Background

The case involved Mr M Willis, the former managing partner of GWB Harthills LLP, a firm of solicitors. In 2018, the claimant was diagnosed with cancer and went on sick leave, receiving payments from a permanent health insurance (PHI) scheme. A dispute arose regarding whether the claimant was entitled to profit share payments into his pension alongside PHI benefits. The claimant submitted his first claim to the Employment Tribunal on 16 April 2020, which was partially admitted by the respondent in November 2020. A consent judgment on liability was entered on 6 January 2021. A second claim was lodged on 7 June 2021 and heard between 19 and 26 June 2021, resulting in dismissal on 3 May 2022. A remedy hearing for the first claim took place from 3-6 October 2022, with deliberations concluding on 21 December 2022. The Tribunal made no award in the claimant’s favour and was highly critical of his conduct, particularly his dishonesty in giving evidence. Both parties applied for costs, and the Tribunal ordered the claimant to pay the respondents’ costs, capped at £210,000, to be assessed by the County Court on a standard basis.

Costs Issues Before the Court

The key costs issues before the Employment Appeal Tribunal (EAT) were whether the Employment Tribunal had properly exercised its discretion in awarding costs, specifically in relation to the claimant’s ability to pay. The appeal focused on three grounds:

(1) whether the Tribunal failed to properly consider the claimant’s ability to pay when deciding to award costs;

(2) whether it failed to account for the impact of the costs order on the claimant’s wife and children; and

(3) whether it wrongly included an estimated £340,000 profit share in assessing the claimant’s ability to pay.

The Parties’ Positions

The claimant argued that the Tribunal erred by not adequately considering his financial circumstances, including his limited liquidity, substantial debts, and the potential impact on his family if forced to sell the family home. He also contended that the Tribunal wrongly relied on an uncertain profit share entitlement, which had not been paid due to ongoing disputes. The respondents maintained that the Tribunal had correctly assessed the claimant’s ability to pay, noting his substantial equity in the family home and the likelihood of future profit share payments. They emphasised the claimant’s unreasonable conduct, including dishonesty, which justified the costs order.

The Court’s Decision

The EAT dismissed the appeal, upholding the Tribunal’s costs order. It found that the Tribunal had properly considered the claimant’s ability to pay at both the discretionary and quantum stages. The Tribunal’s broad assessment of the claimant’s means, including his half-share in the family home and potential profit share, was deemed sufficient. The EAT rejected the argument that the Tribunal should have explicitly addressed the impact on the claimant’s family, noting the significant capital value of the property. It also held that the Tribunal was entitled to consider the estimated profit share, despite its uncertain realisation, as part of a forward-looking assessment of the claimant’s financial position. The EAT concluded that the Tribunal’s approach was lawful and within its discretion under Rule 84 of the Employment Tribunal Rules 2013.

Background

The case of Logix Aero Ireland Limited v Siam Aero Repair Company Limited [2025] EWHC 1283 (KB) arose from a commercial dispute involving the sale of two Pratt & Whitney 127 aircraft engines. The parties had entered into a Letter of Intent (LOI) on 4 July 2024 (signed by the defendant) and 9 July 2024 (signed by the claimant), which was partially subject to the execution of subsequent Sale and Purchase Agreements (SPAs). Negotiations were conducted primarily by email. From 29 July 2024, a fraudster intercepted and manipulated email communications between the parties, leading the claimant to pay the purchase price of USD 824,900 into the fraudster’s bank account rather than the defendant’s. The defendant, having not received payment, refused to release the engines.

The claimant issued proceedings on 21 October 2024, seeking declarations, damages, and/or delivery up of the engines. The defendant applied on 27 December 2024 to strike out the claim under CPR 3.4(2)(a) and/or for reverse summary judgment under CPR 24.3, arguing the claim had no reasonable prospects of success. The defendant also sought indemnity costs due to the claimant’s original pleading, which included unsubstantiated allegations of fraud. The claimant subsequently submitted a draft Amended Particulars of Claim (draft APC), which removed the fraud allegations and reframed the claim around breach of a confidentiality clause and apparent authority.

Costs Issues Before the Court

The key costs-related issues before Mrs Justice Heather Williams were:

1. Whether the defendant was entitled to indemnity costs due to the claimant’s original pleading, which included unsubstantiated allegations of fraud.
2. The appropriate costs order following the court’s determination of the strike-out and summary judgment applications.

