I handed down my judgment on 28 February 2006: C v C (No 2) [2006] EWHC 336 (Fam). Two matters now arise for determination: first, the question of the costs of the inspection appointment on 21 February 2006 and, second, the question of permission to appeal. I shall deal with them in turn.

Although I was not informed of this until 16 March 2006 the parties had agreed that I should deal with the question of costs on the basis of written submissions to be lodged by the close of business on 17 March 2006. I received written submissions from all the parties, including Messrs X, on 17 March 2006 and further written submissions from the anstalt on 20 March 2006.

There are two issues in relation to costs: (1) Who should pay the costs of Messrs X? (2) Should the wife, as they contend, be ordered to pay the costs of (i) the husband and (ii) the anstalt?

In relation to the costs incurred by Messrs X as neutral third party in the inspection appointment application it is common ground that I should determine now who should pay these costs, at least in the first instance. It is also common ground that usually it is the applicant for an inspection appointment – here the wife – who will be ordered to pay these costs in the first instance: Totalise plc v The Motley Fool Limited [2001] EWCA Civ 1897.

There is, in my judgment, no reason why the ordinary principle should not apply here, so my starting point is that I should make an order that the wife pays Messrs X’s costs of the inspection appointment. The ultimate incidence of those costs as between the parties to the proceedings – the wife, the husband and the anstalt – is a matter best dealt with at the end of the proceedings by the judge who has had the conduct of the final hearing.

The only real dispute between the parties is whether, in the particular circumstances of this case, and where the wife claims not to have adequate funds with which to litigate, the costs should, in the first instance be paid not by the wife but out of the anstalt’s monies frozen by my earlier orders. Initially the wife said they should, whilst the husband said they should not. The anstalt has now indicated in its further submissions lodged on 20 March 2006 that it has no objection to Messrs X’s reasonable costs being paid in the first instance from the frozen monies. In all the circumstances, I think that the appropriate order is that Messrs X’s costs be paid in the first instance by the wife, the wife being permitted to have recourse to the frozen monies for this purpose, the ultimate liability for meeting these costs as between the wife, the husband and the anstalt being reserved to the trial judge. In default of agreement between the parties as to the amount of Messrs X’s costs I will direct that they are to be the subject of a summary assessment which I will conduct as soon as the relevant statement of costs has been lodged.

In relation to the husband’s and the anstalt’s costs of the inspection appointment, the wife submits that these costs, together with her own costs, should be reserved. Much the greater part of Mrs Carew Pole’s submissions on this point is taken up with an attempt to demonstrate that the hearing on 21 February 2006 was necessitated by the failure or refusal of the husband and the anstalt to agree until the morning of the hearing that at least the non-privileged parts of the conveyancing file should be produced. I do not accept this as an accurate reflection of the reality. The primary reason why the hearing took place was because of letters which the wife’s solicitors had written to the anstalt’s solicitors and to Messrs X on 10 February 2006. The letter to the anstalt’s solicitors asserted baldly that:

The simple fact therefore, as matters turned out, is that from 10 February 2006 onwards the purpose of the hearing on 21 February 2006 was, and was seen by all parties as being, to determine the issues in relation to which I gave judgment on 28 February 2006. These were issues all of which were raised by the wife. They were issues on each of which, with one minor exception (see paragraphs [34]-[42] above), the wife failed. In my judgment, this was, albeit an interlocutory hearing, a hearing where discrete issues were raised in circumstances where it is fair, just and appropriate that the question of costs should be dealt with now and where the fair, just and appropriate order is that the costs from 10 February 2006 onwards should follow the event.

Mrs Carew Pole has failed to articulate any convincing reason why these costs should be reserved. On the contrary, as Mr Rajah submits, there is every reason, both as a matter of principle and in the circumstances of this particular case, why I should deal with the question of costs now.

As Mr Rutter points out, I ordered the husband to pay the wife’s costs of his unsuccessful opposition on 18 January 2006 to her application for the order that Messrs X attend the inspection appointment on 21 February 2006. He submits that, so far as concerns the husband’s costs, costs should follow the event, just as they did on 18 January 2006. I agree.

The same goes, in my judgment, for the anstalt’s costs. The position of the anstalt is a fortiori. Faced with the letters from the wife’s solicitors on 10 February 2006 the anstalt had no alternative but either to capitulate to the wife’s demands or to fight. It elected to fight a battle which was, after all, entirely of the wife’s choosing. It won on virtually every point. The wife’s application was dismissed. The anstalt, in my judgment, is entitled to its costs as against the wife.

The question now arises as to who should pay the costs of these arguments about the costs. I have, in substance, found against the wife on virtually every point and it seems to me fair, just and appropriate that she should pay the costs of the exercise.

