Monthly Costs Law RoundUp | December 2025

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Parties Cannot Be Expected To Second-Guess Their Experts | Planning Inquiry Costs Award Quashed

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The Court of Appeal’s decision in R (Halton Borough Council) v Secretary of State for Housing, Communities and Local Government [2025] EWCA Civ 1566 establishes that parties to planning inquiries are not expected to second-guess their experts, and an expert’s concessions under cross-examination do not automatically justify a costs award.

Background

In September 2017, a developer, MJ Gleeson, submitted a planning application to Halton Borough Council for 139 dwellings on land in Runcorn. The Health and Safety Executive objected on public safety grounds due to the site’s proximity to the Runcorn Chemicals Complex. Despite this, the Council resolved to grant permission, relying on its adopted development plan and advice from its specialist risk consultants, DNV.

Consequently, the Secretary of State called in the application in May 2021. A public inquiry was scheduled. The Council and HSE served statements of case and proofs of evidence. The Council’s evidence on public safety was given by its expert, Mr Hopwood of DNV. The developer submitted a position statement indicating that, as the public safety matter was between the Council and the HSE, it would rely on the Council to provide evidence in support of the application [§6]. A national security direction was made, meaning part of the inquiry would be held in private.

The inquiry opened on 11 January 2022. In closed session on 13 January, Mr Hopwood was cross-examined by Mr Kimblin QC on behalf of the HSE [§10]. Under questioning, he conceded that the local policy relied upon by the Council failed to follow the principles in the National Planning Policy Guidance and that, following those principles, he would advise strongly against granting permission. This was inconsistent with his previous advice.

Faced with this, the Council withdrew its support for the development. The applicant then withdrew the planning application, causing the inquiry to collapse. Both the HSE and another interested party, Viridor Energy Limited (which operated one of the UK’s largest energy-from-waste plants near the site [§7]), applied for their costs of participating in the aborted inquiry against the Council.

On 27 July 2022, the Secretary of State’s decision-maker, Mr Parsons, allowed the applications in part. He found the Council’s decision to withdraw its support when it did was unreasonable, causing the other parties to incur unnecessary wasted expense. He awarded costs from the date of their Rule 6 statements. The Council’s application for judicial review of this costs decision was dismissed by Fordham J. The Council appealed to the Court of Appeal.

Costs Issues Before the Court

The central issue on appeal was whether the Secretary of State’s decision to award costs against the Council was lawful. This required examination of whether the finding of unreasonable conduct was rational and whether adequate reasons were given. The case turned on the application of the Secretary of State’s Planning Practice Guidance on awards of costs, particularly in the context of a called-in application. The court had to consider whether the Council’s reliance on its expert’s evidence up to the point of his damaging cross-examination, and its subsequent withdrawal of support, constituted a failure to comply with “normal procedural requirements” or was otherwise unreasonable behaviour justifying a costs award.

The Parties’ Positions

The Council argued that Mr Parsons’ decision was flawed. It contended that its withdrawal of support was a direct and reasonable consequence of its expert witness changing his evidence under cross-examination, which was a material change in circumstances. It submitted that there was no identifiable “normal procedural requirement” it had breached and that it was not unreasonable to rely on its appointed expert’s written evidence until it was tested and found wanting during the inquiry. The Council drew an analogy with criminal costs cases, arguing that a party is not responsible for an expert’s unexpected failure under cross-examination unless the evidence was obviously untenable from the outset [§46-51].

The Secretary of State defended the decision. It was argued that the Council had a responsibility to ensure its evidence was robust enough to withstand scrutiny and to continuously appraise its position as the inquiry progressed. The submission was that the Council’s late withdrawal, after the other parties had incurred substantial preparation costs, was a procedural failure that amounted to unreasonable behaviour. The Secretary of State maintained that the reasons given were adequate and the decision was within the bounds of rationality.

The Court’s Decision

The Court of Appeal unanimously allowed the appeal. Lord Justice Lewison, giving the lead judgment (with which Lady Justice Asplin and Lord Justice Coulson agreed [§69-70]), identified demonstrable flaws in the reasoning of the costs decision.

First, the court found an irreconcilable contradiction in Mr Parsons’ reasoning. He accepted the Council withdrew support due to new evidence given under cross-examination, yet simultaneously concluded there had been “no material change in the evidence” [§35]. This was a clear logical error — “a leap in reasoning which fails to justify the conclusion” and “a demonstrable flaw in the reasoning” [§35].

