Without Prejudice Schedule Of Incurred Costs Kept Privilege | Lower Bill Did Not Show Unambiguous Impropriety

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In Ian Henderson & Anor v Ministry of Defence [2026] EWHC 2645 (SCCO), the SCCO refused to lift privilege over informal costs breakdowns whose figures exceeded the later certified bills. A without prejudice schedule that reflected costs actually incurred did not, on those facts, disclose unambiguous impropriety merely because the bill was lower. Practitioners who use informal schedules to obtain payments on account need to know where that line falls.

Background

The claimants claimed damages against the Ministry of Defence for noise-induced hearing loss sustained during military service [2]. In about January 2020, Hugh James agreed with the MOD’s solicitors an informal protocol under which the claimant served a without prejudice schedule or breakdown of costs and disbursements, with a view to encouraging an early payment of 50% on account [3]. Where no settlement followed, the claimant served a certified bill with a Notice of Commencement.

Increasingly, the MOD used the schedules as a basis for negotiating substantive costs settlements. In about August 2024, having noted apparent discrepancies between schedules and bills, it accused Hugh James of systematic overcharging, and the protocol was abandoned [3]. The first claimant’s breakdown totalled £44,939.52; the relevant net bill figure was £37,261.29 [4]. The second claimant’s breakdown totalled £162,601.36 against a net bill figure of £132,052.75 [5].

Costs Issues Before the Court

Point 1 of the Points of Dispute in both claims was headed as a discrepancy to previous cost details, and the defendant asserted that the disparities were suggestive potentially of CPR 44.11 misconduct [6]. As a prerequisite to pleading that allegation, it sought permission to adduce and rely on the breakdowns at the detailed assessment hearing. The court determined two preliminary issues: whether the breakdowns had without prejudice status and, if so, whether the defendant could demonstrate unambiguous impropriety [7].

The Parties’ Positions

The defendant submitted that delivering schedules containing significantly higher costs than were justifiable, to induce the paying party to overpay, was a clear example of unambiguous impropriety, and that the sums claimed exceeded the costs actually incurred [11]. Mr Dunne relied on McNamee v LB Brent, where privilege was set aside over an informal statement of costs that fundamental errors, including incorrect, inflated hourly rates, had caused to grossly exaggerate the claimant’s entitlement [12].

The claimants maintained that the breakdowns, proffered primarily to facilitate payments on account, were accurate estimates of the costs incurred, and that the lower bills reflected a choice to limit their claims and narrow issues [13]. They acknowledged that the defendant sometimes used the schedules for substantive negotiation, but said that was the defendant’s election [14].

The Court’s Decision

The parties agreed at the hearing that the schedules were, prima facie, without prejudice documents [8]. Mr Dunne referred to Schering Corporation v Cipla Limited, in which Laddie J said that marking a document without prejudice is some indication that the author intended it to be treated as part of a negotiating process. Costs Judge Whalan proceeded on that common understanding.

Without prejudice status confers a veil or cloak of privilege which the court should be slow to remove. One exception, identified by Walker LJ in Unilever v Procter & Gamble, arises where exclusion of the evidence would act as a cloak for unambiguous impropriety [9]. The passage from Passmore on Privilege set out by the judge records that the hurdle is high and that, in Motorola Solutions Inc v Hytera Communications Corp Ltd, the test was described as deliberately difficult to satisfy.

Mr Hogan relied on the judgment of Males LJ in Motorola [10]. That judgment states that even where something said without prejudice is contrary to a party’s open position, it will not be admitted unless the statement demonstrably constitutes an abuse of the privilege. It also holds that the test is not diluted where the issue arises at an interim stage.

On the balance of the available evidence, the judge was satisfied that the schedules claimed exclusively costs which the claimants had actually incurred, and rejected the allegation that they included costs in excess of those incurred or costs for which the claimants were not liable [16]. He accepted that the later bills, compiled by cost lawyers, reduced or discounted the sums claimed, anticipating challenges on assessment and narrowing the inter partes dispute.

The claimants’ witness evidence explained how that happened [14]. The breakdowns were filtered summaries of recorded time and disbursements from the case management system; they did not purport to be bills and were not certified. When external cost lawyers drew the bills, they excluded items such as routine internal correspondence, funding work, administrative tasks and recorded time considered excessive, duplicative or disproportionate.

The breakdowns were served primarily to support applications for interim payments. Although the defendant sometimes used them as a starting point for substantive negotiation, the judge did not accept that the claimants intended to induce final settlement, let alone settlement at an over value [16]. Costs of a failed application in the McPherson breakdown were a genuine, isolated mistake, later corrected, rather than an illustration of “systematic overcharging”.

The judge added that the claimants’ solicitors were not entirely invulnerable to criticism [17]. More could have been done to rationalise the fairly detailed breakdowns. Once it became evident that the defendant was using them as the basis for substantive inter partes negotiation, more could reasonably have been done to alert it to the likely presence of some duplication and disproportionality.

Those criticisms did not change the result. Costs Judge Whalan held that the breakdowns contained no fundamental errors of calculation and no misrepresentation, and that any inconsistency between the without prejudice and open positions “was a long way short of any form of CPR44.11 misconduct” [17]. He contrasted McNamee, where “a succession of fundamental errors produced an informal schedule which grossly inflated the costs actually incurred by the receiving party”.

The defendant’s case therefore fell a long way short of demonstrating unambiguous impropriety. On the facts, the claimants were entitled to maintain privilege, and the defendant could not adduce and rely on the breakdowns at the part-heard detailed assessment [17], [18]. A central question was whether the without prejudice schedule overstated costs actually incurred, not whether it exceeded the figure later claimed in the bill.

Practical Implications

This is a first instance decision, and the outcome turned on the evidence. For receiving parties, protection rested on the finding that each without prejudice schedule claimed only costs actually incurred [16]. Before service, check hourly rates, fee earner seniority and recorded time, since fundamental errors of that kind distinguished McNamee [12], [17], and remove items such as unsuccessful applications.

Consider rationalising an informal schedule before it is served: the judge noted that cost draughtsmen later did this without difficulty [17]. Where a paying party starts treating the schedule as the basis for substantive negotiation, write promptly to flag the likely presence of duplication and disproportionality, and state that the schedule is not a certified bill and makes no representation about inter partes recoverability.

For paying parties, a comparison of schedule and bill totals, however stark, was not enough here. An application to adduce a schedule, and any CPR 44.11 point built on it, needs evidence that the schedule exceeded costs actually incurred or rested on fundamental errors, measured against the strict Motorola test of unambiguous impropriety [10], [17].

▶ Watch the case summary

Admissibility (or not) of without prejudice offers on costs

Without Prejudice Letter Reveals Fundamental Dishonesty Undermining Claimant’s Case

Without Prejudice Offer: Admission Denied

Miscertification of a bill of costs and the court’s powers in relation to misconduct under CPR 44.11

CPR 44.11: Misconduct in detailed assessment proceedings

Allegations of misconduct and the court’s powers under CPR 44.11

Defendant Made No Part 36 Offer | Late Counsel Offers Came After Most Costs Had Been Incurred | Claimant Recovers 85% Despite Losing Main Issue

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In JBX v Frimley Health NHS Foundation Trust (Costs) [2026] EWHC 2525 (KB), the High Court ordered an NHS trust to pay 85 per cent of a claimant’s costs although he lost the principal issue at trial. The trust had made no Part 36 offer, relying instead on counsel-to-counsel offers made less than a fortnight before trial. Defendants seeking costs protection should note how the court weighed that omission.

Background

The claimant, JBX, suing by his mother and litigation friend, brought a claim for damages against Frimley Health NHS Foundation Trust. His damages were assessed at £4,341,302.86, including interim payments and allowing for CRU, together with substantial periodical payments [16]. The primary question at trial was whether his proposed domiciliary care regime, option 1, met his reasonable needs [18].

The trust’s opposition to domiciliary care was made clear when it served its Counter Schedule and expert evidence on 13 February 2026 [5]. None of the parties made any offer under CPR Part 36. Offers were instead made in counsel-to-counsel exchanges between 20 April and 5 May 2026, in the fortnight before the trial started on 6 May 2026. These included the trust’s offer of 29 April 2026 and the claimant’s final offer of 5 May 2026 [8].

Costs Issues Before the Court

The draft order was agreed save for costs, and the judge approved the agreed parts [3]. The contested question was whether the trust should pay the claimant’s costs under the general rule in CPR 44.2(2)(a), or whether the court should depart from that position because the claimant had not persuaded the court to accept option 1 [16]. Within that question, the court had to weigh the parties’ informal offers and the absence of any Part 36 offer.

