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Retainer Termination Without Good Reason | Unenforceability And The Indemnity Principle

Detailed Assessment, New Costs Blog, Solicitor & Client Costs, Termination of Retainer

The Senior Courts Costs Office’s decision in HD and others v North Devon Healthcare Trust [2026] EWHC 2009 (SCCO) addresses the enforceability of retainers terminated without good reason, the application of the abuse of process test to detailed assessment proceedings, and the circumstances in which a solicitor may be ordered personally to pay costs on the indemnity basis under CPR 44.11.

Background

The six linked claims at the centre of this judgment arose from alleged failings in the consent process relating to the use of synthetic mesh in the treatment of female pelvic conditions, including urinary stress incontinence. The claimants were among a larger cohort of individuals represented by Mr Darren Hanison, a sole practitioner trading as Fortitude Law, who had been instructed to pursue damages claims against various NHS trusts in England. NHS Resolution was notified of 305 such claims, received letters of claim in approximately 100 of them, and compromised 58 on substantially similar terms, including provision for the payment of reasonable legal costs.

Damages in the six linked claims were duly paid. Mr Hanison commenced detailed assessment proceedings in each, serving signed and certified bills of costs on the relevant defendants. The defendants applied to link the six cases, noting the significant similarities between the bills and the common issues likely to arise in points of dispute. On 7 July 2022, Costs Judge James granted that application, and the linked cases were listed for a five-day hearing to determine seven preliminary issues common to all six bills.

The first hearing was listed for 28 November to 2 December 2022. The judge was unwell on 28 November and the matter stood down. Counsel then acting for the claimants served a skeleton argument late that evening. When the hearing resumed on 29 November, it became apparent that Mr Hanison had not lodged the documents required by paragraph 13.11 of the Practice Direction to CPR Part 47. An attempt had been made to provide a laptop computer to the court late on 28 November, but when the judge examined it on 29 November it was found to contain files relating to only three of the six linked claims. The hearing could not proceed. Costs Judge James adjourned it and ordered the claimants to pay the costs of 28 and 29 November, to be assessed if not agreed. The costs order was made against the claimants, not against Mr Hanison personally, and was on the standard basis by operation of CPR 44.3(4).

The preliminary issues hearing was relisted for 27 to 31 March 2023. Costs Judge James heard submissions on all issues, gave judgment on some, reserved others, and provided a reserved judgment on 13 April 2023. A third hearing took place on 17 April 2023 to deal with the remaining preliminary issues. That was the last substantive activity in the detailed assessment proceedings.

On 18 May 2023, the Solicitors Regulation Authority intervened into Mr Hanison’s practice on grounds including suspected dishonesty and failure to comply with regulatory rules. Fortitude Law ceased to trade. Lester Aldridge was appointed as the SRA’s intervening agent. DAC Beachcroft LLP, acting for the defendants, wrote to each of the claimants suggesting they obtain independent legal advice in relation to the costs process. Some appear to have done so, but none engaged actively or to any significant extent in the costs proceedings thereafter.

Disciplinary proceedings were commenced against Mr Hanison on 14 May 2025, leading to a hearing before the Solicitors Disciplinary Tribunal on 24 February 2026. Mr Hanison faced 17 allegations of professional misconduct. He admitted many, including allegations of dishonesty. The SDT found several other allegations of dishonesty proved on the balance of probabilities and, by a written judgment dated 12 March 2026, ordered that he be struck off the Roll of Solicitors.

Mr Hanison was not formally removed from the court record as solicitor for the claimants in the six linked claims until an order of Senior Costs Judge Rowley dated 10 June 2025. From the conclusion of the third hearing before Costs Judge James on 31 March 2023 until the application considered in this judgment, nothing of substance had occurred in the detailed assessment proceedings. No new solicitors came on the record for any of the claimants. None of the other claimants in the wider cohort had commenced detailed assessment proceedings at all.

On 12 December 2025, the defendants issued an application seeking, among other things, a declaration that the retainers and conditional fee agreements between the claimants and Mr Hanison were unenforceable, strike out of the bills of costs and detailed assessment proceedings, repayment by Mr Hanison of payments on account totalling £92,000, an unless order against the wider cohort of claimants who had not commenced detailed assessment proceedings, and orders that Mr Hanison pay the defendants’ costs of the abortive November 2022 hearing and of the detailed assessment proceedings as a whole, on the indemnity basis. The application was supported by witness statements from Mr Mark Ashley and Mr Myles Mundill of DAC Beachcroft. The hearing took place on 3 July 2026 before Costs Judge Joseph. Neither the claimants nor Mr Hanison appeared or were represented.

Service and Joinder of Mr Hanison

After the hearing on 3 July 2026, Costs Judge Joseph raised of his own motion the question of whether Mr Hanison had been properly served with the evidence in support of the application. The judge was also concerned that Mr Hanison, having been removed from the court record by Senior Costs Judge Rowley’s order of 10 June 2025, was not at that moment a party to the action nor representing a party in it. The judge raised these matters with counsel in correspondence following the hearing.

That correspondence generated a further application by the defendants to join Mr Hanison as a party to the action. A further witness statement signed by Mr Mundill was filed in which evidence was given that Mr Hanison had in fact been served, prior to the hearing on 3 July, with the evidence in support of the application. The judge was satisfied that Mr Hanison had been served with the evidence prior to the hearing but considered it appropriate for him to be joined formally into the action for the purposes of the defendants’ application.

On 13 July 2026, the judge made an order to that effect which included various directions requiring service on Mr Hanison of the latest application and the evidence in support of it. As that order was made without a hearing, it included the usual paragraph that any party affected by the order could apply to vary it, stay it or set it aside within seven days of receipt of it. The order also stated that if no application was made within that time, the court would proceed to determine the application dated 12 December 2025 without further submissions. No party applied to vary, set aside or stay that order within the time stipulated. The judge was satisfied that Mr Hanison had had every reasonable opportunity to respond to the application and to make any submissions he might have wished to make.

Enforceability of the Retainers

Costs Judge Joseph began by considering whether the retainers between the claimants and Mr Hanison had been terminated without good reason and were accordingly unenforceable. The claimant HD had waived privilege over her conditional fee agreement following advice from new solicitors. The CFA, exhibited to Mr Ashley’s witness statement, was in fairly standard terms and had been signed by Mr Hanison on 26 September 2018. It expressly covered negotiations about, or a court assessment of, the costs of the claim.

The judge accepted the defendants’ submission that the retainer was an entire contract. Relying on Re Underwood & Piper v Lewis [1894] 2 QB 306, the judge noted that a solicitor’s retainer in an action is ordinarily an entire contract to conduct the action to the end, and that a solicitor cannot sue for costs until the contract has been entirely fulfilled. The retainer with HD plainly encompassed not only negotiations with the defendant about recoverable costs but also, if required, preparation for and attendance at a detailed assessment hearing. Agreement or court assessment of recoverable costs was an express and necessary step required by the retainer.

The judge found that Mr Hanison’s contractual obligations included the obligation to obtain agreement, or a court assessment, of HD’s recoverable costs. Although that process had been started, it had by no means concluded. Following the intervention into Mr Hanison’s practice, there was now no prospect at all of him ever completing his obligations under the retainer. The passage of a very considerable period of time in which no activity at all had occurred supported the inference that he had evinced no intention of so doing. The judge concluded that the retainer between HD and Mr Hanison was unenforceable by Mr Hanison against HD.

The judge inferred that the terms of the retainers between the rest of the claimants in the six linked claims were on the same, or substantially similar terms. The retainer between Mr Hanison and HD was in relatively standard terms. There was no reason to believe that Mr Hanison would have concluded retainers with the other claimants on materially different terms. Had that been the case, it had been open to Mr Hanison to adduce appropriate evidence establishing it. He had not done so. The judge concluded that the retainers between each of the claimants in the six linked claims were unenforceable by Mr Hanison against any of those claimants.

Strike Out for Abuse of Process

The judge then considered whether the bills of costs and detailed assessment proceedings should be struck out, either as a consequence of the unenforceability of the retainers or on the separate ground of abuse of process under CPR 3.4(2)(b). If the retainers were unenforceable, the claimants had no liability to their solicitor for any costs incurred pursuant to those retainers. If they had no such liability, there could be no claim by those claimants against the defendants for any of those costs. Any other conclusion would amount to a breach of the indemnity principle. The further consequence must be that the detailed assessment proceedings had to be struck out, or alternatively that the bills of costs must be assessed at nil.

The judge nevertheless addressed the separate arguments for strike out based on abuse of process. The defendants relied on the two-stage framework in Asturion Fondation v Alibrahim [2020] EWCA Civ 32. At the first stage, the court considers whether the claimant has deliberately allowed the proceedings to become dormant, and if so why. That involves examining the claimant’s intention, to be inferred from the evidence as a whole. The court must assess objectively the strength of any explanation advanced, having regard to the length of the period of inactivity. Prolonged inactivity may itself support the inference that a claimant does not intend to advance the action. Where such stagnation is established, the burden shifts to the claimant to explain why the claim should be permitted to continue.

The judge had no evidence from Mr Hanison. He had been given the opportunity to give evidence and make submissions and had elected not to do so. The claimants in the six linked claims had also had a similar opportunity and had not taken it. No explanation had been given, let alone a credible one. The costs proceedings of the claimants in the six linked claims had been deliberately allowed to become dormant. The extensive and wholly unexplained delay offended against the integrity of the court’s process. The serious abuse of the court’s process had been perpetrated by Mr Hanison, the solicitor and officer of the court whom the claimants in the six linked claims trusted to pursue their claims for costs.

The judge also found that there was now no realistic prospect of any of the detailed assessments in any of the six linked claims being pursued. In addition, there was significant prejudice to the defendants. They had made payments on account of costs in relation to six sets of detailed assessment proceedings. If the detailed assessment proceedings were allowed to remain extant, the defendants presently had no way of knowing when they would be resolved, nor for how much they might be liable. The judge accepted that the failure by the claimants in the six linked claims to take any steps at all since the last hearing before Costs Judge James was, in all the circumstances, a serious abuse of the process of the court.

At the second stage of the enquiry, the court considers whether striking out the claim is a proportionate response to the abuse. The defendants had put forward a possible alternative to strike out, namely an unless order against the claimants in the six linked claims to the effect that if they did not request a substantive detailed assessment hearing within 14 days, their claims should be struck out. The judge concluded that if such a course were a realistic option the claimants would have appeared on the hearing of the defendants’ application to make submissions to that or similar effect. The fact that they had not done so indicated that they had no such intentions. In all the circumstances, the judge did not consider that any useful purpose would or could be served by delaying the strike out of the claims by the claimants in the six linked claims for any further period of time. Immediate strike out was not only the proportionate response to the current state of affairs, but was the only realistic option, in order to do justice between the parties. It would be seriously unfair to the defendants to prolong these matters any further.

Repayment of Payments on Account

The judge dealt with the application for repayment of payments on account relatively shortly in the light of the findings and decisions already made. Now that the detailed assessment proceedings in the six linked claims had been struck out and the retainers between Mr Hanison and the claimants declared to be unenforceable, the case for the return of monies paid to Mr Hanison on account of the costs of the claimants was unanswerable. The payments on account were made on the footing that there were enforceable retainers in existence between the receiving parties and their solicitor. It would, to all intents and purposes, constitute a breach of the indemnity principle for those payments to be retained. There were orders against Mr Hanison for the repayment of all of the payments on account of costs which the defendants had made to him in the six linked claims.

Unless Order Against the Wider Cohort

No action at all had been taken by any of the other claimants in the cohort of claims against the various defendants to progress their respective claims for costs. The defendants had applied for an unless order against those claimants under CPR 47.8. None of the claimants to which this part of the application was directed had been involved in the detailed assessment proceedings commenced by the claimants in the six linked claims. Given that, it was appropriate that those claimants should be given an opportunity, if they so wished, to commence detailed assessment proceedings. The orders for costs in favour of those claimants were made a considerable time ago. It was appropriate for the court to exercise its discretion under CPR 47.8. The power to make an unless order is discretionary. The judge considered it right that the claimants should now be placed under the unless sanction. There was an unless order against those claimants that they should commence detailed assessment proceedings in respect of their costs within 28 days, failing which all of the costs to which they would otherwise be entitled would be disallowed.

Costs Orders Against Mr Hanison Under CPR 44.11

The defendants sought orders that Mr Hanison pay the costs of the abortive hearing on 28 and 29 November 2022 and the costs of the detailed assessment proceedings as a whole, on the indemnity basis. The order made by Costs Judge James on 29 November 2022 had been against the claimants in the six linked claims, not against Mr Hanison. The application now made was for something quite different, namely an order against Mr Hanison personally.