Second, the court held that the decision-maker set the bar too high in effectively requiring a party to guarantee its expert evidence would survive cross-examination [§59]. The judgment clarified that testing an expert’s evidence to see if it would withstand cross-examination is not a “normal procedural requirement” in planning inquiries [§61]. The reason for instructing an expert is their independent expertise, which the instructing party does not possess. A party is not expected to second-guess its expert as a matter of routine [§61]. The mere fact that an expert’s evidence is later undermined does not, without more, render the party’s prior reliance on it unreasonable [§45].

The court noted the Council had held multiple conferences with its expert and counsel, which aligned with good practice recommended by the RTPI [§65]. There was no finding that the expert’s initial proof was obviously flawed or failed to provide a “respectable basis” for the Council’s position [§57]. Furthermore, the damaging concessions related to the validity of local policy — a matter not obviously within the public safety expert’s core remit — making it harder to foresee that such questions would be put to him [§66].

The judgment emphasised that the costs decision failed to identify what the Council did wrong or at what point its conduct became unreasonable [§62]. There was no specific procedural rule breached, nor any direction from the inspector ignored [§55]. The link between the withdrawal and a finding of unreasonable conduct was, therefore, “tenuous, to say the least” [§62]. The Court of Appeal concluded that the Council had a good reason to withdraw when it did and that the finding of unreasonable behaviour was untenable [§67].

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Monthly Costs Law RoundUp – October 2025

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Appellate Costs

Variation Of Costs Orders After Successful Appeal | When Previous Orders Should Stand (05/10/2025)
The Court of Appeal (Moylan LJ, Falk LJ, Cobb LJ) refused to vary a 2021 costs order in Potanina v Potanin (No.2) (Costs) [2025] EWCA Civ 1223 despite the husband’s subsequent Supreme Court success, holding that where the fundamental basis of earlier success remains undisturbed by appellate decision on different grounds, the original costs order should stand. Payment on account ordered at £350,000 (approximately 72% of costs claimed) within 60 days, but set-off against Supreme Court costs liability rejected.

Costs Cross-Appeal Fails Where Challenge Arose From Applicant’s Own Default (09/10/2025)
Lord Justice Coulson upheld costs orders against a relief from sanctions applicant in Google LLC v Robertson [2025] EWCA Civ 1262, finding the respondent’s jurisdictional challenge—though unsuccessful—arose directly from the applicant’s service default. The high threshold for overturning discretionary costs orders on appeal (SCT Finance v Bolton) meant reduction might have been appropriate but the judge’s decision wasn’t wrong.

Section 51 Jurisdiction

High Court Removes The “Murphy” Exceptionality Test For Inter Partes Costs In Criminal Judicial Reviews (06/10/2025)
The Divisional Court (Lady Justice Whipple and Lady Justice Yip) overturned Murphy v Media Protection Services in R (Bates) v Highbury Corner Magistrates’ Court [2025] EWHC 2532 (Admin), restoring full s.51(1) Senior Courts Act 1981 discretion for costs in criminal judicial reviews. No “exceptionality” requirement applies—CPR 44.2’s general rule governs, with unsuccessful parties ordinarily paying costs.

Supreme Court

When Should Costs Be Awarded In A Foreign Currency? Supreme Court Rejects ‘Loss Reflection’ Test (23/10/2025)
Lord Hodge and Lady Simler held in Process & Industrial Developments Limited v The Federal Republic of Nigeria [2025] UKSC 36 that costs orders should ordinarily be awarded in the currency of invoicing and payment, rejecting the “loss reflection” test from Cathay Pacific. The court distinguished costs awards from compensatory damages, emphasising costs are discretionary contributions under s.51 Senior Courts Act 1981 and CPR 44.2, not full indemnities for loss. No inquiry into funding arrangements required to avoid disproportionate satellite litigation. The default rule is currency of invoicing and payment; exception only where the currency choice is abusive or speculative.

Indemnity Costs & Dishonest Conduct

Can Unreasonable Refusal To Mediate Lead To Indemnity Costs On Appeal Even Where Permission Is Granted? (06/10/2025)
HHJ Paul Matthews held in Fernandez v Fernandez [2025] EWHC 2530 (Ch) that a 10-week delay coupled with rejecting all 26 mediation dates constituted “out of the norm” conduct justifying indemnity costs on appeal. Permission to appeal doesn’t immunise parties from costs sanctions, and the executor lost estate indemnity for pursuing the appeal in their own interest rather than the estate’s benefit.

