Entries by Toby Moreton

Conditional Value Reservation Does Not Prevent Rendering Of Interim Statute Bills Where No Uplift Agreed

In Mehta v Howard Kennedy LLP [2026] EWHC 968 (KB), Mr Justice Kimblin, sitting with Costs Judge Nagalingam as assessor, dismissed an appeal against findings that 24 invoices totalling £3,124,674.04 delivered by Howard Kennedy LLP to their client Vishal Mehta constituted interim statute bills subject to the time limits in section 70 of the Solicitors Act 1974. The central question was whether a reservation in paragraph 5(2) of Howard Kennedy’s Terms of Business, permitting a value or importance element to be taken into account in a concluding bill if not reflected in earlier bills, qualified the finality of the invoices so as to bring the case within Ivanishvili v Signature Litigation LLP [2024] EWCA Civ 901. Applying the contractual interpretation principles in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, Kimblin J held that the reservation was conditional in nature and had no application to a retainer containing no success-related, conditional, or contingent fee arrangement. The Terms of Business stated in express terms that each bill was a final bill for the period covered and carried statute bill status. The General Notes, though not contractually binding, were relevant to interpretation and confirmed the value element applied only where specifically discussed or referenced in the engagement letter. The decision clarifies that Ivanishvili does not apply where there is no outcome-dependent fee structure, providing important guidance on when interim invoices constitute statute bills triggering section 70 time limits.

SCCO Lacks Jurisdiction to Order Security for Costs of Detailed Assessment Proceedings

In Magomedov v Rabinovich [2026] EWHC 962 (SCCO), Costs Judge Brown held that the Senior Courts Costs Office lacks jurisdiction to order security for costs in detailed assessment proceedings under CPR 25. The defendants in the underlying commercial litigation, having obtained costs orders totalling approximately £4.2 million following dismissal of claims valued at over US$13 billion, sought security of £336,000 for the costs of the detailed assessment itself, representing 70% of estimated future assessment costs of £480,000. They relied on alleged material changes of circumstances including an indemnity costs order and increased risk of non-payment. Costs Judge Brown rejected the application, holding that CPR 47 constitutes a self-contained code for detailed assessment proceedings with no express importation of CPR 25, and that the only available interim measure is an interim costs certificate under CPR 47.16. Drawing on CT Bowring v Corsi, JSC Karat v Tugushev, and GFN SA v Bancredit Cayman, he reasoned that there was no adequate enforcement sanction for such an order and that permitting such applications would generate disproportionate satellite litigation inconsistent with the Overriding Objective. He further held that even if jurisdiction existed, he would have refused the application in his discretion, noting the absence of material change of circumstances, the availability of security before the trial court, and the fact that the application itself had generated approximately £150,000 in costs, demonstrating the very concerns about disproportionality that militate against recognising such jurisdiction.

Default Costs Certificate Upheld Despite Variation For Irrecoverable VAT

In MT Construction Limited v Frieze & Saunders [2026] EWHC 813 (SCCO), Deputy Costs Judge Erwin-Jones refused an application to set aside a Default Costs Certificate where the paying party claimed a binding oral agreement had extended the deadline for serving Points of Dispute. The defendants contended that during a telephone call on 17 October 2025 their solicitor had agreed with the receiving party’s costs draftsman to extend the deadline to 1 December 2025 in exchange for accepting email service, later recorded in a unilateral email sent on 8 November 2025. The judge found that this email could not constitute a written agreement of both parties as required by CPR 2.11, particularly where the receiving party denied the conversation had occurred in those terms and their subsequent email of 11 November expressly asserted the original deadline. The mandatory ground under CPR 47.12(1) therefore failed. Applying the Denton v White framework to the discretionary ground, the judge found the breach serious and significant, the reasons insufficient, and noted that even if the alleged extension had been valid, Points of Dispute were still not served by that later date. The decision reinforces that alleged oral agreements to extend time limits must be evidenced by written agreement from both parties under CPR 2.11, and that unilateral emails purporting to record earlier conversations cannot satisfy this requirement where promptly disputed.

