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

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

Background

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

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

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

Costs Issues Before the Court

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

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

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

The Parties’ Positions

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

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

The Court’s Decision

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

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

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

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

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

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

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

Interim Payment on Account

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

      • Costs within the budget: 90% of budgeted costs and 70% of incurred costs [§63].
      • Out-of-budget interim application costs: an interim payment of 70%, rejecting the claimants’ submission that 50% was appropriate [§64–65].
      • Budget overspend: The court accepted the defendant was likely to establish ‘good reason’ for some overspend, particularly in pre-trial phases, due to the unprecedented case management, frequent pleading amendments, and evolving nature of the litigation [§71–73]. Adopting a cautious approach similar to that in Montres Breguet SA v Samsung Electronics Ltd [2022] EWHC 1895 (Ch), it awarded an interim payment of 20% of the claimed overspend of £394,985.31 [§74].
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The Technology and Construction Court’s decision in National House-Building Council v Hodson Developments Ltd & Ors [2025] EWHC 3438 (TCC) confirms that a party cannot rely on its solicitors’ withdrawal as a good reason for failing to file a costs budget on time.

Background

The claimant, the National House-Building Council (NHBC), commenced proceedings in January 2024 against three defendants. The first defendant was a development company, with the second and third defendants being its current and former directors. The claim, valued at approximately £5 million, sought remediation and other costs from the first defendant under the NHBC’s rules and, alternatively, under an indemnity agreement from the individual defendants [§11–12].

The defendants initially instructed Gowlings as their solicitors in late February 2024. In late July 2024, due to what was said to be an unexplained conflict, the second and third defendants instructed North Star Law Ltd, which had at some stage acted for all parties in the pre-proceeding stage [§12]. Pleadings closed in June 2025. A first case and costs management conference (CCMC) was listed for 20 June 2025. In accordance with CPR 3.13, the parties were required to file and exchange costs budgets not later than 21 days before that conference, by 30 May 2025.

In the period leading up to this deadline, the first defendant’s director, Mr Hodson, was engaged with a separate planning inquiry beginning in February 2025 and adjourned into mid-April and May 2025. However, the court noted there had been a failure to give proper instructions to Gowlings well before the planning inquiry commenced [§13]. Communications from Gowlings to the first defendant on 3 March 2025 warned of the need to file a budget and the consequences of failing to do so [§14]. Gowlings terminated their retainer on 14 May 2025 and applied for a formal order declaring they had ceased to act, which was granted by Waksman J on 3 June 2025 [§16–17]. The first defendant had notice of that application before it was made [§17]. Consequently, the first defendant failed to file a costs budget by the 30 May deadline.

All three defendants missed the deadline, but at the CCMC on 20 June, relief from sanction was granted to the second and third defendants as their delay was only one day and the application was unopposed [§18].

At that hearing, North Star Law had agreed to act for all defendants from 18 June and a combined budget was before the court on 19 June [§18]. However, as there was no formal application or evidence from the first defendant seeking relief, the court directed a separate hearing to determine whether the automatic sanction under CPR 3.14 should be disapplied for the first defendant [§18]. That hearing took place on 15 September 2025.

Costs Issues Before the Court

The sole issue for determination was the first defendant’s application, dated 4 July 2025, for relief from the sanction imposed by CPR 3.14 [§1]. This rule states that unless the court orders otherwise, a party which fails to file a budget when required will be treated as having filed a budget comprising only the applicable court fees [§5]. The practical effect of maintaining the sanction would be to restrict the first defendant’s recoverable costs for future stages of the litigation to court fees only, should it be successful. Importantly, both parties agreed that the sanction is “forward-facing only” and would not automatically affect the incurred costs already shown in the Precedent H [§8]. The sanction affects only recoverable future costs, not the conduct of the defence itself.

The court was required to apply the established three-stage test from Denton v White [2014] EWCA Civ 906, as recently affirmed by the Court of Appeal in Leadingway Consultants v Saab & Anr [2025] EWCA Civ 852 [§6, §9]. The court was also to consider all the circumstances, with particular regard to the factors in CPR 3.9 [§3].

The Parties’ Positions

The First Defendant’s Position: The first defendant, through counsel Mr Letman, accepted the breach was serious but argued it was not at the worst end of the scale [§20]. It was submitted that the director, Mr Hodson, had been occupied with a critical planning inquiry which concluded in May 2025. He had hoped to persuade Gowlings to resume representation and claimed he did not realise the specific deadline of 30 May would trigger an automatic sanction, as he had no solicitors advising him after 14 May [§23]. The first defendant apologised for the failure and argued that maintaining the full CPR 3.14 sanction would be disproportionate and manifestly unjust given the context [§33]. It was emphasised that the estimated future costs to be managed were approximately £260,000 [§19].

The Claimant’s Position: The claimant, through Mr Townend KC, opposed the application. It was argued that the breach was serious and significant, involving a delay from 30 May until a budget was provided on 19 June [§20]. The claimant contended there was no good reason for the default, pointing to clear warnings in correspondence from both Gowlings and the court, and a general lack of engagement by the first defendant in the litigation [§22, §28]. The claimant relied on authorities including BMCE Bank International Plc v Phoenix Commodities PVT Ltd & Anor [2018] EWHC 3380 (Comm), where relief was refused for a 14-day delay [§7, §21]. It was submitted that granting relief would undermine the need for compliance with rules and the efficient conduct of litigation, as the failure had necessitated an additional hearing.

The Court’s Decision

The court refused the application for relief from sanction. Applying the Denton test, Recorder Singer KC held as follows.

On the first stage, it was found that the breach was serious and significant. The delay was from 30 May to 19 June 2025, a period which the court considered “relatively long” in the context of authorities such as BMCE Bank v Phoenix, where a shorter delay resulted in the sanction being upheld [§20–21]. This failure caused the need for a separate hearing, depriving other litigants of court time [§31].

