CPR 46.4 | Protected Parties | Court Rejects ‘Light Touch’ Approach To Assessement Of Solicitor-Client Costs Shortfall

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Background

In CFB v AXA Insurance UK PLC the Claimant, CFB, a protected party represented by a litigation friend due to a severe brain injury sustained from a fall at a construction site on 12 March 2019, succeeded in obtaining a £1 million settlement from AXA Insurance under the Third Party (Rights against Insurers) Act 2010.

During the proceedings, complex issues arose, including the denial of employment by the employer and AXA’s attempt to avoid the insurance cover based on non-disclosure of the Claimant’s immigration status.

The settlement precipitated two claims for costs: one inter partes claim (the Claimant’s costs against the Defendant) and one solicitor-client claim for costs (Prince Evans Solicitors LLP’s costs against the Claimant). The hearing for the costs determination took place over multiple dates: 7 August 2024, 12 December 2024, and 24 January 2025.

The settlement of inter partes costs stood at £378,000 (inclusive of interest and assessment costs) against a claim of £439,167.62. The solicitor-client costs included additional liabilities such as a success fee of £31,413.80 and an ATE premium of £1,680, along with a shortfall in costs recovered from the Defendant and a separate sum for “pure” solicitor-client costs amounting to over £23,000.

Costs Issues Before the Court

The costs issues before the court involved two primary claims. The inter partes claim needed approval for the settlement reached, involving a recovery percentage of approximately 85%. The more contentious issue was the solicitor-client claim.

Prince Evans Solicitors LLP (PE) sought recovery for additional liabilities, a shortfall in costs not recovered from AXA, and separate “pure” solicitor-client costs. These claims encompassed work related to the solicitor-client relationship beyond the settlement proceedings, specifically covering issues such as immigration advice and costs related to the Claimant’s appointment of a deputy under the Court of Protection.

The Parties’ Positions

Regarding the inter partes costs, the parties agreed on a settlement of £378,000 against a claim of £439,167.62. The negotiations for settlement appeared to have considered various vulnerabilities and potential deductions on assessment.

In addressing the solicitor-client costs, Prince Evans Solicitors LLP, through Mr. Roy KC, advocated for the court to take a “light touch” approach to approval, heavily relying on counsel’s advice. The solicitors argued that the current procedure for determining these claims was flawed, suggesting that a more lenient process aligned with the treatment of damages claims be adopted. They highlighted potential conflicts of interest given the litigation friend’s dual role as the solicitor’s spouse and the solicitor’s preference for a senior fee earner allaying concerns on the firm’s behalf.

The Court’s Decision

Costs Judge Brown scrutinised both the procedural aspects and the substantive costs claims put forward by Prince Evans Solicitors LLP.

In his decision, Costs Judge Brown addressed several criticisms raised by Mr Roy KC and Mr Smith, particularly regarding the scrutiny of solicitor-client cost claims. The Judge rejected the notion of a heavy presumption against approving settlements and underscored the necessity of detailed scrutiny in such cost matters given the potential conflicts of interest and the need to protect the interests of the protected party.

The court dismissed the suggested “light touch” approach, explaining that the existing rules mandated a meticulous examination of the costs claimed to ensure they were reasonable and in the interest of the protected party. Key to the judgment was the necessity to consider the merits of the costs claimed, not merely rely on the advice of learned counsel without further interrogation.

Concerns were raised over the high hourly rates charged, the substantial reliance on counsel, and the lack of delegation, which all contributed to an inflated costs claim. Furthermore, the claims for “pure” solicitor-client costs, including immigration advice and the appointment of a deputy, were considered highly unusual and possibly outside the scope of what could reasonably be charged under the CFA.

Ultimately, while the court approved the inter partes costs settlement, it refused to approve the solicitor-client cost deductions without a detailed assessment. The judgment emphasised that proper scrutiny and assessment were indispensable to safeguarding the interests of vulnerable parties and ensuring fair and reasonable solicitor remuneration.`

Pushing By Vulnerable Adult Found Not To Constitute “Intentional Harm” Under Para 4.3(8) EL/PL Protocol | However, Claim Escapes On Valuation At Time Of Letter of Claim

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Background

This case involves Julie Johnson (the Claimant) and her former employer Choice Support (the Defendant). The Claimant had worked with the Defendant for five years, providing care to elderly patients with complex needs. One patient, referred to as “E,” required regular management of his catheter bag.

