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 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
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
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
This matter concerned an unfair prejudice petition presented by Rudan Business Holding S.A (the Petitioner) under section 994 of the Companies Act 2006. The Petitioner and the First Respondent, Tridan Trusted Advisors AG, each held a 50% shareholding in Leo Services Holding Limited (the Company). The petition alleged that the affairs of the Company were being conducted in a manner unfairly prejudicial to the Petitioner’s interests, focusing on allegations that the Second Respondent, Daniel Tribaldos, had falsified a loan agreement and subsequently removed the Petitioner’s nominees from the board of a key subsidiary, Leo Trust Switzerland AG, before transferring the shares in that subsidiary and another to entities he controlled.
The first costs and case management conference (CCMC) was heard in March and April 2022 by Deputy ICC Judge Lambert, who approved the parties’ costs budgets for the liability phase of the proceedings. Shortly thereafter, in May 2022, the Respondents served an Amended Points of Defence and Counter-Petition which substantially expanded the factual and legal issues in dispute. The Petitioner served an Amended Reply in August 2022. The disclosure process became protracted and complex, involving applications for Letters of Request to the Swiss courts under the Hague Convention to obtain permission to disclose documents located in Switzerland. This led to the vacation of the original trial window in 2023 and the listing of a Further CCMC.
The Further CCMC eventually took place before Deputy ICC Judge Jones on 6 May 2025, where directions were given for a 16-day trial (including two days’ pre-reading) in a window beginning on 29 June 2026. At that hearing, the consideration of both parties’ applications to revise their costs budgets was adjourned to a separate hearing. Both the Petitioner and the Respondents had filed revised costs budgets in late April 2025, seeking very substantial increases to their previously approved figures. The hearing before Deputy ICC Judge Kyriakides on 18 December 2025 was to determine the principle of whether variations to those budgets should be allowed, with quantum to be addressed separately.
Costs Issues Before the Court
The court was required to determine the competing applications by the Petitioner and the Respondents to revise their respective costs budgets upwards. The Petitioner sought an additional £2,269,495, increasing its total budget from approximately £2.67 million to approximately £4.84 million. The Respondents sought an additional £1,644,045, increasing their total budget from approximately £1.75 million to approximately £3.40 million. The applications engaged the provisions of CPR 3.15A, which mandates revision of a budget where significant developments in the litigation warrant such revisions.
The key issues for the court were: first, identifying whether the events relied upon by each party constituted “significant developments” in the litigation; second, determining whether each party had submitted particulars of the proposed variation “promptly” as required by the rule; and third, if both threshold tests were met, exercising discretion as to whether to allow the revisions and in what amount.
The Parties’ Positions
The Petitioner argued that multiple significant developments warranted budget revisions. Its primary contention was that the Respondents’ Amended Defence in May 2022 fundamentally expanded the scope of the litigation by introducing numerous new allegations, expanding the defence from 21 to 51 pages. This, it argued, had a cascading effect, increasing the work required for subsequent phases including disclosure, witness statements, trial preparation, and the trial itself, which had increased from an eight-day to a sixteen-day estimate. The Petitioner also pointed to the specific costs of the effective Further CCMC in May 2025. On promptness, the Petitioner submitted that in the context of this case — where proceedings were effectively paused during the Swiss disclosure process — it was sensible and proportionate to serve a single revised budget ahead of the Further CCMC in April 2025. It argued no prejudice arose from this approach.
The Respondents similarly relied on the expansion of issues from the amended pleadings as a significant development, particularly impacting disclosure and witness evidence. They also emphasised the unexpected scale of the electronic disclosure exercise, which necessitated engaging FTI Consulting LLP as an e-disclosure provider. The Respondents contended that they had acted promptly by serving a revised budget on the Petitioner in January 2023, although this budget was never formally filed with the court. The Respondents also submitted that the court’s primary role was to manage future costs prospectively and that allowing revisions long after costs had been incurred undermined the costs budgeting regime.
The Court’s Decision
Deputy ICC Judge Kyriakides applied the two-stage test derived from Persimmon Homes Ltd v Osbourne Clark LLP [2021] EWHC 841 (Ch) and Sharp v Blanks [2017] EWHC 3390 (Ch). The court first had to be satisfied that there had been a significant development since the last approved budget and that particulars of the variation were submitted promptly. Only if both thresholds were met would the court exercise its discretion on quantum.
The court also drew on the policy purposes underlying the costs budgeting regime, as identified in both Persimmon and Sharp: predictability of costs exposure for the parties, greater accuracy in costs recovery, the likely reduction in detailed assessment costs where accurate budgets are in place, and the inherent desirability of significant developments being reflected in the budgets.
Significant Developments
The court made findings on a phase-by-phase basis. The non-consequential amendments in the Respondents’ Amended Defence, and the consequential Amended Reply, were held to be significant developments in the litigation. They expanded the case from a 21-page defence to a 51-page document, introducing new issues not reasonably anticipated at the time of the original budgeting. Many of the new allegations did not arise from the Petitioner’s own amendments and could not have been foreseen.
