Case No: HC-2014-001191
Neutral Citation Number: [2016] EWHC 2526 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL

Date: 14/10/2016

Before:

MASTER CLARK

- - - - - - - - - - - - - - - - - - - - -

Between:

	EMW LAW LLP
	Claimant	
	- and -
		
	SCOTT HALBORG	Defendant	

- - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - -

Vikram Sachdeva QC (instructed by EMW Law LLP) for the Claimant
Robert Marven (instructed by Deals & Disputes Solicitors LLP) for the Defendant

Hearing dates: 13 April, 18 August 2016

- - - - - - - - - - - - - - - - - - - - -

Judgment
Master Clark:
The applications
1.	This is my judgment in two applications:
(1)	the claimant’s application dated 29 October 2015 for specific disclosure (“the disclosure application”);
(2)	the defendant’s application dated 18 November 2015 for an order that there be a trial of a preliminary issue.

Claim and parties
2.	The claimant is a firm of solicitors.  The defendant is a solicitor who at all material times traded as a sole trader under the trading name “Halborg & Co”.

3.	On 19 December 2008, the defendant entered into a CFA (“the underlying CFA”) with Albert and Eileen Halborg (who were in fact his parents) and Halborg Ltd (then wholly owned by the defendant) (collectively referred to as “the Halborg claimants”) in respect of their claim against a firm of architects, Savage Hayward (“the architects”), for negligent advice in relation to a development scheme at Mr and Mrs Halborg’s residential property (“the substantive claim”).

4.	The defendant contacted the claimant to carry out work on his behalf in the substantive claim.

5.	On 25 March 2009, the defendant entered into the agreement with the claimant that is the basis of this claim, (“the agency CFA”) under which the claimant was to carry out work as the defendant’s agent, also on a conditional fee basis, under which the claimant was entitled to be paid its basic charges, disbursements and a success fee, provided these had first been recovered in full from the defendants in the substantive claim.  The claimant’s agreed hourly rate was £300 and the success fee was 95%.

6.	The claimant pleads that it started work on 7 April 2009 and continued until 6 August 2010, and that the total hours spent were 179.8.

7.	The substantive claim was brought in the Queen’s Bench Division on 15 September 2009 (under claim no HQ 09 X04098).

8.	On 6 August 2010 the Halborg claimants accepted a Part 36 offer of £350,000, which amounted to a “win” under the underlying CFA.  The defendant prepared a bill of costs totalling some £1,357,714 plus interest. The bill included a claim for the claimant’s costs totalling £123,590 plus interest described as “agency charges”. The bill also included charges claimed by the defendant for liaising with the claimant, amounting to £18,815.

9.	The solicitors for the architects, Berrymans Lace Mawer (“Berrymans”), served points of dispute on 16 September 2011, in which they stated that the claimant’s work was in its entirety duplicative of the defendant’s work, was of no value and that they were offering nothing in respect of it.

10.	There was then correspondence between the claimant and the defendant as to who would manage costs recovery, in which there were disputes as to a number of matters.

11.	On 21 November 2011, the claimant wrote directly to Berrymans expressly withdrawing the defendant’s authority to negotiate costs on its behalf and offering to accept £65,000 plus VAT for its costs.  The defendant’s position is that this was a repudiatory breach of contract disentitling the claimant to any payment for its costs from the defendant.

12.	The claimant’s case is that in about November 2011, the defendant settled the claim for costs in the substantive claim, and that it has not provided the claimant with details of that settlement, nor has it paid the claimant.  The defendant denies that the claim for costs was settled on that date, but his Defence is unclear as to whether the costs claim has been settled (but on a different date) or whether it has not settled at all.  However, in his witness statement dated 18 November 2015 in opposition to the claimant’s application, the defendant states unequivocally that there has been no settlement of the costs claim.