On 25 December 2018, the Claimant was crouching to empty E’s catheter bag because the stool normally used for this task had broken two days earlier and hadn’t been replaced. E pushed the Claimant, causing immediate back pain. Though she initially recovered, she later developed foot drop (confirmed by MRI), leading to medical treatment and cancellation of a planned holiday. Growing concerns about her long-term health and ability to work safely ultimately led her to pursue a personal injury claim.

The procedural timeline included extensive document exchanges between parties, with the Claimant’s solicitors submitting a Letter of Claim on 14 October 2019, setting the stage for the costs issues. The Defendant raised Points of Dispute on 22 November 2022, challenging the application of the Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims (“the Protocol”). The detailed assessment hearing took place on 26 February 2025, with judgment issued on 28 April 2025.

Costs Issues Before the Court

The court addressed specific costs issues regarding the Protocol’s applicability:

  1. Whether the claim’s estimated value exceeded the Protocol’s limit
  2. Whether the case involved “harm, abuse or neglect of or by children or vulnerable adults,” explicitly excluded from the Protocol under paragraph 4.3(8)

The Parties’ Positions

The Claimant contended that her solicitors reasonably assessed the claim’s value between £11,730 and £26,050 at the time of the Letter of Claim, placing it outside the Protocol’s limit. This assessment considered her worsening symptoms, potential ongoing medical requirements, and possible future earnings loss.

The Defendant argued that the Claimant’s solicitors had overestimated the claim’s value. They further maintained that although E was clearly a vulnerable adult, the incident didn’t constitute “harm, abuse, or neglect” under paragraph 4.3(8). Drawing on multiple authorities, they emphasized that E’s pushing wasn’t intended to cause injury, nor did E understand that his actions could result in harm.

The Court’s Decision

Deputy Costs Judge Erwin-Jones addressed both contested points.

Regarding claim valuation, the Judge determined that based on evidence available when the Letter of Claim was sent, the Claimant’s solicitors reasonably estimated general damages within the moderate bracket for back injuries (£11,730 to £26,050). Given the Claimant’s persistent symptoms and concerns about future work capacity, the valuation appropriately included potential earnings loss and related costs. The court therefore found it reasonable that the estimated claim exceeded the Protocol limits.

On the paragraph 4.3(8) issue, while acknowledging E was undoubtedly a vulnerable adult, the court found his actions did not constitute “harm, abuse or neglect” as interpreted in previous cases including Lawal v London Borough of Southwark. E’s pushing was a known risk managed through the provision of a stool, and no evidence suggested E possessed awareness or intention to cause harm.

Consequently, the court found that there was an absence of harm, abuse or neglect of or by the vulnerable adult and so, were it not for the reasonably assessed value of the case at the time the Protocol would have applied.

Professional Negligence Claim Survives Partial Strike-Out Despite Procedural Deficiencies | Limited Relief From Sanctions Granted

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Background

Since before 2010, the Claimant, Miss Michele Carrington, has been the owner of a house at 46 Thatcher Avenue, Torquay, Devon. The house is a two-storey dwelling located adjacent to the sea overlooking Torbay. Over the years, Carrington has experienced significant medical conditions, rendering her largely housebound, although she has been able to live independently with the assistance of a full-time live-in carer.

In 2010, Carrington retained Mr Godfrey, an architect, surveyor, and contract administrator, operating through two companies: Godfrey Partnership Limited (GPL) and Godfreys Architects and Surveyors Limited (GAS). Though GAS had dissolved by the time proceedings were initiated, GPL was dissolved thereafter. Initially, GPL was the First Defendant, with American International Group UK Limited (AIG) sued as the professional indemnity insurer of GAS under the Third Parties (Rights against Insurers) Act 2010. Following GPL’s dissolution, AIG became the sole Defendant.

In 2010, Carrington accepted a proposal from Godfrey to provide professional services to extend and refurbish her property. The agreed services encompassed full architectural, surveying, and contract administration over the entire project life (RIBA stages A to L). Under a JCT Minor Works contract (JCT MWC), Ease Development Services Limited (Ease) was appointed for a contract sum of £231,425.21 plus VAT. The works began in May 2012, but multiple issues ensued, leading to Godfrey’s cessation of services and Ease’s termination of the contract in mid-2013. The Claimant contends that very little work was done and that what was done was defective, necessitating substantial remediation which she could not afford.