On the second stage, the court found there was no good reason for the breach [§27]. Whilst Mr Hodson’s focus on the planning inquiry was acknowledged, the court found the first defendant had failed to engage with the litigation and its procedural obligations for some time, as was clear from the evidence from Gowlings [§28]. Correspondence from both the former solicitors and the court had made the requirements clear. The director’s assertion that he did not “see the sanction coming” because he had no solicitors after 14 May was not accepted as justification; the court observed that working out when the deadline fell “would not have been a difficult exercise by any stretch of the imagination” [§15, §24]. His hope that Gowlings would resume representation brought with it “a very significant risk that something bad might happen in the meantime” [§25].

The court also noted the distinction between litigants in person, who are exempt from the costs budgeting requirements under CPR 3.13, and unrepresented limited companies, which are not. The first defendant was not excluded from the rules merely because it lacked representation [§26].

At the third stage, considering all the circumstances, the court concluded that maintaining the sanction would not be manifestly unjust [§29–34]. The breach was serious, the reasons were not good, and the effect was to cause inefficiency by necessitating an additional hearing. The court gave some “minor credit” to Mr Hodson for his statement that he would have acted differently had he known of the automatic sanction [§30]. However, this did not outweigh the other factors.

The court rejected the submission that the sanction was disproportionate in the circumstances of this case, observing that CPR 3.14 prescribes this specific consequence for non-compliance and “cannot be said to be of itself disproportionate” [§33]. The court’s refusal to order otherwise in this case, where there had been a relatively long delay, no good reason, and consequent inconvenience to the court and other litigants, could not render the sanction disproportionate.

Consequently, the automatic sanction under CPR 3.14 was upheld [§34]. The first defendant would therefore be treated as having filed a costs budget comprising only court fees for the estimated future costs of the litigation.

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The High Court’s decision in Limbu & Ors v Dyson Technology Ltd & Ors [2026] EWHC 38 (KB) demonstrates that aggressive and disproportionate conduct on procedural applications will result in severe costs reductions, even for the successful party.

Background

The claim was brought by or on behalf of twenty-four Nepalese and Bangladeshi migrant workers regarding alleged exploitative and abusive working and living conditions at two Malaysian factories within the Dyson supply chain. The claims were advanced in negligence, various intentional torts (false imprisonment, intimidation, assault, battery), and unjust enrichment. The defendants denied all liability. Proceedings were issued in May 2022 but were significantly delayed by a jurisdiction challenge by the defendants [§5]. The Court of Appeal ultimately rejected that challenge in December 2024, and the Supreme Court refused permission to appeal in May 2025 [§5]. Pleadings closed in autumn 2025, and the first costs and case management conference was held on 19 December 2025 [§6-7]. The judgment addresses several case management issues, with costs considerations permeating the court’s analysis throughout.

Costs Issues Before the Court

The judgment directly addressed several discrete costs-related issues. First, there was the fundamental case management decision of whether to order a split trial of liability and quantum for lead claimants, or to try preliminary liability issues on assumed facts. This decision had significant implications for the overall proportionality and future cost of the litigation. Second, the court had to determine the costs consequences of the defendants’ largely successful application to strike out substantial parts of the claimants’ Reply, including an assessment of the reasonable and proportionate costs of that application [§48-62]. Third, the court considered an application for early specific disclosure, where the potential for early disclosure to streamline pleadings and avoid later cost was a key factor [§71-82]. Finally, the court noted the need for future costs management, highlighting the “enormous” incurred and budgeted costs of £5.2 million (claimants) and £7.5 million (defendants) and expressing serious concern about their scale [§85-86].

Beyond these discrete issues, proportionality considerations drove the court’s approach to every major case management decision.

The Parties’ Positions

On the overarching case management issue, the claimants argued for a conventional split trial of liability and quantum for a group of lead claimants [§10]. They contended this would allow findings on liability based on actual facts, promoting a just and cost-effective resolution. The defendants advocated for the trial of preliminary legal issues on assumed facts, arguing this would be a more proportionate first step that could potentially dispose of the case without the cost of hearing witness evidence [§11-12].

On the strike-out application, the defendants, having largely succeeded, sought their costs on the indemnity basis and requested an order that 50% of the costs of the Reply be disallowed [§55.4]. The claimants, while conceding most of the defective paragraphs, argued the application was overly aggressive. Rather than consenting to strike-out, they made a cross-application to withdraw the impugned passages by amendment, seeking to avoid adverse costs consequences [§49, §55.6].

Regarding early disclosure, the claimants argued that early inspection of five key categories of documents—including audit reports, meeting minutes, and correspondence—would facilitate an effective disclosure process and might lead to targeted re-amendments, promoting efficiency [§71-73]. The defendants resisted, seeing no justification for departing from the standard disclosure timetable [§74].

On costs management, both parties had filed substantial budgets, but the court had not yet heard detailed argument, instead signalling its serious concern at the December hearing [§85].

The Court’s Decision

Split trial versus preliminary issues

The court ordered a split trial on liability for lead claimants, rejecting the preliminary issues approach [§45]. It found the defendants’ proposal risked creating “dangerous confusion” by requiring findings on Dyson’s knowledge based on a mix of assumed and proven facts [§31.2]. It also held that such an approach would likely increase delay and cost, as any appeal would be on hypothetical facts, and a second liability trial might still be needed [§31.3-31.5]. This decision was fundamentally guided by the overriding objective and the need to manage the case justly and at proportionate cost, particularly given the existing delay and the inequality of arms between the parties [§8].

The court also excluded the unjust enrichment claim from the stage-1 liability trial [§45.3]. It held that it would be “disproportionate and inconvenient” to require forensic accountancy evidence at the liability stage, as such evidence would need to be prepared twice—first for liability and again for quantum—and the experts could not properly assess the alleged enrichment without first having the court’s findings on working and living conditions [§44].

Strike-out application costs

On the strike-out application costs, the court held the defendants were entitled to costs as the largely successful party [§56]. However, due to their conduct—issuing the application on 21 November rather than waiting for the claimants’ promised substantive response due 26 November, when over three weeks remained until the relisted hearing—the court reduced their entitlement to 50% of their costs [§55-56]. The defendants’ insistence on indemnity costs in the context of this particular strike-out dispute contributed to preventing the parties from resolving what the court characterised as “this storm in a teacup” [§56.3]. The court also noted that the claimants had contributed to the dispute by tactical manoeuvring and failing to consent to the strike-out application [§55.6, §56.3].

