Claimant's Costs Reduced By 40% Due To Chaotic Litigation Conduct

CARL V HAWKINS & OTHERS [2025] EWHC 1104 (Ch)

In Carl v Hawkins & Ors [2025] EWHC 1104 (Ch), the High Court addressed multiple costs issues arising from protracted litigation involving multiple defendants. The judgment examined interim costs orders, specifically those emerging from the Briggs hearing, where costs were ordered to be assessed on a standard basis. Significantly, the court declined to order immediate payments on account for Mr Limbani (£36,825 plus VAT) and Mrs Edwards (£39,673), determining that detailed assessment by a Costs Judge was necessary given the parties’ competing submissions regarding “costs thrown away”. The court applied a 40% discount to Mr Carl’s costs to reflect the chaotic manner of his litigation conduct, emphasising that while litigants in person receive judicial tolerance, this should not prejudice other parties without appropriate sanction. Notably, the judgment specified this discount should only apply to any net balance claimed after cross-claims were considered. The court found that Mrs Edwards was entitled to her costs of the cheque action against Mr Carl, while Mr Limbani was effectively in a “no-score draw” position requiring no costs payment from either side. Critically, the judge mandated that all costs be subject to detailed assessment, rejecting the initially suggested 80/20 cost allocation, thereby ensuring comprehensive judicial scrutiny of the parties’ respective cost claims.

“Mr Carl protests the discount of 40% which I ordered to be applied to his costs to reflect the chaotic and unstructured way in which he has approached this litigation. I have no sympathy for this protest. The conduct of this litigation has clearly become Mr Carl's retirement hobby, and this has resulted in an outpouring of correspondence which has confused and complicated the positions of the other parties to the litigation. The court extends considerable tolerance to litigants in person, but it is not right that other litigants in person in the same proceedings should suffer from this tolerance without some sanction being imposed to reflect the court's disapproval of the way in which the proceedings were in fact conducted. Mr Carl also notes that the application of this discount to the (already very low) hourly rate applied to litigants in person means that his own work on the case is so negligibly recompensed as to be almost nugatory. I understand that concern, but do not share it.”

Citations

Carrasco v Johnson [2018] EWCA Civ 87 Interest awarded on claims should compensate a claimant for being kept out of money owed, not as punishment. Wallersteiner v Moir (No 2) [1975] QB 373 In equity, compound interest may be awarded where a fiduciary misuses money for personal benefit, as a means of disgorging presumed profits. Sir Owen George Glenn Knzm Onzm v Eric John Watson [2018] EWHC 2016 (Ch) When awarding statutory interest, courts may consider generic benchmarks rather than a claimant’s specific borrowing costs. Watson v Kea Investments [2019] EWCA Civ 1759 Courts have discretion to award interest at a higher rate in equitable claims for knowing receipt, depending on the circumstances. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 Compound interest may be awarded by equity where money is retained by fraud, or where a fiduciary misapplies trust funds. Black v Davies [2005] EWCA Civ 531 Equity may award compound interest in cases of fraud or breach of fiduciary duty to reflect wrongful retention of funds. Hotel Portfolio II UK Ltd v Ruhan [2022] EWHC 1695 (Comm) Compound interest is available in cases involving equitable compensation where money has been wrongfully withheld. Mitchell v Al-Jaber [2023] EWHC 1239 (Ch) Compound interest may be appropriate in cases involving dishonest appropriation of funds, even where specific profits cannot be identified. Re Barrell Enterprises [1973] 1 WLR 19 Courts may amend judgments prior to order if it serves the interests of justice. Pisante v Logothetis [2022] EWHC 2575 (Comm) A finding of fraud alone does not automatically justify the imposition of indemnity costs. Kiam v MGN Ltd (No 2) [2002] EWCA Civ 66 Indemnity costs may be awarded where a party’s conduct is unreasonable to a high degree, but not merely because it is misguided or flawed.

