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Retainer Termination Without Good Reason | Unenforceability And The Indemnity Principle

Detailed Assessment, New Costs Blog, Solicitor & Client Costs, Termination of Retainer

The Senior Courts Costs Office’s decision in HD and others v North Devon Healthcare Trust [2026] EWHC 2009 (SCCO) addresses the enforceability of retainers terminated without good reason, the application of the abuse of process test to detailed assessment proceedings, and the circumstances in which a solicitor may be ordered personally to pay costs on the indemnity basis under CPR 44.11.

Background

The six linked claims at the centre of this judgment arose from alleged failings in the consent process relating to the use of synthetic mesh in the treatment of female pelvic conditions, including urinary stress incontinence. The claimants were among a larger cohort of individuals represented by Mr Darren Hanison, a sole practitioner trading as Fortitude Law, who had been instructed to pursue damages claims against various NHS trusts in England. NHS Resolution was notified of 305 such claims, received letters of claim in approximately 100 of them, and compromised 58 on substantially similar terms, including provision for the payment of reasonable legal costs.

Damages in the six linked claims were duly paid. Mr Hanison commenced detailed assessment proceedings in each, serving signed and certified bills of costs on the relevant defendants. The defendants applied to link the six cases, noting the significant similarities between the bills and the common issues likely to arise in points of dispute. On 7 July 2022, Costs Judge James granted that application, and the linked cases were listed for a five-day hearing to determine seven preliminary issues common to all six bills.

The first hearing was listed for 28 November to 2 December 2022. The judge was unwell on 28 November and the matter stood down. Counsel then acting for the claimants served a skeleton argument late that evening. When the hearing resumed on 29 November, it became apparent that Mr Hanison had not lodged the documents required by paragraph 13.11 of the Practice Direction to CPR Part 47. An attempt had been made to provide a laptop computer to the court late on 28 November, but when the judge examined it on 29 November it was found to contain files relating to only three of the six linked claims. The hearing could not proceed. Costs Judge James adjourned it and ordered the claimants to pay the costs of 28 and 29 November, to be assessed if not agreed. The costs order was made against the claimants, not against Mr Hanison personally, and was on the standard basis by operation of CPR 44.3(4).

The preliminary issues hearing was relisted for 27 to 31 March 2023. Costs Judge James heard submissions on all issues, gave judgment on some, reserved others, and provided a reserved judgment on 13 April 2023. A third hearing took place on 17 April 2023 to deal with the remaining preliminary issues. That was the last substantive activity in the detailed assessment proceedings.

On 18 May 2023, the Solicitors Regulation Authority intervened into Mr Hanison’s practice on grounds including suspected dishonesty and failure to comply with regulatory rules. Fortitude Law ceased to trade. Lester Aldridge was appointed as the SRA’s intervening agent. DAC Beachcroft LLP, acting for the defendants, wrote to each of the claimants suggesting they obtain independent legal advice in relation to the costs process. Some appear to have done so, but none engaged actively or to any significant extent in the costs proceedings thereafter.

Disciplinary proceedings were commenced against Mr Hanison on 14 May 2025, leading to a hearing before the Solicitors Disciplinary Tribunal on 24 February 2026. Mr Hanison faced 17 allegations of professional misconduct. He admitted many, including allegations of dishonesty. The SDT found several other allegations of dishonesty proved on the balance of probabilities and, by a written judgment dated 12 March 2026, ordered that he be struck off the Roll of Solicitors.

Mr Hanison was not formally removed from the court record as solicitor for the claimants in the six linked claims until an order of Senior Costs Judge Rowley dated 10 June 2025. From the conclusion of the third hearing before Costs Judge James on 31 March 2023 until the application considered in this judgment, nothing of substance had occurred in the detailed assessment proceedings. No new solicitors came on the record for any of the claimants. None of the other claimants in the wider cohort had commenced detailed assessment proceedings at all.

On 12 December 2025, the defendants issued an application seeking, among other things, a declaration that the retainers and conditional fee agreements between the claimants and Mr Hanison were unenforceable, strike out of the bills of costs and detailed assessment proceedings, repayment by Mr Hanison of payments on account totalling £92,000, an unless order against the wider cohort of claimants who had not commenced detailed assessment proceedings, and orders that Mr Hanison pay the defendants’ costs of the abortive November 2022 hearing and of the detailed assessment proceedings as a whole, on the indemnity basis. The application was supported by witness statements from Mr Mark Ashley and Mr Myles Mundill of DAC Beachcroft. The hearing took place on 3 July 2026 before Costs Judge Joseph. Neither the claimants nor Mr Hanison appeared or were represented.

Service and Joinder of Mr Hanison

After the hearing on 3 July 2026, Costs Judge Joseph raised of his own motion the question of whether Mr Hanison had been properly served with the evidence in support of the application. The judge was also concerned that Mr Hanison, having been removed from the court record by Senior Costs Judge Rowley’s order of 10 June 2025, was not at that moment a party to the action nor representing a party in it. The judge raised these matters with counsel in correspondence following the hearing.

That correspondence generated a further application by the defendants to join Mr Hanison as a party to the action. A further witness statement signed by Mr Mundill was filed in which evidence was given that Mr Hanison had in fact been served, prior to the hearing on 3 July, with the evidence in support of the application. The judge was satisfied that Mr Hanison had been served with the evidence prior to the hearing but considered it appropriate for him to be joined formally into the action for the purposes of the defendants’ application.

On 13 July 2026, the judge made an order to that effect which included various directions requiring service on Mr Hanison of the latest application and the evidence in support of it. As that order was made without a hearing, it included the usual paragraph that any party affected by the order could apply to vary it, stay it or set it aside within seven days of receipt of it. The order also stated that if no application was made within that time, the court would proceed to determine the application dated 12 December 2025 without further submissions. No party applied to vary, set aside or stay that order within the time stipulated. The judge was satisfied that Mr Hanison had had every reasonable opportunity to respond to the application and to make any submissions he might have wished to make.

Enforceability of the Retainers

Costs Judge Joseph began by considering whether the retainers between the claimants and Mr Hanison had been terminated without good reason and were accordingly unenforceable. The claimant HD had waived privilege over her conditional fee agreement following advice from new solicitors. The CFA, exhibited to Mr Ashley’s witness statement, was in fairly standard terms and had been signed by Mr Hanison on 26 September 2018. It expressly covered negotiations about, or a court assessment of, the costs of the claim.

The judge accepted the defendants’ submission that the retainer was an entire contract. Relying on Re Underwood & Piper v Lewis [1894] 2 QB 306, the judge noted that a solicitor’s retainer in an action is ordinarily an entire contract to conduct the action to the end, and that a solicitor cannot sue for costs until the contract has been entirely fulfilled. The retainer with HD plainly encompassed not only negotiations with the defendant about recoverable costs but also, if required, preparation for and attendance at a detailed assessment hearing. Agreement or court assessment of recoverable costs was an express and necessary step required by the retainer.

The judge found that Mr Hanison’s contractual obligations included the obligation to obtain agreement, or a court assessment, of HD’s recoverable costs. Although that process had been started, it had by no means concluded. Following the intervention into Mr Hanison’s practice, there was now no prospect at all of him ever completing his obligations under the retainer. The passage of a very considerable period of time in which no activity at all had occurred supported the inference that he had evinced no intention of so doing. The judge concluded that the retainer between HD and Mr Hanison was unenforceable by Mr Hanison against HD.

The judge inferred that the terms of the retainers between the rest of the claimants in the six linked claims were on the same, or substantially similar terms. The retainer between Mr Hanison and HD was in relatively standard terms. There was no reason to believe that Mr Hanison would have concluded retainers with the other claimants on materially different terms. Had that been the case, it had been open to Mr Hanison to adduce appropriate evidence establishing it. He had not done so. The judge concluded that the retainers between each of the claimants in the six linked claims were unenforceable by Mr Hanison against any of those claimants.

Strike Out for Abuse of Process

The judge then considered whether the bills of costs and detailed assessment proceedings should be struck out, either as a consequence of the unenforceability of the retainers or on the separate ground of abuse of process under CPR 3.4(2)(b). If the retainers were unenforceable, the claimants had no liability to their solicitor for any costs incurred pursuant to those retainers. If they had no such liability, there could be no claim by those claimants against the defendants for any of those costs. Any other conclusion would amount to a breach of the indemnity principle. The further consequence must be that the detailed assessment proceedings had to be struck out, or alternatively that the bills of costs must be assessed at nil.

The judge nevertheless addressed the separate arguments for strike out based on abuse of process. The defendants relied on the two-stage framework in Asturion Fondation v Alibrahim [2020] EWCA Civ 32. At the first stage, the court considers whether the claimant has deliberately allowed the proceedings to become dormant, and if so why. That involves examining the claimant’s intention, to be inferred from the evidence as a whole. The court must assess objectively the strength of any explanation advanced, having regard to the length of the period of inactivity. Prolonged inactivity may itself support the inference that a claimant does not intend to advance the action. Where such stagnation is established, the burden shifts to the claimant to explain why the claim should be permitted to continue.

The judge had no evidence from Mr Hanison. He had been given the opportunity to give evidence and make submissions and had elected not to do so. The claimants in the six linked claims had also had a similar opportunity and had not taken it. No explanation had been given, let alone a credible one. The costs proceedings of the claimants in the six linked claims had been deliberately allowed to become dormant. The extensive and wholly unexplained delay offended against the integrity of the court’s process. The serious abuse of the court’s process had been perpetrated by Mr Hanison, the solicitor and officer of the court whom the claimants in the six linked claims trusted to pursue their claims for costs.

The judge also found that there was now no realistic prospect of any of the detailed assessments in any of the six linked claims being pursued. In addition, there was significant prejudice to the defendants. They had made payments on account of costs in relation to six sets of detailed assessment proceedings. If the detailed assessment proceedings were allowed to remain extant, the defendants presently had no way of knowing when they would be resolved, nor for how much they might be liable. The judge accepted that the failure by the claimants in the six linked claims to take any steps at all since the last hearing before Costs Judge James was, in all the circumstances, a serious abuse of the process of the court.

At the second stage of the enquiry, the court considers whether striking out the claim is a proportionate response to the abuse. The defendants had put forward a possible alternative to strike out, namely an unless order against the claimants in the six linked claims to the effect that if they did not request a substantive detailed assessment hearing within 14 days, their claims should be struck out. The judge concluded that if such a course were a realistic option the claimants would have appeared on the hearing of the defendants’ application to make submissions to that or similar effect. The fact that they had not done so indicated that they had no such intentions. In all the circumstances, the judge did not consider that any useful purpose would or could be served by delaying the strike out of the claims by the claimants in the six linked claims for any further period of time. Immediate strike out was not only the proportionate response to the current state of affairs, but was the only realistic option, in order to do justice between the parties. It would be seriously unfair to the defendants to prolong these matters any further.

Repayment of Payments on Account

The judge dealt with the application for repayment of payments on account relatively shortly in the light of the findings and decisions already made. Now that the detailed assessment proceedings in the six linked claims had been struck out and the retainers between Mr Hanison and the claimants declared to be unenforceable, the case for the return of monies paid to Mr Hanison on account of the costs of the claimants was unanswerable. The payments on account were made on the footing that there were enforceable retainers in existence between the receiving parties and their solicitor. It would, to all intents and purposes, constitute a breach of the indemnity principle for those payments to be retained. There were orders against Mr Hanison for the repayment of all of the payments on account of costs which the defendants had made to him in the six linked claims.

Unless Order Against the Wider Cohort

No action at all had been taken by any of the other claimants in the cohort of claims against the various defendants to progress their respective claims for costs. The defendants had applied for an unless order against those claimants under CPR 47.8. None of the claimants to which this part of the application was directed had been involved in the detailed assessment proceedings commenced by the claimants in the six linked claims. Given that, it was appropriate that those claimants should be given an opportunity, if they so wished, to commence detailed assessment proceedings. The orders for costs in favour of those claimants were made a considerable time ago. It was appropriate for the court to exercise its discretion under CPR 47.8. The power to make an unless order is discretionary. The judge considered it right that the claimants should now be placed under the unless sanction. There was an unless order against those claimants that they should commence detailed assessment proceedings in respect of their costs within 28 days, failing which all of the costs to which they would otherwise be entitled would be disallowed.

Costs Orders Against Mr Hanison Under CPR 44.11

The defendants sought orders that Mr Hanison pay the costs of the abortive hearing on 28 and 29 November 2022 and the costs of the detailed assessment proceedings as a whole, on the indemnity basis. The order made by Costs Judge James on 29 November 2022 had been against the claimants in the six linked claims, not against Mr Hanison. The application now made was for something quite different, namely an order against Mr Hanison personally.

The defendants framed their case pursuant to CPR 44.11, which provides that the court may make an order where a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order, or where it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings, or in the assessment proceedings, was unreasonable or improper. Where those conditions apply, the court may disallow all or part of the costs which are being assessed, or order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.

In relation to CPR 44.11(1)(a), the defendants relied upon various defaults perpetrated in the course of the detailed assessment proceedings by Mr Hanison. They pointed to the failure prior to the first hearing before Costs Judge James to lodge at court those documents which were required to have been lodged prior to the hearing pursuant to paragraph 13.11 of the Practice Direction to CPR Part 47. They also relied on the fact that the failure to lodge the requisite documents was compounded by the attempt to provide documents to the court by means of a laptop computer which, in fact, did not contain the requisite documents.

In relation to CPR 44.11(1)(b), the defendants submitted that the conduct of Mr Hanison throughout the detailed assessment proceedings had been unreasonable. Their main complaint was the substantial delay which had occurred following the last hearing before Costs Judge James. They also pointed to the various rulings which were made by Costs Judge James on the preliminary issues which they said demonstrated that very high and unsustainable claims for costs were made in respect of certain items in the bills of costs. By way of some examples, in respect of the letter of claim sent on behalf of HD, 63.3 hours were claimed, but only 15 hours were allowed. In respect of the letter of response, 66.1 hours were claimed but only 10 hours were allowed and, in respect of the Schedule of Loss, 31.3 hours were claimed but only 7.9 hours were allowed, of which one hour only was at grade A and the rest at grade D.

The judge noted that Costs Judge James had very considerable concerns about the claims for costs which had been made. He shared those concerns. The reductions in the claims on the preliminary issues were substantial, as well as being reductions which one would not normally expect to see in claims for costs of this nature. Of further concern was the fact that Mr Hanison had, to all intents and purposes, abandoned the detailed assessments.

The leading case on the operation of CPR 44.11 is Gempride Ltd v Bamrah [2018] EWCA Civ 1367. Mistakes or negligence, without more, are insufficient to engage the rule. Unreasonable conduct is essentially conduct permitting of no reasonable explanation. In order for the conduct of a legal representative to be unreasonable, that conduct must also breach the legal representative’s duty to the court. The burden of proof is on the applicant and even when the threshold criteria are satisfied, the court still has a discretion as to whether an order ought to be made. Any order made must be proportionate to the misconduct.

The hearings on 28 and 29 November 2022 were wholly ineffective due to the fact that the legal representative for the claimants in the six linked claims had failed to lodge at court prior to the hearing the necessary documents to enable the detailed assessment hearing to proceed effectively. There could be no doubt that a solicitor on the record has the responsibility for lodging those documents and for complying with the requisite practice direction. The judge was satisfied that Mr Hanison was seriously in breach of his duties to the court. That conduct was unreasonable and there was no reasonable explanation for it.

Mr Hanison was not removed from the court record until the order of 10 June 2025 of Senior Costs Judge Rowley. Until that point, he had sole responsibility for the conduct of the detailed assessments on behalf of the claimants in the six linked claims. It is a fundamental obligation on the part of a solicitor that unless and until he is removed from the record, he must act in the matter. This is apparent from CPR 42.2(5) which contains the presumption that a solicitor on the record is acting until the conclusion of the matter. That is the case even if the retainer has been terminated.

Since the last hearing before Costs Judge James, nothing of any substance had occurred. The judge had found that there had been a serious abuse of the process of the court in that respect. It followed from that finding that the conduct of the person who was responsible for that delay was itself unreasonable. There had been no explanation given for it.

The judge found that both CPR 44.11(a) and (b) were engaged. The costs to which the claimants in the six linked claims would otherwise have been entitled had already been disallowed. The defendants’ application invited the court to order Mr Hanison to pay the defendants’ costs of the hearing on 28 and 29 November 2022, and of the detailed assessments as a whole.

The judge had no hesitation in concluding that Mr Hanison should pay the costs of the hearing on 28 and 29 November 2022. His various defaults amounted to conduct which was unreasonable and which, on any analysis, caused the hearing to have to be abandoned. It could hardly be controversial or unsurprising that a solicitor on the record who conducts himself in such a way should end up being ordered to pay the costs of the abortive hearing.

In relation to the rest of the costs of the detailed assessments, the judge reached the same decision. The various significant and substantial reductions in those parts of the bill which were assessed by Costs Judge James on the preliminary issues indicated an attempt to claim very much more than could ever have been allowed on a standard basis assessment. As Mr Hanison had not responded to the defendants’ allegations in this respect, the judge had to proceed with there being no explanation at all as to why and on what basis such high amounts were claimed. The making of a claim for costs, and the signing of a bill of costs which makes very high and unsustainable claims for costs, is itself unreasonable. On that basis, Mr Hanison’s unreasonable behaviour started at the very outset of the detailed assessment proceedings by the signing of the bills. Detailed assessment proceedings are started by the service of a Notice of Commencement and a signed and certified bill (CPR 47.6).

