New Costs Blog Archives

Can Defendants Be Ordered To Pay Costs When Fundamental Dishonesty Allegations Fail?

The High Court’s decision in Hakmi v East & North Hertfordshire NHS Trust [2025] EWHC 2597 (KB) establishes that defendants may be ordered to pay a percentage of a claimant’s costs arising from unsuccessful fundamental dishonesty allegations, even where the claimant has lost the underlying claim.

Background

The claim arose from clinical negligence allegations concerning the treatment of Mr Mohamed Atef Hakmi, a consultant orthopaedic surgeon, following a stroke on 16 November 2016. It was alleged that the second defendant’s stroke consultant at Norwich & Norfolk Hospital failed to offer thrombolysis, resulting in serious disability. Quantum was agreed at £1,033,824, subject to liability. [§1]

The trial, held in June 2025, focused on breach of duty and causation. The court dismissed the claim, finding that thrombolysis would probably not have altered the outcome even if offered. [§97] While the court identified certain process failures (including failure to check telemedicine equipment before the shift and failure to conduct hourly neurological checks post-admission [§65, §75]), the claim ultimately failed on causation: Mr Hakmi had made a very good, if imperfect, recovery, achieving a Modified Rankin Scale score of 2, which falls within the range of a good outcome whether or not thrombolysis had been administered. [§95-97]

During the proceedings, the defendants raised an allegation of fundamental dishonesty against Mr Hakmi under section 57 of the Criminal Justice and Courts Act 2015, contending that he had deliberately underperformed in neuropsychological and other assessments conducted by their experts (Dr Bach, Dr Hassan, and Dr Santullo) to advance his claim. [§98] This allegation was raised formally in the defendants’ counter-schedule dated 18 March 2025 and was maintained throughout the trial. [§134-135] The allegation was ultimately rejected by the court, which found that Mr Hakmi’s poor performance in testing could be explained by his psychological condition, fatigue from serious familial issues, and the organic effects of his stroke rather than deliberate malingering. [§126-129]

Costs Issues Before the Court

Following the dismissal of the claim, the court was required to determine the appropriate costs order. [§131] The primary issue was whether the defendants should bear a portion of the claimant’s costs due to their unsuccessful pursuit of the fundamental dishonesty allegation. The defendants had raised this issue in their counter-schedule dated 18 March 2025, and it was maintained throughout the trial despite the evidence becoming “increasingly wanting.” [§133]

The court also had to consider the general principle that costs follow the event, given the claim’s dismissal, and whether any order for costs payable by the claimant should be subject to enforcement restrictions.

The Parties’ Positions

The claimant submitted that the defendants should pay a percentage of his costs from the date the fundamental dishonesty allegation was formally raised (18 March 2025), arguing that the issue had been pursued without sufficient basis and had caused significant distress and reputational damage. [§134] The claimant’s solicitors had previously put the defendants on notice that costs would be sought if the allegation failed. [§132] The claimant proposed that 25% of his costs from 18 March 2025 would be appropriate, reflecting the resources devoted to defending the allegation. [§134]

The defendants contended that costs should follow the event, with the claimant paying their costs of the action. [§131] They argued that the fundamental dishonesty issue was properly investigated and pursued, and that some costs associated with it would have been incurred in any event as part of the defence. The defendants highlighted that they had made two “drop hands” offers shortly before trial, which were not accepted. [§132] They maintained that the allegation was raised and pursued in good faith, with counsel assuring the court that “careful consideration had been given to making and maintaining the allegation right through to submissions.” [§133]

The Court’s Decision

The court held that, while the claimant was liable for the defendants’ costs as the unsuccessful party, the defendants’ failure to establish fundamental dishonesty warranted a partial costs order in the claimant’s favour. [§133, §135]

The court found that the allegation had been pursued to the end of the trial despite the evidence being “properly explored at the trial and found increasingly wanting.” [§133] Critically, the court rejected the defendants’ argument that making such an order would “undermine the costs regime” or give defendants a “free tilt at raising the issue of fundamental dishonesty.” The court stated: “If anything it is the converse, not to make such an order would give a defendant a free tilt at raising the issue of fundamental dishonesty.” [§133]

The court noted several factors supporting a costs order in the claimant’s favour:

- - Reputational impact | There was “unfavourable national press coverage on the first day of trial” [§134]
  - Serious consequences if proved | The allegation, if established, “would have been disastrous for his reputation and career” [§134]
  - Opportunity to abandon | “It would have been open to Mr de Bono to have abandoned the issue after the close of evidence, or indeed earlier, but he did not do so” [§133]

The court rejected the claimant’s submission for 25% of costs, considering it too high, and instead ordered the defendants to pay 15% of the claimant’s costs from 18 March 2025, subject to detailed assessment on the standard basis if not agreed. [§134-135] This percentage reflected that some costs would have been incurred regardless, but acknowledged the additional burden imposed by the fundamental dishonesty allegation. The court also accepted Mr de Bono’s submission “that some of the costs would have been incurred in any event.” [§134]

The court also ordered that the claimant pay the defendants’ costs of the action, not to be enforced without the leave of the court. [§135]

Fundamental dishonesty found on appeal by reason of material non disclosure

No Procedural Tension Between CPR 44.11 And s57 of the Criminal Justice and Courts Act 2015

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Claimant Penalised In Costs For “Unreasonable and Unrealistic” Costs Budget

Mixed Claims And CPR 44.16(2)(b) | Exceptions To Qualified One Way Costs Shifting (QOCS)

Security For Costs | Proportionality And Foreign Enforcement

New Costs Blog

The Court of Appeal’s decision in Qatar Investment and Projects Development Holding Co & Anor v Phoenix Ancient Art S.A. & Ors [2025] EWCA Civ 1300 addresses proportionality in security for costs applications on appeal and the principles governing security against foreign appellants.

Background

The claimants, Qatar Investment and Projects Development Holding Co and His Highness Sheikh Bin Abdullah Al Thani, brought two actions against five defendants, including the appellants Phoenix Ancient Art S.A., Ali Aboutaam, and Hicham Aboutaam. The 2020 Action concerned a small chalcedony statuette figure of the goddess Nike, while the 2023 Action related to a marble object known as the Head of Alexander the Great as Herakles and a small chalcedony cameo known as the Phalera with an Imperial Eagle. The principal claims were for rescission of the contracts of purchase and claims in deceit and conspiracy. The two actions were managed together.

On 9 December 2024, the claimants applied for summary judgment and for orders striking out the defences in both actions and debarring the appellants from defending on the grounds of non-compliance with disclosure orders. By an order dated 11 April 2025, Garnham J debarred the appellants from defending the 2023 Action, struck out their defence, and granted the claimants summary judgment. In relation to the 2020 Action, he granted summary judgment on the claims based on fraud, dishonesty and fraudulent misrepresentation, and stayed all other claims. Consequential orders were made on 29 April 2025.

The appellants were granted limited permission to appeal by Phillips LJ on 25 July 2025. The core issue on appeal was whether Garnham J was correct to order summary judgment without considering the substantive merits, on the basis that the substance of the allegations which the appellants were precluded from defending were deemed to be admitted. The permission order allowed the claimants to apply for security for costs. The claimants subsequently issued an application on 8 August 2025, seeking security in the sum of approximately US$229,000, representing 75% of their total anticipated appeal costs of US$305,291.38.

Costs Issues Before the Court

The application for security for costs was brought under CPR 25.29(1), which permits the court to order security for costs on an appeal on the same grounds as against a claimant. The claimants relied on three specific grounds under CPR 25.27(b): (i) that the appellants were resident out of the jurisdiction; (ii) that Phoenix was a company and there was reason to believe it would be unable to pay the claimants’ costs if ordered to do so; and (iii) that the appellants had taken steps in relation to their assets that would make it difficult to enforce an order for costs against them.

The court was required to conduct a two-stage inquiry: first, to determine whether any of the conditions in CPR 25.27(b) were satisfied; and second, to decide whether it was just in all the circumstances to make an order. A further issue concerned the appropriate quantum of security, with the claimants seeking a substantial sum and the appellants challenging both the principle and the amount.

The Parties’ Positions

The claimants argued that all three grounds for security were met. Regarding residence abroad, they contended that all three appellants were resident outside the jurisdiction. On inability to pay, they pointed to Phoenix’s financial statements, which they argued showed a heavily insolvent position when adjusted for overvalued inventory and irrecoverable debts. They also highlighted previous statements by the appellants concerning their impecuniosity. On the assets ground, they relied on specific transactions, including Mr Ali Aboutaam’s disposal of his interests in Phoenix and Tanis Antiquities Ltd for no consideration, monthly payments from Phoenix to Mr Ali Aboutaam with no evidence of their destination, and a general failure by the appellants to provide full disclosure of their assets.

The appellants challenged the application on several fronts. On the residence ground, they argued that for the 2020 Action, the pre-Brexit version of the rules should apply to Phoenix and Mr Ali Aboutaam as Swiss residents, which would have provided protection as Switzerland was a Lugano Convention state. They accepted this point had limited practical effect as it did not apply to the 2023 Action or to Mr Hicham Aboutaam. On inability to pay, they suggested the claimants’ own case was that the appellants were wealthy, which was inconsistent with the assertion that Phoenix could not pay costs. On the assets ground, they argued that the Individual Appellants each had substantial equity in real properties in Geneva and New York respectively, which far exceeded the potential costs liability, and that the matters relied on by the claimants did not demonstrate steps taken to make enforcement difficult. They further submitted that ordering security based on residence abroad would be discriminatory absent objectively justified grounds relating to obstacles to enforcement.