Critically, the court then conducted a summary assessment. It rejected the defendants’ claimed costs of £61,366.03 as “unreasonable and disproportionate,” finding that “to spend over £60,000 on this issue” demonstrated that “[t]he application has been fought without any proper regard to the actual importance of the issue or the value of these claims” [§58]. The court criticised the instruction of leading counsel on the documents, the claim for over 18 hours of partner time, over 100 hours’ work on the documents, and over 12 hours’ work on costs alone [§58]. It also rejected the premise that total counsel brief fees of £105,000 for the case management conference were reasonable, or that 20% of such fees was justified for the remaining strike-out issues [§59].

The court found that the reasonable and proportionate costs for the application were no more than £12,000. Consequently, the defendants were awarded only £6,000 (being 50% of £12,000) [§60].

The court declined to make a specific order disallowing 50% of the costs of preparing the Reply, leaving that for detailed assessment, but noted that a costs judge would be entitled to consider the wasted costs incurred in pleading paragraphs that should never have been in the Reply [§62].

Warning to the parties

The court issued an express warning to the parties. It stressed the importance of the duty of co-operation under r.1.3, citing the Court of Appeal’s observation in Município de Mariana v BHP Group [2022] EWCA Civ 951 that co-operation in group litigation is “of the utmost importance” [§8.6]. Both sides had failed to comply with that duty: the claimants by defective drafting and tactical resistance; the defendants by aggressive and disproportionate pursuit of the application. The court stated that parties should “take note” that such conduct would result in recovery of “only a fraction of the unreasonable and disproportionate costs” incurred [§61].

Early disclosure

The court granted the application for early specific disclosure of the five categories of documents [§82]. It found a “proper basis” for the order, as early access to these key documents—which Dyson had already identified given their prior expenditure of over £540,000 on disclosure—would help the claimants assess their case and consider any necessary amendments promptly [§78-80]. This was held to be consistent with the duty of co-operation in group litigation and would assist in correcting the information asymmetry between the parties, potentially avoiding later cost and delay [§77-81].

Costs management

Finally, on costs management, the court deferred the detailed budgeting exercise to an adjourned hearing [§85]. It explicitly warned the parties that it was “very concerned by the enormous incurred and budgeted expenditure in this case” and that they should not expect their projected costs to be approved “in anything like the sums estimated in their budgets” [§86]. The court invited the parties to co-operate in identifying tangible cost savings in their final budgets.

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Court Grants Non-Party Costs Order Against Secured Creditors Who Funded Failed Construction Claim

The Technology and Construction Court’s decision in Thomas Barnes & Sons PLC (In Administration) v Blackburn with Darwen Borough Council [2026] EWHC 24 (TCC) confirms that secured creditors who fund, benefit from, and exercise real control over administration litigation are properly treated as “real parties” for non-party costs purposes.

Background

The dispute originated from a contract for the construction of a bus station in Blackburn, entered into in 2014 between Blackburn with Darwen Borough Council (BBC) and Thomas Barnes & Sons Plc (Barnes). BBC terminated the contract in 2015. Barnes, by then in administration, subsequently issued proceedings in the Technology and Construction Court in 2020, claiming damages in excess of £3 million for alleged wrongful termination [§2].

The claim proceeded to an 11-day trial in July 2022. In a judgment handed down in October 2022, the claim was dismissed in its entirety [§2]. BBC, as the successful defendant, was entitled to its costs. The company in administration had no means to meet this costs liability.

The Respondents to the present application are Mr Thomas Barnes (Thomas), a former director and shareholder of Barnes, and Mrs Pamela Barnes, Mr Craig Barnes, and Mr Scott Barnes. The latter three are, respectively, the widow and the executors of the estate of Brian Barnes (Brian), Thomas’s late brother and co-owner of the company [§5]. The company’s administrators had been appointed in November 2015 by the Respondents in their capacity as debenture holders, to whom the company owed approximately £684,714.66 [§7].

From the outset of the litigation pursued in administration, the Respondents provided the funding for the company’s legal costs and disbursements [§11]. They also, following an application by BBC, provided security for BBC’s costs totalling approximately £583,000, comprising a payment into court of around £138,000 and charges over properties valued at around £445,000 [§24-25]. BBC’s incurred and budgeted costs at the time were around £995,000 [§25].

Following the dismissal of the claim, BBC sought to recover the shortfall in its costs by making an application under section 51 of the Senior Courts Act 1981 for a non-party costs order (NPCO) against the Respondents [§1, §3]. The application was heard on 12 December 2025.

Costs Issues Before the Court

The ultimate issue was whether it was just to make a NPCO against the Respondents, requiring them to pay BBC’s recoverable costs of successfully defending the claim, to the extent those costs were not satisfied by the security already provided. This required the court to determine several factual and legal sub-issues, including the degree of funding, control, and personal financial benefit derived from the proceedings [§29-36, §38-39].

The Parties’ Positions

BBC’s Position: BBC submitted that the Respondents were the real parties to the litigation. They had funded the claim entirely, thereby enabling it to be brought. They had a direct and substantial financial interest in its outcome as the primary secured creditors, standing to recover their debt from any successful award [§3]. Thomas, in particular, was alleged to have exercised a significant degree of control over the litigation, including introducing the solicitor (Ms Morrison) whom the administrators then instructed, attending the pre-action meeting where he was referred to as Ms Morrison’s “client,” and being intimately involved in its substance [§8, §14]. BBC argued it was just that those who stood to gain personally from the claim should bear the costs of its failure, rather than the public purse [§39].

The Respondents’ Position: The Respondents resisted the order. Thomas asserted that he did not control the litigation; his involvement was limited to providing necessary assistance to the administrators in his capacity as a former director [§12]. He stated that all decisions were made by the joint administrators. The Respondents acknowledged funding the claim and having a financial interest, but argued this was consistent with creditors funding an officeholder to realise assets for the benefit of the estate [§32]. They emphasised there was no evidence of impropriety or bad faith. They also pointed to the absence of any specific warning, after the 2016 and 2017 correspondence, that a NPCO would be sought, and noted they had already provided substantial security for costs, suffering significant personal loss [§26].