Since the hearings before Costs Judge James, nothing had happened. Mr Hanison had abandoned them and his clients. The judge had found that such conduct amounted to a serious abuse of the court’s process. Nothing of any value had been achieved by them due to the failure of the solicitor on the record to fulfil his obligations and duties to the court.

Indemnity or Standard Basis?

The defendants contended that the costs for which Mr Hanison was liable should be paid on the indemnity basis. The indemnity basis differs from the standard basis in two respects. First, the onus of showing that costs have not been reasonably incurred or are not reasonable in amount is on the paying party. Secondly, there is no requirement of proportionality. See CPR 44.3 and Excelsior Commercial and Industrial Holdings Limited v Salisbury Hannah Aspden and Johnson [2002] EWCA Civ 879.

The criteria for the making of an indemnity costs order have been considered many times. In the very recent case of Breeze v Chief Constable of Norfolk Constabulary [2026] EWHC 1937 (KB), Cotter J set out in some detail the various important rules and decisions on the issue. One of the circumstances in which an indemnity order may be made is where there has been an abuse of the court’s procedure. In Three Rivers DC v Bank of England [2006] EWHC 816 (Comm), Tomlinson J identified the relevant principles. It was emphasised that the court should have regard to all the circumstances of the case and that the discretion to award indemnity costs is very wide.

The critical requirement, before an indemnity order can be made, is that there must be some conduct or some circumstance which takes the case out of the norm. That was emphasised by Christopher Clarke J in Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 2531 (Comm) who, having adopted Tomlinson J’s summary in Three Rivers, and noting that an order for indemnity costs was itself a departure from the norm, said that it is important not to lose sight of the essential requirement of unreasonable or inappropriate conduct overall and not to treat examples of such which may amount to such conduct as necessarily constituting it.

In relation to the hearing on 28 and 29 November 2022, Mr Hanison failed to lodge the necessary papers to enable the hearing to proceed. He provided a laptop computer at the end of the first day which did not contain the necessary documents, and which meant that Costs Judge James had no choice but to abandon the hearing. He thereby wasted significant court time and resources in addition to causing the defendants to expend significant resources which ultimately were wasted. The judge was satisfied that the conduct of Mr Hanison in relation to the hearing on 28 and 29 November 2022 was unreasonable to a high degree such that the case was taken out of the norm. An indemnity costs order in respect of those costs was the appropriate response.

In addition, Mr Hanison had abandoned the detailed assessment proceedings. The result of the findings and decisions which the judge had made was that those detailed assessment proceedings had themselves achieved nothing and that the defendants again had been required to expend considerable time, effort and resources in what had been for all concerned a fruitless and wasteful exercise. Mr Hanison had failed to fulfil his duties to the court in his capacity as the solicitor for the claimants in the six linked claims and as an officer of the court. His conduct was well outside the norm. Taking all the circumstances of this case into account, it was appropriate that Mr Hanison should pay the costs of the detailed assessment proceedings in the six linked claims on the indemnity basis.

Costs of the Application

The defendants’ application had been successful. The general rule under CPR 44.2 is that the unsuccessful party will be ordered to pay the costs of the successful party. Whilst the court has a discretion to make a different order, the judge could see no reason at all to depart from the usual rule in this case. Again, indemnity costs were sought and for the same reasons as were given above, it was appropriate that an indemnity order should be made.

Undertakings

At the hearing on 3 July 2026, the judge expressed a concern that, notwithstanding the application now being made by the defendants, the defendants might still have the right to pursue the claimants in the six linked claims personally in respect of the costs which the defendants had incurred in these detailed assessment proceedings. The judge enquired whether the defendants might be prepared to provide the court and those claimants with appropriate undertakings not to do so. In making that enquiry the judge made it clear that the court had no right to require any such undertakings to be given, and that whatever judgment might be reached on the defendants’ application would in no way be conditional upon such undertakings being given. Mr Ashley gave appropriate undertakings dated 31 July 2026 on behalf of his clients.

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Non-Compliant Points Of Dispute Risk Strike Out Or Costs Sanctions | Court Of Appeal Warning In Ward v Rai

Detailed Assessment, New Costs Blog, Personal Injury, Points of Dispute & Replies

The Court of Appeal (Civil Division)’s decision in Ward v Rai [2026] EWCA Civ 816 restores a Costs Judge’s refusal to strike out non-compliant Points of Dispute and warns paying parties that paragraph 8.2 of PD 47 requires an Ainsworth compliant approach.

Background

Ward v Rai arose from a road traffic accident on 18 September 2019. Mr Paul Ward brought proceedings against Mr Gagandeep Rai, who admitted liability subject to issues of causation and quantum. The underlying claim settled in January 2023 by acceptance of a Part 36 offer in the sum of £546,984.

Detailed assessment proceedings were commenced by the claimant on 3 August 2023. Item 39 of the bill of costs claimed 134.1 hours for work done on documents, supported by a 24-page schedule, at a cost of £38,819.50 plus VAT. Of that time, 126.7 hours were attributed to a Grade A fee earner, with the balance at Grade D. Work on documents represented approximately half of the total profit costs claimed. The total bill, including counsel’s fees and disbursements, came to £129,196.50 including VAT.

The defendant served points of dispute on 30 August 2023. Point 23 of those points of dispute challenged item 39, raising a series of general criticisms about the document time claimed and indicating that the defendant would rely on an annotated documents schedule to support those challenges. No such schedule was served at that stage. The claimant replied on 4 January 2024, taking issue with the adequacy of Point 23 and relying on Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178 in support of an argument that the point lacked the specificity required by paragraph 8.2(b) of Practice Direction 47. The claimant nonetheless responded to the general points raised and indicated a willingness to accept a total of 130 hours.

A two-day detailed assessment hearing was requested on 26 March 2024 and listed for 5 and 6 August 2024. At around 4.45pm on 31 July 2024, after hours in service terms, the defendant filed and served the annotated documents schedule that had been referenced in Point 23. This was the first time individual items in dispute were identified. The schedule offered 58.5 hours as a primary case and 58.8 hours as a fallback, divided into eight categories that did not correspond to the eight points listed in Point 23.

At the hearing, Point 23 was not reached until the latter part of the second day. The claimant applied to Deputy Costs Judge Friston to strike out Point 23 as non-compliant with Ainsworth and to refuse permission to rely on the annotated schedule. In an ex tempore judgment, the Costs Judge declined to do either and adjourned the detailed assessment to a third day.

The adjourned hearing took place on 8 November 2024. The Costs Judge conducted a line-by-line assessment of approximately 10% of the entries in the documents schedule, with the remainder assessed on a broadbrush basis agreed by the parties. The bill was assessed in the sum of £89,032.62 plus interest. On costs of the assessment itself, the outcome was affected by a Part 36 offer made by the defendant. The claimant had offered to settle costs at £105,000 and the defendant had offered £100,000. The assessed figure fell below the defendant’s offer, with the result that the defendant was ordered to pay the claimant’s costs of the detailed assessment up to 3 July 2024, and the claimant was ordered to pay the defendant’s costs thereafter. However, the defendant’s costs were to exclude time spent on 6 August 2024 dealing with the annotated documents schedule, on the basis that part of that afternoon had been wasted. The narrow gap between the offers may provide some explanation for what might otherwise seem an uneconomic appeal.

The claimant appealed to the High Court on five grounds. Mrs Justice Hill, sitting with Costs Judge Leonard, rejected each of the individual grounds but allowed the appeal on the basis of what she described as a residual, overarching argument: that the Costs Judge’s approach was wrong and failed to give proper effect to paragraphs 8.2(b) and 13.10(2) of PD 47. The Judge set aside the order made at the adjourned hearing, struck out Point 23, and refused permission to rely on the annotated documents schedule. The matter was remitted to the Costs Judge to determine consequential issues, including proportionality.

The defendant appealed to the Court of Appeal. Permission was granted by Lewison LJ, who noted the unusual nature of the case and observed that it was well arguable that the Judge had simply disagreed with the Costs Judge, notwithstanding her acknowledgment of the limited bases on which a case management decision can be disturbed on appeal. The Court of Appeal heard the appeal on 17 June 2026 and handed down judgment on 2 July 2026. A Respondent’s Notice contended that, in deciding whether to admit variations to points of dispute, the court should first categorise whether the variation was curative of non-compliance or augmentative.

The Costs Judge’s Decision

The Costs Judge recorded that the parties had been in negotiations around the time the notice of hearing had been sent in May 2024, such that there was a real likelihood of settlement. He noted confusion about bundles and observed that the annotated schedule went beyond the general points raised in the points of dispute, or at least provided significantly greater detail.

The Costs Judge summarised the test approved in Ainsworth as being whether there was sufficient particularity in the points of dispute for the proceedings to proceed fairly. He gave two reasons not to strike out Point 23. First, the original points of dispute would have allowed a fairly broad-brush assessment in any event and would have allowed the claimant to have known the case being made against him and to have responded to it. Secondly, and perhaps more importantly, both parties knew that there should have been a further document. The defendant had taken no steps to provide it until very close to the hearing, but the claimant had also done nothing to chase it. Thus both parties were significantly at fault for having failed to comply with the overriding objective and to assist the court by getting their act together earlier.

The Costs Judge then turned to whether to permit reliance on the annotated schedule, a question he said he had not found easy. While unacceptably late, it was not an ambush: it had been mentioned at the start and both parties were at fault for not ensuring that it was available on a timely basis. There was merit in the argument that the types of points raised would be fairly obvious to a costs practitioner, and indeed many of the points had been anticipated by the claimant. However, the assessment had also been unusual in considering items on a line-by-line basis, which gave rise to concern as to the impact of the delay.

The Costs Judge considered that paragraph 13.10 of PD 47 gave him very wide powers. He took the view that an adjournment was inevitable. It would be unfair to require the claimant to proceed on the basis that he had to respond to the annotated schedule, and even without it the claimant would still be in difficulty, without at least a breakdown from the defendant of which items were referred to in the categories in the points of dispute. Given the inevitability of an adjournment, the Costs Judge concluded that, on balance, the court would be assisted by having the annotated schedule available. Thus, and very reluctantly, the defendant would be permitted to rely on it, and an adjournment would be ordered subject to costs sanctions which would be imposed at the end of the process.

The High Court’s Decision

The Judge sat with Costs Judge Leonard. There were five grounds of appeal, namely that the Costs Judge: (1) did not give proper effect to paragraph 8.2(b) of PD 47 and wrongly applied Ainsworth; (2) wrongly concluded that a broad brush assessment was possible without the annotated schedule; (3) failed to give proper effect to CPR 1.3 (the duty of parties to help the court to further the overriding objective), misapplying Barton v Wright Hassall LLP [2018] UKSC 12; (4) wrongly allowed reliance on the annotated schedule; and (5) failed to give proper effect to paragraph 13.10 of PD 47. The first three grounds related to the refusal to strike out Point 23 and the last two related to permission to rely on the annotated schedule.

The Judge reminded herself of the basis on which an exercise of discretion may be disturbed on appeal. On ground 1, she concluded that Point 23 did not comply with paragraph 8.2(b) of PD 47 or Ainsworth. It made general assertions and failed to identify specific items in dispute or why they were disputed. However, that was insufficient because the Costs Judge had not found that Point 23 was compliant, and the question whether to strike out was a discretionary one linked to the question of whether reliance on the annotated schedule should be allowed.

Ground 2 related to the Costs Judge’s comment that a fairly broad-brush assessment would have been possible without the annotated schedule. The Judge rejected the challenge to that point, noting that the Costs Judge had recognised that it was the parties’ right to descend into further detail. Rather, the Costs Judge was saying that there was enough in Point 23 to gain a broad understanding of the challenge. This was clear from the content of the reply, the preparation of Bundle 2 and the broadbrush approach ultimately taken at the final hearing on 8 November 2024. Ground 2 was therefore dismissed.

The Judge also dismissed ground 3, which challenged the Costs Judge’s criticism of the claimant for not chasing the annotated schedule, on the basis that the challenge related to an argument that had not been raised with the Costs Judge at the relevant time. Ground 4 was dismissed for the same reason.

As to ground 5, the authorities did not support the criticism made of the Costs Judge’s comment that his powers under paragraph 13.10 were very wide, such that this aspect of ground 5 failed.

The Judge then went on to consider what she described as the residual, overarching argument from grounds 1 and 5, to the effect that the Costs Judge’s approach was wrong and failed to give effect to paragraphs 8.2(b) and 13.10(2) of PD 47. She accepted the argument by the claimant that the adjournment was necessitated by the defendant’s conduct with regard to Point 23 and the late annotated schedule. If Point 23 had been struck out then the assessment would have concluded on 6 August 2024, without the need for an adjournment. Any issues with the bundles also related to Point 23. The defendant had been on notice since January 2024 that Point 23 was not compliant and had taken no steps to remedy that until two working days before the hearing. The reason given for not serving the schedule, namely a hope to achieve settlement, was circular because a detailed understanding would facilitate settlement. The costs and delay caused by a third day were not consistent with the overriding objective, and the unfairness to the defendant resulting from striking out was of his own making. The Judge stated that she was very conscious of the limited role of an appellant court considering an appeal against a discretionary case management decision, but nonetheless concluded that the decision not to strike out Point 23 and to allow reliance on the annotated schedule was wrong. The Costs Judge had erred in principle by failing to give sufficient weight to the requirements of paragraph 8.2(b) and Ainsworth, and failing to ensure that the power in paragraph 13.10(2) was exercised in accordance with the overriding objective.

The Court of Appeal’s Decision

Lady Justice Falk, with whom Lord Justice Jeremy Baker and Lord Justice Foxton agreed, allowed the appeal and restored the Costs Judge’s decision.

The Court of Appeal emphasised that this was a second appeal against a case management decision. It is well-established that appellate courts should not interfere with such decisions simply because they disagree with them or otherwise consider that they would have taken a different course. Rather, as Lewison LJ reiterated in Broughton v Kop Football (Cayman) Ltd [2012] EWCA Civ 1743, case management decisions are discretionary decisions that often involve an attempt to find the least worst solution where parties have diametrically opposed interests. The discretion involved is entrusted to the first instance judge. An appellate court does not exercise the discretion for itself. It can interfere with the exercise of the discretion by a first instance judge where he has misdirected himself in law, has failed to take relevant factors into account, has taken into account irrelevant factors or has come to a decision that is plainly wrong in the sense of being outside the generous ambit where reasonable decision makers may disagree. The essential question is whether the decision could properly have been made.

The Judge had carefully directed herself as to these principles and reminded herself of them again later in her judgment. However, the Court of Appeal concluded that her decision nonetheless strayed beyond the limits set by them. Despite the efforts of counsel for the claimant to persuade the court otherwise, the Costs Judge’s decision disclosed no error of principle or failure to take relevant matters into account, and did not otherwise fall outside the ambit of his discretion. It should therefore not have been set aside.

Preliminary Observations

The Court of Appeal made a number of preliminary observations. First, one of the reasons why appellate courts must exercise caution when reviewing case management decisions is that it is impossible to recreate the situation before the judge. On an appeal against a case management decision an appellate court is simply not in the same position as the judge. It will not have the same perspective of the circumstances as they appeared to the judge on the ground at the time, it risks being influenced by hindsight, and it also risks being influenced by arguments that were simply not made or at least were not developed before the judge, and which have benefited from a lengthy period of gestation.

Secondly, case management decisions are frequently made under significant pressure. This case provided an excellent example. The Costs Judge had little option but to make an immediate decision at the end of the second day, with an unreserved judgment, because he had to decide whether to complete the assessment on that day or to adjourn.

Thirdly, an ex tempore judgment is just that, unreserved and lacking in the preparation that would go into a reserved judgment. It should be read as a whole, with those points and the circumstances in which it was delivered in mind, rather than picked apart in minute detail.

Fourthly, the points that had arisen in this case included an alleged lack of reasoning on the part of the Costs Judge, as well as some confusion caused by what appeared to have been a mis-recollection on his part at the adjourned hearing as to precisely what his reasoning had been at the earlier hearing. The Court of Appeal reminded the parties of what Munby LJ said in In re A (Children) [2011] EWCA Civ 1205: it is the responsibility of the advocate, whether or not invited to do so by the judge, to raise with the judge and draw to his attention any material omission in the judgment, any genuine query or ambiguity which arises on the judgment, and any perceived lack of reasons or other perceived deficiency in the judge’s reasoning process. In this case the claimant’s failure to do so was all the more marked by the fact that, by the date of the adjourned hearing on 8 November, his legal team had obtained a transcript of the judgment under appeal, but had neither shared it with the defendant nor provided a final version to the Costs Judge. Further, no permission to appeal against the decision on 6 August was sought at any stage from the Costs Judge, which might also have provided an opportunity for clarification, and (relying on CPR 47.14(7)) no appeal was filed in the High Court until after the November hearing.

Finally, the Court of Appeal observed that it does no credit to the justice system for there to be appeals on case management issues which do not, on analysis, raise material points of principle and the cost implications of which must risk outweighing the sums at stake. This reinforces the importance of parties seeking clarification, and where appropriate, reconsideration by the first instance judge. An appeal should be a last resort. This is quite apart from the fact that the very narrow gap between the final Part 36 offers should have given serious pause for thought before embarking on the hearing in the first place.

