Non-Party Commercial Funder With “Significant Interest” Liable For Defendants’ Costs On Indemnity Basis.

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Background

The case of Maranello Rosso Limited v Lohomij BV & Ors concerned an unsuccessful claim brought by Maranello Rosso Limited (“MRL”), a Guernsey company, against multiple defendants arising from a failed scheme to purchase and sell a collection of vintage cars. The claim, issued in May 2020, alleged a conspiracy to injure MRL by unlawful means. The defendants successfully applied for summary judgment in September 2021, with the court holding the claims were largely compromised by a prior settlement agreement. MRL’s appeal was dismissed in December 2022. The claimant was ordered to pay the defendants’ costs at first instance and on appeal, but the defendants recovered nothing from MRL. This led to the present applications by certain defendants for non-party costs orders against Hamish Vans Agnew, who was alleged to have funded the litigation.

Costs Issues Before the Court

The key costs issues were whether the respondent, Mr Vans Agnew, should be liable for the defendants’ costs under section 51 of the Senior Courts Act 1981 as a non-party funder, and if so, to what extent. The court had to determine: (1) whether the respondent was a “pure funder” or had a commercial interest in the litigation; (2) whether his funding caused the defendants to incur costs; (3) whether any liability should be capped at the amount of funding provided (the “Arkin cap”); and (4) whether costs should be assessed on the indemnity basis.

The Parties’ Positions

The applicants argued the respondent was a commercial funder who provided £514,000 to MRL through a “vehicle sale agreement” and separate loans, representing 46.5% of MRL’s first instance costs. They contended the transaction was effectively litigation funding, as the respondent stood to gain a 10% success fee plus a Ferrari worth £1 if the claim succeeded – a potential 14-fold return. They sought full reimbursement of their first instance costs on an indemnity basis.

The respondent argued he was merely securing repayment of existing loans through the car purchase, with only £27,000 constituting genuine litigation funding. He maintained the defendants’ costs would have been incurred regardless of his involvement, as other funders contributed £1.4 million after his payments. He denied controlling the litigation or being a “real party” to it.

The Court’s Decision

The court found the respondent was not a “pure funder” but had a substantial commercial interest in the litigation’s outcome. The “vehicle sale agreement” was held to be a funding arrangement disguised as a sale, with the car acting as security. The respondent’s funding enabled the claim to proceed at critical stages, causing the defendants to incur costs.

The judge rejected applying the Arkin cap, given the respondent’s significant potential returns. He ordered the respondent to pay: (1) all of the applicants’ costs up to 6 May 2021 (when another funder contributed); and (2) one-third of costs thereafter, recognising other funders’ involvement in the later stages. The court awarded costs on the indemnity basis due to the respondent’s attempt to disguise funding as a car purchase and his close alignment with MRL’s conduct of the litigation.

The decision illustrates the courts’ willingness to look beyond formal structures to the economic reality of funding arrangements when exercising their discretion under section 51. It also demonstrates that funders with substantial commercial interests may face uncapped costs liabilities, particularly where their involvement is causally linked to the incurring of costs by the opposing party.

Additional Security For Costs Ordered For Inquiry And Detailed Assessment Despite Discharge Of Injunction.

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Background

The legal dispute involved Alta Trading UK Limited and its co-claimants against Peter Miles Bosworth and various other defendants. The claim stemmed from allegations of fraudulent misrepresentation and improper trading activities. Initially, in February 2015, Teare J granted the Claimants a worldwide freezing order against the Defendants, requiring fortification of $2 million. Over the following years, the freezing order was continued, supplementary applications for fortification were made, and costs orders against different defendants were issued and reviewed. In February 2025, Mr Justice Henshaw ruled in favour of the Defendants, dismissing the Claimants’ claims and leading to various consequential applications regarding fortification and security for costs.