The effective Further CCMC listed for 6 and 7 May 2025 was a significant development, as it was an unanticipated hearing to re-set the entire procedural timetable and address additional matters including the trial length. However, the earlier adjournment of a CCMC in June 2024 was not a significant development. The court accepted the Respondents’ submission that the adjournment was a normal part of litigation. A February 2023 hearing on the Petitioner’s application to extend time for inspection of documents was similarly not significant.
The expansion of issues from the amended pleadings and, for the Respondents, the unexpected scale of data collection were significant developments in the disclosure phase. The Petitioner’s original budget had estimated a population review of 250–300 documents and production of around 2,000 documents from the Respondents. In fact, the Petitioner carried out a population review of 9,722 documents. The Respondents’ position was more stark: 3,340,540 documents were collected, of which 91,710 were migrated to a Review Workspace, necessitating the engagement of FTI Consulting LLP as an e-disclosure provider — an expense the original budget had expressly excluded.
The increased scope of issues and disclosure justified a finding of significant development for witness statement preparation. However, the court held that a party’s internal decision to change solicitors and redistribute work between solicitors and counsel — as the Respondents had done following their instruction of Gresham Legal — was not a significant development. It was an internal matter arising from the choice of the party, not a change in the litigation itself. The court added that if the overall total of the approved budgeted costs for a phase was not changed by such redistribution, the Respondents should not be penalised merely because of the reallocation; but any additional costs above the approved amount would fall to be dealt with at detailed assessment.
No significant development was found for the expert evidence phase. The Petitioner relied principally on the introduction of an issue under section 191 of the Companies Act 2006. The court found, however, that this issue was introduced by the Petitioner’s own Amended Petition, for which permission had been granted in the order of 21 March 2022, and that paragraph 12 of that order already made provision for expert reports on the relevant share valuations. The costs of that expert evidence should therefore have been included in the Petitioner’s budget as originally approved. The court also held that a substantial increase in the Petitioner’s solicitors’ hourly rates — Freshfields’ rates having risen by approximately 25% in June 2024 — was not a significant development in the litigation warranting a budget revision. It was a matter between the solicitors and their client. The Respondents’ claimed variations for this phase were also rejected: the increase in expert fees from £45,000 to £65,000 was unexplained, and the only change identified — a Panamanian expert no longer being required — would logically reduce fees, not increase them.
The increase in trial length from eight to sixteen days was a significant development warranting increases to both parties’ trial preparation and trial costs. However, the court rejected the Petitioner’s argument that the adjournment of the trial from 2023 to 2026, and the consequent increase in lawyers’ fee rates, constituted a separate significant development. An adjournment during which lawyers raise their fees does not fall within that category.
On contingent costs, the court found that the withdrawal of an anticipated injunction application was a significant development warranting a downward revision of the Respondents’ budget. However, most other contingent cost variations were refused. The Respondents’ overspend on the security for costs application was not a significant development: they should have anticipated a contested hearing and budgeted for it. An application by the Petitioner for security for costs, which was issued and then withdrawn within weeks, was not significant either. Nor was an application for an extension of time for disclosure, which the court treated as part and parcel of normal litigation.
Promptness
The court emphasised that the core purpose of costs management is the prospective control of future costs. It rejected the Petitioner’s argument that waiting to submit a single comprehensive revision until before the effective Further CCMC was “prompt” in this context. The court stated that this approach was “approaching costs budgeting from the wrong direction,” echoing Master Kaye’s language in Persimmon. The purpose of costs budgeting is to provide prospective predictability and certainty, not to approve incurred costs retrospectively. Where a significant development occurs, the mandatory obligation under CPR 3.15A is to revise the budget promptly in relation to that development — even if this results in multiple revisions over time. A single belated application, filed after the relevant costs have been fully incurred, effectively transforms the court’s function from approving prospective budgets into conducting what amounts to a summary assessment.
The parties were found not to have acted promptly regarding revisions for statements of case, disclosure, and witness statements. The significant developments in the pleadings were known by mid-to-late 2022, and the disclosure exercise had been completed by January 2023, yet revised budgets were not submitted until April 2025 — well after the relevant costs had been incurred. The Petitioner’s delay of nearly three years from service of the Amended Defence, and over two years eight months from service of the Amended Reply, could not on any interpretation be considered prompt. The Respondents’ position was no better: even if the January 2023 budget were relied upon, it was served nearly eight months after the Amended Defence and was never submitted to the court.
The Respondents’ January 2023 budget itself was not capable of satisfying the submission requirements of CPR 3.15A. It was served on the Petitioner but never filed with the court. ICC Judge Greenwood did not have a copy of it at the directions hearing on 2 February 2023, and its only appearance in the court file was as an exhibit to a witness statement filed in support of the Respondents’ security for costs application on 6 April 2023. That did not constitute submission of a costs budget to the court. The court also noted that the figures in the January 2023 budget differed significantly from the April 2025 revision — for statements of case alone, the claimed increase rose from £114,299 to £185,784 without explanation — illustrating the difficulties courts face when asked to approve incurred costs rather than prospective estimates.
The court found the parties had acted promptly regarding the Further CCMC costs, trial preparation, and trial phases. The scale of additional work for trial could only be properly assessed as the May 2025 CCMC approached, when the trial length was determined.