The Arguments on Appeal

Turning to the arguments on appeal, the focus had to be on the judgment of the Costs Judge, because the question was whether he was entitled to make the decision that he did.

Counsel for the claimant submitted that the Costs Judge had erred in principle by treating the decision-making process as a singular exercise of discretion. What he should have done was, first, decide whether the original points of dispute were Ainsworth compliant, such that they met the requirements of paragraph 8.2 of PD 47. That was a binary question, as demonstrated by O’Sullivan v Holmes and Hills LLP [2023] EWHC 508 (KB). The correct answer to that was that they were not compliant, such that the annotated schedule, which was served very late, was curative rather than augmentative. Secondly, if they were not compliant, the Costs Judge had to decide what to do, both in relation to the points of dispute and the annotated schedule. That second stage was a discretionary decision but, importantly, the fact that the points of dispute had been found to be non-compliant informed how the discretion should be exercised, as did the reasons for the breach, the length of time that had elapsed before an attempt was made to cure it and the proximity of that attempt to the hearing.

The Court of Appeal did not accept that the Costs Judge erred in principle. Although counsel for the claimant sought to argue that he did not conclude that Point 23 was non-compliant, it was sufficiently clear that he proceeded on that basis, as indeed the Judge had also concluded. Most obviously, no question of strike-out would have arisen if Point 23 was compliant. Point 23 was obviously incomplete because it referred to a non-existent annotated schedule. The Costs Judge agreed that Ainsworth applied despite it being a solicitor and client case, and while he observed that the original points of dispute would have allowed for a fairly broad-brush assessment, he made it clear elsewhere in his judgment that it was up to the parties whether they wished to proceed on a more detailed basis (as, the Court of Appeal added, the cross-reference to a schedule indicated that the defendant wished to do). The Costs Judge proceeded to give reasons why he should not strike out Point 23, clearly implying that he considered that he had power to do so.

Further, it was unrealistic to suggest that the Costs Judge did not have the non-compliance in mind, together with the other factors relied on by counsel for the claimant, in making his decisions in respect of Point 23 and the annotated schedule. He referred to the schedule being served at an extremely late stage, leading to not a happy state of affairs, the claimant having already prepared and put together bundles on a different basis. During the course of argument, the Costs Judge asked for an explanation for the delay, and was provided with one by counsel for the defendant, namely that the parties were in discussion and it was hoped that a hearing could be avoided.

The Costs Judge must be taken to have had that explanation in mind when he made his decision very shortly afterwards. Its absence from the judgment was a point that should most appropriately have been raised with the judge at the time. Further, although counsel for the claimant criticised that explanation by arguing that the negotiations referred to were negotiations at a later stage, once the hearing date was fixed, that was far from obvious from what was available to the court. Rather, the available chronology was consistent with a more continual process of discussion, as one would expect. And an attempt to rely on an indication in the first appeal hearing that the schedule may also have been overlooked by the defendant’s solicitor suffered from the defect that there was no indication that that point was made to the Costs Judge. In any event, that would not exonerate the claimant from blame for failure to chase it.

The Judge had suggested that the explanation given to the Costs Judge was circular, because settlement would have been much more likely if the annotated schedule was available, such that the claimant understood the case against him in detail. The Court of Appeal was not convinced by that. If it was likely to make a real difference to the discussions, it would surely have been chased for or supplied much earlier. The Costs Judge’s observations about both parties being at fault and the nature of the points raised were relevant in this context.

The Court of Appeal clarified that what it had said about the explanation for the delay should not be read as endorsing it as an acceptable excuse for non-compliance. It was not a good excuse, but it was a relevant part of the circumstances that the explanation was not of an egregious nature. There was no indication of, for example, a tactical move designed to wrongfoot the claimant, which would be a strong factor against allowing relief.

Counsel for the claimant further submitted that the Costs Judge had failed to have regard to the overriding objective, including the changes made to it in 2013 when proportionality of expense and the importance of compliance with rules were prioritised. She relied on two cases relating to late amendments to statements of case under Part 17, Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm) and CIP Properties (AIPT) Ltd v Galliford Try [2015] EWHC 1345 (TCC). These paragraphs recognise the significance of the new, much stricter, approach, such that it is now more readily recognised that costs sanctions for late amendments may not be adequate, and indulgence of failures to comply with procedural obligations can no longer be expected.

Counsel for the claimant submitted that the same principles should be applied to Part 47. Compliance with paragraph 8.2 of PD 47 was of manifest importance. The points of dispute inform the receiving party of the challenges being made and allow a reply to them. This enables the parties and the court to understand the full scope of the dispute, affecting both listing and preparation for the hearing, as well as the parties’ ability properly to make and assess offers.

The Court of Appeal agreed with all of this, but it did not mean that the decision of the Costs Judge was one that he was not entitled to make. The Costs Judge must be taken both to have been aware and to have taken into account the now well-embedded change of culture that followed the 2013 reforms. It is both unrealistic and inappropriate to expect judges to spell out aspects of the overriding objective, in the form that has now been in place for some 13 years, when they make case management decisions, not least because that would lead to a wholly disproportionate exercise in box-ticking.

The gravamen of the claimant’s complaint was that the Costs Judge failed to identify that it was the defendant’s default that had the effect of the hearing going to a third day, which among other things undermined what was intended to be a streamlined process of detailed assessment. As the Judge had observed, that would have been unnecessary if Point 23 had been struck out. But that started from the wrong place. It was uncontroversial that Point 23 would have been compliant if it had been accompanied by the annotated schedule when the points of dispute were first served. It was also apparent that, in that case, a three day hearing would have been required: there was simply insufficient time to deal with all the other matters and a detailed dispute about work on documents in two days. Indeed, the transcript of the hearing on 8 November clearly showed that this was undisputed by counsel for the claimant. So the real question was not whether a third day was required because of the default (because it would have been needed without a default), but what other costs or difficulties arose from the default. Those would have included the fact that the claimant did not have the benefit of the annotated schedule when replying to the points of dispute or when preparing for the hearing (subject of course to the point that it did not chase for the schedule, as it could have done), as well as the inconvenience and some inevitable increase in costs in having a hearing split by an adjournment, rather than being completed over consecutive days.

Potentially, the claimant was also put to a disadvantage in making or assessing offers under Part 36. However, there was more than one answer to that. Most obviously, it would have been a very good reason to chase for the annotated schedule. Alternatively, the claimant could have sought to protect its position in other ways, including through the terms of any Part 36 offer that it made thereafter.

The claimant was not assisted in relation to paragraph 13.10 by the decision in Celtic Bioenergy Ltd v Knowles Ltd [2022] EWHC 1223 (QB). In that case the lower court had refused an application made around a month before the hearing to rely on a supplemental point of dispute in relation to whether the claimant’s conditional fee agreement complied with the indemnity principle. In the course of her judgment dismissing the defendant’s appeal against the decision of Master Campbell, Foster J rejected the proposition that there was any presumption that documents will be accepted however late they are and however many new points they raise, observing that the rules confer a wide discretion to make a decision in accordance with the overriding objective and it cannot be gainsaid that there will come a time when a document will be just too late. The Court of Appeal agreed, but nothing here indicated a restriction on the scope of the discretion, rather the reverse. The point being made was that the Master was entitled to decide as he had, not that he was obliged to do so.

While it would clearly have been open to the Costs Judge to strike out Point 23 and not permit reliance on the annotated schedule, and another judge might have taken that course, he was not obliged to do so. It was open to him to impose a costs sanction instead, as he made clear that he would. As it turned out, the costs sanction actually imposed at the 8 November hearing was very limited, but there was no appeal against that decision.

The Judge’s criticisms of the Costs Judge’s decision proceeded on the basis that the adjournment was necessitated by the late schedule. The Court of Appeal had already addressed that. Beyond that, the primary objections were that insufficient weight was attributed to the importance of compliance with paragraph 8.2(b) and Ainsworth, and that the Costs Judge failed to exercise the power in paragraph 13.10(2) in accordance with the overriding objective. However, questions of weight are pre-eminently ones for the first instance judge, and for the reasons already given the Court of Appeal was not persuaded that the Costs Judge failed to have proper regard to the overriding objective.

Concluding Remarks

The Court of Appeal allowed the appeal and restored the decision of the Costs Judge. It emphasised, however, that this was on the basis that this was a decision that the Costs Judge was entitled to make within the generous ambit of his discretion. It was neither the only decision he could make, nor was it one with which other judges would necessarily agree.

Paying parties should be under no illusion that paragraph 8.2 of PD 47 requires an Ainsworth compliant approach. They should not assume that a lenient approach will be taken if they take a similar approach to the defendant in this case. Those who do not comply on a timely basis risk non-compliant elements of their points of dispute being struck out or, as a minimum, cost sanctions. Similarly, late variations by either party under paragraph 13.10 of PD 47 risk being disallowed or permitted only on conditions, including as to costs.

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Indemnity Costs Awarded After Contempt Proceedings Used As Commercial Pressure

Commercial Litigation, Detailed Assessment, Indemnity Costs, New Costs Blog, Payment on Account

The High Court’s decision in Bargain Busting Ltd v Shenzhen SKE Technology Company Ltd [2026] EWHC 1146 (Ch) addresses the basis and quantum of costs following dismissal of a contempt application that the court found had been used to weaponise the criminal jurisdiction to pursue the applicant’s private interests.

Background

These proceedings arose from a contempt application brought by Bargain Busting Limited (“BBL”) against Shenzhen SKE Technology Company Limited, Stobbs IP Limited, Wan-Yi Tsai, and Jixuan Si. The contempt application was started in August 2025 and concerned allegations that the respondents had interfered with the administration of justice by writing to the Intellectual Property Office (“IPO”) to request that it delay registration of a trade mark pending the outcome of an application for permission to appeal to the Court of Appeal. The respondents included both the first defendant company and the solicitors and fee earners who had acted on its behalf, namely Stobbs IP Limited and two of its lawyers.

The substantive hearing took place before HHJ Paul Matthews, sitting as a Judge of the High Court in the Business and Property Courts in Bristol. On 23 April 2026, judgment was handed down ([2026] EWHC 933 (Ch)) dismissing the contempt application, together with associated strike out applications and a joinder application. The court commented adversely in that judgment on the use of the contempt jurisdiction in the circumstances of the case.

Following the handing down of the main judgment, written submissions were invited on consequential matters, including the basis of the costs order, the mode of assessment, whether a payment on account should be ordered, and permission to appeal. A clip of correspondence and attendance notes was also placed before the court for the purposes of those consequential matters. The consequential judgment was handed down on 13 May 2026.

BBL was represented by Aidan Eardley KC, instructed by Brandsmiths. The respondents were represented by Fiona Horlick KC and Charlotte Elves, with Kingsley Napley LLP acting for the first respondent and Hickman and Rose acting for the remaining respondents.

Costs Issues Before the Court

BBL accepted that it had been unsuccessful in the strike out applications, the contempt application, and the joinder application, and did not resist an order that it pay the respondents’ costs. The live issues before the court on consequential matters were therefore: first, whether those costs should be assessed on the standard basis or the indemnity basis; second, whether the costs should be subject to summary assessment or detailed assessment; and third, whether a payment on account should be ordered and, if so, in what amount. A fourth issue, namely permission to appeal, was also addressed.

The claimant calculated the total costs claimed by the respondents across their costs schedules as some £293,460. The court corrected this to £296,099.61 plus applicable VAT on the costs of Hickman and Rose, producing a total of £322,628.77. The respondents sought indemnity costs, relying on the conduct of BBL and its solicitors during the course of the litigation. BBL resisted the indemnity basis and submitted that, in any event, the costs should be subject to detailed assessment rather than summary assessment, and that no payment on account was appropriate.

The Parties’ Positions

The respondents’ position on the basis of assessment

The respondents argued that costs should be assessed on the indemnity basis. They contended that BBL by these proceedings had sought to weaponise the contempt jurisdiction against the defendants, to drive a wedge between the defendants and their lawyers, to strike fear and loss of professional status amongst the defendants’ lawyers, and to boast to the IP legal market.

The respondents relied on a number of features of BBL’s conduct during the litigation. First, an open offer of settlement had been made in August 2025, on the basis that BBL would discontinue and pay the respondents’ costs on the indemnity basis. That offer was maintained at various points and was not withdrawn until January 2026. Second, at a directions hearing on 16 January 2026, Trower J had remarked that the weaponisation of the contempt jurisdiction was a problem and that the application appeared to fall squarely into that category. Third, a letter dated 23 January 2026 from BBL’s solicitors had, in the respondents’ submission, threatened to report the second to fourth respondents to the Solicitors Regulation Authority unless the defendants agreed to pay BBL’s costs incurred in connection with the trade mark applications. Fourth, a without prejudice save as to costs telephone call on 11 March 2026 had, in the respondents’ submission, revealed that the contempt proceedings had been issued as a form of pressure on the defendants to cease attempting to persuade the IPO to delay registration of the trade mark.

BBL’s position on the basis of assessment

BBL submitted that the court had made no findings in the main judgment that its applications were abusive, or any other findings capable of taking the case out of the norm. It argued that the August 2025 offer was not a genuine offer to settle, as it required BBL to discontinue and pay costs on the indemnity basis. It also submitted that the respondents had not referred in correspondence to the points which ultimately succeeded, and had not made strike out applications until January 2026. As to the January 2026 letter, BBL submitted that it did not contain a threat to report the respondents to the SRA; rather, it explained that the conduct alleged would, if well-founded, amount to breaches of the SRA Code, and provided reassurance that BBL would not raise those matters in another forum if the contempt application were settled. BBL further submitted that the telephone call of 11 March 2026 had been mischaracterised, and that it represented a genuine attempt to resolve the proceedings.

Mode of assessment

The respondents submitted that summary assessment was appropriate, relying on paragraph 9.2 of CPR PD44, which provides that the court should make a summary assessment at the conclusion of a hearing lasting not more than one day. The hearing had lasted less than one day. BBL submitted that detailed assessment was appropriate, primarily because of the size of the costs claimed.

Payment on account

BBL submitted that a lack of clarity about the respondents’ costs made a payment on account inappropriate. The respondents sought a payment on account. BBL also raised points about duplication of effort between Stobbs IP and Kingsley Napley, both of whom had acted for the first respondent, and about the rates claimed in the costs schedules.

The Court’s Decision

Indemnity costs

The court ordered costs on the indemnity basis. HHJ Matthews confirmed that it was not necessary for the main judgment to have made findings on all matters relevant to the costs decision. The general conduct of the parties in litigation is not ordinarily an issue for determination in the substantive judgment, and the court may make supplementary findings for the purpose of consequential matters after giving the parties an opportunity to be heard. The court noted that it had, in any event, commented adversely on the weaponisation of the contempt jurisdiction in paragraphs 33 to 34 of the earlier judgment.

The court applied the well-established principle that an award of indemnity costs is appropriate where the conduct of the paying party or the circumstances of the case take it out of the norm: Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879; Hosking v Apax Partners Ltd [2019] 1 WLR 3347, [42]. The court also noted the range of factors that may be taken into account in such an assessment, as set out in Three Rivers DC v Bank of England [2006] EWHC 816 (Comm), [25].

The court observed that the proceedings themselves were of an unusual nature, making very serious allegations against officers of the court, and potentially having far-reaching professional consequences for those officers. In terms of seriousness, the court put the allegations in the contempt application on the same level as allegations of dishonesty. The court noted that there is no presumption that a failure to make good allegations of dishonesty should normally lead to an order for costs on the indemnity basis; instead, it is a factor to take into account, and may be a reason for making such an order: Thakkar v Mican [2024] EWCA Civ 552.

Three factors were identified as particularly significant. First, the nature of the alleged contempt: writing to the IPO to request a delay in registration pending an application for permission to appeal was described as the kind of thing solicitors do routinely, and was supported by the IPO’s own published practice and decisions. The court found it difficult to understand how BBL’s solicitors could have formed the view that such conduct amounted to a criminal offence. Second, the January 2026 letter: notwithstanding BBL’s submissions, the court found, to the civil standard, that the letter was intended to be read as a threat to report the respondents to the SRA unless they agreed to BBL’s terms. Even if that intention could not be established, the letter fell to be judged by its effect on the reasonable addressee, and any reasonable addressee would have understood it as such a threat. Third, the without prejudice save as to costs telephone call of 11 March 2026: the court found that the call made clear that the claimant justified the issue of criminal contempt proceedings in August 2025 as a form of pressure on the defendants to cease trying to persuade the IPO to delay registration of their client’s trade mark. Criminal proceedings should not be used for such a purpose.

The court held that, whether or not these various factors would each individually justify an award of costs on the indemnity basis, taken together they did so overwhelmingly. The claimant made very serious allegations against the defendants, and lost. It was wrong and out of the norm for the claimant’s solicitors opportunistically to seek to use criminal contempt proceedings, in which the touchstone is the public interest in the administration of justice, in order to pursue their client’s private interests. It was wrong and out of the norm for the claimant’s solicitors to threaten the defendants with being reported to the SRA in order to persuade them to agree to their client’s terms.