The Court’s Decision

The court found that the residence abroad condition under CPR 25.27(b)(i) was satisfied for all appellants. It rejected the argument that the pre-Brexit rules applied to the 2020 Action, holding that the Civil Procedure (Amendment) Rules 2025 had substituted a new Part 25 with no transitional provision preserving the old position for pre-2021 claims.

On the inability to pay condition concerning Phoenix, the court applied the principles from Phaestos Ltd v Ho, noting that there must be reason to believe the company will be unable to pay, which is more than mere doubt. It found the evidence amply justified this conclusion, pointing to Phoenix’s 2023 financial statements, which showed a net asset position that became heavily insolvent when adjusted for overvalued inventory and an irrecoverable debt from Electrum. The court also noted Mr Hicham Aboutaam’s evidence that Phoenix had very little ready cash and could not borrow, indicating a worsened financial position.

Regarding the assets condition, the court applied the principles from Ackerman v Ackerman, emphasising that the test is objective and concerns steps taken in relation to assets that would make enforcement difficult. It found that Mr Ali Aboutaam’s disposal of his interest in Tanis for no consideration and the unexplained monthly payments from Phoenix to him were such steps. It also drew an adverse inference from the appellants’ failure to provide full asset disclosure, both in the context of their pleaded impecuniosity and under a worldwide freezing order. The court rejected the argument that the Individual Appellants’ property equity provided a sufficient answer, noting the properties were subject to substantial local creditor claims, making the equity precarious and vulnerable to enforcement.

On the second stage of the inquiry, the court held it was just to order security. It noted the established risk of dissipation, the history of non-disclosure, and late payment of prior costs orders, and the absence of any suggestion that security would stifle the appeal. On the discrimination point, the court found there were objectively justified grounds for ordering security based on the appellants’ own circumstances, including lack of available assets and the risk of steps to prevent enforcement, which provided rational justification.

On quantum, the court found the claimants’ claimed costs of £225,000 disproportionately high for a one-day appeal on a short point of law. It rejected the argument that costs of the respondent’s notice (seeking to uphold the judgment on the merits) should be included, holding that the claimants would not have been entitled to security for the underlying summary judgment application. Taking a broad-brush approach, it ordered security in the reduced sum of £70,000, reflecting the costs of responding to the appeal alone.

The application for security for costs was therefore allowed, but only in the sum of £70,000.

Security For Costs Application Under CPR 25 | Financial Difficulties and Late Claims

CPR 25.27 | £6m Security For Costs Denied As Escrow Funds In UK Account Deemed Sufficient To Satisfy Any Costs Order

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

Security for costs and the role of court approved costs budgets

Court of Appeal: Fixed Costs Do Not Apply To Appeals But QOCS Does

Variation of costs orders on appeal Court of Appeal decision Potanina v Potanin

Costs Cross-Appeal Fails Where Challenge Arose From Applicant’s Own Default

New Costs Blog

Background

The claim was brought by Colin Robertson against Google LLC concerning the termination of a contract under which Mr Robertson provided YouTube videos. The termination occurred on 22 February 2021, and Mr Robertson alleged that Google’s actions, including “demonetising” and “shadow banning” his channel, amounted to unlawful discrimination under section 29 of the Equality Act 2010 or, alternatively, breach of contract. A claim form was issued on 7 October 2021, with a requirement for service on Google in the USA within six months, by 7 April 2022. On 5 April 2022, the claim form was delivered to Google’s headquarters, but the mandatory Form N510, required under CPR rule 6.34 for service out of the jurisdiction, was not filed with the court or served with the claim form. Google pointed out this omission on 19 April 2022, confirming that valid service had not been effected. In response, Mr Robertson filed Form N510 with the court on 22 April 2022 and applied for relief from sanctions, seeking to validate the service or extend time for service.

The application for relief was heard by Deputy District Judge Grout on 17 May 2023. The judge determined that valid service had not occurred by 5 April 2022 due to the absence of Form N510. The primary dispute centred on whether CPR rule 7.6(3) (governing extensions of time for service) or rule 3.9 (relief from sanctions) applied to rectify the defect. The judge, influenced by authorities cited, applied the rule 3.9 test and granted relief from sanctions, deeming service to have taken place on 5 April 2022. A separate jurisdictional challenge by Google, arguing that the Equality Act claims required permission to serve out of the jurisdiction, was rejected by the judge. Following the judgment, the judge issued a costs order dated 14 August 2023, requiring Mr Robertson to pay the costs of the application for relief from sanctions. Mr Robertson appealed this costs order, leading to a cross-appeal in the Court of Appeal.

The Costs Cross-Appeal

The costs issue before the Court of Appeal arose from the judge’s order that Mr Robertson pay the costs of his application for relief from sanctions. Mr Robertson contended that the costs order should not encompass costs incurred by Google in pursuing its unsuccessful jurisdictional challenge regarding the Equality Act claims. The key question was whether there was a causative link between the application for relief and the jurisdictional challenge, and if so, whether the judge had properly exercised discretion in awarding costs. The issue required consideration of whether costs related to distinct, unsuccessful arguments should be excluded from the general principle that an applicant for relief from sanctions typically bears the costs of the application.

The Parties’ Positions

Mr Robertson, through his counsel Mr Boch, argued that the costs order should be varied to exclude costs associated with Google’s jurisdictional challenge. It was submitted that this challenge was separate from the service issue and had been lost by Google, meaning there was no causal connection to the relief application. Mr Boch relied on the principle that costs should follow the event only for issues directly related to the application, citing that the general rule in cases like Swivel UK Ltd v Tecnolumen GmbH (where an applicant for relief pays costs) should not apply to unrelated, unsuccessful arguments. He emphasised that Google’s jurisdictional challenge concerned whether permission was needed to serve the Equality Act claims out of the jurisdiction, which was distinct from the defect in service due to the missing Form N510.

Google, represented by Ms Evans KC and Mr Roberts, maintained that the costs order was appropriate. They argued that all costs incurred were part of the same application process and arose directly from Mr Robertson’s failure to effect valid service. It was submitted that the jurisdictional challenge was a legitimate aspect of their response to the application, as it went to the merits of whether relief should be granted. Google contended that the judge had broad discretion under CPR rule 44.3 and that the costs order was a proper exercise of that discretion, reflecting the overall context where Mr Robertson’s default necessitated the application.

The Court’s Decision on Costs Cross-Appeal

The Court of Appeal dismissed Mr Robertson’s costs cross-appeal. Lord Justice Coulson, delivering the leading judgment, held that the judge’s costs order was within his discretion and not open to challenge. The court noted that appeals against costs orders face a high threshold, as established in SCT Finance v Bolton, where it was emphasised that appellate intervention is rare unless the decision is unprincipled or outside the wide discretion afforded to first-instance judges.

The court found that the judge had been aware of Mr Robertson’s arguments regarding the jurisdictional challenge but had reasonably concluded that the costs were incurred as a result of the application for relief. It was determined that Google’s jurisdictional challenge was not separate but formed part of the overall dispute stemming from Mr Robertson’s failure to serve the claim form correctly. The court observed that if the relief application had not been made, the jurisdictional issue would not have arisen, establishing a causative link. Although Lord Justice Coulson indicated that, if deciding afresh, he might have reduced the costs by 20% to account for Google’s lack of success on the jurisdictional point, he stressed that this did not render the judge’s decision erroneous. The judge had already made significant reductions to Google’s claimed costs, demonstrating a balanced exercise of discretion. Consequently, the court upheld the costs order, requiring Mr Robertson to pay the costs of the application.

https://tmclegal.co.uk/variation-of-costs-orders-on-appeal-potanina-v-potanin/

https://tmclegal.co.uk/section-51-costs-jurisdiction-injunction-gotti-perrett/

https://tmclegal.co.uk/late-costs-budget-relief-from-sanctions-denied/

https://tmclegal.co.uk/bmce-bank-international-plc-v-phoenix-commodities-pvt-ltd-anor/

https://tmclegal.co.uk/courts-discretion-as-to-costs/

https://tmclegal.co.uk/invalid-service-of-n252/

Sanderson Orders Appropriate Where Claimant Aligns With Successful Defendant On Key Issue

New Costs Blog

The Commercial Court’s decision in Russian Aircraft Lessor Policy Claims (Consequentials) [2025] EWHC 2529 (Comm) addresses costs apportionment, interest rate determinations, and Sanderson orders following the billion-dollar Russian aircraft insurance judgment handed down in June 2025.

Background

The proceedings concerned six consolidated claims by aircraft lessors against insurers following the loss of aircraft in Russia after the invasion of Ukraine. The substantive judgment on 11 June 2025 ([2025] EWHC 1430 (Comm)) determined coverage issues, with the court finding that losses fell under ‘war risks’ rather than ‘all risks’ cover.

Following that judgment, several parties settled: DAE and Falcon with all insurers, and Merx with its war risks insurers. A consequentials hearing on 15-16 September 2025 resolved outstanding issues concerning interest, costs, and permission to appeal in the remaining AerCap, Merx, and Genesis claims.

The costs issues were particularly complex because claimants had pursued alternative claims against both ‘all risks’ and ‘war risks’ insurers. AerCap’s primary case throughout trial was that losses were caused by all risks perils, meaning all risks insurers were liable. When this failed and war risks insurers were found liable instead, difficult questions arose about who should bear the costs of the successful all risks defendants.

Costs Issues Before the Court

The court faced three main categories of costs issues across the remaining claims:

- - First, the incidence of costs: which parties should pay costs to whom, and in what proportions? This required determining how to apportion costs where claimants had brought alternative claims against different insurer groups, and how to reflect partial success on various issues.
  - Second, Sanderson and Bullock orders: where claimants succeeded against war risks insurers but failed against all risks insurers, should the war risks insurers be required to pay the all risks insurers’ costs (either directly via a Sanderson order, or indirectly via a Bullock order requiring claimants to pay then recover from war risks insurers)?
  - Third, interest: what was the appropriate start date for pre-judgment interest, what rate should apply to US dollar awards, and should interest be simple or compound?