The claim was filed in November 2022 and has encountered significant procedural challenges, largely due to Carrington’s failure to plead her case with sufficient specificity and detail concerning breaches of duty, causation, and limitation defenses. Despite multiple amendments, strike-out applications, and directions for adequate particulars, the Defendant persisted that Carrington had not met the required standard in her pleadings.

Costs Issues Before the Court

The court was tasked with determining whether the amended particulars of claim served by Carrington complied with the court’s previous orders and whether those amendments allowed the case to progress or justified a strike-out application. The Defendant’s strike-out or summary judgment application was premised on Carrington’s alleged failure to articulate a coherent and viable claim, especially in the context of causation and the limitation periods applicable to the alleged breaches.

Additionally, costs issues encompassed previous orders that required Carrington to bear the costs of amendments due to her procedural deficiencies. Specific attention was also needed to assess whether the incurred costs justified relief from sanctions against Carrington, considering the history of non-compliance and delays attributable to her re-drafted pleadings.

The Parties’ Positions

Claimant’s Position: Carrington maintained that Godfrey’s professional negligence in failing to provide adequate construction information, inspect, and review works during the build period, caused extensive damage and financial loss. She submitted that despite procedural deficiencies in earlier pleadings, her current amended particulars clarified these claims sufficiently to proceed to trial. Carrington also sought relief from sanctions for any remaining deficiencies, emphasizing her health, financial status, and the severity of the alleged professional breaches.

Defendant’s Position: AIG argued that the amended particulars still failed to meet the detailed pleading standards required. They contended that Carrington’s case lacked coherence, particularly regarding causation, and reiterated that many of her claims remained statute-barred. AIG further highlighted that, as a matter of procedural rigor and fairness, Carrington should face the strike-out sanction for failing to substantively comply with the court’s unless orders.

The Court’s Decision

The court recognised that, barring the exception relating to the claim for inspection duties, the amended particulars newly served by Carrington presented a substantially compliant case. The court determined that there was a failure to provide a detailed, quantifiable link between breaches of duty concerning inspection and the resultant financial impact, necessitating a partial strike-out of those components.

While acknowledging that Carrington’s pleadings suffered from historical deficiencies, the court applied the three-stage test from Denton v TH White Ltd. It found that while the breaches were serious and without good reason, striking out the entire claim would be disproportionate compared to rectifying specific non-compliant aspects. The court decided that the breaches related to the inspection duties should be struck out, but Carrington’s detailed claims related to review duties were sufficiently coherent to proceed to trial.

On costs, the court noted Carrington’s previous penalties in costs for earlier amendments and confirmed those liabilities. However, noting the complexity of the professional negligence issues and the documented nature of evidence supporting her core claim (post September 2012 breaches), the court granted relief from the broader strike-out sanction. Consequently, Carrington was ordered to serve a final set of amended particulars to correct minor identified errors and eliminate the non-compliant inspection-related claim within fourteen days.

Interim Statute Bills Upheld | Court Rejects CBA Challenge And Confirms Valid Payments Under Solicitors Act 1974.

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Background

The case at hand involves Mr Vishal Mehta, the Claimant, who retained Howard Kennedy LLP, the Defendant, in June 2022 to assist with litigation concerning an alleged US$1 billion fraud against the Mehta family. The Defendant was instructed in response to a worldwide freezing order (WFO) against the Claimant and his family. The litigation covered various stages, including applications to list and appeal the WFO and orders for the Claimant to surrender his passport and provide asset details. The Defendant provided their services from 22nd June 2022 until the retainer was terminated on 5th May 2023.

During this period, the Defendant issued 24 invoices to the Claimant, totalling £3,124,674.04, including VAT and disbursements. The Defendant contended that 13 invoices had been paid more than 12 months before the commencement of the action, thus exempting them from assessment under the Solicitors Act 1974 (‘SA 1974’). This claim of ‘payment’ was disputed by the Claimant. The Defendant asserted that the remaining invoices were unpaid, except for one on 25th May 2023. As these invoices were delivered over 12 months before the application issue, any assessment under SA 1974 required demonstration of ‘special circumstances’. The unpaid invoices totalled £697,583.05, including VAT and disbursements.

Costs Issues Before the Court

The court was tasked with addressing several crucial costs-related issues:
(i) Whether the invoices delivered by the Defendant were interim statute bills or a series of interim invoices making up a ‘Chamberlain’ bill, which became ‘final’ upon the last invoice dated 25th May 2023.
(ii) Whether the retainer constituted a Contentious Business Agreement (‘CBA’) within the meaning of ss59 to 63 of the SA 1974, and if so, whether it was a ‘fair and reasonable agreement’.
(iii) Whether certain invoices were ‘paid’ within the meaning of SA 1974 and if the Claimant could demonstrate ‘special circumstances’ under s70(3) of the SA 1974 to justify an assessment.