The Parties’ Positions

Defendant’s Submissions on Indemnity Costs:
The defendant argued that the claimant’s original Particulars of Claim improperly alleged fraud without sufficient evidential basis. The pleading included speculative assertions (e.g., para 11) suggesting the defendant’s complicity in the fraud, despite the claimant having no concrete evidence to support this. The defendant contended that such allegations were inappropriate and warranted indemnity costs under CPR 44.3(1), as they fell outside ordinary and reasonable conduct of litigation.

Claimant’s Submissions on Indemnity Costs:
The claimant accepted that the original pleading did not meet the strict requirements for pleading fraud but argued that it was an honest attempt to set out suspicions based on the limited information available at the time. The claimant emphasised the urgency of issuing proceedings due to French interim seizure orders and the lack of pre-action disclosure from the defendant. It was submitted that the inclusion of the fraud allegations did not justify an indemnity costs order.

The Court’s Decision

Indemnity Costs:
The court held that the claimant’s original pleading was inappropriate. The allegations of fraud were inadequately particularised and lacked a proper evidential foundation, contrary to the principles set out in Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1. The court rejected the claimant’s justification for the pleading, noting that the urgency of the French proceedings did not necessitate the inclusion of unsubstantiated fraud allegations. The defendant was awarded indemnity costs in relation to the original Particulars of Claim.

Background

The case of Richardson & Others v Slater & Gordon UK Limited [2025] EWHC 1220 (SCCO) involved a group litigation claim by 224 claimants against their former solicitors, Slater & Gordon UK Limited, concerning the enforceability and fairness of Conditional Fee Agreements (CFAs) entered into for personal injury claims. The claims arose from road traffic accidents and workplace injuries occurring between 2016 and 2020. The claimants alleged that the defendant’s retainers were unenforceable as Damages Based Agreements (DBAs), failed to comply with consumer contract regulations, and contained unfair terms. The court was tasked with determining nine preliminary issues, primarily focusing on costs-related matters, including the validity of the CFAs, the adequacy of information provided to clients, and the reasonableness of success fees and hourly rates.

Costs Issues Before the Court

The court was required to determine the following key costs issues:

1. Whether the CFAs were unenforceable as DBAs under s58AA of the Courts and Legal Services Act 1990.
2. Compliance with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CC(ICAC)R).
3. Whether the defendant adequately informed claimants about potential liability for costs exceeding recoverable sums from opponents.
4. Whether claimants gave informed consent to terms permitting recovery of costs exceeding sums recoverable from opponents.
5. The fairness of terms under the Consumer Rights Act 2015.
6. The reasonableness of success fees and hourly rates charged.

The Parties’ Positions

Claimants’ Submissions: The claimants argued that the CFAs were effectively DBAs but did not comply with DBA regulations, rendering them unenforceable. They contended that the defendant failed to provide clear and prominent information about costs, particularly the 25% cap on damages deductions, ATE premiums, and the potential for costs to exceed recoverable sums from opponents. The claimants also alleged that the success fees and hourly rates were unreasonable and lacked informed consent.

Defendant’s Submissions: The defendant maintained that the CFAs were compliant with the CFA Regulations 2013 and were not DBAs. They argued that the information provided to claimants was clear and comprehensive, both orally and in written documentation. The defendant asserted that the success fees were justified by risk assessments and that the hourly rates were standard and agreed upon in the retainer documents.

The Court’s Decision

1. Enforceability as DBAs: The court rejected the claimants’ argument that the CFAs were unenforceable DBAs. It held that the agreements complied with CFA regulations and did not meet the definition of DBAs under s58AA of the Courts and Legal Services Act 1990. The 25% cap on damages deductions was a statutory feature of CFAs, not a DBA mechanism.

2. Compliance with Consumer Contract Regulations: The court found that the defendant had provided sufficient information in a clear and prominent manner, as required by the CC(ICAC)R. The oral explanations and written documentation adequately covered the key terms of the retainer, including the 25% cap and potential liability for unrecovered costs.