Mode of assessment

The court ordered that the costs should be subject to detailed assessment. This was not simply because the amount of money involved was significant. It was because these were complex and hard-fought multi-party proceedings which had lasted about eight months. On any view, a lot of work had been done by all those involved. The fact that the hearing which put an end to these proceedings lasted less than one day did not tell the full story. Justice to both sides required a detailed assessment.

Payment on account

The court ordered a payment on account of £215,000 under CPR rule 44.8, which provides that where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so. The court applied the guidance in Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm), in which Christopher Clarke LJ stated that what is a reasonable amount will depend on the circumstances, the chief of which is that there will, by definition, have been no detailed assessment and thus an element of uncertainty. Any sum will have to be an estimate. A reasonable sum would often be one that was an estimate of the likely level of recovery subject to an appropriate margin to allow for error in the estimation.

The court noted that this was complex, high-value work carried out by specialists on both sides, which would amply justify the London 1 guideline hourly rate. The claimant’s solicitors claimed rates in their costs schedules of £1,100 and £605 for grade A, £550 and £500 for grade B, £380 and £370 for grade C, and £240 for grade D, all of which considerably exceeded the London 1 rate. In contrast, those claimed by the defendants’ and Mr Rebling’s solicitors fell partly within and partly outside the London 1 rates, whilst those for Stobbs IP itself (when acting for the first defendant) were all within the London 1 rates. The claimant made a point about duplication of effort between Stobbs IP and Kingsley Napley, both of whom acted for the first defendant. The claimant also made a point about VAT on Kingsley Napley’s costs schedule, but this had been corrected.

The court referred to Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch), in which the judge made an order for a payment on account equal to 90% of the approved budget. Given that there was no approved costs budget for these proceedings, the court considered it should be more cautious. Overall, the court considered it should build in a margin of about one third, and ordered the claimant to pay £215,000 on account of costs, to be paid to the three solicitors’ firms pro rata to their schedules of costs.

Permission to appeal

The court refused permission to appeal. Under CPR rule 52.6, in a first appeal the court may not grant permission to appeal unless either there is a real prospect of a successful appeal or there is some other compelling reason why an appeal should be heard. The phrase ‘real prospect’ does not require a probability of success (that is, more likely than not), but merely means a prospect which is ‘not unreal’: Tanfern v Cameron-MacDonald [2001] 1 WLR 1311, [21]; Re R (A Child) [2019] EWCA Civ 895, [31]. If the application passes that threshold test, however, the court is not obliged to give permission to appeal; instead it has a discretion to exercise.

The claimant put forward five grounds of appeal, each containing multiple sub-points.

First ground: public interest. This ground contained three points. The first was that the court had wrongly directed itself that the presence of a private interest rules out the possibility of a party invoking the law of criminal contempt. The court rejected this, clarifying that what it had sought to express was that it was impermissible to use criminal contempt proceedings simply for the purpose of pursuing private interests. The second point was that the court had misunderstood the significance of BBL’s submission that there is no requirement for a person who brings a contempt application as of right to demonstrate some wider public interest. The court held that even if it had misunderstood the “significance” of the submission, the claimant did not say the court was wrong to say that a wider public interest must be shown. The third point was that the court was wrong to hold that BBL could not show any sufficient public interest in prosecuting these allegations of criminal contempt. The court held that this was an evaluative judgment, essentially part of fact finding, and that appellate courts will not interfere with evaluative judgments unless compelled to do so.

Second ground: the ‘Representations’. The claimant argued that the court was wrong to break down the ‘Representations’ into indicative and subjunctive/imperative statements and to disregard the latter. The court held that this missed the point: the complaint was that the solicitors had said things that they knew to be untrue, but you cannot tell lies in making a request or issuing a command. Moreover, the court had expressly gone on to deal with the position if it were wrong to break down the ‘Representations’ in this way.

Third ground: ‘interference’. This ground contained two points. The first was that the court’s finding that there could be no arguable ‘interference’ with the administration of justice was vitiated by mischaracterisation of the claimant’s case and failure to take into account the entirety of the statements complained of in the three emails. The court held that the allegation of “mischaracterisation” was not understood, and that it could not give permission for a ground which it did not understand. To the extent that this point depended upon the second ground, it must fail. The second point was that the court was wrong to hold that there could be no interference in circumstances where the IPO alone had the power to decide to register, it knew exactly what the legal position was, and acted in accordance with its own internal guidance at the time. The court held that this was an attempt to appeal against findings of fact, but that the appellant court will not interfere with that unless it is satisfied that the judge was plainly wrong, that is, that the decision was one that no reasonable judge could have reached.

Fourth ground: ‘impropriety’. This ground contained two main points. The first was that the court had mischaracterised the impugned communications as submissions about the meaning and effect of the order of the High Court. The court rejected this, clarifying that its view was that submissions that an order of the court should not yet be implemented for some reason or another were, in this context at least, not improper. There was nothing about “submissions about the meaning and effect” of an order. The second point was that the court’s rejection of the claimant’s case on impropriety was vitiated by its finding that there was simply no real prospect of showing at the hearing of the contempt application that the third and fourth defendants were doing otherwise than asking the IPO to implement its own guidance. The claimant argued that the court was wrong to make that finding because the emails made no reference to the guidance or to the practices of the IPO, and the third and fourth defendants did not give evidence. The court held that the third and fourth defendants could not be obliged to give evidence, and had chosen not to. Realistically, the court was never going to hear from them. Accordingly, the only material before the court on which it could make a finding was the emails, the manual, the decisions of Dr Porter and their own experience as IP lawyers. On that basis the court was entitled to make its finding. Once again, the claimant was simply challenging the court’s finding of fact, and the court saw no real prospect of an appellant court overturning it.

Fifth ground: mens rea. The claimant argued that the court’s conclusion that there was no real prospect of showing that the third and fourth defendants acted with the relevant mens rea was vitiated by its finding that there was simply no real prospect of showing that they were doing otherwise than asking the IPO to implement its own guidance. The claimant argued that that finding was not open to the court, for the reasons given under the fourth ground. The court held that since the fourth ground failed, so did the fifth. The court also noted that the mens rea point was strictly unnecessary anyway.

Since none of these five grounds had any real prospect of success, the court could not give permission to appeal on any of them. The claimant did not suggest that there was any other compelling reason for an appeal, and the application was therefore dismissed.

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High Court Strikes Out Non-Compliant Points Of Dispute Despite Late Annotated Schedule

Detailed Assessment, New Costs Blog, Points of Dispute & Replies

The King’s Bench Division’s decision in Ward v Rai [2025] EWHC 1681 (KB) addresses the consequences of serving non-compliant Points of Dispute in detailed assessment proceedings and the limits of a costs judge’s discretion to permit late variations under PD 47, paragraph 13.10.

Background

The underlying claim arose from a road traffic accident on 18 September 2019 involving Paul Ward (the Appellant/Claimant) and Gagandeep Rai (the Respondent/Defendant). Liability was admitted by the Respondent, with causation and quantum remaining in dispute. The claim was settled on 11 January 2023 by way of a Part 36 offer in the sum of £546,984.

Detailed assessment proceedings were commenced by the Appellant on 3 August 2023. The Appellant’s Bill of Costs included Item 39, which claimed 134.1 hours for work done on documents. That work was itemised in Schedule 2 to the Bill, which ran to 24 pages and comprised 418 individual entries describing the date of the work, the nature of the work, the fee earner involved, and the time spent.

On 30 August 2023, the Respondent served Points of Dispute comprising 25 points. Point 23 addressed Item 39 and made a series of general criticisms of the document time claimed—including that extensive and unnecessary time had been claimed by a Grade A fee earner reviewing medical records before expert evidence had been obtained, that time had been claimed for noting receipt of documents, that multiple administrative entries had been included, and that various entries were duplicated. Point 23 stated that the Respondent would “rely on an annotated documents schedule of objections in support” and proposed that document preparation time be limited to 68 hours 12 minutes. Crucially, no specific items from the 418-entry schedule were identified.

On 4 January 2024, the Appellant served Replies to the Points of Dispute. In those Replies, the Appellant challenged Point 23 on the basis that no specific bill entries had been identified and that neither the nature nor the grounds of the dispute were adequately stated. The Appellant cited Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178 and indicated that, in the absence of specific areas of reduction being identified, a meaningful response could not be provided. The Appellant nonetheless offered 130 hours for Item 39 in response to the general points raised.

On 26 March 2024, the Appellant filed a request for a two-day detailed assessment hearing. A notice of hearing was issued on 28 May 2024, listing the matter for 5–6 August 2024.

At around 4.15 pm on Wednesday 31 July 2024—technically on the morning of Thursday 1 August 2024—the Respondent filed and served the annotated document schedule that had been referenced in Point 23. This was the first occasion on which specific individual items within Item 39 were identified as being in dispute. The schedule categorised the Respondent’s objections to individual entries under eight headings: duplication; supervision; non-progressive; excessive time claimed; non-contemporaneous file notes; case management discussion; incoming correspondence and routine response out; and lower grade offered, not Grade A work. The schedule advanced a primary case of 58.5 hours and an alternative case of 58.8 hours—figures materially different from the 68 hours 12 minutes proposed in the original Point 23.

The detailed assessment hearing took place over 5–6 August 2024 before Deputy Costs Judge Friston. During the hearing, the Judge determined preliminary points and general points from the Points of Dispute. The contentious issue of Point 23 and the annotated schedule was addressed in the latter part of 6 August 2024. The Judge declined to strike out Point 23 and permitted the Respondent to rely on the annotated schedule, adjourning the assessment to a third day. He indicated that costs consequences would follow and would be addressed at the conclusion of the assessment.

The adjourned hearing took place on 8 November 2024. The Judge conducted a line-by-line assessment of approximately 10% of the constituent parts of Item 39. The remaining 90% was assessed using a broad-brush “coffee break option” suggested by the Judge, whereby the parties took a break and the Judge gave them a provisional view on which they made submissions, with the option of detailed item-by-item assessment still available if they wished. The Bill was assessed in a total sum of £89,032.62 with £8,234.91 in interest.

The Deputy Costs Judge’s Decision on Point 23 and the Schedule (6 August 2024)

Deputy Costs Judge Friston gave two reasons for declining to strike out Point 23. First, he considered that the original Points of Dispute would have allowed there to have been a fairly broad-brush assessment in any event and would have allowed the Appellant to have known the case being made against him and to have responded to it. Second, and “perhaps more importantly,” he found that both parties knew that there should have been a further document and that both parties were significantly at fault for having failed to comply with the overriding objective by not ensuring the schedule was available earlier.

The Judge acknowledged that the schedule was served “unacceptably late, almost to the point that one could say, in other circumstances, that it was an ambush.” However, he concluded that it was not an ambush on the facts because it had been mentioned in Point 23 from the beginning and both parties were significantly at fault for not having ensured it was available when preparing for the assessment.

The Judge considered that PD 47, paragraph 13.10 gave him “very wide powers” to either allow or disallow an amendment and to impose conditions, including conditions as to payment of costs. He concluded that there would inevitably have to be an adjournment because it would be unfair to require the Appellant’s counsel to proceed on the basis that he had to respond to the schedule, but equally unfair to require him to deal with the categories in Point 23 “almost in a vacuum” without the benefit of the schedule. He therefore permitted the Respondent to rely on the schedule but indicated that there would be cost sanctions to be imposed at the end of the assessment.

The Judge noted an issue with the Appellant’s bundles: Bundle 1 contained all the documentary items, while Bundle 2 grouped together attendance notes relevant to the general points of principle. However, the Appellant’s counsel had not been informed until very recently that Bundle 1 contained the entirety of the documents. The Judge stated that his criticism of the Appellant’s solicitor in this regard “paled into insignificance” compared to his frustration at the parties’ lack of communication about the schedule.

The Costs Judgment (8 November 2024)

The Judge then addressed the costs of the detailed assessment. The Respondent had made a Part 36 offer which the Appellant had not beaten. The parties agreed that the Respondent would pay the Appellant’s costs up to the date on which the offer expired (3 July 2024) and that the Appellant would pay the Respondent’s costs thereafter, subject to argument about whether the Respondent should bear the Appellant’s costs of the adjourned hearing in any event.

The Appellant argued that the Respondent’s conduct in serving the annotated schedule so late had led to the need for an adjournment, such that the Respondent should be ordered to pay the Appellant’s costs of the adjourned detailed assessment. The Appellant cited Barton v Wright Hassall LLP [2018] UKSC 12 and Woodward v Phoenix Healthcare Distribution Ltd [2019] EWCA Civ 985 in support of the proposition that while the Appellant was under a duty to assist the court for the purposes of the overriding objective, the Appellant was under no duty to remind the Respondent that they had failed to file the schedule.

The Judge found that while the Respondent was significantly at fault for having served the schedule very late, the Appellant was also at fault. He referred to two matters: first, that the Appellant had not chased the Respondent for the annotated schedule; and second, that it had become apparent during the course of the 6 August hearing that the Appellant’s counsel was unaware that documents he needed were contained in the bundles. The Judge stated—contrary to his earlier finding that the bundle issue “paled into insignificance”—that the bundle issue was “more important” and that had counsel been so informed and had the court dismissed the Ainsworth point (as it did), there would have been no need for an adjournment as the court would have been able to deal with the first items in the documentary schedule.

The Judge therefore declined to award the Appellant his costs of the adjourned hearing and ordered that the Appellant pay the Respondent’s costs from 3 July 2024, subject to a small reduction to reflect the time spent on 6 August 2024 dealing with the annotated schedule.

The Appeal

The Appellant appealed against the Judge’s orders of 6 August 2024, advancing five grounds of appeal. Permission to appeal was granted by Sir Stephen Stewart on 11 March 2025. The appeal was heard by Mrs Justice Hill DBE on 18 June 2025, sitting with Costs Judge Leonard as assessor, and judgment was handed down on 3 July 2025.

The Legal Framework

PD 47, paragraph 8.2 requires that Points of Dispute must be short and to the point, must follow Precedent G, and must identify any general points or matters of principle requiring decision before individual items are addressed. Critically, paragraph 8.2(b) requires Points of Dispute to “identify specific points, stating concisely the nature and grounds of dispute.”

In Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178, Asplin LJ held that paragraph 8.2 makes clear that Points of Dispute should be “short and to the point and, therefore, focussed” and that specific points should be made “stating concisely the nature and grounds of dispute.” Common sense dictates that Points of Dispute must be drafted in a way which enables the parties and the court to determine precisely what is in dispute and why. That is necessary to enable the receiving party to reply to the complaints and to enable the court to deal with the issues raised in a manner which is fair, just and proportionate. Asplin LJ identified CPR 3.4(2)(b) and (c) as the applicable powers enabling a Costs Judge to strike out non-compliant Points of Dispute.

Although Ainsworth concerned solicitor-client assessment proceedings, recent decisions including Wazen v Khan [2024] EWHC 1083 (SCCO) and St Francis Group 1 Ltd v Kelly [2025] EWHC 125 (SCCO) have confirmed that the principles apply equally to detailed assessment proceedings between parties under CPR Part 47.

PD 47, paragraph 13.10 addresses variations to Points of Dispute. While permission is not required to vary Points of Dispute, the court may disallow the variation or permit it only upon conditions, including conditions as to the payment of any costs caused or wasted by the variation. In Edinburgh v Fieldfisher LLP [2020] EWHC 862 (QB), Chamberlain J held that while the default position is that parties may vary Points of Dispute, this is subject to a general discretion to disallow the variation or to allow it upon conditions. This is an important discretion, without which it would be possible for parties to ambush their opponents by waiting until the last minute to file supplemental Points of Dispute raising points not previously heralded. The overriding objective must be borne in mind when exercising this discretion.

Hill J’s Decision

Hill J held that Point 23 was not compliant with PD 47, paragraph 8.2(b) or Ainsworth. Point 23 made general assertions without indicating which items they related to and failed to identify the specific items in the Bill of Costs which were challenged or make clear in each case the reasons why the individual items were in dispute. Point 23 was directly comparable to the contentious Points of Dispute in Ainsworth and Christodoulides v CP Christou LLP [2025] EWHC 214 (SCCO) and even less specific than those in O’Sullivan v Holmes and Hills LLP [2023] EWHC 508 (KB) and St Francis.

Hill J accepted that whether Points of Dispute are compliant is a binary question rather than a matter of discretion. However, she recognised that whether to strike out non-compliant Points of Dispute and whether to permit a variation under paragraph 13.10 were evaluative, discretionary questions that were inextricably linked.

Hill J rejected the Appellant’s argument that the Deputy Costs Judge had misdirected himself by finding that a “fairly broad-brush assessment” could have taken place based on Point 23 alone. She held that the Judge had recognised that it would be inappropriate to carry out the detailed assessment on a broad-brush basis and that his focus was on whether to adjourn the case to allow the Appellant more time to consider how to respond to the annotated schedule. What the Judge was saying was that the Appellant had been provided with sufficient information in the original Point 23 to understand, broadly, what the case against him was.

Hill J also rejected the Appellant’s argument based on Barton v Wright Hassall LLP [2018] UKSC 12 and Woodward v Phoenix Healthcare Distribution Ltd [2019] EWCA Civ 985 that the Judge had been wrong to criticise the Appellant for not chasing the Respondent for the schedule. She acknowledged at [88] that there was “an inherent logic in, and attractiveness to” the submission and that it raised “an interesting issue” about where the duty to assist the court conflicts with the absence of a duty to assist an opponent. However, she held that it would be wrong to criticise the Judge for failing to take into account a point not raised with him at the relevant time, as the evidence strongly suggested that these authorities were not cited to the Judge on 6 August 2024 but only at the costs stage on 8 November 2024.