Conclusion on Allowable Variations
The court held that both threshold tests were satisfied only for the phases concerning the Further CCMC (held on 6 May and 18 December 2025), trial preparation, and trial. In principle, revisions to the budgets for these three phases would be allowed, with the quantum of those increases to be agreed between the parties or determined subsequently. All other requested variations were disallowed at this stage, primarily for failure to meet the promptness requirement. For those phases, the parties’ recourse will be to argue at detailed assessment that there is good reason to depart from the last approved budget under CPR 3.18.
The Patents Court’s decision in Parsons v Convatec Limited [2026] EWHC 300 (Pat) addresses costs budgeting in a claim valued at up to £366 million, providing important guidance on the inter partes treatment of premium-rate solicitors’ fees, the limits of budget comparisons between parties, and the court’s approach to assertions that artificial intelligence should reduce litigation costs.
Background
This matter concerned costs budgeting in a substantial claim brought by the claimant, Dr David Parsons, against the defendant, Convatec Limited, under section 40 of the Patents Act 1977. Dr Parsons sought a payment equal to 10–15% of the value of the defendant’s global sales of certain products, which on his own formulation could amount to some £366 million. The claim involved seven patent families and 73 individual patents, and a 27-day trial was listed for 2027. Despite the scale of the claim, both parties agreed that costs budgeting was appropriate.
A preliminary issue regarding the potential impact of section 106 of the Patents Act on the level at which the defendant’s budget should be approved was reserved for a separate judgment. This decision proceeded on the assumption that section 106 had no effect. The outcome of that reserved judgment may have further implications for the approved budget figures.
Costs Issues Before the Court
The court was required to review and approve the parties’ costs budgets in accordance with CPR Part 3 and Practice Direction 3E. The primary focus was on phases of the defendant’s budget which were not agreed, with the claimant challenging the estimated costs as unreasonable and disproportionate. The claimant also raised a general criticism of the defendant’s incurred costs and conduct. The only phase of the claimant’s own budget that was not agreed was for disclosure. The court’s task was to determine the reasonable and proportionate costs for each future phase, having regard to the factors in CPR 44.3(5) and 44.4(3), including the sums in issue, the complexity of the litigation, and any wider factors such as the new issue of law arising under section 40 of the Act.
The Parties’ Positions
The claimant argued that the defendant’s incurred costs to date were at least double his own and were based on hourly rates that were excessive at the most senior levels, with Grade A rates of £1,100, £915 and £675 respectively, compared with corresponding figures of £700 and £525 for the claimant’s solicitors. He invited the court to deprecate this conduct and to adopt a hard-line approach to the defendant’s forward budget, relying on CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd. For specific phases, the claimant contended that the defendant’s solicitors’ costs were top-heavy, that four counsel including IP specialists were unnecessary, and offered lower sums for the CMC, disclosure, witness statements, and trial preparation, often pointing to his own budget as a comparator. The claimant also suggested that efficiency savings could be achieved through the use of AI in the disclosure exercise.
The defendant defended its budget as reasonable and proportionate given the exceptional scale and complexity of the claim. It emphasised the very high sums in issue, the complexity involving seven patent families and 73 patents, and the new issue of law regarding the scope of the enlarged section 40. The defendant argued it had a significantly greater disclosure exercise, requiring the location and hosting of some one million documents spanning 32 years, and that its case involved an additional dimension concerning the source of any benefit derived from the patents, justifying the instruction of IP specialist counsel and more extensive evidence. It maintained that its chosen solicitors, while expensive, were justified by the nature of the dispute, and that its budget represented costs within a reasonable and proportionate range.
The Court’s Decision
The court applied the principles from Various Shared Appreciation Mortgage Borrowers v BOS [2022] EWHC 254 (Ch), approving budgets for each phase with revisions where necessary.
General Approach
The court confirmed that the assessment was from an inter partes perspective: there is nothing wrong with a party instructing a particularly expensive firm because the case is important and they want to win, but the question is what is reasonable and proportionate to be incurred on an inter partes basis. Critically, the court emphasised that the costs budgeting exercise cannot be resolved simply by determining “appropriate” hourly rates. High hourly rates do not of themselves render costs unreasonable or disproportionate. The judge illustrated this with a practical example: a senior partner at Freshfields might complete a task in one hour at £1,100 that a more junior fee earner would take three hours to accomplish. Provided £1,100 is not an unreasonable or disproportionate cost for that task, the high hourly rate is not, of itself, a problem. The court’s quest, applying Discovery Land Company v Axis Specialty Europe, was for a figure within a reasonable and proportionate range, not the absolute lowest amount a party could be expected to spend.
The court also confirmed that a comparison between budgets may be informative but can never be determinative. Asymmetry between the parties’ budgets could be explained by differences in the volume of work, differing strategic approaches to the case, or even one side having underestimated costs.
The court rejected the claimant’s invitation to adopt a hard-line approach of the kind set out in CIP Properties, noting that this submission had not been pressed in oral argument. While opinions could reasonably differ on whether the defendant’s incurred costs were reasonable and proportionate, the court did not consider them so obviously unreasonable as to call into question the reliability of the forward budget. The criticism was, in the court’s view, nothing more than the usual debate about proportionality and reasonableness of costs, albeit involving large figures. Assessment of the reasonableness of incurred costs was a matter for a costs judge performing a detailed assessment, not for the budgeting judge.
