ML Technology Limited and Naurex Limited brought proceedings against B.E.A.T. SAM Limited (trading as Naurex B.E.A.T. SAM) and seven other defendants in the Intellectual Property List of the Business and Property Courts. The claim concerned the use of the trade mark NAUREX and related intellectual property rights following a share purchase agreement under which, in broad terms, the claimants contended that the defendants had continued to use the Naurex brand beyond any licence they were entitled to rely upon. The defendants, for their part, sought declarations of ownership and entitlement to use the rights in question, relying on complex agency arguments. Parallel proceedings were on foot in Switzerland concerning the share purchase agreement itself.
The main judgment was handed down on 18 June 2026. The central issue that emerged at trial was the length of the period of reasonable notice required to terminate the implied licences. The court found that the defendants had infringed the registered trade marks for a period after expiry of that notice period, but the claims in passing off and joint tortfeasorship failed entirely, and the website copyright claim also failed. The second consultancy contract copyright claim succeeded only to the extent of £4,000, a figure agreed on the basis that it was not worth disputing whether it should be lower.
A costs and case management conference had been held, at which costs budgets were approved. The claimants’ total approved and incurred budget at that stage stood at £716,239.24, with a budgeted disclosure phase of £97,768 and an ADR/settlement discussions budget of £5,000. The defendants’ equivalent total was £840,229.20, with a budgeted disclosure phase of £135,000 and an ADR/settlement discussions budget of £4,964. By the time of the pre-trial review in February 2025, both sides had applied for substantial increases to their costs budgets, principally in respect of the disclosure phase. The claimants sought an increase of £259,069.67 for disclosure alone, together with £29,500 each for the witness statements and trial preparation phases. The defendants sought an increase of £470,747.25 for disclosure. The parties had, by that stage, reached a position of mutual acceptance of each other’s proposed increases and submitted an agreed draft order to the court.
Deputy Master Dew directed on 19 February 2025 that the applications be considered at the pre-trial review unless time was insufficient or the judge considered it inappropriate. At the pre-trial review, the judge declined to approve the increases and instead deferred both applications to after trial, so that the value of the additional disclosure could be assessed retrospectively. Neither party objected to that course. The consequentials hearing took place on 21 July 2026 and addressed, among other things, the claimants’ renewed application for approval of the increase to their costs budget for the disclosure phase.
The Application for Budget Variation
Two distinct costs questions required determination at the consequentials hearing. The first was whether the court should retrospectively approve an increase to the claimants’ costs budget for the disclosure phase in the sum of £259,069.67, being an increase of more than three times the originally budgeted figure of £97,768. The claimants indicated that if this increase were approved, they would not press the remainder of their variation application. The defendants had withdrawn their own variation application entirely by the time of the hearing, which prompted the claimants to adopt a more focused position and press for approval of the disclosure increase alone.
The second question was the incidence of the costs of the proceedings as a whole, including whether either party could be identified as the overall winner for the purposes of CPR r.44.2, and whether any issue-based or proportionate costs order was appropriate.
On the budget variation, the claimants’ position was that the increase to the disclosure phase was justified by significant developments after the costs and case management conference, including the need to search additional data sources and to review a larger volume of the defendants’ disclosed documents than had been anticipated. The defendants had agreed in principle to the disclosure increase (though not to the witness statements and trial preparation increases), accepting that the disclosure exercise had been more substantial than originally envisaged. By the time of the consequentials hearing, the defendants had withdrawn their own variation application, and the claimants pressed for approval of the £259,069.67 disclosure increase on the basis that it was not opposed.
The Court’s Decision on Budget Variation
The court refused to approve the retrospective increase to the claimants’ disclosure budget, notwithstanding that the defendants did not oppose it. The reasons given are of direct relevance to costs practitioners and merit careful attention.
The court’s starting point was that costs budgeting is not simply a matter between the parties. Control of costs serves the interests of third parties and of the court itself, because disproportionate expenditure on disclosure imposes burdens beyond those borne by the immediate litigants, including the court’s own resources in dealing with larger volumes of material. The court stated in terms that the fact that the parties and their advisers had agreed not to challenge each other’s proposed increases was a reason for examining the basis for the variation with more, rather than less, intensity. That proposition is the critical one for practitioners: mutual consent to a Precedent T variation does not provide a safe harbour. It may, on this analysis, attract closer scrutiny than a contested application, because the court cannot rely on the adversarial process to test the justification.
The court identified six reasons for refusing the increase. First, the proposed variations were substantial in both absolute and relative terms, and the more substantial the variation, the greater the justification required. Second, the costs already incurred and budgeted at the pre-trial review stage appeared high given the nature of the dispute, and the proposed increases would make them significantly higher. Third, and most significantly for the purposes of this analysis, it was unclear what value the additional disclosure had contributed to resolving the key issues between the parties. The court observed, having heard the trial and reviewed a large volume of the disclosed documents, that much of the disclosure had been of limited utility. The court noted that if the parties had identified at an early stage that the central issue was likely to be the length of the period of reasonable notice, a great deal of the disclosure exercise would probably not have been required. Critically, no attempt had been made in evidence or argument to explain specifically why the additional disclosure was of value, or why a sum of more than £259,000 (described by the court as roughly the price of an average UK house) needed to be spent on it. The court stated that in the context of a case where the costs budgeted appeared disproportionate, a party seeking a retrospective increase bore a heavy burden, and that burden had not come close to being discharged.
Fourth, the court said at the pre-trial review that it may need to consider whether applications to vary the costs budgets should have been made at an earlier stage, and in particular before the costs were incurred, so that the court could have exercised proper control over whether the proposed costs were likely to be justified by the anticipated benefit. The court emphasised that costs budgeting is intended to act as a constraint on future costs, in the interests of justice, not least because parties incurring increased costs at an earlier stage can hinder settlement and therefore result in still further costs in taking a case to trial. Costs budgeting has to take that into account and is not normally a vehicle for sanctioning costs already incurred.
Fifth, the court considered whether insufficient time, effort and cost had been devoted by the parties and their legal advisers to resolving the case at earlier stages, so avoiding further costs (whether on disclosure, witness statements or other work) such as by ADR or mediation. Limited provision had been made for this and, while the court did not know what without prejudice discussions there had been, no evidence had been provided that there were serious, third-party assisted attempts to resolve the case.
Sixth, the court noted that it has the power to depart from a costs budget in any event, albeit in limited circumstances, and stated that this would have been a case for doing so.
The court’s view was that, in the light of the applicable principles, the retrospective revision to the costs budgets should not be approved, even though it was not actively opposed by the defendants.
Comment
This decision provides important guidance on the court’s approach to retrospective costs budget variations, particularly where the parties have reached agreement. The proposition that mutual consent may attract more intense scrutiny, rather than less, is clearly stated by the deputy High Court judge, though as a first-instance decision it has not yet been tested at appellate level. The court’s reasoning makes clear that costs budgeting serves a wider public interest, not merely the interests of the parties, and that the court retains an active supervisory role even where the parties are agreed.
The decision is particularly valuable for identifying the evidence the court expected but did not receive: a specific explanation of what the extra disclosure actually contributed to resolving the issues, judged with hindsight after trial, plus evidence of serious third-party assisted settlement attempts. The court also noted that the parties’ limited provision for ADR in their own Precedent T schedules was a relevant factor in assessing whether insufficient effort had been devoted to early resolution.
The procedural mechanics are also instructive: the court deferred both parties’ variation applications from the pre-trial review to after trial, over an agreed draft order, so that it could assess value retrospectively. This approach enabled the court to evaluate whether the additional disclosure had in fact contributed materially to resolving the dispute, rather than accepting the parties’ prospective justifications at face value.
The King’s Bench Division’s decision in Winehouse v Parry & Gourlay [2026] EWHC 1970 (KB) addresses the calculation of interim payments on account where indemnity costs have been awarded and the receiving parties have departed substantially from their approved costs budgets without making variation applications under CPR r.3.15A.
Background
The claim was brought by Mr Mitchell Winehouse, suing as personal representative of the estate of his daughter Amy Jade Winehouse, the singer and songwriter who died on 23 July 2011. The defendants, Ms Naomi Parry and Ms Catriona Gourlay, had been close friends and associates of Amy Winehouse during her lifetime. Following her death, 141 items of property came into the defendants’ possession and were subsequently sold at Julien’s Auctions in Los Angeles in 2021 and 2023. The claimant alleged that the defendants were not entitled to possess or sell those items and were therefore liable to the estate for the proceeds of sale.
A six-day trial took place on 8 to 12 December 2025 and 27 January 2026 before Sarah Clarke KC sitting as a Deputy Judge of the High Court. The substantive judgment, handed down on 20 April 2026, found for both defendants on all issues and dismissed the claimant’s claims in their entirety. Every disputed issue of fact and law was resolved against the claimant, including findings that he and his witnesses had given unreliable evidence on material points.
Critically, the court found that the claimant and his witnesses knew prior to the 2021 auction that the defendants were selling a number of significant disputed items in that auction, and that contemporaneous emails and documents in the claimant’s possession proved this beyond doubt. This knowledge, and the evidence proving it, meant that the claim should never have been commenced and should have been withdrawn long before trial.
Following receipt of the embargoed draft judgment, the parties were unable to agree an order on costs and consequential matters. By an order dated 20 April 2026, the court adjourned the hearing generally and set a timetable for the exchange of costs schedules and the filing of written submissions and responsive submissions on the incidence, basis, quantum and interim payment of costs. The court indicated it would determine all issues on the papers unless an oral hearing was directed. Detailed submissions and responsive submissions were received from all parties, accompanied by approximately 500 pages of documentary evidence. A further costs issue was raised by the claimant’s solicitor by email shortly before the judgment on costs was finalised, to which the defendants’ solicitors responded. The court determined all costs issues on the papers.
Costs Issues Before the Court
Four distinct costs issues required determination. First, the incidence of costs: whether the general rule under CPR r.44.2 that costs follow the event should apply, or whether the court should depart from it and make no order as to costs. Second, the basis of assessment: whether costs should be assessed on the standard or indemnity basis. Third, the quantum of any interim payment on account under CPR r.44.2(8): specifically, what percentage of budgeted and unbudgeted costs should be ordered by way of interim payment, having regard to the approved costs budgets and the very substantial departures from those budgets by all parties. Fourth, whether any interim payment orders should be stayed pending a prospective application to the Court of Appeal for permission to appeal.
The costs budgeting position was central to the interim payment calculation. A costs management order had been made. The first defendant’s approved budget was £218,730 inclusive of VAT, against total costs as at 28 April 2026 of £715,361.98 inclusive of VAT, leaving unbudgeted costs of £496,631.98. The second defendant’s approved budget was £194,485.20 inclusive of VAT, against total costs of £487,132.15 inclusive of VAT, leaving unbudgeted costs of £292,646.95. Neither defendant had made a budget variation application under CPR r.3.15A. The claimant’s own total costs as at 28 April 2026 were £951,080.28 inclusive of VAT, against an approved budget of £160,850 inclusive of VAT, representing an overspend of approximately £790,000.
A further discrete issue arose very late in the costs proceedings when the claimant’s solicitor raised by email a challenge to the recoverability of the second defendant’s costs, relying on references to a conditional fee agreement and a social media statement by the second defendant suggesting she had secured third-party funding. The claimant submitted that the conflicting accounts raised a question as to whether some or all of the costs claimed by the second defendant were properly recoverable, and that any interim payment in respect of those costs would be particularly prejudicial given her alleged impecuniosity.
The Parties’ Positions
The claimant accepted that the defendants were the successful parties and that the usual starting point would be a costs order in their favour, but contended that this was an exceptional case in which the court should make no order as to costs. His primary submission was that the defendants had withheld explanations for their possession of the disputed items for several years, had failed to engage meaningfully with ADR until a very late stage, and had by their conduct driven the case to trial and caused costs to escalate beyond the approved budgets. He submitted that the defendants should not be permitted to recover costs caused by their own unreasonable conduct.
In the alternative, the claimant submitted that any costs orders should be made on the standard basis and reduced by 75% of each defendant’s total costs. On interim payments, the claimant proposed that any order should be limited to 90% of budgeted costs and 50% of unbudgeted costs, and that payment should be stayed pending determination of any application to the Court of Appeal for permission to appeal. The claimant argued that there was a real risk of injustice if interim payments were made and subsequently could not be recovered from the defendants given their alleged impecuniosity.
The defendants submitted that the claimant’s defeat was total and comprehensive and that there was no basis to depart from the general rule. They further submitted that the claimant’s conduct was unreasonable to a high degree and took the case out of the norm within the meaning of Excelsior Commercial and Industrial Holdings Ltd [2002] EWCA Civ 879, justifying an indemnity costs order in favour of both defendants. In support of that submission, the defendants relied on a range of conduct findings made in the substantive judgment, including the speculative and thin nature of the claim as issued, the late addition of serious allegations of deliberate concealment and breach of fiduciary duty, the aggressive pursuit of those allegations to the end of trial, the claimant’s courting of press publicity, and the finding that the claimant had told a newspaper journalist he had gone to the police when he knew he had not.
On interim payments, the defendants sought approximately 80% of each defendant’s total costs inclusive of VAT, submitting that there were good and unavoidable reasons why the defendants had been forced to depart from their budgets and that there was a high degree of confidence that a sum in excess of that figure would be recovered on detailed assessment. They submitted that payment should be made within 14 days and that no stay should be granted.
In response to the late CFA and third-party funding challenge, the second defendant’s solicitor confirmed that the second defendant was and remained personally liable for the total amount of her legal fees, that a CFA had at one point been agreed but had never been put into effect, and that the social media statement about third-party funding had been optimistic and premature as no funder had in fact materialised. Both defendants had provided signed costs schedules. The first defendant’s solicitor corroborated that account.
The Court’s Decision
The court ordered the claimant to pay the costs of both defendants on the indemnity basis, to be assessed if not agreed, with no reduction of 75% or any other amount. Interim payments were ordered in the sum of £569,330.99 to the first defendant and £394,521.89 to the second defendant, both payable within 14 days. No stay was granted. The court also refused the claimant’s application for permission to appeal.
Indemnity Costs
Applying the principles in Excelsior and as summarised by Coulson LJ in Thakkar v Mican [2024] EWCA Civ 552, and the concurring remarks of Lady Carr CJ in that case, the court was satisfied that the claimant’s conduct was unreasonable to a high degree and outside the ordinary and reasonable conduct of proceedings. The court found that the claimant had pursued a claim that was speculative, weak, opportunistic and thin, had issued proceedings without any positive factual case, had pleaded his claim in vague and sloppy terms, and had abandoned his claim to a number of items shortly before trial having failed to apply any critical thought to the list of items he was claiming. The court further found that the claimant had significantly expanded his claim at a very late stage by adding allegations of deliberate concealment and breach of fiduciary duty, both of which were dismissed, and that these late additions significantly expanded the seriousness of the allegations, the scope of the evidence, the issues in dispute and the length of the trial.
The court found that the claimant had made grave, unjustified and demonstrably false allegations of dishonesty and deceit against both defendants and pursued these aggressively to the end. The allegations included deliberate concealment (put on the basis that the defendants had deliberately deceived the claimant by lying to him about their possession of the disputed items and their intention to auction them), breach of fiduciary duty (based on the assertion that the first defendant had deliberately, knowingly and repeatedly deceived the claimant in order to derive significant, improper, financial gain), and theft (allegations made within days of the 2021 auction that the defendants had deliberately removed items from the estate’s lockup without the estate’s knowledge or consent). The court found these claims to be totally unfounded and was extremely critical of the claimant for making them.
The court further found that the claimant deliberately courted publicity in a way that was calculated to exert pressure on the defendants and cause significant damage to their reputations. He gave an exclusive statement to The Sun newspaper published on 3 November 2023 (the day after the claim was served) which plainly alleged that the defendants had sold items that they were not entitled to sell and which did not belong to them, for the purpose of achieving significant financial gain and thereby depriving the Amy Winehouse Foundation of funds. At a court hearing in July 2024, the claimant’s instructed counsel stated in open court in front of members of the press that there was “evidence of suspicious circumstances surrounding these auctions”. In an article in the Sunday Times Magazine published on 14 April 2024, the claimant stated that he had “gone to the police” about the case and repeated this on oath at trial. However in cross-examination he conceded that this was untrue and the court found that it could not see how “telling a newspaper journalist that he had gone to the police when he knew he had not, can be anything other than deliberate and when coupled with his accusation that the defendants had stolen the Items from the lockup, was plainly intended to damage the defendants’ reputations and probably also to put pressure on them to give him the proceeds of sale of their Items”.
The court rejected the claimant’s submission that the trial of this litigation was caused by the defendants’ refusal to accept his offers of settlement or mediation. A review of the pre-trial correspondence demonstrated the aggressive and unpleasant way in which the claimant’s solicitor pursued the defendants and made offers of settlement which only ever amounted to requiring the defendants to concede his claim and make payments of money to him, whilst leaving him free to continue to publicly make serious accusations of dishonest, deceitful behaviour against them. At no point did the claimant ever properly consider the explanations provided by the defendants, nor the inherent weakness of his own case. On the contrary his response was to disbelieve the defendants and make additional, even more serious allegations against them shortly before trial.
The court found that the defendants were fully entitled to defend their personal and professional reputations to the end, and that they had no other realistic option given the claimant’s serious and damaging allegations, his aggressive conduct throughout, his refusal to accept their explanations, his unrealistic settlement offers and the real risk that he would thereafter be free to continue making public allegations of deceit and dishonesty against them.
As Lady Carr CJ observed in Thakkar, an unnecessarily aggressive approach to litigation is unacceptable. The court found that the claimant’s high degree of unreasonable conduct extended into every facet of the proceedings: pre-trial, at trial, and in respect of his unreasonable and unrealistic approach to the issue of costs. The court noted that the claimant’s costs submissions themselves demonstrated that he had no insight into his own failings and continued to conduct the litigation in a similar vein, making baseless allegations against the defendants in an attempt to avoid the obvious costs consequences of the total failure of his claim.
No Costs Reduction
The court declined to reduce the amount of costs payable by the claimant by any amount. The claimant would be liable for the total costs incurred by both defendants subject to assessment if not agreed. The court found that the claimant’s high degree of unreasonable conduct, extending into every facet of the proceedings (pre-trial, at trial, and in respect of his unreasonable and unrealistic approach to the issue of costs), fully justified the making of indemnity costs orders in favour of both defendants with no reduction. The court noted that quantum would ultimately be a matter for a costs judge to determine on detailed assessment.
Interim Payments | The Court’s Reasoning
In assessing what was a reasonable amount for interim payment under CPR r.44.2(8), the court estimated the likely level of recovery on an indemnity costs basis by each defendant and allowed a margin for error. The court took into account that the claimant’s total costs as at 28 April 2026 amounted to £951,080.28 (inclusive of VAT) against budgeted costs of £160,850 (inclusive of VAT), an overspend of approximately £790,000. The court found it inevitable that the defendants were also forced to significantly exceed their budgeted costs to meet the unreasonable way in which the claimant deliberately litigated and pleaded his claim. It was notable however that the claimant’s total costs were significantly higher than the total costs incurred by either defendant.
The court applied the principle that where indemnity costs have been ordered, doubts as to whether the item of cost in question was reasonably incurred, or reasonable in amount, are resolved in favour of the receiving party (CPR r.44.3(3)). The court considered that the additional costs incurred by the defendants, over and above the costs budget, were reasonably incurred as a result of the claimant’s unreasonable conduct of this litigation and that the vast majority of these costs were therefore likely to be recovered. The court also took into account that the defendants’ costs would undoubtedly have increased from the figures quoted in their April 2026 costs schedules due to the way in which the claimant had chosen to unreasonably litigate the issue of costs.
The court further considered that there were good reasons why the first defendant’s total costs were significantly higher than the costs of the second defendant. The court estimated that the reason the trial overran by three days (taking six court days to complete rather than the three days listed) was largely due to the additional allegations of deliberate concealment and breach of fiduciary duty and the significant time taken up in evidence and submissions dealing with the facts and law caused by these matters. These matters would inevitably have significantly increased the time and costs expended by the defendants pre-trial. This applied to both defendants but was particularly relevant in respect of the total costs incurred by the first defendant, as she was alleged by the claimant to have been the person mainly responsible for the deliberate concealment, and was directly involved in all the evidence and matters relevant to this issue. In addition, she alone faced the allegation of breach of fiduciary duty.