The Court’s Decision

The court granted the application and made a NPCO against the Respondents, jointly and severally liable for BBC’s recoverable costs, subject to the security already provided. The liability of Craig and Scott Barnes was limited to their capacity as executors of Brian’s estate [§45].

In reaching its decision, the court applied the principles from Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] UKPC 39 and Goknur Gida v Aytacli [2021] EWCA Civ 1037 [§28-36].

The key findings were:

Funding and Financial Interest: It was conceded and found as a fact that the Respondents funded the litigation and stood to benefit personally from its success [§40]. Although other creditors might have benefited if the claim succeeded spectacularly, the Respondents were the only guaranteed substantial beneficiaries [§40]. By the May 2022 progress report, payments of around £328,000 had already been made to them from other realisations, leaving around £357,000 due [§23]. Despite the reduced claim valuation — Barnes’s own quantity surveyor had by then assessed the maximum claim at only £1.789m against BBC’s valuation of around £604,000 [§22] — they continued to fund a costly trial.

Control of the Litigation: The court rejected Thomas’s assertion that he was merely assisting the administrators. Considering his introduction of the solicitor to the administrators [§14], his passionate belief in the claim [§8, §14], his attendance at every day of trial during which he “undertook active investigations” [§14], and the administrators’ reliance on his knowledge and funding, the court found he exercised “a real degree of control” alongside the administrators [§15, §41]. The court observed that the litigation “could not have continued” without Thomas’s substantial input on the claim’s substance and the Respondents’ willingness to finance it [§15]. For the other Respondents, while they did not themselves control the litigation, their willingness to fund it meant they supported Thomas’s pursuit of the claim [§16, §41].

“Real Party” Analysis: The court concluded the Respondents were “the real parties to the proceedings in very important and critical respects” [§42]. They were not pure funders but persons who funded, benefited from, and (in Thomas’s case) controlled the litigation for their own purposes. The court did not find impropriety or bad faith, but held that this was not required where funding, benefit, and control justified the order [§30-31, §42]. The court distinguished cases where a NPCO might discourage legitimate funding by officeholders, finding the Respondents’ position was fundamentally that of risk-taking litigants with a primary eye on their own financial recovery [§44]. The court expressly rejected the submission that making an NPCO in these circumstances would have a “chilling effect” on the ability of officeholders to fund justified claims [§44].

Other Factors: The court considered but attached limited weight to the lack of a specific post-2017 warning. It noted that as early as December 2016 and May 2017, BBC’s solicitors had written to the administrators’ consultants and then the administrators themselves, referring to the possibility of a NPCO and citing Deutsche Bank [§9-10]. The court found there was no compelling reason to believe this was not communicated to the Respondents, especially as they had not addressed these letters in their evidence [§10, §26]. The provision of security was a relevant but not determinative factor, and the negotiated amount did not preclude a further order [§43].

The court held that, in all the circumstances, justice required that the Respondents, who had sought to gain access to justice for their own substantial benefit, should bear the cost of the defendant’s successful defence, rather than the defendant (and ultimately the public) bearing the unrecovered shortfall [§39, §42].

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

Background

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

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

Costs Issues Before the Court

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

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

The Parties’ Positions

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

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

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

The Court’s Decision

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

1. Costs of GIAG’s Claim Against Mrs Dewsall

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

2. First Worldwide Freezing Order (Mr Dewsall)

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

3. Search Order Costs

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

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

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

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

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

4. Contempt Application/Bench Warrant

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

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

5. Second Worldwide Freezing Order

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

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

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

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

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

This judgment establishes an important qualification to Dos Santos:

  1. If you contest and lose an interim application → expect to pay costs (per Dos Santos)
  2. If costs are reserved (whether by consent or court order) → the trial judge considers overall justice including trial outcome
  3. If you are a successful defendant and the application primarily targeted another party → you may escape a costs order entirely
  4. If you are an applicant relying on evidence later discredited → you risk indemnity costs against you
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CPR 44.10 | The Sound of Silence | When A Court Order Is Silent As To Costs

Indemnity Costs And The High Risk Of Pursuing A Weak Case

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Dishonest Evidence And Baseless Allegations Justify Indemnity Costs Order

Can A Defendant Insurer Recover VAT On Costs Where The Insured Is In Liquidation?

The High Court’s decision in Moller & Ors v One Touch Solution Ltd (in creditors’ voluntary liquidation) & Anor [2026] EWHC 14 (Comm) confirms that a company in liquidation can recover VAT on post-liquidation legal services via Regulation 111(5) of the VAT Regulations 1995, meaning the paying party is not liable for VAT where the receiving party has suffered no loss.

Background

This case concerned a claim brought against One Touch Solution Limited (in creditors’ voluntary liquidation) and its insurer, Hiscox Insurance Company Limited, under the Third Parties (Rights Against Insurers) Act 2010. The substantive details of the underlying claim are not material to the costs issue determined. Procedurally, the claimants were granted permission to amend their Particulars of Claim by an order of Dias J dated 30 July 2024. As a consequence of that amendment, the judge ordered that the claimants pay the first defendant’s reasonable costs of amending its defence, to be assessed if not agreed [§1].

The parties were unable to agree on the quantum of those costs. At a subsequent hearing on 10 December 2025, the court conducted a summary assessment of those costs, assessing them net of VAT in the sum of £25,000 [§2]. However, a dispute arose between the parties regarding the recoverability of VAT on those costs. This issue was not resolved at the hearing. Instead, the court directed that the parties file written submissions on the VAT point for a determination to be made on the papers [§2].

Costs Issues Before the Court

The court was required to determine two discrete costs issues arising from the hearing on 10 December 2025.

The primary issue was whether the defendants were entitled to recover VAT on the £25,000 of costs awarded for the amended defence. This issue turned on the VAT status of the first defendant, which was in creditors’ voluntary liquidation, and the position of its insurer, the second defendant.

The secondary issue was whether the claimants were entitled to their costs of preparing the written submissions on the VAT point, which they quantified at £1,000 (excluding VAT) [§9].