Key Principles and Application

1. Cost Consequences When Primary Case Fails

AerCap recovered approximately $1 billion from war risks insurers. It sought to recover 81% of its total costs, arguing that only 19% related to the ‘peril issue’ on which its primary case failed. War Risks Insurers argued AerCap should recover only 30% of costs, reflecting the significance of the peril issue at trial.

The court found AerCap should recover 65% of its costs. The reduction reflected that the peril issue—whether losses were caused by all risks or war risks perils—occupied the bulk of trial time, and AerCap’s primary case throughout was that all risks insurers were liable. Although AerCap argued it was merely putting war risks insurers to proof, the court found AerCap was “not neutral on the point” and actively advanced the all risks case, including through witness evidence. [§45(i)]

The court rejected AerCap’s narrow quantification of peril-related costs, stating that while only c.20% of costs might be referable solely to peril issues, this “does not reflect the importance of the issue of peril in the case and at the hearing” and failed to account for costs that, though theoretically relating to other issues, “in reality related principally to peril.” [§45(i)]

Practical significance: Claimants pursuing alternative claims against different defendant groups risk substantial costs reductions even when ultimately successful, if their primary case on a major issue fails. The court will look to the substance and importance of issues, not just narrow cost allocation exercises.

2. Sanderson Orders: When Alternative Claims Create Costs Shifting

The Sanderson/Bullock Distinction

Both orders shift costs of successful defendants to unsuccessful defendants, but through different mechanisms. A Sanderson order requires the unsuccessful defendant to pay the successful defendant directly. A Bullock order requires the claimant to pay the successful defendant, then recover those costs from the unsuccessful defendant. The court generally prefers Sanderson orders unless there are concerns about the unsuccessful defendant’s ability to pay. [§54]

AerCap: 65/35 Split

For AerCap, the court ordered a 65/35 split: war risks insurers would pay 65% of all risks insurers’ costs via Sanderson order, with AerCap bearing 35%. The court reasoned that while the peril issue would likely have been contested between the two insurer groups even if AerCap had been neutral, AerCap had actively pursued all risks insurers as its primary case and called evidence supporting that case. The split reflected that war risks insurers were primarily responsible for the peril debate, but AerCap bore some responsibility for pursuing its primary case. [§53]

Merx: 100% Sanderson Order

By contrast, for Merx the court ordered war risks insurers to pay 100% of all risks insurers’ costs directly via Sanderson order. The distinguishing feature was that Merx, unlike AerCap, had actively supported all risks insurers’ case on peril at trial, describing it as “irresistible” in opening submissions and relying on all risks insurers’ factual and expert witnesses. [§65] War Risks Insurers were therefore solely responsible for incurring those costs.

Genesis: Split Sanderson Order

For Genesis, the court made a Sanderson order requiring unsuccessful war risks insurers (D2-D6) to pay their shares of all risks insurers’ costs directly, but required Genesis to pay the share referable to the successful lead war risks insurer (TMK 510). [§77(v)]

Key Principles Established

The court’s approach establishes that Sanderson orders in multi-party insurance litigation depend on:

- - Whether claims were genuinely alternative or whether claimant actively supported one case over another
  - The extent to which different defendant groups were responsible for contested issues
  - Whether unsuccessful defendants can fairly be said to have caused successful defendants’ costs to be incurred

As the Court of Appeal stated in Irvine v Commissioner of Police [2005] EWCA Civ 139 (cited at [§50]), these are “strong orders” requiring careful assessment of whether it would work injustice to make unsuccessful defendants liable for successful defendants’ costs.

3. US Prime as Default Interest Rate and Pleading Requirements

The court’s treatment of interest rate arguments reinforces the default position established in Lonestar Communications Corp LLC v Kaye [2023] EWHC 732 (Comm).

The Default Rule

The court confirmed that US Prime is the default pre-judgment interest rate for US dollar awards in the Commercial Court. As explained in Lonestar, US Prime represents the rate offered by US banks to their most creditworthy customers. [§19-20]

Challenging the Default

War Risks Insurers argued AerCap’s actual borrowing costs were lower than Prime, relying on a spreadsheet showing average costs of borrowing for AerCap entities of approximately 6% (Prime minus 2.5%). The court rejected this argument because: [§21]

- - Defendants must plead that the claimant’s actual borrowing costs are lower than Prime
  - War Risks Insurers had merely denied Prime was appropriate, without pleading a positive case
  - The spreadsheet was inadequate: it showed mainly internal group funding, left questions about when facilities were entered into and whether rates were fixed or floating, and these issues had not been explored at trial
  - Without proper pleading, there was “no proper exploration of whether there is a category of corporate borrowers who pay lower rates than US banks’ most creditworthy customers”

Compound Interest

The court rejected AerCap’s claim for compound interest, finding there was “no adequate plea or proof by AerCap that its losses should be calculated by reference to the cost of borrowing on the basis of compound interest.” [§27] Following Sagicor Bank Jamaica Ltd v Seaton [2022] UKPC 48, compound interest as damages requires proper pleading and proof, not merely assertion that commercial borrowing is on compound terms.

Practical significance: Parties seeking to depart from US Prime (whether higher or lower) must plead their case and adduce proper evidence. Disclosure documents prepared for other purposes will not suffice. The court will not investigate borrowing costs absent proper pleading creating a live issue for trial.

4. Payments on Account and Proportionality

The court ordered unusually low payments on account in several instances, reflecting concerns about proportionality:

- - AerCap: 45% of recoverable costs (rather than typical 50%), given “unusually serious issues as to the reasonableness and proportionality” of its £81 million claimed costs [§59]
  - TMK 510: 45% of recoverable costs, given “surprising scale” of over £2.2 million attributed to the Genesis action alone and questions about allocation between claims [§78(iii)]
  - Swiss Re: No interim payment for either Merx or Genesis claims, despite entitlement to costs, due to “surprising magnitude” of costs claimed [§74, §79]

Permission to Appeal Refused

The court refused permission to appeal on all 23 grounds advanced by War Risks Insurers and 5 grounds by Chubb. Applying the principles from LZLabs GmbH v IBM UK Ltd [2025] EWCA Civ 842, the court found none had a realistic prospect of success. Many grounds were challenges to factual findings or evaluations of expert evidence, where the threshold for appeal is particularly high. The court criticised the “kitchen sink” approach, noting that settling parties (DAE, Falcon, Merx) had removed some potentially more promising grounds, leaving mainly attempts to relitigate what was determined at trial. [§85-88]

Practical Implications

This judgment provides important guidance for practitioners in complex multi-party insurance litigation:

For Claimants: Carefully consider costs risks when pursuing alternative claims against different defendant groups. Success against your secondary target may result in costs recovery substantially below 100% if your primary case on major issues fails. Early Part 36 offers reflecting the alternative case may protect position.

For Defendants: When seeking to challenge default interest rates, plead the case properly and adduce evidence rather than relying on disclosure documents. Spreadsheets prepared for other purposes will not establish actual borrowing costs.

For All Parties: Sanderson orders shifting costs between defendants depend heavily on who drove contested issues and whether claimant actively supported one defendant’s case over another. Clear evidence of case positioning throughout trial is crucial.

Bullock order upheld on appeal

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

Summary Determination Of Costs Without A Trial

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account

Reasonable Joint Costs Recoverable In Full Regardless Of Number Of Defendants

Division vs Apportionment

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

New Costs Blog

Background

The matter concerned an application to set aside a Default Costs Certificate in detailed assessment proceedings arising from family litigation. The underlying case was a divorce petition under Case Number BV20D09765, where an order had been made by HHJ Poole on 15 May 2024 requiring the Respondent (H) to pay the Petitioner’s (W) costs. Those costs were to be assessed on the standard basis from 1 June 2020, in respect of the divorce petition and incidental applications, including applications by H for declarations regarding the validity of the divorce. The assessment was to be conducted in accordance with Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013, with both parties having instructed solicitors on record.

On 11 February 2025, W served a Notice of Commencement of Bill of Costs, which was emailed to H’s solicitor and formally served by post on 12 February 2025. The notice, in Form N252, specified that points of dispute were to be served by 6 March 2025, and it included a warning that failure to do so would lead to an application for a Default Costs Certificate for the full amount of the bill. H did not serve points of dispute by the deadline. On 6 March 2025, W’s representatives applied for a Default Costs Certificate, which was issued on 11 March 2025 and served on H’s solicitors. H then issued an application to set aside the Default Costs Certificate on 21 March 2025.

During this period, there were assertions regarding the health of both parties. W was noted to have been incapacitated, as evidenced by a sick note dated 27 February 2025. H was also reported to have been unwell, although the only medical evidence provided was a sick note dated 10 April 2025, which post-dated the relevant period. H had agreed to vacate a parallel hearing in March 2025, but this was attributed to Ramadan rather than health issues. H’s solicitor indicated that delays were partly due to H’s need to secure funds for a payment on account to his legal team and that he was in no position to finalise instructions until 3 March 2025.

Costs Issues Before the Court

The primary issue before the court was whether the Default Costs Certificate should be set aside pursuant to CPR 47.12. The application required consideration of whether H had shown a good reason for the certificate to be set aside and whether the application complied with Practice Direction 47, paragraph 11.2(3), which mandates that a draft of the proposed points of dispute be filed with the application. Additionally, the court had to evaluate the conduct of both parties in the context of the overriding objectives and the principles from Denton v White [2014] EWCA Civ 906 regarding relief from sanctions.