Hill J accepted that the Deputy Costs Judge was not wrong to say that paragraph 13.10(2) afforded him “very wide powers,” as this chimed closely with Foster J’s reference in Celtic Bioenergy Ltd v Knowles Ltd [2022] EWHC 1223 (QB) to “a wide discretion.” However, she held that Ground 5 raised two distinct aspects: the first (whether “very wide powers” was a correct characterisation) failed; the second (whether the Judge nevertheless misapplied those powers) succeeded.

Hill J concluded that the Judge’s refusal to strike out Point 23 and his decision to allow the Respondent to rely on the schedule was wrong. She held that the Judge’s decision failed to give sufficient weight to the requirements of paragraph 8.2(b) and Ainsworth and failed to ensure that the paragraph 13.10(2) power was exercised in accordance with the overriding objective as required by Edinburgh and Celtic.

Hill J found that the adjournment was necessitated solely by the Respondent’s conduct regarding Point 23 and the schedule, not by issues with the Appellant’s bundle. The hearing on 5–6 August 2024 had addressed all the issues on the detailed assessment save for that relating to Point 23. If the Judge had decided to strike out Point 23 and disallow the schedule, the assessment would have concluded on 6 August 2024. The Judge had specifically held in his 6 August judgment that his criticism of the Appellant’s solicitor regarding the bundle “paled into insignificance” compared to his frustration at the parties’ lack of communication about the schedule, and the issues over the bundle did not prevent all the issues on the detailed assessment save for that relating to Point 23 being concluded on 6 August 2024. The Judge’s later recollection on 8 November that the bundle issue was “more important” was inconsistent with his original finding.

Hill J noted that the Respondent had been on notice that the Appellant’s position was that Point 23 was not compliant since 4 January 2024, some seven months before the detailed assessment hearing, yet had taken no steps to remedy the position until two working days before the hearing. The Respondent’s explanation for the delay—that the parties hoped to settle and avoid a hearing—was, Hill J observed, “entirely circular” because settlement was surely much more likely to be achieved if the Appellant understood the case against him in detail. This breach of paragraph 8.2(b) was even more egregious than that in Ainsworth, where there had been five months’ notice, and that in Celtic, where supplementary Points of Dispute had been provided around one month before the hearing.

The Judge’s decision meant that the detailed assessment process continued into a third day, leading to additional costs and delay. Hill J held that it was hard to see how that was consistent with the requirement in the overriding objective to deal with the case “justly and at proportionate cost,” bearing in mind that this requirement includes saving expense, dealing with cases expeditiously, and enforcing compliance with rules, practice directions and orders. The streamlined nature of detailed assessment proceedings was also relevant.

Hill J concluded that the Judge erred in principle and did not balance the various factors fairly in the scales, such that it was appropriate for the appellate court to intervene. The appeal was allowed.

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SCCO Lacks Jurisdiction to Order Security for Costs of Detailed Assessment Proceedings

Commercial Litigation, Detailed Assessment, New Costs Blog, Security for Costs

The Senior Courts Costs Office’s decision in Magomedov v Rabinovich [2026] EWHC 962 (SCCO) addresses whether the court conducting a detailed assessment has jurisdiction to order security for the costs of that assessment under CPR 25, or whether its powers are confined to the interim costs certificate procedure under CPR 47.16.

Background

The underlying litigation arose from two alleged unlawful means conspiracies. The Respondents (Claimants in the original proceedings) brought claims against the Applicants — the Eleventh, Twelfth, and Fourteenth Defendants, described as the Rabinovich Defendants — together with nineteen other defendants. The first alleged conspiracy concerned the sale of an indirect interest in a company to a Russian state-owned oil pipeline company at an undervalue, in respect of which the Respondents claimed approximately US$5 billion. The second alleged conspiracy concerned the wresting of control and practical ownership of the Respondents’ stake in one of the largest transport and logistics companies in Russia, with a claimed value of approximately US$8.8 billion, including an entitlement to acquire a further interest under option agreements.

The substantive proceedings were determined by Mr Justice Bright, whose judgment is reported at [2025] EWHC 59 (Comm). At a hearing on 3 May 2024, Bright J awarded security for costs in favour of the Applicants in the sum of £1,162,000. He rejected the Applicants’ alternative application for summary judgment or strike out in respect of certain parts of the Respondents’ claim but held that there was no jurisdiction to hear any of the Respondents’ claims. By order dated 17 January 2025, the Eleventh and Twelfth Defendants were awarded 75% of their costs on the standard basis, and the Fourteenth Defendant was awarded its costs on the indemnity basis. By order of 17 February 2025, substantial interim payments on account of costs were awarded: £1,162,000 in favour of the Eleventh and Twelfth Defendants and £211,286 in favour of the Fourteenth Defendant.

The Respondents’ funding arrangements were described as opaque. Following Bright J’s judgment, a further application was heard by Bryan J for disclosure in respect of those arrangements. That application was granted, with costs awarded in the Applicants’ favour. An interim payment on account of costs of approximately £73,116 was awarded in connection with the disclosure application, and a further interim payment of £32,312 was made in respect of a freezing injunction. The total interim payments awarded across all relevant orders amounted to approximately £1.8 million, a figure supported by an agreed schedule produced to the court. Permission to appeal Bright J’s decision was refused, though a renewal application was due to be heard shortly at the time of the costs hearing.

The Applicants served a Notice of Commencement of Detailed Assessment and a Bill of Costs in the sum of £4.2 million in respect of four costs orders made in their favour, with two further orders relating to an injunction application. At the time of the hearing before Costs Judge Brown on 11 March 2026, Points of Dispute had not yet been served — they were due on 27 March 2026 — and no Request for a Detailed Assessment Hearing had been filed. It was in this procedural context that the Applicants made an application to the Senior Courts Costs Office for security for the costs of the detailed assessment proceedings in the sum of £336,000, representing 70% of an estimated total of approximately £480,000.

The Application and Opposing Arguments

The Applicants sought security in the sum of £336,000, said to represent 70% of the estimated future costs of the detailed assessment. Those estimated costs comprised £220,000 for preparation of the Bill of Costs and approximately £259,000 for preparing Replies, conducting settlement negotiations, and representation at the detailed assessment hearing — giving a total estimate of approximately £480,000. The Applicants contended that there had been material changes of circumstances since the original security for costs order made by Bright J, which justified the court revisiting the position and granting further security specifically referable to the costs of the assessment proceedings. They identified four material changes: the award of costs on the indemnity basis in favour of the Fourteenth Defendant; the applications before Bryan J and his costs orders; the CPR 52.30 proceedings; and an increased risk of non-payment, given that the First Claimant was said to be incarcerated in Russia and had been made bankrupt, and that the Respondents would have no incentive to pay costs if permission to appeal were refused.

The Applicants, represented by Mr Thomas Mason of Fieldfisher LLP, contended that CPR 25.1 and CPR 25.2 conferred jurisdiction on the SCCO to make an order for security for the costs of the detailed assessment proceedings. They submitted that CPR 25.2(1) expressly permits an interim remedy to be made “at any time, including before proceedings are started or after judgment has been given”, and that this language was broad enough to encompass an application made in the context of detailed assessment proceedings following the determination of the substantive claim. They further submitted that, for the purposes of CPR 25.26, they should be regarded as defendants — having been compelled to participate in the original litigation — and that the costs proceedings were sufficiently ancillary to the substantive claim to bring them within the scope of the security for costs jurisdiction.

The Respondents, represented by Mr Imran Benson of Seladore Legal Limited, objected on two principal grounds. First, they submitted that the SCCO lacked jurisdiction to entertain the application at all, on the basis that the court’s powers in detailed assessment proceedings are limited to those set out in CPR 47, and that the only relevant interim measure available is the power to issue an interim costs certificate under CPR 47.16. Second, they argued that even if jurisdiction existed, the application should be dismissed on conventional principles applicable to security for costs applications, including the principle that security cannot be ordered against a party who is, in substance, the defendant to the claim in question. The Respondents contended that, in substance, the receiving party in a detailed assessment is more akin to a claimant pursuing a monetary claim, and that the paying party is in the position of a defendant compelled to participate in those proceedings.

The Respondents accepted that the relevant “gateways” for a security for costs application were satisfied and did not contend that an award would stifle the assessment proceedings.

The Jurisdictional Question

Costs Judge Brown described the application as unusual, if not unprecedented, in the context of inter partes detailed assessment proceedings in the SCCO. Neither advocate was able to find any cases on it, nor was the judge aware of any such application ever having been made in that court.

The judge began by reviewing the fundamental principles governing security for costs. As Lord Millett explained in CT Bowring v Corsi & Partners [1994] BCC 713, the purpose of the jurisdiction is to prevent “the injustice which would result if a plaintiff who was in effect immune from orders for costs were free to litigate at the defendant’s expense even if unsuccessful”. An order for security can be made only against a plaintiff; it cannot be made against a defendant, because a plaintiff institutes proceedings voluntarily whereas the defendant has no choice in the matter and must be allowed to defend himself without being subjected to the embarrassment of having to provide security for the plaintiff’s costs. The court must have regard to the substantial and not the nominal position of the parties.

The judge noted that it appears clear from a number of decisions that when dealing with the substantive claim a court can order security for the costs of the detailed assessment proceedings as costs of proceedings. Thus, while the costs sought under a costs order may be seen as a ‘claim’ by a winning defendant against a losing claimant, the costs of detailed assessment proceedings may form part of the security that the court provides to a defendant in a claim. The decisions appear to assume “proceedings” in CPR 25.26(2) must be understood as including the detailed assessment proceedings for the purpose of determining the amount of security, presumably on the basis that such proceedings are ancillary to the main proceedings, or as it may be put, the assessment of costs are part of the ‘working out’ of the substantive claim.

However, the judge held that it does not follow that merely because the court dealing with the substantive claim could include such costs as part of the security, the court in the detailed assessment proceedings can be assumed to have the same powers under CPR 25.2, rather than the more limited power under CPR 47, once the claim has been determined.

The judge observed that the meaning of the term ‘proceedings’ depends on its statutory context and on the underlying purpose of the provision in which it appears. In Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] EWHC 1205 (QB), Foxton J held that detailed assessment proceedings were a distinct phase of the proceedings, not an originating process. However, the court was not addressing the issue as to whether for other purposes costs proceedings may be regarded as separate from the substantive proceedings, in particular for the purpose of deciding whether the terms of CPR 25 apply.

Costs Judge Brown reasoned that detailed assessment proceedings have their own particular procedure. They do not set out expressly any power to grant security for the costs of detailed assessment, nor is there any express importation of CPR 25. The only interim measure provided for is the power to order an interim certificate, which is itself a method of providing security for a claim. Whilst CPR 25.2 permits the court dealing with the substantive claim to make an interim order “after judgment has been given”, the use of the word ‘interim’ in CPR 25 at least points to the jurisdiction to make such orders being linked to determination of the claim which the court is then dealing with. It is perhaps difficult to read “after judgment” as extending the power so that it can be used at any time after judgment and even in later cost proceedings, rather than as part of the process of giving judgment.

The judge distinguished the power to order security from ordinary case management powers such as disclosure or requests for further information. Whilst the court does have power to order disclosure under its case management powers or CPR 31, and generally to order a Part 18 request for further information even though the power might not be expressly set out, the power to order security is qualitatively different from ordinary case management powers. The former are rather more obviously case management powers which are integral and necessary to the determination of disputes which arise in detailed assessment, whereas orders for security on claims which have already been determined are not.

The judge held that had it been intended that there should be a power to make orders for security in detailed assessment proceedings, the rules would have said so expressly and made clear the circumstances in which it could be applied for, and indeed who is to be regarded as the defendant and who the claimant for these purposes. The previous status of the parties as claimant and defendant for the purposes of the CPR rules is changed in detailed assessment, so that the parties are referred to as receiving party and paying party. Whilst the fact that the parties are renamed may not be decisive, it is indicative. If the Applicants were right that they should still be regarded as the defendants and CPR 25 did apply independently in costs assessment, then both parties might be able to apply for security, as the receiving party might say they were the defendant to the claim for costs. This would seem to be a highly improbable interpretation.

The judge further held that if CPR 25 had been intended to apply, the rules would have dealt with the difficult issue as to the point at which a claim for costs ceases to be merely ancillary to the original substantive claim and as to whether the court is imposing security for a claimant on a claim — which it is clear the court should not, at least in general, do.

In contrast to the position when the court is dealing with the substantive claim, there is no obvious sanction to enforce an order for security. Mr Mason did not show the judge any basis in law for striking out Points of Dispute, which are not regarded as statements of case, not being documents which require a statement of truth. In any event, in many instances such an order might be a disproportionate sanction.

The judge observed that there is no obvious need for any power to order security in detailed assessment proceedings given the wide powers of the court dealing with the substantive claim. It is far from the ordinary role of the costs court to deal with issues such as the ‘gateways’ and broader considerations which might apply in the event that there were risks of stifling — issues which are outside the SCCO’s normal remit. It is difficult to see how the Costs Court can readily determine whether there has been a material and sufficient change of circumstances when it is not the court dealing with the substantive claim. These can be expensive and time-consuming applications.

The judge noted that an order for interim payment is a form of security, and the court thus has the express power to provide security by way of an interim costs certificate. In the circumstances, and for the reasons set out, the judge was not persuaded that he could read into the provisions of CPR 47, which are at least intended to be part of a self-contained code for detailed assessment, powers that go beyond that.

Following the approach in GFN SA v Bancredit Cayman Limited [2010] Bus LR 587, the court can look to the settled practice of the court and, as the judge indicated, it does not seem that there is any practice of the court making such orders in inter partes claims. If the judge were to accept that the Applicants were right, it would be effectively to import or instigate the risk of a substantial amount of satellite litigation. Had there been such a jurisdiction it would surely have been enthusiastically employed to ward off any challenge to the claim for costs. There is good reason to believe such a jurisdiction would be used oppressively and would give rise to disproportionate costs. Such concerns strongly weighed against what seemed to the judge a novel interpretation of the rules.

The application itself appeared to have generated some £150,000 in costs. Costs proceedings are intended to be costs efficient and afford access to justice in circumstances where parties are often depleted in resources. The judge accepted that there are circumstances where a defendant to a claim may not be fully protected in respect of the costs of detailed assessment, but there are ample means of achieving security before the court dealing with the substantive claim. That must in itself be good reason for rejecting an application for security.

Costs Judge Brown concluded that he was not persuaded that the court dealing with the assessment of costs does have power to order security. But even if there were technically a jurisdiction to do so, the position is akin to a lack of jurisdiction and he should in limine refuse the application.

Material Change of Circumstances and Discretion

The judge went on to consider, in case he was wrong about jurisdiction, whether there had been a material change of circumstances justifying a revisiting of the security previously ordered, and whether in any event the application should be refused as a matter of discretion.

A defendant may obtain an order seeking an increase in security previously allowed if they can justify the further increase by reference to a material change of circumstances; and if the defendant proves such a material change of circumstances the court has a discretion to recalculate afresh the totality of the security. The judge was not satisfied that there had been any adequate or substantial change of any substance justifying the revisiting of the security for the costs of detailed assessment. Whilst the Applicant may be able to identify some changes, these were at best slight. As a matter of discretion, the judge was firmly of the view, in the particular circumstances, that he should not revisit it.

As to the indemnity costs order, the judge accepted that when a court is dealing with the substantive claim, the award of costs on an indemnity basis may amount to a material change of circumstances. However, not only was it not at all clear on what basis the security was granted in this case, the judge was not confident what, if any, difference it would make to the amount of the required security. Proportionality is unlikely to be a factor. Whether on the indemnity basis or standard, the court is required to determine the reasonableness of the costs, and the court is required to apply an objective standard of reasonableness when deciding whether costs have been reasonably incurred. In many cases the court may have little doubt about the reasonableness of the costs it is to award so that there is no need to exercise any doubt in favour of the receiving party. The basis of assessment may thus make no difference. Beyond referring to the award of costs on an indemnity basis, Mr Mason did not provide any clear basis for thinking that the basis of assessment would necessarily affect the extent of the security required. In any event the place for this point was before Bright J, not at this stage of the costs proceedings.

As to the order of Bryan J, if this changed anything it was marginal, as a substantial interim payment had been made against the costs of the disclosure application and a freezing injunction application. The judge may well have taken the view that the award of such an interim payment provided adequate security generally. The further difficulty was the failure to explain why the matter was not raised before the judge who would have been in a far better position to deal with it. In any event additional costs associated with the detailed assessment of perhaps relatively short applications would be modest. This could not justify a general revisiting of the amount of security.

As to the Part 52.30 application, plainly it was not for this court to give security in respect of other applications. It had not been heard at the time of the hearing and presumably the costs of it were not in the Bill.

As to greater risk, the judge accepted that if permission to appeal is refused the Respondents may no longer have an incentive to comply because judgment has already been given. But security is not set as a function of risk. Once the gateways are established and there is a risk of non-payment, then full security is provided. Mr Mason did demur from the judge’s suggestion that security in this case had been set on such a basis. Accordingly, the judge did not accept that the matters relied on were sufficient to justify revisiting the security.

Discretionary Refusal

The judge held that in any event he would reject the application in his discretion.