Taking all these factors into account, the court considered that the likely level of recovery for each defendant would be the full amount of budgeted costs and at least 85% of unbudgeted costs. Allowing a margin for error, the court reduced the interim payment figure to 90% of budgeted costs and 75% of unbudgeted costs, both inclusive of VAT. This in the court’s view arrived at a reasonable amount for each defendant to receive by way of interim payment.
For the first defendant, this resulted in an interim payment order of £569,330.99, calculated as £196,857 (90% of budgeted costs inclusive of VAT) plus £372,473.99 (75% of unbudgeted costs inclusive of VAT). For the second defendant, this resulted in an interim payment order of £394,521.89, calculated as £175,036.68 (90% of budgeted costs inclusive of VAT) plus £219,485.21 (75% of unbudgeted costs inclusive of VAT).
The Late Challenge to Recoverability
The court dealt briefly with the claimant’s late challenge to whether the second defendant was in fact liable to pay the costs she claimed to have incurred. The claimant relied on an assertion that the second defendant had apparently made on social media in March 2024 that she had secured a third-party funder, a statement by her solicitors in December 2024 that the second defendant “has a CFA with this firm”, and a later statement in her costs submissions that “a CFA was agreed at one point but no costs were incurred under it. Ms Gourlay was obliged to pay them regardless of the outcome. She is heavily indebted to her solicitors.”
The court found that the claimant’s attempt to raise this further issue so late in the day was unimpressive and provided further evidence that he was continuing to drive up the costs of all parties by raising new, weak arguments to bolster his already weak costs submissions, and find a way to avoid paying the costs orders to which the defendants were fully entitled. The court accepted the explanations provided by the defendants and their solicitors. In particular the court noted that both defendants had provided signed costs schedules which carried obligations of truthfulness, not only on the defendants but also their solicitors. It would be a grave and serious matter to give misleading information in these schedules and in the defendants’ submissions to the court regarding the quantum of costs incurred, the basis for those costs and the second defendant’s liability to pay. The court made it clear that it fully accepted the figures given in the costs schedules of both defendants, and the explanations provided by them and their solicitors regarding the basis of their liability to pay these costs. This was consistent with the court’s findings at trial that the defendants were and are credible and truthful witnesses.
The court further noted that the defendants’ solicitors had conducted the difficult litigation properly and appropriately, despite coming under significant and unreasonable pressure from the claimant and his solicitors, including being bombarded with aggressive and unpleasant correspondence and serious allegations of impropriety against the first defendant and her solicitor, which the court found to be unfounded and improper.
Time for Payment and No Stay
The court ordered the claimant to pay both interim payment orders within 14 days of the date of the order, in accordance with CPR r.44.7. The claimant plainly had ready access to the funds to satisfy these orders and there was no reason why the defendants or their solicitors should wait longer than that to receive these funds, particularly given both defendants’ parlous financial situations which had been caused by the claimant’s unreasonable behaviour.
The court declined to stay the interim payment orders pending any application to the Court of Appeal for permission to appeal. The court adopted the defendants’ submissions that the risk that the claimant may succeed on appeal was limited, and in any event his grounds related only to the Category B disputed items, meaning that there was no appeal against the court’s dismissal of his claim in respect of the Category A and Category C items. In those circumstances, in the unlikely event that the claimant was granted permission to appeal and ultimately succeeded to this limited extent, he would still be liable for substantial adverse costs orders.
Conclusion
The decision illustrates the court’s approach to interim payments on account where indemnity costs have been awarded and both sides have massively exceeded their approved budgets without making variation applications. The court treated the paying party’s own overspend (approximately £790,000 against a budget of £160,850) as affirmative evidence that the receiving parties’ departures from budget were reasonably incurred, particularly where those departures were caused by the paying party’s unreasonable conduct. By applying the indemnity costs principle in CPR r.44.3(3) that doubts are resolved in favour of the receiving party, and estimating likely recovery at 100% of budgeted costs plus at least 85% of unbudgeted costs before applying a margin for error, the court arrived at interim payment orders representing 90% of budgeted and 75% of unbudgeted costs. This is a substantially higher recovery rate on unbudgeted costs than would ordinarily be expected, and reflects both the indemnity basis of assessment and the court’s finding that the excess costs were caused by the paying party’s unreasonable litigation conduct.
https://tmclegal.co.uk/wp-content/uploads/2026/08/whinehouse.webp6671000Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-08-01 21:48:292026-08-02 11:18:45Payment on Account Percentage Where Budgets Are Massively Exceeded | Overspend By Paying Party As Evidence Costs Were Reasonably Incurred
The High Court’s decision in Szwed v Aviva Insurance Ltd [2026] EWHC 1425 (KB) confirms that the merits of an appeal may be a material factor at the third stage of the Denton framework when the court can see without much investigation that the grounds are very weak, and that costs budget decisions attract a high threshold for appellate intervention.
Background
This matter arose from a personal injury claim brought in the Central London County Court by Mr Pawel Szwed against Aviva Insurance Limited. The underlying claim related to a road traffic accident on 30 January 2018, in which the Appellant was knocked from his bicycle after the Respondent’s insured opened a van door into his path. Liability was admitted, and allegations of contributory negligence were subsequently abandoned. The Appellant valued his claim at up to £100,000 in his original claim form, though his final schedule of loss dated 16 August 2024 sought a total of £960,504.75 for past and future losses. The Respondent’s counter-schedule contended that the Appellant was entitled to no more than £919.22 for past losses, with nothing for future losses. The parties instructed psychiatric, orthopaedic surgery, and ENT experts, with directions given in the usual way for the preparation of joint statements.
The procedural history of the claim was protracted. In November 2022, the Respondent served surveillance evidence on the Appellant, following which his solicitors came off the record. He has represented himself, with the assistance of a court interpreter, ever since. The first trial window in April to May 2023 was vacated because the Appellant was unable to comply with the court’s directions.
By the time the matter came before Recorder Glancy KC on 28 July 2023, only the joint statement of the psychiatry experts had been prepared. The orthopaedic and ENT joint statements remained outstanding. The Respondent had applied on 24 May 2023 for the claim to be struck out, or in the alternative for an unless order to secure the outstanding joint statements. The Recorder declined to strike out the claim but made an unless order at paragraph 2(a) of his order, to the effect that the claim would be struck out unless by 4.00 pm on 20 September 2023 the Appellant provided evidence that his orthopaedic and ENT experts were willing and able to engage in joint discussions and prepare joint statements. Directions were given to a new trial window from 1 March to 30 June 2024.
The Costs Budget Decisions
The Recorder also permitted the Respondent to vary its costs budget by adding £27,000 to the previously approved figure, against a sought increase of £31,611.11. The reasons for the increase related to the Appellant’s travel from Poland to attend medico-legal examinations, the obtaining and disclosure of surveillance evidence, and the costs of instructing interpreters to attend hearings.
The ENT joint statement was provided on 14 September 2023. However, by the time the matter came before HHJ Hellman on 22 December 2023, the orthopaedic joint statement remained outstanding. The Judge granted the Appellant relief from sanctions in relation to paragraph 2(a) of the Recorder’s order and directed that the orthopaedic joint statement be provided by 22 June 2024.
The Judge also considered three applications made by the Appellant, dated 1 September, 1 October, and 9 December 2023, which were in substance a single application seeking to have the Respondent’s costs budget reduced, or “cut entirely”, on the basis that the Respondent had been behaving oppressively by causing the Appellant to spend money disproportionately on costs. The Judge dismissed those applications, accepting the evidence of the Respondent’s solicitor, Jacob Wright, that the delay in the joint expert process had been caused by the Appellant’s own conduct rather than that of the Respondent. The Judge also noted that it was far from clear that any power existed to make the order sought in any event. The orthopaedic joint statement was ultimately provided on 21 July 2024, and the trial was listed to commence on 29 June 2026, being the fifth attempt to list the matter for trial.
The Appeals and Strike Out
The Appellant filed his Appellant’s Notice in appeal KA-2023-000166 on 21 August 2023, challenging the Recorder’s unless order and the decision to permit the Respondent to extend its costs budget. He filed his Appellant’s Notice in appeal KA-2024-000012 on 17 January 2024, challenging the Judge’s dismissal of his applications to reduce the Respondent’s costs budget. Both appeals were subject to significant procedural difficulties, including the absence of CPR-compliant appeal bundles, the absence of transcripts of the relevant judgments, and a failure to provide properly formulated grounds of appeal.
On 19 February 2025, Martin Spencer J directed the Appellant to file a witness statement addressing the continuing relevance of the appeals in light of the progress of the underlying proceedings. The statement provided on 13 March 2025 was considered by Sir Stephen Stewart on 26 March 2025, who concluded that it did not meet the requirements of Martin Spencer J’s order. Sir Stephen made an unless order requiring the Appellant to file a further witness statement by 4.00 pm on 17 April 2025 explaining clearly the continuing relevance of the appeals. The Appellant did not comply, and both appeals were automatically struck out at 4.01 pm on 17 April 2025.
The Appellant applied on 24 April 2025 for a retrospective extension of time to comply with Sir Stephen Stewart’s order in appeal KA-2023-000166, but made no such application in KA-2024-000012. On 23 March 2026, Ritchie J refused the application and confirmed that KA-2023-000166 remained struck out. By a further application dated 23 March 2026, the Appellant sought to set aside Ritchie J’s order, and also sought to set aside the automatic strike out of KA-2024-000012. The Respondent agreed that it was consistent with the overriding objective to treat that application as relating to the strike out of both appeals. The application came before Mrs Justice Hill, who delivered judgment on 11 June 2026.
Before the hearing, the Appellant applied on 20 March 2026 to vacate the trial listing to allow for the proper disposal of his two appeals. On 8 May 2026, HHJ Holmes dismissed that application, observing that the determination of the appeals did not prevent a fair trial taking place as currently listed.
The Legal Framework
Mrs Justice Hill noted that in accordance with R (Hysaj) v SSHD [2014] EWCA Civ 1633 at [38] and Lakatamia v Su [2019] EWCA Civ 1626 at [3], the guidance given by the Court of Appeal in Denton v TH White Ltd [2014] EWCA Civ 906 applies to applications for extensions of time. The Denton guidance requires a judge to address an application for relief from sanctions in three stages: first, to identify and assess the seriousness and significance of the failure to comply; second, to consider why the default occurred; and third, to evaluate all the circumstances of the case, so as to enable the court to deal justly with the application, including the matters set out in CPR 3.9.
The court also noted that in Hysaj at [46], the Court of Appeal held that in most cases the merits of an appeal will have little to do with whether it is appropriate to grant an extension of time: it is only in those cases where the court can “see without much investigation that the grounds of appeal are either very strong or very weak” that the merits will have a significant part to play when it comes to balancing the various factors that have to be considered at stage (3) of the Denton process.
The Appellant sought to rely on fresh evidence on appeal, said to provide further proof that he was not responsible for the breakdown of the joint expert process. However, the Appellant did not identify which documents were new, nor did he explain why those documents could not have been obtained with reasonable diligence for use before the Recorder or the Judge. This would have been necessary to meet the first criterion for the admission of such evidence on appeal set out in Ladd v Marshall [1954] 1 WLR 1489.
Application of the Denton Framework
At stage one, Mrs Justice Hill held that the Appellant’s failure to comply was significant and serious. The appeals had a protracted history, relating to two orders made in 2023, in the context of County Court proceedings that remained live, and where permission had not yet been granted. By the time of Sir Stephen Stewart’s order, the Appellant had already been afforded significant latitude, both in terms of the extensions of time he had been granted and the fact that there was (and still is) no CPR-compliant appeal bundle before the court on either appeal. Martin Spencer J had ordered the Appellant to provide a witness statement addressing the “potentially academic” issue, but he had failed to do so. The order made by Sir Stephen Stewart was therefore giving the Appellant a further opportunity to do something which he had already been directed to do. Against this background, the Appellant’s failure to comply was significant and serious as it had led to yet further delay in the appeals being progressed and yet further court resources being deployed on the appeals.
At stage two, the court considered why the default occurred. Although the Appellant contended that his mobile telephone was stolen on 28 March 2025, he provided no corroborating evidence of this, such as a police report. Even if the Appellant was without access to his mobile phone, he could have tried to access his email via another device. The Appellant asserted that he regained access to his email account on 14 April 2025, but again no proof of this was provided. If the Appellant had immediately checked his email on that date, he would have seen the order and would have still had time to comply as the deadline was not until 4.00 pm on 17 April 2025. The Appellant contended that even when he regained access to his email on 14 April 2025, he did not see the 31 March 2025 email from the court enclosing the Sir Stephen Stewart order because he needed the assistance of a friend who reads English, and that friend had not been available since 14 March 2025. No evidence from the friend was provided to support this assertion. The number of documents the Appellant had filed in these appeals, and the volume of material provided by the Appellant ahead of the hearing, suggested that he was able to deploy assistance in enabling him to fully participate in the litigation process. For these reasons the court did not find the reason the default occurred very persuasive.
At stage three, the court evaluated all the circumstances of the case, so as to deal justly with the application, including having regard to the matters set out in CPR 3.9, namely the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance with rules, practice directions and orders. This evaluation encompassed the academic nature of the appeals, the merits of the appeals, and the broader conduct of the litigation.
The Academic Nature of the Appeals
The court agreed with the Respondent that the appeal against the Recorder’s 28 July 2023 unless order relating to the orthopaedic and ENT experts was entirely academic. The unless order had been completely overtaken by events in that on 22 December 2023 HHJ Hellman granted the Appellant relief from sanctions for the remaining element of non-compliance with it. The unless order was therefore superseded within the County Court proceedings on that date. The lack of ongoing relevance of the unless order was underscored by the fact that the joint expert process had now been completed, and by the fact that the trial could now fairly proceed. Indeed, in his 14 May 2025 statement addressing the “potentially academic” issue, the Appellant himself did not refer to the joint expert issues but rather the “financial result of the costs of the parties”, which the court took to relate to the costs budget issues alone.
There was also an element to which both the appeals relating to the costs budget were academic. This was because at present the Appellant had the benefit of Qualified One Way Costs Shifting, meaning that no cost orders made against him in the Respondent’s favour could be enforced without the permission of the court, and to the extent that there was in the future an argument about the Respondent’s costs, the Appellant may well be able to take some of these points then.
The Appellant was correct to highlight that the Recorder’s order and the Judge’s judgment included findings about his conduct with which he disagreed. However, it was plain that his credibility was much more widely in issue in the County Court claim, not least given the surveillance evidence. Insofar as there was any attempt to cross-examine the Appellant at trial on these issues, it would be open to him to contend that these findings were not properly made, but the Respondent’s counsel conceded in open court during the hearing that he had no intention of questioning the Appellant at trial about whether he had paid his experts or about why the joint expert process broke down.
The Merits of the Appeals
Mrs Justice Hill was satisfied that the merits of both KA-2023-000166 and KA-2024-000012 were in fact “very weak”, for the following reasons.
First, the Recorder’s decision to impose an unless order was based on his interpretation of the material placed before him as to why the joint expert process had broken down. The parties had different accounts for this and the Recorder opted to accept the Respondent’s position. Accordingly, this was very far from a material mistake of fact of the kind considered in E v SSHD [2004] EWCA Civ 49 at [66], where such mistakes need to be “established” in that they are “uncontentious and objectively verifiable”.
Second, the Recorder’s decision to permit the Respondent to extend its cost budget was a case management decision. It is well recognised that an appeal court should be slow to intervene with such a decision. As the White Book 2026 explains at paragraph 52.3.11, a party applying for permission to appeal to overturn a case management decision made within the judge’s discretion must cross a high threshold (Royal & Sun Alliance Insurance Plc v T & N Ltd [2002] EWCA Civ 1964 at [38]; Walbrook Trustees (Jersey) Ltd v Fattal [2008] EWCA Civ 427 at [33]). In Abdulle v Commissioner of Police of the Metropolis (Practice Note) [2015] EWCA Civ 1260, the Court of Appeal re-affirmed that it would not lightly interfere with case management decisions of lower courts. The reasons the Recorder agreed to extend the budget related to the Appellant’s travel from Poland to attend medico-legal examinations, the obtaining and disclosure of surveillance evidence, and the costs of instructing interpreters to attend hearings. While it was plain that the Appellant disagreed with those reasons, they were plainly reasonable. They were also unrelated to the alleged mistake of fact relating to the joint expert process.
Third, the Judge’s dismissal of the Appellant’s applications to have the Respondent’s cost budget reduced, ideally to nil, on grounds of its “oppressive” conduct, was again a case management decision. It was a highly unusual application. As the Judge identified it was far from clear that there was a power to make such an order. In any event the Judge was entitled to accept Mr Wright’s evidence, not that relied on by the Appellant, which sought to explain the delays in the joint expert process, so as to refuse the application.
Fourth, PD52A, paragraph 4.6 makes special provision for applications for permission to appeal from case management decisions. When considering such an application, the court may take into account whether “(a) the issue is of sufficient significance to justify the costs of an appeal” and whether “it would be more convenient to determine the issue at or after trial”. For the reasons given above, both of those questions would be answered in the negative in respect of both these applications for permission to appeal, which would provide a further basis for refusing permission.
Fifth, the factors relied on by the Appellant in support of his argument that the CPR 52.6(b) test applies, were generic factors that apply in very many cases: there was nothing particularly “compelling” about them.
Conclusion
Mrs Justice Hill held that there had already been very substantial delay in the underlying County Court claim and in both appeals, which had not therefore been conducted efficiently and at proportionate cost. It was also material that the Sir Stephen Stewart order was not the only occasion in the County Court or in this court when the Appellant had not complied with rules, practice directions and orders and there was a need to enforce such compliance.
For all these reasons, having applied the Denton criteria, the court dismissed the Appellant’s application. Both appeals therefore remained struck out.
https://tmclegal.co.uk/wp-content/uploads/2026/06/SZWED-1.webp10861448Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-06-12 14:39:352026-06-12 15:44:56Application 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
This matter arose from proceedings brought in the Technology and Construction Court by The New Lottery Company Limited and Northern & Shell Plc (together, the claimants) against the Gambling Commission (the defendant), with Allwyn Entertainment Ltd, Allwyn International AG, and Camelot UK Lotteries Limited joined as interested parties. The proceedings concerned two distinct but intertwined claims: the Process Claim and the Modifications Claim, both arising from the fourth National Lottery competition, which the claimants described as “the most financially significant procurement process in UK history”.
The Process Claim challenged the conduct of the competition itself, including the evaluation and award process. The Modifications Claim concerned modifications made to the enabling agreement following the award decision. The claimants sought damages in excess of £1 billion and a declaration of ineffectiveness, which, if granted, would potentially have brought the National Lottery to a standstill. The proceedings were substantial, with the list of issues originally running to 64 issues in relation to the Process Claim and 17 issues in relation to the Modifications Claim.
Throughout the proceedings, the claimants advanced numerous serious allegations against the defendant and the interested parties, including allegations of bias, conflicts of interest, pre-determination of the competition outcome, retrospective amendment of reasoning to “retrofit” feedback to scores already awarded, and preferential treatment of Allwyn in the provision of Phase One Feedback. Many of these allegations were abandoned shortly before or during trial, often without notice and without explanation. Issues were dropped at the outset of trial, at the outset of closing submissions, and even during closing submissions, frequently only after the court or the other parties drew attention to the fact that they had not been addressed or could no longer be maintained.
The judgment, handed down by Mrs Justice Joanna Smith DBE, found against the claimants on all material issues. The consequentials hearing took place on 22 May 2026, at which the costs issues described below fell to be determined. By that stage, the claimants were represented by Mr Roger Mallalieu KC, without the assistance of any of their trial counsel. The defendant was represented by Ms Sarah Hannaford KC, Ms Rachael O’Hagan, and Mr Barney McCay, and the interested parties by Mr Mark Howard KC, Mr Malcolm Birdling KC, and Mr Jamie Carpenter KC.
Costs Issues Before the Court
Two principal costs issues required determination at the consequentials hearing.