3. Informed Consent and Reasonableness of Success Fees: The court held that the claimants had agreed to the terms of the CFA, including the potential for costs to exceed recoverable sums from opponents. However, it found that the success fees required reassessment due to a lack of detailed explanation of their calculation. The court reduced the success fees to 10% for passenger claims, 15% for straightforward driver claims, and upheld the 100% fee for cases proceeding to trial.

4. Hourly Rates: The court ruled that the defendant’s uniform hourly rate of £217 for all fee earners was unusual and lacked justification. It applied the Guideline Hourly Rates (GHR) for National Band 1, allowing differentiated rates based on fee earner seniority.

5. Fairness of Terms: The court concluded that the terms of the CFA were fair and transparent under the Consumer Rights Act 2015. The key terms, including the 25% cap, were prominently displayed and explained in plain language.

In summary, the court upheld the validity of the CFAs but adjusted the success fees and hourly rates to reflect reasonableness and fairness. The judgment provides clarity on the standards for informing clients about costs in CFAs and the importance of transparency in solicitor-client agreements.

Background

The case of Gorenstein v Sears Tooth Solicitors concerned a detailed assessment of costs under the Solicitors Act 1974. The claimant, Ms Elinor Gorenstein, sought an assessment of costs billed by her former solicitors, Sears Tooth, in relation to family proceedings involving financial remedy and children matters. The assessment was heard before Costs Judge Nagalingam in the Senior Courts Costs Office (SCCO). The parties had exchanged points of dispute and replies, with key issues centring on the applicability of section 74(3) of the Solicitors Act 1974, the adequacy of costs estimates provided, and the reasonableness of certain categories of costs claimed.

Costs Issues Before the Court

The court was required to determine several preliminary costs issues, including:

1. Whether section 74(3) of the Solicitors Act 1974 applied to the assessment, given that the underlying proceedings were in the Family Court rather than the County Court.
2. Whether the retainer agreement complied with CPR 46.9(2), particularly regarding informed consent for costs exceeding what might be recoverable inter partes.
3. The adequacy of costs estimates provided by the defendant and whether the claimant should be bound by them.
4. The treatment of estimated time entries in the bill of costs.
5. The categorisation of fee earners described as “Managing Clerks” and the appropriate charging rates.

The Parties’ Positions

Claimant’s Submissions:
The claimant argued that section 74(3) of the Solicitors Act 1974 applied, limiting recoverable costs to what could have been allowed on an inter partes basis. Relying on Oakwood Solicitors v Menzies [2024] UKSC 34 and PACCAR Inc v Competition Appeal Tribunal [2023] UKSC 28, the claimant contended that the statutory construction should protect clients from excessive costs. The claimant further submitted that the retainer failed to provide “full and fair” disclosure of costs risks, citing Macdougall v Boote Edgar Esterkin [2001] 1 Costs LR 118 and Herbert v HH Law [2019] EWCA Civ 527. Additionally, the claimant challenged the adequacy of costs estimates and the inclusion of estimated time entries.

Defendant’s Submissions:
The defendant argued that section 74(3) did not apply, as the proceedings were in the Family Court, not the County Court. Relying on Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387, the defendant submitted that CPR 46.9 provided sufficient consumer protections. The defendant maintained that the retainer adequately explained costs liabilities and that post-retainer communications reinforced this understanding. On estimates, the defendant cited Guest Supplies International Ltd v Ince Gordon Dadds LLP [2022] EWHC 2652 (SCCO), arguing that estimates were not binding caps and that the claimant had not demonstrated reliance on them to her detriment.

The Court’s Decision

Section 74(3) Solicitors Act 1974:
The court held that section 74(3) did not apply, as the proceedings were in the Family Court, not the County Court. The Crime and Courts Act 2013 had clarified the distinction between these jurisdictions, and there was no evidence Parliament intended to extend section 74(3) to Family Court matters. The court rejected the claimant’s argument that this created an “absurd result,” noting that pre-2013, similar proceedings would have been in the High Court, where section 74(3) also did not apply.

Retainer and CPR 46.9:
The court found the retainer complied with CPR 46.9(2). The retainer explicitly stated that the claimant would be responsible for her own costs, with limited exceptions where costs might be recovered from the opponent. This constituted an agreement permitting the solicitor to recover more than might be allowed inter partes. The court also rejected the claimant’s argument that certain costs (incoming letters, overheads, dual attendances) were “unusually incurred,” as the retainer had clearly provided for these charges.