Defendant’s Budget — Phase-by-Phase
Case Management Conference: The defendant estimated £193,600 for a further one-day CMC. The court allowed £170,000, making a modest reduction to reflect the cost of the defendant’s solicitors, particularly the proportion attributable to Grade A fee earners (£77,600 out of £118,600 in solicitors’ costs), given that counsel were also instructed at an estimated cost of £75,000.
Disclosure: The defendant estimated £1,515,775, comprising £100,000 for counsel, £270,000 for document hosting disbursements, and £1,145,775 for solicitors’ fees. The court allowed £1,300,000. It accepted that the defendant had a difficult and extensive disclosure exercise, involving the location and hosting of approximately one million documents across 32 years of the claimant’s career, and found nothing unreasonable about the number of Relativity accounts or the hosting fees. The court also accepted that investing time in training machine-learning systems for the initial stage of disclosure was a proportionate and reasonable approach.
However, the court found an element of “luxury” in the estimate. Some of that came from the hourly rates applied to Grade A fee earners, with approximately £215,000 of costs attributable to very senior staff at very high rates. Further luxury, in the court’s judgment, came from the number of hours estimated by more junior fee earners who were also charged at rates above guideline levels on work that, while extensive, was reasonably commoditised.
Significantly, the court addressed the claimant’s argument that AI should reduce the defendant’s disclosure costs. The judge observed that it is easy to assert that AI should reduce costs, but the claimant had not identified specific steps involving AI that the defendant should be taking but was not. The defendant was already adopting an orthodox approach to disclosure, including investing in machine-learning systems. The court declined to reduce the budget on the basis of a general assertion about AI efficiencies without evidence of particular savings that were being foregone.
Witness Statements: The defendant estimated £978,600 based on six factual witnesses, compared with the claimant’s estimate of £493,000 for three witnesses. The court allowed £700,000. It accepted that the defendant had a legitimate additional dimension to its evidence — disputing the extent to which any benefit derived from the patents rather than from marketing, production, distribution, or regulatory matters — and found the claimant’s offer of £382,000 much too low. However, the court considered the mix of hours unreasonable on an inter partes basis, with Grade A fee earners estimated to spend 580 hours and more junior fee earners 900 hours on six witness statements, taking into account the requirements of Practice Direction 57AC. It also noted that the three additional witnesses would not be addressing matters as complex as the inventorship and patent issues covered by the first three.
Pre-Trial Review: The defendant estimated £257,900 for a two-day PTR. The court allowed £200,000. While acknowledging one would not necessarily expect a packed agenda at the PTR given the quality of representation on both sides, the PTR was listed for two days and that could not be ignored. The court found the claimant’s own estimate for counsel (£25,000 for a two-day hearing) to be on the low side, and concluded the truth lay somewhere in the middle.
Trial Preparation: The defendant estimated £2,051,250 on the basis of a single expert. The court reduced this by £350,000 in total (to £1,701,250), comprising a £200,000 reduction for counsel brief fees and a £150,000 reduction for solicitors’ costs. The court accepted that it was reasonable and proportionate for the defendant to instruct a four-person counsel team including IP specialists, given the nature of the inventorship dispute and the expansive way in which the claimant put his case on section 40. However, it was not satisfied that it was reasonable for the defendant’s counsel team to receive brief fees almost twice those of the claimant’s team. On solicitors’ costs, the court identified a top-heavy team at expensive hourly rates, a risk of overlap with counsel, and an element of what it described as a “Rolls-Royce service” that was unreasonable on an inter partes basis.
Trial: The defendant estimated £1,850,300 based on a single expert and 30 trial sitting days (although the trial itself was listed for 27 days). The court reduced this by £330,000 (to £1,520,300). The reduction equated to the cost of having a Grade A partner, at a charge-out rate of £1,100 per hour, sitting in court for 10 hours per day for the duration of the trial, in addition to the same level of involvement from three other team members. The court considered it unreasonable and disproportionate on an inter partes basis for a full four-person solicitor team to be in court listening to counsel’s submissions throughout the trial. Consistent with its broad-brush evaluative approach, the judge acknowledged that removing the Grade A partner’s time made no allowance for residual work that partner might do outside court, but equally left untouched the other team members’ court attendance costs. Refreshers for counsel and the defendant’s expert attendance costs of £60,000 were approved, with the court finding the claimant’s own estimate of £16,500 for expert attendance too low to be a reliable guide.
Claimant’s Budget
Disclosure: The claimant estimated £859,500. The court allowed £650,000, finding that the defendant’s disclosure exercise was approximately twice as large as the claimant’s. Having allowed the defendant £1,300,000 for disclosure, the court considered £650,000 a reasonable and proportionate figure for the claimant’s less exacting exercise. An unexplained increase of £330,000 from the previous iteration of the claimant’s budget raised a flag but was not in itself a reason for reduction.