First, it seemed to the judge that the Applicants could have raised these matters before Bright J, or indeed before Bryan J, in any event when the Court was concerned with the extent of the interim payment. No adequate explanation as to the failure to raise this at an earlier stage had been provided.

Second, the fact that the Applicants recovered only 75% of their costs before Bright J seemed to weigh in favour of reducing the amount of security and may be a reason why the Applicants were content with security as it was. In any event, this confirmed the judge’s view that he would not have increased the security.

Third, there was no obvious nor appropriate sanction if the Respondents did not comply with an order of payment into court. Mr Benson was not saying that the Respondents would not pay any security ordered, but if the Respondents did not pay there would need to be consideration of the sanction. Such a consideration led the court to refuse security in Dar International FEF Co v Aon Ltd [2003] EWCA Civ 1883. The order sought did not include any unless provision, and the judge remained unclear as to what effective sanction might be provided by way of an unless order. It was difficult to see what effective and proportionate measures would follow if no payment were made. The striking out of the Points of Dispute, even if the judge had jurisdiction to do this, was liable to be disproportionate. The benefits of a Days Healthcare order (depriving the paying party of representation at any detailed assessment hearing or the right to attend) were highly questionable. In circumstances where the costs of further hearings on this issue were likely to be substantial and disproportionate, such concerns must weigh against the order in the first instance.

Fourth, although in general it is not appropriate to consider the merits of a claim when dealing with a claim for security, in a costs claim the court may be in a good position to form a relatively clear, albeit necessarily provisional, view as to the amount reasonably recoverable. Bryan J appeared to take the view that at least some of the Applicants had a real prospect of recovering more than the amount allowed by way of interim payment. Neither party suggested the judge was bound by these views and that he could not exercise his own judgment. But in any event things had moved on since then. The Applicants had produced a Bill of Costs. The judge had not been shown it and could have been shown it. The decision not to produce it in the hearing bundle seemed significant. It was later offered by the Applicants at the hearing. It would no doubt take time to consider this Bill but it should provide details of the claim and the judge could then perhaps have taken a reasonable view as to the likely reasonableness of the costs claims and possibly a more informed view than the court ordering the original interim payment.

The judge made clear his concern about the amount of costs claimed. The hearing before Bright J proved to be lengthy and the issues arising appeared intricate, but these applications were interlocutory, not trials. Fees for counsel were said to be some £800,000. They may of course be justified but this was a large sum when seen particularly in the context of the fact that much of the work was or would have been shared with other Defendants. There was quite possibly a remarkable increase in the solicitor’s costs from the costs intimated by an open letter dated February 2025 and the Bill of Costs. If the statement of costs on the application the judge was dealing with, and the number of the attendance of fee earners at the hearing, was anything to go by, it would suggest that the costs claimed in the substantive matter may be very substantially reduced. In any event there is no reliable standing or predictable measure of a disallowance on an assessment of costs whether on a standard basis or on an indemnity basis — each claim depends on its facts. Reductions for unreasonable multiple fee-earner attendance, duplication, administrative work on bundles not properly chargeable can give rise to a large reduction of costs.

The judge noted that costs of preparing the Bill were put at £220,000; at £135-140 per hour for a Grade D costs draftsman that would equate to over 40 weeks’ work at 24/25 hours per week. The hourly rate may be open for debate and there might be some involvement of higher grades of fee earner. Nevertheless these figures appeared to be very concerning in a case where substantial time had already been spent dealing with costs, preparing for the security of costs application, the statements of costs for the interim costs application, and in circumstances where the solicitors might reasonably be expected to have kept reasonable ledgers which will have been provided in detailed bills to their clients.

The judge accepted that the sums involved in the underlying claim were huge and that it would be said that the claim was of considerable importance to the parties. Without the Bill of Costs and without Points of Dispute, it was difficult to form a view with any confidence that the further security sought was reasonably necessary for the “working out” of the claim or whether it was security to pursue a significantly overstated claim for costs. The judge’s concern was that it may be the latter but, in any event, unless he was confident that it was the former, it seemed plain from first principles that he should not in his discretion grant it.

Quantum

The judge went on to consider what amount of security might have been appropriate, had jurisdiction been established and the discretion exercised in the Applicants’ favour.

The judge held that it was impossible to say with any confidence how long a detailed assessment in this case would take, certainly without Points of Dispute. However neither party was suggesting that there were any particularly difficult features to the assessment.

The judge could see that junior costs counsel might be instructed to deal with hourly rates, if in dispute, and counsel’s fees. Such counsel might reasonably be expected, on hourly rates of circa £250-325 per hour, possibly for one day, so that the fee might be put at about £7,000-9,000. One might reasonably expect a costs draftsman and/or a costs lawyer to be primarily concerned with the Replies, if any were required. Such an individual, having been involved with preparing the Bill of Costs and having already considered the underlying files, would be familiar with the documentation, and could ordinarily be expected to deal with the rest of the assessment.

There would be work preparing the files for submission to the court and ordinarily a short inter partes bundle. However, files could be expected to be in good order. Those files should not be filleted — the full files should be provided to the court. It should not take a costs draftsman familiar with the files long bookmarking the relevant documentation so that they can be shown to the assessing judge. The most demanding element of this part of the assessment is retrieving the relevant documents and if they cannot be found, explaining their absence. But in any event the assessment generally just involves going through the documents, most of which speak for themselves, and by process of sampling and extrapolating reasonable sums, a well-ordered file should not take a long time to assess.

The judge indicated that detailed assessment in this case, assuming the typical points are taken, might be nearer 5 days, if the file is well ordered and the representation effective. That may be optimistic. It could take longer. If a long time is spent explaining why documents have not been produced to the court pursuant to the normal order for production, it could take substantially longer, but that will be a matter which might lie at the door of the receiving party. But in any event dealing with the ‘nuts and bolts’ of the assessment is rarely for counsel and normally appropriate for a costs draftsman or a costs lawyer, with limited involvement of the more senior fee earners.

In short, the judge would reckon the future costs of the detailed assessment for the purposes of security to be nearer to the relatively low £10,000s. This was a fraction of the costs said to have been incurred, albeit by both parties, in the application.

It followed that even if the judge had been persuaded to give further security, he would not have done so on the basis of the estimate of costs provided by the Applicants. It was very difficult to estimate the costs of a detailed assessment in circumstances where the judge did not have the Points of Dispute. He could not see why he should not assume that the assessment would be undertaken in an efficient manner and the underlying files were well kept and in order. But whatever the reasonable figure, it struck the judge that it was a sum that was as likely to fall within a margin of error on the initial award of security for costs or the awards of interim payment costs — a matter which might confirm his concerns about proportionality and the decisions he had set out above.

The application was dismissed.

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The Senior Courts Costs Office’s decision in MT Construction Limited v Frieze [2026] EWHC 813 (SCCO) addresses the requirements for setting aside a default costs certificate under CPR 47.12, both on the mandatory ground that the receiving party was not entitled to obtain it and on the discretionary ground that there is good reason for the detailed assessment to continue.

Background

MT Construction Limited brought an application for an injunction against Dennis Frieze and Anne Saunders. By an order dated 17 July 2025, the Defendants were ordered to pay the Claimant’s costs of that application on the indemnity basis, to be assessed if not agreed. The order also provided for a payment on account of £20,000, which was duly made.

The Claimant’s costs agents, TLS, prepared a Bill of Costs and Notice of Commencement and began attempts to serve the Service Pack on the Defendants’ solicitors, Hunters Solicitors, from September 2025 onwards. Those attempts were met with some difficulty: Hunters would not confirm whether the Bill had been received when first served by post, nor would they confirm whether they would accept service by email. On 17 October 2025, TLS served the Service Pack by first class post, and Royal Mail tracking confirmed delivery on 20 October 2025. The Notice of Commencement stipulated a deadline of 11 November 2025 for Points of Dispute.

Also on 17 October 2025, a telephone call took place between Mr Collins of TLS and Mr McGuinness of Hunters Solicitors. The parties’ accounts of that call diverged in a material respect. Mr McGuinness’s evidence was that Mr Collins had agreed in principle to grant a 21-day extension for Points of Dispute if service by email were accepted. Mr Collins’s evidence, supported by a file note made on the same day, was that the call recorded only that Hunters did not have instructions for accepting service by email, with no agreement as to any extension.

On Saturday 8 November 2025, Hunters sent an email purporting to record that an agreement had been reached: that if service by email were accepted, 21 days for Points of Dispute would be agreed, and confirming that this was agreeable to Hunters. By that point, Hunters had been in possession of the correctly served Service Pack for 19 days. On Tuesday 11 November 2025, TLS replied by email confirming that Points of Dispute remained due by close of play that day and warning that a request for a Default Costs Certificate (“DCC”) would be filed if Points of Dispute were not received by 4 pm. No Points of Dispute were served, and no application was made to the court for an extension of time. On 12 November 2025, TLS filed a request for a DCC, which was sealed by the court on 14 November 2025, communicated to Hunters by email the same day, and delivered by post on 17 November 2025.

On 28 November 2025, the Defendants issued an application to set aside the DCC, supported by a witness statement from Mr McGuinness. Hunters Solicitors were subsequently intervened into by the Solicitors Regulation Authority on 4 March 2026, and Mr McGuinness moved to Alpha Alexis Law Firm, where he continued to act under the supervision of Mr Mahesh Kakkar.

In open correspondence in December 2025, the Claimant offered to consent to the DCC being varied to remove the VAT element, which would have reduced the certified sum from £47,005 to £39,271. The Defendants did not accept that offer and instead pursued the application to set aside the DCC in its entirety. Points of Dispute were not served with the set-aside application and were not served until shortly before the hearing on 25 March 2026. The matter came before Deputy Costs Judge Erwin-Jones, with judgment handed down on 8 April 2026.

Costs Issues Before the Court

The central issue before the court was whether the Default Costs Certificate dated 14 November 2025 should be set aside under CPR 47.12. Two distinct grounds were in play.

The first was the mandatory ground under CPR 47.12(1), which requires the court to set aside a DCC if it is shown that the receiving party was not entitled to obtain it in the first place. The Defendants contended that a binding agreement had been reached to extend the deadline for Points of Dispute to 1 December 2025, such that the DCC had been obtained prematurely and the receiving party had not been entitled to it.

The second was the discretionary ground under CPR 47.12(2), which permits the court to set aside or vary a DCC where there is some other good reason for the detailed assessment proceedings to continue. Practice Direction 47, paragraph 11.2 sets out the procedural requirements for such an application: it must be supported by evidence, the court must consider promptness, and as a general rule the applicant must file a draft of the Points of Dispute it proposes to serve if the certificate is set aside.

Where the mandatory ground is not established and the court exercises its discretion under CPR 47.12(2), the three-stage framework from Denton v White [2014] EWCA Civ 906 applies. The court is required to assess the seriousness and significance of the breach, the reasons for it, and all the circumstances of the case, including the need to conduct litigation efficiently, proportionately, and in a manner that enforces compliance with the Rules, Practice Directions, and audits. It is clear that good reason for the failure must be established before the court proceeds to consider the wider circumstances.

A further, narrower issue arose in relation to the VAT element of the DCC. The Claimant had offered in open correspondence to consent to the DCC being varied to remove the VAT element, on the basis that the VAT certificate within the Bill confirmed that the Claimant was able to recover VAT as input tax from HMRC. The certified sum of £47,005 would, on that basis, be reduced to £39,271. The Defendants did not accept that offer and pursued the full set-aside application instead.

The costs of the set-aside application itself were also in issue, with the Claimant seeking a summary assessment of its costs of and occasioned by the application.

The Parties’ Positions

The Defendants argued, in the first instance, that the mandatory ground under CPR 47.12(1) was made out. Their case was that a binding agreement had been reached on 17 October 2025 during the telephone call between Mr Collins and Mr McGuinness, to the effect that a 21-day extension would be granted for Points of Dispute in exchange for acceptance of email service. The email of 8 November 2025 was said to record and give effect to that agreement, extending the deadline to 1 December 2025. On that basis, the DCC had been obtained before the extended deadline had expired and the receiving party had not been entitled to it.

In the alternative, the Defendants relied on the discretionary ground under CPR 47.12(2). They submitted that the failure to serve Points of Dispute in time was inadvertent, that Mr McGuinness had genuinely believed an extension was in place until 1 December 2025, and that the period around 11 November 2025 had been one of heavy professional commitments involving High Court work in Birmingham, Manchester, and London. The Defendants further argued that the draft Points of Dispute served before the hearing demonstrated genuine issues to be resolved on assessment, and that setting aside the DCC would cause no prejudice to the Claimant, given that £20,000 had already been paid on account and the remaining sum in dispute was relatively modest.

The Claimant resisted the application in its entirety. On the mandatory ground, the Claimant’s position was that no binding extension agreement had been reached. Mr Collins’s evidence, supported by his contemporaneous file note, was that the 17 October call had recorded only that Hunters did not have instructions to accept email service, with no agreement as to any extension. The Claimant submitted that the email of 8 November 2025, sent unilaterally by Hunters on a Saturday with one working day remaining before the deadline, could not constitute a written agreement of both parties for the purposes of CPR 2.11, and that TLS’s silence in response to that email did not amount to agreement, particularly given that TLS’s email of 11 November 2025 had expressly and unambiguously asserted the original deadline.

On the discretionary ground, the Claimant submitted that the breach was serious and significant, that no good reason had been established for it, and that the reasons advanced—a mistaken belief in an extension and pressure of other commitments—were insufficient. The Claimant further contended that the draft Points of Dispute were in general terms and did not identify with particularity what items were to be challenged or on what basis, and that it would be disproportionate for the assessment to continue given that the proposed costs of the hearing alone totalled over £17,000 in a claim where the net sum in dispute was approximately £39,000 and £20,000 had already been paid on account.

The Court’s Decision

Deputy Costs Judge Erwin-Jones refused the application to set aside the DCC, but varied it to remove the irrecoverable VAT element, reducing the certified sum to £39,271. The varied DCC was ordered to stand as a costs order in the proceedings in respect of the Claimant’s costs of the injunction application.

The Mandatory Ground: CPR 47.12(1)

The judge was satisfied that the Service Pack was validly served and delivered on 20 October 2025 as confirmed by Royal Mail tracking. The period of 21 days prescribed by CPR 47.19 therefore expired on 11 November 2025. On the factual dispute concerning the telephone call of 17 October 2025, the judge preferred Mr Collins’s version of events on the balance of probabilities. The judge found that the email of 8 November 2025 did not satisfy the requirements of CPR 2.11 for a binding written agreement to vary time. An email sent unilaterally by one party after having received documents by postal service, purporting to record the terms of an earlier oral conversation 20 days earlier which the other party denied having had in those terms, could not of itself constitute a written agreement of both parties. TLS’s immediate silence in response to that email did not constitute agreement, particularly since their email of 11 November 2025 expressly and unambiguously asserted the original deadline.

The judge was conscious that 8 November was a Saturday, leaving one whole working day before the deadline at a time when the deadline must have been apparent to Hunters. Having considered all of the evidence, the judge was not persuaded that a binding extension agreement had been reached. The mandatory ground under CPR 47.12(1) was therefore not established.

The Discretionary Ground: CPR 47.12(2)

Turning to the court’s discretion under CPR 47.12(2) and applying the Denton framework, the judge found that the breach was serious and significant. The Defendants’ solicitors had been in possession of the Bill by service since at least 20 October 2025 and almost certainly for several weeks if not over a month beforehand. The 21-day period prescribed by CPR 47.19 is sufficient in all but the most complex cases, and no Points of Dispute were served by the deadline or indeed before the week of the hearing.

Mr McGuinness’s reasons for the breach were that the failure was inadvertent, that he believed there was an extension in place until 1 December, and that the period around 11 November 2025 he was engaged in heavy High Court commitments in Birmingham, Manchester and London. The judge noted that there was no evidence about the systems in place at his firm for supervision, for receiving and distributing email and postal correspondence, no evidence about diary management systems, no explanation as to why email service was initially refused, and nothing to explain what the systems were to cover the work of a busy fee earner working all over the country.

Even accepting that Mr McGuinness believed there was an extension in place, that belief was not objectively reasonable in the absence of any written agreement from TLS and in view of the fact that the Bill of Costs and Notice of Commencement had been served on 20 October and sent by email previously. The unanswered email of 8 November 2025 did not constitute any agreement, but it was relevant that even if one assumed the deadline was 1 December 2025, Points of Dispute were still not served by that date.

The reason for the breach was at best a combination of a mistaken belief in an extension and the pressure of other commitments. These were not sufficiently good reasons within the meaning of the authorities. The court took into account the need to conduct litigation efficiently and at proportionate cost. The Defendants argued that the Points of Dispute now served demonstrated genuine issues to be resolved on assessment and that setting aside the DCC would cause no prejudice to the Claimant because the Claimant had already received £20,000 on account.

The judge found that the draft Points of Dispute served before the hearing were in general terms and did not identify with any specific particularity what items were to be challenged and on what basis. In any event, the mere existence of draft Points of Dispute in a claim of around £39,000 net where £20,000 had already been paid on account did not of itself demonstrate there was good reason for the assessment to continue. It would be disproportionate for it to do so in any event. The proposed costs schedules for the hearing alone together totalled over £17,000.