13.	The claim is for breach of contract, in particular, for breach of various implied terms set out at para 14 of the Amended Particulars of Claim:

“a.	The Defendant would use all reasonable efforts to negotiate recovery of the Claimant’s costs from the Defendants to the Substantive Claim.
b.	The Defendant would not prevent the Claimant from the recovery of its costs from the Defendants to the Substantive Claim.
c.	The Defendant was obliged not to prefer his own costs recovery over that of the Claimant.
d.	The Defendant was obliged to ascribe to the Claimant a fair proportion of any global costs settlement.
e.	The Defendant was obliged to pursue a costs settlement on behalf of the Claimant if all costs apart from those attributable to the Claimant’s work had been settled.
f.	The Defendant was obliged to keep the Claimant informed of all relevant developments in the recovery of the Claimant’s costs.
g.	The Defendant was obliged to disclose to the Claimant any documents relevant to the recovery of the Claimant’s costs.
h.	The Defendant was obliged to seek instructions from the Claimants to the Substantive Claim in relation to any issues arising in the recovery of the Claimant’s costs.”

14.	The relevant background includes that on 22 October 2013, the claimant commenced Part 8 proceedings in the Senior Courts Costs Office (“the SCCO proceedings”).  The Re-amended Particulars of Claim in those proceedings alleged the following express or implied terms in the agency CFA, so far as relevant here:
(1)	The claimant would be paid a reasonable sum by the defendant for its work, to be assessed if not agreed;
(2)	If no costs at all were recovered from the defendants in the substantive claim, then that obligation would be extinguished;
(3)	If some costs were recovered from the defendants in the substantive claim, then the defendant would pay the claimant a reasonable proportion of its costs;
(4)	The defendant was under an obligation to use best endeavours, alternatively reasonable endeavours, to recover the claimant’s costs in the substantive claim.

15.	On 6 February 2014, the defendant applied for summary judgment and/or to strike out the claim in the SCCO proceedings. That application was dismissed by an order dated 24 October 2014 of Master Campbell, who held that the claimant had a real prospect of success in establishing the implied terms alleged in those proceedings.  Master Campbell also refused permission to appeal, commenting that

“all the contentions put forward on behalf of Mr Halborg failed and all by a wide margin, none coming anywhere near satisfying me that the criteria for summary judgment had been met.”

16.	The defendant’s application for permission to appeal on the issue of the implication of the terms was refused on paper by Nugee J, but granted after an oral hearing.

17.	The appeal itself was dismissed by HHJ Charles Purle QC.  The defendant sought permission (on points not directly relevant here) for a second appeal from the CA, and this was refused by Vos LJ who commented:

“As the Judge said, the claimant undoubtedly has an arguable claim for fees”
	
and continued

“There is no other compelling reason why the appeal should be heard. Indeed, quite the reverse.  The claim needs to be resolved at a full hearing before further appeals are mounted.”

Permission was granted on one point not relevant to this application (whether the claimant is a “litigant in person” for the purpose of quantifying the costs awarded to it on the defendant’s unsuccessful strike out application) by Briggs LJ on 7 April 2016.

Disclosure application
18.	This application is made under CPR 31.12, which provides:

“(1)	The court may make an order for specific disclosure or specific inspection.
(2)	An order for specific disclosure is an order that a party must do one or more of the following things –
(a)	disclose documents or classes of documents specified in the order;
(b)	carry out a search to the extent stated in the order;
(c)	disclose any documents located as a result of that search.”

19.	Useful guidance as to the exercise of this power is to be found in the 2016 White Book at para 31.12.2 2016 (p893):

“The court will take into account all the circumstances of the case and in particular the overriding objective in Pt 1 (see Practice Direction supplementing Pt 31, para.5.4 (para.31APD.5) and the concept of proportionality).

The rationale for the discretion to order specific disclosure is that the overriding objective obliges the parties to give access to those documents which will assist the other’s case: Commissioners of Inland Revenue v Exeter City AFC Ltd [2004] B.C.C. 519. The court has a discretion as to whether it makes the order. It may make an order at any time, regardless of whether standard disclosure has already occurred; and it may make orders for specific disclosure against a claimant before the service of the defence where it would assist the defendant to plead a full defence rather than an initial bare denial: Dayman v Canyon Holdings Ltd January 11 2006 unrep. ChD, H.H. Judge Mackie Q.C.