The first was whether the defendant and the interested parties were entitled to recover their costs on an indemnity basis rather than the standard basis. It was common ground that the claimants were liable to pay the costs of both the defendant and the interested parties on a standard basis. The dispute was as to whether the basis of assessment should be elevated to an indemnity basis. The defendant and the interested parties sought indemnity costs in respect of the entirety of the proceedings, covering both the Process Claim and the Modifications Claim. The claimants conceded realistically that there were grounds for an indemnity costs order in respect of the costs of the trial of the Process Claim, or perhaps the costs of the Process Claim from the date of the pre-trial review, but contended that standard costs should apply to everything else, including the Modifications Claim in its entirety and the Process Claim up to the pre-trial review or the start of trial.
The second issue was whether the court should depart from the general rule that the winning party recovers all of its costs, by making a reduction to the defendant’s recoverable costs to reflect what the claimants characterised as an unreasonable approach to disclosure. The claimants sought a reduction to the defendant’s costs on the basis that the defendant’s conduct of the disclosure exercise had substantially increased the costs of all parties. The figure sought shifted between the witness evidence and the skeleton argument: the thirteenth statement of Mr Bryant suggested a 7.3% reduction, while the skeleton argument for the hearing proposed a 20% reduction for the first time, which would have had the effect of reducing the defendant’s costs bill by approximately £4 million. The application was made on 18 May 2026, four days before the hearing.
A third, more discrete point also arose concerning the extent of the interested parties’ involvement in the proceedings for the purposes of costs assessment, specifically whether the claimants could go behind the agreed list of issues, which had been annotated with references to the pleadings and had delineated the interested parties’ involvement throughout the trial.
The Parties’ Positions
On indemnity costs: The defendant and the interested parties submitted that the conduct of the claimants throughout the entirety of the proceedings was such as to take the case out of the norm and to warrant an order for indemnity costs across the board. They relied upon the cumulative effect of a number of factors: the inadequate and unparticularised pleadings from the outset; the broad and scattergun nature of the allegations, which included serious allegations of impropriety and dishonesty; the repeated and unexplained abandonment of issues and allegations, often at the last moment and without proper notice; the prejudice and disruption caused to the defendant and the interested parties by those abandonments; the unpleaded and fluctuating nature of the allegations advanced at trial; and the weak and speculative character of the claims from the beginning. Ms Hannaford KC submitted that the conduct warranting indemnity costs was not confined to the trial itself, because the conduct at trial was itself a consequence of the highly unreasonable manner in which the proceedings had been advanced from the outset. Mr Howard KC submitted that there was a need for the court to mark its disapproval of the claimants’ conduct by making an order for indemnity costs.
The claimants, through Mr Mallalieu KC, conceded realistically that there were grounds for an indemnity costs order in respect of the costs of the trial of the Process Claim, or at least from the date of the pre-trial review. However, they argued that standard costs should apply to the Modifications Claim in its entirety and to the Process Claim up to the pre-trial review or the start of trial. Mr Mallalieu also submitted that the defendant’s and interested parties’ costs were extremely high and raised proportionality as a relevant consideration in the exercise of the court’s discretion, arguing that the disproportionate level of those costs was a factor that should weigh against an indemnity costs order. He further cautioned the court against the exercise of hindsight in assessing the reasonableness of the claimants’ conduct.
On departure from the general rule: The claimants submitted that the defendant’s approach to disclosure had substantially increased the costs of all parties and that it would be unreasonable or unjust to require them to bear those increased costs. The application was advanced through the thirteenth statement of Mr Bryant, initially proposing a 7.3% reduction, with the skeleton argument for the hearing escalating that figure to 20% without adequate explanation. The claimants relied on the principles set out in TMO Renewables v Timothy Yeo [2021] EWHC 2773 (Ch), [2021] Costs LR 947.
The defendant, through Ms Hannaford KC, characterised Mr Bryant’s witness statement on the subject as “extremely thin” and submitted that the application was little more than a last-ditch attempt to obtain a reduction in the defendant’s costs. The defendant noted that it had had no proper opportunity to put in evidence in response to the application, given the very late service of the witness statement. The defendant also confirmed that it had excluded from its overall costs application both existing costs orders made during the proceedings and costs incurred in relation to the inadvertent disclosure of privileged documents, and that these would not be added back at a later stage.
The Court’s Decision
Indemnity costs: Mrs Justice Joanna Smith DBE ordered that both the defendant and the interested parties were entitled to recover their costs on an indemnity basis in respect of the entirety of the proceedings, covering both the Process Claim and the Modifications Claim.
The applicable principles were not in dispute. The court referred to Three Rivers DC v Bank of England [2006] EWHC 816 (Comm) at [25] per Tomlinson J, which cited Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson [2002] EWCA Civ 879, and to the summary of the law in Hislop v Perde Kaur [2018] EWCA Civ 1726 per Coulson LJ at [35] to [36]. Essentially, there must be conduct which takes the case out of the norm. That is a highly fact-sensitive question and the court’s discretion is extremely wide. The touchstone is unreasonableness, but that unreasonableness must be “to a high degree”. Unreasonable in this context does not mean merely wrong or misguided in hindsight. The court may have regard to an aggregation of factors and there are infinite situations that may give rise to highly unreasonable conduct.
The court found that this was a huge and important claim, billed by the claimants as “the most financially significant procurement process in UK history”. The claimants sought damages of over £1 billion together with a declaration of ineffectiveness which, if granted, would potentially have brought the National Lottery to a standstill. One would expect such a significant and substantial claim to be advanced in a serious, responsible, and proper manner. That was not what happened.
The court noted its observation in the main judgment that, notwithstanding the size of the claim and the legal resources available, the Process Claim had been advanced by the claimants in an apparently unfocused manner, leading to various of the numerous original issues being dropped at the outset of trial, at the outset of closing submissions and even during closing submissions. In many cases, the issues were not dropped until it was specifically drawn to the claimants’ attention by the court or by the other parties that they had not been addressed in the claimants’ written closing submissions or that there no longer seemed to be any viable basis on which they could be maintained. The extent of this moveable feast was regrettable and, given the legal resources available to the claimants, inexcusable. It led to significant time being wasted by the other parties in dealing with issues which were subsequently abandoned. It also risked leaving the court with an imperfect understanding of how the case was being advanced. The court described this as surprising, given the nature and alleged value of the claim, which would be an understatement.
There were numerous serious and wide-ranging allegations, including of impropriety and dishonesty, made by the claimants running through the litigation from the outset. These included allegations of: bias against the defendant as a whole and against specific individuals working for the defendant; conflicts of interest of varying types; pre-determination by the defendant’s Evaluators of the outcome of the Competition leading to only a perfunctory review at moderation; amendments to the defendant’s reasoning after the award decision was made but before it was communicated to the applicants so as to “retrofit” the feedback and comments to the scores awarded; and preferential treatment of Allwyn by the defendant in the provision of Phase One Feedback. These allegations were all advanced over an extended period of time. Many of them were only dropped shortly before or at the trial in wholly unsatisfactory and unreasonable circumstances.
By the end of trial, the list of issues, which originally ran to 64 issues in relation to the Process Claim and 17 issues in relation to the Modifications Claim, had been very substantially reduced, often without any proper notice being given to the other parties. This was, in the court’s judgment, highly unreasonable and wholly out of the norm. The court observed that no explanation had ever been provided by the claimants for their abandonment of any of the issues, nor had any reason been given by them for what the court considered to be a cavalier and highly unusual and unreasonable way of proceeding.
One of the most serious of the allegations made in the Modifications Claim was that the need for the Challenged Modifications was brought about “wholly or substantially by Allwyn’s failures to meet its obligations under the Enabling Agreement”, an allegation which was taken seriously by Allwyn, but mysteriously abandoned by the claimants without explanation during the course of the trial.
In addition to these numerous, serious, and wide-ranging allegations, the scale of the abandonments caused very significant disruption to the court and to the other parties, which the court considered to be out of the norm. It caused significant prejudice to the other parties in terms of their defence of the proceedings, in particular their understanding as to the case that was being advanced against them and the costs they had spent in trying to address that case. It also made it difficult for the court to understand the way in which the case was being advanced. At times, it was advanced in a fluid and apparently fully flexible and opportunistic manner.
Indeed, the claimants advanced a number of wholly unpleaded and unparticularised allegations at the trial and frequently sought to amend and reformulate existing allegations in a manner which the court considered also fell well outside the norm. The court commented on this approach in numerous places in the judgment. At [746] the court observed that the claimants had been forced in light of their abandonments “to reformulate (and often to reinvent their case) at every opportunity” throughout the trial. The court observed that this appeared to be a strong indicator that there was “really no basis whatever for [the] claim of manifest error or, indeed, therefore, for the intervention of the court”.
The court considered that the claimants advanced weak and speculative allegations in respect of both the Process Claim and the Modifications Claim from the outset. They pursued these all the way to trial notwithstanding that they had been notified by the defendant that those claims were doomed to fail from early in 2023. In the Process Claim the claimants had to overcome an almost insuperable hurdle: they had to establish that The New Lottery Company Limited would have passed every one of the 12 Pass/Fail Areas in respect of which it was failed during the Competition and that Camelot and Allwyn should both have been disqualified. The issue of standing, which the court found against the claimants in the Process Claim, meant that, absent proper evidence as to the counterfactual, the Modifications Claim could not succeed. Yet, the claimants fought the Modifications Claim (which it is now accepted was intertwined with the Process Claim) without such evidence. The court also agreed with Ms Hannaford KC that the Modifications Claim was always very weak in its own right owing to The New Lottery Company Limited’s woeful performance in the fourth National Lottery competition, the gap between its score and the scores of Allwyn and Camelot being 30%.
Mr Mallalieu correctly cautioned the court against the exercise of hindsight, and the court considered whether any of these matters might be affected by hindsight, but agreed with Ms Hannaford that hindsight did not affect the analysis in this case given the way in which the trial and case had proceeded from the outset.
Individually or cumulatively, the matters identified by the court were, in its judgment, highly unreasonable and took the case out of the norm. The court relied upon the many detailed points made in the judgment as to the claimants’ poor and unparticularised pleadings, their abandonment of claims, the prejudice and disruption caused by these abandonments, the extent of the unpleaded and fluctuating allegations and the weak and speculative nature of the claims.
The court did not accept the claimants’ evidence in the thirteenth statement of Mr Bryant that they were not to blame for the approach they took to the litigation or that their conduct was the consequence of circumstances imposed upon them. The court also did not consider it to be appropriate to “salami slice” the orders for costs by reference to individual issues or periods of time, as Mr Mallalieu suggested. The court accepted Ms Hannaford’s submissions that the conduct of the claimants which warranted an order for indemnity costs was not just their conduct at trial, because that conduct was itself a consequence of the highly unreasonable way in which these proceedings had been advanced and pursued from the beginning. The pleadings were inadequate and unparticularised from the outset, the claims were weak and none of these issues was remedied prior to trial. The pleadings gave no proper indication to the defendant and the interested parties as to the case that they must meet. The allegations made by the claimants, as Mr Howard KC said, were broad and scattergun because there did not appear to be a realistic pleaded case. They were not supported by adequate evidence from the claimants. Yet the defendant and the interested parties had to expend very considerable amounts of money in preparing to meet those allegations as best they could, only to find them being peremptorily abandoned or changed at trial.
Accordingly, the conduct that the court found to be highly unreasonable was conduct running through the whole of the case. It plainly warranted an order for indemnity costs in relation to the entirety of the proceedings. Further, the court agreed with Mr Howard that there was a need to mark disapproval on the part of the court of such extraordinary conduct by the making of such an order.
During the course of his submissions, Mr Mallalieu suggested that the defendant’s and interested parties’ costs were extremely high, that there were issues arising in relation to their proportionality, and that this was a relevant consideration to take into account in the exercise of the court’s discretion. Specifically he prayed in aid the disproportionate nature of those costs in seeking to persuade the court not to award costs on an indemnity basis. However, the court rejected that submission. The court stated that there is nothing in the authorities to suggest that proportionality is a relevant factor in considering whether to make an order for indemnity costs and that it was inclined to think that it is not. If a party has conducted itself in a highly unreasonable fashion which is out of the norm so as to justify the award of indemnity costs, that party has forfeited the right to any assessment based on arguments of proportionality. In any event, even if the court was wrong about that, it did not consider that Mr Mallalieu’s arguments on proportionality would have shifted the dial given the serious and highly unreasonable nature of the conduct in this case. The conduct here was such that there was no injustice in the claimants being unable to challenge the quantum of the other parties’ costs on the grounds of proportionality.
Departure from the general rule: The court turned to deal with the claimants’ application for the court to depart from the general rule that the winning party should recover all of its costs. The claimants sought an order for a reduction to the defendant’s costs to reflect various issues that they had identified with the disclosure exercise, as explained in the thirteenth statement of Mr Bryant. In short, the claimants submitted that the defendant’s approach to disclosure had substantially increased the costs of all parties involved and that it would be unreasonable or unjust to expect them to pay those increased costs.
The court was referred by Mr Mallalieu to the relevant principles in relation to the approach to costs, which are set out in the case of TMO Renewables v Timothy Yeo [2021] EWHC 2773 (Ch), [2021] Costs LR 947 at [7] to [14]. The court bore those in mind, but did not need to recite them. In the evidence of Mr Bryant, it was suggested that there should be a 7.3% reduction of the defendant’s costs to reflect the unreasonable costs incurred during disclosure. However, in the claimants’ skeleton argument for the hearing it was suggested for the first time that there should be a 20% reduction. No adequate explanation was given as to why that should be the case.
Having considered the arguments, the court was not prepared to make any reduction to the defendant’s costs. Having regard to all the circumstances of this case, the court considered justice to require that the defendant, as the winning party, should be entitled to recover all of its costs.
This application was made only on 18 May (the hearing being on 22 May) in the witness statement of Mr Bryant. Ms Hannaford described Mr Bryant’s witness statement on the subject as “extremely thin”, and the court agreed. No adequate explanation for the proposed reduction had been given. The defendant had had no proper opportunity to put in evidence in response to the application, which the court considered to be unfair, and the court bore in mind that the judgment in this matter had been handed down over a month ago and that this consequentials hearing was taking place, therefore, some considerable time after receipt of the judgment. If an application for a 20% reduction (or any reduction) from the defendant’s costs was to be made, it should have been made with proper notice being given to the defendant.
The court agreed with the defendant that this was little short of a last-ditch attempt on the part of the claimants to obtain a reduction of the defendant’s costs. A reduction of 20% would have the effect of slicing around £4 million from the defendant’s cost bill. The court did not consider there to be any basis for such an order, nor did it consider it to be fair, just or in accordance with the overriding objective to make that order.
The defendant had excluded both existing costs orders made during the course of the proceedings and costs incurred in relation to its inadvertent disclosure of privileged documents from its overall application for indemnity costs. It had confirmed that these would not be added back later. If the defendant spent an unreasonable amount of time on disclosure, that could be addressed on the assessment of costs. The court accepted that there were difficulties in this case with disclosure, but bore in mind that the issues raised in these proceedings necessitated a substantial and complex disclosure exercise. Disclosure in tranches was the subject of court orders, including as to costs. That was not unusual in a case of this magnitude and the court did not consider the disclosure issues identified by the claimants to go beyond what one would expect to see in the ordinary cut and thrust of litigation of this type.
Accordingly, in the exercise of its discretion and having regard to the relevant principles and the overriding objective, this was not a case in which the court should depart from the general rule that the losing party must pay all of the winning party’s costs.
The extent of the interested parties’ interests in the proceedings: Finally, the court observed that the extent of the interested parties’ interest in these proceedings was agreed by the parties in the list of issues which was annotated with relevant references to the pleadings. The trial proceeded on the basis that the list of issues accurately identified and delineated the interested parties’ involvement. The court did not consider there now to be any scope for the claimants to go behind that identification and delineation when it comes to the assessment of costs.
https://tmclegal.co.uk/wp-content/uploads/2026/06/New-Lottery.webp6671000Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-06-08 18:01:022026-06-08 19:47:06Highly Unreasonable Conduct Forfeits Any Right to Challenge The Winner’s Costs On Proportionality Grounds
The NOx Emissions Group Litigation comprises 13 Group Litigation Orders covering claims by various claimants against vehicle manufacturers and dealers relating to alleged emissions irregularities in diesel vehicles. The lead GLO was made against Mercedes, with additional lead GLOs (“ALGLOs”) against Ford, Nissan, Renault and Peugeot-Citroen. The remaining GLOs are referred to as Non-ALGLOs.
Two previous Costs Management Hearings had produced detailed judgments and Costs Management Orders. At the second hearing in July 2025, two phases were adjourned: the ADR/settlement phase of the Second General budget, and the expert evidence phase within Tranche 3. The third Costs Management Hearing took place on 16 April 2026. Following that hearing, the court granted permission for experts in five disciplines to give written and oral evidence at the quantum trial, though the scope of issues was reduced. The parties were given a further opportunity to revise their budgets in light of those decisions. The judgment was handed down on 4 June 2026 by Mr Justice Constable and Senior Costs Judge Rowley.
Both previous judgments had criticised the claimants’ estimated costs in strong terms. At the third hearing, reassurances were again given on behalf of the claimants that the court’s earlier criticisms had been taken on board, particularly regarding the layers of solicitor representation. However, that reassurance was undermined by the claimants’ own counsel accepting that the extent of counsel time, particularly in relation to the experts’ phase, could not be justified and would no doubt be reduced. The court observed that, given that concession, it was not apparent why realistically reduced figures had not been put forward before the hearing.
Issues Before the Court
The court was required to assess and approve budgeted costs for two phases left outstanding from the second hearing. The first was the experts’ phase within Tranche 3, covering five separate expert disciplines. The second was the ADR/settlement discussions phase of the Second General budget, covering the period from 1 April 2026 to the end of the quantum trial in December 2026.
Within the experts’ phase, the court had to grapple with a recurring structural issue: the ratio of legal fees to expert fees. The court had previously commented on the inappropriate level of lawyer time being spent in the curation of expert evidence, and the same concern arose again. The claimants’ budgets for several disciplines reflected what the court described as a “1:1:1” ratio between profit costs, counsel’s fees and experts’ fees, meaning that the total legal spend was approximately twice the amount being charged by the experts themselves. The court had to determine, for each discipline, what level of legal input was reasonable and proportionate relative to the expert work being undertaken.
A further structural issue concerned the claimants’ practice of suppressing profit costs figures to bring them into line with the other two elements. The court noted that this did not address the underlying concern about the overall ratio, and if anything reinforced the view that the legal team’s input into the expert evidence was excessive.
For the ADR/settlement phase, the court was required to assess the claimants’ revised budget of approximately £1.98 million. The defendants’ combined budget for this phase had been agreed by the claimants in its entirety. The court also had to address specific disputes in relation to individual GLOs.
The Parties’ Positions
Claimants
The claimants maintained that their revised budgets, produced following the hearing, reflected the court’s decisions on the scope of expert evidence and were reasonable and proportionate.
In relation to Loss Assessment, the claimants submitted that the list of issues approved by the court encompassed the majority of the issues in their original proposal, together with some further issues and complexities, and that the budgets had not otherwise been reduced beyond a moderate reduction in counsel’s fees.
In relation to Mechanical Engineering, the claimants pointed to the reductions made following the hearing, which they attributed to the removal of the initial joint expert meeting and joint statement, counterbalanced to some extent by the permission given to the defendants to serve additional factual witness statements. The claimants also highlighted the particular demands of the Mercedes GLO given the number of core sample vehicles involved, and the Nissan/Renault GLO which they said justified a higher budget given the involvement of two separate original equipment manufacturers. The claimants relied on the defendants’ own correspondence, in a different context, asserting significant differences in the technical issues facing the manufacturers.
On the 1:1:1 ratio point, Mr Barclay informed the court that the profit costs figures had been reduced to bring them into line with the other two elements, on the basis that this reflected what was reasonable and proportionate in accordance with the statement of truth on the budgets. He characterised this as the solicitors taking a reduction rather than as reverse engineering to produce aligned figures.
In relation to Consumer Behaviour, the claimants submitted that the reduction in scope did not materially affect the work required. For Software Engineering, the claimants said the budgets had been reduced to reflect the fact that no separate reports were required, but that the costs for joint meetings and joint statements would be greater than originally budgeted. For UK Vehicle Valuation, the claimants submitted that the single remaining issue had been significantly expanded and encompassed some of the issues originally set out elsewhere, resulting in only a moderate adjustment to the proposed budget.
