Barclay & Anor v Barclay & Ors (No 1)

The court has a broad discretion over the incidence, amount and timing of costs. Discrete interim issues may be finally determined before trial where the procedure is fair and postponement would be unjust or inconvenient. The usual rule is that costs follow success and are dealt with as the litigation progresses.

Indemnity costs require conduct or circumstances taking the case outside the norm. Legal professional privilege does not protect covert recordings themselves. The narrow Lyell v Kennedy exception may protect a selection or marking-up of another person’s documents where it reveals the trend of legal advice, but the claim must be established evidentially. Costs caused by an unnecessary review or sifting exercise may be awarded separately from costs of creating transcripts.

The claimants sought relief concerning covert recordings allegedly made by the defendants. Earlier doorstep delivery-up orders required delivery of recordings, transcripts and related material to supervising solicitors.

On the return dates, the defendants raised possible objections to inspection based on legal professional privilege. Most material was subsequently provided, leaving residual objections concerning communications with legal advisers and related documents. The claimants sought further particulars, protective directions, costs of the privilege issues and costs connected with the review of raw audio, including an application for indemnity costs and immediate detailed assessment.

1. The court approved agreed directions concerning particularisation of the residual privilege objections, protection of the claimants’ privileged information, additional items held by Quest, restriction of third-party access to sensitive court documents and extension of time for service of the defence.
2. It was appropriate to determine the costs issues immediately. They were discrete issues on which the parties had had a fair opportunity to present evidence and argument. There is no general rule preventing an interim issue from being finally resolved merely because it may overlap with an issue for trial.
3. The claimants were the successful parties on the privilege issue. The defendants were ordered to pay the costs caused by raising and maintaining the privilege objections, with detailed assessment forthwith. The assessment was ordered on the standard basis. The general rules in CPR 44.2(2)(a) and CPR 47.1 supported that result.
4. The privilege objections were legally ambitious, evidentially flimsy and maintained for many weeks without adequate justification. However, the court declined to order indemnity costs. Although the conduct took the matter outside the norm, it remained appropriate to require proof that the costs were proportionate and reasonable.
5. The covert recordings themselves were not protected by legal professional privilege, consistently with Property Alliance Group v Royal Bank of Scotland plc (No 3). The only potentially relevant basis was the narrow exception in Lyell v Kennedy (No 3). As explained in Sumitomo Corporation v Credit Lyonnais Rouse Ltd, that principle concerns selections or markings-up of another person’s documents which tend to reveal the trend of legal advice. The evidence did not establish any sufficient basis for its application. The rarity of such cases was noted in Imerman v Tchenguiz.
6. The defendants were also ordered to pay costs relating to the supervisors’ review of the raw data, covering items 1, 3 and 4 of the costs claimed, subject to challenge at detailed assessment. The costs of creating transcripts, item 2, were not ordered at that stage because their necessity and value remained unclear.