The Parties’ Positions

H sought to set aside the Default Costs Certificate under the discretionary limb of CPR 47.12(2). It was accepted on behalf of H that the first two stages of the Denton test were not met, but it was argued that the certificate should be set aside for several reasons. Firstly, H’s representatives had made an in-time request for an extension to file points of dispute on 5 March 2025, which was not expressly refused but was not agreed due to W’s costs lawyer lacking instructions. Secondly, it was questioned whether W had given specific instructions to reject the extension request. Thirdly, H emphasised a significant and unexplained increase of approximately 300% between the costs claimed in a prior N260 statement from the final hearing and the current bill of costs, arguing that this discrepancy could not be justified solely by the difference between legal aid rates and market rates. H contended that allowing the certificate to stand would diminish matrimonial assets unfairly.

W opposed the application, asserting that the Notice of Commencement had clearly warned of the consequences of non-compliance. W’s costs lawyer had been unable to obtain instructions to grant an extension by the deadline, and the application for the Default Costs Certificate was made in accordance with the pre-authorised course of action. W argued that H’s delays, including the failure to file points of dispute promptly and the subsequent delay in applying to set aside the certificate, were not sufficiently justified. W also maintained that the increase in costs was attributable to legitimate differences between legal aid billing and inter partes costs assessment, including variations in hourly rates, claimable items, and assessment bases.

The Court’s Decision

The court granted the application to set aside the default costs certificate under CPR 47.12 dated 11 March 2025 and permitted H to rely on the points of dispute served on 26 March 2025. However, no costs were awarded to either party in respect of the application.

In reaching this decision, the court found that H’s request for an extension on 5 March 2025 had not been rejected out of hand; rather, W’s costs lawyer had been unable to secure instructions in time. The court noted that W’s legal team had been pre-authorised to apply for a Default Costs Certificate upon non-compliance, but criticised their failure to provide prior warning to H’s team before making the application, describing their conduct as “only very slightly short of opportunistic.” Nevertheless, the court emphasised that H’s team had been aware of the deadline and the lack of authority to extend, and there was no adequate explanation for the delays between the issuance of the certificate and the application to set it aside, or for the initial failure to include draft points of dispute with the application.

The court placed significant weight on the unexplained 300% increase in costs between the N260 and the current bill. While acknowledging that differences between legal aid and inter partes costs could account for some variance, the court found the magnitude of the increase sufficiently concerning to warrant setting aside the certificate, given the potential impact on matrimonial assets. The court noted that W’s team had not adequately addressed this discrepancy before or during the application.

Applying the principles from Denton, the court concluded that neither party had acted in a manner that furthered the overriding objective of dealing with cases justly and at proportionate cost. Consequently, while the Default Costs Certificate was set aside to allow detailed assessment to proceed, the court exercised its discretion to make no order as to the costs of the application.

Defendants Fail To Have US$3.7m Default Costs Certificate Set Aside

CPR 47.12 | Setting Aside A Default Costs Certificate | Application Denied

Failure To File And Serve An N260 Statement Of Costs

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

NO EXCUSES: RELIEF FROM SANCTIONS REFUSED FOLLOWING LATE FILING OF A COSTS BUDGET

The Importance Of Accurate Costs Estimates

Can Unreasonable Refusal To Mediate Lead To Indemnity Costs On Appeal Even Where Permission Is Granted?

New Costs Blog

The High Court’s decision in Fernandez v Fernandez [2025] EWHC 2530 (Ch) confirms that unreasonable refusal to mediate on appeal may independently justify indemnity costs, and that executors conducting appeals in their own interest lose their right to indemnity from the estate.

Background

This judgment follows HHJ Paul Matthews’ substantive appeal judgment handed down on 22 September 2025 ([2025] EWHC 2373 (Ch)), which dismissed Julian Fernandez’s appeal against his removal as executor. Having invited written submissions on consequential matters, the court now addresses the specific costs orders arising from the appeal, including whether unreasonable refusal to mediate justifies indemnity costs.

The case concerned an appeal by Julian Fernandez against an order made by District Judge Wales on 3 December 2024, which removed him as executor of the estates of his parents and of a trust established during their lifetimes. The respondents to the appeal were his siblings, Leessa Karen Fernandez and Graeme Nicholas Fernandez, along with other defendants to counterclaim. The appeal was heard by HHJ Paul Matthews, who handed down a written judgment on 22 September 2025 dismissing the appeal [§1]. Following the substantive decision, the court invited written submissions on consequential matters, leading to this judgment dealing exclusively with costs-related issues [§1].

Costs Issues Before the Court

The court was required to determine five matters arising from the dismissed appeal [§2]: (i) the incidence of costs, specifically whether the unsuccessful appellant should pay the respondents’ costs; (ii) the basis of assessment, namely whether costs should be assessed on the standard or indemnity basis; (iii) whether a payment on account of costs should be ordered and in what amount; (iv) whether interest should be awarded on costs; and (v) whether the appellant was entitled to an indemnity from the estates and trust fund for his own costs and any costs liability to the respondents [§2]. The court also determined whether summary or detailed assessment was appropriate [§25-28].

The Parties’ Positions

The respondents sought an order that Julian pay their costs of the appeal on the indemnity basis [§4, §13]. They argued that Julian’s conduct warranted indemnity costs, citing his unreasonable refusal to mediate, his pursuit of unwarranted factual enquiries, his making and failure to withdraw improper allegations, his misdescription of legal authorities, and the over-elaborate and repetitive nature of his grounds and skeleton arguments [§13]. They also requested a detailed assessment of costs [§25], a payment on account of £46,000 (approximately 60% of their claimed costs of £77,663.91) [§31], interest on costs at 2% above base rate from the dates of payment [§34], and a declaration that Julian was not entitled to an indemnity from the estates or trust for his costs or his liability to pay theirs [§36].

Julian’s position on costs was ambiguous [§4]. In his submissions dated 25 September 2025, he initially appeared to argue that the respondents should not be entitled to recover costs at all, primarily due to their late service of a costs statement, which he claimed was served after 16:00 on the day before the hearing and therefore deemed served on the hearing day [§4, §7]. However, his draft order proposed that he pay the respondents’ costs on the standard basis [§4]. He opposed indemnity costs, contending that the grant of permission to appeal by Michael Green J indicated his conduct was not “out of the norm” [§14]. He also argued that the respondents’ costs were inflated and disproportionate, suggesting that summary assessment was appropriate and disputing the need for a payment on account or interest [§26, §31-32]. On the indemnity issue, Julian did not provide a substantive response to the respondents’ application [§37].

The Court’s Decision

The court ordered Julian to pay the respondents’ costs of the appeal on the indemnity basis, to be subject to detailed assessment if not agreed, with interest at 2% above bank base rate from the dates the respondents paid their legal costs until judgment [§38]. A payment on account of £38,832 was required by 4 pm on 20 October 2025 [§38]. The court also declared that Julian was not entitled to any indemnity from the estates or trust fund for his own costs of the appeal or for his costs liability to the respondents [§37-38].

Incidence of Costs

On the incidence of costs, the court applied the general rule under CPR rule 44.2(2)(a) that the unsuccessful party should pay the costs of the successful party [§3, §6]. As the appeal had been dismissed, the respondents were the successful party, and no reason was found to depart from the general rule [§6]. Julian’s argument that the respondents should be denied costs due to late service of their costs statement was rejected [§7-11]. The court found that any prejudice was minimal, as Julian had the statement the evening before the hearing, and the case was not suitable for summary assessment, rendering the point largely irrelevant [§11]. The court cited authority, including Macdonald v Taree Holdings Ltd [§9], that failure to comply with the practice direction should not lead to a total deprivation of costs where otherwise entitled. The court described Julian’s submission as “formalism of the most unthinking kind” [§11].

Basis of Assessment

Regarding the basis of assessment, the court held that indemnity costs were justified due to Julian’s conduct, which was “out of the norm” [§24]. The court referenced Hosking v Apax Partners Ltd [§12] in emphasising that indemnity costs are appropriate where behaviour takes the case out of the norm.

Key factors included:

- - Unreasonable refusal to mediate | Julian delayed responding to mediation offers for ten weeks (from 14 April to 23 June 2025) and failed to propose alternative dates, effectively frustrating the process [§15-16]. On 14 April 2025, the respondents proposed 26 dates for mediation (5 in May, 21 in June) [§15]. They chased for a response on 9 May and 8 June, but received only a holding response on 13 June [§15]. Julian’s substantive response on 23 June stated none of the 26 dates was possible and that mediation was unlikely before the appeal hearing on 8 July [§15]. The court found it “unacceptable to take so long to respond” and “equally unacceptable not to be able to make some re-arrangement” for at least one of 26 dates [§16]. It concluded that “Julian just did not wish to mediate” [§16]. This alone warranted a costs sanction, as per Thakkar v Patel [§17-18].
  - Pursuit of matters beyond the core issue | Julian insisted on pursuing matters other than whether he should be replaced as executor, including what he called “central issues” that were not even pleaded [§19]. This constituted “conduct out of the norm” [§19].
  - Other conduct points | The court considered allegations regarding misdescription of authorities and over-elaborate pleadings but found these, standing alone, were not sufficient to justify indemnity costs [§21-22]. The court was not prepared to conclude that counsel deliberately miscited authorities and proceeded on the basis of mistaken understanding [§21]. Similarly, over-elaborate and repetitive pleadings, whilst regrettable, were not of themselves “conduct out of the norm” [§22].

The court concluded that the mediation refusal and pursuit of unpleaded issues “amply justify an award of costs on the indemnity basis” [§24].

Method of Assessment

On the method of assessment, the court ordered detailed assessment rather than summary assessment [§25-28]. Although Julian argued that summary assessment was suitable for a hearing lasting one day or less under CPR PD 44 paragraph 9.2(b) [§26], the court noted he had omitted the final part of the rule, which provides for detailed assessment where “there is good reason to do so, for example where the paying party shows substantial grounds for disputing the sum claimed” [§27]. The court found substantial grounds for disputing the costs existed, which could not be dealt with summarily, and therefore ordered detailed assessment [§28].