Defendants
Numerous defendants’ counsel took aim at the amounts claimed for solicitors’ profit costs, counsel’s fees and experts’ charges. The similarity between them led to the description of them being incurred in a “1:1:1” ratio. After numerous attacks upon the unlikely nature of the similar figures being spent by all concerned, the claimants’ explanation that profit costs figures had been reduced to match the other two elements was described by the court as not reassuring and as not meeting the substance of the criticism, namely that a ratio of 1:1:1 was itself inappropriate.
Mr Carlo Taczalski, for the defendants generally on the Mechanical Engineering issue, disputed the extent of the asymmetry between the claimants and defendants. He accepted that the defendants have in-house expertise but denied that this was a substitute for the work needed to be carried out by the CPR Part 35 expert. Mr Taczalski also disputed that the need to deal with more core sample vehicles justified the claimants’ assumption that there would need to be a double allocation of costs to Mercedes.
Mr Bailey, for Renault, submitted that there was an unexplained discrepancy in circumstances where the claimants’ mechanical engineering expert fees were 1.5 times the defendants’ experts but the solicitors and counsel fees were double. He submitted that the result was more extreme than the 1:1:1 approach seen elsewhere. For Peugeot-Citroen, Mr Hogan described the sums claimed for both expert fees and counsel’s fees as “surprising” and the profit costs as “arbitrary”.
For Software Engineering, the defendants said the work required was limited to the filing of a joint statement following a meeting between the respective experts. Notwithstanding this, the claimants still sought nearly half of the original budgeted sums even though the cost of preparing an initial report and two responsive reports was no longer required. The extent of counsel’s fees was also criticised as not reflecting the expert led exercise allowed by the court.
For Consumer Behaviour, the defendants’ offer of little more than one third of the sums claimed by the claimants reflected the stark difference in the parties’ views of its utility. The defendants made a valid point regarding the reduction in issues to be dealt with by this expert, but their offer allowed for little more than the expert’s fees claimed.
For UK Vehicle Valuation, the defendants referred to the “considerably reduced scope” and quoted the managing judge as saying that the remaining issue was a “very limited question”. The defendants described the remaining issue as being slightly expanded, rather than the claimants’ description of it. Notwithstanding this description, the reduction in the claimants’ budgets of just over a fifth did not reflect the reduction in scope, in the defendants’ submission.
The Court’s Decision
The 1:1:1 Ratio
The court held that the explanation given by the claimants for the 1:1:1 ratio was not reassuring and did not meet the substance of the criticism. The fact that profit costs figures had been suppressed to match counsel’s fees and expert fees did not address the underlying concern about the overall ratio. If anything, it reinforced the view that there was too much input from the legal team into the expert evidence.
The court stated that it ought not to be the case that the legal fees are anywhere close to twice the amount of the expert fees required to produce the necessary evidence. Previous judicial comments had been made about an inappropriate amount of lawyer time being spent in the curation of expert evidence.
The court noted that the budgets produced by the Lead and ALGLO defendants suggested that the legal input of solicitors and counsel combined would be no more costly than the expert evidence and on some occasions rather less. Whilst the court did not rely too heavily upon such budgets, which were inevitably produced on a somewhat speculative basis where the defendants did not consider that evidence was required, it reinforced the view that the amount of legal input into the claimants’ production of expert evidence was some way beyond what was reasonable between the parties.
Loss Assessment
Prior to the hearing, the claimants’ budgeted costs for this discipline amounted to £1,855,808.74 in addition to incurred costs of £2,355,017.34. Following the undertaking to revise counsel fees given at the hearing, counsel’s fees were claimed in the sum of £558,277.87 (a reduction of £62,030.87) whilst the profit costs remained at £618,000 and experts’ fees at £617,500. The overall estimated costs claimed were therefore £1,793,777.87. The defendants’ offer was £1,267,500.
The court noted that the proposed reduction in the legal fees was exactly 10% in this field and that this reduced the proportion from being 2:1 to 1.9:1. The court was under the impression that something rather more significant was being contemplated by the claimants’ legal team.
Taking the experts’ fees figure of £617,500 and doubling it as a starting point to reflect an equal amount for legal fees, the court reached a figure which was below the defendants’ offer of £1,267,500. In such circumstances, it was difficult to consider the defendants’ offer to be anything other than a reasonable sum to allow and so the court allowed £1,267,500.
Mechanical Engineering
Prior to the hearing, the budgeted costs claimed were £3,234,598.19, together with £2,481,298.26 in respect of incurred costs. Following the hearing, the fees were reduced by, in round terms, £279,000 (profit costs), £364,000 (counsel’s fees) and £144,000 (experts’ fees) totalling a revised estimated figure of £2,445,959.49. The defendants’ offer for this element totalled £1,460,605.
The court noted that the incurred costs under this heading were more easily explained than for the loss assessment discipline, given the further testing regime in the context of quantum which had involved mechanical engineers. There was little challenge to the experts’ fees themselves as opposed to the fees expected to be required for legal oversight.
If the court again took, as a starting point, the doubling of the experts’ fees for the various Lead and ALGLOs it reached, in round terms, £680,000 for Mercedes; £340,000 each for Peugeot-Citroen and Ford; and £515,000 in respect of Nissan/Renault.
The court considered that this starting point in respect of Mercedes was sufficiently close to the (revised) sum actually sought by the claimants of £718,681.65 for the estimated sum to be allowed as claimed.
The same was not true for the remainder of the ALGLO budgets, where the total revised sums sought remained significantly in excess of double the expert fees. The court tended to the view that the same sum should be allowed in respect of Peugeot-Citroen and Ford given that these manufacturers would appear to be broadly similar (at least in terms of number of sample vehicles). The figure of £340,000 fell squarely between the offers made by the two defendants. The court considered that the Peugeot-Citroen offer was unrealistic assuming the experts’ fees were allowed as claimed. However, the Ford figure of £400,000 allowed for 1 to 1.5 times those experts’ fees for legal fees and the court viewed this as a reasonable sum to be allowed to the claimants rather than the sum being claimed of nearly £500,000.
In relation to Nissan/Renault, it appeared that both sides were working on the principle that something in the region of 1.5 times the other ALGLO budgets would be reasonable. The court agreed, and with that in mind, allowed £600,000 in respect of that budget.
Accordingly, the court allowed £400,000 for each of Peugeot-Citroen and Ford.
Software Engineering
Costs in respect of this expert discipline were claimed at the GLO specific level. Prior to the hearing the estimated costs claimed were £1,956,800.90. Following the hearing, the estimated costs had been reduced to £759,015.80 based on £234,000 (profit costs), £223,133.70 (counsel’s fees) and £301,882.10 (experts’ fees). This estimated sum was in fact now considerably lower than the £951,128.93 offered by the defendants prior to the hearing. In large part this was explained by the reduction in scope of the evidence allowed.
At the case management hearing, the managing judge ruled that (at least for the time being) there need not be a separate report in addition to a joint report. It was presently anticipated therefore that the software engineers produce a joint report which sufficiently articulates the reasons for any areas of disagreement in respect of any areas where the software engineers cannot agree. The areas of disagreement were anticipated to be limited.
The court accepted that input into discussions as to how helpful the evidence is, or could be, with further exploration, forms an integral part of the experts’ evidence whether in conference with counsel or otherwise. On the face of it, the reduction of a little over half from the previously contemplated figures seemed to the court to be a realistic reduction. Nevertheless, the court saw some force in the defendants’ argument that the proportion of legal time, and in particular counsel input, should be lessened by the reduction in formal documentation needing to be served. On this basis, the court considered that the budgeted sum should be £125,000 per ALGLO save for Nissan/Renault where it should be £250,000.
Consumer Behaviour
Costs in respect of consumer behaviour were claimed at the Pan NOx level. Prior to the hearing they were claimed in a total sum of £1,425,823.50. Following the hearing, the experts’ fees continued to be claimed at £473,900, the solicitors’ fees had been reduced by £7,000 to £465,850 and counsel’s fees by roughly £88,000 to £391,166.51. The revised sum of £1,330,916.51 claimed for estimated costs remained considerably more than the £525,000 offered by the defendants for this field.
In giving permission for consumer behaviour evidence to be produced at the quantum trial, the managing judge emphasised that the evidence obtained from the consumer behaviour expert was to be non-duplicative to work carried out by the loss assessment expert.
The defendants’ offer of little more than one third of the sums claimed by the claimants for this discipline reflected the stark difference in the parties’ views of its utility. However, the court had determined that evidence under this heading was reasonable. Arguments as to utility, when the court may have relied or not relied at all on such evidence may be made in due course in the usual way if or when any costs order is made, but that was not relevant for the budgeting exercise once permission had been granted. Whilst the defendants made a valid point regarding the reduction in issues to be dealt with by this expert, their offer allowed for little more than the expert’s fees claimed.
The court held that there certainly ought to be some reduction in the expert’s fees, given the focussing of the issues and the court’s exhortation to avoid duplicating evidence being provided by other experts. That was also bound to flow through into the associated legal work. Doing the best it could in what was suspected to be a niche area of expertise, the court allowed a total of £1 million at the Lead/ALGLO level.
UK Vehicle Valuation and/or Pricing
The costs in this expert discipline were also claimed at the Lead/ALGLO level. A total of £938,286.95 for estimated costs was claimed prior to the hearing. Unlike the other disciplines, this sum was made up of four essentially equal parts with “other disbursements” adding to the profit costs, counsel’s fees and experts’ fees. The estimated costs were reduced to £730,333.26 following the hearing. The “other disbursements figure” of £219,300 did not change, but the other three elements were reduced to £175,650 (profit costs), £145,583.26 (counsel’s fees) and £189,800 (experts’ fees). The defendants’ offer for this field was £400,000.
At the case management hearing, the managing judge allowed evidence from an expert in this discipline in a considerably reduced scope from that sought by the claimants. Many of the issues proposed by the claimants to be considered by this expert were rejected.
The court thought it was clear from the determination made by the managing judge that the court’s intention was to provide the claimants with no more than a facility to combat the inevitable expertise contained inhouse at the defendants regarding the marketing of their products. The description of a “limited question” based on only one of nine questions originally proposed and with almost no amendment did not fit with the claimants’ approach as described in their post hearing letter.
The defendants had maintained their offer of £400,000 (which was now more than 50% of the total claimed). It seemed to the court that that was an entirely reasonable sum in respect of this element of the budget and it was allowed as such.
Defendants’ Budgets for the Experts’ Phase
It was confirmed by counsel to the court during the hearing that, in respect of the Tranche 3 expert reports, all of the ALGLO and non-ALGLO defendants’ individual budgets had been agreed, save for Vauxhall. All of the other non-ALGLO defendants had agreed their budget at a maximum of £20,000 for the experts in loss assessment and mechanical engineering. Further sums up to £10,000 had been agreed by those same defendants for the three contingent experts’ disciplines.
This left Vauxhall alone in contending for £23,453.56 for the loss assessment and mechanical engineering experts and £11,726.78 in respect of each of the three contingent experts. Ms Collar made oral submissions in support of the non-contingent experts’ budget by making reference to it amounting to less than 30 minutes for considering the main reports and less than 20 minutes for the contingencies. In Ms Collar’s submission, that time could not be reasonably reduced.
The court held that there was certainly the opportunity for the court to vary sums for different defendants in respect of the same phase in an appropriate case. The difficulty with Vauxhall’s argument was that it inevitably led to a consideration of the hourly rates that were charged in combination with the time claimed. It was trite to say that hourly rates were not set when budgets were considered and therefore it was a slippery slope to consider submissions of this nature in any detail. The task of the court was to set the global figure for each phase and it was a matter for the party thereafter as to what level of lawyer dealt with what aspect of the work required.
All of the non-ALGLO defendants would have to carry out similar work in respect of considering the expert reports obtained in the Lead and ALGLO cases. There was no good reason, as far as the court could see, for Vauxhall to be required to spend more time and effort in this task than any of the other non-ALGLO defendants. The other defendants had either estimated amounts less than £10,000 or £20,000, or been prepared to agree offers, at those sums. The court therefore came to the conclusion that the reasonable sum to allow for Vauxhall’s budget in respect of the Tranche 3 expert reports was also the combined figure of £50,000 made up of £20,000 and three £10,000 budgets.
The entirety of the defendants’ budgets for this phase had been agreed by the claimants. The current defendants’ budgets totalled £1,687,074.55, representing a reduction of a little over £100,000 from the budget put forward for the second hearing.
The claimants said that it was not always obvious why there was a variation in the budgets between defendants given the paucity of assumptions set out. However, the claimants were committed to ensuring that all parties were adequately resourced to engage meaningfully and constructively in ADR/Settlement Discussions and were open to any approach that may facilitate a productive resolution of the dispute, including giving the defendants the benefit of the doubt in their estimates for the ADR phase. Accordingly, the claimants were prepared to agree the totality of the defendants’ projected future costs in the ADR phase of the Second General Budgets.
The court held that it did not seem that the claimants’ approach of effectively agreeing to whatever the defendants said they required to enter into ADR was one which should be endorsed by the court. This was particularly so where the claimants’ own assumptions for this phase were now much more limited. They accepted the defendants’ view that it was unlikely there would be any substantial settlement discussions before the formal PDD judgment was handed down (probably in July). The claimants said that any settlement discussions taking place would be informal rather than via any formal ADR process such as a mediation. Any settlement work was likely to take place prior to the quantum trial beginning in October and that thereafter, the parties would be too busy with the trial to be able to engage in settlement discussions. In any event, no concluded settlement was expected to be reached by the end of the period (31 December 2026), or indeed nor was it expected that any discussions were likely to have reached an advanced stage by then.
Given these limitations, the court recalibrated its view of the sufficiency of the defendants’ estimated costs. Rather than being the lowest sum which could be put forward to avoid judicial criticism, the court took the view that they were quite generous. As such, they had relevance to the sums claimed by the claimants.
The total sum claimed by the claimants had reduced markedly from the previous figure of £11 million to one of £1,984,770. Those costs were claimed against the individual GLOs with just over £1 million claimed against the Lead and ALGLOs and just under £900,000 being claimed against the Non-ALGLOs. The defendants’ offer of £1,211,162 broke down almost exactly two thirds/one third between the Lead and ALGLO defendants and the Non-ALGLOs.
For Peugeot-Citroen, the claimants claimed £192,136 and were offered £168,330 for this phase. The reason for the difference was the sum claimed for the non-lead firms of £52,836. The defendants’ offer allowed for £29,030 for that work on the assumption that the lead solicitors’ time and disbursements were allowed in full.
The lead solicitors’ time in respect of each of the Lead and ALGLOs’ budgets was claimed at the same figure and so too were the disbursements. The only variable between those budgets was where there was a steering committee involved, such as in the Mercedes GLO, and the number of non-lead solicitors involved. In respect of the latter, 17 hours per non-lead solicitor had been allowed for in the claimants’ budgets, save for the Johnson Law Group who had been allowed 25.5 hours and who were intending to provide a co-ordinating role amongst non-lead solicitors in the GLOs in which they were involved.
Mercedes and Ford had agreed figures with the claimants in respect of their budgets. Assuming that the lead solicitors’ time and disbursements had been allowed in full in each, these agreed budgets suggested that Ford had allowed the equivalent non-lead solicitors’ time in full and Mercedes had reduced the non-lead solicitors’ time by roughly one third. The Ford and Mercedes agreements with the claimants suggested that the Peugeot-Citroen offer of 55% or thereabouts was a little low and the court allowed £175,000 for this phase.
For Nissan/Renault, the claimants’ figures were double the other ALGLOs in respect of lead solicitors’ time and disbursements and totalled the sum of £406,816. Nissan offered £235,000 and Renault offered £221,846. At first blush, the defendants had offered at least as much as was being claimed by the claimants and it might be expected that the claimed figure would therefore be agreed. However, the claimants understood from past experience that the Nissan/Renault defendants made separate and different offers which were not capable of being accepted without the agreement of the other. In practice, this meant that the lower of the two offers was the only one which the claimants could actually accept.
In submissions, Mr Teasdale did not shy away from the doubling of the figures under this phase and pointed to the defendants’ budget discussion reports which indicated that, at least as far as Renault were concerned, there would not be any coordination between the defendants in respect of settlement. If the defendants were to go in different directions, then there was no justification for suggesting that the claimants’ costs in this ALGLO should be similar to those in the other ALGLOs. Whilst he contended for the doubling figures in their entirety, Mr Teasdale indicated that in any event, the figures would be higher than those agreed in the Mercedes GLO.
The budgeted figures for these defendants were £200,840.00 (Nissan); £7,675.00 (Nissan authorised dealerships) and £144,966.30 (Renault), making a total of £353,481.30. Based on these figures agreed between the parties, it would appear that the defendants expected to spend approximately 1.5 times more than they considered was reasonable for the claimants to spend in respect of any settlement negotiations.
The court held that there were numerous possibilities as to the methodology of any settlement reached between the claimants and some or all of the defendants. The estimated figures were therefore particularly broad brush in this phase. The court did not think there was any great purpose in considering whether doubling the claimants’ figures in order to cope with two separate OEMs was precisely the correct approach. But it seemed unlikely that the claimants would spend less than the defendants in such negotiations. Consequently, the court considered that £350,000, representing essentially the same sum as claimed by the defendants overall, was the reasonable and proportionate sum for this phase.
For the non-ALGLO defendants, all offered the sum of £50,000 to the claimants in the budget discussion reports in respect of each GLO specific budget. By the time of the hearing, Toyota had agreed a sum of £69,450, but the remaining seven budgets were not agreed. The sums claimed by the claimants in those budgets ranged from £75,400 to £149,363. The lowest three budgets (including Toyota) had been reduced following a decision by the claimants to reflect the fact that in those budgets, only one of the lead solicitor firms was instructed by the claimants. As such, less work was likely to be done. Overall, the claimants did not accept that simply halving the time claimed was appropriate.
The other five budgets were much closer in range (between £121,486 and £149,363) and, as with the ALGLO budgets, they were based on a standard figure for the lead solicitors and for counsel’s fees. Those figures were reduced. As with the ALGLO budgets, these non-ALGLO budgets varied depending upon the amount of non-lead solicitors’ time involved. They contained the same amounts of time as for the ALGLO budgets in respect of each individual non-lead solicitor.
The non-ALGLO defendants’ own budgets generally ranged between £40,000 and £70,000 with Volvo (£82,827.50) and Vauxhall (£103,836.91) being the outliers.
The defendants’ offer of £50,000 on the claimants’ budget per non-ALGLO defendant was said to be based upon the allowances made in the first hearing judgment regarding this phase. However, as Mr Teasdale pointed out, the figures in fact varied quite considerably, with, for example, the budget in the Vauxhall GLO being allowed at £100,000 whereas in the Toyota GLO it was £20,000, which perhaps reflected the suggestion that it ought to be at the lower end of the sums involved given the comparative simplicity of any settlement mechanism. The court considered it was difficult to say any standard figure ought properly to apply in this phase. Even a regimented methodology for settlement of individual claims would require more time where there were considerably more claimants than in others. The court therefore rejected the defendants’ approach of simply allowing a standard figure.
Nevertheless, the court considered the defendants’ two thirds/one third approach between ALGLO and non-ALGLO defendants to be a more appropriate division than allowed for in the 55/45 figures proposed by the claimants and moved the sums allowed towards the defendants’ split. As Mr Kapoor submitted on behalf of the defendants on this subject, any settlement of these claims was likely to be based on a framework which cascaded from the lead and ALGLO defendants to the non-ALGLO defendants, at least in its general shape.
The court also agreed with the general thrust of the defendants that any negotiation would have to be dealt with in a compressed period. Until the PDD judgment was available for consideration, little or no negotiating was likely. Once the quantum trial had commenced, the scope for industry in respect of settlement was also constrained. The court acknowledged Mr Teasdale’s comments that if there was traction in the manner of any negotiations, then significant time may be spent in seeking to resolve the claims. Equally, there may be little or no traction and the court’s task was not to budget on a worst case approach.
Balancing these various factors, and having allowed £975,986 in respect of the ALGLO budgets for this phase, the court allowed the sum of £649,450 in respect of the non-ALGLO defendants. The court allowed a maximum of £75,000 in respect of the single lead firm defendants and allocated the remainder so as to achieve a figure which was approximately 60%/40% overall.
Conclusion
The court’s approach to the experts’ phase established a clear methodology: doubling the approved expert fees as a starting point for reasonable legal costs. This produced total allowed costs of £5,411,181.65 for the claimants and £12,858,057.16 for the defendants.