The Parties’ Positions

The Defendants’ Position: The defendants argued that neither defendant could recover VAT on the costs. They noted that the first defendant entered creditors’ voluntary liquidation on 28 March 2024, and the liability for the legal work subject to the costs order arose after that date [§4]. They contended that the first defendant, being in liquidation, “can neither pay nor recover VAT” [§4]. They further argued that the second defendant (the insurer) could not recover the VAT it had paid because the tax related to a legal service supplied to the insured (the first defendant) [§5]. In support, they cited a passage from Friston on Costs (4th Ed) at [55.37], which states that the ability of the insured party to recover input tax is the relevant factor, not the ability of an insurer funding the litigation. The passage notes that input tax cannot be claimed “by the back door” [§5].

The Claimants’ Position: The claimants contended that the liquidation of the first defendant did not automatically preclude the recovery of VAT [§6]. They relied on Regulation 111(5) of the Value Added Tax Regulations 1995, which provides a mechanism for a person who has ceased to be a taxable person (e.g., due to deregistration following liquidation) to reclaim VAT on services supplied after deregistration, provided those services are attributable to taxable supplies made when the person was registered [§6]. They argued that the first defendant’s estate, through its liquidators, could therefore recover the VAT. On the secondary issue, the claimants sought their costs of £1,000 for preparing the written submissions, arguing they were the successful party on the VAT point and that the issue could have been resolved at the earlier hearing to avoid further expense [§9].

The Court’s Decision

The court ruled in favour of the claimants on both issues.

On the primary VAT issue, the court accepted the defendants’ starting point, as supported by Friston on Costs, that the relevant consideration was the ability of the insured (the first defendant) to recover VAT, not the insurer [§7]. However, the court found that the defendants’ assertion that the first defendant could not recover VAT due to its liquidation was incorrect in law. The court emphasised that Regulation 111(5) of the VAT Regulations 1995 provided “clear support” for the recovery of VAT by the estate of the first defendant, via the liquidators, even though the company was no longer VAT registered [§7]. The court noted that the defendants’ assertion “flies in the face of this Regulation and is unexplained” [§7].

The court further observed that it could “rely on the liquidators of the First Defendant to discharge their duties by filing appropriate VAT returns to recover the sum” [§8]. Consequently, the court held that the first defendant’s estate could recover VAT on the relevant legal services. As neither defendant had suffered a loss in the amount of the VAT, that sum could not be included in the costs payable by the claimants [§8].

On the secondary issue regarding the costs of the written submissions, the court awarded the claimants the £1,000 sought [§11]. The court noted that it had not heard submissions from the defendants on this issue [§10]. Applying the general principle under CPR Part 44 that the unsuccessful party should pay the costs of the issue, the court found the claimants were the “clear winners” on the VAT point [§10.1]. It also held that the sum claimed was reasonable and proportionate, resolving any doubt in favour of the defendants as the paying party [§10.2]. The order was made subject to a provision allowing the defendants to apply in writing to set aside or vary the order, with a corresponding right for the claimants to respond. The court indicated any such applications and responses should be concise, with costs kept to a modest level [§11].

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CPR PD 47 Para 8.2 | Costs Judge’s “Hands Tied” By Non-Compliant Points Of Dispute

The Senior Courts Costs Office’s decision in Aareal Bank AG v Lumineau [2025] EWHC 3299 (SCCO) demonstrates the practical consequences of Ainsworth-non-compliant points of dispute and provides guidance on hourly rates above guidelines and leading counsel instruction where prior involvement exists.

Background

This was a detailed assessment of costs before Deputy Costs Judge Lightman, delivered as an approved transcript. The receiving party, Aareal Bank AG, was a third party in the underlying litigation who was awarded its costs by order dated 12 September 2024 [§3]. The underlying proceedings concerned an application by the paying parties to stay a liquidation and bring the company back under their control, with a later change of position seeking the removal of directors [§19, §30]. The proceedings took place over a relatively short but intense period between June and September 2024 [§2]. The detailed assessment concerned a bill of costs submitted by Aareal, against which the paying parties, Emmanuel Lumineau and Thomas Schneider, served points of dispute. The central matters in dispute related to the level of solicitors’ hourly rates, the instruction and fees of leading counsel, and the adequacy of the paying party’s points of dispute.

Costs Issues Before the Court

The court was required to determine three principal costs issues. First, whether the hourly rates claimed by the receiving party’s solicitors were reasonable, given that some exceeded the applicable guideline rates for London 2 (Grade A £398, Grade B £308, Grade C £260, Grade D £148 from 1 January 2024) [§2]. Second, whether it was reasonable and proportionate for the receiving party to have instructed leading counsel for the application and, if so, whether the level of his fees and the work done in conjunction with junior counsel were recoverable. Third, whether the paying party’s points of dispute complied with the requirements of CPR Practice Direction 47, paragraph 8.2, and the consequences of any non-compliance, particularly in light of the Court of Appeal decision in Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178.

The Parties’ Positions

The paying party contended that the solicitors’ hourly rates should be reduced to the SCCO guideline rates for London 2 effective from 1 January 2024. They relied on the principle from Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 that a “clear and compelling justification” is needed to exceed guideline rates [§4]. On counsel’s fees, the paying party argued that instructing counsel at all was unnecessary, as a senior fee earner should have been capable of handling the work [§13]. In the alternative, they submitted that the instruction of leading counsel was an extravagance, relying on the decision in Coram v DR Dunthorn & Son Ltd [2024] EWHC 672 (KB), which the judge noted was a fact-specific decision [§15, §20]. They also challenged numerous specific items of counsel’s work and associated solicitor time.

The receiving party argued that the complexity and importance of the matter, including insolvency issues and urgent interim applications, justified rates above the guidelines [§19]. Regarding counsel, they submitted that the instruction of leading counsel was necessary due to the case’s complexity and his prior involvement in the matter dating back several years before his appointment as KC in 2020 [§11–12, §17]. They defended the concurrent instruction of junior counsel as a proportionate measure to cover whilst leading counsel was on holiday and to assist in the preparation of the skeleton argument [§31, §34]. In response to the points of dispute, the receiving party argued that they failed to comply with CPR PD 47, paragraph 8.2, as interpreted in Ainsworth, because they did not state concisely the nature and grounds of dispute for individual items, instead relying on generic objections [§21–26]. They argued that the points of dispute were non-compliant with PD 47 and should be struck out; however, the judge did not formally strike them out and instead assessed the items within the constraints identified in Ainsworth [§30, §37].