The Parties’ Positions

The Claimant contended that the invoices were part of an entire ‘Chamberlain’ bill finalised with the last invoice dated 25th May 2023. The Claimant referenced Ralph Hume Garry v. Gwillim, Vlamaki v. Sookias & Sookias, and Boodia v. Richard Slade & Co. Solicitors, to support the contention that the burden of proving interim statute bills lies with the receiving party. Further, the contractual provisions and any ambiguities should be resolved against the solicitor.

Conversely, the Defendant argued that the invoices were indeed interim statute bills as per the clear wording in the Retainer Letter and Terms of Business. The details in the bills aligned with the statutory requirements, and the reservation concerning ‘value’ and ‘importance’ elements was irrelevant as it was not applicable in this case.

Regarding whether the retainer was a CBA, the Claimant argued that the retainer met the definition under s.59 of the SA 1974 due to its specific terms related to contentious business and hourly rates, thus invoking the statutory protections available under ss59-63. The Defendant contended that the agreement was not a CBA, asserting that the intention was for the retainer to fall under the separate statutory regime under ss.69-71. This was substantiated by the terms within the retainer that encapsulated the assessment rights under these provisions.

Concerning payment, the Claimant argued that none of the bills were ‘paid’ within the meaning of the SA 1974. The Defendant, however, provided detailed evidence showing payments made from various sources, including companies related to the Claimant and other solicitors, all authorised under the WFO.

The Court’s Decision

The court determined that the invoices delivered were interim statute bills, given the clear terms outlined in the Retainer Letter and the Terms of Business, which specified that each bill was a final bill for the work carried out within the stated period. These invoices included detailed breakdowns and met the statutory definition of interim statute bills.

On the issue of whether the retainer constituted a CBA, the court concluded that the 1974 Act allows for two separate and mutually exclusive regimes. The nature of the retainer, including the specific terms referencing the delivery of statute bills and rights under ss.69-71, indicated that the agreement did not invoke the protections under ss.59-63. Consequently, the court was not required to determine whether the agreement was ‘fair and reasonable’.

Regarding payments, the court found that the receipts identified by the Defendant were legitimate payments within the meaning of s.70(4) of the 1974 Act. These payments were authorised under the WFO and made with the knowledge and consent of the Claimant. Therefore, the court ruled that it could not order an assessment of any paid invoices delivered before 23rd May 2023, nor could it order an assessment of unpaid invoices, as no ‘special circumstances’ were demonstrated.

In summary, the Claimant was found not entitled to:

(i) Assessment of the invoices paid before 23rd May 2024.
(ii) Assessment of the unpaid invoices, as no special circumstances existed.

However, the Claimant was entitled to an assessment of the invoice delivered on 25th May 2023, as specified in a previous order dated 30 July 2024.

No Deviation From ‘Costs Follow The Event’ Following s68(1) Application Where Solicitor Failed To Respond To Multiple Requests For Final Statute Bill

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Background

On 15 November 2018, the claimant, Mr Jonathan Franklin, sustained personal injuries at work and subsequently instructed the defendant, Your Lawyers Limited, to act on his behalf. The claim was successfully settled on 14 December 2020. However, the defendant did not provide a final invoice regarding the costs incurred in bringing the claim. Consequently, the claimant sought legal advice from Mr James Green of JG Solicitors to review the sums charged by the defendant.

On 14 August 2024, Mr Green requested a Final Statute Bill from the defendant, providing an authority document with an electronic signature. The defendant, represented by senior manager Mr Matthew Plemper, requested a handwritten signature. This revised authority was signed and sent by the claimant on 10 September 2024. Despite this, there was no response from the defendant, prompting Mr Green to send a follow-up letter on 15 October 2024. This letter indicated that if the bill was not delivered by 22 October 2024, a Part 8 application pursuant to s68(1) of the Solicitors Act 1974 would be made.

With no response received, the claimant initiated the Part 8 application on 30 October 2024. The Final Statute Bill was eventually delivered by the defendant on 10 December 2024.

The case was initially listed for a directions hearing on 6 January 2025, which was subsequently relisted to 4 February 2025 and then to 20 March 2025, where counsel took over two hours for their submissions, necessitating a reserved judgment.