The budgets for other phases, including expert reports (budgeted on an agreed assumption of a single expert), were approved as presented or agreed. If the assumption of a single expert proved inaccurate following the May 2026 CMC, the expert evidence budgets would need to be revisited.
https://tmclegal.co.uk/wp-content/uploads/2026/02/shutterstock_2489188913.webp5621000Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-02-22 18:40:072026-05-23 22:00:50High Hourly Rates Do Not Of Themselves Render Budgeted Costs Disproportionate | Costs Budgeting In Parsons v Convatec
The claimant, the National House-Building Council (NHBC), commenced proceedings in January 2024 against three defendants. The first defendant was a development company, with the second and third defendants being its current and former directors. The claim, valued at approximately £5 million, sought remediation and other costs from the first defendant under the NHBC’s rules and, alternatively, under an indemnity agreement from the individual defendants [§11–12].
The defendants initially instructed Gowlings as their solicitors in late February 2024. In late July 2024, due to what was said to be an unexplained conflict, the second and third defendants instructed North Star Law Ltd, which had at some stage acted for all parties in the pre-proceeding stage [§12]. Pleadings closed in June 2025. A first case and costs management conference (CCMC) was listed for 20 June 2025. In accordance with CPR 3.13, the parties were required to file and exchange costs budgets not later than 21 days before that conference, by 30 May 2025.
In the period leading up to this deadline, the first defendant’s director, Mr Hodson, was engaged with a separate planning inquiry beginning in February 2025 and adjourned into mid-April and May 2025. However, the court noted there had been a failure to give proper instructions to Gowlings well before the planning inquiry commenced [§13]. Communications from Gowlings to the first defendant on 3 March 2025 warned of the need to file a budget and the consequences of failing to do so [§14]. Gowlings terminated their retainer on 14 May 2025 and applied for a formal order declaring they had ceased to act, which was granted by Waksman J on 3 June 2025 [§16–17]. The first defendant had notice of that application before it was made [§17]. Consequently, the first defendant failed to file a costs budget by the 30 May deadline.
All three defendants missed the deadline, but at the CCMC on 20 June, relief from sanction was granted to the second and third defendants as their delay was only one day and the application was unopposed [§18].
At that hearing, North Star Law had agreed to act for all defendants from 18 June and a combined budget was before the court on 19 June [§18]. However, as there was no formal application or evidence from the first defendant seeking relief, the court directed a separate hearing to determine whether the automatic sanction under CPR 3.14 should be disapplied for the first defendant [§18]. That hearing took place on 15 September 2025.
Costs Issues Before the Court
The sole issue for determination was the first defendant’s application, dated 4 July 2025, for relief from the sanction imposed by CPR 3.14 [§1]. This rule states that unless the court orders otherwise, a party which fails to file a budget when required will be treated as having filed a budget comprising only the applicable court fees [§5]. The practical effect of maintaining the sanction would be to restrict the first defendant’s recoverable costs for future stages of the litigation to court fees only, should it be successful. Importantly, both parties agreed that the sanction is “forward-facing only” and would not automatically affect the incurred costs already shown in the Precedent H [§8]. The sanction affects only recoverable future costs, not the conduct of the defence itself.
The court was required to apply the established three-stage test from Denton v White [2014] EWCA Civ 906, as recently affirmed by the Court of Appeal in Leadingway Consultants v Saab & Anr [2025] EWCA Civ 852 [§6, §9]. The court was also to consider all the circumstances, with particular regard to the factors in CPR 3.9 [§3].
The Parties’ Positions
The First Defendant’s Position: The first defendant, through counsel Mr Letman, accepted the breach was serious but argued it was not at the worst end of the scale [§20]. It was submitted that the director, Mr Hodson, had been occupied with a critical planning inquiry which concluded in May 2025. He had hoped to persuade Gowlings to resume representation and claimed he did not realise the specific deadline of 30 May would trigger an automatic sanction, as he had no solicitors advising him after 14 May [§23]. The first defendant apologised for the failure and argued that maintaining the full CPR 3.14 sanction would be disproportionate and manifestly unjust given the context [§33]. It was emphasised that the estimated future costs to be managed were approximately £260,000 [§19].
The Claimant’s Position: The claimant, through Mr Townend KC, opposed the application. It was argued that the breach was serious and significant, involving a delay from 30 May until a budget was provided on 19 June [§20]. The claimant contended there was no good reason for the default, pointing to clear warnings in correspondence from both Gowlings and the court, and a general lack of engagement by the first defendant in the litigation [§22, §28]. The claimant relied on authorities including BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor [2018] EWHC 3380 (Comm), where relief was refused for a 14-day delay [§7, §21]. It was submitted that granting relief would undermine the need for compliance with rules and the efficient conduct of litigation, as the failure had necessitated an additional hearing.
The Court’s Decision
The court refused the application for relief from sanction. Applying the Denton test, Recorder Singer KC held as follows.
On the first stage, it was found that the breach was serious and significant. The delay was from 30 May to 19 June 2025, a period which the court considered “relatively long” in the context of authorities such as BMCE Bank v Phoenix, where a shorter delay resulted in the sanction being upheld [§20–21]. This failure caused the need for a separate hearing, depriving other litigants of court time [§31].
