Costs Against Successful Party Archives

Defendant’s Mediation Refusals And Late Expert Change Of Position Insufficient To Displace The Usual Costs Order

Costs Against Successful Party, Costs Budgeting & CMC, Indemnity Costs, New Costs Blog

The Technology and Construction Court’s decision in MJS Projects (March) Limited v RPS Consulting Services Limited [2026] EWHC 884 (TCC) addresses whether a successful defendant’s conduct in refusing mediation and its expert’s late change of evidence justified departing from the usual costs rule.

Background

This costs judgment arose from the dismissal of a professional negligence claim brought by MJS Projects (March) Limited against RPS Consulting Services Limited in the Technology and Construction Court in Leeds. The underlying dispute concerned the design and construction of a container park near Felixstowe Port, with the Claimant alleging that the Defendant’s design fell below the standard of a reasonably competent firm of civil and structural engineers. The court ultimately found in favour of the Defendant, concluding that the cause of the damage was workmanship rather than design.

The pre-action history was protracted. The Defendant’s letter of response, dated 22 May 2019, set out in considerable detail why it considered its design was not negligent and identified eleven workmanship defects, as well as the use of incorrect dowel sizes. The Claimant’s response, dated 5 November 2019, did not engage with those workmanship allegations and instead requested sight of the Defendant’s calculations. Those calculations were provided by letter dated 22 December 2020. No substantive reply was received for nineteen months. When the Claimant wrote again in July 2022, it confirmed that an expert structural engineer had been instructed and that the expert supported the Claimant’s position on design negligence. Proceedings were issued on 14 October 2022. Particulars of Claim were served on or around 10 February 2023, a Defence on or around 14 April 2023, and a Reply on 19 May 2023.

The expert evidence timetable was, as the court described it, “concertina-ed” into a short period before trial. The experts’ joint statement was produced approximately three months before trial, with individual expert reports following thereafter. Supplementary reports were filed in response to points raised in the primary reports, with some material served as late as one week before the trial commenced in February 2024. The claim was dismissed following trial, and the costs and consequential orders hearing took place on 14 May 2025, with judgment handed down on 15 April 2026.

Costs Issues Before the Court

Three distinct costs issues required determination. The first was whether the usual costs order, namely that the unsuccessful Claimant pay the Defendant’s costs, should be departed from on account of the Defendant’s conduct in relation to alternative dispute resolution. The Claimant argued that the Defendant had unreasonably refused to engage in mediation on multiple occasions, both before and after proceedings were issued, and that this conduct justified a departure from the default position under CPR 44.2. The Claimant’s position was that the appropriate order was no order as to costs.

The second issue was whether the Defendant’s expert having changed his position on the mass concrete taper and having produced additional calculations approximately one week before trial constituted conduct that should further influence the costs order in the Claimant’s favour.

The third issue was the Defendant’s cross-application for indemnity costs in respect of the expert evidence phase of the proceedings. The Defendant contended that the conduct of the Claimant and its legal team in relation to the instruction, oversight, and management of the Claimant’s expert was sufficiently outside the norm to justify an order for costs on the indemnity basis for that phase. In the alternative, both parties agreed that a payment on account of costs should be made, with the only dispute being the appropriate percentage reduction to apply to the approved costs budget.

The Parties’ Positions

The Claimant’s position on ADR

The Claimant traced a series of proposals for mediation made from as early as 14 July 2022, when a without prejudice meeting, mediation, or meeting of experts was suggested. That proposal was declined by the Defendant on 30 September 2022 on the basis that mediation was not appropriate until the Claimant had provided its expert report. Further proposals were made on 5 June 2023 and 21 September 2023, the latter suggesting two named mediators and a mediation in late October or November 2023. The Defendant declined that proposal by letter dated 28 September 2023, citing the technical nature of the issues and the fact that liability was denied in full, and suggesting that any mediation should follow the experts’ joint statements due in November 2023.

The Claimant characterised the Defendant’s successive objections as a shifting of the goalposts: first, no mediation until the expert report was provided; then, no mediation until after expert discussions; then, no mediation without the experts present at the mediation itself. The Claimant noted that its expert was based in Singapore, making expert attendance at a mediation impractical. It submitted that, applying the Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 factors, this was not a case unsuitable for mediation. Professional negligence disputes of this nature were routinely resolved at mediation, the parties’ budgets had each included approximately £25,000 for mediation costs, and the value of the claim at nearly £400,000 justified that expenditure. The Claimant also submitted that the merits were not entirely one-sided, given that the Defendant’s expert had changed his position on the mass concrete taper and that the outcome might have been different but for the late additional calculations.

The Claimant’s position on the expert’s late change of evidence

The Claimant submitted that the Defendant’s expert had stated in his written evidence that the mass concrete taper was part of the design and that the failure to install it was a workmanship defect causing the cracking. At trial, he accepted that the mass concrete taper was not part of the design at the relevant joints. The Claimant argued that it had been entitled to approach trial on the basis that the Defendant’s expert would give evidence consistent with his written report and the joint statement. The Claimant asserted that the expert changed his mind as a result of very late additional calculations produced one week before trial, and that this late change of position had a decisive impact on the outcome. On that basis, it was submitted that it would be unjust for the Defendant to recover all of its costs.

The Claimant’s position on indemnity costs

The Claimant resisted the indemnity costs application on the basis that the threshold was high and had not been met. It submitted that the correct Bolam question had in fact been put to the expert in his letter of instruction and was set out on the face of his report. The fact that the expert appeared under cross-examination not to have applied the test correctly did not amount to conduct unreasonable to a high degree. The Claimant also relied on the compressed expert evidence timetable, noting that reports were served late and that supplementary reports followed in quick succession. It was submitted that the expert’s decision to rerun the FE analysis immediately before trial, without informing anyone, could not be attributed to the Claimant or its lawyers, as everyone was astonished when the expert disclosed this during his evidence. The Claimant argued that the tactical decision to focus on design negligence rather than workmanship, whilst ultimately unsuccessful, was a legitimate forensic choice and did not take the conduct of the litigation outside the norm.

The Defendant’s position on ADR

The Defendant accepted the broad outline of the correspondence but submitted that the full chronology had to be considered. It emphasised that workmanship issues had been raised as the cause of the damage for four years before proceedings were issued, and that the Claimant had never substantively engaged with those allegations. The Defendant had provided detailed calculations when requested, had engaged fully in the pre-action protocol process, and had made Calderbank offers and Part 36 offers in the run-up to trial. It submitted that it was not refusing to engage in ADR but was reasonably requiring some understanding of the Claimant’s expert evidence before committing to a mediation process. It noted that the Claimant had refused to provide its expert report even on a without prejudice basis, and that the Claimant’s own stance immediately before trial, asserting that its Part 36 offer “was not made for negotiation purposes” and that it had “a strong case”, demonstrated that mediation would not have had realistic prospects of success. The Defendant also pointed to the Claimant’s imposition of onerous conditions on any mediation, including that the Defendant would have no say in the identity of the mediator appointed, and argued that the Claimant’s refusal to engage with workmanship allegations throughout the pre-action period made meaningful mediation impossible without expert evidence being available.

The Defendant’s position on the expert’s late change of evidence

The Defendant submitted that the mass concrete taper issue had limited materiality. The Particulars of Claim did not mention a mass concrete taper and did not assert that the failure to specify one was a negligent defect in the design. It was never part of the Claimant’s case that a mass concrete taper was required. The issue was only first mentioned in the experts’ joint statement dated 15 December 2023, and the detail of the Defendant expert’s evidence on this aspect came in his report served on 26 January 2024, just over one week before trial. By this time, the majority of costs were already incurred. The Defendant’s expert had explained that a further check was required after consideration of some of the points raised by the Claimant’s expert, and the court accepted that explanation. The additional calculations did not cause the Claimant to abandon its case and did not result in additional costs being incurred. The Defendant also submitted that it was wrong to assert that the expert simply changed his evidence on the number of dowels engaged by the design when the court accepted his explanation that a further check was required.

The Defendant’s position on indemnity costs

The Defendant asserted that the conduct of the Claimant and its legal team in relation to the instruction, oversight, and management of the Claimant’s expert was sufficiently outside the norm to justify an order for costs on the indemnity basis for the expert phase. The Defendant criticised the fact that the Claimant’s expert did not directly answer the question of whether the Defendant’s design was one that a reasonable body of engineers could have produced. Proceedings were issued, the experts’ joint statement produced, and expert reports exchanged without that question being answered. The Defendant asserted that the Claimant did not properly interrogate the application of the Bolam test, the Defendant’s causation arguments, the significance of the date by which the damage had become manifest, nor provide any evidence about what the correct design would be if the Defendant’s design was negligent. The Defendant also criticised the Claimant’s expert’s decision to use FE analysis to assess the Defendant’s design, his use of an out-of-date edition of a technical publication without disclosing that fact, his changes of position without explanation, and his decision to rerun the FE analysis over the weekend before trial without informing anyone. All of these factors, the Defendant submitted, showed the inadequacy of the Claimant’s expert’s compliance with CPR 35 and his expert duty, and justified a costs sanction.

The Court’s Decision

Costs to follow the event

Her Honour Judge Kelly ordered that the Claimant pay the Defendant’s costs, to be the subject of detailed assessment if not agreed. The judge accepted that the Defendant had declined multiple mediation proposals but held that this could not be assessed in isolation. The full chronology had to be considered, including the Claimant’s failure to engage with workmanship allegations raised in 2019, the 19-month delay in responding to the Defendant’s calculations, and the refusal to provide expert evidence even on a without prejudice basis.

Applying the Halsey factors, the judge found that it was not unreasonable for the Defendant to have refused mediation before having some understanding of the Claimant’s expert evidence. The Defendant had raised workmanship issues in response to the letter of claim, and the Claimant had asked for calculations to justify the Defendant’s design but did not deal with the alleged workmanship issues. The Defendant’s calculations were provided, but the Claimant then did not respond for 19 months. When the Claimant wrote again, it stated it had expert support for its case but once more did not engage with the workmanship issues. The Defendant asked for a copy of the expert report on a without prejudice basis and again raised the lack of response to the issues about workmanship and causation. The Claimant did not provide the expert report and did not engage with workmanship issues in any meaningful way.

The judge accepted that the Defendant did not agree to the continued suggestions of mediation without having some understanding of the expert evidence, but held that this could not be described as unreasonable. Other forms of ADR were proposed by the Defendant throughout, and offers were being made. The nature of the dispute would not prevent a successful mediation, but having actively engaged, provided calculations and justification as to why the Defendant asserted it was not negligent, it was not unreasonable to require a meaningful response to the points made before mediation. Mediation may have cost up to £50,000, which was not an insignificant sum, especially when the Claimant was not providing information which was reasonably requested.

Once the expert evidence was available, the Claimant’s offer to consider mediation was only weeks before the start of the trial and was offered only on potentially disadvantageous terms to the Defendant. The judge held that failure to agree to earlier mediation, nor to the last suggestion of mediation on the terms demanded, could not reasonably be held against the Defendant. The Defendant’s reasoned rejection of one form of ADR, namely mediation, was not unreasonable. The legal issues were clear and largely agreed between the parties. The case would always depend upon the court’s assessment of the expert evidence. The Claimant’s refusal to disclose its expert evidence (even on a without prejudice basis) and its apparent failure to instruct its expert to consider all of the workmanship issues raised by the Defence would inevitably have had a significant impact on the likely success of any mediation.

Even had mediation taken place, the judge did not accept that it would have had reasonable prospects of success. The Claimant had not engaged with the Defendant’s allegations of poor workmanship nor provided its expert evidence. The Defendant’s reasonable wish to understand the case it was meeting was not just going to disappear. Offers were being made both ways in the run up to trial, but the parties remained a vast distance apart.