For the ADR/settlement discussions phase, the court allowed £1,625,436.00 for the claimants and £1,687,074.55 for the defendants. The court rejected both the claimants’ initial £11 million estimate and the defendants’ attempt to impose a uniform £50,000 cap across all non-ALGLO defendants, instead adopting a nuanced approach that reflected the varying complexity of individual GLOs while maintaining an overall two thirds/one third split between ALGLO and non-ALGLO work.
The judgment reinforces the principle that legal fees for curating expert evidence must bear a reasonable relationship to the cost of the expert work itself, and that a ratio approaching 2:1 in favour of legal fees will ordinarily be regarded as disproportionate in multi-party litigation.
https://tmclegal.co.uk/wp-content/uploads/2026/06/Various-Claimants.webp10241536Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-06-04 17:00:172026-06-04 17:02:58High Court Cuts Claimants’ Expert-Phase Budgets, Holding Legal Fees Should Not Be ‘anywhere close to twice the amount of the expert fees’
The County Court at Central London’s decision in O’Sullivan v Trading 212 UK Limited [2026] EWCC 32 addresses the circumstances in which a court may depart from approved costs budgets under CPR 3.18 when conducting a summary assessment following trial.
Background
This matter concerned a claim brought by Mr Peter O’Sullivan against Trading 212 UK Limited, arising from the closure of his share trading account in August 2021. The substantive judgment, delivered orally by Recorder Benjamin Wood on 12 February 2026 at the County Court at Central London, dismissed the claim. The recorder found that the defendant had both the contractual right and the regulatory obligation to close the account, the latter arising under the applicable anti-money laundering regulations, though no suggestion was made that the claimant had been involved in anything other than entirely legitimate activity.
The claim had been valued at under £30,000 on the Claim Form, with the prayer to the Particulars of Claim pleading monetary relief of £37,106. No non-monetary relief was sought. As the recorder noted in the costs judgment, when properly analysed, the claim was only ever worth a few thousand pounds. It turned on the application of the relevant regulations and the parties’ written contract to a set of facts that were largely apparent from contemporaneous written communications, with the relevant documents running to no more than a few dozen pages.
The claim was initially issued and case managed in Hull. A costs and case management conference took place before a district judge at the County Court at Hull on 11 December 2024, at which the claim was allocated to the multi-track and a costs management order was made. The claimant’s budget was agreed at £59,575 (of which £8,625 had already been incurred), and the defendant’s budget was approved at £188,558.98 (of which just over £88,000 had already been incurred). All figures in the judgment were stated net of VAT.
The defendant applied to strike out the claim on the basis that the claimant’s conduct, which was said to involve attempts to interfere with witnesses and intimidate the defendant’s employees, jeopardised the fairness of the proceedings. That application was heard on 15 September 2025 and adjourned, with the claimant offering undertakings to the court. Costs were reserved. The claimant’s costs schedule for that hearing totalled £20,800 and the defendant’s totalled £59,513.67, both figures being additional to the budgeted costs.
At the pre-trial review on 16 October 2025, a circuit judge increased each party’s budget by £18,243.50. Three phases of the claimant’s budget were increased (witness statements, PTR and trial preparation) and two of the defendant’s phases (witness statements and trial preparation) were increased.
During the course of the trial itself, the defendant produced late disclosure of documents, including internal “Slack” messages, which ought to have been identified and disclosed considerably earlier. That late disclosure generated a significant volume of additional work, including a partially successful and partially unsuccessful application to amend the Particulars of Claim. Both parties filed Precedents T in respect of their increased costs: the claimant’s increase was £54,115 and the defendant’s was £63,330.91, though the defendant later indicated it would seek only £41,477.33 of that figure.
By the time judgment was handed down on the substantive claim, the parties had, between them, a little over £482,000 in costs on the table. The recorder noted that the parties’ actual costs incurred were somewhat higher: the claimant had spent just under £246,426.54 and the defendant had spent £452,456.26, giving a combined total of approaching £700,000 in actual costs incurred in a dispute worth, on the recorder’s analysis, around £5,000.
There being insufficient time to deal with consequential matters on 12 February 2026, the recorder gave directions for the resolution of costs issues. Written submissions were received from both parties. The claimant requested that costs be determined on paper; the defendant requested a hearing. Following consideration of the written submissions, the recorder directed an oral hearing, which took place on 21 May 2026. The costs bundle, which had originally been 54 pages, had grown to 205 pages by the time of the hearing, with both parties having produced further written submissions without invitation or permission to do so. The defendant also filed an N260 indicating costs of just under £30,000 for the hearing on 21 May alone. The claimant filed a costs schedule of £1,925 for that hearing.
Throughout the proceedings, the claimant had been represented by Anthony Metzer KC and George Symes of counsel, instructed by Andreas Laws. The defendant was represented by Anna Greenley of counsel, instructed by Winckworth Sherwood LLP. At the costs hearing itself, the claimant chose to appear in person, assisted by his wife, on the basis that he wished to save money. Following the conclusion of the hearing, the claimant sent two further detailed emails to the court containing additional submissions, the second of which prompted an order that neither party should file further submissions without applying formally and on notice.
The recorder noted that, so far as could be discerned from the absence of any witness statement explaining a refusal of an ADR proposal (as would have been required by the CCMC order), neither party had proposed mediation, early neutral evaluation or any other form of ADR at any stage.
Costs Issues Before the Court
The recorder was required to determine a number of distinct costs issues following the dismissal of the claim. The principal question was what costs order, if any, should be made, and in particular whether the general rule under CPR 44.2(2) should apply so as to require the unsuccessful claimant to pay the defendant’s costs, or whether the conduct of the parties, and in particular the defendant’s late disclosure and the circumstances surrounding the strike out application, justified a departure from that general rule or a modification of any order made.
Two specific conduct-related issues were identified as warranting separate treatment. The first concerned the defendant’s failure to comply with its standard disclosure obligations until the trial had almost concluded, specifically its failure to search for and disclose internal Slack messages. The second concerned the claimant’s conduct in the period leading up to the defendant’s strike out application, which had been heard on 15 September 2025 and adjourned on the basis of undertakings.
A further significant issue arose in relation to the costs management orders made at the CCMC and PTR, and specifically whether there was good reason, within the meaning of CPR 3.18, to depart from the approved and revised budgets when carrying out the summary assessment. The recorder considered the competing approaches in RNB v LB Newham [2017] EWHC B15 (Costs) and Nash v Ministry of Defence[2018] EWHC B4 (Costs), as well as the principles established in Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 WLR 3399.
The court was also asked to carry out a summary assessment of the costs of both parties in respect of the various elements of the order. The claimant sought assessment of his costs arising from the defendant’s late disclosure, as set out in his Precedent T dated 6 February 2026, totalling £54,115. The defendant sought costs of the claim as a whole, including the costs of the strike out application (£59,513.67), budgeted and incurred costs, Precedent T costs and the costs of the hearing on 21 May 2026 (approximately £30,000), though the latter figure was not included in its formal quantification document.
Finally, the claimant raised the question of whether any order for payment of costs should be stayed pending the determination of his application for permission to appeal the substantive judgment.
The Parties’ Positions
The claimant’s position, as developed through his written submissions settled by counsel and his own oral and written submissions at the costs hearing, was that the defendant should pay his costs in relation to steps caused or prolonged by the defendant’s conduct, and that, save in relation to those issues, there should be no order as to costs. This represented a hardening of the position set out in his earlier written submissions of 26 February 2026, in which it had been submitted on his behalf that the fairest order was no order as to costs save for those costs directly consequential on the defendant’s late disclosure, with any costs order in favour of the defendant being drastically reduced in the alternative.
In relation to the defendant’s late disclosure, the claimant submitted that he should have his costs consequent upon this misconduct on the indemnity basis, on the basis that the conduct was analogous to that of the defaulting claimant in Finsbury Food Group plc v Axis Corporate Capital UK Ltd [2023] EWHC 1559 (Comm), whose conduct was described by the Deputy Judge as “profoundly unsatisfactory“.
The defendant’s position was that the correct and just order was that the claimant pay the defendant’s costs, save for a limited concession in respect of the costs of the reconvened trial and of considering the late disclosure. The defendant submitted that it should have its costs in relation to the strike out application on the basis that it was necessarily made, relying upon the matters set out in the witness statement of a partner at Winckworth Sherwood dated 10 June 2025.
The General Rule and Conduct
The recorder began by noting that costs are in the discretion of the court, but that the discretion must be exercised judicially. CPR 44.2(2) provides that if the court does decide to make an order about costs the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. The successful party was the defendant, because the claim had been dismissed.
Following CPR 44.2(4), the court must have regard to all the circumstances in deciding what order to make about costs, including the conduct of all the parties, whether a party has succeeded on part of its case (even if it has not been wholly successful) and any admissible offer to settle. In this case, there had been no admissible offers to settle other than an offer from the defendant to the claimant, made on 29 October 2025, which was to accept just over £160,000 in respect of its costs as they then stood.
Much of the parties’ focus in their costs submissions had been on conduct, and in particular on each other’s conduct. The recorder observed that the case had been extremely hard fought and every point that could be taken had been taken. One of the difficulties with conducting litigation in this way is that costs rise and, because people become polarised and irritated with each other, they take more and more points in their scramble for victory.
With two exceptions, the recorder did not consider it would be just, having regard to the conduct of both the parties, to start doing a fine analysis of the impact of particular elements of conduct that might be said to have had an impact on the costs. This included all of the conduct points made by the claimant in his written submissions after the hearing and in his own written submissions relied upon at the hearing, to the extent that there were admissible conduct points and not impermissible challenges to the substantive judgment. The recorder considered that it would be wholly disproportionate for the court to descend into the level of detail that appeared to be envisaged.
The recorder therefore did not propose to make an adjustment to the costs order for general conduct points. The two specific points that did warrant separate consideration were the defendant’s disclosure and the claimant’s conduct leading to the defendant’s strike out application.
The recorder also noted the claimant’s position as expressed in his email of 22 May 2026: “I know the difference between right and wrong, and that is all that matters to me. I will either get Justice or I will end up penniless trying. I have my principles your Honour, they are expensive but I will not depart from them.” The recorder further noted that the claimant had not accepted the Financial Ombudsman’s decision of 2 December 2022, which had concluded that the defendant had not done anything substantially unfair or unreasonable in restricting and then closing the claimant’s account.
Having considered the parties’ submissions, and subject to those two points, the recorder concluded that there was no reason to depart from the general rule that the unsuccessful party should pay the successful party’s costs.
The Defendant’s Disclosure
As the recorder had explained in his substantive judgment, the defendant had not complied with its standard disclosure obligations until the trial had almost concluded. In particular, it failed to carry out a search for internal “Slack” messages as part of its initial disclosure searches, in spite of the fact that these might have revealed the internal communications that led to the decision to close the claimant’s account. The absence of such messages in the defendant’s disclosure led its witness (who had left the defendant’s employment in 2022, years before the disclosure exercise was undertaken) to give evidence that was wrong, to the effect that there was no paper trail. It was evident that the witness said this because of the absence of any disclosed communications and not because the witness was trying to hide anything.
Even at the time of the costs judgment, it was not really clear why the defendant failed to disclose those Slack messages as part of its standard disclosure and, in fairness to its Company Secretary and Legal Counsel, who made an explanatory witness statement during the course of the trial, even she did not appear fully to understand what went wrong. But something did go wrong on the defendant’s side and it led to this case taking up a great deal more court time and the incurring of a great deal more expense on both sides.
In reaching that conclusion, the recorder also reflected his earlier conclusion that there were no adverse inferences that ought to be drawn from the non-disclosure or late disclosure and that, by the time he gave judgment on the substantive claim, the defendant was compliant with its disclosure obligations. It followed that the defendant’s late disclosure did not change the outcome of the litigation. The recorder also had no basis to conclude that the late disclosure might have altered either party’s approach to the litigation.
The defendant had partially conceded that it should not recover its own costs in relation to its late disclosure, nor of the reconvened trial. The claimant submitted that he should have his costs consequent upon this misconduct on the indemnity basis.
In the recorder’s judgment, the just costs order in relation to disclosure was that the defendant should not receive its costs of the disclosure phase and that it should pay all of the claimant’s costs consequent upon the late disclosure, on the standard basis, including the costs of the unsuccessful elements of his re-amendment application.
In making this order, the recorder sought to strike a balance between marking the court’s disapproval of a sophisticated financial institution’s failure to comply with its procedural obligations and the undesirability of encouraging an “innocent” party to act disproportionately in response. The recorder was not persuaded that the defendant’s conduct was “unreasonable to a high degree” and “out of the norm” such that nothing less than an indemnity costs order would be appropriate and was also not persuaded that the claimant should be deprived of any of his consequential costs so as to reflect the outcome of the work that was carried out. To the contrary, it seemed to the recorder that the additional costs were precipitated by the defendant’s conduct in circumstances where they would otherwise probably have been avoided altogether. It also seemed that the defendant should not have any of its costs of a phase that it failed to conduct properly, even though the recorder recognised that at least an element of this phase would reflect costs incurred in carrying out its own review of the other side’s disclosure.
The recorder was not trying to draw a sharp line around the costs that go in each direction but to work with a rather broader brush. The costs orders in relation to disclosure were made after having stood back and in order to reflect the overall justice of the case.
For the sake of completeness, the recorder also recorded his rejection of the defendant’s submission that he ought to take account of what it said was “significant disclosure outstanding from the Claimant despite repeated requests”. There was no application by the defendant for specific disclosure or specific searches, none of the claimant’s disclosure (or allegedly non-disclosed material) was relevant to the issues that the recorder was or is now required to decide and he was not a sophisticated financial institution with in-house lawyers.
The Defendant’s Strike Out Application
The defendant applied to strike out the claimant’s claim on the basis that his conduct, in seeking to interfere with witnesses and intimidate the defendant’s employees, jeopardised the fairness of the proceedings. That application was heard on 15 September 2025 and adjourned on the basis of undertakings being offered by the claimant to the court, with costs reserved.
The defendant submitted that it should have its costs in relation to that application, on the basis that it was necessarily made. It relied upon the matters set out in the witness statement of a partner at Winckworth Sherwood dated 10 June 2025, which set out what were said to be “a continuous pattern of threatening conduct by the Claimant to the Defendant from December 2021 to at least March 2025 (and possibly to May 2025 through anonymous communications). The effect of the Claimant’s threatening contact with the Defendant and its former employees has been to (i) prevent key witnesses giving evidence, and (ii) cause current members of the Defendant considerable anxiety about giving evidence and becoming known to the Claimant. This jeopardises a fair trial“.
The claimant submitted that he should have his costs of the application, primarily on the basis that the defendant failed to get the claim struck out and, in pursuing such an optimistic application, failed to consider witness summonses or special measures for the hearing, with the consequence that the application as framed was doomed to fail.
Furthermore, in his more recent submissions, the claimant drew attention to what he said were contradictory and unsatisfactory signals from the defendant and its legal team which, he submitted, undermined the assertion that there was any need for the application and instead indicated that the defendant was trying to present an “aggressive fear narrative“. The recorder noted that the claimant did not deny any of the conduct that was directly attributable to him.
The claimant was also very aggrieved by the order that was made at the pre-trial review, in relation to special measures, which resulted in his having to observe the trial by video (from his counsel’s chambers) and only to attend the courtroom when he was giving evidence. The defendant’s witness was in the same position. Although the claimant was able to communicate electronically with his legal team, he submitted that this was very difficult and meant that he could not correct mistakes and give other instructions as the trial proceeded.
The recorder paused to note that, according to the defendant, the hybrid hearing proposal was made on behalf of the claimant at the PTR; there was no challenge to the arrangements, either by way of appeal or by application to the recorder during the course of the trial; the person who became the defendant’s only live witness was reported to be fearful and the recorder later received evidence of the witness’s emotional state shortly after their evidence had concluded; and the court is required to consider special measures for vulnerable witnesses, as set out in Practice Direction 1A.
The recorder rejected any implication by the claimant that the special measures directed by the court at the PTR came about as a result of any cynical attempt by the defendant to gain a tactical advantage.
However, the recorder recognised that the defendant’s strike out application probably raised, rather than lowered, the temperature of the dispute and that it would have created even more polarisation between the parties. The defendant (or its legal team) did not appear to have sought alternative relief (such as special measures, an order preventing contact or similar) short of strike out.
Nevertheless, the recorder was satisfied on the basis of the material that had been shown to him and the submissions of both parties that an application of some sort was appropriate and it was appropriate to seek the court’s intervention so as to facilitate the giving of best evidence by witnesses and so as to enable both sides to have a fair trial.
The recorder therefore ordered the claimant to pay the defendant’s costs of such an application (and the resulting hearing), on the standard basis.
The Budgeted Costs and CPR 3.18
Some of the costs in respect of which the recorder had decided to make a party/party costs order had been the subject of costs management orders (made at the CCMC and at the PTR). Others (including the costs incurred prior to the CCMC, those of the strike out application and those consequent upon the defendant’s late disclosure) had not been managed by the court.
CPR 3.18 provides that in any case where a costs management order has been made, when assessing costs on the standard basis, the court will have regard to the receiving party’s last approved or agreed budgeted costs for each phase of the proceedings, not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so, and take into account any comments made pursuant to rule 3.17(3) and recorded on the face of the order.
Carr J (as she then was) drew attention to the importance of this Rule in Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 WLR 3399. Her Ladyship pointed out at paragraph 67 that the words are “clear” and “mandatory” and explained the purpose and effect of the Rule. Real emphasis needs to be placed on the importance of certainty on costs in the context of access to justice. Costs budgets serve the important function of giving certainty to clients, in the form of knowing what costs they are likely to face, in terms of payment or recovery:Harrison v University Hospitals NHS Trust [2017] EWCA Civ 792, [2017] 1 WLR 4456 per Davis LJ.
However, neither of these decisions contains any guidance as to what would constitute a “good reason” to depart from an agreed or approved budget. The editors of the White Book (at 3.18.3) invite judges to have in mind the Denton test. They go on to identify two decisions which are said to “support the view that a costs judge may depart from the last approved or agreed budget if satisfied that the total costs incurred are disproportionate”.
Although the question of whether to depart from the budgets loomed large, neither party referred the recorder to these decisions and so he had not heard argument about them. The recorder considered whether to invite submissions on their effect but decided that to do so would be disproportionate, adding yet further cost and delay to an already protracted and overly expensive dispute.
In RNB v LB Newham [2017] EWHC B15 (Costs), the Deputy Costs Judge concluded that, if a court on assessment reduces the hourly rates for incurred costs, then this is a good reason to depart from the approved budget (to reflect the hourly rate reduction within the budgeted costs). At paragraph 24 of the judgment, the Deputy Costs Judge drew support for that conclusion from paragraph 73 of Merrix, noting that the rates allowed for incurred costs would need to be applied to the budgeted costs.
In Nash v Ministry of Defence [2018] EWHC B4 (Costs), the Costs Judge took a different view, concluding that hourly rates should not be treated as holding a special status. However, at paragraph 88, he drew attention to the wording at the end of CPR 3.18 as “in recognition that the facts and circumstances in which a costs management order was made may have subsequently changed without revisions being made to the budget“. He went on to give an example where “a change in facts and circumstances led to simplification of matters” without budgets being revised to reflect this such that the addition of the assessed incurred costs to the budgeted costs led to a disproportionately high total. At paragraph 90, he described CPR 44.3(2)(a) as “an effective safety valve for paying parties to seek a further reduction” and concluded at paragraph 91 that “a paying party retains the ability to argue that the overall sum of assessed incurred costs plus budgeted costs is disproportionate such that the overall sum should be reduced“.
It was right at this point to identify the hourly rates of the defendant’s solicitors. Prior to 1 May 2025, the Grade A rate was £605 (rising since then to £650). The Grade B rate was formerly £460 (rising to £495). Grade C actually decreased, from £345 to £340, and Grade D went up from £175 to £205.
The 2025 Guideline Hourly Rates for London 1 for grades A to D were £566, £385, £299 and £205, respectively. “London 1” is defined as “very heavy commercial and corporate work by centrally based London firms“. The rates for London 2 (City and Central London, other work) were £413 (A), £319 (B), £269 (C) and £153 (D). The National 2 rates (which would apply to work carried out in Hull, where this claim began life) were £282 (A), £242 (B), £196 (C) and £139 (D).