Payment on Account

For the payment on account, the court applied CPR rule 44.2(8), which requires such a payment unless there is good reason not to do so [§29]. Julian’s arguments about inflated costs went to quantum rather than the principle, and no good reason was found to avoid an order [§32]. The respondents sought 60% of £77,663.91, rounded down to £46,000 [§31]. The court, applying the approach in Excalibur Ventures LLC v Texas Keystone Inc [§30], considered factors including hourly rates exceeding guidelines and potential duplication of work [§33]. District Judge Wales had previously expressed concerns about the respondents’ costs [§33]. Taking a cautious approach, the court ordered 50% of the claimed costs, amounting to £38,832 (to the nearest pound), payable within 14 days [§33].

Interest on Costs

Interest on costs was awarded at 2% above bank base rate from the dates the respondents paid their legal costs until judgment [§34-35]. The court noted this power is “now routinely exercised” following trial [§34, citing Involnert Ltd v Aprilgrange Ltd]. The court rejected Julian’s argument that inflated costs made interest inappropriate, noting that interest would apply only to costs allowed on detailed assessment, not the claimed amounts [§35].

Indemnity from Estates

Finally, the court denied Julian any indemnity from the estates or trust fund for his costs or his liability to pay the respondents’ costs [§36-37]. The court held that the appeal was conducted entirely in Julian’s own interest, not for the benefit of the estates or trust [§37]. Costs were therefore not properly incurred under section 31(1) of the Trustee Act 2000 and CPR PD 46 paragraph 1.1(b) [§37]. The court noted that the judge below had been entitled to reach the same conclusion regarding Julian’s indemnity for costs of hostile litigation at first instance [§36].

Executor’s Litigation Costs Indemnity Denied And Personal Costs Ordered In Hostile Trust Dispute

A short judgment looking at trust and estate costs principles

Costs Penalty Applied For Silence In The Face Of An Invitation To Mediate | Court Of Appeal Decision

Failure To Engage In ADR And Indemnity Costs, Again

Refusal To Mediate Does Not Always Justify Indemnity Costs

CPR 44.2(8) | Payments On Account In Civil Litigation

High Court Removes The “Murphy” Exceptionality Test For Inter Partes Costs In Criminal Judicial Reviews

New Costs Blog

The Divisional Court’s decision in R (Bates) v Highbury Corner Magistrates’ Court [2025] EWHC 2532 (Admin) fundamentally changes how costs are approached in criminal judicial review proceedings by holding that the long-established Murphy principle was wrongly decided and should no longer be followed.

Background

The judicial review proceedings were brought by the Claimant, Mr Antony Bates, to challenge a summons issued against him in the Highbury Corner Magistrates’ Court and the decision to send him to the Crown Court for trial. The summons had been issued on the application of the Interested Party, Mr James Westhead, who was acting as a private prosecutor. In a judgment dated 31 January 2025 (R (Bates) v Highbury Corner Magistrates’ Court [2025] EWHC 184 (Admin)), the High Court quashed the summons and the committal decision, finding that the application for the summons was vexatious and an abuse of process [§1].

Following the substantive judgment, the Court convened as a Divisional Court (Lady Justice Whipple and Lady Justice Yip) to determine the Claimant’s applications for costs [§1]. The Claimant sought two distinct forms of costs relief: first, the costs incurred in bringing the judicial review proceedings pursuant to section 51(1) of the Senior Courts Act 1981; and second, the costs thrown away in the criminal proceedings in the magistrates’ court pursuant to section 19 of the Prosecution of Offences Act 1985 and regulation 3 of the Costs in Criminal Cases (General) Regulations 1986 [§2]. The costs claimed for the criminal proceedings were quantified at £235,922.11 (including over 400 hours of solicitor time), while the costs for the judicial review proceedings had not been quantified pending the Court’s decision on the principle of recoverability [§4-5]. The Defendant, the magistrates’ court, did not participate in the costs hearing, and the Interested Party, Mr Westhead, attended in person [§8, 90]. The Attorney-General appointed Paul Jarvis KC as Advocate to the Court to assist on the legal issues arising from the Murphy principle [§10-11].

Costs Issues Before the Court

The Court was required to determine two primary costs issues [§12]. The first concerned the Claimant’s application for the costs of the judicial review proceedings under section 51(1) of the Senior Courts Act 1981. This raised a fundamental point of law as to whether the High Court’s general discretion to award costs in such proceedings was circumscribed by the principle established in Murphy v Media Protection Services [2012] EWHC 529, which held that costs in criminal causes or matters should only be awarded under the civil regime in exceptional circumstances [§24]. The Murphy principle had been followed in numerous subsequent cases, with the category of “exceptional circumstances” described as “very narrow indeed” [§34]. Importantly, in none of the cases since Murphy had a court found circumstances sufficiently exceptional to permit departure from the criminal costs regime [§34]. The Court had to decide whether the Murphy principle was correct or should be departed from, and if the discretion under section 51 was available, how it should be exercised in this case [§12].

The second issue related to the Claimant’s application for the costs of the criminal proceedings under section 19 of the Prosecution of Offences Act 1985 and regulation 3 of the Costs in Criminal Cases (General) Regulations 1986 [§14]. This involved considering whether the Court should exercise the power of a District Judge (Magistrates’ Courts) under section 66 of the Courts Act 2003 to make an order for costs inter partes, and if so, whether such an order was appropriate on the facts and how the amount should be determined [§14].

The Parties’ Positions

The Claimant, represented by Adrian Darbishire KC and Stuart Biggs KC, contended that the Murphy principle was wrongly decided per incuriam and should not be followed [§6, 57]. It was submitted that the High Court retained its general discretion under section 51(1) of the Senior Courts Act 1981 to award costs in judicial review proceedings concerning criminal matters, without any requirement for exceptional circumstances [§6]. The Claimant argued that the Court should apply the usual principles under CPR Part 44, with the starting point that the successful party should recover costs from the unsuccessful party [§6-7]. In support, the Claimant relied on authorities such as R v Chief Magistrates, ex parte Osman (1990) Cr App R 313 [§35-41] and R (Chapter 4 Corp Dba Supreme) v the Crown Court at Southwark [2023] EWHC 1362 [§54], which demonstrated a practice of awarding costs under section 51 in criminal matters without reference to the Murphy principle. The Claimant also pointed to numerous other cases, both before and after Murphy, where the High Court had made costs orders in criminal matters applying the conventional approach under section 51 [§42]. For the criminal proceedings costs, the Claimant submitted that the findings in the substantive judgment established that Mr Westhead had engaged in unnecessary or improper acts, warranting an order under section 19 of the 1985 Act, and that the Court should exercise its powers under section 66 of the Courts Act 2003 to make that order rather than remitting it to the magistrates’ court [§7, 105].

The Interested Party, Mr Westhead, resisted both applications [§8]. He did not address the legal principles underpinning the Murphy principle but argued that the costs sought were excessive, highlighting the involvement of two King’s Counsel and multiple solicitors as disproportionate [§8]. He maintained that the private prosecution was in the public interest and that he had been let down by the magistrates’ court and other organisations [§8]. Mr Westhead also stated that he had agreed to the quashing of the summons but not to the reasons or a costs order, and contended he should not be penalised for an error by the District Judge [§8]. He concluded by stating that an adverse costs order would “break [his] spirit to carry on the fight for justice” [§9].

The Advocate to the Court, Mr Paul Jarvis KC, submitted that the Murphy principle was not wrong and should be followed [§11]. He argued that Parliament had enacted separate regimes for civil and criminal costs, and the High Court should only depart from the criminal costs regime in exceptional circumstances [§33]. He relied on subsequent authorities such as R (AB) v Uxbridge Youth Court [2023] EWHC 2951 (Admin) and Morjaria v Westminster Magistrates’ Court [2024] EWHC 178 (Admin), which had affirmed the Murphy principle and emphasised the narrowness of the exception [§29, 33-34]. Mr Jarvis described the rationale as ensuring that “Parliament intended that costs would only be awarded in a criminal cause or matter where such an award is in accordance with the statutory provisions applicable to such causes or matters” [§33].

The Court’s Decision

The Court held that the Murphy principle, as developed in subsequent cases requiring exceptional circumstances before civil costs could be awarded in criminal judicial review proceedings, was wrong and should not be followed [§82, 86-87, 107]. After conducting a detailed analysis of the legislative history and authorities, the Court concluded that the High Court’s power to award costs under section 51(1) of the Senior Courts Act 1981 was not ousted by the criminal costs regime in the Prosecution of Offences Act 1985 [§69-76]. The Court found that sections 18 and 19 of the 1985 Act, which govern inter partes costs orders in the criminal courts, do not apply to the High Court [§75]. There was no need to extend these provisions to the High Court because section 51 already allows for inter partes costs orders to be made in all proceedings before the High Court [§75]. As the Practice Direction (Costs in Criminal Proceedings) 2015 states: “The High Court is not covered by section 18 of the Act but it has complete discretion over all costs between the parties in relation to proceedings before it” [§75].

The Court further held that section 51(5) of the 1981 Act, which provides that nothing in subsection (1) shall alter the practice in any criminal cause, did not preclude the award of costs under the civil regime [§77-81]. The Court found there was no established practice at the time the 1981 Act was passed requiring costs in criminal matters before the High Court to be determined solely under the criminal regime [§78-80]. The decision in Osman demonstrated an established practice of awarding costs pursuant to the High Court’s general discretion in criminal matters [§78]. The Court concluded that the powers under the 1981 Act and the 1985 Act supplemented each other, as stated in Osman [§39, 73].