On promptness, there was a delay of between 14 and 11 days before the application to set aside was issued. Mr McGuinness explained this by reference to the SRA intervention and transition. The judge took that into account but noted that the SRA intervention did not occur until 4 March 2026, well after the application was issued. The delay in November was not explained by that.

The judge was not satisfied that a good reason had been shown for the detailed assessment to continue. The mandatory grounds failed and the discretionary grounds also failed. The application was therefore refused.

Variation for VAT

The Claimant had offered in open correspondence to consent to the DCC being varied to remove the VAT element. In any event, the VAT certificate within the Bill confirmed that the Claimant was able to recover VAT as input tax from HMRC. The DCC was varied under CPR 47.12(2) to reduce the certified sum to £39,271. The payment of £20,000 made on account on 14 August 2025 was to be credited against the varied DCC sum in the ordinary way upon enforcement.

Costs of the Application

The Claimant had succeeded in resisting the application to set aside the DCC. The Defendants brought the application and failed on a substantive ground. The set-aside was refused. The variation of the DCC to remove VAT was, on the Claimant’s open offer, always going to happen. The Defendants chose not to accept the offer to vary and instead pursued a full set-aside. Accordingly, the Defendants were ordered to pay the Claimant’s costs of and occasioned by the application. The judge summarily assessed those costs at £4,250, noting that no VAT was claimed.

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The Senior Courts Costs Office’s decision in Hammond v Herrington Carmichael LLP [2026] EWHC 701 (SCCO) concerned whether 29 invoices totalling approximately £174,183.36 delivered during family finance remedy proceedings constituted interim statute bills or a series of interim payments forming a single Chamberlain bill, the resolution of which determined the applicable time limits under section 70 of the Solicitors Act 1974.

Background

The Defendant had been instructed by the Claimant from 10 August 2023 to 26 June 2025 (with an effective hiatus between January and March 2025) in family finance remedy proceedings. The litigation was protracted and comparatively complex. Over the course of the retainer, the parties concluded four separate but continuous retainers. The Defendant delivered 29 invoices between 25 August 2023 and 7 August 2025, covering costs, disbursements and VAT in the total sum of approximately £174,183.36. It was common ground that many of those invoices had been paid or part-paid by the Claimant.

The Claimant applied for a detailed assessment of all 29 invoices pursuant to s.70 SA 1974. It was agreed by both parties that two invoices—225141 (dated 27 June 2025) and 226664 (dated 7 August 2025)—could properly be the subject of such an assessment. The Defendant challenged the Claimant’s entitlement to assessment in respect of the remaining 27 invoices.

The Part 8 claim was issued by the Claimant on 14 August 2025. The matter came before Costs Judge Whalan in the Senior Courts Costs Office, with the hearing taking place on 23 February 2026. Judgment was handed down on 24 March 2026.

The Claimant appeared in person. Ms Aldred appeared on behalf of the Defendant, instructed by Herrington Carmichael LLP.

One notable feature of the underlying litigation was that the Claimant’s legal costs had been substantially funded by his brother-in-law, Mr Garry Moore. After the Claimant had paid the first nine invoices himself (totalling approximately £39,461), he effectively ran out of funds. Thereafter, invoices were settled from monies drawn down from an escrow account funded by Mr Moore, who deposited a total of £120,000 into that account. It was conceded by the Claimant that the monies drawn down from the escrow account constituted “payments” for the purposes of the SA 1974.

The substantive family proceedings had attracted judicial comment regarding the level of costs incurred. On 26 June 2025, HHJ Farquhar observed that the combined costs of both parties amounted to approximately £366,000, representing 73% of the sole non-pension asset, a property valued at £500,000. The judge described the costs as “frankly ludicrous” and referred to “litigation misconduct” on the part of the parties. These observations formed part of the backdrop to the Claimant’s application.

Costs Issues Before the Court

The judgment addressed two principal issues. The first was whether the 29 invoices delivered by the Defendant constituted interim statute bills or whether they formed part of a series of interim invoices delivered on account, which together comprised a single Chamberlain bill that became final only upon delivery of the last invoice in August 2025. The resolution of this question was determinative of the Claimant’s right to seek assessment under the SA 1974, given the time limits imposed by that Act.

The second issue, which arose in the alternative, was whether the Claimant could demonstrate “special circumstances” pursuant to s.70(3) SA 1974, sufficient to justify the court ordering a detailed assessment of those invoices in respect of which the primary time limits had expired or in respect of which the court’s discretion would otherwise need to be exercised.

The practical significance of the interim statute bill/Chamberlain bill distinction is well established. Where invoices are properly characterised as interim statute bills, each bill is treated as a self-contained, final bill for the period it covers. The time limits in s.70 SA 1974 run from the delivery and payment of each individual interim statute bill. By contrast, where invoices are merely interim requests for payment forming part of a Chamberlain bill, the entire series is treated as a single bill, and the s.70 time limits run only from delivery of the final invoice. The Claimant’s case depended on establishing the latter characterisation, which would have brought all 29 invoices within the scope of a single assessment application.

The s.70 SA 1974 framework provides that under s.70(1), where an application for assessment is made within one month of delivery of a bill, the court must order assessment without requiring payment into court. Under s.70(2), where the application is made after that one-month period, the court has a discretion to order assessment on such terms as it thinks fit. Under s.70(3), where the application is made after the expiration of 12 months from delivery of the bill, after judgment has been obtained, or after the bill has been paid (but within 12 months of payment), no order for assessment shall be made except in special circumstances. Under s.70(4), the court has no power to order assessment on the application of the paying party after the expiration of 12 months from payment of the bill.

Applying those provisions to the facts, the court identified three distinct categories of invoices. First, nine invoices delivered and paid more than 12 months before the issue of the Part 8 claim on 14 August 2025 fell entirely outside the court’s jurisdiction under s.70(4). Second, three invoices (211203, 211953 and 211946) could only be assessed if special circumstances were demonstrated under s.70(3). Third, the remaining 15 disputed invoices (dated between 27 August 2024 and 29 May 2025) were subject to the court’s general discretion under s.70(2).

The Parties’ Positions

Interim Statute Bills or Chamberlain Bill

The Claimant submitted that the invoices delivered by the Defendant did not constitute interim statute bills but rather formed part of a single, entire Chamberlain bill. He argued that the Defendant had acted under a single continuous retainer (matter reference HAM540) throughout the relevant period, that the invoices were sequential and related to the same litigation, and that work was ongoing and carried forward between invoices. In oral submissions, the Claimant emphasised that the invoices comprised “very much a running account”, notwithstanding his concession that each invoice covered a defined period. His position was that he had been discharging his fees by instalments as the case progressed, in circumstances where the account, like the litigation, comprised a continuous process.

The Defendant submitted that the invoices were interim statute bills. It was argued that the Client Care Letters, Terms of Business Letters and, in particular, the Standard Terms of Engagement, contained a clear and unambiguous contractual right to render statute bills as final bills for each relevant period. The Defendant relied on three authorities: Richard Slade & Company plc v Erlam [2022] EWHC 325 (QB); Abedi v Penningtons [2000] 2 Costs L.L. 205; and Boodia v Richard Slade & Company [2024] Costs L.L. 753. From those authorities, three general propositions were drawn: the burden of proving that the retainer provides for interim statute bills falls on the receiving party; the retainer must be construed as a whole; and any fundamental ambiguity should be resolved against a construction that permits interim statute bills. The Defendant submitted that, on the proper construction of the retainer documents, there was no such ambiguity. The Standard Terms of Engagement expressly stated that any reference to “an interim invoice” meant an interim statute bill, and each invoice was a complete and final account for the relevant period, with no accumulation of charges between invoices.

The Court’s Analysis

Contractual Construction

Costs Judge Whalan accepted the three general propositions derived from the authorities cited by the Defendant. The burden of proving that the retainer provides for the delivery of interim statute bills, in contrast to requests for interim payments generally, falls on the receiving party. When construing the retainer, it is necessary to refer to the relevant contractual provisions as a whole. In determining whether a retainer does allow the solicitor to render interim statute bills, the court should resolve any fundamental ambiguity against that construction.

The parties had effectively agreed four separate retainers within the relevant period. Each contractual agreement comprised a Client Care Letter (sometimes supplemented by a Terms of Business Letter) and annexed Standard Terms of Engagement. The Standard Terms of Engagement were revised by the Defendant on several occasions during the relevant period, but the following provisions were cited in each version or iteration of the Terms:

Invoicing

In many cases, we will normally render our invoice at or towards the end of your matter (a Final Bill). However, if your matter becomes protracted or we have notified you that Interim Statutory Bills (ISBs) will be issued regularly as the case progresses, we will deliver an ISB to you from time to time. An ISB is an invoice covering the work carried out up to the date of the ISB or a specified earlier date, and issued before the matter ends. This will help you to budget for costs. Also, we may ask you for further payments to settle disbursements that are in excess of the initial payment on account. The initial sum paid on account will not be accounted for in an ISB but will be shown as a credit in the Final Bill. Any reference in correspondence or on invoices to “an interim invoice” means an ISB.

The invoices delivered by the Defendant to the Claimant followed a common format, insofar as they comprised the Invoice, a breakdown or Billing Guide and a Covering Letter. Each invoice set out the costs, expenses and disbursements incurred for the relevant period and provided a payment due date. The invoice was signed and included a note that the Claimant may be entitled to have his charges reviewed by the Court under sections 70, 71 and 72 of the Solicitors Act 1974. The Billing Guide outlined a very detailed breakdown (by date, time and fee earner, with an accompanying narrative) of all the costs and charges incurred during the relevant period. The Covering Letter referred to the invoice and summarised sums due from the Claimant.

Costs Judge Whalan was satisfied, on the proper contractual interpretation of the retainers, that the invoices delivered by the Defendant to the Claimant were interim statute bills, and not just a series of interim invoices delivered as part of a Chamberlain bill. The Terms of Engagement were unequivocally clear. They provided for the delivery of interim invoices and stated that they had the status of interim statute bills. Indeed, the ‘Invoicing’ provision provided for no real alternative characterisation, given that: “Any reference in correspondence or on invoices to ‘an interim invoice’ means an ISB”. Invoices delivered by the Defendant to the Claimant exhibited all the relevant requirements of interim statute bills. They were drafted with considerable detail, meaning that the Claimant was provided with a clear breakdown of the costs, expenses and disbursements. They were signed, provided a payment due date and displayed clearly his right of assessment under the SA 1974.

The court found accordingly that the 29 invoices delivered by the Defendant to the Claimant between 25 August 2023 and 7 August 2025 were interim statute bills within the meaning of the 1974 Act.

Application of Section 70

The effect of this finding, in combination with the fact that various monies had been transferred from (or on behalf of) the Claimant to the Defendant constituting payment within the meaning of the 1974 Act (as confirmed in Oakwood Solicitors v Menzies [2024] UKSC 34), was that some of the invoices delivered by the Defendant to the Claimant could not be the subject of a SA 1974 assessment. Specifically, the court could not order an assessment of the nine invoices delivered and paid more than 12 months before the Claimant issued his Part 8 claim on 14 August 2025. They were: 200405 (25 August 2023), 201690 (29 September 2023), 202391 (27 October 2023), 204546 (21 December 2023), 205426 (30 January 2024), 206520 (28 February 2024), 207616 (28 March 2024), 208840 (2 May 2024) and 210651 (27 June 2024). These fell outside the court’s jurisdiction under s.70(4).

Insofar as the remaining 18 disputed invoices delivered (and paid/part-paid) between 18 July 2024 and 29 May 2025 were concerned, an assessment of 3 invoices—211203 (18 July 2024), 211953 and 211946 (31 July 2024)—could only be ordered at the discretion of the court and subject to the finding of “special circumstances”, pursuant to s.70(3) of the 1974 Act. The other 15 disputed invoices (dated between 27 August 2024 and 29 May 2025) were subject simply to the discretionary power of the court under s.70(2).

Special Circumstances

In Falmouth House Freehold Co Ltd v Morgan Walker LLP [2010] EWHC 3092 (Ch), Lewison J, having reviewed the case law relevant to special circumstances, stated that whether special circumstances exist is essentially a value judgement. It depends on comparing the particular case with the run of the mill case in order to decide whether a detailed assessment in the particular case is justified, despite the restrictions contained in section 70(2). Special circumstances do not have to be exceptional circumstances. As Costs Judge Rowley confirmed in Masters v Charles Fussell & Co LLP [2021] EWHC B1 (Costs), they can be established by something out of the ordinary course, sufficient to justify departure from the general position under s.70 of the 1974 Act.

In Raydens Ltd v Cole [2021] 7 WLUK 539, Costs Judge Leonard, in citing with approval the guidance of Lewison J in Falmouth, added that a helpful test is to consider whether there is something in the fees claimed by the invoices, or in the circumstances in which they were charged, which “call for an explanation”. If they do call for an explanation or further scrutiny, that is a strong indication that there should be an assessment. This is not the time for the explanation to be given and evaluated in detail. That is the purpose of the assessment procedure and the scrutiny it provides.

The Claimant cited four potential special circumstances: (i) judicial findings on costs, proportionality and litigation conduct; (ii) pension disclosure issue; (iii) representation and escalation of costs; and (iv) assertions concerning third parties (Garry Moore).

The Claimant’s core assertion was that the Defendant allowed his litigation costs to increase exponentially to a point where they were unreasonable and disproportionate. He cited specifically the comment made on 26 June 2025 by HHJ Farquhar during the substantive proceedings, who stated that the costs were “frankly ludicrous” and that the total costs between the two parties were £366,000, representing 73% of the sole non-pension asset. The judge went on to refer to “litigation misconduct” and stated: “I simply look at the costs and accept there is litigation misconduct”. The third issue, representation and escalation of costs, was an essentially amplified repetition of this central submission.

During the interlocutory process of the financial proceedings litigation, an issue arose as to the valuation of the Claimant’s pension. Papers disclosed by or on behalf of the Claimant failed (at least initially) to include a Cash Equivalent Value, and it seems that the submission contributed to some confusion or protraction of the proceedings. The Claimant cited a paragraph from the Respondent’s s.25 statement suggesting that had a CEV been provided earlier, it may not have been necessary to pursue whether it was possible to serve a pension order in Ireland. It was submitted that the omission was an error and that this mistake, in turn, contributed to the unreasonable inflation of costs.

The Claimant submitted that the arrangement whereby his legal costs were largely paid or indemnified by Mr Garry Moore, his brother-in-law, contrasted with the run of the mill case and justified a detailed assessment.

The Defendant submitted that the Claimant’s special circumstances submissions “do not bear scrutiny”. The fees, expenses and disbursements were incurred on the instruction of the Claimant who, like his ex-wife, was determined to pursue the litigation “to the bitter end”. At all times the Claimant knew about the costs that he was incurring, as he was being billed monthly (or at least very regularly), and he latterly had regular conversations with the firm about costs. The fact that the costs incurred may be held to be disproportionate on an inter partes evaluation is of little or no relevance to a Solicitors Act detailed assessment, as the bill is assessed on the indemnity basis. The Claimant made no contemporary criticism of his legal representation by the Defendant. His subsequent allegations were unpersuasive, as demonstrated by the fact that he was willing to enter (or re-engage) in four retainers, culminating in an agreement dated 24 March 2025. There was no evidence at all to suggest that the Defendant’s work for the Claimant was inadequate and that this led to the unreasonable inflation of his costs liability. Insofar as the pension issue was concerned, the error was essentially that of the Respondent, for failing to acknowledge or accept that a foreign (Irish) pension could never have been made subject to a pension sharing order by an English court. The escrow account was a necessary security against non-payment by the Claimant, in circumstances where the Defendant would not have continued to act without such a guarantee of reasonably prompt payment. The arrangement was endorsed enthusiastically by the parties—the Claimant, Mr Moore and the Defendant—and it was conceded that monies drawn down on this account constituted “payments” for the purposes of the SA 1974. There was no credible or sustainable suggestion that these payments were in any way unauthorised.

The Defendant further submitted that a number of additional points militated against the court exercising the discretion in favour of the Claimant. Throughout the period of his representation, the Claimant gave repeated assurances to the Defendant that his costs would be paid, assurances which encouraged the Defendant to continue to act on his behalf, particularly after January-March 2025, when the firm had come off the court record. The Claimant was a capable litigant in person who exhibited a clear understanding of time limits; he started the Part 8 claim himself. The fact that his substantive costs were underwritten by Mr Moore suggested that he may ultimately struggle to satisfy any order for costs made following ongoing assessment proceedings.

Decision on Special Circumstances

Costs Judge Whalan was not satisfied that the Claimant had demonstrated the existence of special circumstances. There was nothing, in the court’s conclusion, that “calls for an explanation” or the scrutiny of the court. Pursuant to the retainers, the Defendant delivered regular, itemised invoices that exhibited very detailed breakdowns of the profit costs, expenses and disbursements that the Claimant had incurred during each relevant period. These costs were incurred pursuant to his instruction and he was aware of his ongoing, accumulating liability. Most of the invoices delivered by the Defendant were paid, within the meaning of the SA 1974.