Costs Issues Before the Court

The primary costs issues under consideration were requests for additional fortification of the Claimants’ undertakings in damages and additional security for costs. Initially, fortification of $2 million had been ordered in 2015, and despite requests for increased amounts over the subsequent years, these had often been refused, with the Claimants offering instead to set aside various amounts in specific accounts. Following the February 2025 ruling against the Claimants, Mr Bosworth and Mr Hurley applied for additional security for costs ($3,736,451), alongside Mr Kelbrick/Attock Mauritius requesting further fortification of $89,045,000 and additional security for costs of £2,798,000 due to asset depletion and increased expected litigation costs related to the Inquiry into damages.

The Parties’ Positions

Claimants: The Claimants argued against the applications for further fortification and security for costs. They asserted no jurisdiction existed to require additional fortification as the injunction had already been discharged. They maintained the existing security (set aside in specific accounts) was adequate, and depletion of assets in jurisdiction was justifiable. The Claimants’ solicitor, Mr Morrison, presented financial documents showing substantial net assets and argued against any need for further fortification or security for costs.

Defendants: The Defendants, particularly Mr Bosworth, Mr Hurley, and Mr Kelbrick/Attock Mauritius, highlighted the insufficiency of current security given the recently ordered Inquiry into damages and detailed assessment of costs. They argued the Claimants had depleted available assets significantly, raising concerns about recovering awarded costs and damages. They sought further fortification equating to the expected extensive litigation costs and argued misconduct and dishonesty by the Claimants justified additional security.

The Court’s Decision

Mr Justice Henshaw ruled against further fortification, agreeing with the Claimants that fortification typically cannot be increased post-discharge of the injunction, applying principles from relevant case law such as The Mito and Thai-Lao Lignite (Thailand). The court found it was inappropriate to apply CPR 3.1(5) to order payment into court in these circumstances.

As to additional security for costs, Mr Justice Henshaw found significant changes in circumstances justified increasing security. The detailed assessment and Inquiry, alongside increased costs due to the Claimants’ conduct, warranted additional security. The court ordered the Claimants to provide further security for Mr Bosworth and Mr Hurley’s costs (totaling £3,736,451) and for Mr Kelbrick/Attock Mauritius (£2,798,000). The orders were not made in ‘unless’ form, allowing liberty to apply to address potential non-compliance.

Claimant’s Costs Reduced By 40% Due To Chaotic Litigation Conduct

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Background

Carl v Hawkins & Ors [2025] EWHC 1104 (Ch) involved a protracted litigation over several unrelated issues, with the core contention revolving around alleged dishonest misappropriation of funds by the defendants, among other claims. Mr Bernard Jacob Carl (“the Claimant”) instituted the proceedings against Mr John Hawkins and multiple other defendants, alleging various forms of wrongdoing. During the course of the litigation, numerous procedural steps were undertaken, culminating in the present costs determination hearing.

Over the years, several interlocutory applications and hearings took place, and multiple defendants either represented themselves or did not actively participate. At the main hearing, Mr Carl, who represented himself, sought various forms of relief, including monetary compensation and proprietary claims over certain assets allegedly acquired with his misappropriated funds. The judgment resulted from a sequence of judicial directions, applications, and interim orders, including a significant pre-trial adjournment ordered by ICC Judge Briggs in June 2021 due to widespread noncompliance with court orders. This led to the present hearing on costs and related issues.

Costs Issues Before the Court

Several costs issues were adjudicated by Mr Simon Gleeson in this judgment:

  • The Claimant’s request for costs recovery, particularly against the defendants found liable for dishonest receipt and assistance.
  • Interim costs orders arising from prior hearings, including the order issued by ICC Judge Briggs on 18 June 2021 requiring the Claimant to bear costs thrown away due to the adjournment.
  • Claimant’s application for sanctions against some defendants for procedural noncompliance, particularly concerning adherence to pre-action protocols.
  • Determination of costs following the mixed success in various interconnected claims, notably between the Claimant and Mrs Edwards.
  • Interest claims relating to the alleged misappropriation of funds and contractual interest under the Bill of Sale.
  • Reduction in costs due to the conduct of the litigation by the Claimant.

The Parties’ Positions

The Claimant, Mr Carl, sought recovery of substantial costs incurred throughout the litigation. He submitted detailed objections to costs claimed by Defendants, particularly regarding the interim costs order resulting from the Briggs hearing. His overarching argument was that costs claimed as “thrown away” were overstated since much of the work performed could be reused in subsequent hearings.