On the second stage, the court found there was no good reason for the breach [§27]. Whilst Mr Hodson’s focus on the planning inquiry was acknowledged, the court found the first defendant had failed to engage with the litigation and its procedural obligations for some time, as was clear from the evidence from Gowlings [§28]. Correspondence from both the former solicitors and the court had made the requirements clear. The director’s assertion that he did not “see the sanction coming” because he had no solicitors after 14 May was not accepted as justification; the court observed that working out when the deadline fell “would not have been a difficult exercise by any stretch of the imagination” [§15, §24]. His hope that Gowlings would resume representation brought with it “a very significant risk that something bad might happen in the meantime” [§25].
The court also noted the distinction between litigants in person, who are exempt from the costs budgeting requirements under CPR 3.13, and unrepresented limited companies, which are not. The first defendant was not excluded from the rules merely because it lacked representation [§26].
At the third stage, considering all the circumstances, the court concluded that maintaining the sanction would not be manifestly unjust [§29–34]. The breach was serious, the reasons were not good, and the effect was to cause inefficiency by necessitating an additional hearing. The court gave some “minor credit” to Mr Hodson for his statement that he would have acted differently had he known of the automatic sanction [§30]. However, this did not outweigh the other factors.
The court rejected the submission that the sanction was disproportionate in the circumstances of this case, observing that CPR 3.14 prescribes this specific consequence for non-compliance and “cannot be said to be of itself disproportionate” [§33]. The court’s refusal to order otherwise in this case, where there had been a relatively long delay, no good reason, and consequent inconvenience to the court and other litigants, could not render the sanction disproportionate.
Consequently, the automatic sanction under CPR 3.14 was upheld [§34]. The first defendant would therefore be treated as having filed a costs budget comprising only court fees for the estimated future costs of the litigation.
https://tmclegal.co.uk/wp-content/uploads/2026/01/Shutterstock_1909580020.jpg7501250Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2026-01-15 17:30:292026-05-23 22:06:47Solicitors’ Withdrawal Does Not Excuse Late Costs Budget | Relief From Sanctions Refused
A group of seven high-profile individuals, including Baroness Lawrence, Sir Elton John, and Prince Harry, the Duke of Sussex, brought separate claims against Associated Newspapers Limited (the Defendant). Their individual claims have been case managed together and are heading towards a combined trial of all issues in all claims [§11]. A key feature of the litigation was that each claimant relied not only on allegations specific to them but also on a substantial body of similar fact and generic allegations common to all claims. Each claimant’s pleading expressly relied on the common allegations as a “modus operandi” supporting their individual case [§10].
At a costs and case management conference (CCMC) in November 2024, the court made an order that included definitions for ‘Individual Costs’ and ‘Common Costs’ for the purposes of costs management and for sharing the claimants’ own costs amongst themselves [§5]. This order did not, however, address the potential liability of the claimants for any adverse costs orders in favour of the Defendant [§6–7]. Following that order, the claimants obtained After-The-Event (ATE) insurance policies totalling approximately £14.1 million (£2.35 million per claimant), calculated on the basis of several liability for any adverse costs [§9, §19]. The Defendant subsequently applied for a determination on the nature of the claimants’ potential liability for costs. Separately, both parties applied to vary their court-approved costs budgets upwards, citing significant developments in the litigation.
Costs Issues Before The Court
The court was required to determine two discrete costs issues. The first was the Defendant’s application for an order specifying that, if any claimant was ordered to pay costs to the Defendant, they would be severally liable for their own ‘Individual Costs’ but jointly and severally liable with any other unsuccessful claimant(s) for the Defendant’s ‘Common Costs’ [§3]. The second issue concerned the competing applications by both the claimants and the Defendant to increase the budgets for several phases of the litigation, namely: Issue/Statements of Case, CMC, Disclosure, and Witness Statements [§33].
The Parties’ Positions
The Defendant’s Position on Costs Liability: The Defendant, represented by Roger Mallalieu KC, argued that the claimants were pursuing a collective strategy based on common allegations, with each claimant’s case relying on and supporting the others [§10–11]. Citing authorities including Stumm v Dixon (1889) 22 QBD 529, Dufoo v Tolaini [2014] EWCA Civ 1536, Rowe v Ingenious Media Holdings plc [2020] EWHC 235 (Ch), and Ontulmus v Collett [2014] EWHC 4117 (QB), it was submitted that where parties combine to present a common claim or defence, the established principle is that they are jointly liable for the costs of that common endeavour [§12]. The Defendant relied on the claimants’ correspondence seeking several liability and on their ATE arrangements as reasons to determine costs liability at this stage [§8–9].
The Claimants’ Position on Costs Liability: The claimants, represented by Andrew Hogan, resisted the application [§15]. They argued that costs orders should ordinarily be made at the end of a case and that no good reason had been shown for a pre-emptive order [§16]. They submitted that their claims remained separate, with distinct individual elements, and that their ATE insurance had been reasonably obtained on a several liability basis [§19]. Imposing joint and several liability now could force them to seek additional, costly insurance cover to guard against the risk of being left solely liable for common costs if a co-claimant could not pay [§9, §19]. In the alternative, they argued that if an order was made, it should be for several liability only, citing factors including that these were separate claims brought by seven individuals in six claims, represented by three firms of solicitors [§22].