The expert’s late change of evidence

The judge did not accept the Claimant’s assertions that a “late change” of evidence by the Defendant’s expert supported a decision that no order as to costs was the appropriate costs order. The judge found that the Defendant’s expert was in error in asserting that a mass concrete taper was part of the Defendant’s design. However, as the need for a mass concrete taper was never part of the Claimant’s case that the Defendant’s design was negligent, this did not have a material bearing on the outcome of the litigation. The Claimant’s expert did not assert that a mass concrete taper was needed to make the design work. The first mention of the need for a mass concrete taper was about two months before trial when the experts produced their joint statement. The need for a mass concrete taper was only if adequate compaction could not be achieved under the relevant joint. The detail of the Defendant’s expert opinion on the need for a mass concrete taper came in his report served about one month before trial.

In both the joint statement and the report, the Defendant’s expert made it clear that he knew that the mass concrete taper was shown on the design drawing for a different joint. However, he was of the opinion that the Claimant’s workmen should have inferred that a mass concrete taper was also required under the relevant joint, even though it was not shown on the design drawings, because of the compaction issue. The Claimant’s expert opined that the necessary compaction could be achieved and that was the finding the judge made. The Defendant’s expert also produced some additional calculations shortly before trial. However, as was stated in the judgment, that was done to enable him to consider the evidence of the Claimant’s expert and the criticisms of the design and the conclusions drawn from them. The judge held this was classically an example of the sort of final “sense check testing” the court would expect from an expert, particularly when the expert evidence has been finalised very late in the day before trial. The judge accepted the Defendant’s submission that this was “simply part of the usual cut and thrust of a professional negligence trial”. In those circumstances, it was difficult to see how any additional costs were caused by the late calculations in any event.

Indemnity costs refused

The Defendant’s application for indemnity costs in respect of the expert phase was refused. The judge reminded herself that the question was whether there was something in the conduct of the action or the circumstances of the case which took the case out of the norm in a way which justified an order for indemnity costs. The judge was just persuaded that the answer to that question was no, and costs should be assessed on the standard basis throughout.

The judge had made findings in the substantive judgment that the Claimant’s expert did not properly understand his duties to the court pursuant to CPR 35, that he did not appear to have considered adequately the applicable legal test, and he did not deal with the workmanship issues raised by the Defendant adequately. He used an outdated edition of a technical publication to justify some conclusions without providing any reference to the updated edition. He carried out additional tests and reran the FE analysis immediately before trial without telling anybody he had done this nor providing anyone with the results. The Claimant lost the case because the judge had no confidence in its expert.

The judge agreed with the Defendant’s submission that this was not simply a case of the court preferring one expert’s evidence over another. The reality was that the criticism of this expert went beyond that. However, the judge accepted that the Claimant’s solicitors had put the correct test in the expert’s instructions, and the expert had set out the correct test in his written report and answered questions in a way which would indicate that he was considering the correct test when giving his opinion. When cross-examined, it became apparent that he was not correctly applying the test and had not given consideration to various matters to which the judge found he should have given consideration. The judge accepted that a claimant is responsible for their expert for the purposes of costs. However, she did not accept that there was sufficient material before trial in the expert’s reports to indicate to the Claimant’s legal team that their expert was going to give evidence in the way that he did. Further questions could perhaps have been asked of the expert during the proceedings. That may have been an error or a tactical decision. However, the judge did not accept that the asserted failure to spot the various problems with their expert’s evidence was sufficient to pass the high hurdle before indemnity costs are justified.

The Claimant made various tactical decisions in how to pursue its case against the Defendant for negligent design. Some tactical decisions would always be needed when a company associated with the Claimant has carried out the construction work for the design and that work is criticised by the Defendant as being the cause of the damage. With hindsight, it may have been better expressly to instruct the Claimant’s expert to deal with the various workmanship defects asserted by the Defendant. However, as the Claimant took the view that it only needed to prove that the defective design was “a” cause of the damage, it did not need to deal with all of those workmanship issues. The tactic was unsuccessful, but the judge accepted that deciding on the tactic did not take the Claimant’s lawyers’ conduct “out of the norm”.

It may have been that the Claimant’s legal team restricted its frame of reference in respect of the expert evidence required because of the analysis undertaken by John Frith. However, the tactic of concentrating primarily on identifying a negligent design and then establishing the negligent design was a cause of the damage, whilst unsuccessful, could not be said to take the conduct of the case so far out of the norm. The further criticisms of the Claimant’s lawyers, such as refusing to answer Part 18 further information questions, the judge would not find to justify indemnity costs. If the Defendant felt that the refusal to answer the questions was unjustified, it could have made an appropriate application.

The Claimant’s counsel asked for clemency for the Claimant’s expert as his reputation had been tarnished by the judgment, and he would have to live with the consequences of that. The judge did not accept that clemency should form any part of the court’s consideration. The question was whether there was something in the conduct of the action or the circumstances of the case which took the case out of the norm in a way which justified an order for indemnity costs.

The judge did not accept that the combination of the Claimant’s tactics and the Claimant’s expert approaching the case in a more technical rather than practical manner, then effectively going off on a frolic of his own immediately before trial and not giving the evidence expected during his oral evidence, created circumstances to justify an order for indemnity costs. It was of relevance that the expert evidence timetable was “concertina-ed” into a short time frame before trial. The joint expert report became available about three months before trial and the individual expert reports then followed. Supplementary expert reports were filed because of additional factors raised in the various reports which required a reply. The judge did not find in the circumstances of this case that the conduct of the Claimant’s lawyers was such that the action was conducted, or the circumstances were such, that it was out of the norm in a way which justified an order for indemnity costs.

Payment on account

The parties were agreed that a payment on account of costs should be made. Applying the principles in MacInnes v Gross [2017] 4 WLR 49, the Defendant sought £312,700.75, being the approved budget in the sum of £344,082, less 10% bringing that sum down to £309,673.80 and then adding interest at 4% of £12,386.96, payable within 21 days. The Claimant sought a reduction of 20% to take into account the fact that there was not a mediation which had been part of the budgeted costs. The Defendant objected to further reduction as the budgeted figure was for all forms of ADR. There was no justification to consider individual phases to reduce further. Any adjustment could be dealt with at detailed assessment.

The judge held that the starting point for assessment of a reasonable sum was a 10% reduction. She did not accept that it was reasonable or proportionate to increase the percentage reduction further in this case. Mediation did not take place, but other forms of ADR did. Interest would run on the costs payable. The judge accepted that 4% interest on pre-judgment costs was a reasonable percentage. She awarded interim costs in the sum of £309,673.80 plus interest at 4%.

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And The Winner Is? Defendant Who Beat Both Strike Out and Summary Judgment Recovers 75% of Her Costs After 80% Costs Order Against Her Reversed on Appeal

Costs Against Successful Party, New Costs Blog

The High Court’s decision in Cook v Skeggs [2026] EWHC 1132 (KB) addresses the proper approach to costs where a defendant successfully resists both strike out and summary judgment applications but makes a late amendment application at the hearing.

Background

The underlying proceedings concern a possession claim brought by the Respondent, Leonard Cook, following his 2022 purchase of a property from the Appellant, Charlotte Skeggs. The property had been sold to Mr Cook for £250,000, having been purchased by Ms Skeggs in 2017 for £560,000. Mr Cook maintained that the transaction was voluntarily entered into. Ms Skeggs, who described herself as a vulnerable woman, alleged fraud and conspiracy, which Mr Cook denied.

The costs appeal before Mr Justice Sweeting arose from an order made by HHJ Parker on 12 March 2025, requiring Ms Skeggs to pay 80% of Mr Cook’s assessed costs of his strike out and summary judgment application. That application had been issued on 1 May 2024 and was listed for hearing in May 2024, but was not determined until 2 January 2025. At the January hearing, the application was dismissed following amendments proposed on behalf of Ms Skeggs at or shortly before the hearing.

The procedural history leading to the costs determination was somewhat involved. Mr Cook had issued his application for strike out and summary judgment shortly before the first costs and case management conference, which had been listed for 9 April 2024. The application notice did not identify the basis upon which either form of relief was sought and was unsupported by any evidence in support of the summary judgment limb. By an order dated 9 May 2024, HHJ Brown recorded that the CCMC had to be adjourned because the application did not comply with CPR 24.5(1) and had been issued too late to afford Ms Skeggs the 14 days’ notice required by CPR 24.4(5). Mr Cook was directed to amend the application.

The amended application notice remained expressed in generic terms, again failing to articulate the grounds relied upon for strike out or to provide any evidential basis for summary judgment, asserting only that both applications should succeed “as a matter of fact and law”. There then followed a period of procedural uncertainty arising from issues concerning capacity, which were addressed by HHJ Parker at a hearing on 25 October 2024. At that hearing, the court accepted that Ms Skeggs had insufficient material to understand the case advanced in support of Mr Cook’s application, and Mr Cook was granted permission to serve further evidence.

On 8 November 2024, Mr Cook served a witness statement in support of the application. That statement was substantially directed to disputing the factual merits of Ms Skeggs’ case and was therefore concerned principally, although not exclusively, with the summary judgment limb. Ms Skeggs served a re-amended Defence and Part 20 Claim on 6 December 2024, though the accompanying application notice was filed late on 9 December 2024. Mr Cook’s solicitors wrote on 16 December 2024 by way of without prejudice save as to costs correspondence, proposing that if Ms Skeggs confirmed by 4pm on 18 December 2024 that she would serve a further re-amended defence limited to the conspiracy allegation and properly particularised by 4pm on 31 December 2024, Mr Cook would consider consenting to the re-amended pleading and propose that the 2 January 2025 hearing be used for costs and case management directions. That offer also required Ms Skeggs to pay Mr Cook’s costs. No agreement was reached.

On 20 December 2024, Mr Cook served two further witness statements dealing with the factual merits of the case. Skeleton arguments were exchanged on 31 December 2024, at which point it became apparent that Ms Skeggs was abandoning her December application and advancing new proposed amendments relating to the conspiracy allegation, presented in the form of an annex to counsel’s skeleton argument rather than as a formal draft.

At the 2 January 2025 hearing, HHJ Parker dismissed both the strike out and summary judgment applications. In relation to summary judgment, the Judge found that the application would have failed irrespective of the amendments, concluding that Mr Cook had not come close to showing that Ms Skeggs’ factual case was merely fanciful. In relation to the strike out, the Judge permitted re-amendment of the defence, with the exception of references to Mr and Mrs Thorpe at proposed paragraphs 21A and 21B, which were not supported by sufficient pleaded facts. The issue of costs was adjourned to a further hearing on 12 March 2025.

At the 12 March 2025 hearing, HHJ Parker considered five categories of costs. In relation to the strike out and summary judgment application, the Judge ordered Ms Skeggs to pay 80% of Mr Cook’s assessed costs. The Judge also awarded Mr Cook his costs of the 12 March 2025 hearing, summarily assessed at £5,980.44, on the basis that the hearing had been necessitated by the late amendment application made on 2 January 2025. Mr Cook’s costs schedule for the half-day application totalled approximately £123,000, a figure which the Judge described as “fairly stunning”. Given the size of that figure, the Judge declined to embark on summary assessment and directed detailed assessment instead.

Ms Skeggs appealed the costs order with the permission of Sir Stephen Stewart. The appeal was heard by Mr Justice Sweeting on 31 March 2026. In advance of that hearing, Mr Anthony Ashley Wilson, the solicitor with conduct of the proceedings on behalf of Ms Skeggs, provided a witness statement dated 27 March 2026 in support of an application to amend the appeal notice and grounds of appeal. That application arose from a “Costs Breakdown” document attached to Mr Cook’s skeleton argument for the appeal, served after 4pm on 25 March 2026, which Mr Wilson stated he had not previously seen and which gave a total (after deducting draftsman’s fees and applying the 20% deduction in HHJ Parker’s order) of £29,254.56 for the costs of the application — substantially lower than the £123,464.60 figure that had been placed before HHJ Parker. Mr Justice Sweeting permitted Ms Skeggs to rely on Mr Wilson’s evidence and to amend her grounds of appeal accordingly.