Costs Issues Before the Court

The court under CPR 44.2 was required to exercise its discretion regarding the award of costs. According to the general rule, “costs follow the event,” implying that the unsuccessful party pays the successful party’s costs. However, the court could make a different order based on the conduct of the parties. The claimant argued for costs to follow the event, whilst the defendant contended for a different order due to purported conduct issues by the claimant.

The Parties’ Positions

Mr Mason, representing the defendant, argued that the claimant’s conduct, prior to and post-commencement of proceedings, warranted a deviation from the general rule. He divided his submissions into three categories:

Pre-Action Conduct:
Mr Mason contended the claimant failed to comply with the Practice Direction – Pre-Action Conduct and Protocols, suggesting the claimant did not indicate that litigation would ensue if requests were ignored.

Commencement of Proceedings:
The defendant claimed that proceedings were initiated as a first resort, contrasting with the solicitation for a “wet ink” signature taking more than a week after signature to be dispatched.

Pursuit of Costs:
Mr Mason suggested that the claimant aimed to pursue costs through litigation rather than genuinely seeking a final statute bill.

Mr Simpson, for the claimant, countered by highlighting that the delays and lack of responses from the defendant justified the commencement of proceedings. He argued the claimant’s attempts to communicate efficiently, and the rational deadlines imposed were in line with typical expectations.

The Court’s Decision

Acting Senior Costs Judge Rowley ruled that the claimant’s conduct was reasonable and did not warrant any deviation from the standard rule that costs follow the event. Judge Rowley pointed out significant points:

Pre-Action Protocol Compliance:
The judge noted that the claimant’s polite and structured correspondence, including the seven-day warning, was sufficient and justified given the defendant’s lack of response. The absence of substantive replies from the defendant did not negate the potential for litigation.

Response Timeliness:
Based on prior evidence from the defendant’s similar case history, it was reasonable to expect that a final statute bill should have been produced within a short timeframe, not the 77 days it eventually took.

Post-Commencement Conduct:
The judge observed that the defendant’s failure to provide clarification during the proceedings, coupled with an uncommunicative approach, did not justify a conduct-based cost order against the claimant.

Given these findings, Acting Senior Costs Judge Rowley concluded that the claimant’s conduct, both before and after the commencement of proceedings, was reasonable and did not exhibit any behaviour warranting a costs penalty. Consequently, he awarded the costs to the claimant, assessing them on the standard basis.

Security For Costs Application Rejected Where Defence And Counterclaim Are Struck Out And No Detailed Cost Breakdown Provided

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Background

The case at hand involved HNW Lending Limited (“HNW”) and Ms. Nicole Stacey Ann Lawrence (“Ms. Lawrence”), who were involved in a legal dispute regarding a loan agreement and a first charge registered against a property. HNW initiated the claim seeking possession of the property known as Former Social Club, Horton Lane, West Park Road, Epsom, KT19 8PH (the “Property”) and repayment of an outstanding loan amount of £3,535,965.82.

On 10 November 2021, HNW commenced proceedings in Kingston County Court. A possession order was initially granted on 3 May 2022, but it was set aside on 13 July 2023 due to non-service of proceedings on Ms. Lawrence. Consequently, the matter was transferred to the Chancery Division of the High Court. Subsequently, the parties filed various applications including HNW’s application to amend the Particulars of Claim and strike out the Defence and Counterclaim, while Ms. Lawrence sought to strike out the claim, other related reliefs, and security for costs.

Throughout the proceedings, Ms. Lawrence raised various defences, including allegations of duress and undue influence, contesting the validity of the Loan Agreement, and refuting HNW’s entitlement to possession of the Property.

Costs Issues Before the Court

The critical costs issue before the court was Ms. Lawrence’s application for security for costs. Ms. Lawrence sought security for her legal costs amounting to £300,000, and additionally, a separate security of £500,000 for Setfords Solicitors’ costs. The application for security for costs was grounded in the assertion that there was reason to believe that HNW would be unable to meet the costs liabilities if ordered to do so.

The Parties’ Positions

Ms. Lawrence, in her application dated 28 August 2024, contended that security for costs was necessary as there was legitimate concern regarding HNW’s ability to satisfy any potential costs orders. She posited that without such security, she and the third party (Setfords Solicitors) would face substantial financial risk.