Positions on Budget Variations: Both parties filed Precedent T forms seeking increases in four phases of their budgets: Issue/Statements of Case, CMC, Disclosure and Witness Statements [§33]. The claimants relied on the need for Amended Replies, an additional CMC, extra disclosure work and the increased number of Defendant witness statements [§39, §48, §55, §66]. The Defendant pointed to the burden of answering significantly amended Particulars of Claim, the additional CMC, the costs of maintaining a legacy email archive and the increased number of its own witness statements [§44, §52, §59, §70]. The court then applied CPR 3.15A, assessing in each case whether there had been a ‘significant development’ and what sums were reasonable and proportionate [§34–37].
The Court’s Decision
Costs Liability Application: The court granted the Defendant’s application [§23]. It held it had jurisdiction under its wide case management powers (CPR 3.1) to make such an order, and that costs sharing orders had become “commonplace in multi-party actions where parties combine to litigate common issues” [§24].
The court applied the principle from Stumm v Dixon that each party is liable jointly with each other for the whole of the reasonable costs of their common claim or defence, but only severally for the individual costs of their claim [§25–26]. The court referred to Rowe v Ingenious Media Holdings plc, noting that it emphasised the need to pay particular attention to “the nature of the claim” when deciding whether to order joint or several liability for costs [§27]. The present case was materially different: the claimants’ cases depended “not merely on them bringing the same central case based on the Similar Fact and Generic cases, but also on each individual Claimants’ own specific case being said to cross support each of the other Claimants’ cases and the collective case as a whole” [§30].
The court rejected the argument that the decision should be deferred. It considered it “imperative” that the claimants understood the consequences of the way the litigation was being conducted, particularly given the substantial costs already incurred and further substantial trial-preparation costs to come [§31]. The fact that the claimants might need to reassess their ATE insurance was “in their own best interests” and not a reason to refuse the order [§31]. The order would not “tie the court’s hands” if circumstances later justified a departure [§32].
Budget Variations: The court assessed each variation request against the test in CPR 3.15A, requiring a ‘significant development’ in the litigation [§34–36]. It noted that “if agreement cannot be reached on a figure for a particular phase of the budget, the Court is not bound by any offer which has been made” [§37].
For the Claimants:
Issue/Statements of Case: Sought £139,295 (£36,120 time costs plus £103,175 disbursements); allowed £20,000 [§39–43]. The court found the Replies went beyond their proper function and, regarding the Ward Allegations, “impermissibly advanced a factual case that contradicted the case advanced in the Particulars of Claim” [§42].
CMC: Sought £200,000; allowed £200,000 in full [§48–51]. A further CMC was a significant development not previously contemplated.
Disclosure: Sought £495,520; allowed £80,000 [§55–58]. The court held the claimants were “largely responsible for their own failure to undertake the disclosure exercise properly in the first place” and had only obtained “several discrete but limited orders for disclosure against the Defendant” [§57].
Witness Statements: Sought £175,000; allowed £50,000 [§66–69]. The budget had assumed the Defendant would serve a maximum of 30 witness statements; 11 further statements required consideration, which constituted a significant development.
For the Defendant:
Issue/Statements of Case: Sought £958,558; allowed £95,000 [§44–47]. The court accepted this was a “more legitimate” request given the claimants’ “significant amendments” imposing “a significant burden to answer and investigate new allegations” [§46]. The preparation of supplemental witness statements could not fall within this phase.
CMC: Sought £200,000; allowed £200,000 in full [§52–54].
Disclosure: Sought £424,439 (including £357,919 for server costs); allowed £357,919 [§59–65]. The claimants argued that the cost of maintaining a legacy email archive was a business overhead and not a “legal cost” under CPR 44.1, citing London Scottish Benefit Society v Chorley (1884) 13 QBD 872. The court rejected this argument, accepting the Defendant’s evidence that the server cost was “only being incurred by reason of this litigation” and was therefore an expense “necessarily arising from the litigation and necessarily caused by the course which it takes” [§64–65].
Witness Statements: Sought £250,800; allowed £90,000 [§70–73]. The increase in witness numbers was “because the scope of the claim has expanded by amendment, bringing in new allegations” [§72].
The court also noted that the November 2024 order required amendment to constitute a proper costs management order as mandated by CPR 3.15(2), observing that “parties seldom draft proper or effective costs management orders” [§74–77].
https://tmclegal.co.uk/wp-content/uploads/2025/12/shutterstock_2674019271.jpg7681366Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2025-12-09 20:23:402026-09-12 12:19:45Co-Claimants Pursuing Common Case Face Joint And Several Liability For Adverse Costs
September delivered critical decisions on costs budgeting, indemnity costs thresholds, and procedural jurisdiction. The NOx Emissions litigation saw budgets slashed by 62%, whilst courts clarified when “annoying” behaviour remains insufficient for indemnity basis awards. Pre-action applications now definitively constitute “proceedings” for costs purposes. Practitioners must note the firm line drawn against Part 36 offers demanding total capitulation and the narrow scope for costs-only joinder applications.