The defendants framed their case pursuant to CPR 44.11, which provides that the court may make an order where a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order, or where it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings, or in the assessment proceedings, was unreasonable or improper. Where those conditions apply, the court may disallow all or part of the costs which are being assessed, or order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.

In relation to CPR 44.11(1)(a), the defendants relied upon various defaults perpetrated in the course of the detailed assessment proceedings by Mr Hanison. They pointed to the failure prior to the first hearing before Costs Judge James to lodge at court those documents which were required to have been lodged prior to the hearing pursuant to paragraph 13.11 of the Practice Direction to CPR Part 47. They also relied on the fact that the failure to lodge the requisite documents was compounded by the attempt to provide documents to the court by means of a laptop computer which, in fact, did not contain the requisite documents.

In relation to CPR 44.11(1)(b), the defendants submitted that the conduct of Mr Hanison throughout the detailed assessment proceedings had been unreasonable. Their main complaint was the substantial delay which had occurred following the last hearing before Costs Judge James. They also pointed to the various rulings which were made by Costs Judge James on the preliminary issues which they said demonstrated that very high and unsustainable claims for costs were made in respect of certain items in the bills of costs. By way of some examples, in respect of the letter of claim sent on behalf of HD, 63.3 hours were claimed, but only 15 hours were allowed. In respect of the letter of response, 66.1 hours were claimed but only 10 hours were allowed and, in respect of the Schedule of Loss, 31.3 hours were claimed but only 7.9 hours were allowed, of which one hour only was at grade A and the rest at grade D.

The judge noted that Costs Judge James had very considerable concerns about the claims for costs which had been made. He shared those concerns. The reductions in the claims on the preliminary issues were substantial, as well as being reductions which one would not normally expect to see in claims for costs of this nature. Of further concern was the fact that Mr Hanison had, to all intents and purposes, abandoned the detailed assessments.

The leading case on the operation of CPR 44.11 is Gempride Ltd v Bamrah [2018] EWCA Civ 1367. Mistakes or negligence, without more, are insufficient to engage the rule. Unreasonable conduct is essentially conduct permitting of no reasonable explanation. In order for the conduct of a legal representative to be unreasonable, that conduct must also breach the legal representative’s duty to the court. The burden of proof is on the applicant and even when the threshold criteria are satisfied, the court still has a discretion as to whether an order ought to be made. Any order made must be proportionate to the misconduct.

The hearings on 28 and 29 November 2022 were wholly ineffective due to the fact that the legal representative for the claimants in the six linked claims had failed to lodge at court prior to the hearing the necessary documents to enable the detailed assessment hearing to proceed effectively. There could be no doubt that a solicitor on the record has the responsibility for lodging those documents and for complying with the requisite practice direction. The judge was satisfied that Mr Hanison was seriously in breach of his duties to the court. That conduct was unreasonable and there was no reasonable explanation for it.

Mr Hanison was not removed from the court record until the order of 10 June 2025 of Senior Costs Judge Rowley. Until that point, he had sole responsibility for the conduct of the detailed assessments on behalf of the claimants in the six linked claims. It is a fundamental obligation on the part of a solicitor that unless and until he is removed from the record, he must act in the matter. This is apparent from CPR 42.2(5) which contains the presumption that a solicitor on the record is acting until the conclusion of the matter. That is the case even if the retainer has been terminated.

Since the last hearing before Costs Judge James, nothing of any substance had occurred. The judge had found that there had been a serious abuse of the process of the court in that respect. It followed from that finding that the conduct of the person who was responsible for that delay was itself unreasonable. There had been no explanation given for it.

The judge found that both CPR 44.11(a) and (b) were engaged. The costs to which the claimants in the six linked claims would otherwise have been entitled had already been disallowed. The defendants’ application invited the court to order Mr Hanison to pay the defendants’ costs of the hearing on 28 and 29 November 2022, and of the detailed assessments as a whole.

The judge had no hesitation in concluding that Mr Hanison should pay the costs of the hearing on 28 and 29 November 2022. His various defaults amounted to conduct which was unreasonable and which, on any analysis, caused the hearing to have to be abandoned. It could hardly be controversial or unsurprising that a solicitor on the record who conducts himself in such a way should end up being ordered to pay the costs of the abortive hearing.

In relation to the rest of the costs of the detailed assessments, the judge reached the same decision. The various significant and substantial reductions in those parts of the bill which were assessed by Costs Judge James on the preliminary issues indicated an attempt to claim very much more than could ever have been allowed on a standard basis assessment. As Mr Hanison had not responded to the defendants’ allegations in this respect, the judge had to proceed with there being no explanation at all as to why and on what basis such high amounts were claimed. The making of a claim for costs, and the signing of a bill of costs which makes very high and unsustainable claims for costs, is itself unreasonable. On that basis, Mr Hanison’s unreasonable behaviour started at the very outset of the detailed assessment proceedings by the signing of the bills. Detailed assessment proceedings are started by the service of a Notice of Commencement and a signed and certified bill (CPR 47.6).

Since the hearings before Costs Judge James, nothing had happened. Mr Hanison had abandoned them and his clients. The judge had found that such conduct amounted to a serious abuse of the court’s process. Nothing of any value had been achieved by them due to the failure of the solicitor on the record to fulfil his obligations and duties to the court.

Indemnity or Standard Basis?

The defendants contended that the costs for which Mr Hanison was liable should be paid on the indemnity basis. The indemnity basis differs from the standard basis in two respects. First, the onus of showing that costs have not been reasonably incurred or are not reasonable in amount is on the paying party. Secondly, there is no requirement of proportionality. See CPR 44.3 and Excelsior Commercial and Industrial Holdings Limited v Salisbury Hannah Aspden and Johnson [2002] EWCA Civ 879.

The criteria for the making of an indemnity costs order have been considered many times. In the very recent case of Breeze v Chief Constable of Norfolk Constabulary [2026] EWHC 1937 (KB), Cotter J set out in some detail the various important rules and decisions on the issue. One of the circumstances in which an indemnity order may be made is where there has been an abuse of the court’s procedure. In Three Rivers DC v Bank of England [2006] EWHC 816 (Comm), Tomlinson J identified the relevant principles. It was emphasised that the court should have regard to all the circumstances of the case and that the discretion to award indemnity costs is very wide.

The critical requirement, before an indemnity order can be made, is that there must be some conduct or some circumstance which takes the case out of the norm. That was emphasised by Christopher Clarke J in Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 2531 (Comm) who, having adopted Tomlinson J’s summary in Three Rivers, and noting that an order for indemnity costs was itself a departure from the norm, said that it is important not to lose sight of the essential requirement of unreasonable or inappropriate conduct overall and not to treat examples of such which may amount to such conduct as necessarily constituting it.

In relation to the hearing on 28 and 29 November 2022, Mr Hanison failed to lodge the necessary papers to enable the hearing to proceed. He provided a laptop computer at the end of the first day which did not contain the necessary documents, and which meant that Costs Judge James had no choice but to abandon the hearing. He thereby wasted significant court time and resources in addition to causing the defendants to expend significant resources which ultimately were wasted. The judge was satisfied that the conduct of Mr Hanison in relation to the hearing on 28 and 29 November 2022 was unreasonable to a high degree such that the case was taken out of the norm. An indemnity costs order in respect of those costs was the appropriate response.

In addition, Mr Hanison had abandoned the detailed assessment proceedings. The result of the findings and decisions which the judge had made was that those detailed assessment proceedings had themselves achieved nothing and that the defendants again had been required to expend considerable time, effort and resources in what had been for all concerned a fruitless and wasteful exercise. Mr Hanison had failed to fulfil his duties to the court in his capacity as the solicitor for the claimants in the six linked claims and as an officer of the court. His conduct was well outside the norm. Taking all the circumstances of this case into account, it was appropriate that Mr Hanison should pay the costs of the detailed assessment proceedings in the six linked claims on the indemnity basis.

Costs of the Application

The defendants’ application had been successful. The general rule under CPR 44.2 is that the unsuccessful party will be ordered to pay the costs of the successful party. Whilst the court has a discretion to make a different order, the judge could see no reason at all to depart from the usual rule in this case. Again, indemnity costs were sought and for the same reasons as were given above, it was appropriate that an indemnity order should be made.

Undertakings

At the hearing on 3 July 2026, the judge expressed a concern that, notwithstanding the application now being made by the defendants, the defendants might still have the right to pursue the claimants in the six linked claims personally in respect of the costs which the defendants had incurred in these detailed assessment proceedings. The judge enquired whether the defendants might be prepared to provide the court and those claimants with appropriate undertakings not to do so. In making that enquiry the judge made it clear that the court had no right to require any such undertakings to be given, and that whatever judgment might be reached on the defendants’ application would in no way be conditional upon such undertakings being given. Mr Ashley gave appropriate undertakings dated 31 July 2026 on behalf of his clients.

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Payment on Account Percentage Where Budgets Are Massively Exceeded | Overspend By Paying Party As Evidence Costs Were Reasonably Incurred

budgeting, Budgeting & Management, Indemnity Costs, Interim Costs Order, New Costs Blog, Payment on Account

The King’s Bench Division’s decision in Winehouse v Parry & Gourlay [2026] EWHC 1970 (KB) addresses the calculation of interim payments on account where indemnity costs have been awarded and the receiving parties have departed substantially from their approved costs budgets without making variation applications under CPR r.3.15A.

Background

The claim was brought by Mr Mitchell Winehouse, suing as personal representative of the estate of his daughter Amy Jade Winehouse, the singer and songwriter who died on 23 July 2011. The defendants, Ms Naomi Parry and Ms Catriona Gourlay, had been close friends and associates of Amy Winehouse during her lifetime. Following her death, 141 items of property came into the defendants’ possession and were subsequently sold at Julien’s Auctions in Los Angeles in 2021 and 2023. The claimant alleged that the defendants were not entitled to possess or sell those items and were therefore liable to the estate for the proceeds of sale.

A six-day trial took place on 8 to 12 December 2025 and 27 January 2026 before Sarah Clarke KC sitting as a Deputy Judge of the High Court. The substantive judgment, handed down on 20 April 2026, found for both defendants on all issues and dismissed the claimant’s claims in their entirety. Every disputed issue of fact and law was resolved against the claimant, including findings that he and his witnesses had given unreliable evidence on material points.

Critically, the court found that the claimant and his witnesses knew prior to the 2021 auction that the defendants were selling a number of significant disputed items in that auction, and that contemporaneous emails and documents in the claimant’s possession proved this beyond doubt. This knowledge, and the evidence proving it, meant that the claim should never have been commenced and should have been withdrawn long before trial.

Following receipt of the embargoed draft judgment, the parties were unable to agree an order on costs and consequential matters. By an order dated 20 April 2026, the court adjourned the hearing generally and set a timetable for the exchange of costs schedules and the filing of written submissions and responsive submissions on the incidence, basis, quantum and interim payment of costs. The court indicated it would determine all issues on the papers unless an oral hearing was directed. Detailed submissions and responsive submissions were received from all parties, accompanied by approximately 500 pages of documentary evidence. A further costs issue was raised by the claimant’s solicitor by email shortly before the judgment on costs was finalised, to which the defendants’ solicitors responded. The court determined all costs issues on the papers.

Costs Issues Before the Court

Four distinct costs issues required determination. First, the incidence of costs: whether the general rule under CPR r.44.2 that costs follow the event should apply, or whether the court should depart from it and make no order as to costs. Second, the basis of assessment: whether costs should be assessed on the standard or indemnity basis. Third, the quantum of any interim payment on account under CPR r.44.2(8): specifically, what percentage of budgeted and unbudgeted costs should be ordered by way of interim payment, having regard to the approved costs budgets and the very substantial departures from those budgets by all parties. Fourth, whether any interim payment orders should be stayed pending a prospective application to the Court of Appeal for permission to appeal.

The costs budgeting position was central to the interim payment calculation. A costs management order had been made. The first defendant’s approved budget was £218,730 inclusive of VAT, against total costs as at 28 April 2026 of £715,361.98 inclusive of VAT, leaving unbudgeted costs of £496,631.98. The second defendant’s approved budget was £194,485.20 inclusive of VAT, against total costs of £487,132.15 inclusive of VAT, leaving unbudgeted costs of £292,646.95. Neither defendant had made a budget variation application under CPR r.3.15A. The claimant’s own total costs as at 28 April 2026 were £951,080.28 inclusive of VAT, against an approved budget of £160,850 inclusive of VAT, representing an overspend of approximately £790,000.

