ltd

In a limitation dispute involving Limitation Act 1980, a claimant’s reliance on section 14A does not, by itself, waive privilege in investigations or advice concerning when the claimant acquired the relevant knowledge. Waiver requires either express deployment of privileged material or waiver by necessary implication. Express deployment requires a clear reference to the privileged document and reliance on its contents for a particular forensic purpose. A claimant may rely on assertion and disclosed primary documents, although selective disclosure may prevent it proving its case. Where witness statements referred to, and relied on, the contents of expert reports, privilege was waived for that discrete investigation only. The waiver did not extend to other investigations.

MAC brought negligence and breach of contract claims against its project manager and quantity surveyor arising from a substantial cost overrun in converting Whatley Manor into a hotel. MAC later sought to amend the claims after obtaining material concerning an alleged fraud by the main contractor, Midas, and issued a fresh claim form.

The defendants sought disclosure of solicitors’ and consultants’ files generated before 7 December 2006. They argued that MAC could not establish that its section 14A knowledge was acquired later without waiving privilege in those investigations. MAC accepted disclosure of primary documents and material concerning investigations directed solely at Midas, but resisted disclosure of material concerning the defendants’ performance. The issue was whether privilege had been waived expressly or by necessary implication.

1. Application partly granted. The defendants’ disclosure application succeeded only in relation to the High Point Rendel investigation. The remainder was dismissed, subject to MAC’s obligation to disclose investigations targeted solely at Midas where it did not claim privilege.
2. Under section 14A, the relevant issue was when MAC first acquired the requisite knowledge for the new claims, not merely what was discovered during the general investigation of the cost overrun. The burden rested on MAC to establish that the claims were not statute-barred. Requisite knowledge included actual and constructive knowledge of the factual essence of the alleged act or omission and an appreciation that the loss was capable of being attributable to it. Legal knowledge of negligence was irrelevant.
3. There was no general rule that placing a matter in issue automatically waived privilege in relevant evidence. A claimant could rely on assertion and primary documents, although it might fail if its evidence was insufficient or selectively disclosed.
4. Express waiver required two elements: a clear reference to the privileged documentation and reliance on its contents to make a particular point. Mere reference to a transaction, discussions or the effect of advice was insufficient. The approach corresponded with the principle reflected in CPR 31.14.
5. The statements concerning the High Point Rendel investigation referred clearly to the instructions, reports and their conclusions. They relied on those contents to show that the investigation criticised the defendants but found no evidence of Midas’ wrongdoing. Privilege was therefore waived in that investigation, including instructions, the investigation, the reports and related discussions. The waiver was confined to that transaction and did not extend to earlier or later investigations.
6. The references to other investigations and to Mr Miskelly’s work were assertions or references to disclosed primary material. They did not waive privilege in the undisclosed files.

First-instance disclosure decision. The judgment refers to earlier interlocutory judgments concerning amendments and limitation, but no appellate decision is stated.