My order, therefore, is that:

The wife is to pay the husband’s and the anstalt’s costs of the inspection appointment on 21 February 2006 (that is, their costs from 10 February 2006 onwards, including their costs of the subsequent argument about the costs) such costs to be the subject of a detailed assessment if not agreed.

Messrs X’s costs of and occasioned by the inspection appointment on 21 February 2006 (including their costs of the subsequent argument about costs) are to be paid in the first instance by the wife, the wife being permitted to have recourse to the frozen monies for this purpose, the ultimate liability for meeting these costs as between the wife, the husband and the anstalt being reserved to the trial judge. In default of agreement between the parties as to the amount of Messrs X’s costs they are to be the subject of a summary assessment which I will conduct as soon as the relevant statement of costs has been lodged.

I was informed by Mrs Carew Pole on 3 March 2006 that the wife wished to appeal. Having invited her to specify which parts of the judgment she wished to challenge, and the grounds of challenge, I was provided on 15 March 2006 with the grounds of appeal as set out in the Notice of Appeal lodged with the Court of Appeal on 13 March 2006 and provided subsequently with a copy of the Notice of Appeal. Neither party availed themselves of the opportunity I afforded them to make submissions as to whether I should or should not give permission to appeal.

The wife seeks to appeal against my decision:

Ground 1 relates to the matter dealt with in paragraphs [64]-[68] above; ground 2 relates to the matter dealt with in paragraph [14]; ground 3 relates to the matter dealt with in paragraphs [16]-[33]; and grounds 4 and 5 relate to the matters dealt with in paragraphs [44]-[62].

I refuse permission to appeal. I do so for the following reasons and because I am not persuaded either that there is a real prospect of the wife succeeding on any of her grounds of appeal or that there is any other compelling reason why the appeal should be heard:

The only ground of appeal which raises a clear point of law – Ground 3 – I regard as scarcely arguable. As I said (see paragraph [34] above), it is “perfectly obvious” that privilege arises in these circumstances.

In relation to each of the other grounds of appeal my decision involved no more than the application of well-established principles to the facts of the particular case. It is said – see Grounds 1, 2 and 4 – that I “erred”, though it is not clear whether what is being said is that I erred in law or in my approach or whether it is said that I was ‘plainly wrong’. On whichever basis the point is being put, I do not accept that there is sufficient arguable merit to justify the grant of permission to appeal.

In substance my decision on the major issue – see Ground 4 – was that the wife had simply failed to satisfy the heavy burden which lies upon anyone seeking to go behind privilege on the ground of ‘fraud’: see paragraph [62] above. There was sufficient suspicion to justify orders for disclosure – it could not be said that the wife was embarking upon a mere fishing expedition – but that is not, without more ado, sufficient justification for going behind privilege. Strong evidence is required; strong evidence, in my judgment, was lacking.

Great play is made in Grounds 1 and 5 of the inquisitorial nature of ancillary relief proceedings. No authority was cited in support of the assertion (if this is indeed what is being said) that this in some way justifies a different approach to questions of privilege, unless reliance is being placed for this purpose on what Coleridge J said in Kimber v Brookman Solicitors [2004] 2 FLR 221. I do not read Coleridge J’s observations as supporting any such general proposition and if they do I would have, with great respect, to differ from my brother.

Finally, I draw attention to the comments I made in paragraph [63] above as to the prematurity of the application. The wife’s solicitors have now had the opportunity of examining the non-privileged contents of the conveyancing file. Mr Rajah draws attention to their subsequent silence on the subject. As he commented in his skeleton argument dated 17 March 2006, “it is clear from [their] silence on the issue that the non-privileged documents provided no grounds for suspicion of fraudulent design.”

I shall leave it to the parties to draft and lodge with the associate an order to give effect to my various rulings. The order will be dated 24 March 2006.

There is one final matter I must deal with. In their letters of 17 and 20 March 2006 the anstalt’s solicitors express their “grave concern as to the spiralling and excessive costs of this case.” They draw attention to the fact that, as at 23 February 2006, the wife’s costs of this litigation amounted to £183,000, the husband’s to £142,775 and the anstalt’s to £68,500 – a total, I observe, of no less than £394,275. This staggering amount has been spent in the course of proceedings which had been commenced – on 21 November 2005 – scarcely three months earlier and which have, as to the substance of the matter, not yet progressed very far despite the intensity of the interlocutory skirmishing. The anstalt’s solicitors suggest that “the parties need to take a step back and look at how this case is being conducted, which cannot be of any benefit to … the family as a whole”. I make no comment save to indicate that I share the concern that such very large sums should already have been incurred in the costs of litigation which is still in many ways at a fairly early stage.