Entries by Toby Moreton

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CPR 44.2(6)(f) | Costs In The Case Where Interwoven Issues And No Clear Winner Precludes Issue-Based Or Percentage Orders

In Vertical Aerospace Group Limited v Thandiwe Ngoma [2026] EWHC 1449 (KB), Tom Little KC, sitting as a Deputy Judge of the High Court, ordered costs in the case following a contested Return Date at which the Defendant’s application to set aside an imaging order on grounds of failure of full and frank disclosure was refused, but the terms of the affidavit were varied appreciably in the Defendant’s favour, and the Claimant’s application for an interrogation order in relation to the Defendant’s electronic devices was refused, though the court declined the Defendant’s preferred approach to disclosure, producing a middle ground outcome. The Claimant contended it had succeeded overall and sought its costs, including the costs of the supervising solicitor and IT expert engaged in connection with the imaging order. The Defendant sought her costs of resisting the refused interrogation order application and argued any remaining costs should be costs in the case or costs reserved. Applying CPR 44.2, the court found no clear overall winner and that approximately 50% of hearing time had produced a positive outcome for each party. The court expressly considered but rejected an issue based costs order under CPR 44.2(6)(f) as the issues were too interwoven to separate without artificiality, and similarly declined a percentage based order or costs reserved. The decision illustrates the court’s approach where multiple interlinking applications produce mixed outcomes with no identifiable overall winner.

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Enforcement Of Costs Orders Not Stayed Merely Because Related Proceedings Remain on Appeal

In Mirza v Lewin, Webster and Yates [2026] EWHC 1423 (Ch), Mr Justice Thompsell refused to stay enforcement of an interim costs order for £1.3 million made against Mr Mirza following dismissal of his Part 20 claim against three directors, but granted a limited stay to permit a late application for permission to appeal on procedural unfairness grounds. Mr Mirza sought a stay under section 49(2) of the Senior Courts Act 1981 and CPR 83.7, arguing that enforcement would cause substantial commercial disadvantage through forced realisation of property assets subject to a Murabaha facility with significant early termination costs, and that a procedural unfairness ground of appeal in related proceedings, on which Newey LJ had granted permission, had potential to undermine the foundation of the costs order. The court rejected the financial hardship arguments, applying Recovery Partners v Rukhadze [2023] WLUK 369, finding no sufficient prospect that Mr Mirza’s position would materially improve within the stay period. However, applying the balance of injustice test from Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065, the court granted a short stay to permit Mr Mirza to apply to the Court of Appeal for late permission to appeal the Part 20 claim on procedural unfairness grounds, with the stay to expire one week from hand down unless such application was lodged, in which case it would continue until the Court of Appeal determined the permission question.

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Court of Appeal Substitutes A 50% Standard-Basis Costs Order Following A 15-Day Trial Marked By Dishonesty On Both Sides

In Donnellan v Ward and Others [2026] EWCA Civ 729, the Court of Appeal allowed an appeal against a costs order made following a 15-day trial in which the Ward parties succeeded on both the Partnership Claim and the Part 20 Claim. The trial judge had made no order for costs, reasoning that Mr Ward’s dishonesty in advancing a false case on the beneficial ownership of Ebonair Investment SA had so substantially inflated costs that it cancelled out any entitlement to costs as the successful party. Lord Justice Lewison (with whom Arnold LJ and Falk LJ agreed) held that this approach was wrong in principle. Applying CPR 44.2 and the principles in Hutchinson v Neale [2012] EWCA Civ 345, Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida [2009] EWHC 1696 (Ch), and Ahuja Investments Ltd v Victory Game Ltd [2021] EWHC 2730 (Ch), the Court held that the judge had failed entirely to account for Mr Donnellan’s own pervasive dishonesty, which infected all three claims, and had given insufficient weight to the principle that costs follow the event. The Court substituted an order requiring Mr Donnellan to pay 50% of the Ward parties’ costs of the Partnership Claim on the standard basis, with no further deduction by the costs judge on the ground of the Ward parties’ dishonesty on the Ebonair issue. Mr Keane and Ms Howard were ordered to pay Ebonair’s costs of the Part 20 Claim on the standard basis.