FERNANDEZ V FERNANDEZ [2025] EWHC 2373 (Ch)

Section 51 Costs Jurisdiction Injunction Without Claim Form | Gotti

Being 'Annoying and Difficult' Not Sufficiently 'Out Of The Norm' For Indemnity Costs In Failed Liquidator Challenge

STOCKLER AND ANOTHER V THE CORPORATION OF THE HALL OF ARTS AND SCIENCES [2025] EWHC 2262 (SCCO)

Key Points

Where a trial is adjourned due to non-compliance, “costs thrown away” are limited to those costs wasted by the adjournment. Costs incurred for preparation that remain of use are not “thrown away” and must be assessed accordingly. [11–12]
The court will not order a payment on account of costs where the amount ultimately recoverable after assessment may be significantly lower than claimed, particularly where the detailed quantum of costs is disputed. [13]
A claimant’s failure to send a pre-action letter in accordance with the Practice Direction on Pre-Action Conduct will not attract a costs sanction where that failure was reasonable and proportionate in the context of deliberate non-engagement by the defendant and attempts at avoidance. [20–23]
Costs orders against litigants in person may be subject to a discretionary discount where the conduct of proceedings has been disorganised or has hindered the efficient administration of justice. Any such discount should be applied only to net balances owed after set-off or cross-claims have been accounted for. [50–51]
Even where a party is found to have acted fraudulently or in breach of court rules, indemnity costs are only awarded where that conduct is unreasonable to a high degree. An absence of serious procedural abuse or moral condemnation may justify refusal of such an order. [57–59]

“I do, however, accept that because of the complicated position arising from the existence of mutual cross-claims for costs, both in respect of these proceedings and in respect of earlier unpaid orders, the calculation of this amount could have unintended consequences. I therefore think that this discount should be applied only to any net balance claimed by Mr Carl after any such cross-claims have been taken into account.”

Key Findings In The Case

The court found that although Mrs Edwards signed the Bill of Sale under her husband’s instruction and without independent legal advice, she was nonetheless bound by its terms as she did not plead or establish a case of undue influence, and the agreement was knowingly executed to support a transfer of security interest to Mr Carl [43–46].
The payments of £175,000 and £15,000 made by Mr Scholes to Mr Williams for the purchase of a Lamborghini Countach were held to constitute knowing receipt of misappropriated funds by Mr Williams, making him liable to repay those sums to Mr Carl [6].
Mr Carl did not send a pre-action letter to Mr Limbani, but the court held this was reasonable and proportionate in light of Mr Limbani’s previous evasive conduct and the unlikelihood of pre-action correspondence achieving any of the objectives of the Practice Direction on Pre-Action Conduct [20–23].
The court declined to award any indemnity costs against Mr Howarth or Mr Edwards, despite findings of fraud and procedural noncompliance, noting that their conduct did not satisfy the required high threshold of “unreasonable to a high degree” necessary to justify such an award [57–59].
The court held that the proper prejudgment interest rate applicable to Mr Carl’s equitable claims based on dishonest receipt and assistance was 1% above base rate, compounded annually, rather than the higher rate sought based on Mr Carl’s individual refinancing costs, as the claim lacked a restitutionary component and required generic rather than claimant-specific assessment [25–32].

“Finally, I note that Mr Carl complains that there is no equivalent discount applied to Mrs Edwards' actions, despite the fact that her conduct of the action was in some respects at least as chaotic as his own. This is not an entirely unjustified argument. However, it is primarily the responsibility of the claimant to bring his case to court in such a fashion as to promote the efficient implementation of justice. Where a claimant chooses to dispense with legal representation and as a result causes significant prejudice to the court and the other parties, I think he must bear the consequences of that decision alone.”

Background

Carl v Hawkins & Ors [2025] EWHC 1104 (Ch) involved a protracted litigation over several unrelated issues, with the core contention revolving around alleged dishonest misappropriation of funds by the defendants, among other claims. Mr Bernard Jacob Carl (“the Claimant”) instituted the proceedings against Mr John Hawkins and multiple other defendants, alleging various forms of wrongdoing. During the course of the litigation, numerous procedural steps were undertaken, culminating in the present costs determination hearing.