Costs Issues Before the Court

The central costs issue on appeal was whether HHJ Parker’s order requiring Ms Skeggs to pay 80% of Mr Cook’s assessed costs of the strike out and summary judgment application was wrong within the meaning of CPR 52.21(3)(a). The appeal raised a number of discrete but related questions.

The first and most fundamental question was whether the Judge had properly identified the successful party on the application. Ms Skeggs had resisted both the strike out and the summary judgment application. The summary judgment application had been dismissed, and the Judge had found that it would have failed even absent the late amendments. The strike out application had also been dismissed, with the Judge permitting re-amendment of the defence in substantially the terms proposed by Ms Skeggs’ counsel. The question was therefore whether, in those circumstances, the Judge had been correct to order Ms Skeggs to pay a substantial proportion of Mr Cook’s costs rather than the other way around.

The second question was whether the Judge had properly distinguished between the two discrete elements of Mr Cook’s application — strike out and summary judgment — when determining the appropriate costs order. Ms Skeggs submitted that the summary judgment application had failed entirely and by a considerable margin, and that the Judge had not given proper effect to that finding. She argued that the Judge had treated the late amendment as having “completely changed the picture” in a way that was inconsistent with his own finding that summary judgment would have failed irrespective of the amendments.

The third question was whether the Judge should have made an issues-based costs order rather than applying a single percentage reduction. Ms Skeggs’ primary position was that she should recover her costs of the summary judgment issue and that Mr Cook should recover his costs of the strike out issue, or alternatively that there should be no order for costs. Mr Cook’s position was that the two applications were closely intertwined and that the Judge had properly exercised his discretion in applying a 20% reduction.

A further issue arose from the amendment application brought by Ms Skeggs in advance of the appeal hearing. That application raised questions about the accuracy of the costs information placed before HHJ Parker at the 12 March 2025 hearing, and whether the presentation of the £123,000 figure as the costs of the application had misled the Judge as to the scale of costs attributable to the strike out and summary judgment elements. Ms Skeggs sought to rely on CPR 44.11, which concerns unreasonable or improper conduct in relation to costs, submitting that Mr Cook’s failure to provide an accurate costs figure until shortly before the appeal hearing may fall within the circumstances covered by that provision.

The Legal Framework

The test on appeal is set out in CPR 52.21(3): the appeal court will allow an appeal where the decision of the lower court was wrong, or unjust because of a serious procedural or other irregularity in the proceedings in the lower court.

In Johnsey Estates v Secretary of State for the Environment, Transport and the Regions [2001] EWCA Civ 535, the Court of Appeal allowed an appeal against the original costs order. Chadwick LJ summarised the applicable principles: costs cannot be recovered except under an order of the court; the question whether to make any order as to costs is a matter entrusted to the discretion of the trial judge; the starting point for the exercise of discretion is that costs should follow the event; the judge may make different orders for costs in relation to discrete issues and should consider doing so where a party has been successful on one issue but unsuccessful on another; the judge may deprive a party of costs on an issue on which he has been successful if satisfied that the party has acted unreasonably in relation to that issue; and an appellate court should not interfere with the judge’s exercise of discretion merely because it takes the view that it would have exercised that discretion differently.

The last of those principles requires an appellate court to exercise a degree of self-restraint. It is not for an appellate court even to consider whether it would have exercised the discretion differently unless it has first reached the conclusion that the judge’s exercise of his discretion is flawed — that is to say, that he has erred in principle, taken into account matters which should have been left out of account, left out of account matters which should have been taken into account, or reached a conclusion which is so plainly wrong that it can be described as perverse.

Whilst the appeal in that case was heard just before the introduction of the Civil Procedure Rules, the general principles set out hold good and it remains the position that appeals against costs involve a high threshold. In particular, an appellate court must not dissect or reinterpret extempore judgments with undue textual scrutiny; the Judge is presumed to have known and applied the correct principles in exercising their discretion unless the contrary is demonstrated.

The Appeal Court’s Analysis

Mr Justice Sweeting concluded that HHJ Parker’s costs order was wrong within the meaning of CPR 52.21(3)(a). The Judge identified several fundamental flaws in the reasoning below.

First, the starting position was that Ms Skeggs was the successful party, having resisted both the strike out on pleading points and summary judgment on the merits of the defence. HHJ Parker had acknowledged that the summary judgment application was “distinctly different” from the strikeout application and would have failed even prior to amendment. The Judge had found that Mr Cook had not come close to showing that Ms Skeggs’ factual case was merely fanciful. Ms Skeggs had therefore demonstrated that she had a sufficient prospect of success, which alone militated against depriving her of her costs.

Second, Mr Justice Sweeting did not consider that it was possible in the circumstances of this case to regard the summary judgment application as merely ancillary to the strikeout or as representing just another way of articulating the same shortcomings in Ms Skeggs’ case. The summary judgment application was advanced on the basis of an assertion that there was no merit in the defence, supported by evidence dealing with the underlying factual matrix, and an invitation to the court to conclude that a conspiracy could not be made out, not simply that the particular species of conspiracy had not been properly identified or was insufficiently particularised. There was plainly a risk, if not a probability, that a substantial amount of work had been carried out in relation to summary judgment rather than the more narrowly defined pleading issue.

Third, HHJ Parker’s conclusion that “the picture had completely changed at the hearing” did not stand up to analysis and was difficult to reconcile with his findings in relation to summary judgment. The Judge had gone no further than saying that there “might” have been a different result on the strike out absent the amendments. It was always apparent that any deficiencies in the pleading could be cured by amendment. Mr Justice Sweeting found it difficult to see how the predictable legal result could have been that Mr Cook could embark upon the hearing on the basis that he would receive his costs irrespective of the outcome.

Fourth, there would have to be a significant reason, grounded in Ms Skeggs’ conduct, for reversing the usual order as to the incidence of costs on interlocutory applications. The relevant conduct in this case was the application for amendment made at the hearing which, while necessary, should have been made earlier in a proper form in accordance with the court’s directions. However, the appropriate way to reflect that conduct was to deprive Ms Skeggs of part of her costs, not to reverse the costs order entirely.

In Matrix Receivables v Must Holdings Limited [2024] EWHC 2167 (Ch), Freedman J observed that the usual order on a summary judgment or strike out application is that the unsuccessful party should pay the costs, in part because of the regime within CPR 44.2(2) and also because of a symmetry: if the applicant is successful, the action comes to an end and the applicant generally recovers the costs of the action; if the strategy does not pay off and the applicant loses, the applicant stands to bear the costs. It is a disincentive to interlocutory applications to know that this starting point exists and operates in practice.

Mr Justice Sweeting noted the practical difficulties in making a costs order on an issues basis, observing that in many cases the judge can and should reflect on the relative success of the parties on different issues by making a proportionate costs order (see Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2009] 1 Costs LR 155). Those difficulties are multiplied where the question is whether the winning party on the issue ought to be deprived of costs. The Judge could not see a proper basis on which to make different orders by reference to issues in the circumstances of this case.

Applying the principles in Johnsey Estates, Mr Justice Sweeting concluded that the correct approach was not to seek to recast HHJ Parker’s order but to exercise the discretion afresh. Ms Skeggs was entitled to her costs as the successful party. The appropriate reflection of her late amendment, which related only to the strike out limb, was a proportionate reduction rather than a reversal of the costs order.

The Costs Breakdown Issue

Mr Justice Sweeting also addressed the issue arising from the revised costs breakdown served with Mr Cook’s skeleton argument for the appeal. That document gave a total of £29,254.56 for the costs of the application (after deducting draftsman’s fees and applying the 20% deduction in HHJ Parker’s order), substantially lower than the £123,464.60 figure referred to at the hearing below. The status of the revised schedule was opaque, and it appeared to have been advanced for a tactical purpose shortly before the appeal hearing.

The Judge noted that there was only one verified costs schedule in relation to the summary judgment and strike out application, and that Mr Cook would have to explain a departure from that costs schedule if he asserted in future that the information given to HHJ Parker was inaccurate. However, Mr Justice Sweeting concluded that it was not appropriate or possible to make any findings in relation to conduct on the material before him, particularly in relation to the CPR 44.11 misconduct issue raised by Ms Skeggs.

The Judge expressed sympathy for HHJ Parker given the circumstances in which he had to decide issues of costs. He did not receive Ms Skeggs’ skeleton prior to the hearing and did not appear, initially, to have had the N260. The matter overran so that he had to see whether the court could sit beyond 4:30pm. He candidly accepted that he did not entirely recollect the basis of his earlier order and had to deal with costs at a hearing separate from the hearing to which they related. It appeared he may not have received the assistance that he should have done in relation to the nature of the costs which were being claimed.

Conclusion

Mr Justice Sweeting allowed the appeal and substituted an order under CPR 44.2(2) that Mr Cook pay Ms Skeggs’ costs of the contested strikeout and summary judgment application on the standard basis, subject to a reduction of 25%. The reduction reflected Ms Skeggs’ late amendment application, which related only to the strike out application and should have been made earlier in accordance with the court’s directions.

The Judge also ordered Mr Cook to pay Ms Skeggs’ costs of the appeal, to be summarily assessed. He gave the parties additional time to make written submissions in relation to those costs, noting that Ms Skeggs’ cost schedules appeared to show that all work was done at Grade A rates, which would require an explanation.

The decision reinforces the principle that the starting point for costs orders on interlocutory applications is that the unsuccessful party should pay the costs of the successful party. Where a defendant successfully resists both strike out and summary judgment applications, there must be a significant reason grounded in the defendant’s conduct to justify reversing that usual order. Late amendment may justify a proportionate reduction in the successful party’s costs recovery, but does not ordinarily warrant a complete reversal of costs liability, particularly where the first instance judge has found that one limb of the application would have failed irrespective of the amendment.

Issues Based And Proportional Costs Orders: When Should They Be Made?

The Costs Of Forcing Amendments | Strike-Out Applications And The Bellhouse Principle

Successful Defendant’s Costs In Judicial Review Claim Reduced by 15% for Partial Failure On Discreet Issue

CPR 44.2 And The Courts’ Discretion As To Costs

Partial Success, Conduct, Offers And Alleged Exaggeration

Two Way Costs Orders And CPR 44.2(8) | Payments On Account

Costs After Mixed Success In Multi-Claim IP Litigation | Applying The Three-Question Test

Commercial Litigation, Costs Against Successful Party, New Costs Blog, Payment on Account

The High Court’s decision in Getty Images (US), Inc & Ors v Stability AI Ltd [2025] EWHC 3419 (Ch) provides authoritative guidance on applying issue-based costs principles where a party loses overall but achieves commercial success on a standalone claim.

Background

The proceedings involved claims for trade mark infringement, secondary copyright infringement, and database rights infringement brought by six Getty Images entities against Stability AI Ltd. The claimants alleged that the defendant’s Stable Diffusion AI image-generation models infringed their intellectual property rights. A trial on liability took place. Shortly before closing submissions, the claimants abandoned three substantial elements of their claim: the Training and Development Claim, the Outputs Claim, and the Database Rights Infringement Claim [§3]. These abandoned claims were subsequently dismissed by order [§3].

The remaining live issues for determination were the Trade Mark Infringement Claim, a related Passing Off Claim, and a Secondary Infringement of Copyright Claim [§4]. In its judgment of 4 November 2025 ([2025] EWHC 2863 (Ch)), the court found that the claimants succeeded in part on the Trade Mark Infringement Claim in respect of Stable Diffusion Models v1.x and v2.x, leading to the defendant offering undertakings and submitting to an inquiry as to damages [§7, §42]. The court found it unnecessary to determine the Passing Off Claim [§4]. The defendant succeeded on the key issue of statutory construction in the Secondary Infringement of Copyright Claim [§4].