The court will need to satisfy itself as to the relevance of the documents sought, and that they are or have been in the party’s control, or at least that there is a prima facie case that these requirements will be met. The relevance of documents is analysed by reference to the pleadings, and the factual issues in dispute on the pleadings: Harrods Ltd v Times Newspaper Ltd [2006] EWCA Civ 294; [2006] All E.R. (D) 302 (Feb) at [12]. Where a claim is likely to turn on particular documents there is a stronger case for an order to be made: Chantrey Vellacott v Convergence Group plc [2007] EWHC 1774 February 6, 2006, ChD Rimer J. (Lawtel LTL Doc. No.AC9100857 (in that case particular emails and draft documents)).”

20.	The main issues in the application are:
(1)	the relevance of the documents sought;
(2)	whether those documents which are subject to without prejudice privilege are disclosable.

Relevance – identifying the issues
21.	The question of the relevance of the documents is closely linked to whether there should be a trial of a preliminary issue as to the existence of the implied terms.

22.	The defendant’s position is that the documents sought are irrelevant to the construction of the agency CFA, or the implication of any terms into it.  He accepts that the documents are “potentially” relevant to any breach of the implied terms alleged by the claimant.  As to that, he says that the implied terms are “vigorously disputed and have never been upheld by the court”.  This reflects, in my judgment, a misunderstanding of the basis on which disclosure is ordered, namely by reference to the issues in the claim at the stage when none of those issues have yet been decided.

23.	The defendant states he is confident that he will succeed on the issue of whether the terms are to be implied into the agency CFA. However, he has not applied for summary judgment or to strike out the allegations as to the implied terms; and in my judgment such an application would be bound to fail for the same reasons as his similar application in the SCCO proceedings did. 

24.	For the reasons given later in this judgment, I have decided not to order a trial of a preliminary issue.  I therefore approach the disclosure application on the basis that disclosable documents are those relating to all the issues in the claim.

25.	Turning to the application itself, disclosure of the following categories of documents is sought:

(1)	The signed Bill of Costs submitted by the defendant in the substantive claim
(2)	Correspondence, attendance notes or meeting notes, relating to communications between the defendant and Berrymans from 22 July 2011 to date, relating to any discussion, negotiation or settlement of the defendant’s costs in the substantive claim
(3)	Correspondence, orders and other communications between the defendant and the SCCO in the detailed assessment proceedings in the substantive claim
(4)	Documents evidencing payments made by Berrymans to the defendant
(5)	Correspondence and other documents that substantiate the work done by the claimant for the defendant
(6)	Correspondence between the defendant and his costs draftsman in the substantive claim.

(1) Signed Bill of Costs
26.	It is not disputed by the defendant that this is a relevant document. The defendant’s position is that the signed copy was sent to Berrymans and is no longer in his control.  Nonetheless it is a disclosable document and should have been disclosed by the defendant in the category of documents which have been but are no longer in his control, together with a statement as to what has happened to it. This has now been done in his witness statement dated 18 November 2015.

(2) Correspondence between the defendant and Berrymans
27.	The defendant resists disclosure of these documents on two grounds:
(1)	that they are irrelevant;
(2)	that they are privileged.

Relevance
28.	The defendants’ counsel initially accepted that correspondence from July 2011 to November 2011 is relevant; but then sought to withdraw that concession and maintain that only documents that show that a settlement was reached are relevant.  I do not accept that submission – the allegations of breach of the implied terms (set out below) are plainly referable to the defendant’s conduct leading up to the settlement, and for that reason documents evidencing that conduct are relevant.

29.	The defendant’s counsel also argued that since the claimant has asserted that there was a settlement of the costs of the substantive claim at the end of November 2011, no correspondence after that can be relevant.  As noted above, the defendant’s position is that no settlement has ever taken place. The defendant’ counsel submitted that all the allegations of breaches of the implied term are premised on the factual basis that a settlement occurred in November 2011, and do not therefore complain about the defendant’s conduct after that date.  The relevant paragraphs of the Amended Particulars of Claim are:

“21.	On or around the end of November 2011 the Defendant settled the costs of the Substantive Claim (“the Settlement”).

22.	Since that date the Defendant has refused to provide details of the Settlement.  The Defendant has also refused the claimant authority to negotiate its costs claim with the Defendant to the Substantive Claim.  As a result, the solicitors to the Defendants to the Substantive Claim have refused to deal with the claimant.