The Parties’ Positions

Mr Tyack KC, for the claimant, sought his costs on the standard basis. Relying on Fox v. Foundation Piling Limited, he argued that a defendant which fails to make any or any sufficient Part 36 offer cannot expect costs protection. He submitted that the trust’s offer of 29 April 2026 was not a valid or timely Part 36 offer and had been beaten, and that any deduction should be no more than five per cent [10].

Ms Toogood KC, for the trust, contended for 75 per cent of the claimant’s costs to 17 February 2026 and no order as to costs thereafter. She relied on the trust’s success on future care and accommodation, to which the bulk of the trial was devoted, and on Pigot v. The Environment Agency, McKeown v. Langer and Hullock v. East Riding of Yorkshire Council [11].

The Court’s Decision

The agreed starting point was that the claimant was the successful party, so that under the general rule the trust should pay his costs [16]. The judge noted that the courts have consistently acknowledged that a successful party who does not win on all issues is not usually, for that reason alone, deprived of part of his costs [17]. The position may be different where the claimant lost the principal argument on which the outcome substantially turned [18].

That was the position here. The greater part of the eight-day trial, and of the factual and expert evidence, concerned option 1, while the lost years claim required only about half a day. The trust won the future care and accommodation point and the claimant won the lost years claim [18].

Although no Part 36 offers had been made, the judge treated Jackson LJ’s judgment in Fox v. Foundation Piling Limited as a useful summary of the approach to CPR Part 44 in personal injury litigation [13]. He set out Jackson LJ’s observation that, where the claimant has a strong case on liability but quantum is inflated, the defendant’s remedy is a modest Part 36 offer, and that a defendant failing to make a sufficient Part 36 offer at the first opportunity cannot expect to secure costs protection [13].

The judge also referred to Welsh v. Walsall Healthcare NHS Trust, in which Yip J approved five principles governing issue-based costs orders [14]. Each case turns on its own circumstances, but the court should assess who in reality is the successful party and who has been responsible for costs being incurred which should not have been [15].

The judge then weighed five points. Future care and accommodation was not unambiguously contentious until 13 February 2026, by which time considerable expert-related costs had been incurred [19]. The 17 February letter had no costs consequences [20]. It was not unreasonable for the claimant to run option 1 to trial [21], and other heads of loss were not agreed until shortly before the hearing [22]. Separately, the remaining conduct criticisms carried little weight [24].

The fifth point was that the trust made no Part 36 offer to protect its position. The judge held that Jackson LJ’s observation at paragraph 63 of Fox continues to hold true [23]. He accepted that the trust’s offer of 29 April 2026 was closer to the final result than the claimant’s offer of 5 May 2026. Nonetheless, Part 36 provided the mechanism by which a defendant should protect its position, and the trust took no steps to do so [23].

Timing added to the point. The trust’s various offers were made less than a fortnight before trial, by which time the bulk of the costs had been incurred. The judge concluded that “there is some force in Mr Tyack’s submission that the Trust is now seeking to gain the advantages of Part 36 without ever making a Part 36 offer.” [23]

Striking the balance, the judge weighed the claimant’s overall success, his loss of the principal battle, his win on the lost years claim and the factors at [19] to [24]. He described the exercise as one that “necessarily requires a broad-brush approach” [25]. The trust was ordered to pay 85 per cent of the claimant’s costs on the standard basis, subject to detailed assessment if not agreed [25].

The judgment does not attribute the reduction from full costs to any single factor. The absence of a Part 36 offer was one of the competing factors weighed in that broad-brush balance, alongside the claimant’s failure on the principal issue [25].

Practical Implications

For defendant NHS trusts and insurers, this first instance decision applies Fox in a dispute about quantum: a defendant that wants costs protection should make a Part 36 offer, and make it early. A trust that wins the principal issue at trial may still be ordered to pay most of a successful claimant’s costs where it made no Part 36 offer [23, 25].

Informal counsel-to-counsel offers remain admissible offers which the court may consider, and the judge took account of them here. Their usefulness to a defendant will be reduced where they arrive shortly before trial, after the bulk of the costs has been incurred [23]. An offer closer to the final result than the claimant’s did not stand in for a Part 36 offer.

Defendants should identify when an issue crystallises and consider a Part 36 offer at that point, whether on the whole claim or on a particular issue, as the claimant argued the trust could and should have done [10]. Leaving offers until the eve of trial risks the argument that the defendant is seeking Part 36 advantages without using Part 36.

For claimants, the decision supports resisting a date-based or no-order outcome where the defendant made no Part 36 offer. Claimant representatives should still expect a deduction where the principal issue is lost, and should record when each issue first became contentious, since that affected the court’s view of which costs could have been saved [19].

 

Costs Determined Following Partially Successful Clinical Negligence Claim

Partial Success, Conduct, Offers And Alleged Exaggeration

Issues-Based Costs Orders And The Powers Of A Trial Judge Under CPR Part 36

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

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

Issue Based Costs Orders, CPR 36.17(4) And Payments On Account Under CPR 44.2(8)

Trial Judge May Be Told The Date Of A Part 36 Offer | Date Falls Within The Fact Of The Offer, Not Its Terms

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In Essendi UK Hotels 2 Limited v London Property Company Limited (Preliminary issue Part 36 CPR) [2026] EWHC 2501 (TCC), the High Court held that a judge who has tried preliminary issues may be told the date of a Part 36 offer before the case is decided. Without that date, a successful party could not even invite the court to award its costs up to the end of the first offer’s acceptance period.

Background

The claim was complex and expensive litigation in the Technology and Construction Court, in which preliminary issues were tried first [6], [8]. HHJ Stephen Davies tried those issues in March 2026 and handed down judgment on 5 June 2026, in which the Claimant was substantially the successful party [1]. As the judge allocated to try the remaining issues, he was the trial judge within CPR 36.3 [8].

The Claimant wished to inform him of the date of the Defendant’s earliest Part 36 offer, so that it could seek its costs of the proceedings down to the date 21 days after that offer [1]. The Defendant had already agreed that the court could be told that it made the offer [14]. The parties agreed that the disclosure point should be decided first, so that the Claimant would not incur the expense of a substantive costs hearing if it lost [9].

Costs Issues Before the Court

The issue was one of pure construction of CPR 36.16, read as part of a self-contained procedural code [10]. Where any part of, or issue in, a case has been decided, CPR 36.16(4)(a) allows the trial judge to be told whether or not there are Part 36 offers, while CPR 36.16(4)(b) forbids disclosure of their terms [4], [7]. Neither limb states whether the judge may be told the date of an offer [4]. If the date could not be given, the Claimant could not even invite a costs order for the period, because its end date could not be made known [2].

The Parties’ Positions

Mr Naylor, for the Claimant, submitted that CPR 36.16(1) creates a starting presumption that a Part 36 offer is admissible on costs [28]. Both counsel accepted that CPR 36.16(2) must prohibit communication of any information about an offer’s existence [30]. Mr Naylor argued that all such information must fall within either the fact of the offer or its terms and, since the date is not a term, it falls within the former [30], [33].

Mr Trompeter KC, for the Defendant, submitted that the date was itself part of the terms of the offer [34]. Alternatively, he argued that CPR 36.16(4) applies according to its express terms, so that what is not expressly permitted is prohibited [41]. He also contended that the date, especially with the offeror’s identity, might allow a shrewd judge to infer that party’s view of the merits [45].

The Court’s Decision

The judge accepted Mr Naylor’s submission that CPR 36.16(1) means the starting point is a presumption that a Part 36 offer will, in principle, be admissible when the court deals with costs [28]. He also accepted Mr Trompeter KC’s submission that CPR 36.16(2) is an immediate derogation from it. Until all issues have been determined, nothing about any Part 36 offer is to be communicated to the trial judge [29].

The judge agreed with Mr Naylor that all information about an offer must fall within either the fact of the offer or its terms. Otherwise a party could tell the judge that on a given date one party sent another a communication of a kind provided for by Part 36, which would undermine the whole purpose of CPR 36.16(2) [31]. The prohibition on disclosing the fact of an offer therefore includes its date and the identity of its maker [31], [32].

Part 36 contains no definition of the terms of an offer [35]. CPR 36.5(1) lists matters, such as the period for acceptance, that are clearly terms, while CPR 36.7 deals separately with when an offer is made [35]. Terms can be changed under CPR 36.9, but the date of an offer cannot [36]. CPR 36.14 refers to a stay and to enforcement upon the terms of the offer [37], and CPR 36.17(5) treats the terms and the stage at which an offer was made as separate matters [38].