The hourly rates of the defendant’s more senior solicitors were significantly higher than any of the guideline rates, and higher even than the guideline rates for very heavy commercial work conducted by centrally based London firms. The claimant had drawn attention in his submissions to the fact that his solicitor was a grade B, working for £300 per hour, but the recorder did not find this comparison to be of any assistance.
The recorder spent some time reflecting upon whether there was a “good reason” to depart from the approved budgets and came to the conclusion that there was, both working from first principles and by parity of reasoning with each of the costs judges’ decisions (hard to reconcile though they might be).
Starting from the position of hourly rates (and so following the reasoning in RNB), the recorder could not see any justification for the defendant being entitled to recover its solicitors’ time at the hourly rates claimed. This was a claim that started in Hull (and was case managed there) and was always of modest value. Even though the defendant was based in the City of London, and was a financial organisation, this case did not justify the involvement of “London 1” solicitors. The recorder was far from convinced that it required London-based solicitors at all, given how many firms operate outside London, including those with financial services specialisms (if that was required).
In the recorder’s view, when it came to an assessment of costs, it would be necessary to reduce the solicitors’ rates by something between around a third and a half, in the case of the more senior solicitors, and by something between around a quarter and a third, in the case of the more junior solicitors. If that was required for the incurred (and not budgeted) costs, then it would, applying RNB, be a good reason to depart from the approved budgets in order to apply the same reductions.
If, on the other hand, the recorder adopted the reasoning in Nash, then he would need to ask himself whether there had been a change in facts and circumstances so as to justify the use of the “safety valve” of seeking a further reduction. As the recorder understood the reasoning in Nash, a change of circumstances would need to be required if the court were considering reducing the overall level of costs below the total of the approved costs. The recorder took the view that, in spite of the parties’ best efforts, there had been a simplification of the issues, such that the total level of expenditure was disproportionately high.
Finally, the recorder reached the same outcome from first principles. As the trial judge, he had the opportunity to review the material and form conclusions about the issues to a far greater degree than the costs managing judge.
The recorder had been able to form views about the factors set out in CPR 44.3(5). He had formed a view about how much this case was really worth. This was and was only a money claim; the case turned on a relatively small number of documents, the application of the anti-money laundering regulations and the interpretation of the written contract between the parties; each side had generated additional work (which could not have been envisaged when the costs management order was made); there were no wider factors of reputation or public importance; the vulnerability of the defendant’s witnesses came to light (and became an issue) only after the costs management order was made.
Put shortly, the recorder took the view that the judge who made the costs management order did so on a basis that had turned out to be completely wrong. Had the judge known what the recorder knew at the time of the costs judgment, it was vanishingly unlikely that this case would have been allocated to the multi-track and it was “all but inconceivable” that the parties would have been allotted 3.5 days of court time for the trial. Even if it had been treated as a multi-track trial, the shorter time estimate ought to have led the court to approach the cost budgeting exercise in a very different way. The parties would have been expected to cut their cloth much better to reflect the pleaded value of the claim.
The recorder wished to emphasise that nothing in the previous paragraph was intended as any criticism whatsoever of the case managing judge (who would no doubt have dealt with this case as part of a busy list and on the basis of the limited information provided by the parties) nor to suggest that there was any impropriety on the part of any of the lawyers.
The recorder recognised that this was the claimant’s claim and that it might be thought unfair to visit his misjudgement upon the defendant as the receiving party.
However, there were three main reasons why this did not prevent the recorder from concluding that he ought to depart from the approved budgets.
First, it is the duty of all parties (and not just a claimant) to assist the court to manage a case proportionately. If a defendant falls into the same errors as a claimant (or different errors with the same consequences) in over-egging a claim at the case management stage, then that defendant shares responsibility for the consequences.
Second, the effect of this decision was not to ignore the approved budget altogether, but to permit departure from it. In that regard, the defendant was right to draw attention to the fact that the claimant had been well aware of the potential scale of his liability for a long time. And a receiving party’s last approved or agreed budget is one of the factors that the court will have regard to, applying CPR 44.4(3)(h).
Third, and in the particular circumstances of this case, it seemed rather more appropriate to evaluate the ways in which the paying party had generated additional work at the end of the claim, rather than at the case management stage.
The recorder therefore concluded that there was a good reason to depart from the defendant’s approved (and revised) cost budget.
Summary Assessment
Having reached conclusions about what costs orders to make and as to the effect of the costs management orders, the recorder turned to the summary assessments that both parties agreed should be carried out.
In undertaking a summary assessment, the recorder’s task was not to undertake a detailed, item by item analysis, but to arrive at a figure which reflected, on a broad-brush basis, costs which were reasonably incurred and reasonable in amount, having regard to the overriding objective and the principle of proportionality. The court must have regard to the factors identified in CPR 44.4(3).
Since the assessment was on the standard basis, the court would only allow costs which are proportionate to the matters in issue, even if they were reasonably or necessarily incurred, and if there was any doubt as to whether costs were reasonably and proportionately incurred or reasonable and proportionate in amount, then that doubt would be resolved in favour of the paying party: CPR 44.3(2).
The Claimant’s Costs
The claimant claimed £54,115 in respect of his costs caused by the defendant’s late disclosure. These were set out in his three-page Precedent T, dated 6 February 2026, with his solicitor’s comments and those of the defendant’s solicitors (together with their offer in respect of each line) on the pages that followed. The amount offered by the defendant in respect of the variation to the budget was £18,000.
Having read all of the comments and considering the work that was necessitated by the late disclosure, with a cross-check for proportionality, the recorder assessed these costs at £27,000 (plus VAT, giving a net figure of £32,400).
The Defendant’s Costs
The recorder turned next to the defendant’s costs, which he dealt with in two parts.
First, he considered the costs of the strike out application, which costs were not the subject of any costs management order and which totalled £59,513.67 (of which £45,772 were solicitors’ costs). 98 solicitors’ hours were spent on the application, including 30.8 hours at grade A and 35.9 hours at grade B.
In the recorder’s judgment, this application could and should have been conducted much more modestly. It was unsuccessful, inasmuch as it was framed as a strike out application, and it was grossly disproportionate to spend more than twice the amount stated on the Claim Form to try to achieve that end.
Using the information available to him, the recorder took the view that the amount that the defendant should recover in respect of this application was £15,000 and he assessed its costs in that amount.
The recorder turned next to the defendant’s costs of the claim as a whole, noting that some of those costs were budgeted and others were not. He also noted that the defendant sought a further £30,000-odd for the hearing that took place on 21 May (which were not included in its “Quantification of Costs” document).
With that additional £30,000, but removing the costs arising out of the late disclosure and of the strike out application, the total costs claimed by the defendant was around £225,000.
The recorder had already explained that the solicitors’ hourly rates required a significant reduction, regardless of the time that was deemed to be recoverable. These accounted for roughly £165,000, with counsel’s fees being the other £60,000.
Having been through the defendant’s analysis more than once, and having performed his own calculations on the figures with which he had been provided, the recorder reached the conclusion that this “rump” of the defendant’s costs should be assessed at £113,750.
He arrived at that figure having conducted a more detailed review, during which he analysed all of the information provided to him for each phase, albeit with a broad brush. In particular, he assessed the disclosure phase at £0 (reflecting his earlier conclusion); he applied very significant reductions to the first two phases (arriving at a figure of £30,000 between them); and he reduced the witness statement phase to £15,000, to reflect his view that one of the defendant’s witness statements should not have been prepared (because that witness had very little, if any, relevant evidence to give) but acknowledging that the task of preparing the statement of the person who became the defendant’s only live witness was not straightforward. He made more modest reductions to the other phases and he allowed only a further £8,000 in respect of the costs on the schedule for the hearing on 21 May.
In arriving at that figure of £113,750, the recorder considered proportionality and concluded that it was a reasonable and proportionate amount in respect of the costs and the work that were the subject of the assessment.
Stay of the Order for Payment
At the end of the parties’ submissions, the claimant asked what would happen if, as turned out to be the case, the recorder were to order him to pay a sum of money in respect of costs and his application for permission to appeal the substantive judgment had not been determined.
The recorder enquired of the claimant whether there was any temporary issue that might prevent him from paying or if there were grounds for believing that the defendant might be unable to repay him, in the event that an appeal were successful and the costs order reversed. The claimant did not identify anything specific that he wanted the recorder to take into account.
In those circumstances, and as the recorder indicated at the time, he said that he would not grant a stay, but that, unless the defendant objected, he would allow a period of 35 days for the claimant to pay the sum ordered, which was considerably longer than the default period of 14 days. He chose that period because it ought to allow sufficient time for the claimant to obtain advice on whether to apply for permission to appeal from the High Court and, if appropriate, to apply for and receive a decision on an application for a stay (from the High Court), whether in the context of his pending application for permission to appeal the substantive judgment or, if he decided that there were grounds for challenging it, in what might become his application for permission to appeal the costs judgment.
Given that the defendant did not object to the claimant’s having 35 days within which to pay any costs that might be ordered, the recorder allowed that timeframe rather than ordering any stay of execution or enforcement.
Conclusions
The recorder observed that the claim had exacted a high price, financially and emotionally, on those involved. It should never have reached this point. Neither side would regard himself or itself as the winner.
The defendant was ordered to pay the claimant’s costs arising from its late disclosure, which the recorder summarily assessed at £27,000 (plus VAT, giving a net figure of £32,400).
However, the claimant was ordered to pay the defendant’s costs of the claim (including its strike out application but excluding the disclosure phase), which the recorder summarily assessed at £128,750.
There was a setting-off of those two amounts, with the consequence that the claimant was required to pay the defendant £96,350. He was given five weeks, until 8 July 2026, within which to make payment.
https://tmclegal.co.uk/wp-content/uploads/2026/06/Safety-Valve.png12541254Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-06-03 15:41:512026-06-03 21:13:06Consequences Of “Over-Egging” A Claim At The CCMC | Court Engages The CPR 44.3(2)(a) Proportionality “Safety Valve” As Good Reason To Depart Downwards From The Approved Budget Under CPR 3.18
The King’s Bench Division’s decision in Mew v General Dental Council [2026] EWHC 1116 (Admin) concerned an appeal against erasure from the Dentists’ Register following a Professional Conduct Committee determination that the appellant’s fitness to practise was impaired by reason of misconduct.
Background
Dr Michael Mew, a registered Specialist Orthodontist and the owner and principal practitioner at a private clinic offering treatment under the umbrella term “Orthotropics,” appealed to the Administrative Court against a determination of the Professional Conduct Committee (“PCC”) of the General Dental Council (“GDC”) dated 6 November 2024. By that determination, the PCC found Dr Mew’s fitness to practise impaired by reason of misconduct and ordered the erasure of his name from the Dentists’ Register. The appeal was brought under section 29 of the Dentists Act 1984.
The charges before the PCC related to advice and treatment provided to two young patients, referred to as Patient A and Patient B, between September 2013 and May 2019, as well as claims made in a YouTube video posted in September 2017. In broad terms, the GDC alleged that the Orthotropic treatment provided to both patients was not clinically indicated, that misleading claims had been made to the patients’ parents about the aims and benefits of the treatment, and that certain statements made publicly on YouTube were inappropriate and without adequate objective evidential foundation. Thirty charges were brought in total, with admissions made to seventeen of them either in advance or at the hearing.
Orthotropics is not recognised by the GDC as a speciality, nor is it available within the NHS. Its central premise, as advanced by Dr Mew, was that environmental factors rather than genetics were the predominant cause of malocclusion, and that early environmental intervention could prevent or improve malocclusion in growing children. Dr Mew described himself as “probably the world’s expert” in Orthotropics and acknowledged that it remained a controversial approach with a limited evidence base.
The PCC proceedings were substantial. There were no fewer than 46 hearing days spread across a two-year period from November 2022 to November 2024, with the matter having originally been listed in December 2021 but removed at Dr Mew’s request. The determination itself ran to 197 paragraphs across 75 pages. Expert evidence was heard from four experts: Mr Stephen Powell and Mr Keith Smith for the GDC, and Professor Daniele Garcovich and Professor Stephen Sheldon for Dr Mew. Joint expert reports were also prepared. The PCC preferred the evidence of the GDC’s experts, found the charges proved, and concluded that misconduct and impairment were established. Erasure was imposed as the appropriate sanction, together with an immediate order for suspension.
The appeal was heard over three days on 20, 21 and 22 January 2026 before Charles Bagot KC, sitting as a Deputy High Court Judge. Further written submissions were received through to 26 February 2026, with email communications continuing to 30 April 2026. A draft judgment was circulated on 8 May 2026, with the parties’ corrections and submissions on costs received on 13, 14 and 15 May 2026. The appeal was dismissed in its entirety. The documents before the court ran to over 8,500 pages, with an authorities bundle of 925 pages.
On the substantive grounds, the Deputy Judge found that the PCC’s determination was correct in all material respects and unassailable. The primary challenge, directed at the PCC’s approach to the competing expert evidence, was rejected. The remaining grounds, including challenges to specific charge findings, the approach to “The Jaw Epidemic” paper, the alleged failure to define “adequate objective evidence,” and the exclusion of open-source internet material from cross-examination, were each dismissed. The fresh evidence application, which sought to adduce the full Harvey Thesis and a cephalometric interpretation guide, was also refused on a notional basis, having been considered at the parties’ joint request to assist with the resolution of costs.
The Legal Framework
CPR 44.2 deals with the court’s discretion about whether to make a costs order and the factors it will take into account. CPR 44.3 guides the court as to the basis of assessment. Where standard basis costs are concerned, the court is to determine any doubt about whether costs were reasonably and proportionately incurred, or were reasonable and proportionate in amount, in favour of the paying party. The considerations which point towards costs being proportionate include whether they bear a reasonable relationship to the factors in CPR 44.3(5), including the value of the non-monetary relief in issue, the complexity, additional work generated by conduct, and wider factors such as reputational issues or public importance.
As for the procedure to adopt for the assessment, CPR 44.6(1) and PD 44.9.1 provide the court’s jurisdiction to conduct either a summary assessment or refer costs for a detailed assessment by a costs officer or judge. PD 44.9.1 provides that the general rule is that the court should make a summary assessment of costs at the conclusion of any hearing which has lasted not more than one day.
The Deputy Judge rejected the Appellant’s submission that it should be implied from that passage that summary assessments should not be made in cases where the hearing has lasted more than one day. The court retains a discretion summarily to assess costs following hearings lasting longer than one day and there is no presumption, let alone rule, against doing so. The Deputy Judge was fortified in that view by the White Book Editors’ guidance at paragraph 44.6.3, which states: “There is no rebuttable presumption against summary assessment in relation to costs where hearings last longer than one day. The exercise of the power to make a summary assessment should be considered in every case.”
The Deputy Judge also noted the guidance at PD 44.9.2 that there may be good reason not to conduct a summary assessment where, for example, the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily.
Costs Issues Before the Court
Following circulation of the draft judgment, the parties agreed that costs should follow the event in accordance with CPR 44.2(2)(a), with the Appellant to pay the Respondent’s costs of the appeal. That much was not in dispute. The costs issues requiring determination by the court were twofold: first, whether the quantum of the Respondent’s appeal costs should be resolved by way of summary assessment or referred to detailed assessment in default of agreement; and second, if summary assessment was the appropriate course, what the correct quantum of those costs should be.
The Respondent’s costs schedule had originally been served in October 2025, when the appeal was first listed but subsequently adjourned. That schedule claimed costs totalling £85,853.20. An updated schedule dated 12 May 2026 increased the sum claimed to £96,248.48. Prior to the costs determination, the Respondent made an open concession of £10,000 against the experts’ fees element of the claim, reducing the sum in issue to £86,248.48. The Appellant raised objections across a range of items within the schedule and opposed the court proceeding to a summary assessment at all.
A procedural issue arose on the morning of handing down, when a dispute emerged between the parties as to whether there had been agreement for the court to be shown recent correspondence containing offers on costs. The Appellant contended that no such agreement had been reached and submitted that the court could not fairly conduct a summary assessment having been exposed to the parties’ respective offers. The Respondent maintained that agreement had been given. The Deputy Judge found it unnecessary to resolve that factual dispute in order to determine the costs issues, holding that judges are routinely required to put matters out of mind (such as documents seen de bene esse or offers disclosed in costs management hearings) and that he was able fairly to conduct a summary assessment notwithstanding his awareness of the offers.
An additional procedural point arose from the Appellant’s submission that, because the draft judgment had been embargoed, its content had not been communicated to Dr Mew by his legal representatives, and it had therefore not been possible to take instructions from him on costs. The Deputy Judge rejected the premise of that submission, noting that the embargo expressly permitted disclosure of the draft and its substance to the parties themselves and their legal representatives, and that there was accordingly no bar on sharing the draft with Dr Mew or taking his instructions.
The Parties’ Positions
Summary assessment versus detailed assessment
The Appellant opposed summary assessment on a number of grounds. It was submitted that, as the appeal hearing had lasted more than one day, the general rule in PD 44.9.1 pointed away from summary assessment. The Appellant also contended that there were multiple areas of the costs schedule requiring further interrogation and the provision of additional detail, and that the objections raised could not fairly be dealt with summarily. A further submission was advanced to the effect that, because the draft judgment had been embargoed and instructions had not been taken from Dr Mew, a summary assessment was procedurally inappropriate. Finally, the Appellant argued that the court’s exposure to the parties’ offers on costs meant that a fair summary assessment could not be conducted.
The Respondent’s position was that the court retained a discretion to conduct a summary assessment regardless of the duration of the hearing, and that the overriding objective supported resolving the costs of the appeal within the judgment rather than deferring them to detailed assessment. The Respondent pointed to the fact that the updated schedule of 12 May 2026 represented only a modest increase on the October 2025 schedule, of which the Appellant had had considerable notice, and that the schedule itself provided the expected level of detail and breakdown. The Respondent had also made an open concession of £10,000 on the experts’ fees, which was characterised as a realistic and sensible approach rather than an acknowledgement that the remaining costs were disproportionate.
Quantum
The Appellant challenged a range of items within the Respondent’s schedule, including the level of experts’ fees, the time costs associated with the experts and their reports, the time spent on producing the costs schedule, and the overall number of items detailed in the schedule of work done on documents (95 separate items being said to be indicative of excess). The Appellant declined to file or serve a schedule of his own costs and declined an invitation from the Respondent to do so for the purpose of contextualising the objections raised.
The Respondent maintained that the costs claimed were reasonable and proportionate having regard to the relevant factors under CPR 44.3(5), including the value of the non-monetary relief in issue, the complexity of the underlying proceedings, the additional work generated by the conduct of the litigation, and the wider reputational and public interest considerations. Particular emphasis was placed on the reasonableness of Counsel’s fees, given the nature and duration of the underlying PCC proceedings, the complexity of the appeal, and the need for complete mastery of 46 days of hearings and over 8,500 pages of documents.
The Decision
The Deputy Judge determined that the appropriate exercise of his discretion was to proceed summarily to assess the costs of the appeal, rather than deferring them to detailed assessment in default of agreement. Whilst he recognised that a referral to detailed assessment would be the normal order following a hearing of more than one day, it was not an invariable rule or presumption. Applying the rules and the overriding objective, several factors pointed in favour of summary assessment.
First, the Deputy Judge was well placed, having heard and determined the appeal via a detailed judgment, to conduct a summary assessment. He had considerable experience of costs and summary assessment, both as a Deputy High Court Judge and when sitting as a Deputy King’s Bench Master. The scale of the costs pointed towards summary assessment, given the amount claimed by the Respondent for the appeal was in five figures, not a substantial six-figure sum or more.
Second, whilst the Appellant complained that he had only about one day to review the Respondent’s updated costs schedule dated 12 May 2026, this had to be seen in the context that this was an update to a schedule served in October 2025, when the appeal was previously listed but adjourned. That earlier schedule already particularised almost 90 per cent of the costs claimed. The October 2025 schedule claimed costs totalling £85,853.20 whereas the May 2026 schedule increased that sum to £96,248.48 (before the £10,000 concession). The Appellant had therefore had an appropriate time period to consider the costs and could reasonably have anticipated that the adjourned hearing would produce a modest increase to the sum claimed.