23.	In breach of the implied terms pleaded at paragraph 14 above the Defendant has:
a.	Failed to use all reasonable efforts to negotiate recovery of the Claimant’s costs from the Defendants to the Substantive Claim.
b.	Prevented the Claimant from recovering its costs from the Defendants to the Substantive Claim
c.	Preferred his own costs recovery over that of the Claimant.
d.	Failed to ascribe to the Claimant a fair proportion of any global costs settlement
e.	(If, contrary to the above, all costs apart from those attributable to the Claimant’s work had been settled) failed to pursue a costs settlement on behalf of the Claimant, having apparently accepted at face value the ascription of the Claimant’s work as being worth nothing.
f.	Failed to keep the Claimant informed of all relevant developments in the recovery of the Claimant’s costs.
g.	Failed to disclose to the Claimant all documents relevant to the recovery of the Claimant’s costs (including, in particular, negotiations over costs, and details of the settlement agreement over costs).”

30.	In my judgment, the allegations in paras 23a, b and c are not premised on the existence of the settlement alleged by the claimant. They are allegations that can still be made even if no settlement agreement had been entered into; and in such a case would be equally referable to the period after November 2011 as before.  

31.	Para 23d refers to “any” global costs settlement and is thus expressly not confined to the November 2011 settlement alleged by the claimant; and is an allegation that extends in time beyond November 2011.

32.	Para 23e is an express counterfactual, which is sufficient of itself to render post November 2011 correspondence relevant.  Paras f and g are also referable to the post November 2011 period.

33.	Finally, since whether a settlement agreement was ever entered into is an issue in the claim, in my judgment this also renders all correspondence with Berrymans relevant.

Privilege
Persons entitled to the privilege
34.	Insofar as the correspondence of which disclosure is sought is subject to without prejudice privilege, the defendant relies on that privilege as a ground for not disclosing those documents.  The privilege is not of course that of the defendant himself, but of the principals for whom he and Berrymans were acting, namely the Halborg claimants and the architects.  The privilege is a joint privilege, and as the defendant points out, cannot be unilaterally but only jointly waived by those entitled to it.

35.	Following the first hearing of the application (on 13 April 2016), the claimant sent copies of his application notice, the evidence in the application and the notice of hearing for the adjourned hearing on 18 August 2016 to the parties in the substantive claim.  These were sent to the defendants to the substantive claim (and copied to Berrymans) on 27 April 2016.  No response was received.  The claimant’s evidence is that the same documents were sent to each of the Halborg claimants on 25 May 2016.   No response was received until 16 August 2016, when each of the Halborg claimants served on the claimant two (substantially identical) statutory declarations by Albert and Eileen Halborg and a letter dated 10 August 2016 from Halborg Limited.  No explanation has been given for the lateness of these.

36.	In these documents each of the Halborg claimants asserted that the application notice had not been served on him/her/it, and that for that reason they did not have full details of the nature of and reasons for the application.  I cannot accept that this is so.  The documents served included a draft order and the evidence in support of the application and in my judgment this was sufficient to give the Halborg claimants notice of the nature of and reasons for the disclosure application.

37.	In addition, each of the Halborg claimants stated that they did not intend to appear at the hearing.  In the case of Halborg Limited, the reason given was that it had not been properly informed as to what was to occur at the hearing.  For the reasons above, I do not consider that to be a valid reason.  In the case of Mr and Mrs Halborg, they referred to a conflicting appointment, namely a celebration of their daughter’s birthday.  They are of course not obliged to attend the hearing; but have been provided with an opportunity to do so, and to make submissions to me in support of their position that the disclosure application should be refused.  They have had nearly 3 months’ notice of the hearing, and I do not consider a social event of this type to be a valid reason for not attending (or being represented at) the hearing.  I therefore proceeded with the adjourned hearing of the disclosure application, having read and taken into account the evidence filed by the Halborg claimants.

38.	Each of the Halborg claimants seeks to assert the privilege in and confidentiality of the documents sought by claimant, expressly states that it is not released or waived by them and objects to their disclosure to the claimant.  The only substantive reason given is that to do so could potentially release them into the public domain (as to which see para 57 below). 