The Court was critical of how Murphy had developed, noting that the principle “emerged without any real argument, without citation of any relevant authorities and without any detailed reasoning” [§55-56, 82]. Stanley Burnton LJ’s judgment in Murphy stated the principle at paragraph 15 without providing any rationale for it, and paragraph 14 demonstrated it was not based on any authority nor had counsel been able to assist with the criteria to apply [§82]. The Court observed that had Osman been cited in Murphy and subsequent cases, and had courts been provided with the same opportunity to analyse the legislative provisions and full range of authorities, “we do not think that the Murphy principle would have developed in the way that it did” [§86].

The Court concluded: “To the extent that Murphy and subsequent cases have been treated as establishing an exceptionality requirement for making orders under section 51 in criminal matters, we think this is wrong and not to be followed. The High Court’s power to make inter partes orders under section 51 is preserved. That is a discretionary power and the court will decide how the discretion should be exercised in the circumstances of any particular case“ [§87].

Having decided that it had the power to make a costs order, the Court exercised its discretion under section 51 to order that the Interested Party pay the Claimant’s costs of the judicial review proceedings [§95, 98]. The Court applied the general rule under CPR 44.2 that the unsuccessful party should pay the costs of the successful party, noting that Mr Westhead’s conduct—including making a vexatious application, abusing the process of the magistrates’ court, and failing to comply with the duty of candour—justified the order [§93, 95-97]. The Court stated: “Given the findings in the substantive judgment, we see no reason why we should not exercise our discretion to make an order that the Interested Party pays the Claimant’s costs of the judicial review proceedings” [§95]. The Court emphasised: “The need for the judicial review proceedings and the way in which they were conducted arose overwhelmingly out of the conduct of Mr Westhead in seeking to maintain an unsubstantiated private prosecution” [§97].

The costs were to be assessed on the standard basis if not agreed [§99-100]. While recognising Mr Westhead’s misconduct in the criminal proceedings below, the Court considered that his conduct in the High Court—while involving “a dogged insistence on airing his belief that the Claimant was guilty of criminal wrongdoing“—did not cross the line into conduct sufficiently out of the norm to justify assessment on the indemnity basis [§100]. The Court noted its reservations about the scale of the costs claimed for the magistrates’ court proceedings (£235,922.11 including over 400 hours of solicitor time) and observed that the Costs Judge should bear these observations in mind when conducting the assessment of the judicial review costs, as significant additional work before issuing the judicial review claim would not be expected [§101].

For the costs of the criminal proceedings, the Court found that section 19 of the Prosecution of Offences Act 1985 was engaged, as Mr Westhead’s actions constituted an “unnecessary or improper act or omission” within the meaning of the section [§103]. The Court stated: “We consider that the way in which the application in the magistrates’ court was made amounts to ‘unnecessary or improper act or omission’ within the meaning of section 19 of the 1985 Act” [§103]. However, the Court declined to determine the amount of costs under regulation 3 of the 1986 Regulations, instead remitting the application to the magistrates’ court for that purpose [§106]. The Court reasoned: “We consider that determination of the amount of costs which Mr Westhead should be ordered to pay pursuant to the provisions of regulation 3 of the 1986 Regulations would be better dealt with in the magistrates’ court by a District Judge, experienced in dealing with applications for costs in proceedings in that court” [§106]. This approach was taken partly because the Court had not heard full submissions on the quantum, and partly because a District Judge would be better placed to assess the reasonableness of costs claimed for magistrates’ court proceedings [§106].

The Claimant’s undertaking not to seek the additional costs of pursuing the costs arguments was upheld, meaning that the costs of the costs hearing itself would not be recoverable from Mr Westhead [§102]. The Court considered this “an appropriate concession” given that the application involved detailed legal consideration in which Mr Westhead played a limited part, and a separate hearing was required because the Claimant was not in a position to make representations on costs at the original hearing [§102].

Section 51 Costs Jurisdiction Injunction Without Claim Form | Gotti v Perrett [2025] EWCA Civ 1168

Court of Appeal authority on section 51 Senior Courts Act 1981 discretionary costs jurisdiction – confirms broad scope of “proceedings” for costs purposes

CPR 44.2 And The Courts’ Discretion As To Costs

High Court analysis of CPR 44.2 general rule that unsuccessful party pays successful party’s costs – the principle now applied in criminal JR

Costs In Withdrawn Judicial Review Claims

Examines costs principles in judicial review proceedings including successful party analysis under CPR 44

Costs Denied | Voluntary Bill Applications Fall Under The Criminal Costs Regime – IPE Marble Arch Limited v Anthony Moran [2024] EWHC 2913 (Admin)

High Court decision applying Murphy principle to private prosecution voluntary bill proceedings – directly relevant pre-Bates authority

Costs In Private Prosecutions, London Solicitors And The “Singh” Discount

Examines costs recoverability principles in private prosecution context including section 16 POA 1985

£70,000 Costs Order Upheld Against Unrepresented Tenants For Vexatious Conduct – Coogan v Taheri [2025] UKUT 293

Recent case on costs sanctions for vexatious conduct and abuse of process – parallels with private prosecutor liability

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account

New Costs Blog, YT

The High Court’s decision in Learning Curve (NE) Group Limited v Lewis & Anor [2025] EWHC 2491 (Comm) demonstrates the difficulty parties face when attempting to avoid Part 36 consequences after failing to beat a claimant’s offer, with the court rejecting challenges to offer validity, interest rates, cost basis, and payment on account quantum.

Background

The claim arose from a Share Purchase Agreement (SPA) dated 29 October 2021, under which the claimant, Learning Curve (NE) Group Limited, acquired shares from the defendants, Richard Huw Lewis and Melanie Probert. The claimant brought proceedings for breaches of warranty and under an indemnity clause in the SPA. In a judgment dated 4 August 2025 ([2025] EWHC 1889 (Comm)), the court found the defendants liable, and the claimant elected to enter judgment in the sum of £5,211,625 for breach of warranty. This sum was reduced by a prior payment of £783,325 made by the defendants under the indemnity, resulting in a net judgment debt of £4,428,300, which was payable by 19 September 2025.

Prior to the trial, the claimant had made a Part 36 offer on 7 February 2024, offering to settle for £5,211,625, which was not accepted by the defendants. Following the main judgment, the court addressed consequential matters, including the effect of the Part 36 offer, interest on the judgment sum, costs, permission to appeal, and a stay pending appeal. The parties provided written submissions, and the court determined these issues on the papers without a further hearing [§8, §11].

The Defendants’ Multi-Pronged Challenge

Following judgment in the claimant’s favour for the exact sum offered under Part 36, the defendants mounted challenges on multiple fronts, seeking to avoid or reduce the consequences under CPR 36.17(4). The court addressed each argument in turn.

Challenge 1 | The Offer Was Unclear

The defendants’ first argument was that the Part 36 offer lacked clarity because it offered £5,211,625 but was silent about the £783,325 already paid by the defendants under the indemnity in October 2022. They contended it was unclear whether the offer required payment of the full £5,211,625 in addition to the amount already paid, meaning the judgment (which credited the earlier payment) had not matched the offer [§19, §23].

The court rejected this argument. HHJ Russen KC held that the £783,325 was properly treated as a payment on account of the larger warranty claim. The offer’s silence on this sum was appropriate because the defendants’ counterclaim sought its return, meaning it could not be “appropriated” by either party until the counterclaim was resolved. The offer included settlement of the counterclaim, so acceptance would have resulted in the claimant retaining the £783,325 as part of the £5,211,625 total. The defendants had not requested clarification under CPR 36.9, and the court found no genuine ambiguity [§20-25].

Drawing on the reasoning in Macleish v Littlestone [2016] EWCA Civ 127 and Synergy Lifestyle Ltd v Gamal [2018] EWCA Civ 210, the court applied a presumption that the payment on account would be treated as made on account of the sum offered, absent contrary clarification. Any other interpretation would produce an “absurd result” [§25].

Challenge 2 | The Claimant’s “Shifting Case” Made Application Unjust

The defendants argued that it would be unjust to apply CPR 36.17(4) consequences because the claimant’s case on quantum had shifted significantly—from £6.8m in the claim form to £10.18m in particulars of claim to different valuations in expert evidence. They contended this uncertainty meant they could not properly evaluate the offer when made [§29-30].

The court found this argument backfired. Rather than supporting injustice, these points “reinforced the effectiveness of the Offer.” The claimant had not made good its pleaded case for £10m+, and the defendants would have “spared themselves both the continuing uncertainty over the level of their financial exposure, including ongoing interest, and the very significant legal costs incurred by both sides since the Offer was made” if they had accepted it [§30].

HHJ Russen KC cited the “formidable obstacle” test from Smith v Trafford Housing Trust [2012] EWHC 3320 (Ch), endorsed by the Court of Appeal in Webb v Liverpool Women’s NHS Foundation Trust [2016] EWCA Civ 365. By making the offer a year before trial at just over half the pleaded sum, the claimant had given defendants a genuine settlement opportunity. The defendants “come nowhere close to overcoming the ‘formidable obstacle'” required to escape Part 36 consequences [§31-33].

Challenge 3 | Enhanced Interest Rate Too High

On interest, the defendants proposed that if enhanced Part 36 interest applied, it should be limited to 4% above base rate rather than the 8% sought by the claimant [§41].

The court awarded 8% above base rate for the period from 28 February 2024 (expiry of the relevant period) to 4 August 2025 (judgment date). This decision was supported by evidence from the claimant’s witness that the claimant had borrowed at rates equivalent to 4.5-7.14% above base since 2021, meaning 8% provided appropriate compensation while remaining within the 10% maximum under CPR 36.17(4)(a). The court noted that enhanced interest under Part 36 may include a “non-compensatory element” as an incentive to settle [§44-46].