A further discrete issue arose very late in the costs proceedings when the claimant’s solicitor raised by email a challenge to the recoverability of the second defendant’s costs, relying on references to a conditional fee agreement and a social media statement by the second defendant suggesting she had secured third-party funding. The claimant submitted that the conflicting accounts raised a question as to whether some or all of the costs claimed by the second defendant were properly recoverable, and that any interim payment in respect of those costs would be particularly prejudicial given her alleged impecuniosity.

The Parties’ Positions

The claimant accepted that the defendants were the successful parties and that the usual starting point would be a costs order in their favour, but contended that this was an exceptional case in which the court should make no order as to costs. His primary submission was that the defendants had withheld explanations for their possession of the disputed items for several years, had failed to engage meaningfully with ADR until a very late stage, and had by their conduct driven the case to trial and caused costs to escalate beyond the approved budgets. He submitted that the defendants should not be permitted to recover costs caused by their own unreasonable conduct.

In the alternative, the claimant submitted that any costs orders should be made on the standard basis and reduced by 75% of each defendant’s total costs. On interim payments, the claimant proposed that any order should be limited to 90% of budgeted costs and 50% of unbudgeted costs, and that payment should be stayed pending determination of any application to the Court of Appeal for permission to appeal. The claimant argued that there was a real risk of injustice if interim payments were made and subsequently could not be recovered from the defendants given their alleged impecuniosity.

The defendants submitted that the claimant’s defeat was total and comprehensive and that there was no basis to depart from the general rule. They further submitted that the claimant’s conduct was unreasonable to a high degree and took the case out of the norm within the meaning of Excelsior Commercial and Industrial Holdings Ltd [2002] EWCA Civ 879, justifying an indemnity costs order in favour of both defendants. In support of that submission, the defendants relied on a range of conduct findings made in the substantive judgment, including the speculative and thin nature of the claim as issued, the late addition of serious allegations of deliberate concealment and breach of fiduciary duty, the aggressive pursuit of those allegations to the end of trial, the claimant’s courting of press publicity, and the finding that the claimant had told a newspaper journalist he had gone to the police when he knew he had not.

On interim payments, the defendants sought approximately 80% of each defendant’s total costs inclusive of VAT, submitting that there were good and unavoidable reasons why the defendants had been forced to depart from their budgets and that there was a high degree of confidence that a sum in excess of that figure would be recovered on detailed assessment. They submitted that payment should be made within 14 days and that no stay should be granted.

In response to the late CFA and third-party funding challenge, the second defendant’s solicitor confirmed that the second defendant was and remained personally liable for the total amount of her legal fees, that a CFA had at one point been agreed but had never been put into effect, and that the social media statement about third-party funding had been optimistic and premature as no funder had in fact materialised. Both defendants had provided signed costs schedules. The first defendant’s solicitor corroborated that account.

The Court’s Decision

The court ordered the claimant to pay the costs of both defendants on the indemnity basis, to be assessed if not agreed, with no reduction of 75% or any other amount. Interim payments were ordered in the sum of £569,330.99 to the first defendant and £394,521.89 to the second defendant, both payable within 14 days. No stay was granted. The court also refused the claimant’s application for permission to appeal.

Indemnity Costs

Applying the principles in Excelsior and as summarised by Coulson LJ in Thakkar v Mican [2024] EWCA Civ 552, and the concurring remarks of Lady Carr CJ in that case, the court was satisfied that the claimant’s conduct was unreasonable to a high degree and outside the ordinary and reasonable conduct of proceedings. The court found that the claimant had pursued a claim that was speculative, weak, opportunistic and thin, had issued proceedings without any positive factual case, had pleaded his claim in vague and sloppy terms, and had abandoned his claim to a number of items shortly before trial having failed to apply any critical thought to the list of items he was claiming. The court further found that the claimant had significantly expanded his claim at a very late stage by adding allegations of deliberate concealment and breach of fiduciary duty, both of which were dismissed, and that these late additions significantly expanded the seriousness of the allegations, the scope of the evidence, the issues in dispute and the length of the trial.

The court found that the claimant had made grave, unjustified and demonstrably false allegations of dishonesty and deceit against both defendants and pursued these aggressively to the end. The allegations included deliberate concealment (put on the basis that the defendants had deliberately deceived the claimant by lying to him about their possession of the disputed items and their intention to auction them), breach of fiduciary duty (based on the assertion that the first defendant had deliberately, knowingly and repeatedly deceived the claimant in order to derive significant, improper, financial gain), and theft (allegations made within days of the 2021 auction that the defendants had deliberately removed items from the estate’s lockup without the estate’s knowledge or consent). The court found these claims to be totally unfounded and was extremely critical of the claimant for making them.

The court further found that the claimant deliberately courted publicity in a way that was calculated to exert pressure on the defendants and cause significant damage to their reputations. He gave an exclusive statement to The Sun newspaper published on 3 November 2023 (the day after the claim was served) which plainly alleged that the defendants had sold items that they were not entitled to sell and which did not belong to them, for the purpose of achieving significant financial gain and thereby depriving the Amy Winehouse Foundation of funds. At a court hearing in July 2024, the claimant’s instructed counsel stated in open court in front of members of the press that there was “evidence of suspicious circumstances surrounding these auctions”. In an article in the Sunday Times Magazine published on 14 April 2024, the claimant stated that he had “gone to the police” about the case and repeated this on oath at trial. However in cross-examination he conceded that this was untrue and the court found that it could not see how “telling a newspaper journalist that he had gone to the police when he knew he had not, can be anything other than deliberate and when coupled with his accusation that the defendants had stolen the Items from the lockup, was plainly intended to damage the defendants’ reputations and probably also to put pressure on them to give him the proceeds of sale of their Items”.

The court rejected the claimant’s submission that the trial of this litigation was caused by the defendants’ refusal to accept his offers of settlement or mediation. A review of the pre-trial correspondence demonstrated the aggressive and unpleasant way in which the claimant’s solicitor pursued the defendants and made offers of settlement which only ever amounted to requiring the defendants to concede his claim and make payments of money to him, whilst leaving him free to continue to publicly make serious accusations of dishonest, deceitful behaviour against them. At no point did the claimant ever properly consider the explanations provided by the defendants, nor the inherent weakness of his own case. On the contrary his response was to disbelieve the defendants and make additional, even more serious allegations against them shortly before trial.

The court found that the defendants were fully entitled to defend their personal and professional reputations to the end, and that they had no other realistic option given the claimant’s serious and damaging allegations, his aggressive conduct throughout, his refusal to accept their explanations, his unrealistic settlement offers and the real risk that he would thereafter be free to continue making public allegations of deceit and dishonesty against them.

As Lady Carr CJ observed in Thakkar, an unnecessarily aggressive approach to litigation is unacceptable. The court found that the claimant’s high degree of unreasonable conduct extended into every facet of the proceedings: pre-trial, at trial, and in respect of his unreasonable and unrealistic approach to the issue of costs. The court noted that the claimant’s costs submissions themselves demonstrated that he had no insight into his own failings and continued to conduct the litigation in a similar vein, making baseless allegations against the defendants in an attempt to avoid the obvious costs consequences of the total failure of his claim.

No Costs Reduction

The court declined to reduce the amount of costs payable by the claimant by any amount. The claimant would be liable for the total costs incurred by both defendants subject to assessment if not agreed. The court found that the claimant’s high degree of unreasonable conduct, extending into every facet of the proceedings (pre-trial, at trial, and in respect of his unreasonable and unrealistic approach to the issue of costs), fully justified the making of indemnity costs orders in favour of both defendants with no reduction. The court noted that quantum would ultimately be a matter for a costs judge to determine on detailed assessment.

Interim Payments | The Court’s Reasoning

In assessing what was a reasonable amount for interim payment under CPR r.44.2(8), the court estimated the likely level of recovery on an indemnity costs basis by each defendant and allowed a margin for error. The court took into account that the claimant’s total costs as at 28 April 2026 amounted to £951,080.28 (inclusive of VAT) against budgeted costs of £160,850 (inclusive of VAT), an overspend of approximately £790,000. The court found it inevitable that the defendants were also forced to significantly exceed their budgeted costs to meet the unreasonable way in which the claimant deliberately litigated and pleaded his claim. It was notable however that the claimant’s total costs were significantly higher than the total costs incurred by either defendant.

The court applied the principle that where indemnity costs have been ordered, doubts as to whether the item of cost in question was reasonably incurred, or reasonable in amount, are resolved in favour of the receiving party (CPR r.44.3(3)). The court considered that the additional costs incurred by the defendants, over and above the costs budget, were reasonably incurred as a result of the claimant’s unreasonable conduct of this litigation and that the vast majority of these costs were therefore likely to be recovered. The court also took into account that the defendants’ costs would undoubtedly have increased from the figures quoted in their April 2026 costs schedules due to the way in which the claimant had chosen to unreasonably litigate the issue of costs.

The court further considered that there were good reasons why the first defendant’s total costs were significantly higher than the costs of the second defendant. The court estimated that the reason the trial overran by three days (taking six court days to complete rather than the three days listed) was largely due to the additional allegations of deliberate concealment and breach of fiduciary duty and the significant time taken up in evidence and submissions dealing with the facts and law caused by these matters. These matters would inevitably have significantly increased the time and costs expended by the defendants pre-trial. This applied to both defendants but was particularly relevant in respect of the total costs incurred by the first defendant, as she was alleged by the claimant to have been the person mainly responsible for the deliberate concealment, and was directly involved in all the evidence and matters relevant to this issue. In addition, she alone faced the allegation of breach of fiduciary duty.

Taking all these factors into account, the court considered that the likely level of recovery for each defendant would be the full amount of budgeted costs and at least 85% of unbudgeted costs. Allowing a margin for error, the court reduced the interim payment figure to 90% of budgeted costs and 75% of unbudgeted costs, both inclusive of VAT. This in the court’s view arrived at a reasonable amount for each defendant to receive by way of interim payment.

For the first defendant, this resulted in an interim payment order of £569,330.99, calculated as £196,857 (90% of budgeted costs inclusive of VAT) plus £372,473.99 (75% of unbudgeted costs inclusive of VAT). For the second defendant, this resulted in an interim payment order of £394,521.89, calculated as £175,036.68 (90% of budgeted costs inclusive of VAT) plus £219,485.21 (75% of unbudgeted costs inclusive of VAT).

The Late Challenge to Recoverability

The court dealt briefly with the claimant’s late challenge to whether the second defendant was in fact liable to pay the costs she claimed to have incurred. The claimant relied on an assertion that the second defendant had apparently made on social media in March 2024 that she had secured a third-party funder, a statement by her solicitors in December 2024 that the second defendant “has a CFA with this firm”, and a later statement in her costs submissions that “a CFA was agreed at one point but no costs were incurred under it. Ms Gourlay was obliged to pay them regardless of the outcome. She is heavily indebted to her solicitors.”

The court found that the claimant’s attempt to raise this further issue so late in the day was unimpressive and provided further evidence that he was continuing to drive up the costs of all parties by raising new, weak arguments to bolster his already weak costs submissions, and find a way to avoid paying the costs orders to which the defendants were fully entitled. The court accepted the explanations provided by the defendants and their solicitors. In particular the court noted that both defendants had provided signed costs schedules which carried obligations of truthfulness, not only on the defendants but also their solicitors. It would be a grave and serious matter to give misleading information in these schedules and in the defendants’ submissions to the court regarding the quantum of costs incurred, the basis for those costs and the second defendant’s liability to pay. The court made it clear that it fully accepted the figures given in the costs schedules of both defendants, and the explanations provided by them and their solicitors regarding the basis of their liability to pay these costs. This was consistent with the court’s findings at trial that the defendants were and are credible and truthful witnesses.

The court further noted that the defendants’ solicitors had conducted the difficult litigation properly and appropriately, despite coming under significant and unreasonable pressure from the claimant and his solicitors, including being bombarded with aggressive and unpleasant correspondence and serious allegations of impropriety against the first defendant and her solicitor, which the court found to be unfounded and improper.

Time for Payment and No Stay

The court ordered the claimant to pay both interim payment orders within 14 days of the date of the order, in accordance with CPR r.44.7. The claimant plainly had ready access to the funds to satisfy these orders and there was no reason why the defendants or their solicitors should wait longer than that to receive these funds, particularly given both defendants’ parlous financial situations which had been caused by the claimant’s unreasonable behaviour.

The court declined to stay the interim payment orders pending any application to the Court of Appeal for permission to appeal. The court adopted the defendants’ submissions that the risk that the claimant may succeed on appeal was limited, and in any event his grounds related only to the Category B disputed items, meaning that there was no appeal against the court’s dismissal of his claim in respect of the Category A and Category C items. In those circumstances, in the unlikely event that the claimant was granted permission to appeal and ultimately succeeded to this limited extent, he would still be liable for substantial adverse costs orders.