Legal principles
39.	The starting point in the modern law is the decision of the House of Lords in Rush & Tompkins Ltd v Greater London Council [1989] AC 1280, in which Lord Griffiths summarised the general rule as follows: 

“The without prejudice rule is a rule governing the admissibility of evidence and is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish. It is nowhere more clearly expressed than in the judgment of Oliver LJ in Cutts v Head [ 1984] Ch.290: 

“that the rule rests, at least in part, upon public policy is clear from many authorities, and a convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J in Scott Paper Co v Drayton Paperworks Ltd (1927) 44 RPC 151 ,156 be encouraged fully and frankly to put their cards on the table … the public policy justification in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial and submissions on the question of liability.”

The rule applies to exclude all negotiations genuinely aimed at settlement whether all or in writing from being given in evidence.”

40.	Lord Griffiths continued (at p1300) by considering the scope of the privilege:

“Nearly all the cases in which the scope of the "without prejudice" rule has been considered concern the admissibility of evidence at trial after negotiations have failed. In such circumstances no question of discovery arises because the parties are well aware of what passed between them in the negotiations. These cases show that the rule is not absolute and resort may be had to the "without prejudice" material for a variety of reasons when the justice of the case requires it. It is unnecessary to make any deep examination of these authorities to resolve the present appeal but they all illustrate the underlying purpose of the rule which is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement.”

41.	In Unilever PLC v Proctor and Gamble [2000] 1 WLR 2346, Robert Walker LJ summarised the exceptions to the rule. These included the exception identified in Muller v Linsley & Mortimer [1996] 1 PNLR 74, discussed below.  As to this, Robert Walker LJ said:

“In Muller's case (which was a decision on discovery, not admissibility) one of the issues between the claimant and the defendants, his former solicitors, was whether the claimant had acted reasonably to mitigate his loss in his conduct and conclusion of negotiations for the compromise of proceedings brought by him against a software company and its other shareholders. Hoffmann L.J. treated that issue as one unconnected with the truth or falsity of anything stated in the negotiations, and as therefore falling outside the principle of public policy protecting without prejudice communications. The other members of the court agreed but would also have based their decision on waiver.”

42.	The claimant’s counsel put forward a number of arguments in support of his submission that without prejudice privilege did not prevent disclosure of the correspondence.

43.	Firstly, he submitted that, in law, as far as Berrymans are concerned, the claimant’s work is treated as the work of the defendant – effectively the claimant is treated as an agent of the disclosed principal, the defendant.  Since the claimant worked for the same clients as the defendant, he submitted that in law the claimant and defendant are treated as one person, with the solicitor agent having no separate legal personality.  For the purpose of without prejudice privilege in communications with Berrymans, there can be no privilege asserted by the defendant against the claimant.

44.	In my judgment this argument overlooks the fact that the privilege is that of the Halborg claimants (and Berrymans), not that of the defendant.  The defendant is not asserting the privilege on his own behalf, but arguing that the privilege to which the Halborg claimants are entitled precludes disclosure of the documents in question.

45.	Secondly, the claimant’s counsel argued that the claimant is entitled to the documents by reason of an implied term in the agency CFA that he was to be kept informed of negotiations with Berrymans and entitled to see any correspondence passing between Berrymans in real time.  The difficulty with this argument that it is based not on the defendant’s disclosure obligations, but on a substantive entitlement that has not been established by the claimant, and which I cannot determine in this application.

46.	The claimant’s third argument is that, by analogy with common interest privilege, the claimant and the defendant are entitled to see the without prejudice correspondence with Berrymans, without the clients losing the ability to assert privilege against the rest of the world.  He referred me to para 6-001 of Passmore, The Law of Privilege, which sets out that where two or more parties establish a joint or common interest in the subject matter of a privileged communication which is made contemporaneously with the existence of that interest, then privileged communications can be shared between the parties to the shared interest without losing the ability to assert privilege in those documents against any third party.

47.	I agree that in the negotiations as to assessment of costs, the Halborg claimants, the defendant and the claimant all shared a common interest, and that this entitles the defendant to see otherwise privileged documents.