HNW, through its submissions, disagreed with Ms. Lawrence’s assertions. The firm contended that the application for security for costs should be rejected, particularly emphasising that with the anticipated striking out of Ms. Lawrence’s Defence and Counterclaim, no basis existed for granting such an order. HNW also highlighted that Ms. Lawrence’s estimate of her own costs was unsubstantiated and lacked detailed breakdowns, thus rendering it unpersuasive.

The Court’s Decision

Judge Andrew Lenon KC thoroughly considered the applications and submissions made by both parties. The court ultimately ruled against Ms. Lawrence’s application for security for costs, reasoning that since her Defence and Counterclaim were being struck out, it would be inappropriate to order security. The judge highlighted that Ms. Lawrence’s estimate of £300,000 for her costs lacked a detailed breakdown and was insufficiently substantiated, and the justification for the security in respect to Setfords’ costs was inadequately explained.

Moreover, the overall observations underscored that further disclosure, which Ms. Lawrence also sought, was deemed unnecessary since it would not materially alter the conclusions reached regarding the binding nature of the Loan Agreement and the enforcement rights under the charge.

 

“Endeavour’ To Notify” ≠ Duty To Halt | Court Upholds Solicitors’ Fees Above Initial Estimate

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Background

The case concerned an appeal brought by Mr Emmanouil Spanakis against an order of Costs Judge Whalan dated 29 August 2023, following a solicitor-client assessment under section 70(2) of the Solicitors Act 1974. Mr Spanakis had instructed Schillings International LLP in relation to a defamation and breach of confidence matter. The parties entered into a retainer agreement on 9 February 2022, which included an estimate for the first phase of work (“Phase One”) of up to £10,000 plus VAT.

An invoice for £15,000 plus VAT was rendered by Schillings on 6 April 2022, covering work carried out between 29 November 2021 and 31 March 2022. Mr Spanakis disputed the invoice on the grounds that it exceeded the initial estimate, that the work was substandard, and that no adequate warning had been given before costs escalated. The matter proceeded to a detailed assessment before the Costs Judge, who allowed the bill at £19,141.80 (including VAT). Mr Spanakis appealed.

Issues on Appeal

The key issues on appeal concerned whether the costs should have been limited to the initial estimate, and more broadly, how solicitor-client cost estimates should be treated when costs exceed them. The appeal required analysis of:

  • Whether Schillings had breached its contractual obligation to inform the client if costs would exceed the estimate;
  • Whether reliance on the estimate was a necessary condition to limiting the recoverable costs;
  • Whether Mr Spanakis had in fact relied on the estimate when instructing the firm;
  • Whether the court should have exercised discretion to limit recovery due to the excessiveness of the charges or the timing of notification.

Appellant’s Arguments

Mr Spanakis advanced five grounds of appeal. Central to his case was that the initial estimate created a legitimate expectation or implied cap, and that the respondent failed to comply with its obligation to notify him if the estimate was likely to be exceeded. He submitted that the court below had:

  1. Failed to consider his position as a consumer and apply the Consumer Rights Act 2015.
  2. Misinterpreted clause 8.3 of the retainer, which he argued imposed a firm duty to provide notice before costs could be increased.
  3. Wrongly concluded that an email of 28 March 2022 constituted sufficient notice.
  4. Erred in law by treating reliance as a requirement for challenging costs above the estimate.
  5. Exercised discretion improperly by failing to account for relevant facts.

Respondent’s Arguments

Schillings contended that the initial estimate was expressly non-binding and subject to assumptions. Clause 8.3 only required the firm to “endeavour” to provide notice. The 28 March 2022 email, sent when just over half the estimate had been used, was said to amount to fair warning that costs would be exceeded.

Schillings further submitted that the estimate could not reasonably have been viewed as a cap, and that the client continued to instruct the firm even after that update, demonstrating both acquiescence and an absence of reliance. The fees claimed were reasonable in light of the additional work, urgency, and complexity that arose during the instruction.

Judgment

Mrs Justice Tipples dismissed the appeal in its entirety. She found that the retainer did not impose a strict duty to provide advance notification before exceeding the estimate. The obligation in clause 8.3 was limited to an obligation to “endeavour” to provide notice. While earlier notification might have been better practice, a failure to notify sooner did not render subsequent costs unrecoverable.

The judge held that reliance on the estimate was necessary to support an argument that the fees should be limited. Mr Spanakis had not shown that he would have acted differently had he been given a more accurate forecast earlier. Rather, after receiving the 28 March 2022 email, he had urged the firm to continue with urgency. This undermined any suggestion of reliance.