These provisions were consistent with Part 36 offers operating along broadly the same lines as a contract, where there is a normal and well-understood difference between the date of an offer and its substantive terms [39]. The judge considered that this would doubtless explain why the rule committee had not defined the terms of an offer [39].

The date of an offer therefore cannot be one of its terms. It must instead be part of the fact that the offer has been made because, in the words of HHJ Stephen Davies, “since 36.16(2) is intended to operate as a blanket prohibition, the fact that a Part 36 offer has been made includes all of the relevant facts about that Part 36 offer other than its terms” [40].

That conclusion disposed of Mr Trompeter KC’s alternative submission, which assumed an intermediate category of facts falling within neither limb of CPR 36.16(4) [41], [42]. The judge considered it made no sense to suppose that the rule committee had recognised such a category and then left open whether it could be disclosed [43].

If such a category did exist, the judge would favour the construction permitting disclosure of all information about the offers other than their terms [44]. The mischief was that the old rule barred disclosure even of an offer’s existence, and that judges might be influenced, even subconsciously, by an offer’s terms at the stage two trial [44]. As he put it, “Disclosing the date of Part 36 offers or the identity of their makers does not reveal the terms of any such offers.” [44]

The judge was not convinced by the argument about inferences on the merits. Defendants make early offers for many reasons, such as testing a claimant’s willingness to go to trial or avoiding irrecoverable costs, and by the end of a stage one trial the judge is likely to have formed a far more illuminating view of the parties [46]. He also presumed that judges do not decide the substantive issues on a hunch about what an offer may say [47].

Finally, the judge found no compelling reason to treat non-disclosure as the default unless disclosure was expressly permitted [48]. If the amendment was meant to let a stage one judge determine the costs of that trial before stage two, withholding who made an offer would make no sense. The argument applied with not quite the same force to the date, but the pay-as-you-go philosophy identified by Green LJ in Langer supported disclosure because, without it, judges “would not even be able to embark on that enquiry” [48]. He concluded that he could be told the date of the Defendant’s first Part 36 offer [49].

Practical Implications

This is a first instance decision, but it gives a reasoned answer to a question CPR 36.16(4) does not expressly address. Where part of a case has been decided and a global Part 36 offer remains in play, a successful party can tell the trial judge the date of the opponent’s first offer without breaching CPR 36.16 [40], [49]. The reasoning also extends to the identity of the offeror, although that point was conceded here and left undecided [14], [48].

Receiving parties seeking costs at the end of a stage one trial should identify the date of the first Part 36 offer and frame the application around the costs incurred before the relevant date [1], [6]. Disclosure only allows the court to consider whether to exercise its discretion; it does not secure the order [48].

Paying parties should not expect CPR 36.16(4) alone to keep the date from the judge, and should prepare their resistance on the exercise of the discretion instead. Both sides must keep the terms of any offer from the judge unless an exception in CPR 36.16(3)(a) to (c) applies [7]. Where the point is contested, it can be determined first, as here, before a full costs hearing is prepared [9].

Calderbank Offers Not To Be Equated To Part 36 In Split Trial Cases

CPR 36.17(5) | Costs Following Trial On Liability And The Effect Of An Extant Part 36 Offer

Costs of determining a preliminary issue

Costs Exceptionally Reserved On Preliminary Issue Due To Potential Set-Off Against Arbitration Awards

Admissibility (or not) of without prejudice offers on costs

CPR 47.20(1)(b) Addresses Entitlement To Assessment Costs | It Does Not Redirect Who Pays An Agreed Liability

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In Joanna Lemos & Ors v Church Bay Trust Company & Ors [2026] EWHC 2402 (SCCO), a Costs Judge refused to make an ATE insurer, joined as an interested party, jointly liable for the receiving party’s costs of assessment. CPR 47.20(1)(b) was held to go to entitlement to those costs, not to who discharges a liability the paying party has already accepted. Practitioners looking to shift assessment costs onto an insurer need to know where that route ends.

Background

The underlying claim was a section 423 Insolvency Act 1986 claim, dismissed after a trial in 2023 [19]. A consent order of 18 October 2023 required the Claimants to pay the Defendants’ costs on the standard basis, with £957,814 payable on account [20]. The 2nd and 3rd Claimants held ATE cover from BCR Legal Assist Limited, with a limit of indemnity for adverse costs of £1,000,000 [43].

A BCR costs entity took over conduct of the costs negotiations in November 2023 [27]. BCR Legal Assist Limited was later added as an interested party by a consent order dated 14 August 2025 [34]. After a preliminary issues hearing on costs budgeting, Gowlings resumed conduct and on 15 January 2026 accepted £957,814 against the bill [44]. The only remaining dispute concerned the costs of assessment [9].

Costs Issues Before the Court

The 2nd and 3rd Claimants, supported by the Defendants, applied for an order that they and “BCR” pay the Defendants’ costs of the detailed assessment proceedings, jointly and severally, with BCR liable inter se for a 100% contribution [2]. The court had to decide whether CPR 47.20 permitted such an order against the Interested Party [204] and, if so, whether conduct or the reasonableness of the points taken under CPR 47.20(3) justified it [229].

The Parties’ Positions

For the 2nd and 3rd Claimants, Mr Waszak confirmed that the application was brought under CPR 47.20(1)(b) only, and was neither a section 51 application nor an application for a non-party costs order [56]. He relied on CPR 47.20(1) making no mention of who pays [51], and submitted that because BCR Legal Assist Limited was a party, it could be ordered to pay costs [50].

Mr Teasdale, for the Defendants, supported the application and submitted that CPR 47.20 identifies no category of payer, referring instead to “all the parties” [154]. Mr Nicol, for the Interested Party, observed that the paying and receiving parties had already agreed that the receiving party would have its costs of assessment [144]. He submitted that there was no power under CPR 47.20(1)(b) to make the order sought [146].

The Court’s Decision

Costs Judge Nagalingam treated the receiving party’s entitlement to the costs of the detailed assessment proceedings as the usual order under CPR 47.20(1), with CPR 47.20(1)(b) providing the exception where the court makes some other order [170], [171]. He held that CPR 47.20(1) does not dictate the source of funds a paying party calls on once its liability has crystallised; it simply addresses which party is entitled to the costs [172].

It followed that the exception must be limited to entitlement [173]. In the judge’s words, “the ‘usual order’ decides entitlement without dictating how that entitlement is later discharged” [174]. The interference that some other order permits is concerned with whether someone other than the receiving party ought to be entitled to the costs of the detailed assessment proceedings [176].

The application did not seek to upset the usual order. The draft order itself provided for payment of the Defendants’ costs of assessment [177]. Instead, the 2nd and 3rd Claimants sought to use CPR 47.20(1)(b) to transfer their liability for those costs to the Interested Party [178]. In substance, they agreed that the Defendants were entitled to the costs of assessment but said they should not have to pay them [184].

The judge placed this within the structure of the proceedings. Detailed assessment is not a new set of proceedings but a procedure within the proceedings that produced the costs order [167], [180]. He stated that “CPR 47.20 cannot be used to alter an existing order for costs.” The primary liability of the 2nd and 3rd Claimants for the main action costs could not be reversed or altered, and they did not seek that outcome [181].

Mr Teasdale’s point that CPR 47.20 does not say who pays was answered directly. The judge said that was not the subject matter of the application, which required him to address who is liable and the status of BCR Legal Assist Limited [186]. The rules generally concern who is liable to pay, not who ultimately writes the cheques [188]. The 2nd and 3rd Claimants had been free to agree the sum and then invoke their contractual right to compel the insurer to pay out [189].

The judge also rejected the premise that the insurer was the funder. Payment out on a policy is not the same as a third party funding arrangement; by using the indemnity they had paid for, the 2nd and 3rd Claimants were the funders [194]. He was not persuaded that intermeddler and real party principles had any relevance to the facts [203].

On whether the court could make the order sought, the judge did not read the rule narrowly. He agreed with Mr Waszak that “the rule is not drafted in such restrictive terms that it could not be applied to an interested party”, and recognised that CPR 47.20(3) sets out common factors rather than an exhaustive list [205].

That acceptance was limited. The judge considered CPR 47.20 very much geared toward consideration of the conduct of the parties to a claim [206]. Only the Defendants’ bill was subject to assessment, so the reasonableness of claiming a particular item applied to the Defendants only, with items disputed on behalf of the 2nd and 3rd Claimants [207].