48.	Finally, the claimant’s counsel submitted that where, as here, there is a dispute as to whether without prejudice communications have resulted in a settlement, without prejudice material is admissible as to that issue, referring me to Civil Procedure 2016 p878 at para 31.3.40; Unilever Plc v Proctor & Gamble Co at p2444D.  I agree that there is an issue in the proceedings as to whether and if so, when a settlement was reached with Berrymans and that the correspondence of which disclosure is sought is relevant to that issue.  In my judgment, therefore, it falls within an established exception to the without prejudice rule and is disclosable.

49.	However, in my judgment the principle in the Muller decision also applies to render other relevant without prejudice material disclosable in this claim.  In Muller the claim was for negligence by the defendant solicitors.  The claimants sought to mitigate their loss by suing a third party; and ultimately after negotiations, reached a settlement agreement with them.  The relevant issue was whether the settlement was a reasonable attempt by the claimants to mitigate their loss.  The defendants denied that it was and sought disclosure of documents relating to it.

50.	Hoffmann LJ discussed the two justifications for the without prejudice rule, namely an implied agreement by the parties to the negotiations, and the public policy justification explained in the authorities referred to above.  He observed that where a party who was not a party to the negotiations seeks disclosure, the implied agreement justification cannot apply, and the only justification for the rule is the public policy one.  It was this justification that was in play in Rush & Tompkins.  However, he distinguished that case on the grounds that the material sought was sought as evidence of admissions against interest.  Since in Muller the documents sought were relevant not as admissions, but as to the reasonableness of the settlement agreement, there was no public policy reason to refuse to admit them.

51.	In Ofulue v Bossert (at para 94), Lord Neuberger was critical of Hoffmann LJ’s statement in Muller that:

“the public policy aspect of the rule is not … concerned with the admissibility of statements that are relevant otherwise than as admissions i.e. independently of the truth of the facts to be admitted.”

52.	He regarded this distinction as “too subtle to apply in practice” and agreed with Robert Walker LJ in the Unilever case that:

“to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications … would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties …”

53.	However, Lord Neuberger’s criticism was confined to the scope of without prejudice privilege, and does not in my view undermine the public policy analysis of the justification of the privilege; nor does it undermine the reasoning in Muller that where disclosure is sought as relevant to issues wholly distinct from those in the negotiations, there is no public policy justification for not granting it.

54.	It is to be noted that Lord Neuberger in Ofulue did not disapprove Muller itself.  In Avonwick Holdings Ltd v Webinvest Ltd [2014] EWCA Civ 1436, LJ Lewison commented on Muller at para 22:

“That was a case in which the plaintiff asserted that a settlement that he had made was a reasonable settlement and the defendant asserted that it was not.  The reasonableness of the settlement was therefore directly in issue and it was the plaintiff who put it in issue. It is hardly surprising that in those circumstances the court ordered disclosure of the negotiations leading to the settlement.”

55.	It is also to be noted however that in Muller, not only the claimant, but also the third party to the negotiations (who was not a party to the claim) were entitled to the privilege.  It is difficult to see how any waiver by that third party could have taken place (and indeed how the two Judges other than Hoffmann LJ based their decision on waiver).

56.	In this case, neither party to the claim is entitled to the relevant privilege.  No question of waiver arises; and as noted, the Halborg claimants object to disclosure.  However, the issues in respect of which disclosure is sought are whether the defendant was in breach of the implied terms alleged by the claimant.  The documents are not sought to be used in any way to prejudice the parties to the negotiations, who are not parties to this claim.

57.	There is in my judgment only one way in which the Halborg claimants (and the architects) could be prejudiced by the disclosure of this material. This could occur if (as the defendant asserts) there has been no settlement of the costs of the substantive claim; and the privileged material was put into the public domain by being referred to in open court.  It would then be available for use in any assessment of costs of the substantive claim.  However, this could be prevented by the court making directions under CPR 31.22 preventing further use of documents referred to in open court; or, if necessary, directing that the public are excluded from the relevant part of the hearing.  So far as use by the claimant himself is concerned, he would be subject to the implied undertaking provided for by CPR 31.22(1).