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Application To Reinstate Two Appeals Struck Out At 4.01 pm Fails In The High Court As Their “Very Weak” Merits Weigh Against Relief At Denton Stage Three

In Szwed v Aviva Insurance Ltd [2026] EWHC 1425 (KB), Mrs Justice Hill dismissed an application to set aside the automatic strike out of two joined appeals challenging costs budget and joint expert decisions made in an ongoing Central London County Court personal injury claim. Recorder Glancy KC had permitted the Respondent insurer to increase its approved costs budget by £27,000, and HHJ Hellman had dismissed the Appellant’s bid to have that budget ‘cut entirely’ for ‘oppressive’ conduct. The appeals were struck out automatically at 4.01 pm on 17 April 2025 when the Appellant, a litigant in person, failed to comply with an unless order of Sir Stephen Stewart requiring a witness statement on their continuing relevance; Ritchie J then refused an extension of time, and the Appellant applied to set that refusal aside. Deciding the matter afresh under the Denton framework, as directed by R (Hysaj) v SSHD [2014] EWCA Civ 1633, Mrs Justice Hill held the breach serious and significant, the reason for default unpersuasive, and the merits very weak, the costs budget rulings being case management decisions attracting a high appellate threshold. Both appeals remained struck out.

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Debarring A Party For Unpaid Costs Rests On Case Management Powers Under CPR 3.1(3)(b), Not The Hadkinson Jurisdiction

In Beech Hill Capital Limited v Lucas Duplan and Others [2026] EWHC 1390 (Comm), Sharif Shivji KC (sitting as a Deputy High Court Judge) considered whether to debar defendants from pursuing applications where three costs orders totalling over £143,000 remained wholly unpaid. The claimant applied under both the Hadkinson jurisdiction and the court’s case management powers. The judge held that the case management jurisdiction, derived from the court’s inherent jurisdiction and CPR rr.3.1(3)(b) and 3.4(2)(c), was the appropriate basis, distinguishing it from Hadkinson on the ground that the latter requires an impediment to the course of justice and may result in complete refusal to hear a party. Applying principles distilled in Michael Wilson and Partners Ltd v Sinclair [2017] EWHC 2424 (Comm) and J Robbins Capital Partners Limited v Zamsort Limited [2024] EWHC 1990 (Comm), the judge found that the defendants offered no explanation for non-payment, raised no impecuniosity or Article 6 argument, and had no assets within the jurisdiction available for enforcement. A debarring order was made on an unless basis, operating against each defendant individually until that defendant discharged the orders made against it, with liberty to apply confined to material changes in circumstances directly relevant to the defendants’ ability to comply. The decision clarifies the distinction between Hadkinson orders and case management orders for non-payment of costs, and confirms that courts will ordinarily impose conditions where wilful disobedience is the reasonable inference.

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Permission Is Not Needed To Pursue Costs Where A Judicial Review Has Been Overtaken By Events

In R (Levy) v Commissioner for His Majesty’s Revenue and Customs [2026] EWHC 1400 (Admin), Fordham J rejected the proposition that permission for judicial review should be granted on academic grounds solely to enable recovery of costs already incurred in the proceedings. The claimant challenged section 28B(4)(a) notices under the Taxes Management Act 1970 arising from film partnership schemes, including grounds relating to removal of loan interest tax relief. After HMRC issued appealable section 28A notices on 16 January 2025, the claimant lodged a First-tier Tribunal appeal and conceded in his skeleton argument that an effective alternative remedy existed. He nonetheless argued that permission was necessary to enable recovery of costs incurred in the judicial review proceedings, suggesting the court should resolve the substantive merits of the loan interest grounds for that purpose alone. Fordham J held that permission for judicial review is not a prerequisite for pursuing a costs order where a claim has been overtaken by events. The applicable mechanism, derived from M v Croydon [2012] EWCA Civ 595 and addressed at paragraph 25.5.3 of the Administrative Court Judicial Review Guide 2025, had not been utilised by the claimant. Permission on all loan interest tax relief grounds was refused, and all costs questions were expressly reserved. 