Conclusion

The decision illustrates the court’s approach to interim payments on account where indemnity costs have been awarded and both sides have massively exceeded their approved budgets without making variation applications. The court treated the paying party’s own overspend (approximately £790,000 against a budget of £160,850) as affirmative evidence that the receiving parties’ departures from budget were reasonably incurred, particularly where those departures were caused by the paying party’s unreasonable conduct. By applying the indemnity costs principle in CPR r.44.3(3) that doubts are resolved in favour of the receiving party, and estimating likely recovery at 100% of budgeted costs plus at least 85% of unbudgeted costs before applying a margin for error, the court arrived at interim payment orders representing 90% of budgeted and 75% of unbudgeted costs. This is a substantially higher recovery rate on unbudgeted costs than would ordinarily be expected, and reflects both the indemnity basis of assessment and the court’s finding that the excess costs were caused by the paying party’s unreasonable litigation conduct.

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Duty To Investigate BTE Insurance | Adequacy Of Enquiries And Recoverability Of Success Fees As Between Solicitor And Client

CFAs & Success Fees, New Costs Blog, Personal Injury, Solicitor and Client Costs

The Senior Courts Costs Office’s decision in Evans v Fletchers Solicitors Limited [2026] EWHC 1523 (SCCO) concerned a solicitor and own client assessment under section 70 of the Solicitors Act 1974, in which the central issue was whether the defendant’s approach to investigating the availability of before the event legal expenses insurance had been adequate, and what consequences flowed from any failure in that regard for the recoverability of a success fee of £30,365.13.

Background

The claimant, Mr Peter Evans, had instructed the defendant, Fletchers Solicitors Limited, in connection with a personal injury claim arising from a road traffic accident in 2017. The claim was successfully resolved, with a compromise of £250,000 recorded in an order dated 14 July 2021. The costs as between the claimant’s solicitors and the opposing party were agreed separately, and the defendant then rendered a bill to the claimant in the sum of £61,615.13. That figure included a success fee of £30,365.13, which had been capped at 25% of the relevant damages in accordance with the Jackson Cap.

Mr Evans subsequently sought advice from JG Solicitors regarding the fees he had been charged. Those enquiries led to the issue of proceedings in the Senior Courts Costs Office, with Mr Evans seeking an assessment of the defendant’s bill. The proceedings raised challenges both to individual items in the bill and to the agreement of costs between the parties. However, the central issue before Senior Costs Judge Rowley was whether the case ought to have been funded by legal expenses insurance rather than a conditional fee agreement. The claimant’s position was that, had proper enquiries been made, he would have been able to use before the event legal expenses insurance held under his home insurance policy with Zurich Insurance Company, and that he would therefore not have been charged a success fee or an after the event insurance premium.

The claimant had signed a CFA on 24 April 2017. As part of that process, a form regarding possible funding options was completed by the claimant’s wife, which confirmed that the claimant had the benefit of family legal expenses insurance as an add-on to his home insurance with Zurich. The legal expenses element of that cover was managed by DAS Legal Expenses Insurance Company Limited.

The defendant’s file contained no record of any enquiries having been made of either Zurich or DAS in 2017. The judge found, on the basis of the absence of any evidence from the defendant’s witnesses on this point, that no such enquiries were made in 2017.

The fee earner who took over the file in May 2019, Ms Charlotte Mackulin, made enquiries at that stage in anticipation of court proceedings. Ms Mackulin asked her assistant to write to several entities identified on the LEI checklist completed in 2017. The response received from Zurich in June 2019 directed the defendant to a policy booklet, which was not in fact received, and provided a telephone number in bold print for further assistance. Ms Mackulin’s assistant sent a follow-up letter on 23 July 2019, the same day Zurich’s response was received, but no telephone contact was made despite the telephone number being prominently displayed in Zurich’s letter. Crucially, no direct contact was ever made with DAS, the actual legal expenses insurer. Ms Mackulin concluded that BTE cover had not been established after reasonable enquiry and wrote to the claimant accordingly. ATE insurance was then incepted.

Following settlement, JG Solicitors made enquiries of both Zurich and DAS. They obtained a copy of a renewal pack confirming that the claimant had held family legal expenses cover managed by DAS at the time of the accident. DAS confirmed by email in February 2022 that it had no record of having been contacted by the defendant at any point, either in 2017 or 2019. The defendant’s Head of Costs, Mr Gary Ratcliffe, then made his own enquiries, including consulting the DAS website via the Wayback Machine. He identified an FAQ entry stating that family legal expenses insurance would not cover motor-related matters. However, DAS declined to provide a definitive answer as to whether cover would have been available, maintaining that a full claim assessment would be required and that such claims needed to be made much closer to the date of the incident.

The defendant declined to refund the success fee and ATE premium on the basis that neither Zurich nor DAS had confirmed that coverage would have been available. The matter proceeded to a hearing on 1 July 2025, with judgment handed down on 19 June 2026.

The Post-2013 Funding Landscape

Challenges by unsuccessful defendant paying parties as to the claimant’s methods of funding had begun in earnest almost as soon as CFAs became prevalent following the introduction of the Access to Justice Act 1999 and the CFA Regulations 2000. These provisions made success fees and ATE premiums recoverable from an opponent and the use of them was therefore a more expensive option from the paying party’s point of view. The requirements of the CFA Regulations overlapped with regulatory requirements for solicitors to consider with their clients the options for funding their case. A failure to comply with the regulations resulted in the CFA being unenforceable by the solicitor against their client and consequently no indemnity against such costs needed to be provided by the opponent. Much of the difficulty with compliance was removed by the revocation of the CFA Regulations in 2005, but the need to advise the client of possible funding options remained as a matter of professional conduct. Arguments by paying parties in between the parties assessments are generally available to clients of solicitors in Solicitors Act assessments.

The proceedings arose in the context of the funding landscape following the reforms introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which removed the recoverability of success fees and ATE premiums from opposing parties in most personal injury cases with effect from April 2013. Since that change, the use of BTE insurance has generally been regarded as preferable for claimants, as it is not expected to require a success fee or ATE premium. The success fee charged in this case, at £30,365.13, represented a very substantial proportion of the total bill, making the funding question of considerable financial significance to the claimant.

The Five-Step Framework

Senior Costs Judge Rowley structured the analysis around five sequential questions. First, whether the defendant’s approach to enquiries into alternative funding had been unreasonable. Second, whether, if reasonable enquiries had been made, there would in fact have been LEI available for the claimant to use. Third, whether using the LEI would have meant that no deduction from the claimant’s damages would have been required. Fourth, whether the claimant would actually have used the BTE insurance had it been available. Fifth, what the consequences of the court’s findings on those questions should be for the costs payable by the claimant to the defendant.

The Parties’ Positions

The claimant’s position was that the defendant had failed to make any enquiries of the actual LEI provider, DAS, either in 2017 or in 2019. The enquiries that were made in 2019 were directed to Zurich, the home insurer, rather than to DAS, which was the entity responsible for managing legal expenses claims. The claimant argued that, on the balance of probabilities, BTE cover had been available and that, had he been properly advised, he would have used it. In support of that contention, Mr Evans gave evidence that, had he been made aware that using the LEI would have resulted in no deduction from his damages, he would unquestionably have taken that course.

On the question of consequences, the claimant argued that all of the defendant’s base costs, as well as the success fee and ATE premium, should be disallowed. Two strands of argument were advanced in support of that position. The first relied on the approach in McDaniel & Co (a firm) v Clarke [2014] EWHC 3826 (QB), in which all base costs had been assessed at nil following a failure to advise on union funding. The second was that the claimant should receive the benefit of the £50,000 limit of indemnity under the LEI policy, to be set against the bill he now faced.

The defendant’s position was that the enquiries made in 2019 had been reasonable in the circumstances and that, in any event, the BTE policy would not have covered the claimant’s personal injury claim arising from a road traffic accident. Mr Ratcliffe’s evidence pointed to his experience that family legal expenses insurance attached to home policies did not generally cover motor-related claims, and to the DAS FAQ entry to similar effect. The defendant also argued that, even if cover had been available in principle, the £50,000 limit of indemnity would have been insufficient for a claim of this value and complexity, and that the solicitors would not have recommended the policy given its terms.

On the question of causation, Mr Meehan relied on the Supreme Court’s decision in Perry v Raleys Solicitors [2019] UKSC 5, arguing that the claimant was required to prove that, had he received reasonable advice, he would have acted upon it so as to achieve a more beneficial outcome. Mr Meehan submitted that the various uncertainties as to coverage meant that the claimant could not discharge that burden, and that at most the court should apply a loss of chance approach to reduce any award accordingly.

Were the Enquiries Unreasonable?

The judge began by reviewing the authorities on the proper practice for a solicitor enquiring about BTE cover. In Sarwar v Alam [2001] EWCA Civ 1401, the Court of Appeal had considered the position in the context of a very modest injury claim and held that a solicitor was not obliged to embark on a treasure hunt to seek the insurance policies of every member of the client’s family. Nevertheless, even in that modest situation, proper modern practice dictated that a solicitor should normally invite a client to bring to the first interview any relevant motor insurance policy, household insurance policy, or any stand-alone BTE insurance policy belonging to the client and any spouse or partner living in the same household. That practice would enable the solicitor to read through the policy and consider the suitability of the insurance.

Subsequently, in Garrett v Halton Borough Council [2006] EWCA Civ 1017, the Court of Appeal gave guidance that solicitors should generally make enquiries of potential BTE insurers, even where the client was unclear as to whether any such cover was available. This led to the point where a failure to ask suitable questions, even in circumstances where it was later established that there was no LEI available, was found to be inadequate in seeking to establish the availability of any alternative funding.

Against that background, the judge found that the enquiries in this case were lacking in numerous respects. The most obvious deficiency was to fail to make any enquiries at all for more than two years after the accident. Thereafter, the letter from Zurich in response to the enquiry was, in the judge’s view, completely miscategorised as one which simply refused to indicate whether cover was available and which justified a repeat letter being sent. A telephone number in bold print in Zurich’s letter was put forward if any further assistance was required and yet there was no evidence to suggest that any phone call was made to Zurich about the apparent absence of the booklet or to discuss the likely coverage of the LEI in question.

Specialist personal injury solicitors, such as the defendant, are aware, or ought to be, that the company dealing with the LEI is not the same as the company dealing with the home contents insurance, since this was made perfectly plain in Sarwar. The Insurance Companies (Legal Expenses Insurance) Regulations 1990 require the management of claims under legal expense insurer contracts to be carried out by an undertaking having a separate legal personality from the insurer providing the main insurance policy.

Consequently, making desultory enquiries of Zurich, and without getting to the LEI company at all, could not be said to be making any form of reasonable enquiry. The fact that the enquiry was being made two years after the accident could hardly be said to have helped matters. If anything, a more concerted effort to establish the position was required given the delay in doing so. In fact, the correspondence was, in the judge’s view, drafted in a way which sought to encourage a lacklustre response from any potential LEI insurer so that the existing CFA arrangement was not disturbed by any putative BTE cover. The letters sent by Ms Mackulin’s assistant contained numerous bullet points requesting confirmation on various technical points and attached a schedule of charges, together with a statement that if no response was received within 14 days, ATE insurance would be advised. This structure, combined with the failure to telephone despite a prominent number being provided in Zurich’s response, supported the judge’s finding as to the character of the enquiry.

It was noteworthy that when JG Solicitors made enquiries some years later, they appeared to have had little difficulty in establishing the LEI insurer as distinct from Zurich itself.

Was There LEI Available?

The judge acknowledged that there could be no absolute answer to this question, but concluded that, on the balance of probabilities, there was such insurance available. The plain words of the Zurich home solutions policy provided that personal injury claims were covered by the LEI option.

Mr Ratcliffe’s evidence sought to undermine those plain words by giving evidence of his experience of coverage. It may be the case that not all home policies allow for accidents arising out of road traffic accidents to be covered, but the judge considered that Mr Ratcliffe’s evidence of what would have been the case was inevitably, at this distance from the material events, of only modest weight. If the correspondence to Zurich was anything to go by, the seemingly stock letter enquiring about the possibility of BTE cover was designed to produce a negative response. Whether that was actually by design or not, its impact would be to limit the number of occasions on which the defendant would have ever been instructed by a BTE insurer. Consequently, Mr Ratcliffe’s experience of his firm using such cover would inevitably have been more limited than might otherwise be the case.