Detailed Assessment & CPR 44.11
No Procedural Tension Between CPR 44.11 And s57 of the Criminal Justice and Courts Act 2015 Costs Judge Nagalingam refused permission to appeal, holding that CPR 44.11 and s57 Criminal Justice and Courts Act 2015 serve distinct purposes with no procedural tension. Detailed assessment cannot become a forum for quasi-fundamental dishonesty findings that should have been pursued at trial, and settlement without apportionment prevents retrospective allocation of damages to specific heads of loss.
HHJ Paul Matthews dismissed an appeal against costs orders depriving an executor of estate indemnity for litigation costs. Executors defending hostile removal proceedings in their own interests rather than for the estate’s benefit lose entitlement to indemnity under Trustee Act 2000 s31, even where administration costs indemnity is preserved.
Section 51 Jurisdiction
Court Of Appeal Confirms That Pre-Action Applications Constitute ‘Proceedings’ for Costs Purposes
Lord Justice Cobb held that pre-action injunction applications constitute “proceedings” under s51 Senior Courts Act 1981, closing a loophole where parties might escape costs consequences through procedural technicalities. Courts possess costs jurisdiction for any application where they are seised and asked to make orders, regardless of whether a claim form was issued.
Costs Budgeting
High Court Slashes Claimants’ Costs Budgets by 62% In NOx Emissions Litigation
Cockerill J and Senior Costs Judge Rowley approved just £21m of £55.7m sought by claimants for Tranche 3 of the NOx Group Litigation. The court criticised continued “over-lawyering”, drastically reduced budgets for CMC attendance from 32 fee earners to 9 in-person attendees, and confined non-lead firms’ recoverable involvement to narrow circumstances, with routine “keeping abreast” work deemed non-recoverable inter partes.
CPR 3.15(8) | £870 Hourly Rate And £90,000 Brief Fee For Leading Counsel Deemed Disproportionate In £1.2m Claim
The High Court reduced trial preparation and trial budgets through broad-brush phase reductions where solicitors’ rates substantially exceeded London Band 2 guidelines and counsel brief fees totalled £90,000. Courts can address excessive rates without breaching CPR 3.15(8)’s prohibition on fixing hourly rates by applying downward adjustments to disproportionate phase totals following GS Woodland Court GP1 Ltd v GRCM Ltd.
Indemnity Costs
Being ‘Annoying and Difficult’ Not Sufficiently ‘Out Of The Norm’ For Indemnity Costs In Failed Liquidator Challenge
The Chancery Division refused indemnity costs against an unsuccessful creditor applicant, finding his conduct, though creating a weak application, did not meet the “out of the norm” threshold. Personal circumstances including head injury and deep investment in the liquidation distinguished the case from authorities like Beattie v Smailes where extravagant applications warranted higher basis awards.
Part 36 Offers
When Part 36 Offers Demand Total Capitulation | Matière v ABM
Alexander Nissen KC held that a Part 36 offer of nil for a multi-million pound counterclaim was not a genuine attempt to settle that aspect of proceedings, making it unjust to apply indemnity costs consequences under CPR 36.17(4) to counterclaim costs. The offer’s genuine nature regarding the claim secured full Part 36 benefits for those costs only, demonstrating offers must involve realistic concessions across all dispute aspects.
Costs Capping
Costs Capping Order | Court Sets Different Caps Despite Defendant’s Push For Parity In Facial Recognition Challenge
Farbey J set reciprocal but non-identical costs caps at £70,000 (claimants) and £100,000 (defendant) in a judicial review of Live Facial Recognition technology policy. Courts will look beyond specific fundraising to assess campaign organisations’ true financial resources, expecting strategic deployment of unrestricted funds whilst recognising that “reciprocal” caps under Criminal Justice and Courts Act 2015 ss88-89 need not be identical.
Fixed Costs Regime
CPR 45.8 Fixed Costs Apply To Interim Applications From Date Of Provisional Track Allocation
Sheldon J quashed a costs order of £10,653 where the case had been provisionally allocated to the Intermediate Track, limiting recoverable costs to £333 plus £303 court fee under CPR 45.8. Fixed costs regime applies from provisional allocation, not formal allocation, and conducting litigation as an unauthorised person constitutes a reserved activity barred under Legal Services Act 2007 absent specific exemption.
Costs-Only Proceedings
Court Refuses Costs-Only Joinder But Orders Consolidation in Will Dispute
HHJ Paul Matthews refused to join a will-writing company as a costs-only party under CPR 46.2 where it contested negligence allegations requiring full trial on breach, causation and quantum. Summary procedure under s51 Senior Courts Act 1981 is inappropriate where non-parties actively dispute liability; consolidation under CPR 3.1(2)(h) offers broader case management solutions where separate proceedings exist.
https://tmclegal.co.uk/wp-content/uploads/2025/10/iStock-2234754020.webp12801920Toby Moretonhttps://tmclegal.co.uk/wp-content/uploads/2026/05/grok-video-6a05f798-3bcb-4a2f-b2a6-b42dc25382a7-1-mp4-image-300x150.webpToby Moreton2025-10-05 19:42:182026-05-23 22:24:23Monthly Costs Law Update – September 2025