On the merits, no point of dispute had been unreasonably taken, leaving no viable argument under CPR 47.20(3)(c) [229]. Nothing in the Interested Party’s conduct would have persuaded the judge to make some other order under CPR 47.20(3)(a) [341], [342]. The application was dismissed as lacking merit and entirely speculative [343], [344].

Practical Implications

This is a first instance decision of the SCCO. An application for some other order under CPR 47.20(1)(b) should be framed around entitlement to the costs of assessment: whether the receiving party should lose some or all of them, or, as the judge considered the rule likely envisages, whether the paying party should recover its own. A paying party that has agreed liability cannot use the rule to redirect that liability to its insurer.

Where a paying party looks to an ATE insurer, the route is contractual. The judge noted that no contractual argument was advanced and no reliance was placed on the insurer acting outside the policy [350], [351]. Solicitors for insured parties should check the policy terms and the limit of indemnity before agreeing liability for the costs of assessment.

Where an insurer is added as an interested party by consent, the parties should consider whether the order deals with costs. Here, it contained no provision for the insurer to be liable for or contribute to the costs of assessment [349]. A party wanting a direct costs remedy against an insurer should also note that the 2nd and 3rd Claimants did not pursue a non-party costs order, which the judge considered telling, albeit sensible [352].

CPR 47.20(1) Decides Who Is Entitled to the Costs of Assessment, Not Where the Money Comes From | Detailed Assessment Is Not New Proceedings

Costs Of Assessment Where Bill Reduced To Under £75,000

s71(3) | Beneficiaries Who Pursued Unreasonable Solicitors Act Assessments Bear the Costs Personally

Understanding Non-Party Costs Orders

Non Party Costs Orders | Court Of Appeal Decision

Acknowledging Costs Information Is Not Written Agreement | SCCO Finds No Right To Charge Under Section 29(2)

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In Royal Holloway and Bedford New College v QLaw Legal Services Limited [2026] EWHC 2090 (SCCO), the SCCO held that a lay co-executor had not agreed in writing to professional executor remuneration under section 29(2) of the Trustee Act 2000. Her request for an estimate, her acknowledgment of emailed costs information and her acquiescence in the bills all fell short. Firms named as executors in wills without a charging clause should note what fails.

Background

The Claimant was the residuary beneficiary of the estate of Ms Selby, who died on 20 November 2022. Her will appointed her friend, Ms Malcher, and the directors of the Defendant, which traded as Quantick Daley Solicitors, as executors. Mr Quantick, the Defendant’s sole director, accepted the role of joint executor [2], [3], [4]. The will contained no charging clause [5].

Between January and July 2024 the Defendant rendered bills totalling £53,187.60 for Mr Quantick’s services as professional executor. The Claimant applied under section 71(3) of the Solicitors Act 1974 for an order for their assessment [6]. The court ordered assessment and directed that the Defendant’s right to receive remuneration be heard as a preliminary issue [7].

Costs Issues Before the Court

With no charging clause in the will, the court had to decide whether the Defendant had any right to charge the estate for Mr Quantick’s services. The Defendant relied on a pre-death letter to Ms Selby and on costs correspondence with Ms Malcher in January 2023. The central statutory question was whether Ms Malcher, as Mr Quantick’s only co-executor, had agreed in writing within section 29(2) of the Trustee Act 2000 that he could be remunerated [39], [41].

The Parties’ Positions

The Claimant’s case was that, absent a charging clause and compliance with section 29(2), there was no mechanism by which the Defendant could charge the estate for Mr Quantick’s services [31]. It also argued that Ms Malcher had not given informed consent [40].

Mr Quantick, for the Defendant, argued that the Trustee Act 2000 required proper authorisation and that the Defendant had it [33]. He relied on the notification to Ms Selby that the directors would charge as professional executors, said that Ms Malcher would have been aware of that agreement because she forwarded the letter, and referred to the January 2023 costs correspondence [34].

The Court’s Decision

Section 29(2) of the Trustee Act 2000 entitles a trustee acting in a professional capacity, who is not a trust corporation, a trustee of a charitable trust or a sole trustee, to reasonable remuneration out of the trust funds if each other trustee has agreed in writing that he may be remunerated [8]. Section 35(1) applies the Act to personal representatives administering an estate [10].

Costs Judge Leonard set out the Court of Appeal’s explanation of the policy behind these provisions in Shepherd & Co Solicitors v Brealey [12], [13]. Sir Nicolas Patten recorded that the Law Commission “rejected a proposal to introduce a general statutory charging clause as a default power because of the need for transparency and the prevention of abuse.” [13]

In Shepherd, the lay executor had instructed the solicitor executor, signed retainer documentation and approved bills. Section 29 was still not satisfied, because another partner appointed as executor had not agreed in writing. It made no difference that he had played no part in the administration [18].

The Defendant’s reliance on the pre-death letter to Ms Selby failed at the outset. Her executors were appointed by her will, and a right to charge could not have been conferred by the letter or by the discussion it recorded [38]. That left section 29(2) as the statutory route to professional executor remuneration.

The judge concluded that Ms Malcher, as Mr Quantick’s only co-executor, had not agreed in writing that he be remunerated [39]. He first set aside two lines of argument. The contractual principles that would normally establish the existence and terms of a solicitor’s retainer were not to the point. Nor was the Claimant’s informed consent argument, since informed consent is not a requirement of section 29(2) [40].

The question was, rather, whether Ms Malcher had agreed in writing, within the meaning of section 29(2), that Mr Quantick could be remunerated for his professional services as executor [41]. The judge then took each strand of the Defendant’s evidence in turn.

Ms Malcher’s de facto acquiescence in the Defendant rendering charges to the estate could not constitute agreement sufficient to satisfy section 29(2). She had reminded the Defendant in January 2023 that she had not received a costs estimate [23]. That request for an estimate was “no more than evidence of that de facto acquiescence” [42].

The January 2023 correspondence fared no better. Ms Lamie’s email set out hourly rates for fee earners, the work to be charged and the charging structure [25]. It said bills would ordinarily be met from estate funds [26]. Ms Malcher replied thanking her for the assurances and the costs information, but the promised terms of business were never sent [27].

The judge held that this exchange, in which costs information was sent and its receipt acknowledged, did not constitute a written agreement on Ms Malcher’s part. He added that it “would be inconsistent with the plain meaning and the underlying purpose of section 29(2) of the Trustee Act 2000 to allow the Defendant to rely upon an implied agreement on Ms Malcher’s part” [43].

It followed that the Defendant had no right to charge the estate for Mr Quantick’s services as professional executor [44]. The preliminary issue was limited to whether a right to remuneration existed. The judge therefore did not address whether, and to what extent, the court should exercise its discretion to permit remuneration [45].

Practical Implications

This is a first instance decision of the SCCO, but it applies the statutory wording directly. Where a will has no charging clause, professional executor remuneration under section 29(2) depends on each other executor having agreed in writing. Firms should obtain the written agreement of every co-executor that the professional executor may be remunerated for the services.

Sending costs information and receiving a reply of thanks is not enough. Nor is a co-executor’s request for an estimate, or her acquiescence in bills being rendered to the estate. The court would not allow reliance on an implied agreement [43], so conduct cannot fill a gap in the paperwork.

Because contractual retainer principles were held not to the point [40], practitioners defending such bills gain nothing by arguing that a retainer was formed with the co-executor. The question is the narrow statutory one. Equally, beneficiaries challenging bills need not argue informed consent, which section 29(2) does not require.

For residuary beneficiaries, a preliminary issue on the right to remuneration, as ordered here within a Solicitors Act assessment [7], can determine entitlement before quantum is examined. Firms appointing several directors or partners as executors should also recall from Shepherd that written agreement is needed from all the executors, whether or not they take part in the administration [18].

s71(3) | Beneficiaries Who Pursued Unreasonable Solicitors Act Assessments Bear the Costs Personally

CPR 46.9(3) | Informed Consent In Solicitors Act Detailed Assessments

CPR 46.9(3)(c)(ii) | Is Informed Consent Required? | And The One Fifth Rule

Informed Consent And Alleged Termination Of Retainer | High Court Appeal

Court Of Appeal Doubts Whether Costs Can Be Paid In Bitcoin | Unargued Crypto Costs Orders Risk Over-Compensating The Payee

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In Gary Jones v Persons Unknown [2026] EWCA Civ 1212, the Court of Appeal expressed real doubt about an order requiring summarily assessed costs to be discharged in Bitcoin, and declined to endorse it. The observations are obiter, but anyone seeking or resisting costs in Bitcoin in crypto asset litigation should expect the court to start from the currency in which the receiving party pays its solicitors.