At paragraph 94 of the judgment, the court expressly found that Spanakis was aware of the growing costs and continued to instruct the firm. There was no evidence of any detrimental reliance on the original estimate. The judge concluded that the work done and charges claimed were reasonable in all the circumstances, including the scope of work ultimately performed and the evolving instructions given by the appellant.

Analysis and Commentary

This judgment provides a significant clarification of how estimates in solicitor-client relationships are treated in detailed assessment proceedings. The High Court reaffirmed that:

  • An estimate is not a cap unless expressly stated to be such. The use of caveats or terms such as “we will endeavour to inform you” do not give rise to absolute obligations or hard ceilings on costs.
  • A client’s ability to resist paying costs in excess of an estimate depends not only on the size of the overrun but on the reasonableness of the solicitor’s actions and the presence (or absence) of reliance.
  • Reliance must be demonstrated with evidence of a change in position or lost opportunity. Mere expectation that costs would remain within the estimate is insufficient.

The decision is particularly valuable for legal practitioners in the way it distinguishes between best practice and enforceable obligation. It recognises that while good client care requires timely and accurate cost updates, the absence of such updates does not automatically disentitle solicitors to recover reasonable fees.

From a costs law perspective, this case reaffirms the importance of clear, well-drafted engagement letters. The inclusion of explicit language confirming that estimates are not binding and may be revised offers protection against challenges where final costs significantly exceed early forecasts. Conversely, it places an evidential burden on clients seeking to rely on estimates as a basis to resist payment.

The involvement of a specialist costs judge at first instance and the appellate endorsement by the High Court makes this a strong authority on the principles governing solicitor-client assessments. It is likely to be cited in future disputes over fees where the scope of a solicitor’s duty to warn of cost increases is in question.

Conclusion

The High Court’s dismissal of Mr Spanakis’s appeal confirmed that the cost estimate given by Schillings was not a binding limit and that the firm had not breached its contractual obligations. The ruling affirmed that reliance is a crucial component in any argument seeking to restrict recovery of fees beyond an initial estimate. This judgment provides clear, authoritative guidance for costs practitioners and solicitors alike, reinforcing the position that a properly drafted retainer and demonstrable reasonableness in billing will withstand scrutiny, even where costs exceed early projections.

Part 36 Additional Amount Is “All Or Nothing” | Maximum £75,000 Awarded After Rejected Offers

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The High Court’s decision in Barry & Anor v Barry [2025] EWHC 819 (KB) confirms that the CPR 36.17(4)(d) additional amount operates as an “all or nothing” entitlement that must be awarded unless the defendant discharges the burden of establishing injustice.

Background

Underlying Dispute: The case arises from a dispute between elderly parents and their son over a series of loans totalling over £650,000. The factual dispute regarding whether the funds were loans or gifts is not the focus here; the judgment concentrates on how costs should be allocated once the court determined that a binding loan agreement existed.

Costs Context: Key costs issues addressed include:

  • The request to vary the pre-approved costs budget in light of late developments.
  • An allegation of “oppressive behaviour” by the defendant during litigation.
  • The impact of the rejected Part 36 settlement offers on the costs award.
  • The method and quantum of the payment on account of costs.

Budget Variation Applications

Late Amendments and Promptness: The defendant’s late amendment to his defence — introducing a new argument regarding the lack of intention to create legal relations — led to significant additional work in trial preparation. The claimants sought a revision of their costs budget to account for these unanticipated developments. The judge emphasised that requests for budget variation must be made promptly [17, 20]. Applications made long after the completion of disclosure were rejected due to a lack of promptness [17].

Judicial Reasoning: The court accepted that the defendant’s last-minute changes were “significant developments” justifying an upward revision for trial-related work [23, 25–26]. However, it reduced the amounts claimed where it found that an excessive proportion of senior lawyer time had been billed [24, 26].

Evaluation of the Oppressive Behaviour Claim

Claim Overview: The claimants contended that the defendant’s litigation conduct was oppressive — designed to drive up legal costs. The court, however, found that although the defence was presented aggressively, the necessary threshold of intentional causation had not been met [18–19].

Court’s Findings: The judge stated that he “never once sensed that he was trying to run up costs needlessly or deliberately to oppress or coerce his parents” [19]. The decision clarifies that aggressive litigation does not equate to oppressive behaviour unless there is clear evidence of a deliberate intent to cause disproportionate expense. The critical words in PD 3D paragraph 13 are “in seeking to cause”, which the court interpreted as requiring targeted intentionality rather than mere “but for” causation [18].