Mrs Edwards, a significant respondent in these proceedings, argued for her costs associated with successful defenses in the main action, while disputing liability for costs in the cheque action. Her position emphasized the complexities due to partial success in different facets of the litigation.

Mr Limbani sought recovery of his costs despite an earlier finding by Simon Gleeson debarring him from recovering costs due to perceived non-cooperative and strategically obstructive conduct during the main action. He additionally sought sanctions against Mr Carl for alleged breaches of pre-action protocols, arguing undue prejudice due to lacking pre-action correspondence and early involvement of legal representation.

Both parties also disputed various elements of interest claims, especially concerning the application of enhanced rates and compounding for pre-judgment interest as well as contractual interest claims under a Bill of Sale.

The Court’s Decision

Mr Simon Gleeson delivered a detailed and nuanced judgment addressing each costs issue:

Regarding the interim costs order from the Briggs hearing, he held that costs “thrown away” are not universally defined but generally relate to costs incurred that are genuinely wasted due to noncompliance or procedural failings. The court rejected any immediate payment on account to Mrs Edwards and Mr Limbani due to unresolved disputes over the quantum of costs genuinely wasted.

Regarding the Claimant’s procedural conduct, particularly regarding pre-action protocols, the court held that the failure to send a pre-action letter to Mr Limbani was reasonable and proportionate under the circumstances, given the likelihood of non-engagement and lack of beneficial pre-litigation negotiation. Therefore, no sanctions were imposed against Mr Carl for procedural breaches.

Interest claims were scrutinised, and the court applied the statutory investment rate (1% above the Bank of England base rate) for pre-judgment interest, rejecting an enhanced rate based on the Claimant’s refinancing costs. Equitable interest was ordered in respect of dishonest receipt claims, applying a compensatory rationale rather than a punishment.

Complex cross-claims for costs, particularly between Mr Carl and Mrs Edwards, required detailed assessment due to the mixed success. The court ordered detailed assessment by a costs judge following rejection of simplistic allocation approaches.

Finally, the court upheld a 40% reduction in Mr Carl’s overall costs claim due to disruptive litigation conduct, maintaining that the claimant, who chose to proceed without legal representation, bore substantial responsibility for case management difficulties. A proportionate approach was ordered to mitigate unintended financial ramifications.

Liquidators Not Personally Liable For Costs Despite Erroneous Admission Of Foleys’ Proof Of Debt.

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Background

This matter concerns the liquidation of Saville Foley LLP (“the LLP”), involving two primary applications. The first application was submitted by Sanrose Investment Limited (“Sanrose”) on 3 August 2023, seeking the reversal of the decision by the LLP’s joint liquidators, Tyrone Courtman and Deviesh Raikundalia (“the Liquidators”) to admit the proof of debt submitted by Lawrence Foley and Jennifer Foley (“the Foleys”) for £502,428. Additionally, Sanrose sought a personal costs order against the Liquidators in case their application succeeded. The second application, dated 6 September 2023, was made by FWJ Legal Limited (“FWJ”), seeking the reversal or variation of the Liquidators’ decision to reject FWJ’s proof of debt dated 10 August 2023.

To provide context, the LLP was incorporated on 8 June 2011 to develop a property in Chelmsford, Essex (“the Property”). The initial members were the Foleys and the Savilles, with Foley Investments Limited (“FIL”), owned by the Foleys, eventually becoming one of the two designated members alongside Sanrose, owned by the Savilles. Despite numerous planning applications and agreements, the development was never completed, leading to significant discord and eventually to the winding-up of the LLP on 13 January 2021, ordered on Sanrose’s contributory petition.

The Liquidators, who were appointed on 1 February 2021, had to deal with the complexities arising from the claims submitted by the parties involved. These included Sanrose’s accepted loan proof of £450,000, FIL’s rejected proof of £450,000, and the Foleys’ accepted proof of £502,428. The dispute largely stemmed from the intricate financial interactions and contributions towards the aborted development project. Against this backdrop, the court was invited to determine the validity and accuracy of the Liquidators’ decisions regarding these proofs and the overall handling of costs incurred in these proceedings.