It was no criticism of Mr Ratcliffe’s evidence that he was unable to obtain confirmation that the FAQ answer applied at the time of the claimant’s accident. But it left some room for doubt and that doubt was fortified by Mr Hazel’s comments. It would have been simple for him to say that family LEI cover could not be used in motor accidents if there was a blanket exclusion in this respect. But he did not make that statement despite being pressed by solicitors on both sides and maintained the more nuanced position that it would depend upon the policy wording in the individual case. That could only mean, as far as the judge was concerned, that some family legal expenses insurance did cover motor accidents, or at least that Mr Hazel suspected that it might have done.

In order to seek some more disinterested evidence, the judge consulted the preliminary report of Lord Justice Jackson regarding his Review of Civil Litigation Costs in May 2009. At paragraph 2.2 of Volume 1, Lord Justice Jackson described BTE as an optional extra on house and contents insurance policies, typically costing in the region of £15 to £20. He stated that the insured may be insured in respect of legal expenses for certain claims which he brings as claimant, including property disputes with the neighbour, claims regarding goods or services received, employment claims or even, depending upon the terms of the policy, personal injury and clinical negligence claims. In many of these cases the BTE insurers pay the claimant’s solicitors on a conventional hourly rate basis, recovering costs from the other side if they win and paying out adverse costs if they lose.

The terms of the Zurich home solutions policy covered personal injury cases in the manner described by Lord Justice Jackson. In any event, the judge preferred the plain words of the policy to Mr Ratcliffe’s evidence in this respect. Jackson LJ’s description of the market simply reinforced that preference.

A separate point made by Mr Meehan was that, even if LEI was available, the solicitors would not have recommended it, given the policy wording. The judge rejected that argument. The points made by Mr Meehan regarding the alleged constraints imposed by the LEI policy held little weight since they were, in the judge’s experience, no more than the sort of wording generally used in such policies. Furthermore, Mr Meehan’s submissions lacked any evidence on which to base the criticisms given that no evidence was given by either Ms Mackulin or Mr Ratcliffe that any such objection to the terms of the policy would have been raised in the event that enquiries had been made sufficiently to establish that it was available.

Would There Have Been No Deduction?

The judge observed that it had been something of an article of faith in the costs world that if a party was able to use BTE insurance, then they would not suffer any reduction in their damages by way of paying for irrecoverable success fees or ATE insurance premiums. Mr Meehan’s skeleton queried whether that was actually the case.

His first argument was that the claimant had failed to establish that the case would have been taken on without any deduction. The judge considered that there was no evidence on this point that helped either side. The fact that the defendant was claiming a success fee and ATE policy in the bill before the court was merely a reflection of the facts that actually occurred. If BTE insurance had been available which covered the claimant’s solicitors’ costs as well as the opponent’s, then there was no obvious need for either a success fee or an ATE policy.

It was not clear why the claimant was said to have the burden of proving a negative. The claimant’s case was simply that the defendant’s activities, or lack of them, had meant that the claimant could not avail himself of insurance he had purchased before the accident. On the face of it, using such insurance would mean a private paying agreement with the solicitor would be backed by an indemnity from the LEI insurer. That arrangement would not require either a success fee or an ATE premium. It seemed to the judge that the defendant ought to be demonstrating that, in such circumstances, they would use a CFA with a success fee and possibly some ATE insurance which the claimant would be required to meet. But there was no such evidence from the defendant any more than there was evidence from the claimant about the supposed inevitability of deductions.

The judge returned to the passage from paragraph 2.2 of the preliminary report of Lord Justice Jackson, which stated that in many of these cases the BTE insurers pay the claimant’s solicitors on a conventional hourly rate basis. A footnote to that passage, numbered 15 and attached to the phrase “on a conventional hourly rate basis”, expressly stated “Without a CFA”. This express description of retainers which do not involve a CFA and therefore do not contain a success fee demonstrated that there was no certainty of any deduction being claimed by a solicitor.

A subsidiary argument of Mr Meehan’s, which potentially had more weight, was that the level of indemnity of £50,000 for the LEI was insufficient and that therefore it could not have been utilised in the first place. Since the LEI is meant to cover both sides’ costs, its limit of indemnity is conceptually burned through at twice the rate, more or less, of an ATE policy which is only responsible for protecting against the opponent’s costs as well as the insured’s disbursements.

The claimant’s claim settled for £250,000 and was obviously a significant personal injury claim. To that extent, the defendant’s argument was well made in that the BTE cover would not have been sufficient to reach trial and that would have been apparent at the outset. There were, however, two difficulties with the defendant’s argument which meant that ultimately it did not prevail.

The first was that the ATE insurance actually taken out, and whose limit of indemnity was £100,000, was also insufficient to take the case to trial. A simple addition of the disbursements in the claimant’s approved budget of £20,280.40 (incurred) and £57,645 (estimated) together with the defendant’s claimed budgeted costs of £73,464, or even just the claimant’s offer in respect of that figure of £66,714, proved that the £100,000 limit of indemnity would have been insufficient to go to trial. That conclusion could have been drawn at the outset of the case if the appropriate approach would be simply to consider the amount of cover required to reach a trial.

Consequently, it was not an answer simply to look at the limit of indemnity of the LEI to decide whether it was an appropriate funding method. Most cases, in fact, settle much earlier, and therefore within the limit of indemnity.

The second difficulty was the existence of so-called top up ATE insurance which had been available for many years, whether or not the original insurance was BTE or ATE. On the basis that top up cover would have been required, whichever policy was originally used should the case have reached a trial, the lower level of indemnity was not a factor which militated against the use of BTE cover if its availability had been established.

Would the Claimant Have Used It?

The defendant argued that, even if there was BTE insurance which the claimant potentially could have used, this was not sufficient for the claimant to obtain a reduction in the defendant’s bill. As Mr Meehan’s skeleton argument put it, the claimant was required to prove that if he had received reasonable advice as to funding, he would have acted upon this, so as to achieve a more beneficial outcome. In other words, it was a basic requirement that the claimant prove loss.

Mr Meehan relied upon dicta approved by the Supreme Court in Perry v Raleys Solicitors [2019] UKSC 5 in support of this proposition. That case dealt with a claim in negligence against the defendant solicitors by the claimant and Mr Meehan particularly relied upon paragraphs 19 and 20 of that decision which fell under the heading “the law about causation in professional negligence cases.”

These paragraphs of the judgment discussed a regular problem of the claimant in establishing what he or she would have done but for the negligent act of their solicitor. It is a counterfactual situation in that the claimant has already had to prove successfully that their solicitor was negligent in order to consider what might have been. It is therefore likely that the situation will be uncertain in terms of proof. Consequently, rather than the court deciding a binary yes or no conclusion on the balance of probabilities, it is often the case that the claimant will receive some but not all of the damages that might flow from the negligence on the basis of a loss of chance.

The thrust of Mr Meehan’s various arguments about whether the policy actually covered the claimant’s personal injury claim, whether it would have been recommended given its terms, and whether, in fact, it would have avoided the claimant having any deduction from his damages were all aimed, to some extent, at reducing the extent of the loss of chance element.

By contrast, Mr Carlisle submitted that all the claimant needed to show was that, on the balance of probabilities, if the claimant had been properly advised he would have taken a different option, that is, he would have used the BTE insurance. In support of this, Mr Carlisle relied upon several paragraphs in the claimant’s witness statement, for example, paragraph 61, in which he said that if he had been made aware that instructing a solicitor associated with his legal expenses policy through Zurich would have resulted in no money, or less money, being deducted from his damages than instructing Fletchers, there was no doubt in his mind that he would have taken that course of action.

The judge acknowledged that it was inevitably the case that any such statement was likely to appear to be self-serving. After all, there was now no prospect of the claimant actually using the BTE policy and so he could safely say that he would have used it in any event. Nevertheless, the judge had no reason to doubt Mr Evans’ evidence and there was no evidence which could be put forward by the defendant to contradict his evidence.

This was not a professional negligence case and it seemed to the judge that the so-called Kitchen discount, from the case of Kitchen v RAF [1958] 1 WLR 563, regarding the use of a loss of chance to reflect the vagaries of a counterfactual situation in professional negligence cases simply did not apply. The attraction of using BTE policies had waxed and waned over the last 25 years depending upon other funding options. But since 2013, and the general elimination of the recoverability of success fees, the use of BTE as a method which would not be expected to require a success fee and ATE insurance to be taken out was something which weighed heavily in the balance. It did not seem to the judge that it took much to persuade the court that if that option were available, then the claimant was likely to avail himself of it. After all, he had paid a fee for that insurance and could be expected to use it unless he was unable to do so.

Consequently, the judge was satisfied on the balance of probabilities that the claimant would have used the BTE insurance policy, whether that was by requiring Fletchers to do so or by instructing another firm who would have been willing to do so.

What Are the Consequences?

Having decided on the balance of probabilities that there was BTE insurance available which the claimant would have used, the judge turned to the question of what effect that had on the costs payable by the claimant to the defendant.

The claimant contended that all of the defendant’s base costs as well as the success fee and the ATE premium should be disallowed. There were two strands to the claimant’s argument regarding the reduction in the base costs. The first was that the judge should follow the approach of Hickinbottom J, when upholding Senior Costs Judge Gordon-Saker’s disallowance of all base costs in the case of McDaniel & Co (a firm) v Clarke [2014] EWHC 3826 (QB). The second strand was that the claimant ought to receive some benefit from the £50,000 limit of indemnity in the LEI by having that sum deducted from the bill which he now faced.

In McDaniel, the solicitors accepted that they had not advised the claimant properly as to alternative methods of funding. In particular, Ms Clarke was a member of a trade union and there was evidence to confirm that the trade union would have backed her claim. On that basis, the judge decided that none of the costs claimed against Ms Clarke were reasonably incurred and so assessed the bill at nil.

The judge did not accept that there was any direct comparison between this case and McDaniel. If the claimant had been able to use the BTE insurance, then he would still have been liable for the solicitors’ base costs: the LEI simply providing an indemnity. That was a very different situation from where a trade union backs its member and the member has, in effect, no direct responsibility. The judge saw no scope for the argument that the base costs were not recoverable in principle by the solicitor based on McDaniel.

Nor did the judge think there was any weight to the second argument regarding the use of the LEI’s limit of indemnity. The claimant had been successful in his case and therefore would expect to recover costs from his opponent. All of the costs reasonably incurred would be recoverable. Only those costs which were unreasonable either in the manner in which they were incurred or in their amount would not be recoverable from the opponent. Such unreasonable costs would also not be recoverable under the LEI policy. There might arguably be a reasonably incurred disbursement which was not recoverable, but there was certainly nothing to suggest that the entire limit of indemnity ought to be set against the costs incurred by the claimant in the manner contended for by Mr Carlisle.

Nevertheless, based on the reasoning throughout the judgment, it was clearly the judge’s view that the success fee would not have been incurred if the BTE policy had been utilised. On that basis, the judge disallowed the success fee in its entirety. The same reasoning would apply to the ATE policy, though the judge noted that this item did not strictly fall for assessment within these proceedings and accordingly made no formal ruling on it.

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

budgeting, Budgeting & Management, Costs Budgeting & CMC, Disbursements, Expert fees, New Costs Blog, Proportionality

The King’s Bench Division’s decision in Various Claimants v Mercedes-Benz Group AG and Others [2026] EWHC 1335 (KB) addresses the appropriate ratio of legal fees to expert fees in costs budgeting for multi-party litigation.

Background

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.

ADR/Settlement Discussions Phase | Defendants’ 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.

ADR/Settlement Discussions Phase | Claimants’ Budgets

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.

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Consequences 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

budgeting, Budgeting & Management, Costs Budgeting & CMC, Hourly Rates, New Costs Blog, Proportionality, Summary Assessment

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.

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The King’s Bench Division’s decision in Mew v General Dental Council [2026] EWHC 1116 (Admin) concerned an appeal against erasure from the Dentists’ Register following a Professional Conduct Committee determination that the appellant’s fitness to practise was impaired by reason of misconduct.

Background

Dr Michael Mew, a registered Specialist Orthodontist and the owner and principal practitioner at a private clinic offering treatment under the umbrella term “Orthotropics,” appealed to the Administrative Court against a determination of the Professional Conduct Committee (“PCC”) of the General Dental Council (“GDC”) dated 6 November 2024. By that determination, the PCC found Dr Mew’s fitness to practise impaired by reason of misconduct and ordered the erasure of his name from the Dentists’ Register. The appeal was brought under section 29 of the Dentists Act 1984.