Part 36 Costs Consequences

Settlement Offer Rejections: Prior to trial, the parents made formal Part 36 offers which the defendant rejected. The offers were made on 17 September 2021 — pre-issue, two years before trial, and shortly after the defendant had rejected mediation [34(2), (4)]. Since the final judgment was more favourable than the claimants’ offers, the court applied the Part 36 regime [32].

The Court’s Analytical Framework: The judge set out a nine-point framework for approaching CPR 36.17 entitlements [33]:

    1. The CPR 36.17(4) cost entitlements apply if the claimant obtains a judgment at least as advantageous as the proposals in the Part 36 offer.
    2. The court must order the four CPR 36.17(4) entitlements unless it is unjust to do so.
    3. The burden shifts to the defendant to establish that it is unjust to order any of the four entitlements.
    4. Entitlement (d) — the “additional amount” — is an “all or nothing” entitlement (JLE v Warrington & Halton Hospitals NHS Trust [2019] EWHC 1582 (QB)).
    5. Therefore, the court must order the tiered “prescribed amount” unless the defendant establishes that it is unjust.
    6. In determining whether it is unjust, the court should have regard to the fact that the additional amount is not compensatory (OOO Abbott v Design Display Ltd [2014] EWHC 3234 (IPEC)); is a key ingredient of the Part 36 code to provide additional incentive to accept reasonable offers (Thai Airways v KI Holdings [2015] EWHC 1476 (Comm)); and is intended to penalise the unreasonable refusal to accept an adequate offer (Cashman v Mid Essex Hospital Services NHS Trust [2015] EWHC 1312 (QB)).
    7. In assessing the sum to which the prescribed percentage applies, the court should consider the gross award it would have made but for the Part 36 provisions, including basic interest, but not any additional interest ordered under Part 36 (Mohammed v The Home Office [2018] EWHC 3051 (QB)).
    8. In considering whether ordering the additional amount is unjust, the court must have regard to “all the circumstances” (CPR 36.17(5)).
    9. The court should also have regard to the five matters set out at CPR 36.17(5)(a)–(e).

Award Components: The judgment awarded:

      • Indemnity basis costs: From 15 October 2021 (the expiry of the relevant period) [41(2)].
      • Enhanced interest on damages and costs: Set at 8% above the base rate [40–41]. The judge rejected the maximum 10% rate as disproportionate, noting that the parties were private individuals rather than institutions [38].
      • An additional sum: The maximum of £75,000 was awarded under CPR 36.17(4)(d) [36, 41(4)].

Judicial Commentary: The judge stated: “The rule mandates the additional amount unless displaced by the weight of circumstances that establish the award is unjust. It is not unjust. This is a paradigm case where the additional amount should be awarded” [35]. The court emphasised that the purpose of the additional amount is to incentivise offerees to accept adequate offers and, if necessary, to penalise unreasonable refusals [35].

Payment on Account of Costs

Interim Payments: The judge ordered a substantial payment on account, reflecting:

      • 55% of incurred costs [48],
      • 90% of the budgeted costs (as per July 2022 budget) [53], and
      • 80% of the newly allowed variation costs [53–54].

Rationale: For incurred costs, the court noted that assessing the correct proportion is “always a matter of risk management” [47]. The higher percentage for incurred costs (55% rather than the typical 50%) reflected the indemnity basis of assessment, under which “any” doubt about reasonableness is resolved in favour of the receiving party [47–48].

For varied budget costs, the court applied a lower percentage (80% rather than 90%) because these costs “did not receive the same degree of scrutiny that would occur at a CCMC” [54].

Conclusion

The judgment in Barry & Anor v Barry [2025] EWHC 819 (KB) provides a detailed account of how costs are determined when unexpected developments occur during litigation. The court’s approach is methodical: applying existing rules strictly while requiring prompt action for budget revisions, setting a high bar for oppressive conduct, and confirming that Part 36 consequences operate on an “all or nothing” basis subject to the injustice discretion.

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account

CPR 36.17 And The Just Rewards Of A Good Part 36 Offer

CPR 3.15A | Costs Budget Revisions | Significant Developments And The Need To Act Promptly

Significant Developments And The New Precedent T

CPR 44.2(8) | Payments On Account In Costs Budgeted Cases

Costs Thrown Away, Indemnity Costs And Payments On Account