Costs Issues Before the Court

The court faced several key cost-related questions. Primarily, whether the Liquidators’ decision to accept the Foleys’ proof of debt was correct, which would determine whether Sanrose’s application to reverse that decision should succeed. Additionally, the validity of the Liquidators’ rejection of FWJ’s proof of debt, which depended significantly on the interpretation of the Deed of Assignment and Charge (“DOA”) between FWJ and FIL, was scrutinized. Finally, the issue of whether a personal costs order against the Liquidators was warranted, based on their conduct during the decision-making process, also needed to be resolved.

The Parties’ Positions

Sanrose, represented by Mr Nathan Webb, argued that the Liquidators had erred in admitting the Foleys’ proof of debt. They contended that the proof in question was not properly substantiated and that the evidence overwhelmingly supported the view that any outstanding sums were owed to FIL, not the Foleys personally. They suggested that inconsistencies and errors in financial documentation further supported this position, and they sought to have the decision reversed and costs awarded against the Liquidators personally for procedural failings.

The Foleys, representing themselves, struggled to clearly articulate their claim but appeared to assert that they were personally owed a debt due to their initial property contribution and other associated costs. They maintained that various payments and transactions with the Savilles equaled a legitimate personal investment in the LLP, qualifying them for such a debt.

FWJ, represented by Mr Adam Deacock, submitted that their claim should be recognised by virtue of the DOA with FIL, which they contended assigned FIL’s rights in the LLP’s liquidation to FWJ. They argued that the intent of the DOA encompassed any liquidation scenario, not limited to a member’s voluntary liquidation, raising questions about contractual interpretation.

The Liquidators, though adopting a largely neutral stance, defended their process and substantive rationality of the decisions made, particularly the acceptance of the Foleys’ proof of debt. They explained this was based on viewing the contributions made by the Foleys as loans and personal investments, aligning with the evidence available in various financial records and correspondence.

The Court’s Decision

In its analysis, the court determined that the Liquidators’ decision to admit the Foleys’ proof of debt must be reversed. The evidence suggested that any ongoing financial claim was more properly ascribed to FIL, not the Foleys personally. This conclusion was supported by the historical accounts, contractual documents, and previous legal positions stated by the parties. Consequently, the court ruled that FIL was the proper creditor, entitled to a debt of £450,000, and therefore should participate in the distribution of the LLP’s assets in liquidation.

Regarding FWJ’s claim, the court reasoned that the DOA between FWJ and FIL effectively assigned FIL’s rights in the LLP’s liquidation to FWJ, despite the specific reference to a member’s voluntary liquidation. By interpreting the DOA within its broader context and the factual backdrop of the compulsory liquidation, the court recognised FWJ’s entitlement to prove in the liquidation based on their rights under the DOA.

On the question of a personal costs order against the Liquidators, the court found no evidence of bad faith or irrational conduct. It was noted that the Liquidators acted in a quasi-judicial capacity and made decisions based on their professional judgment and available evidence. The procedural approach, including the meeting with Mr. Foley, was not deemed improper or indicative of bias. As such, a personal costs order against the Liquidators was not warranted.

In summary, the court’s decisions clarified the proper allocation of debts among the parties involved, affirming the rights of FIL and FWJ within the liquidation process while exonerating the Liquidators from personal costs liability due to the absence of misconduct or unreasonable behavior on their part.`

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

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Background

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

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

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

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

Costs Issues Before the Court

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

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

The Parties’ Positions

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

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

The Court’s Decision

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

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

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

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

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

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

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Background

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

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

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

Costs Issues Before the Court

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

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

The Parties’ Positions

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

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

The Court’s Decision

Deputy Costs Judge Erwin-Jones addressed both contested points.