The Court’s Decision

On the issue of solicitors’ hourly rates, the judge acknowledged his general reluctance to depart from the guidelines but found the case to be “unusual” and of sufficient complexity to justify a modest uplift [§8]. He stated that he had “seen enough to say to anyone that this is an unusual case”, warranting a modest departure, without expressly endorsing all aspects of the receiving party’s characterisation of the case’s complexity [§8]. He did not, however, allow the full rates claimed. He reduced a claimed partner rate of £433.50 to £410 (against a guideline of £398) [§9]. For the associate rate claimed at £306, he allowed £275 [§9]. Other rates at or below the guidelines were left undisturbed.

Concerning the instruction of leading counsel, the judge found it was not unreasonable to instruct Mr Fisher, given his significant prior involvement in the matter dating back several years and predating his appointment as KC in 2020 [§11–12, §17]. The judge noted that it was “not unreasonable at all to instruct Mr Fisher, who had previous experience of this case” [§12]. This represents an important distinction from the scenario in Coram, where leading counsel was newly instructed; the judge treated Coram as a fact-specific decision of no direct application [§20]. However, he questioned whether the matter was sufficiently complex to justify leading counsel charging leading counsel’s rates throughout the whole period, stating that he was “not convinced” on this point [§31]. The judge therefore approached the specific items of counsel’s work on the basis that while leading counsel’s involvement was reasonable, his fees should be moderated to reflect a more junior level for much of the work. He reduced a number of leading counsel items on an item-by-item basis, often by reference to a junior counsel rate: item 49 was reduced from £2,550 to £1,125 [§41]; item 51 from £1,195 to £862.50 [§42]; and item 53 to £1,275 [§42]. Items solely relating to junior counsel’s reading in (items 15 and 16) and initial advice (item 17) were allowed in full, as the points of dispute did not adequately challenge them on an item-by-item basis [§37–38].

On the procedural issue, the judge applied the Ainsworth principles. He held that the paying party’s points of dispute, while identifying a general point of principle (satisfying CPR PD 47 para 8.2(a)), failed to “state concisely the nature and grounds of dispute” for individual items as required by CPR PD 47 para 8.2(b) [§23, §29]. The generic objection to counsel’s fees did not specify why each challenged item was unreasonable. The judge’s frustration with the outcome was palpable: he stated that his “hands are tied” and that he “do[es] not like it” [§37]. As a matter of principle, he refused to entertain reductions based on these non-compliant objections for several items, including approximately three hours of solicitors’ attendance at the hearing [§44]. This procedural failure prevented the paying party from advancing item-specific challenges in respect of a number of entries.

CPR 47.8 | Master Brown Orders Unless Order For Commencement | CPR 47.7 Held To Be Mandatory

The Senior Courts Costs Office’s decision in Awan v Patel & Ors [2025] EWHC 3332 (SCCO) confirms that paying parties can compel receiving parties to commence detailed assessment proceedings even after extreme delay.

Background

The matter before Master Brown was an application dated 27 February 2025 by Mr Sarfaraz Awan, a litigant in person who was described as having been “at one time a litigation solicitor” [§21]. He sought an order requiring the Respondents (the successful Defendants and Counterclaimants in earlier Chancery proceedings) to serve a Notice of Commencement of Detailed Assessment Proceedings and a Bill of Costs. This application related to a costs order made nearly eight years prior, on 20 October 2017 [§2] (noting an apparent typographical error at §8 which states ‘2018’), by Sir John Baldwin QC sitting as a deputy High Court judge. That order provided that Mr Awan and his wife were jointly and severally liable to pay the Respondents’ costs of the claim, counterclaim, and additional claim, on the standard basis, to be assessed if not agreed [§8]. A significant feature was paragraph 3 of the same order, which directed Mr and Mrs Awan to pay £118,800 on account of those costs by 10 November 2017 [§10].

The on-account sum was not paid and subsequently became a judgment debt. The Respondents took steps to enforce it. On 3 February 2019, Chief Master Marsh granted a final Charging Order over Mr Awan’s property [§11]. Later, on 7 March 2024, Master Kaye made a conditional order for sale of the property [§12]. Mr Awan and his wife sought to appeal Master Kaye’s decision, arguing that an interim payment on account of costs was not an enforceable order. Permission to appeal was refused by Fancourt J on 19 July 2024 [§13], and a subsequent application to the Court of Appeal was also rejected by Lewison LJ [§14]. Throughout this period, the Respondents had not commenced detailed assessment proceedings to have their full costs quantified.

Separately, Mr Awan had also made an application to stay execution of the order for sale. Master Brown transferred that application back to the Chancery Division (to Deputy Master Teverson) to be heard alongside an existing application there [§6]. Deputy Master Teverson subsequently stayed execution pending the outcome of the costs application before Master Brown.

Costs Issues Before the Court

The core issue for determination was whether the court should grant Mr Awan’s application and order the Respondents to commence detailed assessment proceedings [§2]. This raised several interrelated legal questions. First, whether CPR 47.7 imposes a mandatory obligation on a receiving party to commence detailed assessment within three months of a costs order, or whether it is merely an option [§30]. Second, if it is an obligation, whether the court has a discretion under CPR 47.8(1) to refuse an application by a paying party to compel commencement, and if so, how that discretion should be exercised [§40–46]. Third, whether the very substantial delay (almost eight years) and the applicant’s alleged motive to frustrate enforcement constituted an abuse of process or other reason to refuse the application [§63–83].

The Parties’ Positions

Mr Awan, acting in person, argued that CPR 47.7 used the word “must”, which created a clear obligation on the Respondents to commence detailed assessment within three months [§18, §22]. He submitted that the order for an interim payment was made on account of costs to be assessed or agreed. In the absence of agreement, there had to be an assessment to determine the final sum payable [§22]. He contended that the Respondents’ failure to serve a bill meant there had been no final determination of costs as envisaged by the original order.