Background

Mr Gary Jones brought proceedings to recover Bitcoin of which he had been defrauded, suing three classes of persons unknown and Huobi Global Ltd, the exchange controlling the tHEL wallet. Mr Nigel Cooper KC, sitting as a Deputy High Court Judge, granted summary judgment and ordered delivery up of 89.6 Bitcoin from that wallet [2], [14], [19].

Paragraph 8 of the Order required the first and second defendants to pay Mr Jones’s costs, summarily assessed at £148,000. Paragraph 9 provided for payment of those costs by the first, second and fourth defendants transferring 8.63532665 Bitcoin from the tHEL wallet to Mr Jones’s nominated wallet by 20 September 2022 [21].

Huobi complied and appears to have debited the Bitcoin from the account of Kyrrex Ltd, a non-party [23]. On Kyrrex’s application under CPR r 40.9, the Court of Appeal held that Kyrrex was directly affected and set aside the relevant paragraphs of the Order [90], [134].

Costs Issues Before the Court

The court heard no argument on the costs provisions [142], [143]. Nugee LJ nevertheless added a footnote on two features of the Order that he had flagged earlier in his judgment [21], [140]. The first was that paragraph 9 required Huobi, against whom no costs order had been made, to discharge the costs from a particular source [141]. The second was whether a court should require a costs liability to be discharged in Bitcoin at all [143].

The Court’s Decision

Nugee LJ described paragraph 9 as a most unusual provision. An order for costs is a money judgment, and in general a court does not tell a defendant ordered to pay money where the money is to come from [142]. He accepted that it was an ingenious attempt to overcome the problem that the first and second defendants were unlikely to be identified, so that ordinary enforcement would probably be impossible [142].

That device carried a risk which materialised: the Bitcoin in the wallet turned out not to belong to the first and second defendants, so the costs were borne by someone innocent of the fraud. It also imposed on Huobi a positive obligation that could in theory be enforceable by committal, although money judgments in general cannot be, and although no costs order had been made against Huobi [142].

On the currency point, Nugee LJ started from the general rule that costs are awarded in the currency in which a party has paid, or is liable to pay, its solicitors, citing Federal Republic of Nigeria v Process & Industrial Developments Ltd [143]. Here that was presumably sterling, as paragraph 8 appeared to confirm. He said: “I am not aware of any precedent for the Court awarding costs in Bitcoin.” Although paragraph 8 awarded costs in sterling, the practical effect of paragraph 9 was to entitle Mr Jones to payment in Bitcoin [143].

Nugee LJ considered it “very doubtful whether this was appropriate”, noting that the deputy judge appears to have made the provision without being referred to any of the relevant material [144]. Miliangos v George Frank (Textiles) Ltd permitted orders for payment in currencies other than sterling, but in his view clearly contemplates that non-sterling orders will be in a foreign currency, implicitly a fiat currency [144].

English law treats cryptocurrency as a form of property. Treating it as money would, Nugee LJ said, be a very significant step, and the court does not order costs orders to be discharged through the transfer of property [144].

He then referred to the Law Commission’s Final Report on Digital Assets. The Commission considered cryptocurrencies unlikely to be treated as cash, and said that an action to enforce an obligation to pay crypto-tokens would be characterised as a claim for unliquidated damages for failure to deliver a commodity, rather than as a monetary debt [145]. It knew of no precedent for monetary remedies denominated in crypto-tokens [146].

The Commission recognised that crypto-tokens are unlikely at present to be regarded as money. It suggested that a court could potentially exercise a discretion to award a monetary remedy in certain crypto-tokens where that would better reflect the innocent party’s loss, but acknowledged that this would on its face be a novel step, best left to the courts when appropriate facts arise [147].

Against that background, Nugee LJ was “very doubtful if a Court should order payment of costs in Bitcoin or other cryptocurrency without the point having been fully argued” [148]. The particular difficulty was over-compensation. The £148,000 had been converted at one Bitcoin to £17,194.11, presumably the prevailing rate on or shortly before the date of the Order, 6 September 2022 [148].

The Order allowed 14 days for the transfer, and Huobi did not make it until 27 September 2022. By then Bitcoin might have risen significantly, so that Mr Jones would net more than the £148,000 assessed. As Nugee LJ put it: “None of this seems very satisfactory.” [148]

On both grounds Nugee LJ considered it open to real doubt whether paragraph 9 should have been made. He declined to resolve the question without argument, but made clear that he did not endorse the form of order [149]. The observations on costs in Bitcoin are therefore obiter. Foxton LJ and Peter Jackson LJ agreed with his judgment [150], [151].

Practical Implications

Receiving parties in crypto asset litigation should seek costs in the currency in which the client has paid, or is liable to pay, its solicitors, which will usually be sterling [143]. An order for costs in Bitcoin, or a mechanism converting a sterling sum into tokens, should not be put before the court without the point being fully argued and the relevant material placed before the judge [144], [148].

Where the paying party is unidentified, practitioners should be wary of drafting orders that direct a third party, such as an exchange, to satisfy costs from a named wallet. The Court of Appeal regarded that as most unusual: it fixes the source of payment for a money judgment and risks the costs falling on an innocent account holder [142].

Paying parties and affected non-parties facing such an order now have a structured line of argument: the currency rule, the treatment of cryptocurrency as property rather than money, and the risk of over-compensation where the token appreciates between assessment and payment [143], [144], [148].

Where any conversion is unavoidable, the order should address the conversion and transfer dates, since a gap between them can leave the receiving party with more than the sum assessed [148]. The observations are obiter and the question was left unresolved, so the point remains open to argument in a suitable case [149].

When Should Costs Be Awarded In A Foreign Currency? Supreme Court Rejects ‘Loss Reflection’ Test

CPR 47.20(1) Decides Who Is Entitled to the Costs of Assessment, Not Where the Money Comes From | Detailed Assessment Is Not New Proceedings

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The Senior Courts Costs Office’s decision in Lemos and others v Church Bay Trust Company and others [2026] EWHC 2402 (SCCO) clarifies the scope of CPR 47.20 and the status of detailed assessment as part of existing proceedings, not new litigation.

Background

The claimants brought a section 423 Insolvency Act 1986 claim under CR-2016-008560, dismissed following trial in June and July 2023. An order dated 18 October 2023 provided by consent that the claimants pay the defendants’ costs on the standard basis, to be assessed by detailed assessment if not agreed, with £957,814 on account.

The Defendants served a Form N252 Notice of Commencement, with the bill of costs, on 27 June 2024. A consent order dated 14 August 2025 added BCR Legal Assist Limited, the second and third claimants’ ATE insurer, as an interested party. A preliminary issue concerning the status of orders made by ICC Judge Jones in relation to costs budgeting was heard on 23 September 2025 and determined by judgment dated 18 November 2025. The bill was subsequently settled at £957,814, leaving only the costs of assessment in dispute.

Costs Issues Before the Court

The second and third claimants applied, supported by the defendants, for an order that BCR Legal Assist Limited be jointly and severally liable with them for the defendants’ costs of the detailed assessment proceedings, with a 100% contribution inter se. The application was expressly not a non-party costs order application, nor one under section 51 of the Senior Courts Act 1981. It was put solely under CPR 47.20(1)(b), with reference to the CPR 47.20(3) factors.

The Parties’ Positions

Mr Waszak, for the second and third claimants, submitted that CPR 47.20(1) is a starting point only, makes no mention of who pays, and that 47.20(1)(b) confers a discretion to be exercised by an evaluative judgment as to where justice lies, relying on Hickinbottom LJ in Sirketti v Kupeli at paragraph 5(i). Mr Teasdale, for the defendants, argued that no real party test was needed because BCR Legal Assist Limited was a party, and observed in reply that CPR 47.20 does not say who should do the paying and that no category of payer is identified, referring to “all the parties” in 47.20(3)(a).

Mr Nicol, for the interested party, submitted that the paying and receiving parties had already agreed that the receiving party would have its costs of assessment, and queried how the court could then make “some other order” under 47.20(1)(b). He described CPR 47.20 as “the gateway to make a costs of assessment order”.

The Court’s Decision

Costs Judge Nagalingam dismissed the application. Central to the reasoning was the court’s characterisation of what a detailed assessment is. The underlying claim, the section 423 action, constituted “the proceedings” (para 164). The detailed assessment flowed from that action under CR-2016-008560, in which the defendants held an order for costs payable by the second and third claimants (para 166).