The charges before the PCC related to advice and treatment provided to two young patients, referred to as Patient A and Patient B, between September 2013 and May 2019, as well as claims made in a YouTube video posted in September 2017. In broad terms, the GDC alleged that the Orthotropic treatment provided to both patients was not clinically indicated, that misleading claims had been made to the patients’ parents about the aims and benefits of the treatment, and that certain statements made publicly on YouTube were inappropriate and without adequate objective evidential foundation. Thirty charges were brought in total, with admissions made to seventeen of them either in advance or at the hearing.

Orthotropics is not recognised by the GDC as a speciality, nor is it available within the NHS. Its central premise, as advanced by Dr Mew, was that environmental factors rather than genetics were the predominant cause of malocclusion, and that early environmental intervention could prevent or improve malocclusion in growing children. Dr Mew described himself as “probably the world’s expert” in Orthotropics and acknowledged that it remained a controversial approach with a limited evidence base.

The PCC proceedings were substantial. There were no fewer than 46 hearing days spread across a two-year period from November 2022 to November 2024, with the matter having originally been listed in December 2021 but removed at Dr Mew’s request. The determination itself ran to 197 paragraphs across 75 pages. Expert evidence was heard from four experts: Mr Stephen Powell and Mr Keith Smith for the GDC, and Professor Daniele Garcovich and Professor Stephen Sheldon for Dr Mew. Joint expert reports were also prepared. The PCC preferred the evidence of the GDC’s experts, found the charges proved, and concluded that misconduct and impairment were established. Erasure was imposed as the appropriate sanction, together with an immediate order for suspension.

The appeal was heard over three days on 20, 21 and 22 January 2026 before Charles Bagot KC, sitting as a Deputy High Court Judge. Further written submissions were received through to 26 February 2026, with email communications continuing to 30 April 2026. A draft judgment was circulated on 8 May 2026, with the parties’ corrections and submissions on costs received on 13, 14 and 15 May 2026. The appeal was dismissed in its entirety. The documents before the court ran to over 8,500 pages, with an authorities bundle of 925 pages.

On the substantive grounds, the Deputy Judge found that the PCC’s determination was correct in all material respects and unassailable. The primary challenge, directed at the PCC’s approach to the competing expert evidence, was rejected. The remaining grounds, including challenges to specific charge findings, the approach to “The Jaw Epidemic” paper, the alleged failure to define “adequate objective evidence,” and the exclusion of open-source internet material from cross-examination, were each dismissed. The fresh evidence application, which sought to adduce the full Harvey Thesis and a cephalometric interpretation guide, was also refused on a notional basis, having been considered at the parties’ joint request to assist with the resolution of costs.

The Legal Framework

CPR 44.2 deals with the court’s discretion about whether to make a costs order and the factors it will take into account. CPR 44.3 guides the court as to the basis of assessment. Where standard basis costs are concerned, the court is to determine any doubt about whether costs were reasonably and proportionately incurred, or were reasonable and proportionate in amount, in favour of the paying party. The considerations which point towards costs being proportionate include whether they bear a reasonable relationship to the factors in CPR 44.3(5), including the value of the non-monetary relief in issue, the complexity, additional work generated by conduct, and wider factors such as reputational issues or public importance.

As for the procedure to adopt for the assessment, CPR 44.6(1) and PD 44.9.1 provide the court’s jurisdiction to conduct either a summary assessment or refer costs for a detailed assessment by a costs officer or judge. PD 44.9.1 provides that the general rule is that the court should make a summary assessment of costs at the conclusion of any hearing which has lasted not more than one day.

The Deputy Judge rejected the Appellant’s submission that it should be implied from that passage that summary assessments should not be made in cases where the hearing has lasted more than one day. The court retains a discretion summarily to assess costs following hearings lasting longer than one day and there is no presumption, let alone rule, against doing so. The Deputy Judge was fortified in that view by the White Book Editors’ guidance at paragraph 44.6.3, which states: “There is no rebuttable presumption against summary assessment in relation to costs where hearings last longer than one day. The exercise of the power to make a summary assessment should be considered in every case.”

The Deputy Judge also noted the guidance at PD 44.9.2 that there may be good reason not to conduct a summary assessment where, for example, the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily.

Costs Issues Before the Court

Following circulation of the draft judgment, the parties agreed that costs should follow the event in accordance with CPR 44.2(2)(a), with the Appellant to pay the Respondent’s costs of the appeal. That much was not in dispute. The costs issues requiring determination by the court were twofold: first, whether the quantum of the Respondent’s appeal costs should be resolved by way of summary assessment or referred to detailed assessment in default of agreement; and second, if summary assessment was the appropriate course, what the correct quantum of those costs should be.

The Respondent’s costs schedule had originally been served in October 2025, when the appeal was first listed but subsequently adjourned. That schedule claimed costs totalling £85,853.20. An updated schedule dated 12 May 2026 increased the sum claimed to £96,248.48. Prior to the costs determination, the Respondent made an open concession of £10,000 against the experts’ fees element of the claim, reducing the sum in issue to £86,248.48. The Appellant raised objections across a range of items within the schedule and opposed the court proceeding to a summary assessment at all.

A procedural issue arose on the morning of handing down, when a dispute emerged between the parties as to whether there had been agreement for the court to be shown recent correspondence containing offers on costs. The Appellant contended that no such agreement had been reached and submitted that the court could not fairly conduct a summary assessment having been exposed to the parties’ respective offers. The Respondent maintained that agreement had been given. The Deputy Judge found it unnecessary to resolve that factual dispute in order to determine the costs issues, holding that judges are routinely required to put matters out of mind (such as documents seen de bene esse or offers disclosed in costs management hearings) and that he was able fairly to conduct a summary assessment notwithstanding his awareness of the offers.

An additional procedural point arose from the Appellant’s submission that, because the draft judgment had been embargoed, its content had not been communicated to Dr Mew by his legal representatives, and it had therefore not been possible to take instructions from him on costs. The Deputy Judge rejected the premise of that submission, noting that the embargo expressly permitted disclosure of the draft and its substance to the parties themselves and their legal representatives, and that there was accordingly no bar on sharing the draft with Dr Mew or taking his instructions.

The Parties’ Positions

Summary assessment versus detailed assessment

The Appellant opposed summary assessment on a number of grounds. It was submitted that, as the appeal hearing had lasted more than one day, the general rule in PD 44.9.1 pointed away from summary assessment. The Appellant also contended that there were multiple areas of the costs schedule requiring further interrogation and the provision of additional detail, and that the objections raised could not fairly be dealt with summarily. A further submission was advanced to the effect that, because the draft judgment had been embargoed and instructions had not been taken from Dr Mew, a summary assessment was procedurally inappropriate. Finally, the Appellant argued that the court’s exposure to the parties’ offers on costs meant that a fair summary assessment could not be conducted.

The Respondent’s position was that the court retained a discretion to conduct a summary assessment regardless of the duration of the hearing, and that the overriding objective supported resolving the costs of the appeal within the judgment rather than deferring them to detailed assessment. The Respondent pointed to the fact that the updated schedule of 12 May 2026 represented only a modest increase on the October 2025 schedule, of which the Appellant had had considerable notice, and that the schedule itself provided the expected level of detail and breakdown. The Respondent had also made an open concession of £10,000 on the experts’ fees, which was characterised as a realistic and sensible approach rather than an acknowledgement that the remaining costs were disproportionate.

Quantum

The Appellant challenged a range of items within the Respondent’s schedule, including the level of experts’ fees, the time costs associated with the experts and their reports, the time spent on producing the costs schedule, and the overall number of items detailed in the schedule of work done on documents (95 separate items being said to be indicative of excess). The Appellant declined to file or serve a schedule of his own costs and declined an invitation from the Respondent to do so for the purpose of contextualising the objections raised.

The Respondent maintained that the costs claimed were reasonable and proportionate having regard to the relevant factors under CPR 44.3(5), including the value of the non-monetary relief in issue, the complexity of the underlying proceedings, the additional work generated by the conduct of the litigation, and the wider reputational and public interest considerations. Particular emphasis was placed on the reasonableness of Counsel’s fees, given the nature and duration of the underlying PCC proceedings, the complexity of the appeal, and the need for complete mastery of 46 days of hearings and over 8,500 pages of documents.

The Decision

The Deputy Judge determined that the appropriate exercise of his discretion was to proceed summarily to assess the costs of the appeal, rather than deferring them to detailed assessment in default of agreement. Whilst he recognised that a referral to detailed assessment would be the normal order following a hearing of more than one day, it was not an invariable rule or presumption. Applying the rules and the overriding objective, several factors pointed in favour of summary assessment.

First, the Deputy Judge was well placed, having heard and determined the appeal via a detailed judgment, to conduct a summary assessment. He had considerable experience of costs and summary assessment, both as a Deputy High Court Judge and when sitting as a Deputy King’s Bench Master. The scale of the costs pointed towards summary assessment, given the amount claimed by the Respondent for the appeal was in five figures, not a substantial six-figure sum or more.

Second, whilst the Appellant complained that he had only about one day to review the Respondent’s updated costs schedule dated 12 May 2026, this had to be seen in the context that this was an update to a schedule served in October 2025, when the appeal was previously listed but adjourned. That earlier schedule already particularised almost 90 per cent of the costs claimed. The October 2025 schedule claimed costs totalling £85,853.20 whereas the May 2026 schedule increased that sum to £96,248.48 (before the £10,000 concession). The Appellant had therefore had an appropriate time period to consider the costs and could reasonably have anticipated that the adjourned hearing would produce a modest increase to the sum claimed.

Third, the Deputy Judge did not accept the Appellant’s assertion that there were multiple areas of the Respondent’s costs schedule which required interrogation and the provision of additional detail. The whole ethos of summary assessment is to avoid that sort of process and the attendant costs and delay, when this can fairly be done. Having scrutinised the Respondent’s schedule, it provided the expected detail and breakdown and, subject to certain adjustments, there was nothing in it which the Deputy Judge considered on the face of it to be disproportionate or unreasonable.

Fourth, and most fundamentally, the Deputy Judge bore in mind that these proceedings related to conduct between 2013 and 2019, now between 7 and 13 years ago. It was in accordance with the overriding objective to resolve all consequential matters within the judgment, rather than deferring the resolution of the appeal costs to further negotiation or, more likely, detailed assessment. The parties’ positions on costs were far apart. The Deputy Judge was pessimistic that simply allowing further time would result in an agreement on the amount of costs. It was probable that further costs would be incurred in proceeding at least part way towards a detailed assessment, which would swiftly become disproportionate to the sums involved, generate additional costs, and entrench the parties’ polarised positions further.

The Deputy Judge also noted that, notwithstanding the importance of the matter to the parties and the public interest in professional regulation, the underlying disciplinary proceedings had already taken up more than their fair share of the tribunal and court system’s limited resources. The PCC proceedings had occupied 46 hearing days spread across a two-year period. The Deputy Judge observed that this duration was manifestly disproportionate and that, with hindsight, the PCC should have exercised considerably more active case management, evidential control, and trial timetabling. Whilst the Appellant opposed the court proceeding to a summary assessment, it was in the Appellant’s interests, as much as the Respondent’s, to draw this protracted matter to a close. It would be doing the Appellant no kindness to permit him to spend further time, energy and money in disputing the appeal costs which he was to pay.

Quantum

As for the quantum of costs, with the Respondent’s open concession against the experts’ fees claimed of £10,000, the sum claimed totalled £86,248.48. The Deputy Judge bore in mind the Appellant’s various objections across a range of the amounts claimed. The Appellant had chosen not to file or serve a schedule of his costs and had declined an invitation by the Respondent to do so in order to contextualise the objections made. The Deputy Judge inferred that the Appellant’s costs of the appeal were greater than those claimed by the Respondent (the Appellant’s experts having, as the Deputy Judge understood it, worked pro bono), which would not be surprising assuming he was privately paying and as he was advancing the appeal, rather than responding to it.

The Deputy Judge noted that the Respondent’s solicitors’ blended hourly rate claimed of £138 for all fee earners involved was below the guideline rate, even for a Grade D fee earner of £146 (London Band 3), let alone that for Grade A of £319. This no doubt reflected negotiations around lower agreed panel rates in return for a regular flow of GDC work. This relatively modest hourly rate mitigated areas where, had the rates been significantly higher, the numbers of hours claimed would have pushed the overall costs claimed in differing categories up to amounts which would potentially have been disproportionate and unreasonable.

After making what he considered to be an appropriate further overall adjustment downwards for experts’ fees consequential on the Appellant’s application to admit fresh evidence, as well as reducing somewhat the solicitors’ time costs relating to the experts and producing the costs schedule, the Deputy Judge reached an overall figure of £75,000 (inclusive of VAT), before examining the other categories of costs further.