The Respondents, represented by Mr David Zachary Lipson of counsel, opposed the application. Their position was that there was no obligation to commence detailed assessment; it was an option [§25]. They argued they could choose to rely solely on the enforceable interim payment order without progressing to a full assessment. Mr Lipson submitted that the application was a tactical attempt to stall enforcement of the judgment debt, which with interest stood at approximately £201,243.64 as at 3 September [§23]. He contended that the court had a broad discretion under CPR 47.8(1) and should refuse the order [§28]. He cited the substantial costs and practical difficulties of preparing a bill after so many years, the history of enforcement problems, and the applicant’s own delay in making the application as reasons to exercise discretion against compelling assessment [§26–28].

The Court’s Decision

Master Brown granted the application and ordered the Respondents to commence detailed assessment proceedings [§85]. His reasoning addressed each key issue in turn.

On the first issue, he held decisively that CPR 47.7 imposes a mandatory obligation, not an option [§31]. The use of the word “must” was conclusive and “plainly… inconsistent with this step being optional” [§31]. This interpretation was supported by the language of CPR 47.8, which refers to a party who “fails to commence”, implying a breach of an obligation: “The word ‘fails’ connotes to my mind an obligation to commence. There must be an obligation to do so because it is only if there is obligation to do so could there be a ‘failure’” [§34]. The judge also referenced the Court of Appeal’s comments in Haji-Ioannou v Frangos [2006] EWCA Civ 1663, which treated delay in commencement as a failure to comply with a rule [§35–37]. He noted that general practice was inconsistent with the notion that commencement was optional [§38]. The Respondents were therefore in breach of the rules for not serving a bill within three months of the October 2017 order [§39].

On the second issue, Master Brown accepted that CPR 47.8(1) likely conferred some discretion on the court not to make an order, as it stated the paying party “may apply” and did not say the court “must” order commencement [§43]. However, he found this was not a general discretion to be exercised freely [§44]. The provision’s purpose was to compel a party in breach to comply and bring the costs claim to a conclusion within a reasonable time [§46]. Any discretion had to be exercised with that purpose in mind and required a good reason to refuse an application [§44].

The judge then considered how to exercise any discretion. He found compelling reasons to order assessment. The interim payment order was made on account of costs to be assessed; its very nature assumed an assessment would follow [§47–48]. Refusing the application would, in effect, convert an interim order into a final one: “I put it to Mr Lipson, not meaning to be pejorative, that in effect he was seeking to convert what is an interim on account order to a final order. And I am not persuaded by him that I have the ability to do that by the terms of the rules” [§49]. The alleged burdens on the Respondents (cost of preparing a bill, assessment fees) were not disproportionate [§56–57], especially as they could limit their bill to the £118,800 already ordered if they wished [§59]. The fact their costs were secured by a charging order placed them in a more advantageous position than many receiving parties [§58]. Master Brown concluded that the factors raised by the Respondents were insufficient to outweigh the applicant’s entitlement to see a bill and have costs assessed [§60–61].

On the third issue, concerning delay and abuse, the judge was not persuaded [§65]. He noted that the CPR 47 scheme provided its own sanctions for delay (primarily disallowance of interest) and was designed to minimise satellite litigation, appearing to be “a self contained scheme dealing with delay, with prescribed sanctions” [§66]. While inordinate delay could theoretically reach a point where assessment was unfair, that point had not been reached here [§67]. Assessment of costs for old work was not unusual — the court in Michael Wilson & Partners Ltd v Emmott [2025] EWHC 747 (Comm) dealt with a 12-year delay [§69]. The case would likely be decided on documents like invoices and attendance notes, not witness recollection [§70]. The judge found no evidence that a fair assessment was now impossible. He also did not accept that Mr Awan’s delay in making the application was contumelious or abusive [§71, §76]. Even if an ulterior motive to delay enforcement was suspected, the application remained objectively justifiable as a paying party is ordinarily entitled to a bill and assessment [§79, §83].

Consequently, Master Brown made an order requiring the Respondents to serve a Notice of Commencement and Bill of Costs, stating: “I do not see any reason why I should not make an Unless Order with, say, three/three and a half months to prepare the Bill” [§87]. He declined to deal with associated applications for disallowance of costs or interest at this hearing, noting those could be addressed later in the assessment process [§88, §90].

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Sanction for delay in commencing detailed assessment proceedings

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High Court Preserves Indemnity For Unsuccessful But Honest Executor Removal Applicants

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

Background

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

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

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

Costs Issues Before the Court

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

The Parties’ Positions

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

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

The Court’s Decision

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

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

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

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

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The Court of Appeal’s decision in R (Public and Commercial Services Union) v Secretary of State for the Home Department [2025] EWCA Civ 1644 upholds a ‘no order as to costs’ determination where a judicial review became academic following a change of government that was already publicly committed to repealing the challenged legislation.

Background

The Public and Commercial Services Union (PCSU) challenged the lawfulness of the Strikes (Minimum Service Levels: Border Security) Regulations 2023. These regulations empowered the Secretary of State for the Home Department to serve “work notices” on trade unions, requiring them to take “reasonable steps” to ensure specified border staff did not participate in strikes [§3]. Failure to comply meant the union would lose immunity from tort liability, while non-complying members would lose statutory protections from detriment and dismissal [§4].

PCSU issued a pre-action protocol letter on 17 January 2024, arguing the regulations unlawfully interfered with Article 11 ECHR rights and inviting their withdrawal [§5]. The then-Conservative government defended the lawfulness of the regulations in its response dated 15 February 2024 [§7]. PCSU issued judicial review proceedings on 5 March 2024 [§8], with permission granted by Holgate J on 8 May 2024 in respect of two grounds, both based on Article 11 ECHR [§10]. The defendant filed detailed grounds maintaining its defence on 26 June 2024 [§12].