58.	For this reason, I do not consider that there is any public policy justification for withholding disclosure of these documents from the claimant provided safeguards are put in place to prevent their release into the public domain.

(3) Correspondence, orders and other communications between the defendant and the SCCO in the detailed assessment proceedings in the substantive claim
59.	The defendant’s evidence is that there has been no communication with the SCCO in respect of the detailed assessment of the costs of the substantive claim; and therefore no documents in this category sought by the claimant.  Whilst this may be the subject of cross examination by the claimant at trial, for the purposes of this application it must be accepted; and this category is not pursued by the claimant.

(4) Documents evidencing payments made by Berrymans to the defendant
60.	As noted, the defendant’s evidence is that there has been no settlement of any costs of the substantive claim.  He does not address the issue of whether any payments on account have been made by Berrymans to him, and as the claimant points out, has not denied that payments have made.  If any such payments have been made, then they are relevant to the issue of breach of the agency CFA, and the loss occasioned to the claimant by the breach. I also cannot see any basis for the defendant’s counsel’s submission that such documents would be privileged.  Such documents, if they exist, are disclosable.

(5) Correspondence and other documents that substantiate the work done by the claimant for the defendant
61.	The claimant’s counsel submitted that correspondence substantiating the work done by the defendant as certified in the Bill of Costs is relevant to (1) whether it can truly be said that the claimant’s work was worth nothing, and (2) whether the value in the claimant’s work came from the claimant, or whether it came from the defendant.  The claimant’s position in the claim is that the defendant was inexperienced in this type of litigation, and needed the expertise which the claimant provided.

62.	Although the defendant’s counsel sought to argue that this material is irrelevant, the Defence makes no admission as to the extent of the work carried out the by claimant; and in my judgment the material is relevant to that issue.  To the extent that the material is subject to litigation/legal advice privilege, such privilege has plainly been waived by the Halborg claimants by reason of their agreement to or knowledge of the claimant carrying out the work on their behalf.

(6) Correspondence between the defendant and his costs draftsman in the substantive claim.
63.	Such correspondence would also be relevant to the issue of the extent and value of the work carried out by the claimant, and I agree with the claimant’s counsel’s submission that the costs draftsman’s perspective on the views of the defendant and Berrymans as to the value of the claimant’s work would be useful to the trial judge.

64.	The defendant’s evidence is that there are no “documents (except the ones the claimant already has) with the costs draftsman” about the detailed assessment proceedings or Berrymans’ stance because the detailed assessment did not proceed.  However, the documents sought are not confined to those in relation to a detailed assessment, but are in the broader category of documents “in relation to the claimant’s costs in the substantive claim or in relation to the stance taken by the paying party in the substantive claim.”  The defendant’s evidence does not show that he has no such documents.

Conclusion on the disclosure application
65.	For these reasons therefore I will order disclosure of the documents in all categories except (1) and (3) above; and will hear counsel on the precise wording of the order, if it cannot be agreed.

Preliminary issue application
66.	By this application, the defendant seeks an order for a trial of the following preliminary issue:

“Which, if any, of the implied terms alleged at paragraphs 14 of the Amended Particulars of Claim redated 18 May 2015 are implied terms of [the agency CFA]”

Whether to order a preliminary issue – the test
67.	The Court of Appeal has warned on a number of occasions of the risks of delay and increased costs resulting from trial of preliminary issues, particularly in complex cases – 2016 White Book, Vol 1, para 1.4.5, p13.

68.	There are several useful summaries of the factors which the Court should take into account in deciding whether to order a preliminary issue.  These are found in:
(1)	Section 8 of the Technology and Construction Court Guide – 2016 White Book, Vol 2, paras 2C-43, pp532-534;
(2)	Steele v Steele [2001] CP Rep 106 – a decision of Neuberger J, in which he identified 10 factors which could be relevant;
(3)	McLoughlin v Jones [2002] QB 1312, in which David Steel J set out the following principles:
(i)	Only issues which are decisive or potentially decisive should be identified;
(ii)	The questions should usually be questions of law;
(iii)	They should be decided on the basis of a schedule of agreed or assumed facts;
(iv)	They should be triable without significant delay making full allowance for the implications of a possible appeal;
(v)	Any order should be made by the court following a case management conference.