Dishonest Evidence And Baseless Allegations Justify Indemnity Costs Order (16/10/2025)
Mrs Justice Steyn awarded indemnity costs and a £3 million payment on account in Clarke v Guardian News & Media Ltd [2025] EWHC 2575 (KB) where the claimant made dishonest pleaded statements, advanced baseless allegations against witnesses, and made unfounded allegations against professional journalists in a failed defamation claim. The court applied Esure Services v Quarcoo, confirming that inability to pay is irrelevant at the costs order stage (Bank St Petersburg principle).

Director Ordered To Pay Creditor’s Costs Personally Despite Rule 3.4 In Failed Administration Application (30/10/2025)
ICC Judge Barber held in Settle v Sandstone Legal Ltd [2025] EWHC 2771 (Ch) that rule 3.4 IR 2016 doesn’t shield directors from personal costs orders under s.51 Senior Courts Act 1981 where they are the “real party” pursuing litigation for personal benefit with knowingly false evidence. The director’s costs as applicant were capped at the issue fee only, as rule 3.12(2) IR 2016 must be read subject to s.51 and CPR 44.2. Pre-administration expenses require “sufficiently direct and appropriate connection” to the eventual administration.

Detailed Assessment

Default Costs Certificate Set Aside Due To Unexplained 300% Costs Increase Despite Defective Application (06/10/2025)
Deputy Costs Judge Erwin-Jones set aside a Default Costs Certificate under CPR 47.12 in Akhtar v Bashir [2025] EWHC 2218 (SCCO) where costs jumped 300% between the statement of costs (N260) and bill without explanation. The difference between legal aid rates and inter partes billing proved insufficient justification, though the applicant’s conduct was “only very slightly short of opportunistic.” The court made no costs order, finding neither party had furthered the overriding objective.

Multi-Party Litigation

Sanderson Orders Appropriate Where Claimant Aligns With Successful Defendant On Key Issue (06/10/2025)
Mr Justice Butcher awarded 100% Sanderson orders in the Russian Aircraft Lessor Policy Claims [2025] EWHC 2529 (Comm) where claimants supported the successful defendant’s case on coverage issues. However, claimants who failed on their primary case recovered only 65% of costs. Compound interest and US Prime rate challenges failed absent proper pleading, with payments on account ordered accordingly.

Apportioning Defendants’ Costs By Time | When Evolving Claims Engage Separate Interests (23/10/2025)
Jonathan Hilliard KC sitting as Deputy Judge held in Jon Flowith & Partners v Greaves & Ors [2025] EWHC 2738 (Ch) that separately represented defendants with distinct interests were entitled to costs from the date the claimant’s skeleton argument engaged those interests, but earlier costs were reserved pending final hearing. The court applied Bolton MDC, finding the “interest which requires separate representation” test satisfied where competing constructions of a Promotion Agreement clause directly implicated D1/D2’s liability position.

Security for Costs

Security For Costs Application Under CPR 25 | Financial Difficulties and Late Claims (13/10/2025)
David Elvin KC ordered security for costs of £1,500,000 (75% of estimated costs) in Baker Botts (UK) LLP v Carbon Holdings Ltd & Ors [2025] EWHC 2225 (Comm), finding compelling evidence of the Part 20 claimant’s financial difficulties despite claimed “transformation” through debt restructuring. The court rejected arguments that recent working capital facilities and debt settlement addendums represented genuine improvement, noting the arrangements likely reflected banks protecting their position. The 75% award (higher than the typical 60-70% discount) reflected the late and tactical nature of a professional negligence counterclaim brought four years after the alleged breach with no prior complaint.

Part 36 Offers

Part 36 Consequentials | Enhanced Interest, Indemnity Costs And 100% Payment On Account (06/10/2025)
HHJ Russen KC awarded full CPR 36.17(4) consequences in Learning Curve (NE) Group Limited v Lewis [2025] EWHC 2491 (Comm) after claimants recovered exactly the sum offered pre-trial, including enhanced interest at 8% above base rate, the £75,000 additional amount, and 100% payment on account (not the usual 90%) due to the indemnity basis element. Five challenges to Part 36 consequences all failed, with the court confirming that arguments about avoidable expense typically reinforce rather than undermine the regime.

Part 36 Validity, Protocol Breaches And Mediation Timing In Probate Disputes (14/10/2025)
HHJ Michael Berkley held in Ellis v Ellis Re: Care (Decd) [2025] EWHC 2609 (Ch) that Part 36 offers remain valid even where offerors don’t yet own the assets being offered, and that delaying mediation pending disclosure from opposing parties is reasonable. Full CPR 36.17(4) consequences applied with enhanced interest at 5% above base on costs (reduced from the typical higher rate), executors recovered litigation costs against the unsuccessful challenger, and payment on account ordered at 90% of budgeted costs.