Following the substantive judgment, the parties were unable to agree on costs, leading to a separate hearing to determine that issue [§6]. Each side filed evidence, including analysis attempting to quantify the proportion of total costs attributable to the Trade Mark Infringement Claim [§12].

Costs Issues Before the Court

The central dispute was identifying the overall winner of the litigation for the purposes of costs, given the mixed outcome. This determination would govern the entitlement to ‘general costs’ – those not attributable to a specific issue [§27]. The specific costs issues for determination were:

1. 1. Whether the claimants or the defendant was the overall winner of the litigation.
  2. If the defendant was the overall winner, whether the Trade Mark Infringement Claim constituted a ‘suitably circumscribed issue’ on which it lost, warranting a departure from the general rule.
  3. If so, what costs order should be made in relation to that issue, considering the claimants’ partial success and failures within the claim.
  4. The appropriate percentage of total costs attributable to the Trade Mark Infringement Claim.
  5. Disputes regarding the interim payment on account of costs, specifically the rate to apply to out-of-budget interim application costs and the treatment of costs incurred by the defendant in excess of its approved budget [§63–74].

The claimants accepted that, on any analysis, they would be liable to pay the defendant’s costs for the claims on which they lost (the three abandoned claims and the Secondary Infringement claim), resulting in a net payment from claimants to defendant [§9].

The Parties’ Positions

The Claimants’ Position: The claimants contended they were the overall winner [§7]. They argued they had obtained substantive, valuable relief in the form of a finding of trade mark infringement, resulting in undertakings and an inquiry as to damages, which they could not have achieved without a trial [§7]. They submitted that the potential for a money transfer was the surest indicator of success, relying on AL Barnes Ltd v Time Talk (UK) Ltd [2003] EWCA Civ 402 [§19]. In the alternative, they argued that if there was no overall winner, general costs should be apportioned [§8]. Their fallback position was that even if the defendant was the overall winner, the Trade Mark Infringement Claim was a discrete issue on which the claimants had won, entitling them to their costs of that claim [§8]. They acknowledged that the issues within the trade mark claim were overlapping, making a more granular issue-based deduction impracticable [§48].

The Defendant’s Position: The defendant contended it was the clear overall winner [§11]. It had successfully defended four out of five main claims, with the claimants abandoning three significant claims very late [§33–34]. It argued that the claimants’ success on the Trade Mark Infringement Claim was extremely limited and historic, and that they had lost on many issues within that claim [§11, §50]. The defendant submitted that as the overall winner, it should recover all of its costs, including general and overlapping ‘marginal’ costs, relying on Monsanto v Cargill [2008] FSR 16 [§27–28]. It opposed any order requiring it to pay the claimants’ costs of the trade mark claim [§11]. On interim payments, it argued for a 70% rate on out-of-budget interim application costs and sought an interim payment for budget overspends, asserting there was good reason for the departure [§70–73].

The Court’s Decision

The court applied the well-established three-question approach from Hospira v Novartis [2013] EWHC 886 (Pat): (1) identify the overall winner; (2) determine if the winner lost on a suitably circumscribed issue; (3) decide if it is appropriate to make a costs order on that issue [§17].

On the first question, the court found the defendant to be the overall winner [§32]. Applying the test from Roache v News Group Newspapers Ltd [1998] EMLR 161 – “who, as a matter of substance and reality, has won?” – the court held that the defendant had substantially denied the claimants the success they sought [§18, §35]. The claimants had abandoned three substantial claims and lost on the Secondary Infringement claim [§33–34]. The relief obtained on the Trade Mark Infringement Claim, while valuable, did not outweigh the defendant’s success in substantially denying the claimants the wider injunctive relief and additional damages they had originally sought across multiple claims [§35–37]. The court rejected the suggestion that this was a “score draw” of the type identified in Vringo Infrastructure, Inc. v ZTE (UK) Ltd [2014] EWHC 4475 (Pat) [§40].

On the second question, the court held that the Trade Mark Infringement Claim was a suitably circumscribed issue [§42, §45]. It involved standalone causes of action, and the claimants had achieved a measure of commercial success, including undertakings and an inquiry [§42].

On the third question, the court considered it appropriate not merely to deprive the defendant of its costs of that issue, but to order it to pay a proportion of the claimants’ costs [§46]. The court reasoned that if viewed as a standalone claim, the claimants would have been the overall winner of the Trade Mark Infringement Claim, albeit with failures on several issues [§43]. To reflect justice, the defendant, as overall winner, would recover all general costs pursuant to Monsanto v Cargill [§41, §47], but the claimants should recover a portion of their costs specifically attributable to the trade mark claim [§46–47].

The court then had to quantify this. It rejected the claimants’ argument that they should recover 100% of the trade mark claim costs, as this would ignore their significant failures within that claim [§49]. These failures included losing on models SD XL, XL Turbo, and v1.6; infringement of the GETTY IMAGES mark for model v1.x; infringement of the iSTOCK mark for model v2.x; their main economic case; and their entire case under section 10(3) of the Trade Marks Act 1994 [§50]. In the absence of detailed evidence on apportionment, the court, using its knowledge of the trial, applied a 25% reduction to the claimants’ recoverable costs of the trade mark claim to reflect these failures [§54].

On the percentage of total costs attributable to the Trade Mark Infringement Claim, the court noted the parties’ widely differing estimates. The claimants originally calculated 26.3%, revised to 20.3% after stripping out general costs [§57–58]. The defendant calculated approximately 15% using a weighted mean [§58]. Doing the best it could, the court took a figure of 17.5% [§59]. Therefore, the defendant’s recoverable costs were reduced by 17.5% (the costs of that issue it could not recover) and by a further approximately 13% (representing 75% of the 17.5% attributable to the claimants’ costs) [§61]. This resulted in a total reduction of 30.6% from the defendant’s overall costs [§61].

The court stood back to assess whether the result reflected the overall justice of the case and concluded that it did [§62].

Interim Payment on Account

Regarding the interim payment, the court ordered [§63–74]:

- - Costs within the budget: 90% of budgeted costs and 70% of incurred costs [§63].
  - Out-of-budget interim application costs: an interim payment of 70%, rejecting the claimants’ submission that 50% was appropriate [§64–65].
  - Budget overspend: The court accepted the defendant was likely to establish ‘good reason’ for some overspend, particularly in pre-trial phases, due to the unprecedented case management, frequent pleading amendments, and evolving nature of the litigation [§71–73]. Adopting a cautious approach similar to that in Montres Breguet SA v Samsung Electronics Ltd [2022] EWHC 1895 (Ch), it awarded an interim payment of 20% of the claimed overspend of £394,985.31 [§74].

Some You Win Some You Lose | Partial Success And The Courts’ Approach To Costs

Issues Based And Proportional Costs Orders: When Should They Be Made?

Partial Success, Conduct, Offers And Alleged Exaggeration

Identifying The Winner

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

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

Dos Santos Principles Considered | Trial Outcome Remains Relevant To Reserved Costs

Costs Against Successful Party, Indemnity Costs, New Costs Blog

The High Court’s decision in Gable Insurance AG v Dewsall & Ors [2025] EWHC 3399 (Ch) addresses the costs consequences of interim applications where a claimant succeeds against some defendants but fails against others, clarifying that Dos Santos v Unitel does not create an automatic rule that successful applicants recover their costs.

Background

The claimant, Gable Insurance AG (in liquidation) (“GIAG”), brought proceedings against four defendants: Mr William Dewsall (First Defendant), Mr Michael Hirschfield (Second Defendant), Mrs Judith Dewsall (Third Defendant), and Horatio Risk Consulting LLP (Fourth Defendant). Following a two-week trial in July 2025, judgment was handed down on 5 September 2025. A consequentials hearing on 27-28 November 2025 addressed numerous issues, with many rulings embodied in a sealed order dated 5 December 2025 [§2]. However, the costs of the claim against Mrs Dewsall and several reserved costs issues from interim applications required further determination [§3].

The reserved costs related to: (1) a worldwide freezing order against Mr Dewsall granted in July 2023 and continued in August 2023 [§3.1]; (2) a search order against Mr Dewsall, Mrs Dewsall, and Horatio in July 2024, with subsequent return date hearings and privilege issues in September 2024 and February 2025 [§3.2]; and (3) a second worldwide freezing order against Mr Dewsall, Mrs Dewsall, and Horatio granted in November 2024, continued in an amended form in January 2025, and replaced by a domestic freezing order in March 2025 [§3.3]. Mrs Dewsall had appealed unsuccessfully to the Court of Appeal against the domestic freezing order and was ordered to pay the costs of that appeal [§3.3].

Costs Issues Before the Court

The court was required to determine the appropriate costs orders for multiple discrete stages of the litigation. The specific issues were: (1) the costs of GIAG’s claim against Mrs Dewsall; (2) the reserved costs of the first worldwide freezing order application; (3) the costs of the search order application and its execution against each relevant defendant; (4) the costs of a contempt/bench warrant application related to the search order; and (5) the costs of the second worldwide freezing order application [§3-4].

A key legal context was the applicability of the Court of Appeal’s guidance in Dos Santos v Unitel [2024] EWCA Civ 1109 on costs for contested interim applications [§13-19]. The Chancellor observed that a party who contests an application “tooth and nail on every point” should generally be ordered to pay costs [§13]. However, the court noted Mr Justice Henshaw’s observation that Dos Santos does not lay down a “firm rule” that applicants always get their costs: where the respondent merely puts in economical evidence, the position may differ [§17].

The Parties’ Positions

GIAG’s Position: GIAG accepted Mrs Dewsall was the successful party on the main claim but argued for a 25-40% reduction in her costs due to alleged litigation misconduct, including failure to engage in ADR, filing an inadequate defence, and deficient disclosure [§21-23]. GIAG sought its costs of all interim applications. For the first freezing order and search order against Mr Dewsall and Horatio, it sought indemnity costs [§37, §43]. For the search order against Mrs Dewsall, it sought its costs on an indemnity basis, arguing the trial outcome was irrelevant following Dos Santos [§47, §49]. For the contempt application, it sought costs against Mr Dewsall [§70]. For the second freezing order, it sought costs against all defendants with a proposed 25% reduction to reflect failure to trace overseas accounts, primarily on an indemnity basis [§87-88].

Mrs Dewsall’s Position: Mrs Dewsall sought her costs of the main claim on the indemnity basis, with no reduction [§22]. She opposed paying any of GIAG’s costs for the search order or the second freezing order [§48]. Instead, she sought her own costs of those applications, also on an indemnity basis, citing alleged breaches of duty by GIAG in obtaining the orders and reliance on a discredited investigative report [§48, §89, §97]. She argued the principles in Dos Santos did not apply where costs had been reserved and she was ultimately successful at trial [§16].

Other Defendants: Mr Dewsall and Horatio did not appear or make representations on costs [§37, §43-44, §89].

The Court’s Decision

The court applied the discretion under CPR 44.2, with the general rule that the unsuccessful party pays costs [§6]. It considered when conduct might justify indemnity costs, applying the test of whether conduct takes the case “out of the norm” [§7].

1. Costs of GIAG’s Claim Against Mrs Dewsall

Mrs Dewsall was awarded all her costs of the main claim on the standard basis [§36]. The court rejected GIAG’s arguments for a reduction. The ADR complaint failed because the key correspondence focused on Mr Dewsall, and GIAG made no clear separate proposal to resolve the claim against Mrs Dewsall [§25-28]. The defence complaint was rejected as GIAG had itself opposed Mrs Dewsall’s late amendment application on the basis her existing pleading was sufficient [§29]. The disclosure deficiencies were more appropriately factored into the search order costs [§31]. The allegations about assisting Mr Dewsall to circumvent the first freezing order were left for a potential separate claim [§32-33]. An indemnity basis award was refused as complaints about GIAG’s conduct were better considered within the specific interim application costs [§35].