Indemnity Costs Awarded for Libel Claim Used to Pressure Anonymous Artist

In Full Colour Black Limited v Banksy [2026] EWHC 795 (KB), Nicklin J ordered indemnity costs from 10 October 2023 following FCB’s discontinuance of a libel claim arising from an Instagram post in which Banksy criticised FCB’s unauthorised commercial exploitation of his artworks through a GUESS collaboration, but refused a non-party costs order against FCB’s sole director. Applying CPR 44.3 and the principles in Hosking v Apax Partners LLP [2019] 1 WLR 3347 and Thakkar v Mican [2024] 1 WLR 4196, Nicklin J held that the proceedings had been deployed to exert pressure by exploiting Banksy’s well-known concern to preserve his anonymity, rather than to obtain vindication by adjudication. The reservation in the Particulars of Claim of a right to seek Banksy’s identification, the correspondence pressing for his full name, the tactical pleading decisions in the Reply, and the settlement overtures linking resolution to a broader commercial arrangement collectively took the case outside the norm. The non-party costs application against the director was refused, the court holding that control of litigation by a sole director, without evidence of serious impropriety or bad faith of a qualitatively different order, did not displace the principle of limited liability under Goknur Gida v Aytacli [2021] 4 WLR 101. The decision illustrates the distinction between conduct warranting indemnity costs against a corporate party and the higher threshold required to impose personal liability on a director, and confirms that litigation pursued as an instrument of leverage rather than adjudication may justify indemnity costs even where it falls short of justifying piercing the corporate veil.

Engagement Letter Not A CBA Where Hourly Rate Increases Entirely At Solicitor’s Discretion

In Safra v Wilmer Cutler Pickering Hale and Dorr LLP, the Senior Courts Costs Office addressed whether an engagement letter providing for hourly rates subject to periodic review at the solicitor’s discretion constituted a contentious business agreement under section 59 of the Solicitors Act 1974, and whether invoices marked as including only services and disbursements “posted to date” qualified as interim statutory bills. Costs Judge Leonard held that the engagement letter was not a CBA because its open-ended provisions for unilateral hourly rate increases lacked the requisite certainty, distinguishing cases involving fixed annual percentage increases. The court further found that the solicitor’s monthly invoices were not interim statutory bills as they expressly reserved the right to charge for work undertaken but not yet recorded in the relevant period, thereby lacking finality. Instead, the invoices collectively comprised a single Chamberlain bill delivered when the final set was provided after termination of the retainer. The decision establishes that solicitors cannot rely on CBA protections where fee variation mechanisms are entirely discretionary, and that invoices explicitly incomplete for their stated period cannot trigger section 70 time limits, regardless of contractual billing provisions or the parties’ conduct during the retainer.

Pre-Action Solicitor Costs Recoverable Where Insurer Settles Damages But Refuses Costs

In Alphabet (UK) Limited v AXA Insurance UK plc [2026] EWHC 674 (SCCO), Costs Judge Brown rejected the argument that “necessity” rather than reasonableness was the test for determining whether a vehicle leasing company was entitled to recover costs of instructing solicitors in a pre-action road traffic accident claim. The claimant, owner of a written-off van insured by the defendant through its lessee, instructed solicitors who made a Part 36 offer for £12,408.70 on 28 March 2023. The defendant settled the damages claim the same day but refused to pay costs of £1,006.80 plus VAT, prompting Part 7 proceedings. The defendant argued that instruction of solicitors had been premature and unnecessary given the prompt settlement, and that as a sophisticated commercial entity the claimant should have awaited an offer before incurring costs. The judge held that no authority supported a “necessity” threshold, and that the applicable test was reasonableness. Applying CPR 26.9 and CPR 45.43, the judge determined that the normal track for the claim was the fast track, and that Table 12 of CPR Part 45 was itself indicative that solicitor instruction in claims exceeding £10,000 was prima facie reasonable. Accepting unchallenged witness evidence about the claimant’s business need to instruct solicitors to deal with insurers on equal terms, the judge found instruction reasonable and awarded fixed recoverable costs of £599 under Table 12, the claim having settled before issue of proceedings.