Third, the Deputy Judge did not accept the Appellant’s assertion that there were multiple areas of the Respondent’s costs schedule which required interrogation and the provision of additional detail. The whole ethos of summary assessment is to avoid that sort of process and the attendant costs and delay, when this can fairly be done. Having scrutinised the Respondent’s schedule, it provided the expected detail and breakdown and, subject to certain adjustments, there was nothing in it which the Deputy Judge considered on the face of it to be disproportionate or unreasonable.
Fourth, and most fundamentally, the Deputy Judge bore in mind that these proceedings related to conduct between 2013 and 2019, now between 7 and 13 years ago. It was in accordance with the overriding objective to resolve all consequential matters within the judgment, rather than deferring the resolution of the appeal costs to further negotiation or, more likely, detailed assessment. The parties’ positions on costs were far apart. The Deputy Judge was pessimistic that simply allowing further time would result in an agreement on the amount of costs. It was probable that further costs would be incurred in proceeding at least part way towards a detailed assessment, which would swiftly become disproportionate to the sums involved, generate additional costs, and entrench the parties’ polarised positions further.
The Deputy Judge also noted that, notwithstanding the importance of the matter to the parties and the public interest in professional regulation, the underlying disciplinary proceedings had already taken up more than their fair share of the tribunal and court system’s limited resources. The PCC proceedings had occupied 46 hearing days spread across a two-year period. The Deputy Judge observed that this duration was manifestly disproportionate and that, with hindsight, the PCC should have exercised considerably more active case management, evidential control, and trial timetabling. Whilst the Appellant opposed the court proceeding to a summary assessment, it was in the Appellant’s interests, as much as the Respondent’s, to draw this protracted matter to a close. It would be doing the Appellant no kindness to permit him to spend further time, energy and money in disputing the appeal costs which he was to pay.
Quantum
As for the quantum of costs, with the Respondent’s open concession against the experts’ fees claimed of £10,000, the sum claimed totalled £86,248.48. The Deputy Judge bore in mind the Appellant’s various objections across a range of the amounts claimed. The Appellant had chosen not to file or serve a schedule of his costs and had declined an invitation by the Respondent to do so in order to contextualise the objections made. The Deputy Judge inferred that the Appellant’s costs of the appeal were greater than those claimed by the Respondent (the Appellant’s experts having, as the Deputy Judge understood it, worked pro bono), which would not be surprising assuming he was privately paying and as he was advancing the appeal, rather than responding to it.
The Deputy Judge noted that the Respondent’s solicitors’ blended hourly rate claimed of £138 for all fee earners involved was below the guideline rate, even for a Grade D fee earner of £146 (London Band 3), let alone that for Grade A of £319. This no doubt reflected negotiations around lower agreed panel rates in return for a regular flow of GDC work. This relatively modest hourly rate mitigated areas where, had the rates been significantly higher, the numbers of hours claimed would have pushed the overall costs claimed in differing categories up to amounts which would potentially have been disproportionate and unreasonable.
After making what he considered to be an appropriate further overall adjustment downwards for experts’ fees consequential on the Appellant’s application to admit fresh evidence, as well as reducing somewhat the solicitors’ time costs relating to the experts and producing the costs schedule, the Deputy Judge reached an overall figure of £75,000 (inclusive of VAT), before examining the other categories of costs further.
Nearly half of that amount related to Counsel’s fees for the appeal inclusive of VAT. The Deputy Judge disagreed with the Appellant’s contention that Counsel’s fees of £30,450 before VAT for appearing at this three-day appeal as well as preparing for it and drafting the written documents, even before factoring in the adjournment of the original listing in October 2025, were disproportionate and unreasonable. Those fees consisted of a brief fee of £28,000, plus two refreshers at £1,000 each, with a modest uplift of £450 which, whilst not explicitly broken down, may have reflected the adjournment of the original listing and a modest amount of time reading back in.
The Deputy Judge considered that no realistic objection could be taken to such fees in the circumstances. Counsel for the Respondent was a leading junior of considerable experience specialising in regulatory work. The underlying proceedings were complex, very lengthy, hard fought and document heavy. All of those factors applied to the appeal, save that at three days, it was not particularly lengthy. That said, the parties had suggested that four days of pre-reading time for the court were necessary (although in the event the necessities of listing meant that it only had one day). Extensive and diligent preparation had plainly been carried out by both parties’ Counsel. That had to be seen in the context that it was necessary for Counsel to have a complete mastery of all the issues, the extensive documents and of 46 days of hearings before the PCC. It was also necessary to distil those lengthy proceedings, the wide-ranging grounds of appeal and the Appellant’s painstakingly detailed submissions into a detailed and convincing written and oral response on behalf of the Respondent. Much was at stake for both parties and there were the wider interests of reputation and the public importance in the proper pursuit of regulatory proceedings. Counsel’s fees claimed were eminently reasonable and proportionate.
As for the Respondent’s solicitors’ time costs, a number of the same considerations also applied in justifying detailed and time-intensive preparation. Other than in relation to expert evidence and time on producing the costs schedule, the Deputy Judge did not consider that the sums incurred were disproportionate or unreasonable, whether standing back and looking at the global amount or considering the breakdown.
The Appellant had complained about the 95 separate items detailed in the schedule of work done on documents, as indicative of excess. In the Deputy Judge’s view, one needed to delve beyond the mere number of items to see that this reflected an admirable attempt at transparency in breaking down tasks into individual components, many of which were less than an hour in duration and reflecting appropriate delegation most (but not all) of the time. The overall total number of hours spent on documents by all fee earners combined was 179.5. Given the relevant factors in relation to the appeal, subject to the points around time on expert evidence being somewhat too high, there was nothing notable or objectionable about the time spent. This reflected work over a period of more than a year from the Appellant’s Notice being served to the substantive hearing, with additional work on consequential matters when the draft judgment was received.
The Deputy Judge made a further downward adjustment, beyond the concession of £10,000 made by the Respondent, to the experts’ fees and solicitors’ time costs on dealing with the experts and their reports, as well as a reduction to the time costs in relation to preparation of the costs schedule which, whilst a complex exercise, appeared on the high side.
For all those reasons, the reasonable and proportionate costs of the appeal were summarily assessed at £75,000. This sum included VAT of £6,090 on the Counsel fee element only (VAT was not claimed on any other aspect), with the Counsel fee before VAT being £30,450. The Appellant was ordered to pay to the Respondent the total sum of £75,000 for the appeal costs.
Whilst CPR 44.7(1) provides that the standard period for the payment of a costs order is 14 days from the date of the order, the Deputy Judge allowed an additional 14 days (28 days in total) for the Appellant to pay the sum ordered, to ensure fairness to the Appellant in making arrangements to pay. The sum was ordered to be paid by 4pm on 12 June 2026.
https://tmclegal.co.uk/wp-content/uploads/2026/05/MEW.webp7501250Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-05-18 09:31:472026-05-23 21:51:55No Presumption Against Summary Assessment Exists for Multi-Day Hearings | Court Retains Full Discretion In Every Case Under PD 44.9.1
This costs judgment arose from the dismissal of a professional negligence claim brought by MJS Projects (March) Limited against RPS Consulting Services Limited in the Technology and Construction Court in Leeds. The underlying dispute concerned the design and construction of a container park near Felixstowe Port, with the Claimant alleging that the Defendant’s design fell below the standard of a reasonably competent firm of civil and structural engineers. The court ultimately found in favour of the Defendant, concluding that the cause of the damage was workmanship rather than design.
The pre-action history was protracted. The Defendant’s letter of response, dated 22 May 2019, set out in considerable detail why it considered its design was not negligent and identified eleven workmanship defects, as well as the use of incorrect dowel sizes. The Claimant’s response, dated 5 November 2019, did not engage with those workmanship allegations and instead requested sight of the Defendant’s calculations. Those calculations were provided by letter dated 22 December 2020. No substantive reply was received for nineteen months. When the Claimant wrote again in July 2022, it confirmed that an expert structural engineer had been instructed and that the expert supported the Claimant’s position on design negligence. Proceedings were issued on 14 October 2022. Particulars of Claim were served on or around 10 February 2023, a Defence on or around 14 April 2023, and a Reply on 19 May 2023.
The expert evidence timetable was, as the court described it, “concertina-ed” into a short period before trial. The experts’ joint statement was produced approximately three months before trial, with individual expert reports following thereafter. Supplementary reports were filed in response to points raised in the primary reports, with some material served as late as one week before the trial commenced in February 2024. The claim was dismissed following trial, and the costs and consequential orders hearing took place on 14 May 2025, with judgment handed down on 15 April 2026.
Costs Issues Before the Court
Three distinct costs issues required determination. The first was whether the usual costs order, namely that the unsuccessful Claimant pay the Defendant’s costs, should be departed from on account of the Defendant’s conduct in relation to alternative dispute resolution. The Claimant argued that the Defendant had unreasonably refused to engage in mediation on multiple occasions, both before and after proceedings were issued, and that this conduct justified a departure from the default position under CPR 44.2. The Claimant’s position was that the appropriate order was no order as to costs.
The second issue was whether the Defendant’s expert having changed his position on the mass concrete taper and having produced additional calculations approximately one week before trial constituted conduct that should further influence the costs order in the Claimant’s favour.
The third issue was the Defendant’s cross-application for indemnity costs in respect of the expert evidence phase of the proceedings. The Defendant contended that the conduct of the Claimant and its legal team in relation to the instruction, oversight, and management of the Claimant’s expert was sufficiently outside the norm to justify an order for costs on the indemnity basis for that phase. In the alternative, both parties agreed that a payment on account of costs should be made, with the only dispute being the appropriate percentage reduction to apply to the approved costs budget.
The Parties’ Positions
The Claimant’s position on ADR
The Claimant traced a series of proposals for mediation made from as early as 14 July 2022, when a without prejudice meeting, mediation, or meeting of experts was suggested. That proposal was declined by the Defendant on 30 September 2022 on the basis that mediation was not appropriate until the Claimant had provided its expert report. Further proposals were made on 5 June 2023 and 21 September 2023, the latter suggesting two named mediators and a mediation in late October or November 2023. The Defendant declined that proposal by letter dated 28 September 2023, citing the technical nature of the issues and the fact that liability was denied in full, and suggesting that any mediation should follow the experts’ joint statements due in November 2023.
The Claimant characterised the Defendant’s successive objections as a shifting of the goalposts: first, no mediation until the expert report was provided; then, no mediation until after expert discussions; then, no mediation without the experts present at the mediation itself. The Claimant noted that its expert was based in Singapore, making expert attendance at a mediation impractical. It submitted that, applying the Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 factors, this was not a case unsuitable for mediation. Professional negligence disputes of this nature were routinely resolved at mediation, the parties’ budgets had each included approximately £25,000 for mediation costs, and the value of the claim at nearly £400,000 justified that expenditure. The Claimant also submitted that the merits were not entirely one-sided, given that the Defendant’s expert had changed his position on the mass concrete taper and that the outcome might have been different but for the late additional calculations.
The Claimant’s position on the expert’s late change of evidence
The Claimant submitted that the Defendant’s expert had stated in his written evidence that the mass concrete taper was part of the design and that the failure to install it was a workmanship defect causing the cracking. At trial, he accepted that the mass concrete taper was not part of the design at the relevant joints. The Claimant argued that it had been entitled to approach trial on the basis that the Defendant’s expert would give evidence consistent with his written report and the joint statement. The Claimant asserted that the expert changed his mind as a result of very late additional calculations produced one week before trial, and that this late change of position had a decisive impact on the outcome. On that basis, it was submitted that it would be unjust for the Defendant to recover all of its costs.
The Claimant’s position on indemnity costs
The Claimant resisted the indemnity costs application on the basis that the threshold was high and had not been met. It submitted that the correct Bolam question had in fact been put to the expert in his letter of instruction and was set out on the face of his report. The fact that the expert appeared under cross-examination not to have applied the test correctly did not amount to conduct unreasonable to a high degree. The Claimant also relied on the compressed expert evidence timetable, noting that reports were served late and that supplementary reports followed in quick succession. It was submitted that the expert’s decision to rerun the FE analysis immediately before trial, without informing anyone, could not be attributed to the Claimant or its lawyers, as everyone was astonished when the expert disclosed this during his evidence. The Claimant argued that the tactical decision to focus on design negligence rather than workmanship, whilst ultimately unsuccessful, was a legitimate forensic choice and did not take the conduct of the litigation outside the norm.
The Defendant’s position on ADR
The Defendant accepted the broad outline of the correspondence but submitted that the full chronology had to be considered. It emphasised that workmanship issues had been raised as the cause of the damage for four years before proceedings were issued, and that the Claimant had never substantively engaged with those allegations. The Defendant had provided detailed calculations when requested, had engaged fully in the pre-action protocol process, and had made Calderbank offers and Part 36 offers in the run-up to trial. It submitted that it was not refusing to engage in ADR but was reasonably requiring some understanding of the Claimant’s expert evidence before committing to a mediation process. It noted that the Claimant had refused to provide its expert report even on a without prejudice basis, and that the Claimant’s own stance immediately before trial, asserting that its Part 36 offer “was not made for negotiation purposes” and that it had “a strong case”, demonstrated that mediation would not have had realistic prospects of success. The Defendant also pointed to the Claimant’s imposition of onerous conditions on any mediation, including that the Defendant would have no say in the identity of the mediator appointed, and argued that the Claimant’s refusal to engage with workmanship allegations throughout the pre-action period made meaningful mediation impossible without expert evidence being available.
The Defendant’s position on the expert’s late change of evidence
The Defendant submitted that the mass concrete taper issue had limited materiality. The Particulars of Claim did not mention a mass concrete taper and did not assert that the failure to specify one was a negligent defect in the design. It was never part of the Claimant’s case that a mass concrete taper was required. The issue was only first mentioned in the experts’ joint statement dated 15 December 2023, and the detail of the Defendant expert’s evidence on this aspect came in his report served on 26 January 2024, just over one week before trial. By this time, the majority of costs were already incurred. The Defendant’s expert had explained that a further check was required after consideration of some of the points raised by the Claimant’s expert, and the court accepted that explanation. The additional calculations did not cause the Claimant to abandon its case and did not result in additional costs being incurred. The Defendant also submitted that it was wrong to assert that the expert simply changed his evidence on the number of dowels engaged by the design when the court accepted his explanation that a further check was required.
The Defendant’s position on indemnity costs
The Defendant asserted that the conduct of the Claimant and its legal team in relation to the instruction, oversight, and management of the Claimant’s expert was sufficiently outside the norm to justify an order for costs on the indemnity basis for the expert phase. The Defendant criticised the fact that the Claimant’s expert did not directly answer the question of whether the Defendant’s design was one that a reasonable body of engineers could have produced. Proceedings were issued, the experts’ joint statement produced, and expert reports exchanged without that question being answered. The Defendant asserted that the Claimant did not properly interrogate the application of the Bolam test, the Defendant’s causation arguments, the significance of the date by which the damage had become manifest, nor provide any evidence about what the correct design would be if the Defendant’s design was negligent. The Defendant also criticised the Claimant’s expert’s decision to use FE analysis to assess the Defendant’s design, his use of an out-of-date edition of a technical publication without disclosing that fact, his changes of position without explanation, and his decision to rerun the FE analysis over the weekend before trial without informing anyone. All of these factors, the Defendant submitted, showed the inadequacy of the Claimant’s expert’s compliance with CPR 35 and his expert duty, and justified a costs sanction.
The Court’s Decision
Costs to follow the event
Her Honour Judge Kelly ordered that the Claimant pay the Defendant’s costs, to be the subject of detailed assessment if not agreed. The judge accepted that the Defendant had declined multiple mediation proposals but held that this could not be assessed in isolation. The full chronology had to be considered, including the Claimant’s failure to engage with workmanship allegations raised in 2019, the 19-month delay in responding to the Defendant’s calculations, and the refusal to provide expert evidence even on a without prejudice basis.
Applying the Halsey factors, the judge found that it was not unreasonable for the Defendant to have refused mediation before having some understanding of the Claimant’s expert evidence. The Defendant had raised workmanship issues in response to the letter of claim, and the Claimant had asked for calculations to justify the Defendant’s design but did not deal with the alleged workmanship issues. The Defendant’s calculations were provided, but the Claimant then did not respond for 19 months. When the Claimant wrote again, it stated it had expert support for its case but once more did not engage with the workmanship issues. The Defendant asked for a copy of the expert report on a without prejudice basis and again raised the lack of response to the issues about workmanship and causation. The Claimant did not provide the expert report and did not engage with workmanship issues in any meaningful way.
The judge accepted that the Defendant did not agree to the continued suggestions of mediation without having some understanding of the expert evidence, but held that this could not be described as unreasonable. Other forms of ADR were proposed by the Defendant throughout, and offers were being made. The nature of the dispute would not prevent a successful mediation, but having actively engaged, provided calculations and justification as to why the Defendant asserted it was not negligent, it was not unreasonable to require a meaningful response to the points made before mediation. Mediation may have cost up to £50,000, which was not an insignificant sum, especially when the Claimant was not providing information which was reasonably requested.
Once the expert evidence was available, the Claimant’s offer to consider mediation was only weeks before the start of the trial and was offered only on potentially disadvantageous terms to the Defendant. The judge held that failure to agree to earlier mediation, nor to the last suggestion of mediation on the terms demanded, could not reasonably be held against the Defendant. The Defendant’s reasoned rejection of one form of ADR, namely mediation, was not unreasonable. The legal issues were clear and largely agreed between the parties. The case would always depend upon the court’s assessment of the expert evidence. The Claimant’s refusal to disclose its expert evidence (even on a without prejudice basis) and its apparent failure to instruct its expert to consider all of the workmanship issues raised by the Defence would inevitably have had a significant impact on the likely success of any mediation.
Even had mediation taken place, the judge did not accept that it would have had reasonable prospects of success. The Claimant had not engaged with the Defendant’s allegations of poor workmanship nor provided its expert evidence. The Defendant’s reasonable wish to understand the case it was meeting was not just going to disappear. Offers were being made both ways in the run up to trial, but the parties remained a vast distance apart.
The expert’s late change of evidence
The judge did not accept the Claimant’s assertions that a “late change” of evidence by the Defendant’s expert supported a decision that no order as to costs was the appropriate costs order. The judge found that the Defendant’s expert was in error in asserting that a mass concrete taper was part of the Defendant’s design. However, as the need for a mass concrete taper was never part of the Claimant’s case that the Defendant’s design was negligent, this did not have a material bearing on the outcome of the litigation. The Claimant’s expert did not assert that a mass concrete taper was needed to make the design work. The first mention of the need for a mass concrete taper was about two months before trial when the experts produced their joint statement. The need for a mass concrete taper was only if adequate compaction could not be achieved under the relevant joint. The detail of the Defendant’s expert opinion on the need for a mass concrete taper came in his report served about one month before trial.
In both the joint statement and the report, the Defendant’s expert made it clear that he knew that the mass concrete taper was shown on the design drawing for a different joint. However, he was of the opinion that the Claimant’s workmen should have inferred that a mass concrete taper was also required under the relevant joint, even though it was not shown on the design drawings, because of the compaction issue. The Claimant’s expert opined that the necessary compaction could be achieved and that was the finding the judge made. The Defendant’s expert also produced some additional calculations shortly before trial. However, as was stated in the judgment, that was done to enable him to consider the evidence of the Claimant’s expert and the criticisms of the design and the conclusions drawn from them. The judge held this was classically an example of the sort of final “sense check testing” the court would expect from an expert, particularly when the expert evidence has been finalised very late in the day before trial. The judge accepted the Defendant’s submission that this was “simply part of the usual cut and thrust of a professional negligence trial”. In those circumstances, it was difficult to see how any additional costs were caused by the late calculations in any event.
Indemnity costs refused
The Defendant’s application for indemnity costs in respect of the expert phase was refused. The judge reminded herself that the question was whether there was something in the conduct of the action or the circumstances of the case which took the case out of the norm in a way which justified an order for indemnity costs. The judge was just persuaded that the answer to that question was no, and costs should be assessed on the standard basis throughout.
The judge had made findings in the substantive judgment that the Claimant’s expert did not properly understand his duties to the court pursuant to CPR 35, that he did not appear to have considered adequately the applicable legal test, and he did not deal with the workmanship issues raised by the Defendant adequately. He used an outdated edition of a technical publication to justify some conclusions without providing any reference to the updated edition. He carried out additional tests and reran the FE analysis immediately before trial without telling anybody he had done this nor providing anyone with the results. The Claimant lost the case because the judge had no confidence in its expert.