Can A Vulnerable Party’s Change Of Mind Justify Part 36 Withdrawal Of An Accepted Part 36 Offer? (27/10/2025)
Senior Master Cook refused permission to withdraw an accepted Part 36 offer in Chinda v Cardiff & Vale University Health Board [2025] EWHC 2692 (KB), holding that client vulnerability and medical conditions affecting concentration do not constitute a “change of circumstances” under CPR 36.10(3) where no objective change occurred. The court distinguished between change of mind and change of circumstances (Cumper v Pothecary), emphasising Part 36’s certainty and predictability. Overriding objective vulnerability provisions relate to participation and evidence-giving, not settlement decisions.

Fundamental Dishonesty

Can Defendants Be Ordered To Pay Costs When Fundamental Dishonesty Allegations Fail? (14/10/2025)
Deputy High Court Judge David Pittaway KC ordered defendants to pay 15% of the claimant’s costs from the date fundamental dishonesty allegations were raised in Hakmi v East & North Hertfordshire NHS Trust [2025] EWHC 2597 (KB). Rejecting the “free tilt” argument under s.57 Criminal Justice and Courts Act 2015, the court held that failing to make an order would give defendants a free tilt at reputational damage despite the claimant losing the underlying clinical negligence claim on fundamental dishonesty grounds.

Discontinuance & Contempt

When Interlocutory Costs Orders Survive Discontinuance But Underlying Conduct Is Penalised (19/10/2025)
Mr Justice Freedman held in MEX Group Worldwide Limited v Ford & Ors [2025] EWHC 2689 (KB) that CPR 38.6 discontinuance principles generally prevail even where contempt has been proven, particularly where the underlying freezing order was wrongly obtained through material non-disclosure. Interim costs orders totalling £50,000 survived discontinuance (Dar El Arkan principle), but contempt costs were reduced to 50% on standard basis (not indemnity) reflecting the WFO should never have been granted. Inquiry as to damages ordered despite proven contempt.

Costs Orders & Judicial Discretion

Percentage-Based Costs Order Upheld For Litigation With Mixed Outcomes (20/10/2025)
Mr Justice Cawson upheld a 50/50 percentage-based costs order on appeal in Daniel Family Homes Limited v Gold [2025] EWHC 2697 (Ch), emphasising the “formidable obstacle” and “great deal of persuading” required to interfere with a trial judge’s costs discretion. The court held trial judges have a wide margin of appreciation in mixed-outcome litigation and are best positioned to assess overall success and conduct. Ground 2 of the appeal succeeded (£84,000 trespass damages awarded) but the costs order remained unchanged.

When Can “Neutral” Defendants Face Costs Orders In Judicial Review? (21/10/2025)
Deputy High Court Judge David Pievsky KC refused to vary a “costs in case” order to “no costs” in Medis Pharma Ltd v NHS Resolution [2025] EWHC 2616 (Admin), finding the defendant’s Summary Grounds had “pushed back” on factual and error points, preventing it from attaining truly neutral status under the Davies principle. The court refused relief from sanctions for a skeleton argument filed the day before hearing (13 days late), forcing the claimant to rely on its original Statement of Facts and Grounds instead.

Costs Capping

Costs Capping Inappropriate Where Unrecovered Costs Shift To Non-Party Tenants (17/10/2025)
Lord Justice Birss (with Lord Justice Nugee concurring) refused a CPR r52.19 costs capping order in Spender v FIT Nominee Ltd [2025] EWCA Civ 1319, finding the effect would shift unrecovered costs from 70 appellant tenants to 366 non-participating tenants through Landlord and Tenant Act 1985 service charge recovery provisions. The court identified the “real contest” as between participating and non-participating tenants, not landlord versus tenants, making costs capping unjust despite access to justice concerns.

CPR 46.27 Variation Refused Despite Financial Resources | Objective Unreasonableness Test Applied (28/10/2025)
Fordham J refused to vary Aarhus Convention costs caps in R (The Badger Trust and Wild Justice) v Natural England [2025] EWHC 2761 (Admin), holding that CPR 46.27’s “prohibitively expensive” test comprises two independent limbs: real-world affordability and objective unreasonableness. The court found variation objectively unreasonable despite claimants’ financial resources, emphasising default Rule 26 caps represent a “soft presumption” and that paradigm environmental protection cases require “space to be a repeat player.” The decision warned of the chilling effect financial scrutiny has on environmental NGOs’ access to justice.

Employment Tribunal Properly Considered Ability To Pay When Awarding Costs Despite Family Impact

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Background

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

Costs Issues Before the Court

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

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

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

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

The Parties’ Positions

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

The Court’s Decision

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

Who Pays The Costs Before A Land Registry Dispute Reaches The Tribunal?