Nearly half of that amount related to Counsel’s fees for the appeal inclusive of VAT. The Deputy Judge disagreed with the Appellant’s contention that Counsel’s fees of £30,450 before VAT for appearing at this three-day appeal as well as preparing for it and drafting the written documents, even before factoring in the adjournment of the original listing in October 2025, were disproportionate and unreasonable. Those fees consisted of a brief fee of £28,000, plus two refreshers at £1,000 each, with a modest uplift of £450 which, whilst not explicitly broken down, may have reflected the adjournment of the original listing and a modest amount of time reading back in.

The Deputy Judge considered that no realistic objection could be taken to such fees in the circumstances. Counsel for the Respondent was a leading junior of considerable experience specialising in regulatory work. The underlying proceedings were complex, very lengthy, hard fought and document heavy. All of those factors applied to the appeal, save that at three days, it was not particularly lengthy. That said, the parties had suggested that four days of pre-reading time for the court were necessary (although in the event the necessities of listing meant that it only had one day). Extensive and diligent preparation had plainly been carried out by both parties’ Counsel. That had to be seen in the context that it was necessary for Counsel to have a complete mastery of all the issues, the extensive documents and of 46 days of hearings before the PCC. It was also necessary to distil those lengthy proceedings, the wide-ranging grounds of appeal and the Appellant’s painstakingly detailed submissions into a detailed and convincing written and oral response on behalf of the Respondent. Much was at stake for both parties and there were the wider interests of reputation and the public importance in the proper pursuit of regulatory proceedings. Counsel’s fees claimed were eminently reasonable and proportionate.

As for the Respondent’s solicitors’ time costs, a number of the same considerations also applied in justifying detailed and time-intensive preparation. Other than in relation to expert evidence and time on producing the costs schedule, the Deputy Judge did not consider that the sums incurred were disproportionate or unreasonable, whether standing back and looking at the global amount or considering the breakdown.

The Appellant had complained about the 95 separate items detailed in the schedule of work done on documents, as indicative of excess. In the Deputy Judge’s view, one needed to delve beyond the mere number of items to see that this reflected an admirable attempt at transparency in breaking down tasks into individual components, many of which were less than an hour in duration and reflecting appropriate delegation most (but not all) of the time. The overall total number of hours spent on documents by all fee earners combined was 179.5. Given the relevant factors in relation to the appeal, subject to the points around time on expert evidence being somewhat too high, there was nothing notable or objectionable about the time spent. This reflected work over a period of more than a year from the Appellant’s Notice being served to the substantive hearing, with additional work on consequential matters when the draft judgment was received.

The Deputy Judge made a further downward adjustment, beyond the concession of £10,000 made by the Respondent, to the experts’ fees and solicitors’ time costs on dealing with the experts and their reports, as well as a reduction to the time costs in relation to preparation of the costs schedule which, whilst a complex exercise, appeared on the high side.

For all those reasons, the reasonable and proportionate costs of the appeal were summarily assessed at £75,000. This sum included VAT of £6,090 on the Counsel fee element only (VAT was not claimed on any other aspect), with the Counsel fee before VAT being £30,450. The Appellant was ordered to pay to the Respondent the total sum of £75,000 for the appeal costs.

Whilst CPR 44.7(1) provides that the standard period for the payment of a costs order is 14 days from the date of the order, the Deputy Judge allowed an additional 14 days (28 days in total) for the Appellant to pay the sum ordered, to ensure fairness to the Appellant in making arrangements to pay. The sum was ordered to be paid by 4pm on 12 June 2026.

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The Senior Courts Costs Office’s decision in Safra v Wilmer Cutler Pickering Hale and Dorr LLP [2026] EWHC 703 (SCCO) addresses fundamental questions about the requirements for contentious business agreements and interim statutory bills in the context of a high-value international arbitration retainer.

Background

The claimant retained the defendant solicitors in September 2022 to represent him in five consolidated LCIA arbitrations and related proceedings concerning disputes within his family over his late father’s US $23 billion estate. The engagement letter provided for remuneration by reference to specified hourly rates, with provision for the defendant to review and revise billing rates periodically, notifying the client of changes as and when they occurred.

Between December 2022 and September 2024, the defendant rendered invoices totalling over US $35 million. The claimant made payments totalling approximately US $16.4 million but disputed the balance. In December 2024, the claimant applied for assessment of the defendant’s bills under Part III of the Solicitors Act 1974.

The parties agreed that a number of preliminary issues should be determined before any assessment proceeded, including whether the engagement letter constituted a contentious business agreement (CBA), whether the defendant’s invoices were interim statutory bills, when any statutory bills were delivered, and whether the court should order assessment.

Was the Engagement Letter a CBA?

Costs Judge Leonard held that the engagement letter was not a CBA within the meaning of section 59 of the Solicitors Act 1974. While the letter provided for remuneration by reference to hourly rates (a permissible basis for a CBA following the 1990 amendment to section 59), it lacked the requisite certainty.

The critical defect was the engagement letter’s provision for hourly rate reviews. The letter stated that rates would be reviewed periodically and could be revised, with changes notified to the client as and when they occurred. Crucially, the timing and amount of any increases were entirely at the defendant’s discretion, with no fixing mechanism.

The judge distinguished cases such as Acupay System LLC v Stephenson Harwood LLP [2021] EWHC B11 (Costs), where a CFA provided for annual increases at a fixed rate of 3%. Here, the defendant’s right to increase rates was “entirely open-ended” as to both timing and amount. The defendant’s only obligation was to notify the client when increases took effect; there was no requirement for prior consultation or agreement.

Applying Wilson v The Specter Partnership [2007] 6 Costs LR 802, the judge held that “the purpose of a CBA is to fix the fees, or provide a fixing mechanism, so that the parties (and in particular the client) know where they stand.” The engagement letter’s unilateral, open-ended review provisions created “a significant element of uncertainty” inconsistent with CBA status.

The judge also noted that the engagement letter’s reference to the client’s right to apply for assessment under Part III of the Solicitors Act 1974 was inconsistent with it being a CBA, which would have restricted that right under sections 60 and 61.

Would the CBA Have Been Unreasonable?

Although unnecessary given the finding that the engagement letter was not a CBA, the judge considered whether it would have been unreasonable under section 61(2)(b) if it had been a CBA.

The judge found that the negotiation process was fair. The hourly rates were individually negotiated with experienced lawyers acting for a sophisticated businessman, and were set by reference to comparable rates charged by other advisers. The defendant was under no obligation to explain the distinction between CBA and non-CBA retainers.

However, the judge would have found the agreement unreasonable. A retainer providing for entirely open-ended hourly rate increases, while simultaneously removing the client’s rights under section 70 to challenge those rates on assessment, would have been unreasonable. Had the engagement letter been a CBA, it would have been set aside and the defendant’s costs assessed in their entirety.

Did the Engagement Letter Permit Interim Statutory Bills?

The judge held that the engagement letter did contractually permit the delivery of interim statutory bills. The letter provided for “monthly statements for work performed and expenses recorded on our books during the previous month,” stated that such statements were “due and payable upon receipt,” and required the client to raise any queries “in a timely fashion.”

While the word “ordinarily” qualified the timing of monthly statements, the engagement letter clearly indicated that each statement would cover all work performed during the previous month. The reference to expenses “recorded on our books” did not prevent the statements from being interim statutory bills, given the principle in Slade v Boodia [2018] EWCA Civ 2667 that separate bills may be rendered for profit costs and disbursements.

Were the Invoices Actually Interim Statutory Bills?

Despite the contractual right to deliver interim statutory bills, the judge held that the defendant’s invoices were not in fact interim statutory bills because they lacked the essential characteristic of finality.

Each invoice (whether draft or finalised) contained the wording: “Includes only Services and disbursements posted to date.” The judge held that the clear meaning of this phrase was that some work performed during the period covered by each invoice might not have been recorded at the time of delivery and might have to be included in a subsequent invoice. The invoices were therefore expressly not final for the periods they covered.

The defendant’s attempt to interpret this phrase as merely indicating that further charges might be rendered for subsequent periods was rejected as not viable. There would be no reason for an invoice covering a specified period to include a redundant warning about charges for future periods.

The judge also noted discrepancies between draft and finalised invoices. For example, the figure for legal fees in the March 2023 invoice changed from US $967,337 in the May 2023 draft to US $1,011,675 in the September 2023 draft to US $1,017,435 in the September 2024 final version. This supported the conclusion that it could take months for the defendant’s fees for a given month to be finalised, consistent with the warning that invoices might not comprise all fees for the period covered.

The Chamberlain Bill

Since the individual invoices were not statutory bills, the judge held that the complete series of invoices together comprised a single “Chamberlain bill” (following Chamberlain v Boodle & King and Bari v Rosen [2012] 5 Costs LR 851). This bill was delivered on 17 September 2024, when the defendant sent the claimant a comprehensive set of finalised invoices.

The claimant’s application for assessment was made on 17 December 2024, within three months of delivery. The Chamberlain bill was part-paid. Accordingly, the court had jurisdiction under section 70(2) to order assessment without the need to establish special circumstances under section 70(3).

Allocation of Payments

Although unnecessary given the Chamberlain bill analysis, the judge addressed how the claimant’s payments should have been allocated had the invoices been interim statutory bills.

The defendant contended that payments should be allocated to the oldest outstanding invoices first (following the rule in Clayton’s case and minimising interest). The claimant argued that monthly payments of US $400,000 (later US $600,000) were intended to be allocated to the corresponding monthly invoices.

The judge preferred the defendant’s analysis. Under Simson v Ingham (1823) 2 B&C 70, it was incumbent on the claimant to specify how payments should be allocated; failing that, allocation was for the defendant. The only evidence of specific instructions was the claimant’s witness evidence given under cross-examination, which the judge found unreliable. The defendant had clearly explained in October 2023 how it was applying payments, and the claimant had not objected at the time.

Special Circumstances

Again addressing the position had the invoices been interim statutory bills, the judge considered whether special circumstances justified assessment of bills falling within section 70(3).

The judge held that special circumstances did exist, primarily relating to the provision of costs information. The defendant had failed to comply with its obligation under paragraph 8.7 of the SRA Code of Conduct to ensure the client received the best possible information about costs as the matter progressed.

Costs information was provided sporadically. For example, no information was given for the period December 2023 to July 2024 (when bills totalling over US $14 million were incurred) until after termination of the retainer in September 2024. The defendant offered costs information on three occasions but should not have waited to be asked; it was obliged to provide such information proactively and regularly.

The judge also attached weight to the defendant’s response to concerns raised in December 2022. The claimant’s representative had explained that the claimant could not afford fees at the level of the first three months and asked whether fees could be managed at around US $400,000 per month. The defendant’s partner responded: “We’ll find a way to make that or something else he wants work.” This assurance was comparable to a costs estimate and relevant to assessment of reasonableness, following Mastercigars Direct Ltd v Withers LLP [2009] 1 WLR 881. In the event, fees averaged about US $1.5 million per month.

The judge rejected arguments based on the size of individual time charges or expenses, finding these generally explicable given the scale and complexity of the arbitrations. However, the failure to provide adequate costs information as fees accrued to levels far beyond what the client had indicated he could afford constituted special circumstances justifying assessment.

Conditions of Assessment

The judge declined to impose any conditions on the order for assessment. While the claimant was based outside the jurisdiction and was understood to be extremely wealthy, he had already paid almost 50% of the claimed fees. The defendant had been aware from the outset that the claimant was based abroad and could have taken steps to protect its position. The current situation was “at least as much the responsibility of the defendant as the claimant,” particularly given the inadequate provision of costs information.

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The High Court’s decision in Garden House Software Ltd v Marsh & Ors [2026] EWHC 568 (Ch) illustrates how a court may reject itemised costs challenges yet still impose a substantial global reduction on broad-brush proportionality grounds.

Background

HHJ Cadwallader had dismissed an application by the First, Second, Sixth and Seventh Defendants (collectively, “THD”) for reverse summary judgment and to strike out the Claimant’s claims. The parties agreed that costs should follow the event and be summarily assessed on the standard basis. The dispute concerned quantum alone. The Claimant sought £87,698.30 (solicitors’ fees £37,698.30; counsel’s fees £50,000). THD contended this was disproportionate and proposed £39,460.40, achieved through reductions to hourly rates, disallowing one senior fee earner’s time entirely, halving counsel’s fees, and cutting time spent preparing the statement of costs.