For the earlier period (29 October 2021 to 28 February 2024), the court awarded 2% above base under section 35A of the Senior Courts Act 1981, rejecting the defendants’ proposal of 1% [§42, §44].

Challenge 4 | Costs Should Be Reduced by 50%

The defendants argued that the claimant’s costs recovery should be capped at 50% because the claimant had “deliberately exaggerated its claim” by pursuing £10m when the true value was approximately £5m. They also contended that any payment on account should exclude pre-budget incurred costs, limiting it to £846,206.50 [§52-53].

The court rejected this comprehensively. The existence of the Part 36 offer undermined the exaggeration argument—defendants had a clear opportunity to settle at the sum now established as correct. The claimant succeeded “on all material issues presented by the parties” and was entitled to full recovery [§54-55]. The court specifically noted that costs reserved from an earlier disclosure application should be included, as these would never have been incurred if the offer had been accepted [§57].

Challenge 5 | Payment On Account Too High

The court ordered payment on account at 100% of the approved budgeted costs (£1,257,382), departing from the common practice of 90% [§58].

HHJ Russen KC explained that the usual 90% approach reflects the protection CPR 3.18 gives to approved budgets on standard basis assessment—providing confidence that this percentage is unlikely to constitute overpayment. However, CPR 3.18 does not apply to indemnity basis costs. Citing Burgess v Lejonvarn [2020] EWCA Civ 114, the court held that where a significant portion of costs will be assessed on the indemnity basis, approved budgets become “prima facie irrelevant” to those costs [§59-60].

With total invoiced costs of £2,210,133 and a significant element on the indemnity basis, the payment on account of £1,257,382 represented only 57% of total costs incurred. The court was satisfied this was unlikely to constitute overpayment even allowing for reasonableness challenges [§61].

Final Elements | The Additional Amount and Interest on Costs

The court ordered:

- - The additional amount of £75,000 under CPR 36.17(4)(d), payable within 6 weeks [§34]
  - Interest on costs at 2% above base until 28 February 2024 and 8% above base until 4 August 2025, with the Judgments Act rate thereafter [§63]

Permission to Appeal and Stay—Also Refused

For completeness, the defendants also sought permission to appeal on four grounds and a stay pending appeal. Permission was refused on all grounds, with the court finding no real prospect of success [§67-80]. The stay application was rejected as the defendants had not demonstrated “solid grounds of irremediable harm” and appeared able to access resources to meet their liabilities [§85-88].

Key Takeaway

This judgment illustrates that comprehensively challenging Part 36 consequences rarely succeeds. The “formidable obstacle” test means courts will apply the full range of CPR 36.17(4) benefits unless clear injustice can be demonstrated—and arguments that defendants could have avoided expense by settling will typically reinforce rather than undermine those consequences.

CPR 36.17 And The Just Rewards Of A Good Part 36 Offer

igh Court decision on full CPR 36.17(4) consequences including enhanced interest at 6% above base, indemnity costs, and additional amount. Directly relevant authority on when courts apply Part 36 benefits.

CPR 36.17 | Part 36 Offer To Accept £1 Was A Genuine Attempt To Settle

Court of Appeal guidance on the “formidable obstacle” test and when Part 36 consequences apply. Discusses the strict compliance required and high hurdle for escaping consequences.

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

High Court decision on CPR 36.17(5) mandatory factors and when costs must be reserved. Explores the “formidable obstacle” threshold in split trial context.

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

Guidance on payment on account principles, including the standard 90% of budgeted costs approach and the relevance of CPR 3.18 on assessment.

When Part 36 Offers Demand Total Capitulation | Matière v ABM

Recent High Court decision on what constitutes a genuine Part 36 offer and when offers may be challenged as demands for capitulation rather than settlement.

When Is A Part 36 Offer Not A Part 36 Offer?

Court of Appeal guidance on Part 36 offer validity and construction, relevant to the offer clarity arguments in Learning Curve.

Variation Of Costs Orders After Successful Appeal | When Previous Orders Should Stand

New Costs Blog

The Court of Appeal’s decision in Potanina v Potanin (No.2) (Costs) [2025] EWCA Civ 1223 addresses variation of costs orders on appeal, confirming that costs orders should not be varied where the fundamental basis of the earlier success remains undisturbed by a subsequent appellate decision on different grounds.

Background

The proceedings concerned a costs judgment following a remitted appeal in one of the most protracted and high-value matrimonial disputes in English legal history. The parties, both Russian nationals, divorced in Russia in 2014 after a 30-year marriage. In the Russian proceedings, the wife received what was described as a “tiny fraction” of the parties’ estimated $20 billion wealth, as only assets legally owned by the husband were divided — the vast majority of his wealth held through trusts and corporate structures was excluded. The wife subsequently relocated to London and in October 2018 applied for leave to bring financial remedy proceedings in England under Part III of the Matrimonial and Family Proceedings Act 1984.

The Appeal History

In January 2019, Cohen J granted the wife leave on a without-notice basis. The husband applied to set aside that order, arguing the judge had been materially misled. After hearing both sides, Cohen J set aside his original order and refused leave. The wife appealed to the Court of Appeal. In May 2021, the Court of Appeal allowed her appeal [2021] EWCA Civ 702, finding that Cohen J had not been materially misled and that the proper approach was to adjourn set-aside applications unless the respondent could deliver a “knockout blow.” The court restored the grant of leave and ordered the husband to pay the wife’s costs, with payments on account totalling £491,439.80 [§6].

The husband appealed to the Supreme Court. In March 2024, the Supreme Court allowed his appeal by a majority of 3:2 [2024] UKSC 3. Critically, the Supreme Court succeeded on different grounds from those argued below. It held that the entire “knockout blow” practice was unlawful and contrary to procedural fairness, but did not disturb the Court of Appeal’s findings that Cohen J had not been materially misled. Because it succeeded on new procedural grounds, the Supreme Court remitted two of the wife’s grounds of appeal back to the Court of Appeal for determination under the correct legal principles. The Supreme Court also ordered the wife to pay 50% of the husband’s appeal costs, but deferred payment until final determination of the wife’s substantive Part III claim [§7].

The Present Proceedings

On 4 September 2025, the Court of Appeal handed down judgment on the two remitted grounds [2025] EWCA Civ 1136 [§1]. That substantive judgment allowed the wife’s appeal and granted her leave to make an application under Part III of the Matrimonial and Family Proceedings Act 1984. This subsequent judgment, handed down on 2 October 2025, addressed the costs issues arising from that remitted appeal and the protracted litigation history [§1-2].

The husband was a designated person under the Russia (Sanctions) (EU Exit) Regulations 2019, necessitating a licence for any financial transfers [§3]. The parties agreed that the husband should pay the wife’s costs of the appeal on a standard basis, to be assessed if not agreed, and that a licence would need to be obtained for payment [§3]. However, they disputed four ancillary costs matters [§4].

Costs Issues Before the Court

The court was required to determine four specific costs issues [§4]. First, whether the costs order made by the Court of Appeal in May 2021 should be varied in light of the subsequent decision of the Supreme Court in 2024, an issue remitted by the Supreme Court for the Court of Appeal’s consideration [§4(i)]. Second, whether the husband should make a payment on account of the wife’s costs of the appeal [§4(ii)]. Third, whether the husband could offset his liability for costs against the sum the wife was ordered to pay by the Supreme Court [§4(iii)]. Fourth, the appropriate time frame for the husband to meet any costs award, given the sanctions regime affecting him, with the husband seeking 90 days and the wife proposing 14 days [§4(iv)].

Previous Costs Orders

For context, the Court of Appeal’s May 2021 order included two separate costs awards on the standard basis: £255,301.20 on account for the appeal costs, and £236,138.60 on account for the set aside application costs [§6]. The Supreme Court’s March 2024 order required the wife to pay 50% of the husband’s appeal costs, but deferred payment until 90 days after the later of: obtaining a licence, conclusion of detailed assessment or agreement, or final determination of the wife’s substantive Part III claim [§7].

The Parties’ Positions

The wife contended that the 2021 costs order should remain unaltered, arguing that she had comprehensively succeeded in the earlier appeal by demonstrating that the first instance judge (Cohen J) had not been materially misled, a point not challenged by the husband in the Supreme Court appeal [§8]. She noted that the husband had succeeded in the Supreme Court on an argument which had not previously been raised [§8]. She sought a payment on account of £350,000, representing approximately 72% of her total costs [§10]. She proposed that payment should be made within 14 days of obtaining the required licence [§11]. She opposed any offset of the Supreme Court costs liability, noting that under that order, payment was deferred until the conclusion of the entire proceedings [§12, referencing §7].

The husband argued that the 2021 costs order should be varied to reflect the Supreme Court’s decision. He accepted liability for the wife’s costs of Cohen J’s de novo determination and the Maintenance Regulation case, but disputed liability for costs of the set aside aspect [§9]. As a compromise, he proposed that he pay 50% of the costs of the 2021 appeal and 50% of the costs before Cohen J, on the basis that each party had succeeded in their respective appeals [§9]. He disputed the necessity of any payment on account but, if ordered, did not appear to dispute the figure [§10]. He sought 90 days for payment after the licence was obtained, citing “formidable practical difficulties” in transferring funds through intermediary banks under sanctions compliance requirements, and noted potential delays beyond his control [§11]. He pointed out that the Supreme Court had allowed 90 days in its March 2024 order [§11]. He also requested that his costs liability be offset against the sum the wife owed under the Supreme Court’s costs order [§12].