The context changed following the general election on 4 July 2024, which resulted in a Labour government [§13]. The Labour Party had, while in opposition, opposed the underlying 2023 Act and the regulations, pledging to repeal them [§6, §11]. On 6 August 2024, the Minister for Migration and Citizenship wrote to PCSU confirming the new administration’s belief that the 2023 Act “unduly restricts the right to strike” and pledged to repeal it via the forthcoming Employment Rights Bill [§15]. The letter confirmed that, although the legal power remained until repeal, the Home Secretary would not exercise the power to issue work notices in the interim [§15].

The following day, the Government Legal Department wrote stating the claim had become academic and inviting discontinuance. It also stated that the Home Secretary would not agree to pay PCSU’s costs, since PCSU had “not demonstrated that the claim has become academic by virtue of the legal merits of the case” [§16]. The parties agreed to discontinue the claim, with the ordinary costs consequences of discontinuance disapplied by consent, leaving the issue of costs for the court’s determination based on written submissions [§17].

Costs Issues Before the Court

The sole issue for HHJ Jarman KC at first instance, and subsequently the Court of Appeal, was the appropriate costs order following the discontinuance of the judicial review claim after it became academic due to a change of government policy. PCSU sought its costs on the basis it had been “wholly successful” in obtaining what it sought, namely the repeal of the MSL Regulations [§18]. The Secretary of State resisted any costs order, contending the claim had “become academic for political reasons, rather than for reasons connected with the merits of the claim” [§19]. The Respondent did not file any witness evidence in support of this assertion [§19]. The court had to determine whether, in these specific circumstances, PCSU was the “successful party” entitled to its costs, or whether the lack of a causal link between the claim and the outcome warranted a different order.

The Parties’ Positions

The Appellant’s (PCSU’s) Position: PCSU argued it had been “wholly successful” in obtaining what it sought via the litigation [§18]. It contended that the minister’s letter, which described the regulations as “unduly restrictive,” amounted to an acknowledgment that the claim was soundly based in law. It submitted that the authorities did not place an evidential burden on a claimant to prove the defendant’s concession was caused by the litigation [§40]. Relying on the line of authority beginning with R (Bahta) v SSHD, PCSU argued that a defendant could no longer avoid costs by asserting “pragmatic” settlement reasons without clear evidence [§40]. It emphasised the constitutional continuity of government, submitting that the new administration could not be “absolved of [legal] responsibility for the acts of the previous administration” [§39].

The Respondent’s (Secretary of State’s) Position: The respondent accepted that where it is “tolerably clear” a claimant would have won at trial, they would usually be entitled to costs, but pointed out (correctly) that it had not been suggested that the judge should have made an order for costs on that basis in this case [§41]. The respondent’s central contention was that the claim became academic for extrinsic political reasons following a change of government, not because of the claim’s legal merits. It argued that a causal link between the claim and the relief obtained was required, citing Speciality Produce Ltd, ZN (Afghanistan), and Parveen [§41]. It submitted that the clear pre-election pledge to repeal the Act meant the outcome would have happened anyway, irrespective of the litigation.

The Court’s Decision

The Court of Appeal (Bean LJ, with whom Peter Jackson and Elisabeth Laing LJJ agreed) dismissed the appeal, upholding HHJ Jarman KC’s order of no order as to costs [§48–50]. The court’s analysis focused on the principles governing costs in settled judicial review claims and the critical issue of causation.

The court reiterated the high threshold for appellate intervention in costs matters, as set out in Roache v News Group Newspapers Ltd: before the court can interfere, it must be shown that the judge erred in principle, left out of account or took into account some feature that should or should not have been considered, or that the decision was wholly wrong [§22]. It then applied the principles from the seminal case of R (M) v Croydon LBC, noting that where a claimant obtains substantially all relief sought (a “type (i)” case), it is hard to see why they should not recover all costs absent a good reason [§26]. However, the court emphasised that subsequent authorities, including Speciality Produce, R (RL) v Croydon, ZN (Afghanistan), and Parveen, establish that causation is a “relevant and sometimes decisive factor” [§36]. A claimant must show that the litigation caused or contributed to the result; it is not enough that the desired result occurred if it “would have happened anyway” [§47].

The court accepted PCSU’s constitutional continuity argument in principle, agreeing that an incoming government “cannot be absolved of [legal] responsibility for the acts of the previous administration” [§43]. However, it found that was not what the Government was asserting in this case [§43].

The court also accepted that R (Bahta) and M v Croydon represented an important change in attitude, meaning defendants can no longer escape costs by citing “purely pragmatic reasons” for settlement [§44]. In the typical case where a public body agrees to reconsider a challenged decision following issue of proceedings, and there is no dispute about causal link, the claimant will generally be entitled to costs [§44].

However, the court rejected PCSU’s characterisation of the minister’s letter as a legal admission [§46]. It found the phrase “unduly restrictive” simply reflected the new administration’s long-held political view, not a concession that the regulations were unlawful or that the claim would have succeeded at trial. The court held that the letter “cannot be read as if it said” something akin to an admission that the High Court would have found a breach of Article 11 rights or that the interference exceeded the margin of appreciation [§46].

It had, realistically, not been suggested on behalf of PCSU that this was a case which the Union would clearly have won at trial. The court observed that “Article 11 cases have not usually resulted in easy victories for claimants, either in our domestic courts or at Strasbourg” [§45]. The question therefore turned on whether the bringing of the claim made a difference to the outcome, either by changing the decision which would otherwise have been taken or at least achieving the desired result more quickly than would otherwise have occurred [§45].

The court agreed with the respondent that the commitment of the Labour Party to repeal the restrictions was so clear that there was good reason to believe it would have come about in any event, even if PCSU had not issued its claim [§47]. Using the terminology of Singh LJ in ZN (Afghanistan), the outcome was achieved for an “extrinsic reason”; or in the words of Males LJ in Parveen, it “would have happened anyway” [§47]. As in R (RL) v Croydon, the claimant got what it wanted, but had not shown it got what it wanted, or even got it more quickly, because of issuing the claim [§47].

The court characterised this case as “quite close to the borderline” but was not satisfied that HHJ Jarman KC made any error of principle or error of law which would justify overturning his exercise of discretion [§48]. His concise reasoning—that the claim became academic for political reasons after a change of government, not because of the claim—was sufficient and disclosed no error of principle [§42]. The appeal was therefore dismissed.

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