2. First Worldwide Freezing Order (Mr Dewsall)

GIAG was awarded its reserved costs against Mr Dewsall on the indemnity basis [§40-42]. The order was successfully obtained and continued, subject to undertakings [§38]. Indemnity costs were justified because Mr Dewsall’s subsequent failure to disclose assets, uncovered via the search order, took his conduct “out of the norm” [§42].

3. Search Order Costs

The search order costs (excluding the bench warrant application) totalled approximately £4.8 million, comprising: obtaining the order (£410,000), executing the search (£850,000), and subsequent review of materials including privilege analysis (£3.56 million) [§43].

Mr Dewsall: Ordered to pay GIAG’s costs on the indemnity basis [§45]. This was due to clear evidence of destruction and concealment of documents, obstruction of the search, and threats against individuals carrying out the search [§45].

Horatio: Ordered to pay GIAG’s costs on the standard basis [§46]. Its complete non-engagement did not, of itself, justify indemnity costs; the court was not referred to any authority supporting that proposition [§46].

Mrs Dewsall: No order as to costs between GIAG and Mrs Dewsall [§69]. The court held it would be unjust to order her to pay costs for an exercise primarily targeting Mr Dewsall — over 90% of documents recovered belonged to him [§54]. GIAG’s own costs schedules showed search order work being incurred in March 2024, before Mrs Dewsall was even joined as a party [§55]. Had the claim been against her alone, any perceived inadequacy in disclosure would more likely have been addressed by specific disclosure application rather than a search order [§53].

Conversely, GIAG was not ordered to pay Mrs Dewsall’s costs because her initial disclosure was inadequate — over 1,000 previously undisclosed documents were found on her devices [§53, §63]. She also bore some responsibility for the blanket assertion of privilege (made by Mr Dewsall purportedly on behalf of both defendants) that increased costs [§58-59, §65].

4. Contempt Application/Bench Warrant

Mr Dewsall: Ordered to pay 50% of GIAG’s costs on the standard basis [§76]. The 50% reduction reflected the court’s view that seeking a bench warrant was “somewhat precipitate” and a “heavy handed and inappropriate” mechanism for securing compliance with the search order [§74, §76]. The court noted that Mr and Mrs Dewsall had been in court the same day for separate possession proceedings and believed the search team had come to evict them [§77]. Indemnity costs were refused as Mr Dewsall would be “punished twice for the same offence” if indemnity costs were awarded given other indemnity costs orders [§78].

Mrs Dewsall: No order as to costs [§79-80]. The evidence showed Mr Dewsall took the lead in refusing access [§73, §79].

5. Second Worldwide Freezing Order

The application was primarily triggered by a belief that Mr Dewsall had overseas accounts, based on an investigative report [§83-84]. When GIAG attempted to enforce the worldwide freezing order in various jurisdictions, none of the accounts existed [§84]. A BVI court was subsequently highly critical of the report, finding the investigator had no personal information about the accounts but only hearsay evidence [§86].

Mr Dewsall: Ordered to pay 50% of GIAG’s costs on the indemnity basis [§91, §93]. The 50% reduction reflected GIAG’s failure to establish overseas accounts. Indemnity costs were justified by Mr Dewsall’s conduct: failing to disclose assets, failing to account for expenditure in breach of the first freezing order, and attempting to avoid service by denying he was Mr Dewsall [§92-93].

Horatio: Ordered to pay 50% of GIAG’s costs on the standard basis [§95].

Mrs Dewsall: A cross-order was made [§104, §108-109]. She was ordered to pay 50% of GIAG’s costs on the standard basis, applying Dos Santos as she had fought the application and appealed unsuccessfully to the Court of Appeal [§96, §104]. However, GIAG was ordered to pay 50% of Mrs Dewsall’s costs on the indemnity basis [§108-109]. This reflected the court’s finding that it “ought to have been apparent” to GIAG by the return date hearing in February 2025 that the investigative report was unreliable, following questions raised at the January 2025 hearing [§111-112]. GIAG’s failure to recognise this was unreasonable and took its conduct “sufficiently outside the norm” to justify indemnity costs [§112].

The court directed that where costs orders were mutual, they should be set off [§125]. Interest on costs and payments on account were to be agreed or determined subsequently, along with the disposal of proceeds from Weald Hall held in court [§126-129].

This judgment establishes an important qualification to Dos Santos:

If you contest and lose an interim application → expect to pay costs (per Dos Santos)
If costs are reserved (whether by consent or court order) → the trial judge considers overall justice including trial outcome
If you are a successful defendant and the application primarily targeted another party → you may escape a costs order entirely
If you are an applicant relying on evidence later discredited → you risk indemnity costs against you

CPR 44.10 | The Sound of Silence | When A Court Order Is Silent As To Costs

Indemnity Costs And The High Risk Of Pursuing A Weak Case

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Group Litigation: A Determination Of Costs Related To Common Issues

CPR 44.2 And The Courts’ Discretion As To Costs

Dishonest Evidence And Baseless Allegations Justify Indemnity Costs Order

High Court Preserves Indemnity For Unsuccessful But Honest Executor Removal Applicants

Costs Against Successful Party, New Costs Blog, Trustees & Estates

The High Court’s decision in Shufflebotham v Shuff-Wentzel [2025] EWHC 3321 (Ch) confirms that trustees who bring an honest and reasonable application may retain their indemnity to recoup costs from the estate, even when ordered to pay the successful party’s costs personally.

Background

The case concerned an application made by two of the three executrices and trustees of the estate of Alan Shufflebotham (deceased), the claimants, for their replacement and for the removal and replacement of the third executrix and trustee, the defendant. The application was heard on 14 August 2025, resulting in an ex tempore judgment. The claimants were unsuccessful in their bid to remove the defendant from her office. However, they were permitted to resign (which was unopposed), and the court ordered the appointment of a professional executor and trustee to act alongside the defendant and a lay representative from the first claimant’s branch of the family. The claimants had originally proposed Mr Taylor as the professional trustee, but he subsequently withdrew his consent to act and another professional was appointed.

A significant procedural feature was that the defendant had substantially changed her position only nine days before the hearing. Until a fairly late stage — and in any event until her without prejudice save as to costs offer of 5 August 2025 — the defendant had opposed the appointment of Mr Taylor without providing any proper reason and had proposed either that she continue alongside a lay trustee or that a different professional trustee of her own choosing be appointed. The 5 August offer proposed that Mr Taylor replace all parties as sole executor to complete the administration of the estate, with the defendant and Mr Taylor then becoming the trustees of the testamentary trust. Acceptance of that offer would, as the judge later held, have left the first claimant’s branch of the family entirely unrepresented on the trust.

Following the substantive decision, the question of costs was disputed. The court determined that the claimants were entitled to their own costs from the estate under their trustee indemnity and that the defendant, as the overall successful party, was entitled to her costs of the application. However, significant disagreement remained over whether the defendant’s costs should be paid by the claimants personally or directly from the estate, and whether the claimants could recoup any personal liability via their indemnity. The court invited sequential written submissions on these issues, received on 23 September 2025 for the claimants and 9 October 2025 for the defendant.

Costs Issues Before the Court

The court was required to determine two distinct but related costs issues. The first was whether the defendant’s costs should be paid by the claimants personally or directly from the assets of the estate. The second, contingent on the first, was whether the claimants, if ordered to pay the defendant’s costs personally, should be permitted to recoup that outlay from the estate pursuant to their trustee indemnity.

The Parties’ Positions

The claimants, represented by Mr Perrin, argued that the case did not fit neatly into the conventional categories of trust litigation. They submitted it was more akin to a ‘trust dispute’ brought for the benefit of the estate to break a deadlock, rather than hostile litigation. They contended that as the application was necessary and brought reasonably in the execution of their duties, the defendant’s costs should be paid from the estate. In the alternative, if the claimants were ordered to pay personally, they argued they should be entitled to indemnify themselves from the estate, as their conduct was not improper. Distinction was also sought for the second claimant, who was not a beneficiary and was said to have played a neutral role, merely seeking her own removal.

The defendant, represented by Mr Poole, argued the proceedings were a hostile ‘beneficiaries dispute’ where costs should follow the event against the unsuccessful party personally. She submitted the claimants’ primary aim was her removal, which constituted hostile litigation. She further contended that the claimants had acted unreasonably by ignoring pre-action proposals, advancing overblown criticisms, and rejecting her reasonable settlement offer made on 5 August 2025. On this basis, she argued the claimants should not only pay her costs personally but should also be denied the right to recoup those costs from the estate via their indemnity.

The Court’s Decision

The court held that the defendant’s costs should be paid by the claimants personally, but that they were entitled to recoup those costs from the estate under their indemnity. In reaching this conclusion, the judge applied the principles summarised by Asplin LJ in Price v Saundry [2019] EWCA Civ 2261 and the traditional categories from Re Buckton [1907] 2 Ch 406.

On the character of the proceedings, the judge found that while the case did not fall squarely into one category, it was closest to a ‘beneficiaries dispute’. The central purpose of the claimants’ application was the removal of the defendant against her will, which was properly characterised as hostile litigation. Consequently, the correct order was for the unsuccessful claimants to pay the successful defendant’s costs. The judge rejected the argument that the second claimant should be treated differently, noting she had chosen to join the joint application, was represented by the same lawyers, advanced the same evidence, and had not distinguished her position until the costs submissions.

On the indemnity issue, the court found no basis to deprive the claimants of their right to recoup the costs from the estate. The judge held that bringing the application was a reasonable step to address a genuine deadlock in the administration of the estate. The claimants had acted honestly and not for their own personal benefit or for the benefit of one group of beneficiaries over another. While some criticisms of the defendant were exaggerated, trustees — particularly lay trustees — were not to be held to a standard of perfection. The rejection of the defendant’s 5 August offer was not unreasonable, as accepting it would have left one branch of the family unrepresented on the trust, an outcome the court itself later deemed inappropriate. Applying the principle from Lewin on Trusts that doubts should be resolved in favour of trustees, the judge ordered that the claimants’ right of indemnity remained intact.

The final order was that the claimants were jointly and severally liable for the defendant’s costs, but were entitled to call upon their indemnity from the estate in respect of that liability.

Trustees Who Fail To Provide Trust Disclosure To Beneficiary Face Adverse Costs On Discontinuance

Failure To Mediate And Validity Of Part 36 Offers In Probate Claims

CPR 44.2(8) | No Restriction To Ordering A Payment On Account

CPR 44.2 And The Courts’ Discretion As To Costs

Co-Claimants Pursuing Common Case Face Joint And Several Liability For Adverse Costs

No Order As To Costs Where Neither Party Is The “Successful Party” | Matrix v Musst

Costs Against Successful Party, New Costs Blog, Part 36

The High Court’s decision in Matrix Receivables Ltd v Musst Holdings Ltd [2025] EWHC 3204 (Ch) confirms that the “paying party” test is not determinative where a claimant’s overall recovery is a fraction of its claim and its principal claims have failed.

Background

The claim arose from a dispute concerning the introduction of investment customers to a fund manager, Astra. The claimant, Matrix Receivables Limited, was the assignee of a claim originally belonging to Matrix Money Management Limited (MMM). It alleged that MMM had played a significant role in introducing two customers, 2B and Crown, to Astra via the defendant, Musst Holdings Limited. Matrix claimed it was entitled to a share of the management and performance fees subsequently received by Musst from Astra.