Detailed assessment in these circumstances was therefore “not new proceedings, but in fact part of the existing proceedings which led to the costs order in the Defendants’ favour” (para 167). The judge restated the point at para 180: detailed assessment proceedings are “not a new set of proceedings but rather a procedure that follows where it is impracticable for the originating court to maintain the case for the purpose of assessing costs which the parties cannot agree”.

From that characterisation followed the conclusion at para 181 that “CPR 47.20 cannot be used to alter an existing order for costs”. The second and third claimants’ primary liability to pay the defendants’ costs of the main action could not be reversed or altered, and they did not seek to avoid it.

The judge then analysed the reach of CPR 47.20(1). The provision that the receiving party is entitled to the costs of the detailed assessment proceedings was described as “the usual order” (para 170). Critically, CPR 47.20(1) “does not dictate the source or sources of funds a paying party calls on when the sum they are liable for has crystallised, whether by agreement or assessment”; it “simply addresses which party is entitled to the costs of the detailed assessment proceedings” (para 172).

Accordingly, the exception in 47.20(1)(b) “must be limited to the question of entitlement, rather than the source or sources of funds once the amount of the entitlement has been concluded” (para 173). The “usual order” decides entitlement “without dictating how that entitlement is later discharged”, and any exception is similarly confined (para 174). Interference under 47.20(1)(b) is concerned with “whether someone other than the receiving party ought to be entitled to the costs of the detailed assessment proceedings” (para 176).

The application did not seek to upset the usual order at all: the draft order provided for payment of the receiving party defendants’ costs of assessment (para 177). What the second and third claimants sought was to use 47.20(1)(b) “to effectively transfer their liability for the costs of the detailed assessment proceedings to the Interested Party” (para 178). Put shortly, they agreed the defendants were entitled to those costs but said they should not have to pay them (para 184).

The judge accepted, agreeing with Mr Waszak, that CPR 47.20 is not drafted in such restrictive terms that it could not be applied to an interested party, and recognised that CPR 47.20(3) does not set out an exhaustive list of factors to consider, but rather certain common factors (para 205). But the rule is “very much geared toward consideration of the conduct of the parties to a claim” (para 206).

A second strand concerned the preliminary issue hearing. Mr Teasdale had argued that the interested party would have sought their costs of the preliminary issues hearing had the point raised been accepted by the court. The judge rejected that characterisation of how liability for the costs of a point of dispute is ordinarily addressed (para 197). Had the court found against the defendants at the preliminary issue hearing, that would not necessarily have ended the detailed assessment; it would have been premature to make any order as to the costs of assessment (para 198). Nor does the fact that the assessment did not immediately continue “present an opportunity to hive off a selected element of the wider points of dispute” and make a costs order based on the de facto winner of an individual point (para 199).

It is not uncommon to win and lose various points during a detailed assessment, “but it is the overall result that matters, when contrasted with offers (if indeed any were made) and factors such as conduct” (para 200). A detailed assessment does not stop for a summary assessment of the costs of every point taken; instead, when a CPR 47.20 order is made, either party may ask the court to exercise its discretion as to any particular item or point (para 201). “The order for costs of assessment is dictated by the overall result” (para 202). The judge’s own concluding comments in the 18 November 2025 judgment, recording costs reserved with no separate order, were “an explicit explanation that the preliminary issues heard were simply part of the detailed assessment” (para 218). Listing such a hearing earlier than other dates is a function of court management and does not change that position (paras 299 to 301).

Practical Implications

This first instance decision has a direct drafting consequence. The consent order of 14 August 2025 added BCR Legal Assist Limited as an interested party and set out defined permissions: to serve and file written submissions, to file evidence, and to attend and participate in hearings as directed, limited to matters affecting the interested party’s interest (para 313). The judge observed that both the claimants and defendants “conveniently neglect to address the fact it was they who consented to the addition” with “no provision (nor by later variation or amendment) for BCR Legal Assist Limited to be liable for or contribute to the costs of assessment” (para 349). Silence on costs was treated as significant, not neutral.

Where an insurer, funder or other interested party is to be joined for the purposes of a detailed assessment, any party contemplating a later costs claim against it should address costs expressly in the joinder order, or seek a variation. Restrictions attaching to a party in its capacity as interested party cannot be applied retrospectively to the period when it was a non-party (para 312).

Practitioners should also note that the detailed assessment is part of the existing action and the CPR 47.20 order turns on the overall result. Arguments constructed around the outcome of a discrete preliminary issue, whether to claim costs or to resist them, should be reserved for the final 47.20 exercise, where the court may be asked to exercise its discretion as to any particular item or point taken.

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Wasted Costs Applications | The Practical Necessity Of A Costs Schedule

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The Family Court’s decision in Pool v Pool [2026] EWFC 226 (B) arose from an adjourned First Appointment in financial remedies proceedings at which a wasted costs application against the respondent husband’s former solicitors was withdrawn after counsel for the applicant wife conceded that no Form N260 had been prepared or served.

Background

Pool v Pool [2026] EWFC 226 (B) arose from financial remedies proceedings in the Family Court, in which the applicant wife, Sabrina Pool, sought the transfer of a tenancy into her sole name following the breakdown of a marriage that had lasted from 1998 to 2018. Divorce proceedings were issued in 2024. By March 2025, the parties appeared to have reached an informal agreement on the tenancy transfer, and the respondent husband, Jean-Paul Pool, attended Ash Solicitors in West London to instruct them to prepare a consent order. The wife declined to agree to a dismissal of claims without financial disclosure, instructed MacKenzie & Co, and proceedings were issued in October 2025.

Ash Solicitors indicated in correspondence that the husband remained willing to transfer the tenancy, but by 17 November 2025 they reported that they were without instructions, the husband having communicated only that he was sick. He was not heard from again. He is rumoured now to be in the Seychelles, and he has filed no documents and taken no further part in the proceedings.

The First Appointment was listed for 4 February 2026. The husband filed no Form E and no other documentation. Shortly before that hearing, Ash Solicitors went on the record as acting for the husband and filed a document headed “Respondent Husband’s Position Statement for the FDA“. That document asserted, among other things, that it was “common knowledge” that the husband suffered from mental health difficulties, had been hospitalised, and was in no fit state to participate in the proceedings. Ash Solicitors did not attend the hearing, did not contact the court to explain their absence, and the husband was neither present nor represented.

The court, acting on the capacity assertions in the position statement, ordered that a medical report on the husband’s capacity be prepared and adjourned the First Appointment. It also directed that a member of Ash Solicitors file a statement explaining their conduct and their failure to take any steps to ascertain the husband’s capacity. The court indicated that the adjourned hearing would consider whether a wasted costs order should be made against the firm.

A statement was duly filed on 24 July 2026, signed by Santhya Sasitharan of Ash Solicitors. It disclosed that after the firm’s initial meeting with the husband in March 2025, a social worker at the Royal Free Hospital had made contact regarding the husband’s housing situation. The statement acknowledged that the firm had understood the treatment to be related to mental health but had been unable to contact the husband or his support worker to confirm this. It then stated that it had been “further clarified” that it was the husband’s father who suffered from mental health difficulties. Correspondence disclosed alongside the statement revealed that the social worker in question was attached to a team at the hospital with no connection to mental health services.

The adjourned hearing took place on 3 August 2026 before Deputy District Judge Hales, sitting remotely at the Royal Courts of Justice. The wife was present and represented by counsel, Natalya Evans. The husband did not appear. Representatives of Ash Solicitors attended for part of the hearing.

Costs Issues Before the Court

The primary costs question before the court was whether a wasted costs order should be made against Ash Solicitors pursuant to the court’s jurisdiction under section 51 of the Senior Courts Act 1981 and the procedural framework in CPR 46.8, as applied in family proceedings through FPR 28.2. The application had been foreshadowed at the February 2026 hearing and was confirmed at the outset of the August hearing by counsel for the wife.

The conduct said to ground the application was the filing of a position statement asserting, without any evidential basis, that the husband lacked capacity to engage in proceedings; going on the record without instructions from the husband; failing to attend the First Appointment without notifying the court; and, separately, forwarding the remote hearing link to a third party without the court’s permission.

A secondary issue arose from the wife’s own solicitors’ conduct. The judge noted that the failure to file and serve a Form N260 had caused the wasted costs application to be withdrawn, and observed that this failure was likely to result in a direct cost to Mrs Pool. The judge stated that he would hope that MacKenzie & Co would absorb that cost burden rather than pass it to their client.

