C v C & Anor

An applicant for an inspection appointment will ordinarily pay the neutral third party’s costs in the first instance, subject to final allocation between the parties. Where discrete issues are raised and substantially fail, costs may properly follow the event even though the hearing is interlocutory. Suspicion sufficient to justify disclosure does not by itself displace legal professional privilege. A party seeking to invoke the fraud exception must produce strong evidence. The inquisitorial nature of ancillary relief proceedings does not, without more, require a different approach to privilege. Permission to appeal should be refused where the proposed grounds have no real prospect of success and disclose no other compelling reason for an appeal.

The judgment concerned consequential costs and permission to appeal following an earlier interlocutory judgment in proceedings between a wife, her husband and an anstalt. The earlier hearing concerned inspection of a conveyancing file and claims of legal professional privilege. The wife had raised issues concerning the privilege claim and the possible application of the fraud exception, but had failed on virtually every point.

The court determined who should bear the costs of the inspection appointment and the subsequent costs argument. It also considered the wife’s proposed appeal against the refusal to inspect privileged documents, the acceptance of the privilege claim, and the rejection of the fraud exception.

1. Costs of the inspection appointment. The ordinary starting point was that the applicant for an inspection appointment should pay the neutral third party’s costs in the first instance, applying Totalise plc v The Motley Fool Limited [2001] EWCA Civ 1897. The wife was therefore ordered to pay Messrs X’s costs initially, with permission to have recourse to the frozen monies. Ultimate liability between the wife, husband and anstalt was reserved to the trial judge.
2. Costs between the parties. The hearing concerned discrete issues raised by the wife. She failed on virtually every issue, and the appropriate order was that costs from 10 February 2006 onwards should follow the event. The wife was ordered to pay the husband’s and anstalt’s costs, including the subsequent argument about costs.
3. Privilege and fraud. The wife had established sufficient suspicion to justify disclosure orders, so her application was not a fishing expedition. That suspicion did not justify going behind legal professional privilege. The burden on a party invoking the fraud exception was heavy, and strong evidence was required. The wife had failed to satisfy that burden.
4. Inquisitorial proceedings. The inquisitorial nature of ancillary relief proceedings did not itself justify a different approach to privilege. The judge did not read the observations of Coleridge J in Kimber v Brookman Solicitors [2004] 2 FLR 221 as supporting such a general proposition. If they did, he respectfully disagreed.
5. Permission to appeal. Permission was refused. Ground 3, concerning the legal context for privilege, was scarcely arguable. The remaining grounds concerned the application of established principles to the facts and lacked sufficient arguable merit. There was neither a real prospect of success nor any other compelling reason for the appeal to be heard.

not stated in the judgment.