The claim was advanced on two alternative bases: in contract and in unjust enrichment. The proceedings were brought in 2020 in the Business and Property Courts under case number BL-2020-001417. A substantive trial took place over seven days [§46]. In the main judgment, [2025] EWHC 2487 (Ch) [§1], the court dismissed the contractual claims in their entirety. On the unjust enrichment claims, the court found that Matrix was entitled to a share of the management fees received by Musst after 4 September 2014, awarding judgment in the sum of £175,380.76 plus interest [§2] (referred to elsewhere in the judgment as approximately US$175,000 [§34]). Matrix had sought 80% of management fees but was awarded 40% in respect of one customer and 20% in respect of another, with further reduction because receipts prior to September 2014 were statute-barred [§39]. The larger claim for a share of the performance fees was dismissed on the basis that the chain of causation between MMM’s introductory services and Musst’s eventual receipt of those fees had been broken. The court found that whatever service was provided in 2012 was “eclipsed” by the years of costs, risk and litigation effort undertaken by Musst against Astra, coupled with the lack of assistance—indeed opposition—on the part of Mr Reeves, the controller of Matrix [§40].

Following the substantive judgment, a consequentials hearing was held on 4 November 2025 to determine issues including interest, permission to appeal, costs, and a stay of execution [§1, §3]. Permission to appeal was refused, the court finding no real prospect of success [§15]. This blog post focuses on the court’s analysis and decision regarding costs.

Costs Issues Before the Court

The primary issue for the court was determining the appropriate costs order following a judgment where the claimant had succeeded on only a small part of its overall claim. The court needed to decide which party was the “successful party” for the purposes of CPR 44.2, and whether to depart from the general rule that the unsuccessful party pays the successful party’s costs. This involved a detailed evaluation of three matters: the relative success and failure on the different heads of claim (contract, management fees, performance fees); the proportionality of the recovery to the costs incurred; and the conduct of the parties—particularly the principal witness for the claimant.

The Parties’ Positions

Matrix’s Position: Matrix argued it was the successful party because it was the party to whom money was ordered to be paid [§16]. It relied on authorities such as AL Barnes v Time Talk [2003] EWCA Civ 402, Day v Day [2006] EWCA Civ 415, and Fox v Foundation Piling Ltd [2011] EWCA Civ 790, which emphasise that in commercial litigation, the “surest indicator of success” is identifying who has to pay money at the end of the case [§16–17]. Matrix also cited Global Energy Horizons v Gray [2021] Costs LR 133 for the proposition that a defendant facing an exorbitant claim should protect its position through a Part 36 offer [§19]. It submitted that the absence of a Calderbank or Part 36 offer from Musst was significant, as such offers are the recognised mechanism for a defendant to protect its position on costs [§25]. Matrix contended that the unsuccessful contract and performance fee claims did not substantially increase costs, as they were based on the same facts as the successful management fee claim [§23].

Musst’s Position: Musst contended that, looking at the substance of the litigation, it was the successful party [§26]. It relied on the test from Medway Primary Care Trust v Marcus [2011] EWCA Civ 750, which asks “who, as a matter of substance and reality, has won?” [§26]. Musst argued that “the juice” of the action was the claim for performance fees, which failed entirely [§34]. The recovery for management fees was less than 5% of the total sums claimed and was dwarfed by the costs of the action [§34–35]. It submitted that maintaining the weak contract claims until trial was unreasonable conduct [§36]. Musst also pointed to the conduct of Mr Reeves (Matrix’s controller), who had actively assisted Astra in litigation against Musst—a position fundamentally at odds with Matrix’s claim for a share of the fees generated by that very litigation [§36].

The Court’s Decision

The court held that the just order was that there should be no order as to costs [§81]. In reaching this decision, Sir Clive Freedman (sitting as a Deputy Judge of the High Court) conducted a detailed evaluation, proceeding through three stages of analysis.

The “Paying Party” Test

The court acknowledged the force of the “paying party” test, describing it as “highly relevant” [§38]. However, it concluded that the test was not “the be all and end all of the analysis” on the unusual facts of this case [§38]. The court expressly declined to treat the first instance decisions of Hamad Aldrees v Rotex [2019] EWHC 526 (TCC) and Rotam v GAT [2018] EWHC 3006 (Comm)—both of which had looked beyond the paying party test—as wrongly decided [§38].

Evaluating Success and Failure

The court found that it was “artificial” to label either party as the overall winner [§76]. While Matrix had secured a money judgment, its success was limited to a small fraction of its claim. The claim for performance fees—described as “the only sensible raison d’être for the claim being commenced or continuing” [§73]—had failed completely, as had the alternative contract claims. The sum recovered was “small relative to the costs of the claim as a whole” [§80(5)]. The court noted that if the claim had been confined to the management fees from the outset, it would likely have been conducted more proportionately, “confined to say 3 days rather than 7 days” and without the involvement of leading counsel [§46].

The court also drew a connection between delay and the costs outcome. The same unexplained delay in obtaining the assignment from MMM and bringing the claim that led to the refusal of pre-action interest [§5–6] also featured in the conduct analysis, reinforcing the conclusion that Matrix could not claim the full fruits of success [§68].

Conduct

The court considered the parties’ conduct to be a relevant factor under CPR 44.2 and 44.4 [§55–57]. It was critical of Matrix for maintaining “at best very weak” contract claims right up to trial [§53]. The claims were “barely maintained” from the opening and formally abandoned at the end of the trial; the court found there was “nothing to it” and Matrix should have notified Musst so that it would not have had to prepare to meet them [§53, §72].

More significantly, the court found the conduct of Mr Reeves justified a “significant adjustment” in the costs order [§69]. His actions in supporting Astra against Musst in parallel litigation—including providing disclosure, a witness statement, and giving evidence at trial for Astra—were “entirely at odds” with Matrix’s interests in the instant case [§60]. The court found that this was not merely a rejection of evidence, which is commonplace, but a “very stark and unusual” situation involving fundamentally contradictory positions [§65]. Mr Reeves’ evidence was found to have “all the hallmarks of someone who has suspended truth for his own changing interests from time to time” and to “appear to turn with the wind” [§61–62]. The court was entitled to deprecate this conduct and take it into account in respect of the costs of the action [§66–67].

Conclusion

The court concluded that neither party was successful [§76]. Even if Matrix were to be regarded as the successful party by virtue of being the receiving party, the numerous factors outlined—including the total failure of the contract claims, the total failure of the performance fees claim which was “the juice of the action”, the partial failure on management fees, the very small amount recovered relative to both the claim and the costs, and the criticised conduct of Mr Reeves—provided ample reason to depart from the general rule [§79–80]. The court ordered that there be no order as to costs [§81].

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In R (on the application of Prestige Social Care Services Ltd) v Secretary of State for the Home Department [2025] EWHC 2860 (Admin), the court dismissed a sponsor licence revocation challenge but reduced the defendant’s costs to reflect its failure on the Annex C1 ground.

Background

The claim for judicial review was brought by Prestige Social Care Services Ltd challenging the Secretary of State’s decision to revoke its sponsor licence under the Workers and Temporary Workers: Guidance for Sponsors. The claim raised three substantive grounds, including whether the revocation based on “non-genuine vacancies” under Annex C1 Ground (z) of the Sponsor Guidance was irrational. The Defendant argued revocation was justified under both Annex C1 Ground (z) and, alternatively, under Annex C2 Grounds (a) and (b) (breach of sponsor duties), citing high staff turnover, a failed visa application, and recruitment of a worker unable to drive for a driving-required role.

Following a one-day hearing on 23rd September 2025, His Honour Judge Tindal (sitting as a Judge of the High Court in the Administrative Court, Birmingham) dismissed the claim. Whilst the court found the Defendant’s reasoning under Annex C1 irrational, it held the decision to revoke was nevertheless lawfully sustainable under Annex C2 Grounds (a) and (b) (breach of sponsor duties) pursuant to section 31(2A) Senior Courts Act 1981. The court then directed written submissions on costs and permission to appeal.

Costs Issues Before the Court

The court was required to determine three costs questions following dismissal of the claim: first, whether the Defendant as successful party was entitled to its costs; second, whether any reduction should apply given the Defendant’s failure on the Annex C1 issue despite succeeding overall; and third, whether the Defendant’s late service of its costs schedule warranted any penalty. The court also needed to fix the quantum and payment terms.

The Parties’ Positions

The Defendant sought its costs as the successful party, submitting a schedule totalling £21,712.70. It relied on the general rule under CPR 44.2(2)(a) that the unsuccessful party pays the successful party’s costs.

The Claimant did not dispute that the Defendant was the successful party but contended a costs reduction was warranted on two bases.

- - First, the Defendant had not succeeded on all issues – specifically, the court found the Annex C1 reasoning irrational. The Claimant relied on CPR 44.2(4)(b) which permits the court to consider whether a party succeeded on part of its case even if not wholly successful.
  - Second, the Claimant pointed to the Defendant’s delay in filing and serving the costs statement, submitting this should be taken into account under CPR PD 44 paragraph 9.6 and Simpson v MGN [2015] EWHC 126 (QB). Notably, the Claimant did not propose a specific percentage reduction.

The Court’s Decision

His Honour Judge Tindal accepted the Defendant was the successful party as the claim had been dismissed, triggering the general rule under CPR 44.2(2)(a). However, applying CPR 44.2(4) and (5), the court considered the Defendant had not succeeded on all issues.

Impact of Late Costs Schedule

On the late costs schedule, the court acknowledged that under CPR PD 44 para 9.6 and Simpson v MGN, late service may be taken into account and costs reduced. However, the court found the Defendant’s delay was “technical and had no impact at all” as judgment had been reserved. Nevertheless, the court stated it would “take it into account” under para 9.6, though this appeared to be absorbed into the overall assessment rather than driving any specific reduction.

The Proportionate Costs Reduction

The court then turned to the more significant issue: whether the Defendant’s partial failure on issues warranted a costs reduction. The court cited Multiplex v Cleveland Bridge [2009] 1 Costs LR 155, where Jackson J (as he then was) held at paragraph 71(viii):

“In assessing a proportionate costs order, the judge should consider what costs are referable to each issue and what costs are common to several issues. It will often be reasonable for the overall winner to recover not only the costs specific to the issues which he has won but also the common costs.”

Applying this principle, the court noted the Defendant’s schedule was modest at £21,712.70 (less than a quarter of the Claimant’s schedule) and, whilst not broken down by issue, “most of the costs expended are likely to have been common costs.” Nevertheless, the court held “there should be some deduction by a proportion to reflect that the Defendant did not succeed on all issues.“

The court observed that neither party had suggested a specific percentage reduction. Taking a “broad-brush” approach, the court reasoned that although the Defendant succeeded overall, it did not prevail on the Annex C1 non-genuine-vacancy issue (Ground (z)), even though it succeeded on alternative grounds under Annex C2 and on the case overall. The court therefore held “the appropriate reduction should be modest” and applied a 15% deduction to reflect this partial failure.

Further “Rounding Down” Adjustment

The court then made an additional observation, noting that “six hours preparing for a one-day hearing is on the high-side for a Defendant.” Following the 15% deduction to reflect partial success, the court rounded the resulting figure down to £18,000 inclusive of VAT as a proportionate final sum, rather than mechanically calculating 85% of £21,712.70 (which would have been £18,455.80).

Payment Terms and Procedural Matters

The court ordered the Claimant to pay £18,000 within three months, reflecting that the Claimant was a small business whilst the Defendant was a Government department. The court allowed the Claimant seven days to apply to vary either the costs order or the payment timetable, failing which the order would stand. The court also extended the time for any appeal application accordingly.

Permission to appeal was refused, as the grounds raised were either fact-specific or not directed at the determinative issues in the case.