The Court’s Decision

Variation Of Costs Orders On Appeal | The 2021 Order

The court declined to vary the 2021 costs order, establishing important principles on variation of costs orders on appeal [§13, §17(i)]. It found that the wife’s success in the earlier appeal was based on grounds not materially challenged or disturbed by the Supreme Court, which had decided the husband’s appeal on previously unargued points [§13]. The fundamental basis on which she succeeded in 2021 — that Cohen J had not been materially misled — was not challenged in, let alone disturbed by, the Supreme Court [§13, citing the Supreme Court’s decision at [40]].

The court considered the wife the successful party overall, as she had obtained leave to pursue her financial application [§13]. Applying the principle in Baker v Rowe [2009] EWCA Civ 1162 at [25], and noting that although the general rule does not apply to appeals from the Family Division under CPR 44.2(3)(a), the court found “no good reason why this should not be the ‘decisive factor’ in this case” [§13].

Payment on Account

The court ordered a payment on account of £350,000 [§14, §17(ii)(a)]. In line with CPR rule 44.2(8), the court was satisfied there was no good reason the wife should not receive a reasonable sum on account of her costs [§14]. The sum claimed — a little over 70% of the total costs claim per the wife’s form N260 — was deemed appropriate [§14].

Set-off Against Supreme Court Costs Order

The court rejected the husband’s request for an offset against the Supreme Court costs liability [§15, §17(v)]. It noted that it was not open to the court to vary the costs order made by the Supreme Court [§15]. The wife’s payment obligation under the Supreme Court order was deferred until the conclusion of the entire proceedings (specifically, “the final determination of the wife’s substantive Part III claim”) [§7, paragraph 1(a)(iii)].

Time for Payment

The court set a period of 60 days from the wife’s notification that the required licence had been obtained [§16, §17(ii)]. This balanced the husband’s cited practical difficulties against the wife’s preference for a shorter timeframe [§16]. The court found 90 days excessive but 14 days unrealistic [§16]. The order specified that if payment was not made by the due dates, interest at the applicable judgment rate would begin to accrue immediately [§17(iii)]. The order expressly confirmed that the Supreme Court’s costs order stood unaltered [§17(v)].

CPR 44.2(8) | Payments On Account Of Costs | Court Of Appeal Decision

Court of Appeal decision on payment on account principles, applying Excalibur Ventures and Dana Gas margin-for-error approach.

CPR 44.2(8) | Payments On Account In Civil Litigation

Comprehensive guidance on CPR 44.2(8) principles, including when “good reason” exists to refuse payment on account and quantum determination.

Set-Off Of Costs Against Damages Or Costs | The Principles

Analysis of Lockley principles on set-off between costs orders.

CPR 44.2 And The Courts’ Discretion As To Costs

Detailed examination of identifying the “successful party” under CPR 44.2, including application in family proceedings.

Court Of Appeal: Fixed Costs Do Not Apply To Appeals But QOCS Does

Court of Appeal guidance on costs discretion in appellate proceedings and how costs regimes apply differently at appeal level. Relevant to multi-stage appeal costs issues.

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

High Court decision confirming payment on account can be ordered after final order is sealed, and that lack of liquid funds is not “good reason” to refuse.

No Procedural Tension Between CPR 44.11 And s57 of the Criminal Justice and Courts Act 2015

New Costs Blog

The Senior Courts Costs Office’s decision in XX v Young & Aviva Insurance Limited [2025] EWHC 2443 (SCCO) confirms that costs judges cannot make quasi-fundamental dishonesty findings during detailed assessment proceedings.

Background

The dispute originated from a road traffic accident in which the Second Claimant, a 62-year-old woman, was struck by a vehicle driven by the First Defendant while crossing a road. The Second Defendant, Aviva Insurance Limited, was the insurer liable to satisfy any judgment. The Claimant sustained significant injuries, including pelvic and acetabular fractures requiring surgical intervention, with an anticipated earlier need for a hip replacement. The claim proceeded on quantum only, with liability remaining in dispute, and the parties eventually settled at a Joint Settlement Meeting for £149,000, a sum expressed to be “net of contributory negligence” [§49]. The consent order provided for the Second Defendant to pay the Second Claimant’s costs, to be assessed on the standard basis, with a specific term that neither party would be precluded from raising conduct issues during the assessment [§85].

The Second Claimant’s bill of costs was drawn in the sum of £517,985. The detailed assessment was heard over two separate three-day sittings before Costs Judge Nagalingam, during which interim written judgments were provided. Following the line-by-line assessment, the bill was significantly reduced to £339,565.16, a reduction of approximately 34% [§2]. A further judgment on 4 August 2025 addressed the issue of proportionality, applying an additional reduction which effectively concluded the detailed assessment. The reduction to profit costs alone, excluding the costs of the assessment, amounted to approximately 38% [§3].

Costs Issues Before the Court

The matter before the court was the Second Defendant’s application for permission to appeal the judgment of 4 August 2025. The application focused on the judge’s decision regarding proportionality and his rejection of the Second Defendant’s arguments for a costs reduction based on the alleged misconduct of the Second Claimant under CPR 44.11 [§25]. The central issue was whether the judge erred in his approach by not making further reductions to the bill on these grounds. The Second Defendant argued that the case raised important points of principle concerning the relationship between allegations of fundamental dishonesty in the substantive claim and the ability to seek costs sanctions for misconduct on assessment.

The Parties’ Positions

The Second Defendant’s Position

The Second Defendant, represented by Ms McDonald, sought permission to appeal on two grounds. Firstly, under CPR 52.6(1)(a), it was argued that the appeal would have a real prospect of success. The defendant contended that the judge failed to properly consider the Second Claimant’s failure to provide evidence explaining why she accepted a settlement sum significantly lower than her pleaded claim following the disclosure of surveillance evidence [§25(c)]. It was submitted that the judge erroneously reversed the burden of proof and neglected to consider proportionality-based reductions for costs incurred after the date the Claimant should have recovered, and for work on heads of loss (future losses and accommodation) for which no damages were ultimately recovered [§28].

Secondly, under CPR 52.6(1)(b), it was argued there was a compelling reason for the appeal to be heard. The defendant submitted that the judgment created a problematic juxtaposition, implying that defendants must take allegations of fundamental dishonesty to trial to secure a finding under section 57 of the Criminal Justice and Courts Act 2015, rather than seeking a conduct-based reduction under CPR 44.11 at the costs assessment stage [§25(b)]. It was suggested that guidance from an appellate court was needed on this point, with an anecdotal assertion that the Federation of Insurance Lawyers (FOIL) had an interest in the outcome [§15].

The Second Claimant’s Position

The Second Claimant, represented by Mr Mason, resisted the application. While his submissions are not detailed in the judgment, the court’s decision reflects that the Claimant’s position aligned with the judge’s reasoning: that the bill had already been substantially reduced, that the costs order agreed by the parties did not contain the limitations the defendant now sought, and that the assessment was not the correct forum to re-litigate substantive allegations that could and should have been pursued before the trial judge.

The Court’s Decision

Costs Judge Nagalingam dismissed the application for permission to appeal [§109]. Addressing the first ground, the judge held that the appeal would not have a real prospect of success. The court rejected the argument that it had failed to consider the Claimant’s lack of explanation for the settlement, noting that the settlement was a commercial agreement net of contributory negligence and that a party cannot be compelled to waive privilege concerning its reasons for settling [§105]. The judge also found no merit in the arguments regarding further proportionality reductions. He clarified that it was not open to him to retrospectively determine a date of full recovery or to assume that nil damages were recovered for specific heads of loss, as the global settlement sum was not apportioned [§67].

The judge emphasised that the purpose of a detailed assessment is not to hear arguments a party wished it had run but did not [§57]. He noted that the defendant could have sought an issues-based, time-limited, or percentage-based costs order when settling the case if it wished to protect its position, but it had agreed to a standard order for costs [§58-60]. The significant reductions already applied (a 44% reduction in time claimed for work on documents [§63]) were deemed sufficient to bring the costs to a proportionate level.

On the second ground, the judge found no “compelling reason” for an appeal. He firmly rejected the notion of a tension or “lacuna” between the fundamental dishonesty regime in section 57 of the 2015 Act and the general misconduct provision in CPR 44.11 [§77]. The judge reasoned that the two mechanisms serve distinct purposes: section 57 provides for the dismissal of a claim, a serious step requiring a trial, whereas CPR 44.11 allows for costs sanctions for a broad range of unreasonable or improper conduct [§78]. He found the defendant’s argument that the judgment would lead to a blocking of the courts with trials to be speculative and unsupported by any evidence, noting the absence of any formal interest from FOIL [§94-98].

Finally, the judge confirmed that he had properly considered and rejected the CPR 44.11 misconduct argument during the assessment, finding the threshold for a finding of unreasonable or improper conduct had not been met [§107]. Consequently, permission to appeal was refused. There was no order as to the costs of the permission hearing, as the respondent’s attendance was not directed by the court and the substantive costs of the assessment had already been agreed between the parties [§115].

CPR 44.11 | Claimant’s Costs Of £174,565.79 Reduced To Nil

Direct CPR 44.11 misconduct case with complete disallowance of costs for unreasonable behaviour

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

Comprehensive analysis of CPR 44.11 powers and requirements for misconduct findings

CPR 44.11: Misconduct in detailed assessment proceedings

Court of Appeal authority on misconduct in detailed assessment with mis-certification issues

Solicitor’s Costs Budget Figure, Prepared on Reasonable and Proportionate Basis, Does Not Inherently Constitute Misleading or Improper Conduct Under CPR 44.11

Recent 2025 High Court decision on CPR 44.11 threshold for misconduct

Fundamental dishonesty found on appeal by reason of material non disclosure

Court of Appeal case distinguishing fundamental dishonesty from general misconduct

Appeals from costs judges: Seeking permission to appeal

Procedural guidance on permission to appeal from costs judges under CPR 52.6