Contractual Terms Permitting Interim Statute Bills Upheld Where Unambiguous

In Hammond v Herrington Carmichael LLP [2026] EWHC 701 (SCCO), Costs Judge Whalan determined whether 29 invoices totalling approximately £174,183.36 delivered during family finance remedy proceedings constituted interim statute bills or a single Chamberlain bill, a distinction critical to the application of time limits under section 70 of the Solicitors Act 1974. The Claimant argued the invoices reflected a continuous running account under a single retainer, rendering all invoices assessable upon delivery of the final invoice in August 2025. The Defendant relied on Richard Slade & Company plc v Erlam [2022] EWHC 325 (QB), Abedi v Penningtons [2000] 2 Costs L.L. 205 and Boodia v Richard Slade & Company [2024] Costs L.L. 753, submitting that the Standard Terms of Engagement unambiguously provided that any interim invoice constituted an interim statute bill. Costs Judge Whalan accepted the Defendant’s construction, finding the contractual provisions unequivocal, particularly the clause stating “any reference in correspondence or on invoices to ‘an interim invoice’ means an ISB.” Applying section 70(4), nine invoices paid more than twelve months before the Part 8 claim was issued on 14 August 2025 fell outside the court’s jurisdiction entirely. The Claimant failed to establish special circumstances under section 70(3) in respect of three further invoices, the court finding nothing calling for explanation notwithstanding judicial criticism of costs levels in the underlying proceedings. Assessment was confined to two invoices conceded by the Defendant. The decision reinforces that clear contractual language designating interim invoices as statute bills will be upheld, strictly limiting clients’ assessment rights under the twelve-month time bar.

Settlement Sum Not Determinative Of Track Allocation Under CPR 46.13

The Senior Courts Costs Office’s decision in Smith v Wigan Borough Council [2026] EWHC 660 (SCCO) concerned whether a claimant’s recoverable costs should be restricted to Small Claims Track levels following settlement of a housing disrepair claim for £1,000 plus repairs. Background The Claimant, Gillian Smith, an elderly and vulnerable tenant, brought a claim against […]

Summary Assessment Reduced by 20% On Broad-Brush Proportionality Grounds Despite Rejecting Specific Challenges

In Garden House Software Ltd v Marsh & Ors [2026] EWHC 568 (Ch), His Honour Judge Cadwallader determined the costs consequential upon dismissing an application by the First, Second, Sixth and Seventh Defendants (“THD”) for reverse summary judgment or strike-out. The parties agreed costs should follow the event under CPR 44.2 and be summarily assessed on the standard basis, but disputed quantum. The Claimant sought £87,698.30, while THD contended the sum was disproportionate, proposing a reduction to £39,460.40 by challenging hourly rates, team composition, counsel’s fees, and time spent on the costs statement. The judge, applying the test of reasonableness and proportionality under CPR 44.3, rejected THD’s characterisation of the application as straightforward, finding it a heavy application in a high-value specialist claim where THD’s late shift in arguments increased necessary preparation. He held London 1 Guideline Hourly Rates were justified, the deployment of both a Partner and a Grade-A Legal Director was reasonable without duplication, and instructing both leading and junior counsel for a combined £50,000 was proportionate. While dismissing THD’s specific challenges, the court applied a broad-brush assessment of overall proportionality and imposed a global reduction of 20 per cent, ordering THD to pay costs summarily assessed at £70,158.64.

Senior Costs Judge Establishes 25% Markup Cap For Medical Reporting Organisation Fees

JXX (a Protected Party by his Litigation Friend ABB) v Archibald & Anr and HLA (a Protected Party by her mother and Litigation Friend HDA) v LXA & Ors concerned the correct approach to assessing Medical Reporting Organisation (MRO) fees on detailed assessment. Senior Costs Judge Rowley held that such fees are properly characterised as disbursements, not outsourced solicitors’ profit costs, meaning the long-applied ‘Stringer cap’ requiring comparison with hypothetical solicitor costs was not the correct test. The court rejected the defendants’ argument that deferred payment or write-off facilities constituted irrecoverable funding costs under Hunt v R.M. Douglas (Roofing) Ltd, finding these were commercial terms inherent to the market rather than credit arrangements. However, the court equally rejected the claimants’ contention that aggregate fees were immune from scrutiny, noting that tripartite market tensions meant competition imperfectly regulated reasonableness between parties. On evidence showing markups of 30% to 53% calculated on a macro-business basis, the judge was not persuaded the full amounts were reasonable between the parties. Applying a cautious approach under the CPR and overriding objective, he concluded that a 25% markup on experts’ fees (including associated disbursements) represented a reasonable and proportionate amount recoverable. The decision provides important guidance on assessing third-party disbursements where conventional time-recording breakdowns are unavailable.