A further procedural point arose in relation to the wife’s solicitors having exhibited the entirety of the pleadings from Family Law Act proceedings between the parties to a statement filed in the financial remedies proceedings, without having obtained permission from the Brentford Family Court for that disclosure and without any order having been made at the original First Appointment.

The Parties’ Positions

At the outset of the hearing, Ms Evans confirmed on behalf of the wife that a wasted costs order was sought against Ash Solicitors. The application rested on the conduct described above: the filing of a position statement containing assertions about the husband’s capacity for which the firm had no evidential foundation, going on the record without instructions, failing to attend the First Appointment, and forwarding the hearing link to a third party without permission.

However, on inquiry by the court, Ms Evans conceded that no Form N260 had been prepared or served on Ash Solicitors. Following a short adjournment, Ms Evans communicated by email that the wife no longer pursued the wasted costs application. The judgment records that this withdrawal was presumably a consequence of the absence of the N260, though no formal explanation was provided to the court.

Ash Solicitors, represented initially by Ms Sasitharan and subsequently by Ms Veronica Lartey, who was introduced as the person with supervisory responsibility for family work at the firm, did not advance any substantive defence to the wasted costs application before it was withdrawn. During the court’s subsequent inquiry, Ms Lartey accepted that the firm had no instructions to go on the record in February 2026, that there was no evidence to support the capacity assertions in the position statement, and that the assumption about the social worker’s connection to the mental health team had been an error for which she could offer no explanation. She also accepted, after a struggle, that permission to forward the remote hearing link to a third party was a matter for the court alone.

The Court’s Decision

The wasted costs application was withdrawn before any determination was made, and the court made no wasted costs order. The withdrawal followed the concession by the wife’s counsel that no Form N260 had been prepared or served.

Once the application was withdrawn, the court did not simply move on. The judge used the explanatory statement that had been directed at the February hearing, the correspondence with the hospital social worker that Ash Solicitors had disclosed, and the oral concessions made by Ms Lartey during the hearing to record a series of matters. The judge recorded that Ash Solicitors had no instructions from the husband when they went on the record in February 2026; that the capacity assertions in the position statement were made without any evidential basis and rested on an assumption that was demonstrably wrong; and that the firm had forwarded the remote hearing link to a third party without the court’s knowledge or permission.

The judge described this conduct as “utterly extraordinary” and stated that it had resulted in the firm misleading the Court, though he made clear he did not suggest this was deliberate or that the firm had anything to gain. He characterised the conduct as betraying “carelessness, ignorance of the rules and, it is not too strong to say, utter incompetence.” The judge also noted that if all these steps were conducted by Ms Sasitharan, a solicitor apprentice and not an admitted solicitor, it was a further poor reflection on the firm, betraying a failure to ensure proper and competent supervision of non-admitted staff.

In relation to the wife’s solicitors, the judge noted the failure to file and serve an N260, for which there was no explanation and which led to the withdrawal of the application. He stated that this failure was likely to lead to a direct cost to Mrs Pool, and that he would hope her solicitors would take the necessary steps to ensure the relevant cost burden was undertaken by them rather than by her. He also noted that the wife’s solicitors had exhibited what appeared to be the entire pleadings from Family Law Act proceedings between the parties without permission from the Brentford Family Court, and that no order had been made at the original First Appointment. The judge observed that none of the legal professionals in the case had covered themselves with glory.

The judgment concludes with the judge expressing the hope that it would lead to those involved reflecting upon their conduct, seeking further training or guidance, and ensuring that their clients receive a significantly improved level of service in the future. He stated that parties to family proceedings, many of whom are spending money they can ill afford, deserve no less from the legal professionals involved, and that the competent conduct of legal proceedings is not negotiable.

Analysis | The N260 Point

Neither CPR 46.8, PD 46 nor FPR 28.2 expressly requires a schedule of costs to be filed at the show cause stage of a wasted costs application. The procedural framework requires notice to the legal representative and an opportunity to respond, but does not prescribe the form that notice must take or the documents that must accompany it. Form N260 is not mentioned in the wasted costs rules themselves. That is not the whole picture. PD 44 para 9.5 applies to family proceedings through FPR 28.2 and imposes a positive duty on any party intending to claim costs to prepare a written statement following Form N260 as closely as possible, filed and served in accordance with para 9.5(4), in any case to which para 9.2 applies. Para 9.2 sets the general rule that the court should assess summarily at the conclusion of any hearing lasting not more than one day. Para 9.6 supplies the sanction for non-compliance. So a costs schedule is not a condition precedent to issuing the application, but it is required where summary assessment is in prospect.

In this case, the absence of an N260 led directly to the withdrawal of the application. The judgment does not record any ruling by the judge that an N260 was required as a matter of law, nor does it contain any analysis of whether the application could have proceeded without one. The withdrawal followed counsel’s concession, not a judicial determination. What the case demonstrates is that the absence of a costs schedule made the application practically unviable, even if not legally defective.

The practical lesson is clear. A wasted costs application seeks an order that a legal representative pay costs personally. The court cannot make such an order without knowing what costs are claimed and on what basis. Without a schedule, the court has no evidential foundation on which to assess quantum, even if liability were established. The application becomes an exercise in principle divorced from remedy.

Applicants should file a schedule in any event. The rules do not make one a condition of issuing the application, but PD 44 para 9.5 engages once the matter reaches a hearing at which costs will be claimed and summarily assessed, and para 9.6 gives the court a discretion to take any failure into account. The risk of withdrawal, as occurred here, is otherwise substantial. Whether the court would in every case treat the absence of a schedule as ending the application is not decided by this judgment, which records no ruling on the point.

Analysis What Survived the Withdrawal

The court’s inquiry did not end when the wasted costs application was withdrawn. The judge had already directed that Ash Solicitors file an explanatory statement, and that statement had been filed and served. The firm’s representatives attended the hearing. The judge used that material, together with the disclosed correspondence and the oral concessions made by Ms Lartey, to place on the record a series of observations about the firm’s conduct.

Those observations are now part of a published judgment. They record that the firm went on the record without instructions, asserted incapacity without evidence, failed to attend a hearing without explanation, and forwarded a hearing link to a third party without permission. The judge described the conduct as “utterly extraordinary” and as betraying “carelessness, ignorance of the rules and, it is not too strong to say, utter incompetence.”

These are not findings made pursuant to a wasted costs order, because no such order was made. But they are judicial observations made after inquiry, recorded in a judgment, and based on admissions made by the firm’s own representative. Their status is not equivalent to findings made in a contested wasted costs application, but they are not without weight. They may be deployed in a fresh, properly constituted wasted costs application if one is brought. They may be relevant to a referral to the Solicitors Regulation Authority. They may be relevant in any dispute between the wife and her own solicitors about the costs consequences of the failed application.

Practitioners should note that withdrawal of a wasted costs application does not necessarily insulate the respondent from scrutiny or from the consequences of what emerges during the court’s inquiry. If the court has already directed evidence and conducted a hearing, the material that comes to light may survive the withdrawal and may be used for other purposes.

Analysis | The Permission Points

Two separate permission issues arose in this case, both of which were treated as procedural failures by the judge. The first concerned the wife’s solicitors, who had exhibited the entirety of the pleadings from Family Law Act proceedings between the parties to a statement filed in the financial remedies proceedings. No permission had been sought from the Brentford Family Court, which had conducted the Family Law Act proceedings, and no order had been made at the original First Appointment in the financial remedies proceedings authorising the disclosure.

The second concerned Ash Solicitors, who had forwarded the remote hearing link for the First Appointment to a social worker at the Royal Free Hospital, inviting her to attend. This had been done without the court’s permission and without notifying either the court or the wife’s legal team.

Both are permission points, but they are different in kind. The first concerns the use of documents from one set of proceedings in another. The second concerns the disclosure of a confidential hearing link to a third party and the invitation to that third party to attend a private hearing. The first is a question of which court’s permission is needed and whether it can be implied from case management directions. The second is a question of whether permission was needed at all, a question to which the answer is plainly yes.

Ms Lartey accepted, after a struggle, that responsibility for granting permission to invite a third party to a hearing lay with the court alone. That concession was rightly made. The hearing was a private family proceedings hearing. Attendance is restricted. A party’s legal representative has no unilateral right to invite third parties, however well-intentioned the motive. The court controls its own process, and permission must be sought in advance.