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All Costs Reserved To Trial Judge After ‘Plainly Necessary’ Mixed-Outcome Hearing

In Latter Rain Outpouring Project Ltd v Green & Ors [2026] EWHC 1381 (Ch), Adam Kramer KC sitting as a High Court judge addressed costs following a mixed outcome on an interim injunction application and enforcement application in a dispute over control of a company owning a £3 million property. The Applicant failed entirely on its injunction application (save for continuation of existing undertakings) but achieved partial success on enforcement, securing orders for provision of bank statements, cheque stubs, and loan disbursement documentation. Costs from the earlier Mann J hearing had been reserved to the return date judge, and no costs order had been made at the February 2026 hearing before Mark Anderson KC. Kramer KC declined to make any immediate costs order, reasoning that the outcome was mixed, the hearing had been plainly necessary given the deadlock in the Company and urgency surrounding the property, and that an immediate order would be premature. All outstanding costs, including those reserved by Mann J, were reserved to the preliminary issue trial judge or any future judge hearing the matter. The decision illustrates the court’s willingness to defer costs decisions in company control disputes where fundamental questions of authority and membership remain unresolved, particularly where the hearing served a necessary case management function despite the applicant’s limited success on the relief sought.

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Highly Unreasonable Conduct Forfeits Any Right to Challenge The Winner’s Costs On Proportionality Grounds

In The New Lottery Company Limited and Northern & Shell Plc v The Gambling Commission [2026] EWHC 1311 (TCC), Mrs Justice Joanna Smith DBE awarded indemnity costs to the defendant and interested parties across the entirety of both claims arising from the fourth National Lottery competition. While the claimants conceded liability for costs, they argued that indemnity costs should be limited to the trial of the Process Claim, with standard costs applying to the Modifications Claim and earlier stages. Applying Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879, Three Rivers DC v Bank of England [2006] EWHC 816 (Comm), and Hislop v Perde Kaur [2018] EWCA Civ 1726, the court held that conduct warranting indemnity costs must be highly unreasonable and out of the norm. The court found that the claimants had advanced inadequate and unparticularised pleadings from the outset, made serious allegations of impropriety that were repeatedly abandoned without explanation, and pursued weak and speculative claims in a fluid and opportunistic manner causing significant prejudice and disruption. The court rejected the submission that proportionality of the winning parties’ costs was relevant to whether indemnity costs should be ordered, holding that a party guilty of highly unreasonable conduct forfeits the right to any assessment based on proportionality arguments. The court declined to reduce costs by reference to individual issues or time periods, emphasising that the unreasonable conduct permeated the entire litigation from inadequate initial pleadings through to trial.

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High Court Cuts Claimants’ Expert-Phase Budgets, Holding Legal Fees Should Not Be ‘anywhere close to twice the amount of the expert fees’

In Various Claimants v Mercedes-Benz Group AG and Others [2026] EWHC 1335 (KB), Mr Justice Constable and Senior Costs Judge Rowley addressed a critical costs management issue at the third Costs Management Hearing in the NOx Emissions Group Litigation: the appropriate ratio of legal fees to expert fees in the Tranche 3 budget. The claimants’ budgets reflected a near-equal split between profit costs, counsel’s fees, and expert fees, producing a combined legal spend approximately twice the expert fees, a structure the court described as a “1:1:1” ratio. The court held, applying CPR Part 3, that legal fees ought not to approach twice the expert fees, and adopted a methodology of doubling the approved expert fees as a starting point for permissible legal costs. For Loss Assessment, the defendants’ offer of £1,267,500 was allowed in full. For Mechanical Engineering, the Mercedes budget was allowed as claimed at £718,681.65, with £400,000 allowed for each of Peugeot-Citroen and Ford, and £600,000 for Nissan/Renault. For Software Engineering, £125,000 per ALGLO was allowed, save £250,000 for Nissan/Renault. Consumer Behaviour was allowed at £1,000,000 at Lead/ALGLO level. UK Vehicle Valuation was allowed at the defendants’ offer of £400,000.