Costs Estimates:
The court declined to cap costs at the estimated figures but agreed they should be considered in assessing reasonableness. Following Guest Supplies, the court held that estimates were not binding unless relied upon to the client’s detriment. The defendant had provided regular updates and explanations for exceeding estimates, and the claimant had not shown she would have acted differently had more accurate estimates been given.

Estimated Time:
The court rejected the claimant’s argument that all estimated time should be disallowed. Instead, it directed that such entries be assessed on a line-by-line basis, taking into account the work actually done and the claimant’s knowledge of the same.

Managing Clerks:
The court encouraged the parties to resolve this issue between themselves, failing which further submissions would be required.

Next Steps:
The matter was adjourned for a line-by-line assessment of the remaining disputed costs, with the parties directed to provide available dates for the continuation hearing.

Background

The case concerned an application by Volga-Dnper Logistics B.V. (the Defendant) to vary an interim payment order made by Bryan J on 11 February 2025. The order required the Defendant to make payments totalling USD 202,811,264 to Celestial Aviation Trading entities (the Claimants) by 25 February 2025, plus a £50,000 payment on account of costs. The Defendant sought to vary the order so that its payment obligations would only commence after obtaining licences from OFSI (UK) and OFAC (US) sanctions authorities.

The dispute arose from aircraft lease agreements between the Claimants and two Russian airlines, with the Defendant providing guarantees. Following Russia’s invasion of Ukraine in February 2022 and subsequent sanctions, the Claimants terminated the leases and demanded payment from the Defendant under the guarantees. When payment was not forthcoming, proceedings were issued in May 2022.

The procedural history included delays due to the Defendant’s difficulties in securing legal representation under sanctions regimes. The Defendant’s ultimate beneficial owner, Alexey Isaykin, was designated under UK sanctions in June 2022 and US sanctions in August 2024. After various adjournments, Bryan J heard the Claimants’ interim payment application on 11 February 2025, making the order now sought to be varied.

Costs Issues Before the Court

The key costs-related issue was whether the court should vary the interim payment order to make payment conditional upon the Defendant obtaining sanctions licences. The Defendant argued that without such variation, it faced an impossible choice between complying with the order (potentially breaching sanctions) or being in contempt of court for non-payment.

The court had to consider: (1) the principles governing variation of interim payment orders under CPR 25.20(6)(b); (2) the impact of UK and US sanctions legislation on the Defendant’s ability to comply; and (3) whether the circumstances justified varying the original order.

The Parties’ Positions

The Defendant submitted that variation was necessary because:

1. Complying with the order without licences would breach UK and US sanctions
2. The original order was made without full consideration of sanctions implications
3. It had promptly applied for necessary licences (though only after the payment deadline)
4. It faced potential contempt proceedings despite being unable to comply lawfully

The Claimants opposed variation, arguing:

1. The court was aware of sanctions issues when making the original order
2. No material change of circumstances or misstatement justified variation
3. The order itself did not breach sanctions – compliance was the Defendant’s responsibility
4. Variation would prejudice their ability to enforce against the Dutch-held funds
5. They would not pursue contempt proceedings while sanctions prevented compliance

The Court’s Decision

The court refused to vary the interim payment order, finding:

1. Variation principles: Following Tibbles v SIG, variation requires a material change of circumstances or misstatement. Neither was established here as the court was aware of sanctions issues when making the original order.
2. Sanctions impact: While sanctions created practical difficulties for the Defendant:
   • The order itself did not breach sanctions (following Mints and R v R)
   • UK sanctions were unlikely to be breached as the Defendant was Dutch and funds would go to Ireland
   • US sanctions concerns were mitigated as ING would not release funds without OFAC approval
   • The Serious Crime Act 2007 offence risk was not made out
3. Practical considerations:
   • Variation would weaken the Claimants’ position in Dutch enforcement proceedings
   • The Defendant delayed both its variation application and licence requests
   • The Claimants’ assurance against contempt proceedings addressed the Defendant’s key concern

The court emphasised that while sanctions created compliance difficulties, this did not automatically justify varying the order. The original order remained appropriate as it did not itself breach sanctions and preserved the Claimants’ enforcement position.