Implications for Practice

This decision provides practical guidance on several costs principles in judicial review proceedings:

- - Proportionate costs orders under CPR 44.2 and section 31(2A): Even where a claim is dismissed and the defendant is clearly the successful party – indeed, even where relief is refused under section 31(2A) Senior Courts Act 1981 because the outcome would have been substantially the same without the error – the court will examine whether that party failed on discrete issues. Where such failure is established, a modest percentage reduction may be appropriate to reflect the resources expended on an issue the successful party lost.
  - The common costs principle: Courts recognise that in multi-ground judicial review claims, most costs are “common costs” that would have been incurred regardless of which ground ultimately succeeded. This militates against substantial reductions where the successful party’s overall case prevailed. Here, a 15% reduction was deemed “modest” and appropriate where common costs predominated and the successful party would have won on alternative grounds in any event.
  - Late costs schedules: Technical procedural failures in serving costs schedules will be noted under CPR PD 44 para 9.6 but may have limited practical impact where they caused no delay to the court’s decision-making process. Courts retain discretion to “take into account” such failures without imposing punitive reductions, particularly where judgment has been reserved.
  - Broad-brush discretion: Courts will exercise broad-brush discretion based on their assessment of the relative success on different issues, the nature of the failure, and whether the successful party would have prevailed in any event. The court is not bound to apply precise mathematical formulae but may round to an appropriate figure reflecting overall proportionality.

For practitioners, the case reinforces that winning overall does not guarantee full costs recovery. Where multiple grounds are advanced and one fails – even if that failure does not affect the ultimate outcome under section 31(2A) – defendants should expect modest reductions to reflect the wasted costs on that issue.

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The High Court’s decision in Jon Flowith & Partners v Greaves & Ors [2025] EWHC 2738 (Ch) demonstrates how costs of separately represented defendants may be apportioned by reference to the evolving nature of their interests during strike-out applications.

Background

The judgment of 22 October 2025 addressed costs issues consequential to an earlier judgment dated 15 September 2025. The substantive hearing on 25 July 2025 concerned an application by the third defendant, IM Properties Development Limited (D3), to strike out the claimant’s claims against it. In the September judgment, the court ordered that the claimant’s claims against D3 be struck out unless the claimant applied within 28 days for permission to amend its particulars of claim to remedy identified defects [§3]. D3’s original position was that the particulars disclosed no reasonable grounds for bringing the claim, but it later modified its stance, advocating for a conditional strike-out order after considering the claimant’s skeleton argument [§3].

The first and second defendants (D1 and D2) participated in the application, primarily to protect their separate interests, particularly concerning the construction of clause 3.1(e) of the Promotion Agreement relating to the payment of “Owner’s Agent Fees” [§4-6]. The claimant’s Particulars of Claim had failed to specify whether D1/D2 or D3 were liable to pay these fees [§4], and D3 contended in its Defence that only D1/D2 were liable, whilst D1/D2 took the opposing position that D3 was liable [§5]. Prior to the hearing, D3 made an open offer to adjourn the application pending service of amended particulars by the claimant, on condition that the claimant paid the costs thrown away [§8]. This offer was rejected by the claimant [§8]. D1 and D2 indicated their agreement in principle with a consent order, subject to amendments ensuring their costs were also covered [§9]. At the hearing, D1 and D2 supported D3’s position that a conditional strike-out order should be made [§11].

Costs Issues Before the Court

The court was required to determine the costs liability arising from the strike-out application, specifically the application by D1 and D2 that the claimant should pay their costs of the application [§1]. The claimant contended that there should be no order as to costs [§1]. The key issues for determination were: whether the claimant, as the unsuccessful party on the application, should be liable for the costs of D1 and D2; whether D1 and D2 were entitled to their costs as separately represented parties with distinct interests; and how the costs should be assessed. A subsidiary issue was whether the costs should be subject to a summary assessment or a detailed assessment.

The Parties’ Positions

The first and second defendants (D1 and D2) sought an order that the claimant pay their costs of the application. They argued that their separate representation was justified because they had distinct interests from D3, particularly regarding the construction of clause 3.1(e) of the Promotion Agreement concerning liability for Owner’s Agent Fees. They emphasised that the claimant’s case was developing through its skeleton argument and oral submissions, which engaged their interests directly [§21]. They also highlighted that the hearing could have been avoided had the claimant sought to amend its pleadings earlier.

The claimant (C) submitted that there should be no order for costs. It relied on the general principle that an unsuccessful party should not ordinarily have to pay two sets of costs [§17]. It cited Bolton MDC v Secretary of State for the Environment [1995] 1 WLR 1176 for the proposition that interested parties should only recover their costs if there was a specific issue requiring separate representation that was not covered by another party [§17]. The claimant argued that neither it nor D3 had suggested the court should determine the construction of the Promotion Agreement in a way that bound D1 and D2, and therefore their attendance was unnecessary [§15].

The Court’s Decision

The court held that the claimant, having lost the application [§12], should bear the costs of D1 and D2 incurred from the date of receipt of the claimant’s skeleton argument onwards [§16, §26]. However, costs incurred by D1 and D2 prior to that date were reserved [§15, §26]. The court refused to undertake a summary assessment of the costs, directing that they be subject to detailed assessment if not agreed, because it did not know the proportion of costs incurred during the relevant period [§26].

The court reasoned that D1 and D2 had a separate interest from D3 which required separate representation [§19]. This was evidenced by the competing constructions of clause 3.1(e) of the Promotion Agreement advanced by D1/D2 and D3 concerning liability for Owner’s Agent Fees [§5, §20]. The court rejected the claimant’s submission that D3 had not sought determination of this point, noting that D3 had indeed sought a determination that would bind D1 and D2 [§15].

Furthermore, the claimant’s evolving case, as set out in its skeleton argument and oral submissions, directly implicated D1 and D2. The claimant advanced claims that went beyond its pleaded case, including allegations that D1 and D2 had acted on behalf of D3 rather than just on their own behalf [§21(1)]. It was also confirmed at the hearing that the Owner’s Agent Fees claim was run against D1 and D2 alone (not D3), though the Particulars had not made this clear [§21(2)]. The court found that in circumstances where the claim was in “a state of some development from the original Particulars, and in a manner which engaged D1 and D2’s interests”, it was appropriate and prudent for D1 and D2 to attend the hearing given their different interest to D3 [§23].

The court noted that D1 and D2’s counsel at the hearing added value to the proceedings, including by answering the court’s question about whether D1 and D2 supported an unless order for the entirety of C’s claim against D3, making submissions about any revised draft pleading and D1/D2’s ability to respond to it, and addressing one point arising from C’s reply [§24]. Counsel was careful not to duplicate D3’s submissions [§24].

The court also found that the strike-out hearing, and thus the associated costs, could have been avoided entirely had the claimant sought to amend its pleadings in good time before the hearing [§13, §25].

For the period before receipt of C’s skeleton argument, the court reserved D1/D2’s costs. During this earlier period, D1/D2’s stance was that they wished to ensure the Owner’s Agent Fees point was not dealt with by the court at D3’s request in a way that decided against their construction [§14]. This was a stance “in opposition to D3 to that degree” [§15], which meant it would not be appropriate to order C to pay these costs. The outcome of the final hearing, particularly the view taken on the competing constructions of clause 3.1(e), would be relevant to how these earlier costs should be borne [§15].

Applying the principle from Bolton MDC, the court concluded that the circumstances justified an award of costs to D1 and D2 for the period after the claimant’s skeleton argument was served. The court noted that Bolton established that interested parties might recover costs not only where there was a separate issue, but also where they had “an interest which requires separate representation” [§18, emphasis in judgment]. The court found that D1 and D2, as separate defendants with different interests from D3, clearly satisfied this test [§19-23].

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The High Court’s decision in Daniel Family Homes Limited v Gold [2025] EWHC 2697 (Ch) confirms the formidable obstacle facing parties who seek to challenge percentage-based costs orders on appeal.

Background

The proceedings originated in the County Court at Oxford, where Daniel Family Homes Limited (DFH) brought a claim for possession of 28 Rogers Lane, Stoke Poges, Slough (the Property) and sought damages for trespass. The defendants, Jeffrey Gold and Patricia Gold, resisted the claim and brought a Part 20 Claim. They asserted a beneficial interest in the Property through proprietary estoppel, a resulting or constructive trust, or a Declaration of Trust. They also claimed repayment of loans totalling £629,576.53 plus interest. [§5]

DFH and Mr Daniel, the Part 20 defendant, denied the Golds had any beneficial interest. They contended that an agreement existed for the Golds to pay rent for their occupation, which would be set off against the loan amounts, resulting in no money being owed. They later alleged an Assured Shorthold Tenancy (AST) had been agreed in 2008. They also claimed a set-off for charges related to the storage of Mr Gold’s vehicles on Mr Daniel’s land. [§6]

A five-day trial took place before HHJ Melissa Clarke in November 2024. In her judgment dated 10 December 2024, the Judge found that the Golds had no beneficial interest in the Property and that no Declaration of Trust had been executed. [§9(i)] She found that the Golds had become trespassers after a notice to quit expired on 2 June 2021, and she made a possession order. [§9(vi), §24] However, she did not award damages for trespass from that date. On the financial issues, the Judge found that certain loans had been made by the Golds, including a loan of £121,000 [§9(ii)], but that there was no agreement for them to pay rent (and thus no rent to set off) and no agreement for interest to be paid on the loans, save for two early documented loans. [§9(iii), §9(iv)] She also rejected the claim for a set-off regarding car storage charges, finding no binding agreement due to insufficient evidence of fresh consideration. [§9(v)] Following the hand down of judgment, the Judge heard submissions on costs and ordered that each party pay 50% of the other party’s costs. [§10]

Both parties appealed aspects of the order with the permission of Michael Green J. DFH and Mr Daniel appealed on five grounds, including the costs order. Mr and Mrs Gold cross-appealed on three grounds. The appeals were heard together by Mr Justice Cawson in the High Court. [§2-3]

Costs Issues Before the Court

The costs issue before the High Court was whether HHJ Clarke erred in her exercise of discretion when making the costs order following trial. [§11(v)] The appellants, DFH and Mr Daniel, challenged the order that each party pay 50% of the other’s costs. They argued the Judge incorrectly stated that 50% of the Golds’ costs related to their money claim, failed to have sufficient regard to the Golds’ conduct in the proceedings, and failed to properly reflect the fact that DFH and Mr Daniel had been successful in reducing the amount claimed on the money counterclaim. [§11(v)]

The Parties’ Positions

Mr Thakerar, for DFH and Mr Daniel, submitted that the Judge exercised her discretion incorrectly. He argued that the Judge was wrong to state that 50% of the Golds’ costs had been spent on their money claim, suggesting this was an unsupported estimation. He further contended that the Judge failed to have adequate regard to the conduct of Mr and Mrs Gold during the proceedings and that insufficient weight was given to the success of DFH and Mr Daniel on specific issues, notably in successfully defending the beneficial interest claim and reducing the quantum of the successful money claim. [§60]

Mr Taylor, for Mr and Mrs Gold, would have defended the Judge’s costs order as a proper exercise of her wide discretion. He would have argued that the Judge was entitled to take a broad, percentage-based approach to reflect the mixed outcome of the litigation, where both parties had enjoyed significant successes and failures.

The Court’s Decision

Mr Justice Cawson dismissed the appeal on the costs issue (Ground 5), expressing only a provisional view because there would inevitably be argument regarding the costs of the appeal and cross-appeal and how his decision on the substantive grounds might impact the Judge’s costs order below. [§57] He held that the Judge had a wide margin of appreciation in costs matters and that an appellate court would only interfere where a clear error of principle was established. No such error was identified. [§59]

The court made several key observations in upholding the costs order. Firstly, it rejected the criticism that the Golds’ solicitors had not produced a Statement of Costs at the conclusion of the trial. It noted there is no presumption in favour of summarily assessing costs after a five-day trial, and therefore no expectation for the parties to have produced such statements. [§58]

Secondly, the court emphasised that the Judge had explicitly considered an issue-based costs order as an alternative but rightly concluded that a percentage-based approach was more appropriate in the circumstances. This was a decision well within her discretion. [§59]

Finally, the court found that the Judge had the significant advantage of having presided over the entire trial and seen how the various issues unfolded. She was therefore in the best position to assess the overall success of the parties and the impact of their conduct. [§60] The argument that insufficient weight was given to the appellants’ success on certain issues did not establish a clear error of principle. The court stated it would require “a great deal of persuading” to substitute its own discretion for that of the trial judge and concluded that the 50/50 costs order was one she was entitled to make. [§61-62]

Additional Outcome

It should be noted that whilst the costs appeal was dismissed, the court allowed Ground 2 of the appeal, holding that the Judge had erred in not awarding damages for trespass from 2 June 2021. Mr Justice Cawson awarded damages at a rate of £2,000 per month from June 2021 to the date of judgment (approximately £84,000), and thereafter at the agreed rate of £100 per day. [§29] This substantive success on appeal would inevitably affect the final costs position between the parties.