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

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

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

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

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Background

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

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

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

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

Costs Issues Before the Court

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

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

The Parties’ Positions

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

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

The Court’s Decision

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

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

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

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

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Background

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

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

Costs Issues Before the Court

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

The Parties’ Positions

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

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

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

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

The Court’s Decision

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

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

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

In summary, the Claimant was found not entitled to:

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

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

Claimant Awarded Costs Against First, Second, and Sixth Defendants on Joint and Several Basis Following Successful Liability Judgment, With £20 Million Interim Payment Ordered on Standard Assessment Basis.

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Background

The case of IBM United Kingdom Limited v LzLabs GmbH & Ors. ([2025] EWHC 998 (TCC)) concerns a dispute wherein IBM United Kingdom Limited (“IBM”) brought claims against LzLabs GmbH, Winsopia Limited, LzLabs Limited, Mark Jonathan Cresswell, Thilo Rockmann, and John Jay Moores (collectively, “the Defendants”) regarding breaches of the Integrated Collaboration Agreement (ICA).

On 10 March 2025, the Court handed down judgment ([2025] EWHC 532 (TCC)), ruling in favour of the Claimant against the First, Second, and Sixth Defendants, and dismissed the claims against the Third, Fourth, and Fifth Defendants. The Court’s key findings included that the Second Defendant (Winsopia) breached the ICA, the First Defendant (LzLabs) and the Sixth Defendant (Mr Moores) unlawfully procured breaches of the ICA by Winsopia, and that the First, Second, and Sixth Defendants were liable for the tort of unlawful means conspiracy.

Following the judgment, a Consequentials Hearing was held to determine several matters including the ambit and terms of injunctive relief, disposal and directions for the quantum trial, any declaratory relief, costs, permission to appeal, and stay of injunctive relief.

Costs Issues Before the Court

The primary costs-related issue before the court was whether the Defendants should pay the Claimant’s costs and the basis of such costs. The Claimant sought an order for payment of its costs on a joint and several basis, subject to detailed assessment on the indemnity basis if not agreed. The Defendants argued for a reduction in costs on grounds that the Claimant lost on certain issues and against specific defendants.

The Defendants also sought an order that the Claimant should pay the costs of the Third, Fourth, and Fifth Defendants due to the unsuccessful claims against them. Additionally, there was a discussion surrounding the extent to which the Claimant’s costs in the failed claims should be accounted for.

The Parties’ Positions

The Claimant’s position was that it was the successful party and thus entitled to recover costs against the First, Second, and Sixth Defendants jointly and severally. They argued for indemnity costs on the grounds of the Defendants’ alleged deliberate concealment, non-compliance with audit requests, systematic breaches, and obstructive conduct during the proceedings.

Conversely, the Defendants contended that the costs should be apportioned relative to the issues on which the Claimant did not succeed, particularly the claims against the Third, Fourth, and Fifth Defendants. They also argued for joint rather than several liability for costs and sought reduction and standard basis assessment of the Claimant’s costs.

The Court’s Decision

The Court ruled that the Claimant should be regarded as the successful party and therefore entitled to recover costs from the First, Second, and Sixth Defendants on a joint and several basis. The Court did not find it practical to make an issue-based costs order or a reduction in proportionate costs simply because the Claimant did not succeed on every issued aspect.

The Court rejected the claim that indemnity costs were appropriate, viewing the Defendants’ conduct, while assertive, not unreasonable to a degree warranting penalisation through indemnity costs. The costs were ordered to be assessed on the standard basis.

Regarding the payment on account, the Court acknowledged the extensive litigation costs (£45.3 million) and found £20 million to be a reasonable sum to award as an interim payment on account of the costs incurred, factoring in anticipated adjustments upon detailed assessment.

The Court rejected the application for the costs of the Third, Fourth, and Fifth Defendants on the basis that their legal representation and defence positions were aligned with those of the First, Second, and Sixth Defendants, and their incurred costs were minimal.

Finally, the Court granted a stay of the injunctive relief awarded to IBM, allowing for the possibility of an appeal, but did not extend this to the orders for delivery up/destruction in respect of the ICA Programs given the built-in safeguards.

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

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Background

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

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

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

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

Costs Issues Before the Court

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

The Parties’ Positions

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

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

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

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

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

The Court’s Decision

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

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

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

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

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