Costs Issues Before the Court

The court was required to conduct a summary assessment, determining what was reasonable and proportionate under CPR 44.3. The judge addressed each of THD’s specific challenges before applying a final, broad-brush assessment of overall proportionality. Specific issues arose concerning: (i) whether hourly rates should be reduced to London 2 Guideline Hourly Rates; (ii) whether the deployment of both a Partner and a Grade-A Legal Director was justified; (iii) whether instructing both leading and junior counsel at a combined fee of £50,000 was excessive; and (iv) whether 5.1 hours spent preparing the statement of costs (costing £2,549.70) was disproportionate.

The Parties’ Positions

The Claimant argued its costs were reasonable and proportionate. The application was a heavy one, listed for a full day with half a day’s judicial pre-reading, in a high-value specialist commercial and insolvency claim. THD had shifted the basis of their application following detailed correspondence from the Claimant’s lawyers before the hearing, advancing new points under time pressure, which necessitated preparation to address both the original and revised arguments. The application was brought only three months before a 12-day trial where substantial security for costs had been provided.

THD characterised the hearing as involving short points of law, not heavy or complex, justifying only modest costs. They advanced several specific challenges:

Hourly Rates: All rates should be reduced to London 2 GHR on the basis the matter was straightforward.
Team Composition: All time recorded by the Grade-A Legal Director (Mr Abdul) should be disallowed; the work of the Partner should have sufficed.
Counsel’s Fees: Instructing both a King’s Counsel and a junior was excessive; their combined fees should be capped at £25,000, half the amount claimed.
Statement of Costs: The 5.1 hours spent (1.1 hours by a Grade C fee earner and 4 hours by a Senior Costs Lawyer) was excessive and should be reduced to 2 hours total.

THD also pointed to their own costs of approximately £44,228 as a comparator, suggesting the Claimant’s higher spend demonstrated disproportionality.

The Court’s Decision

HHJ Cadwallader awarded the Claimant £70,158.64, representing a 20% reduction from the sum claimed. The judge addressed each of THD’s challenges in turn before applying a global reduction.

Character of the Application

The court rejected THD’s characterisation of the hearing as involving short, simple points of law. The application was listed for a day with half a day’s judicial pre-reading and was a heavy application, albeit the judge’s judgment was terse. THD had shifted the basis of their application following detailed correspondence from the Claimant’s lawyers before the hearing, advancing new points, so that under time pressure the Claimant had to deal with both the original and new points, which increased the preparation required. The application was brought only three months before a 12-day trial where very substantial security for costs had been provided.

Hourly Rates

The judge declined to reduce rates to London 2 GHR. This was a heavy application in a high-value, specialist commercial and insolvency claim, for which London 1 rates were not inappropriate. GHR are a starting point, not a cap. The judge noted that THD’s own Grade-A rate of £595 per hour (Birmingham) exceeded National 1 GHR and indeed the London 1 Grade-A GHR. Having regard to the application’s complexity and importance and the nature of the underlying issues, London 1-level rates were justified.

Team Composition

The court rejected THD’s submission that all time recorded by the Grade-A Legal Director should be disallowed. The Claimant’s explanation—that two senior fee earners were appropriate to manage a complex, high-stakes application with evolving arguments, and to ensure efficient division of labour—was persuasive. The deployment of a Partner and a Grade-A Legal Director was reasonable. The total time taken by both was also reasonable, and THD identified no duplication.

Counsel’s Fees

The instruction of both leading and junior counsel was held to be reasonable. Leading counsel had familiarity with the case and its history and had drafted statements of case; the use of junior counsel to support him should have allowed costs to be kept down. The combined fees of £50,000 were considered reasonable and proportionate, given the factors already identified.

Time Spent on the Statement of Costs

The time spent on the statement of costs (1.1 hours by a Grade C fee earner plus 4 hours by a Senior Costs Lawyer, totalling £2,549.70) was found to be in context neither unreasonable nor disproportionate.

Comparative Spend

The judge acknowledged that THD’s own costs for the application were approximately £44,228, roughly half of the Claimant’s figure. However, comparative spend can be a cross-check; it is not determinative. The question is what was reasonable and proportionate on the part of the Claimant. Given the points already made, it was unsurprising that the Claimant incurred a higher figure than THD.

Overall Proportionality

While THD’s proposed global reduction to £39,460.40 was not a fair reflection of what it reasonably cost the Claimant to oppose the application, and the specific challenges did not warrant the sweeping reductions sought, the judge nevertheless stepped back and looked at the matter in the round. He considered that the overall figure of £87,698.30 must be reduced, for reasons of proportionality, by 20%, to £70,158.64, which he considered to be reasonable and proportionate.

Analysis

The decision demonstrates the two-stage nature of summary assessment under CPR 44.3. A court may find that individual elements of a costs claim—hourly rates, team composition, counsel’s fees—withstand specific challenge when tested against the reasonableness criterion, yet still conclude that the aggregate figure requires reduction when assessed against the proportionality criterion.

The judgment confirms that Guideline Hourly Rates remain a starting point, not a cap, and that the nature, complexity and importance of the matter may justify rates at the higher end of the spectrum. The judge’s observation that THD’s own rates exceeded certain GHR benchmarks provided a useful comparative point that undermined their argument for strict application of lower guideline rates.

On team composition, the decision illustrates that deploying multiple senior fee earners is not inherently unreasonable where the matter is complex, high-stakes, and involves evolving arguments requiring efficient division of labour. The absence of identified duplication was significant.

The instruction of both leading and junior counsel was justified by leading counsel’s existing familiarity with the case and the judge’s finding that the use of junior counsel should have allowed costs to be kept down. The combined fee of £50,000 was assessed in the context of a full-day hearing with substantial pre-reading in a high-value specialist claim.

The most significant aspect of the decision is the application of a 20% global reduction after rejecting the specific challenges. The judge gave limited reasoning for this reduction beyond stating it was required “for reasons of proportionality” when looking at the matter “in the round”. This broad-brush approach reflects the court’s residual discretion to stand back from the detail and assess whether the total figure is proportionate to the matter in issue, even where individual components are reasonable.

The decision serves as a reminder that success in defending itemised challenges to a costs claim does not guarantee recovery of the full sum claimed. Proportionality operates as an independent control mechanism, and a receiving party should anticipate that a court conducting summary assessment may apply a global reduction even where specific criticisms are rejected.

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High Hourly Rates Do Not Of Themselves Render Budgeted Costs Disproportionate | Costs Budgeting In Parsons v Convatec

Costs Budgeting & CMC, Hourly Rates, New Costs Blog, Proportionality

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.

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CPR PD 47 Para 8.2 | Costs Judge’s “Hands Tied” By Non-Compliant Points Of Dispute

Counsel Fees, Detailed Assessment, Hourly Rates, New Costs Blog, Points of Dispute & Replies

The Senior Courts Costs Office’s decision in Aareal Bank AG v Lumineau [2025] EWHC 3299 (SCCO) demonstrates the practical consequences of Ainsworth-non-compliant points of dispute and provides guidance on hourly rates above guidelines and leading counsel instruction where prior involvement exists.

Background

This was a detailed assessment of costs before Deputy Costs Judge Lightman, delivered as an approved transcript. The receiving party, Aareal Bank AG, was a third party in the underlying litigation who was awarded its costs by order dated 12 September 2024 [§3]. The underlying proceedings concerned an application by the paying parties to stay a liquidation and bring the company back under their control, with a later change of position seeking the removal of directors [§19, §30]. The proceedings took place over a relatively short but intense period between June and September 2024 [§2]. The detailed assessment concerned a bill of costs submitted by Aareal, against which the paying parties, Emmanuel Lumineau and Thomas Schneider, served points of dispute. The central matters in dispute related to the level of solicitors’ hourly rates, the instruction and fees of leading counsel, and the adequacy of the paying party’s points of dispute.

Costs Issues Before the Court

The court was required to determine three principal costs issues. First, whether the hourly rates claimed by the receiving party’s solicitors were reasonable, given that some exceeded the applicable guideline rates for London 2 (Grade A £398, Grade B £308, Grade C £260, Grade D £148 from 1 January 2024) [§2]. Second, whether it was reasonable and proportionate for the receiving party to have instructed leading counsel for the application and, if so, whether the level of his fees and the work done in conjunction with junior counsel were recoverable. Third, whether the paying party’s points of dispute complied with the requirements of CPR Practice Direction 47, paragraph 8.2, and the consequences of any non-compliance, particularly in light of the Court of Appeal decision in Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178.

The Parties’ Positions

The paying party contended that the solicitors’ hourly rates should be reduced to the SCCO guideline rates for London 2 effective from 1 January 2024. They relied on the principle from Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 that a “clear and compelling justification” is needed to exceed guideline rates [§4]. On counsel’s fees, the paying party argued that instructing counsel at all was unnecessary, as a senior fee earner should have been capable of handling the work [§13]. In the alternative, they submitted that the instruction of leading counsel was an extravagance, relying on the decision in Coram v DR Dunthorn & Son Ltd [2024] EWHC 672 (KB), which the judge noted was a fact-specific decision [§15, §20]. They also challenged numerous specific items of counsel’s work and associated solicitor time.

The receiving party argued that the complexity and importance of the matter, including insolvency issues and urgent interim applications, justified rates above the guidelines [§19]. Regarding counsel, they submitted that the instruction of leading counsel was necessary due to the case’s complexity and his prior involvement in the matter dating back several years before his appointment as KC in 2020 [§11–12, §17]. They defended the concurrent instruction of junior counsel as a proportionate measure to cover whilst leading counsel was on holiday and to assist in the preparation of the skeleton argument [§31, §34]. In response to the points of dispute, the receiving party argued that they failed to comply with CPR PD 47, paragraph 8.2, as interpreted in Ainsworth, because they did not state concisely the nature and grounds of dispute for individual items, instead relying on generic objections [§21–26]. They argued that the points of dispute were non-compliant with PD 47 and should be struck out; however, the judge did not formally strike them out and instead assessed the items within the constraints identified in Ainsworth [§30, §37].

The Court’s Decision

On the issue of solicitors’ hourly rates, the judge acknowledged his general reluctance to depart from the guidelines but found the case to be “unusual” and of sufficient complexity to justify a modest uplift [§8]. He stated that he had “seen enough to say to anyone that this is an unusual case”, warranting a modest departure, without expressly endorsing all aspects of the receiving party’s characterisation of the case’s complexity [§8]. He did not, however, allow the full rates claimed. He reduced a claimed partner rate of £433.50 to £410 (against a guideline of £398) [§9]. For the associate rate claimed at £306, he allowed £275 [§9]. Other rates at or below the guidelines were left undisturbed.

Concerning the instruction of leading counsel, the judge found it was not unreasonable to instruct Mr Fisher, given his significant prior involvement in the matter dating back several years and predating his appointment as KC in 2020 [§11–12, §17]. The judge noted that it was “not unreasonable at all to instruct Mr Fisher, who had previous experience of this case” [§12]. This represents an important distinction from the scenario in Coram, where leading counsel was newly instructed; the judge treated Coram as a fact-specific decision of no direct application [§20]. However, he questioned whether the matter was sufficiently complex to justify leading counsel charging leading counsel’s rates throughout the whole period, stating that he was “not convinced” on this point [§31]. The judge therefore approached the specific items of counsel’s work on the basis that while leading counsel’s involvement was reasonable, his fees should be moderated to reflect a more junior level for much of the work. He reduced a number of leading counsel items on an item-by-item basis, often by reference to a junior counsel rate: item 49 was reduced from £2,550 to £1,125 [§41]; item 51 from £1,195 to £862.50 [§42]; and item 53 to £1,275 [§42]. Items solely relating to junior counsel’s reading in (items 15 and 16) and initial advice (item 17) were allowed in full, as the points of dispute did not adequately challenge them on an item-by-item basis [§37–38].

On the procedural issue, the judge applied the Ainsworth principles. He held that the paying party’s points of dispute, while identifying a general point of principle (satisfying CPR PD 47 para 8.2(a)), failed to “state concisely the nature and grounds of dispute” for individual items as required by CPR PD 47 para 8.2(b) [§23, §29]. The generic objection to counsel’s fees did not specify why each challenged item was unreasonable. The judge’s frustration with the outcome was palpable: he stated that his “hands are tied” and that he “do[es] not like it” [§37]. As a matter of principle, he refused to entertain reductions based on these non-compliant objections for several items, including approximately three hours of solicitors’ attendance at the hearing [§44]. This procedural failure prevented the paying party from advancing item-specific challenges in respect of a number of entries.

The judge noted throughout that proportionality would be addressed separately at the conclusion of the detailed assessment; the determinations in this judgment relate to reasonableness of individual items [§6, §42].