The judge agreed with the Defendant’s submission that this was not simply a case of the court preferring one expert’s evidence over another. The reality was that the criticism of this expert went beyond that. However, the judge accepted that the Claimant’s solicitors had put the correct test in the expert’s instructions, and the expert had set out the correct test in his written report and answered questions in a way which would indicate that he was considering the correct test when giving his opinion. When cross-examined, it became apparent that he was not correctly applying the test and had not given consideration to various matters to which the judge found he should have given consideration. The judge accepted that a claimant is responsible for their expert for the purposes of costs. However, she did not accept that there was sufficient material before trial in the expert’s reports to indicate to the Claimant’s legal team that their expert was going to give evidence in the way that he did. Further questions could perhaps have been asked of the expert during the proceedings. That may have been an error or a tactical decision. However, the judge did not accept that the asserted failure to spot the various problems with their expert’s evidence was sufficient to pass the high hurdle before indemnity costs are justified.
The Claimant made various tactical decisions in how to pursue its case against the Defendant for negligent design. Some tactical decisions would always be needed when a company associated with the Claimant has carried out the construction work for the design and that work is criticised by the Defendant as being the cause of the damage. With hindsight, it may have been better expressly to instruct the Claimant’s expert to deal with the various workmanship defects asserted by the Defendant. However, as the Claimant took the view that it only needed to prove that the defective design was “a” cause of the damage, it did not need to deal with all of those workmanship issues. The tactic was unsuccessful, but the judge accepted that deciding on the tactic did not take the Claimant’s lawyers’ conduct “out of the norm”.
It may have been that the Claimant’s legal team restricted its frame of reference in respect of the expert evidence required because of the analysis undertaken by John Frith. However, the tactic of concentrating primarily on identifying a negligent design and then establishing the negligent design was a cause of the damage, whilst unsuccessful, could not be said to take the conduct of the case so far out of the norm. The further criticisms of the Claimant’s lawyers, such as refusing to answer Part 18 further information questions, the judge would not find to justify indemnity costs. If the Defendant felt that the refusal to answer the questions was unjustified, it could have made an appropriate application.
The Claimant’s counsel asked for clemency for the Claimant’s expert as his reputation had been tarnished by the judgment, and he would have to live with the consequences of that. The judge did not accept that clemency should form any part of the court’s consideration. The question was whether there was something in the conduct of the action or the circumstances of the case which took the case out of the norm in a way which justified an order for indemnity costs.
The judge did not accept that the combination of the Claimant’s tactics and the Claimant’s expert approaching the case in a more technical rather than practical manner, then effectively going off on a frolic of his own immediately before trial and not giving the evidence expected during his oral evidence, created circumstances to justify an order for indemnity costs. It was of relevance that the expert evidence timetable was “concertina-ed” into a short time frame before trial. The joint expert report became available about three months before trial and the individual expert reports then followed. Supplementary expert reports were filed because of additional factors raised in the various reports which required a reply. The judge did not find in the circumstances of this case that the conduct of the Claimant’s lawyers was such that the action was conducted, or the circumstances were such, that it was out of the norm in a way which justified an order for indemnity costs.
Payment on account
The parties were agreed that a payment on account of costs should be made. Applying the principles in MacInnes v Gross [2017] 4 WLR 49, the Defendant sought £312,700.75, being the approved budget in the sum of £344,082, less 10% bringing that sum down to £309,673.80 and then adding interest at 4% of £12,386.96, payable within 21 days. The Claimant sought a reduction of 20% to take into account the fact that there was not a mediation which had been part of the budgeted costs. The Defendant objected to further reduction as the budgeted figure was for all forms of ADR. There was no justification to consider individual phases to reduce further. Any adjustment could be dealt with at detailed assessment.
The judge held that the starting point for assessment of a reasonable sum was a 10% reduction. She did not accept that it was reasonable or proportionate to increase the percentage reduction further in this case. Mediation did not take place, but other forms of ADR did. Interest would run on the costs payable. The judge accepted that 4% interest on pre-judgment costs was a reasonable percentage. She awarded interim costs in the sum of £309,673.80 plus interest at 4%.
https://tmclegal.co.uk/wp-content/uploads/2026/05/Shutterstock_2231119983.webp7501250Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-05-16 09:07:052026-05-23 21:52:22Defendant’s Mediation Refusals And Late Expert Change Of Position Insufficient To Displace The Usual Costs Order
HHJ Cadwallader had dismissed an application by the First, Second, Sixth and Seventh Defendants (collectively, “THD”) for reverse summary judgment and to strike out the Claimant’s claims. The parties agreed that costs should follow the event and be summarily assessed on the standard basis. The dispute concerned quantum alone. The Claimant sought £87,698.30 (solicitors’ fees £37,698.30; counsel’s fees £50,000). THD contended this was disproportionate and proposed £39,460.40, achieved through reductions to hourly rates, disallowing one senior fee earner’s time entirely, halving counsel’s fees, and cutting time spent preparing the statement of costs.
Costs Issues Before the Court
The court was required to conduct a summary assessment, determining what was reasonable and proportionate under CPR 44.3. The judge addressed each of THD’s specific challenges before applying a final, broad-brush assessment of overall proportionality. Specific issues arose concerning: (i) whether hourly rates should be reduced to London 2 Guideline Hourly Rates; (ii) whether the deployment of both a Partner and a Grade-A Legal Director was justified; (iii) whether instructing both leading and junior counsel at a combined fee of £50,000 was excessive; and (iv) whether 5.1 hours spent preparing the statement of costs (costing £2,549.70) was disproportionate.
The Parties’ Positions
The Claimant argued its costs were reasonable and proportionate. The application was a heavy one, listed for a full day with half a day’s judicial pre-reading, in a high-value specialist commercial and insolvency claim. THD had shifted the basis of their application following detailed correspondence from the Claimant’s lawyers before the hearing, advancing new points under time pressure, which necessitated preparation to address both the original and revised arguments. The application was brought only three months before a 12-day trial where substantial security for costs had been provided.
THD characterised the hearing as involving short points of law, not heavy or complex, justifying only modest costs. They advanced several specific challenges:
Hourly Rates: All rates should be reduced to London 2 GHR on the basis the matter was straightforward.
Team Composition: All time recorded by the Grade-A Legal Director (Mr Abdul) should be disallowed; the work of the Partner should have sufficed.
Counsel’s Fees: Instructing both a King’s Counsel and a junior was excessive; their combined fees should be capped at £25,000, half the amount claimed.
Statement of Costs: The 5.1 hours spent (1.1 hours by a Grade C fee earner and 4 hours by a Senior Costs Lawyer) was excessive and should be reduced to 2 hours total.
THD also pointed to their own costs of approximately £44,228 as a comparator, suggesting the Claimant’s higher spend demonstrated disproportionality.
The Court’s Decision
HHJ Cadwallader awarded the Claimant £70,158.64, representing a 20% reduction from the sum claimed. The judge addressed each of THD’s challenges in turn before applying a global reduction.
Character of the Application
The court rejected THD’s characterisation of the hearing as involving short, simple points of law. The application was listed for a day with half a day’s judicial pre-reading and was a heavy application, albeit the judge’s judgment was terse. THD had shifted the basis of their application following detailed correspondence from the Claimant’s lawyers before the hearing, advancing new points, so that under time pressure the Claimant had to deal with both the original and new points, which increased the preparation required. The application was brought only three months before a 12-day trial where very substantial security for costs had been provided.
Hourly Rates
The judge declined to reduce rates to London 2 GHR. This was a heavy application in a high-value, specialist commercial and insolvency claim, for which London 1 rates were not inappropriate. GHR are a starting point, not a cap. The judge noted that THD’s own Grade-A rate of £595 per hour (Birmingham) exceeded National 1 GHR and indeed the London 1 Grade-A GHR. Having regard to the application’s complexity and importance and the nature of the underlying issues, London 1-level rates were justified.
Team Composition
The court rejected THD’s submission that all time recorded by the Grade-A Legal Director should be disallowed. The Claimant’s explanation—that two senior fee earners were appropriate to manage a complex, high-stakes application with evolving arguments, and to ensure efficient division of labour—was persuasive. The deployment of a Partner and a Grade-A Legal Director was reasonable. The total time taken by both was also reasonable, and THD identified no duplication.
Counsel’s Fees
The instruction of both leading and junior counsel was held to be reasonable. Leading counsel had familiarity with the case and its history and had drafted statements of case; the use of junior counsel to support him should have allowed costs to be kept down. The combined fees of £50,000 were considered reasonable and proportionate, given the factors already identified.
Time Spent on the Statement of Costs
The time spent on the statement of costs (1.1 hours by a Grade C fee earner plus 4 hours by a Senior Costs Lawyer, totalling £2,549.70) was found to be in context neither unreasonable nor disproportionate.
Comparative Spend
The judge acknowledged that THD’s own costs for the application were approximately £44,228, roughly half of the Claimant’s figure. However, comparative spend can be a cross-check; it is not determinative. The question is what was reasonable and proportionate on the part of the Claimant. Given the points already made, it was unsurprising that the Claimant incurred a higher figure than THD.
Overall Proportionality
While THD’s proposed global reduction to £39,460.40 was not a fair reflection of what it reasonably cost the Claimant to oppose the application, and the specific challenges did not warrant the sweeping reductions sought, the judge nevertheless stepped back and looked at the matter in the round. He considered that the overall figure of £87,698.30 must be reduced, for reasons of proportionality, by 20%, to £70,158.64, which he considered to be reasonable and proportionate.
Analysis
The decision demonstrates the two-stage nature of summary assessment under CPR 44.3. A court may find that individual elements of a costs claim—hourly rates, team composition, counsel’s fees—withstand specific challenge when tested against the reasonableness criterion, yet still conclude that the aggregate figure requires reduction when assessed against the proportionality criterion.
The judgment confirms that Guideline Hourly Rates remain a starting point, not a cap, and that the nature, complexity and importance of the matter may justify rates at the higher end of the spectrum. The judge’s observation that THD’s own rates exceeded certain GHR benchmarks provided a useful comparative point that undermined their argument for strict application of lower guideline rates.
On team composition, the decision illustrates that deploying multiple senior fee earners is not inherently unreasonable where the matter is complex, high-stakes, and involves evolving arguments requiring efficient division of labour. The absence of identified duplication was significant.
The instruction of both leading and junior counsel was justified by leading counsel’s existing familiarity with the case and the judge’s finding that the use of junior counsel should have allowed costs to be kept down. The combined fee of £50,000 was assessed in the context of a full-day hearing with substantial pre-reading in a high-value specialist claim.
The most significant aspect of the decision is the application of a 20% global reduction after rejecting the specific challenges. The judge gave limited reasoning for this reduction beyond stating it was required “for reasons of proportionality” when looking at the matter “in the round”. This broad-brush approach reflects the court’s residual discretion to stand back from the detail and assess whether the total figure is proportionate to the matter in issue, even where individual components are reasonable.
The decision serves as a reminder that success in defending itemised challenges to a costs claim does not guarantee recovery of the full sum claimed. Proportionality operates as an independent control mechanism, and a receiving party should anticipate that a court conducting summary assessment may apply a global reduction even where specific criticisms are rejected.
The Senior Courts Costs Office’s decision in JXX v Archibald & Anr [2026] EWHC 630 (SCCO) establishes a new framework for assessing Medical Reporting Organisation fees in personal injury litigation, rejecting both parties’ primary submissions and crafting a novel middle path.
Background
This matter concerned the recoverability of Medical Reporting Organisations fees (MROs) in personal injury litigation. The Senior Costs Judge was required to determine the approach to assessing such fees following the settlement of all other costs in two lead cases: JXX v Archibald & Anr and HLA v LXA & Anr.
In JXX, a reserved judgment was handed down on 17 January 2025. This judgment put the claimant to an election regarding providing further information on medical evidence fees. The claimant chose to provide that information with the agreement of the MRO involved, Medical and Professional Services Limited (MAPS), which was subsequently joined as a Third Party. Given the significance of the issues, an application was made in the related case of HLA for it to be heard concurrently. This was granted, and the MRO in that case, Premex Services Limited (Premex), was also joined as a Third Party. An application by the Association of Medical Reporting Organisations (AMRO) to intervene was refused in July 2025.
By early October and November 2025 respectively, the bills of costs in both the JXX and HLA cases were agreed save for the fees attributable to the MROs. The experts’ own fees were also agreed. Consequently, the hearing between 17 and 20 November 2025 constituted a detailed assessment focused solely on the recoverability and quantum of the MRO fees. The parties, including the third-party MROs, filed 27 witness statements, with half a dozen witnesses cross-examined on behalf of the defendants.
Costs Issues Before the Court
The central issue was how the court should assess the reasonableness of fees charged by an MRO for its services in arranging and administering the procurement of medical expert evidence. The dispute crystallised around two competing legal and evidential approaches.
The first, advocated by the defendants, was based on the county court decision in Stringer v Copley (2002). This approach, sometimes called “the Stringer Cap”, required the receiving party to demonstrate that the MRO’s charges did not exceed the reasonable and proportionate cost of the work if it had been done by the instructing solicitors themselves. This necessitated a detailed breakdown distinguishing the expert’s fee from the MRO’s charges.
The second approach, advanced by the claimants and the MROs, argued that MRO fees should be treated as a disbursement and assessed for reasonableness in amount on a holistic basis, looking at the aggregate invoice. They contended that a retrospective, time-based breakdown was artificial and impossible as MROs do not record time like solicitors. Their model involved applying a percentage markup to the expert’s fee, calculated on a macro, business-wide basis rather than being specific to individual cases.
The court was therefore required to determine: (1) the correct characterisation of MRO fees (as outsourced solicitors’ work or a disbursement); (2) the appropriate legal test for assessing their reasonableness; (3) whether any elements of the fee (such as costs associated with deferred payment or write-off facilities) were irrecoverable as “funding costs”; and (4) if recoverable, how to quantify a reasonable fee.
The Parties’ Positions
The Defendants’ Position: The defendants, represented by Roger Mallalieu KC, argued that the court should follow the approach established in Stringer v Copley and affirmed in subsequent cases such as the Claims Direct Test Cases and CXR v Dome Holdings Ltd. They submitted that MRO fees were only recoverable if shown not to exceed the cost of a solicitor doing the work. This required a clear breakdown separating the expert’s fee from the MRO’s administrative charges. The defendants contended that the claimants had failed to provide sufficient evidence to satisfy this test. They also argued that elements of the MRO fee relating to deferred payment terms and write-off facilities constituted irrecoverable “funding costs” pursuant to the principle in Hunt v R.M. Douglas (Roofing) Ltd. In the absence of a breakdown to excise these irrecoverable elements, the entire MRO fee should be disallowed.
The Claimants’ and MROs’ Position: The claimants and the joined MROs (represented by Benjamin Williams KC, Robert Marven KC and Nicholas Bacon KC) contended that the Stringer approach was flawed. They argued that MRO fees were properly characterised as a disbursement, not outsourced profit costs. The correct test was simply whether the aggregate fee for the medical evidence (expert’s fee plus MRO charge) was reasonable and proportionate. They emphasised the valuable services provided by MROs, including maintaining expert databases, ensuring compliance, and managing administration efficiently. They denied that their commercial terms involved providing “funding”, arguing that deferred payment was an inherent part of the personal injury costs landscape, analogous to a solicitor’s retainer. They submitted that the fees were set by a competitive market and that the court should not engage in an artificial “deconstruction” of a globally priced service. In the absence of evidence from the defendants showing the fees were unreasonable, they should be allowed in full.
The Court’s Decision
Senior Costs Judge Rowley handed down a detailed judgment which departed from both parties’ primary submissions and established a new framework for assessing MRO fees. The significance of the decision lies in its rejection of both the defendants’ Stringer-based approach and the claimants’ holistic aggregate approach, crafting instead a novel percentage-based cap.
Characterisation and Legal Test: The judge held that MRO fees are a disbursement, not outsourced solicitors’ work. This was the fundamental legal holding that distinguished the judgment from previous approaches. Applying the test from Crane v Canons Leisure Centre, which focuses on the nature of the work done (whether it is solicitors’ work) and where responsibility for the work lies, the judge concluded that the work was not “solicitors’ work” in the requisite sense. The work done by MROs was described in Stringer as “administrative work”, which could be carried out by non-fee earning staff. Furthermore, once the expert was chosen, the MRO was left to organise matters until the report was provided, with responsibility for the report’s contents lying with the expert, not the solicitor. Consequently, the Stringer “cap” – requiring a comparison with a hypothetical solicitor’s cost – was not the correct legal test to apply. The court rejected the defendant’s argument that a quasi-solicitor breakdown was necessary because such a breakdown would be vulnerable to the challenge that the work was administrative rather than legal work in any event, and because the responsibility for the work did not lie with the solicitor in the manner described in Crane.
Recoverability of “Funding Costs”: The court rejected the defendant’s argument that deferred payment terms and write-off facilities rendered the fees irrecoverable. It found these were commercial features of the relationship between solicitors and MROs in a market where all participants typically waited for reimbursement until the end of a case. They did not constitute “funding costs” of the type prohibited by Hunt v Douglas Roofing. The judge’s reasoning was strengthened by a comparative analysis: he noted that experts who were instructed directly also effectively deferred payment, and solicitors operating under CFAs similarly delayed receipt of their fees. The purpose of the MRO terms was to provide medical evidence, not to provide credit, even though deferred payment was a byproduct of the agreement. This was entirely different from a disbursement loan from a bank or other litigation funder. The write-off facility was similarly a commercial element of the wider contractual relationship, not a separate service constituting funding. The judge emphasised that the MRO arrangement was consistent with the broader personal injury costs landscape, where staggered payment was an inherent feature affecting all participants.
Assessment of Reasonableness and Quantum: While rejecting the Stringer breakdown, the judge also rejected the claimants’ argument that the court could do no more than accept the aggregate fee as reasonable based on market competition. The evidence demonstrated that MROs applied a percentage markup to the expert’s fee – the judge accepted this evidence from the MROs themselves. Premex charged 35% or 45% for most evidence, and MAPS most commonly charged 53% but also 30%, with outliers ranging from 20% to 104%. However, the judge rejected the argument that these percentages were made reasonable by market competition or that they should be allowed in full between the parties.
The judge found the “tripartite tension” (where the payer is not the service chooser) meant market competition was an imperfect regulator of reasonableness between the parties. Those ultimately paying for the fees had no say in the competition between MROs. The judge also rejected the claimants’ assertion that MROs negotiated discounted rates with experts. The evidence, save for one expert (Professor Cosker) whose testimony the judge did not find convincing on this point, showed that expert fees were consistent regardless of whether instruction came via an MRO or directly from solicitors. In a market where the MRO placed a percentage markup on the expert’s fees, it would be self-defeating to seek to reduce the figure on which the markup would be applied. The MROs’ own evidence therefore showed that their fees inflated the experts’ fees by the percentage markups claimed.
The judge reached the 25% figure by applying a “cautious approach” based on several factors:
(i) limitations in the receiving parties’ evidence;
(ii) the lack of detailed cost analysis from the MROs demonstrating their cost base;
(iii) the tripartite tension which meant market competition was an imperfect regulator of reasonableness between the parties; and
(iv) the variation in percentages (ranging from 30% to 53% generally, with outliers beyond this) which reflected ongoing commercial relationships between solicitors and MROs rather than case-specific factors justifying different rates.
The 10% increase in Premex’s markup during the HLA case suggested later cases were making up for previous shortfalls rather than reflecting current case profitability.
On this basis, the judge held that a markup of 25% on the expert’s fee represented a reasonable amount recoverable between the parties. Any markup claimed below 25% would be allowed as claimed; any claimed above 25% would be reduced to that figure. Importantly, the judge held that this percentage should apply to the entire expert invoice, including disbursements such as expert travel costs, for reasons of simplicity and practicality. As the judge explained, “the percentage mark up is intended to achieve an overall sum” and allowing it only on certain elements would simply justify a higher percentage on those elements.
The judge concluded that this percentage-based approach provided a practical and fair method of quantification, avoiding the disproportionate cost of detailed deconstruction in every case while ensuring paying parties were not liable for unreasonable charges. He suggested that stating this maximum recoverable percentage on future invoices would assist transparency and contrasted this simple disclosure with the impractical “quasi-solicitors’ breakdown” that would not be workable in practice.