69.	The claimant’s counsel also referred me to Lexi Holdings Plc v Pannone & Partners [2009] EWHC 3507 (Ch) in which Briggs J refused to order the trial of a preliminary issue of an illegality defence, where the issue, if determined in the defendant’s favour, was dispositive of the claim.  At para 4 he said:

“Taking the pros first, Mr Lawrence for Pannone, who seeks such an order, refers first to the fact that, in a sense, an ex turpi causa defence is an in limine challenge to the case being advanced based upon the proposition that, if the claim is arising out of a fraud committed by the claimant, the court should have nothing whatsoever to do with it. That is a fair analysis, but it carries no great weight on the question whether or not to order it to be dealt with by way of preliminary issue.  In my judgment, questions of case management, questions of cost, delay and the use of the parties and the court’s resources must come first and foremost in the consideration whether any particular issue should be dealt with as a preliminary issue.”

70.	The defendant’s counsel made the following submissions in support of ordering the preliminary issue.

71.	Firstly, he argued that the determination is potentially dispositive of the claim if determined in the defendant’s favour.  I respectfully agree with Briggs J that this is not a factor of great weight.  Moreover, in this case, a number of implied terms are alleged.  Although the implied terms in this claim are not identical to those alleged in the SCCO proceedings, as set out above, a number of judges have held or commented that at least one of the implied terms in that claim was “more than arguable” (Master Campbell), “strongly arguable” (HHJ Purle QC sitting as a High Court Judge) and “arguable” (Vos LJ).

72.	There is a significant risk therefore that the trial of the issue would not in fact dispose of the claim, and that is a factor against ordering it.  

73.	Secondly, the defendant’s counsel submitted that the trial would result a substantial saving of time and money.  This would however only be the case if the defendant succeeded on all the implied terms. The more likely outcome is that the defendant would have partial success at most, and both parties would be put to the additional time and expense of a further trial.

74.	Thirdly, the defendant’s counsel argued that the question of the implication of terms is a question of law and that very little effort would be involved in identifying the relevant facts.  The claimant’s counsel submitted that, on the contrary, the court would be required to investigate the factual context and commercial purpose underlying the agency CFA, and for that purpose oral evidence from both the main protagonists would be required.  The defendant’s counsel accepted that some oral evidence would be needed, though not as extensive as suggested by the claimant.  The fact that the parties would be called as witnesses in both trials is factor against ordering the preliminary issue (see e.g. the Lexi Holdings case at para 12.)

75.	The extent of factual dispute in the claim is not clear at this stage, because the claimant has not pleaded the basis on which the terms alleged to be implied by him are to be implied.  In his submissions, the claimant’s counsel said that the claimant’s case included that the terms were to be implied as a matter of business efficacy.  This would involve the sort of factual investigation outlined by the claimant’s counsel, which renders trial of a preliminary issue inappropriate.

76.	This is a case with a high degree of personal animosity between the parties, which as mentioned above, has already gone to a second appeal in the SCCO proceedings. The parties were unable to agree even case summaries for the case management conference. The prospects of their being able to agree a statement of facts or even what facts are relevant to the trial of the preliminary issue are effectively nil.  This is a factor against ordering a preliminary issue.

77.	Fourthly, the defendant’s counsel submitted that expense would be saved by removing the need for further disclosure.  However, no evidence has been given as to the cost of providing that disclosure and it is unlikely to be significant in relation to the case as a whole.  The expense of the application for further disclosure has already been incurred and is not to be taken into account in this context.

78.	This is also a case, where on the basis of past proceedings, the losing side in the issue is likely to appeal, resulting in further delay.  A further factor is the relatively low value of the claim, namely £123,590.23.  It is a claim which should be resolved as quickly and cost effectively as possible; and two trials are inevitably more expensive than one.  Ordering a preliminary issue in this case is in my judgment likely to cause delay and increase costs.

Conclusion on the preliminary issue
79.	For these reasons, therefore, I refuse to order the trial of the preliminary issue sought by the defendant.