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When a dispute arises in relation to a Land Registry application and eventually proceeds to the First-tier Tribunal (Property Chamber), parties often overlook a critical question: who pays the legal costs incurred before the Tribunal gets involved?

The short answer:

Costs incurred before the matter is formally referred to the Tribunal are considered to be part of the proceedings before the Registrar. These are governed by a different costs regime than that which applies in Tribunal proceedings.

Key legal framework:

      • Section 76 of the Land Registration Act 2002 (LRA 2002)
      • Rule 202 of the Land Registration Rules 2003
      • Practice Guide 38 (HM Land Registry)
      • Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013

Proceedings before the Registrar

Until the application is referred to the Tribunal (under section 73(7) of the LRA 2002), any dispute remains a matter before the Registrar. This includes initial objections, correspondence, and preliminary work.

Under Rule 202 of the Land Registration Rules 2003, the Registrar may order a party to pay another party’s costs only where the paying party has behaved unreasonably. There is no general power to award costs just because a party is unsuccessful.

Practice Guide 38 confirms this …

Paragraph 2.1 of HM Land Registry’s Practice Guide 38 states:

“The tribunal has no power to make an order for costs in respect of the proceedings before the registrar whether incurred before or after the reference to it.”

This means that even after the Tribunal takes over the dispute, costs incurred prior to that referral still fall outside its jurisdiction.

The Tribunal’s powers on costs

The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 limit the Tribunal’s ability to award costs. It may only do so where:

      • A party has acted unreasonably in the Tribunal proceedings,
      • There is a wasted costs application, or
      • Another limited statutory provision applies.

None of these extend to the pre-referral phase.

What changed in 2013?

Not much. Before 2013, such disputes were handled by the Adjudicator to HM Land Registry. Since July 2013, they are determined by the Tribunal. But the cost regime has remained the same:

      • Costs before the referral are governed by section 76 / Rule 202, not by the Tribunal.
      • The Tribunal cannot retrospectively award those costs.

Why does this matter?

Because parties frequently attempt to recover pre-reference legal costs through Tribunal proceedings. This is not permitted. Parliament has made clear that any such recovery must be sought via a costs application to the Registrar, and only in cases involving unreasonable conduct.

Summary

      • Costs incurred before the date of reference (e.g. 6 October 2022) are governed by the Registrar’s costs regime.
      • The Tribunal cannot award those costs.
      • Only the Registrar can do so, and only where the paying party acted unreasonably.

This reflects a deliberate and structured separation of jurisdiction – and a more limited entitlement to costs than many parties assume.

English Grant Of Representation Required For Standing In Administration Claims

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“The entirety of the claim is brought by the claimant on behalf of the estate of the late Mr Ali. Each cause of action seeks a remedy not for the benefit of the claimant personally but for the benefit of those entitled to the estate. The claim is therefore brought in a representative capacity and thus as part of its administration, and English law applies to the question whether the claimant has standing. As the claimant is not named as executor by the tenor of the Proof of Will, it could be entitled only to a grant of letters of administration. As no such grant has been obtained, the proceedings are a nullity.”

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Defective Service Of Proceedings

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“The rules governing service are clear that it is the registered office or principal place of business – which appear to be one and the same in this case – which needs to be used as the postal address for service upon a limited company. I have no doubt that errors such as have occurred here are often dealt with on a practical basis by amendment in the manner attempted by the claimant’s solicitors. But there is nothing within the rules to require one party to assist the other and a practical solution does not alter the legal position. It is one which the defendant is entitled to uphold, should it wish to do so.”

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Supreme Court: Introduction

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Assessments of costs in the Supreme Court are conducted by the Costs Officers appointed by the President. One must be a Costs Judge; the second must be the Registrar of the Supreme Court. The Costs Officers normally sit together as a Court of two or three. The current panel of Costs Judges sitting in the Supreme Court is the Senior Costs Judge (Chief Taxing Master) Gordon-Saker, Master Leonard and Master James.

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Without Prejudice Offer: Admission Denied

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Following our recent report on the case of Hossaini v EDS Recruitment Ltd in which the Employment Tribunal had wrongly considered and taken into a “Without Prejudice” (as opposed to a “Without Prejudice Save As To Costs” offer) when determining costs, the First Tier Tribunal has fallen into the same error. Upholding the appeal, Judge Elizabeth Cooke found that the offer should not have been disclosed and the decision on costs insofar as it turned on the fact of this offer could not stand.

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