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The High Court’s decision in Ellis v Ellis & Ors Re: Care (Decd) [2025] EWHC 2609 (Ch) confirms that Part 36 offers in probate disputes remain valid even where the offeror does not yet own the assets being offered, and clarifies when it is reasonable to delay mediation pending disclosure.

Background

The dispute concerned the estate of Yeamon Keith Care, who died in March 2020. The Claimant, Luke Ellis, sought to propound the will dated 23 August 2016, under which he was the sole beneficiary of the residuary estate, primarily comprising a share in Tregear Farm. The Third Defendant, Vivian Care, the brother of the deceased, challenged the will on the grounds of lack of testamentary capacity, want of knowledge and approval, and due execution. Vivian also advanced a counterclaim for proprietary estoppel, asserting that the deceased had led him to believe he would inherit the farm. The First and Second Defendants were the executors of the estate and adopted a neutral stance throughout the proceedings [§2, §5, §92].

Pre-action correspondence commenced in June 2020, with Vivian indicating a challenge to the will [§7]. A Larke v Nugus request was made in July 2020 [§8]. Despite repeated promises, Vivian failed to provide a letter of claim outlining his case [§89]. Luke instructed solicitors in May 2021 and, after further delays, issued proceedings in July 2022 without a prior letter of claim [§15, §50]. Vivian served a defence and counterclaim [§53]. A case and costs management conference took place in May 2023 [§26, §57], and mediation was attempted in November 2023 but was unsuccessful [§32, §128]. The substantive trial occurred over several days in April and May 2024, with a further hearing in July 2024 [title page]. The substantive judgment, handed down in January 2025, upheld the validity of the will and dismissed all of Vivian’s claims [§1].

Costs Issues Before the Court

The court was required to determine the incidence of costs following the substantive judgment. The key costs issues were:

- - whether the general rule that costs follow the event should be departed from due to alleged unreasonable pre-action conduct by the Claimant;
  - whether the Claimant’s refusal to mediate until September 2023 warranted a costs sanction;
  - the applicability of the probate exceptions concerning the testator’s conduct causing the litigation and reasonable grounds for investigation;
  - the validity and consequences of the Claimant’s Part 36 offer dated 15 January 2024;
  - whether the Third Defendant should pay the litigation costs of the First and Second Defendants as executors; and
  - the appropriate payment on account of costs [§5-6].

The Parties’ Positions

The Third Defendant accepted that the Claimant was the successful party but contended that the First and Second Defendants were not successful [§5, §47]. He argued for no order for costs until September 2023 based on three grounds: unreasonable pre-action conduct by the Claimant, including a failure to serve a letter of claim before issuing proceedings [§7-20]; an unreasonable refusal to mediate until September 2023 [§21-33]; and the application of the probate exceptions [§34-40]. He submitted that the testator’s conduct, through promises and familial expectations, caused the litigation, and that there were reasonable grounds for investigation, particularly regarding due execution and testamentary capacity [§35-40]. He challenged the validity of the Part 36 offer, arguing it was uncertain and not a genuine attempt to settle [§41-46], and contended there was no principled basis for him to pay the executors’ costs [§47-48].

The Claimant argued that costs should follow the event in accordance with the general rule [§49]. He submitted that his issuance of proceedings without a letter of claim was justified due to the Third Defendant’s prolonged delays and failure to articulate his case despite having access to relevant documents [§50-56]. He maintained that his refusal to mediate prior to September 2023 was reasonable because he lacked necessary disclosure from the Third Defendant, including medical records and evidence supporting the proprietary estoppel claim [§57-61]. He opposed the application of the probate exceptions, contending that the testator’s conduct did not cause the litigation and that any investigation period had ended well before proceedings were issued [§62-69]. He asserted that the Part 36 offer was valid and should trigger the full consequences under CPR 36.17 [§70-72], and that the Third Defendant should pay the executors’ costs to avoid the successful party bearing them [§73-74].

The First and Second Defendants supported the Claimant’s position on costs [§75]. They argued that the Third Defendant’s challenge to the will necessitated their involvement and that it would be unjust for the estate or the Claimant to bear their litigation costs [§76]. They emphasised that their costs budget had been agreed, indicating an expectation that the unsuccessful party would pay [§77]. They submitted that the probate exceptions did not apply and that the Third Defendant’s conduct had prolonged the litigation unnecessarily [§78-79].

The Court’s Decision

Pre-Action Conduct

The court held that the general rule under CPR 44.2 should apply, with the Third Defendant paying the costs of the Claimant and the executors, subject to specific considerations [§80-83]. On pre-action conduct, the court found that the Claimant’s failure to serve a letter of claim was not a brazen breach of the protocol [§84]. The Third Defendant had ample time and material to formulate his claim from as early as August 2021, and the Claimant’s issuance of proceedings in July 2022 was a reasonable response to prolonged inactivity [§86, §89]. The court concluded that a letter of claim would not have altered the course of litigation or facilitated earlier settlement [§99].

The court made detailed findings about the Third Defendant’s delay in formulating his case. Despite having access to most key documents by late 2020, including the will file and signed authorities to obtain further records, no letter of claim was forthcoming despite repeated promises [§87-89]. The documents held out for—such as full Adult Social Care records and complete bank files—were not necessary to formulate the claim [§90-93]. The court found that the Third Defendant was able to plead his counterclaim without difficulty once proceedings were issued, demonstrating that sufficient information was available much earlier [§98].

Mediation

Regarding the refusal to mediate, the court determined that the Claimant’s delay in agreeing to mediate until September 2023 was justified [§100]. The Third Defendant had withheld key disclosure, including medical records and evidence on proprietary estoppel, until after the case management conference [§100, §106]. The court found it reasonable for the Claimant to await disclosure before engaging in mediation, and noted that the period of delay was relatively short and incurred minimal additional costs [§101, §107-108]. No costs sanction was imposed [§109].

The court rejected arguments based on Northamber Plc v Genee World Limited, noting that silence in response to mediation invitations is only “as a general rule” unreasonable, and each case turns on its own facts [§102-103]. The reasons given by the Claimant—lack of complete information about the estate and evidence supporting the proprietary estoppel claim—were reasonable in the circumstances [§104, §106].

Probate Exceptions

The court rejected the application of the probate exceptions [§110]. On the first exception (testator’s conduct), it held that the testator’s conduct did not cause the litigation [§110-114]. Familial expectations and promises, even if they existed, did not amount to conduct surrounding the will with confusion or uncertainty, following established authority such as Re Cutcliffe’s Estate [§110-111]. The court declined to depart from Re Cutcliffe, noting that recent authoritative decisions have endorsed it and the trend is to narrow rather than broaden the exception [§111].

The court found that the worst that could be said against the testator was that he did not live up to expectations he had allowed to develop within the family, based on intentions formed during his first wife Betty’s lifetime [§112, §39]. The testator had gone out of his way to engage professionals in making his will, which was in short form and perfectly clear [§113]. There was no confusion or uncertainty surrounding the will itself [§113].

On the second exception (reasonable investigation), the court found that any reasonable investigation period had ended by August 2021 for most issues, and by March 2022 for the due execution issue [§122]. The Third Defendant had sufficient information to assess the merits early on, and pursuing the claims beyond those points constituted hostile litigation.

The court made detailed findings on each challenged ground:

- - Testamentary capacity: The plentiful medical evidence did not suggest incapacity [§117]. The Third Defendant failed to admit this fact after service of a Notice to Admit Facts, and the court noted this could be taken into account under CPR 32.18(5) [§117]. The description of the deceased by the Third Defendant’s expert was alien to the true picture, and the Third Defendant would or should have been aware of the deceased’s acuity [§117].
  - Knowledge and approval: This was a professionally drawn will that accorded with detailed attendance notes of instructions [§118]. The Third Defendant had access to the will file long before proceedings were issued [§118]. Even without prior knowledge of a meeting where the deceased reviewed the draft will with his chosen executors, this ground was always going to be extremely difficult [§118].
  - Due execution: While there was an apparent conflict between the attestation witnesses’ evidence, the Third Defendant had spoken to both witnesses before issuing proceedings [§119]. The court found that any reasonable investigation should have factored in: (a) the strong presumption of due execution; (b) the professional standing of the witnesses; (c) careful instructions given on execution; and (d) an attendance note placing both witnesses at the surgery on the date of execution [§119]. An objective assessment of these factors, all available pre-issue, should have led to the conclusion that this would be difficult to succeed on and was “certainly going to be in the nature of hostile litigation” [§120].

The court emphasised that while reasonable investigations may justify a “no order as to costs” for a period, “once the parties are aware of the settled positions of the attestation witnesses, time must begin to run to decide whether the investigation phase is over” [§120].

Part 36 Offer

The court upheld the validity of the Claimant’s Part 36 offer, finding it sufficiently clear and a genuine attempt to settle [§123-129]. The offer represented a significant value (approximately 14.6% of the estate), and the Third Defendant’s objections were deemed pedantic or capable of resolution [§124-125, §128]. Issues such as whether the will would be formally admitted to probate or which party owned the third tractor were “technical details that could have been sorted out had the Part 36 Offer been accepted” [§125].

The court rejected arguments that the offer was invalid because the Claimant did not own the land being offered (it was vested in the executors) or that the bank’s charge created difficulties [§126]. It found these submissions “almost contrived” since the executors would obviously abide by any settlement and the estate’s net value would have allowed the bank to be paid [§126].

Consequently, the consequences under CPR 36.17(4) applied, including indemnity costs from the expiry of the relevant period and an additional amount [§129]. However, considering the offer was made only three months before trial, the court reduced the interest on costs to 5% above base rate to avoid injustice, while applying the other consequences in full [§134]. The court noted that “all circumstances of the case” included the Third Defendant’s conduct in relation to the personality disorder issue raised late in the proceedings [§134].

Executors’ Costs

The court ordered the Third Defendant to pay the executors’ litigation costs on the standard basis [§140]. It held that the executors’ costs were incurred solely due to the Third Defendant’s challenge, and it would be unjust for the Claimant or the estate to bear them [§137]. The court noted the executors’ neutrality and the agreement of their costs budget as supporting this outcome [§138-139].

The court rejected the Third Defendant’s argument that there was no principled basis for this order, observing that CPR 44.2(1) clearly encompasses executors as parties [§136]. The court emphasised that if the Third Defendant did not pay the executors’ costs, the Claimant would effectively bear them despite being the successful party, which would be “wholly unjust” [§137]. The court noted by analogy to administration pending suit cases that the losing party should pay such costs [§139].

Payment on Account

On payment on account, the court awarded the Claimant £94,000, representing 90% of budgeted costs and 75% of incurred costs, reflecting the approved budget and the indemnity basis applicable from February 2024 [§145-147]. The executors were awarded 85% of their budgeted costs (on combined incurred and budgeted costs of £20,278), considering the estate’s illiquidity and the need for efficient administration [§148].

The court applied the principles from Cleveland Bridge v Sarens, noting that where costs form part of an approved costs budget, payment on account should be no less than 90% of that budgeted amount [§144]. For incurred costs not subject to the approved budget, a more cautious approach of 75% was adopted [§145].