Over the years, several interlocutory applications and hearings took place, and multiple defendants either represented themselves or did not actively participate. At the main hearing, Mr Carl, who represented himself, sought various forms of relief, including monetary compensation and proprietary claims over certain assets allegedly acquired with his misappropriated funds. The judgment resulted from a sequence of judicial directions, applications, and interim orders, including a significant pre-trial adjournment ordered by ICC Judge Briggs in June 2021 due to widespread noncompliance with court orders. This led to the present hearing on costs and related issues.

Costs Issues Before the Court

Several costs issues were adjudicated by Mr Simon Gleeson in this judgment:

The Claimant’s request for costs recovery, particularly against the defendants found liable for dishonest receipt and assistance.
Interim costs orders arising from prior hearings, including the order issued by ICC Judge Briggs on 18 June 2021 requiring the Claimant to bear costs thrown away due to the adjournment.
Claimant’s application for sanctions against some defendants for procedural noncompliance, particularly concerning adherence to pre-action protocols.
Determination of costs following the mixed success in various interconnected claims, notably between the Claimant and Mrs Edwards.
Interest claims relating to the alleged misappropriation of funds and contractual interest under the Bill of Sale.
Reduction in costs due to the conduct of the litigation by the Claimant.

The Parties’ Positions

The Claimant, Mr Carl, sought recovery of substantial costs incurred throughout the litigation. He submitted detailed objections to costs claimed by Defendants, particularly regarding the interim costs order resulting from the Briggs hearing. His overarching argument was that costs claimed as “thrown away” were overstated since much of the work performed could be reused in subsequent hearings.

Mrs Edwards, a significant respondent in these proceedings, argued for her costs associated with successful defenses in the main action, while disputing liability for costs in the cheque action. Her position emphasized the complexities due to partial success in different facets of the litigation.

Mr Limbani sought recovery of his costs despite an earlier finding by Simon Gleeson debarring him from recovering costs due to perceived non-cooperative and strategically obstructive conduct during the main action. He additionally sought sanctions against Mr Carl for alleged breaches of pre-action protocols, arguing undue prejudice due to lacking pre-action correspondence and early involvement of legal representation.

Both parties also disputed various elements of interest claims, especially concerning the application of enhanced rates and compounding for pre-judgment interest as well as contractual interest claims under a Bill of Sale.

The Court’s Decision

Mr Simon Gleeson delivered a detailed and nuanced judgment addressing each costs issue:

Regarding the interim costs order from the Briggs hearing, he held that costs “thrown away” are not universally defined but generally relate to costs incurred that are genuinely wasted due to noncompliance or procedural failings. The court rejected any immediate payment on account to Mrs Edwards and Mr Limbani due to unresolved disputes over the quantum of costs genuinely wasted.

Regarding the Claimant’s procedural conduct, particularly regarding pre-action protocols, the court held that the failure to send a pre-action letter to Mr Limbani was reasonable and proportionate under the circumstances, given the likelihood of non-engagement and lack of beneficial pre-litigation negotiation. Therefore, no sanctions were imposed against Mr Carl for procedural breaches.

Interest claims were scrutinised, and the court applied the statutory investment rate (1% above the Bank of England base rate) for pre-judgment interest, rejecting an enhanced rate based on the Claimant’s refinancing costs. Equitable interest was ordered in respect of dishonest receipt claims, applying a compensatory rationale rather than a punishment.

Complex cross-claims for costs, particularly between Mr Carl and Mrs Edwards, required detailed assessment due to the mixed success. The court ordered detailed assessment by a costs judge following rejection of simplistic allocation approaches.

Finally, the court upheld a 40% reduction in Mr Carl’s overall costs claim due to disruptive litigation conduct, maintaining that the claimant, who chose to proceed without legal representation, bore substantial responsibility for case management difficulties. A proportionate approach was ordered to mitigate unintended financial ramifications.

Specialist costs services across the UK

TMC Legal provides expert costs drafting, negotiaton and costs budgeting services together with representation in detailed assessment hearings. Our experienced costs lawyers and law costs draftsmen act nationwide. Contact us today.