The wife’s solicitors’ position is less clear-cut. Pleadings from related proceedings are often exhibited to statements in financial remedies cases, particularly where they are relevant to the issues in dispute. Whether express permission is required, and from which court, depends on the nature of the documents, the purpose for which they are being used, and whether any order restricting disclosure was made in the original proceedings. The judge’s observation that no permission had been sought and no order made suggests that he considered permission was required, but the judgment does not analyse the point in detail.

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Default Costs Certificate Set Aside Due To Unexplained 300% Costs Increase Despite Defective Application

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Agreed Budget Variation Refused | Mutual Consent Intensifies, Not Reduces, Retrospective Scrutiny

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The High Court’s decision in ML Technology Limited and Naurex Limited v B.E.A.T. SAM Limited and others [2026] EWHC 2142 (Ch) holds that mutual agreement between parties to a costs budget variation may attract closer scrutiny than a contested application, because the court cannot rely on the adversarial process to test the justification.

Background

ML Technology Limited and Naurex Limited brought proceedings against B.E.A.T. SAM Limited (trading as Naurex B.E.A.T. SAM) and seven other defendants in the Intellectual Property List of the Business and Property Courts. The claim concerned the use of the trade mark NAUREX and related intellectual property rights following a share purchase agreement under which, in broad terms, the claimants contended that the defendants had continued to use the Naurex brand beyond any licence they were entitled to rely upon. The defendants, for their part, sought declarations of ownership and entitlement to use the rights in question, relying on complex agency arguments. Parallel proceedings were on foot in Switzerland concerning the share purchase agreement itself.

The main judgment was handed down on 18 June 2026. The central issue that emerged at trial was the length of the period of reasonable notice required to terminate the implied licences. The court found that the defendants had infringed the registered trade marks for a period after expiry of that notice period, but the claims in passing off and joint tortfeasorship failed entirely, and the website copyright claim also failed. The second consultancy contract copyright claim succeeded only to the extent of £4,000, a figure agreed on the basis that it was not worth disputing whether it should be lower.

A costs and case management conference had been held, at which costs budgets were approved. The claimants’ total approved and incurred budget at that stage stood at £716,239.24, with a budgeted disclosure phase of £97,768 and an ADR/settlement discussions budget of £5,000. The defendants’ equivalent total was £840,229.20, with a budgeted disclosure phase of £135,000 and an ADR/settlement discussions budget of £4,964. By the time of the pre-trial review in February 2025, both sides had applied for substantial increases to their costs budgets, principally in respect of the disclosure phase. The claimants sought an increase of £259,069.67 for disclosure alone, together with £29,500 each for the witness statements and trial preparation phases. The defendants sought an increase of £470,747.25 for disclosure. The parties had, by that stage, reached a position of mutual acceptance of each other’s proposed increases and submitted an agreed draft order to the court.

Deputy Master Dew directed on 19 February 2025 that the applications be considered at the pre-trial review unless time was insufficient or the judge considered it inappropriate. At the pre-trial review, the judge declined to approve the increases and instead deferred both applications to after trial, so that the value of the additional disclosure could be assessed retrospectively. Neither party objected to that course. The consequentials hearing took place on 21 July 2026 and addressed, among other things, the claimants’ renewed application for approval of the increase to their costs budget for the disclosure phase.

The Application for Budget Variation

Two distinct costs questions required determination at the consequentials hearing. The first was whether the court should retrospectively approve an increase to the claimants’ costs budget for the disclosure phase in the sum of £259,069.67, being an increase of more than three times the originally budgeted figure of £97,768. The claimants indicated that if this increase were approved, they would not press the remainder of their variation application. The defendants had withdrawn their own variation application entirely by the time of the hearing, which prompted the claimants to adopt a more focused position and press for approval of the disclosure increase alone.

The second question was the incidence of the costs of the proceedings as a whole, including whether either party could be identified as the overall winner for the purposes of CPR r.44.2, and whether any issue-based or proportionate costs order was appropriate.

On the budget variation, the claimants’ position was that the increase to the disclosure phase was justified by significant developments after the costs and case management conference, including the need to search additional data sources and to review a larger volume of the defendants’ disclosed documents than had been anticipated. The defendants had agreed in principle to the disclosure increase (though not to the witness statements and trial preparation increases), accepting that the disclosure exercise had been more substantial than originally envisaged. By the time of the consequentials hearing, the defendants had withdrawn their own variation application, and the claimants pressed for approval of the £259,069.67 disclosure increase on the basis that it was not opposed.

The Court’s Decision on Budget Variation

The court refused to approve the retrospective increase to the claimants’ disclosure budget, notwithstanding that the defendants did not oppose it. The reasons given are of direct relevance to costs practitioners and merit careful attention.

The court’s starting point was that costs budgeting is not simply a matter between the parties. Control of costs serves the interests of third parties and of the court itself, because disproportionate expenditure on disclosure imposes burdens beyond those borne by the immediate litigants, including the court’s own resources in dealing with larger volumes of material. The court stated in terms that the fact that the parties and their advisers had agreed not to challenge each other’s proposed increases was a reason for examining the basis for the variation with more, rather than less, intensity. That proposition is the critical one for practitioners: mutual consent to a Precedent T variation does not provide a safe harbour. It may, on this analysis, attract closer scrutiny than a contested application, because the court cannot rely on the adversarial process to test the justification.

The court identified six reasons for refusing the increase. First, the proposed variations were substantial in both absolute and relative terms, and the more substantial the variation, the greater the justification required. Second, the costs already incurred and budgeted at the pre-trial review stage appeared high given the nature of the dispute, and the proposed increases would make them significantly higher. Third, and most significantly for the purposes of this analysis, it was unclear what value the additional disclosure had contributed to resolving the key issues between the parties. The court observed, having heard the trial and reviewed a large volume of the disclosed documents, that much of the disclosure had been of limited utility. The court noted that if the parties had identified at an early stage that the central issue was likely to be the length of the period of reasonable notice, a great deal of the disclosure exercise would probably not have been required. Critically, no attempt had been made in evidence or argument to explain specifically why the additional disclosure was of value, or why a sum of more than £259,000 (described by the court as roughly the price of an average UK house) needed to be spent on it. The court stated that in the context of a case where the costs budgeted appeared disproportionate, a party seeking a retrospective increase bore a heavy burden, and that burden had not come close to being discharged.

Fourth, the court said at the pre-trial review that it may need to consider whether applications to vary the costs budgets should have been made at an earlier stage, and in particular before the costs were incurred, so that the court could have exercised proper control over whether the proposed costs were likely to be justified by the anticipated benefit. The court emphasised that costs budgeting is intended to act as a constraint on future costs, in the interests of justice, not least because parties incurring increased costs at an earlier stage can hinder settlement and therefore result in still further costs in taking a case to trial. Costs budgeting has to take that into account and is not normally a vehicle for sanctioning costs already incurred.

Fifth, the court considered whether insufficient time, effort and cost had been devoted by the parties and their legal advisers to resolving the case at earlier stages, so avoiding further costs (whether on disclosure, witness statements or other work) such as by ADR or mediation. Limited provision had been made for this and, while the court did not know what without prejudice discussions there had been, no evidence had been provided that there were serious, third-party assisted attempts to resolve the case.

Sixth, the court noted that it has the power to depart from a costs budget in any event, albeit in limited circumstances, and stated that this would have been a case for doing so.

The court’s view was that, in the light of the applicable principles, the retrospective revision to the costs budgets should not be approved, even though it was not actively opposed by the defendants.

Comment

This decision provides important guidance on the court’s approach to retrospective costs budget variations, particularly where the parties have reached agreement. The proposition that mutual consent may attract more intense scrutiny, rather than less, is clearly stated by the deputy High Court judge, though as a first-instance decision it has not yet been tested at appellate level. The court’s reasoning makes clear that costs budgeting serves a wider public interest, not merely the interests of the parties, and that the court retains an active supervisory role even where the parties are agreed.

The decision is particularly valuable for identifying the evidence the court expected but did not receive: a specific explanation of what the extra disclosure actually contributed to resolving the issues, judged with hindsight after trial, plus evidence of serious third-party assisted settlement attempts. The court also noted that the parties’ limited provision for ADR in their own Precedent T schedules was a relevant factor in assessing whether insufficient effort had been devoted to early resolution.

The procedural mechanics are also instructive: the court deferred both parties’ variation applications from the pre-trial review to after trial, over an agreed draft order, so that it could assess value retrospectively. This approach enabled the court to evaluate whether the additional disclosure had in fact contributed materially to resolving the dispute, rather than accepting the parties’ prospective justifications at face value.

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