Although the substantive parties’ costs may well have been incurred (individually and collectively) to a level that was disproportionate inter partes, that was of no general relevance to a solicitor/client assessment, which proceeds on the indemnity basis. This distinction between inter partes proportionality and indemnity basis assessment was the key reason why the judge found the judicial criticism of costs levels irrelevant to the special circumstances analysis. It was hard to foresee that the presumption of reasonableness would be dislodged on the particular facts of this case. No identifiable or sustainable criticism was made of the Defendant during the period(s) of representation, and the fact that the Claimant was content to be represented by the firm was illustrated by his willingness to re-engage the Defendant after March 2025. This absence of contemporary criticism and the Claimant’s voluntary re-engagement directly undermined his retrospective complaints about representation quality and cost escalation.

Insofar as special circumstances were not demonstrated, it followed that the court could not exercise its discretion to order the detailed assessment of the 3 invoices 211203 (18 July 2024), 211953 and 211946 (31 July 2024). Insofar as the remaining 15 disputed invoices were concerned, it was not appropriate, having regard to the matters set out in paragraphs 29 and 30 of the judgment (including the Claimant’s repeated assurances of payment, his sophistication as a litigant in person, and the potential difficulty in satisfying any costs order), for the court to exercise discretion to order a detailed assessment.

Conclusion

The court concluded that the retainers concluded by the Claimant and the Defendant provided for the delivery of interim statute bills. The invoices delivered by the Defendant to the Claimant between 25 August 2023 and 7 August 2025 were interim statute bills. The Claimant was not entitled to an assessment of the invoices that were delivered and paid between 25 August 2023 and 27 June 2024. The Claimant was not entitled to an assessment of the invoices delivered and paid/part-paid dated between 18 July 2024 and 29 May 2025. There were no special circumstances arising in this case and, at the discretion of the court, a detailed assessment was refused. The Claimant was—by concession and agreement—entitled to a detailed assessment of two invoices, 225141 (27 June 2025) and 226664 (7 August 2025), should he wish to pursue this.

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Senior Costs Judge Establishes 25% Markup Cap For Medical Reporting Organisation Fees

Detailed Assessment, Disbursements, New Costs Blog, Personal Injury

The Senior Courts Costs Office’s decision in JXX v Archibald & Anr [2026] EWHC 630 (SCCO) establishes a new framework for assessing Medical Reporting Organisation fees in personal injury litigation, rejecting both parties’ primary submissions and crafting a novel middle path.

Background

This matter concerned the recoverability of Medical Reporting Organisations fees (MROs) in personal injury litigation. The Senior Costs Judge was required to determine the approach to assessing such fees following the settlement of all other costs in two lead cases: JXX v Archibald & Anr and HLA v LXA & Anr.

In JXX, a reserved judgment was handed down on 17 January 2025. This judgment put the claimant to an election regarding providing further information on medical evidence fees. The claimant chose to provide that information with the agreement of the MRO involved, Medical and Professional Services Limited (MAPS), which was subsequently joined as a Third Party. Given the significance of the issues, an application was made in the related case of HLA for it to be heard concurrently. This was granted, and the MRO in that case, Premex Services Limited (Premex), was also joined as a Third Party. An application by the Association of Medical Reporting Organisations (AMRO) to intervene was refused in July 2025.

By early October and November 2025 respectively, the bills of costs in both the JXX and HLA cases were agreed save for the fees attributable to the MROs. The experts’ own fees were also agreed. Consequently, the hearing between 17 and 20 November 2025 constituted a detailed assessment focused solely on the recoverability and quantum of the MRO fees. The parties, including the third-party MROs, filed 27 witness statements, with half a dozen witnesses cross-examined on behalf of the defendants.

Costs Issues Before the Court

The central issue was how the court should assess the reasonableness of fees charged by an MRO for its services in arranging and administering the procurement of medical expert evidence. The dispute crystallised around two competing legal and evidential approaches.

The first, advocated by the defendants, was based on the county court decision in Stringer v Copley (2002). This approach, sometimes called “the Stringer Cap”, required the receiving party to demonstrate that the MRO’s charges did not exceed the reasonable and proportionate cost of the work if it had been done by the instructing solicitors themselves. This necessitated a detailed breakdown distinguishing the expert’s fee from the MRO’s charges.

The second approach, advanced by the claimants and the MROs, argued that MRO fees should be treated as a disbursement and assessed for reasonableness in amount on a holistic basis, looking at the aggregate invoice. They contended that a retrospective, time-based breakdown was artificial and impossible as MROs do not record time like solicitors. Their model involved applying a percentage markup to the expert’s fee, calculated on a macro, business-wide basis rather than being specific to individual cases.

The court was therefore required to determine: (1) the correct characterisation of MRO fees (as outsourced solicitors’ work or a disbursement); (2) the appropriate legal test for assessing their reasonableness; (3) whether any elements of the fee (such as costs associated with deferred payment or write-off facilities) were irrecoverable as “funding costs”; and (4) if recoverable, how to quantify a reasonable fee.

The Parties’ Positions

The Defendants’ Position: The defendants, represented by Roger Mallalieu KC, argued that the court should follow the approach established in Stringer v Copley and affirmed in subsequent cases such as the Claims Direct Test Cases and CXR v Dome Holdings Ltd. They submitted that MRO fees were only recoverable if shown not to exceed the cost of a solicitor doing the work. This required a clear breakdown separating the expert’s fee from the MRO’s administrative charges. The defendants contended that the claimants had failed to provide sufficient evidence to satisfy this test. They also argued that elements of the MRO fee relating to deferred payment terms and write-off facilities constituted irrecoverable “funding costs” pursuant to the principle in Hunt v R.M. Douglas (Roofing) Ltd. In the absence of a breakdown to excise these irrecoverable elements, the entire MRO fee should be disallowed.

The Claimants’ and MROs’ Position: The claimants and the joined MROs (represented by Benjamin Williams KC, Robert Marven KC and Nicholas Bacon KC) contended that the Stringer approach was flawed. They argued that MRO fees were properly characterised as a disbursement, not outsourced profit costs. The correct test was simply whether the aggregate fee for the medical evidence (expert’s fee plus MRO charge) was reasonable and proportionate. They emphasised the valuable services provided by MROs, including maintaining expert databases, ensuring compliance, and managing administration efficiently. They denied that their commercial terms involved providing “funding”, arguing that deferred payment was an inherent part of the personal injury costs landscape, analogous to a solicitor’s retainer. They submitted that the fees were set by a competitive market and that the court should not engage in an artificial “deconstruction” of a globally priced service. In the absence of evidence from the defendants showing the fees were unreasonable, they should be allowed in full.

The Court’s Decision

Senior Costs Judge Rowley handed down a detailed judgment which departed from both parties’ primary submissions and established a new framework for assessing MRO fees. The significance of the decision lies in its rejection of both the defendants’ Stringer-based approach and the claimants’ holistic aggregate approach, crafting instead a novel percentage-based cap.

Characterisation and Legal Test: The judge held that MRO fees are a disbursement, not outsourced solicitors’ work. This was the fundamental legal holding that distinguished the judgment from previous approaches. Applying the test from Crane v Canons Leisure Centre, which focuses on the nature of the work done (whether it is solicitors’ work) and where responsibility for the work lies, the judge concluded that the work was not “solicitors’ work” in the requisite sense. The work done by MROs was described in Stringer as “administrative work”, which could be carried out by non-fee earning staff. Furthermore, once the expert was chosen, the MRO was left to organise matters until the report was provided, with responsibility for the report’s contents lying with the expert, not the solicitor. Consequently, the Stringer “cap” – requiring a comparison with a hypothetical solicitor’s cost – was not the correct legal test to apply. The court rejected the defendant’s argument that a quasi-solicitor breakdown was necessary because such a breakdown would be vulnerable to the challenge that the work was administrative rather than legal work in any event, and because the responsibility for the work did not lie with the solicitor in the manner described in Crane.

Recoverability of “Funding Costs”: The court rejected the defendant’s argument that deferred payment terms and write-off facilities rendered the fees irrecoverable. It found these were commercial features of the relationship between solicitors and MROs in a market where all participants typically waited for reimbursement until the end of a case. They did not constitute “funding costs” of the type prohibited by Hunt v Douglas Roofing. The judge’s reasoning was strengthened by a comparative analysis: he noted that experts who were instructed directly also effectively deferred payment, and solicitors operating under CFAs similarly delayed receipt of their fees. The purpose of the MRO terms was to provide medical evidence, not to provide credit, even though deferred payment was a byproduct of the agreement. This was entirely different from a disbursement loan from a bank or other litigation funder. The write-off facility was similarly a commercial element of the wider contractual relationship, not a separate service constituting funding. The judge emphasised that the MRO arrangement was consistent with the broader personal injury costs landscape, where staggered payment was an inherent feature affecting all participants.

Assessment of Reasonableness and Quantum: While rejecting the Stringer breakdown, the judge also rejected the claimants’ argument that the court could do no more than accept the aggregate fee as reasonable based on market competition. The evidence demonstrated that MROs applied a percentage markup to the expert’s fee – the judge accepted this evidence from the MROs themselves. Premex charged 35% or 45% for most evidence, and MAPS most commonly charged 53% but also 30%, with outliers ranging from 20% to 104%. However, the judge rejected the argument that these percentages were made reasonable by market competition or that they should be allowed in full between the parties.

The judge found the “tripartite tension” (where the payer is not the service chooser) meant market competition was an imperfect regulator of reasonableness between the parties. Those ultimately paying for the fees had no say in the competition between MROs. The judge also rejected the claimants’ assertion that MROs negotiated discounted rates with experts. The evidence, save for one expert (Professor Cosker) whose testimony the judge did not find convincing on this point, showed that expert fees were consistent regardless of whether instruction came via an MRO or directly from solicitors. In a market where the MRO placed a percentage markup on the expert’s fees, it would be self-defeating to seek to reduce the figure on which the markup would be applied. The MROs’ own evidence therefore showed that their fees inflated the experts’ fees by the percentage markups claimed.

The judge reached the 25% figure by applying a “cautious approach” based on several factors:

(i) limitations in the receiving parties’ evidence;

(ii) the lack of detailed cost analysis from the MROs demonstrating their cost base;

(iii) the tripartite tension which meant market competition was an imperfect regulator of reasonableness between the parties; and

(iv) the variation in percentages (ranging from 30% to 53% generally, with outliers beyond this) which reflected ongoing commercial relationships between solicitors and MROs rather than case-specific factors justifying different rates.

The 10% increase in Premex’s markup during the HLA case suggested later cases were making up for previous shortfalls rather than reflecting current case profitability.

On this basis, the judge held that a markup of 25% on the expert’s fee represented a reasonable amount recoverable between the parties. Any markup claimed below 25% would be allowed as claimed; any claimed above 25% would be reduced to that figure. Importantly, the judge held that this percentage should apply to the entire expert invoice, including disbursements such as expert travel costs, for reasons of simplicity and practicality. As the judge explained, “the percentage mark up is intended to achieve an overall sum” and allowing it only on certain elements would simply justify a higher percentage on those elements.

The judge concluded that this percentage-based approach provided a practical and fair method of quantification, avoiding the disproportionate cost of detailed deconstruction in every case while ensuring paying parties were not liable for unreasonable charges. He suggested that stating this maximum recoverable percentage on future invoices would assist transparency and contrasted this simple disclosure with the impractical “quasi-solicitors’ breakdown” that would not be workable in practice.

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s71(3) | Beneficiaries Who Pursued Unreasonable Solicitors Act Assessments Bear the Costs Personally

Detailed Assessment, Indemnity Costs, New Costs Blog, Solicitor & Client Costs, Trustees & Estates

The Senior Courts Costs Office’s decision in Tucker & Anor v Howe [2026] EWHC 208 (SCCO) addresses two consequential issues arising from a nine-day detailed assessment of the costs of an estate administrator appointed under probate proceedings.

Background

The matter concerned the detailed assessment of costs under section 71(3) of the Solicitors Act 1974. The costs were those of Mr Mark Keeley, a solicitor and partner at Freeths LLP, who had been appointed as administrator pending suit of the estate of the late Mr Steven Howe. The appointment was made by order of HHJ Pearce on 16 October 2020 within probate proceedings brought by the executrices (the Claimants) to propound Mr Howe’s will against his daughter, the Defendant. Mr Keeley’s appointment authorised him to charge reasonable professional fees and terminated upon the final order in the probate claim.

The probate claim was compromised by a consent order in December 2021. Disputed matters of administration were later resolved by a further consent order made by District Judge Woodward on 21 February 2023. That order provided for the determination of the Administrator’s costs by way of a third-party detailed assessment pursuant to section 71(3) of the 1974 Act, setting out a timetable for the service of a bill, points of dispute, and the commencement of assessment proceedings in the Senior Courts Costs Office if agreement was not reached. The bill for assessment, served pursuant to that order, was drawn in the total sum of £147,436.33 across twelve parts, covering both contentious and non-contentious work under two separate contracts of retainer, together with Mr Keeley’s own professional time costs and counsel’s fees.

The assessment hearing took nine days of court time over three separate periods between April 2024 and February 2025. That duration was largely the result of 67 pages of Points of Dispute which employed the word “staggering” or “staggeringly” 54 times and the word “astonishing” 17 times. The court found none of that hyperbole justified. The bill was assessed at £129,686.76, just below 88% of the amount claimed. The court found the Claimants’ conduct to have been unreasonable to a high degree and ordered them to pay the costs of the assessment on the indemnity basis, summarily assessed at £132,400 exclusive of VAT.

The parties were unable to agree the terms of a final order, leading to a further hearing on two unresolved issues: whether the Claimants or the estate should bear the costs of the assessment, and the recoverability of VAT on those assessment costs. The question of costs liability had taken on particular significance because the estate of Mr Howe was insolvent, an Insolvency Administration Order having been made on 23 July 2025.

Costs Issues Before the Court

Two discrete costs issues required determination. The first was the identity of the party liable to pay the costs of the detailed assessment proceedings. The Claimants argued the burden should fall on the insolvent estate, while Mr Keeley contended the Claimants were personally liable in their capacity as beneficiaries who had applied for the assessment. The second issue was whether Value Added Tax was properly recoverable on the costs of the assessment, with the Claimants arguing that the work constituted a non-taxable self-supply by Freeths.

The Parties’ Positions

On the burden of costs, Professor Watson-Gandy submitted for the Claimants that the central consideration in a section 71(3) assessment was the protection of the estate’s interests, relying on Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15. He argued that the Claimants had participated in their capacity as executrices fulfilling a fiduciary duty to the beneficiaries. He submitted that DJ Woodward’s consent order made no provision for personal liability and that CPR 46.2, which governs costs orders against non-parties, would have been required if such liability was intended.

Mr Latham argued for Mr Keeley that the Claimants had clearly applied for and pursued the assessment in their capacity as beneficiaries, a point reinforced by their own pre-action correspondence and by the legal arguments they had advanced to broaden the scope of the assessment. The Claimants’ representative, Mr Valls, had consistently corresponded on behalf of all the beneficiaries and demanded a detailed assessment in that capacity. The court retained an absolute discretion under section 51 of the Senior Courts Act 1981 and section 71(3)(b) of the 1974 Act. Given the court’s findings on the Claimants’ unreasonable conduct — conduct not attributable to the estate or the beneficiaries as a whole — it was appropriate to order the Claimants to pay the costs personally.

On VAT, Professor Watson-Gandy argued that where solicitors act for themselves in contentious business matters, the supply is not a taxable supply, citing the VAT tribunal decisions in Ralph Arthur Archer v The Commissioners and D A Walker v The Commissioners. It was submitted that Freeths’ bills were addressed to Mr Keeley at Freeths, and that estate accounts bore Freeths’ business address, indicating a self-supply. Mr Latham submitted that the point had not been raised in the Points of Dispute against the main bill and should not be permitted to be raised after the assessment had concluded. On the merits, he argued that Mr Keeley and Freeths were separate legal entities capable of entering into a retainer and that VAT was properly chargeable on Freeths’ supply of services to him.

The Court’s Decision

Burden of the Costs of Assessment

Costs Judge Leonard held that the Claimants were personally liable for the assessment costs in their capacity as beneficiaries. The court rejected the argument that they had acted as executrices, for several reasons. The Claimants had made it clear from the outset that they were acting as beneficiaries. They had relied extensively upon their position as beneficiaries to broaden the scope of their challenges to Mr Keeley’s costs. And the statutory jurisdiction under section 71(3) does not empower the court to order an assessment on the application of a trustee, executor or administrator; it empowers the court to do so on the application of any person interested in the relevant property — in this case, the beneficiaries of Mr Howe’s will.

The description of the Claimants as executrices in the heading of the proceedings and other procedural documents reflected the proper title of the probate proceedings in which the consent order was made. It had no bearing on the substance of the order or the capacity in which the assessment was pursued. The court held that CPR 46.2 had no application because the Claimants were already parties to the assessment proceedings, not non-parties. DJ Woodward’s order made no provision for the costs of the assessment because orders for assessment do not make such provision; the award and quantification of those costs was a matter for the assessing judge.

Even if the court was wrong on any of those points, it accepted Mr Latham’s submissions on the appropriate exercise of discretion. The Claimants had, without ever themselves making any attempt at negotiation, rejected three attempts by Mr Keeley to settle the costs dispute upon receipt of a smaller sum than he was ultimately found to be due on assessment. Had they engaged with those settlement attempts, it would have been possible to avoid the necessity for the court to spend nine days reducing the bill by less than £18,000 inclusive of VAT. It would be unfair for the estate, and potentially for Mr Ross Tucker and Mr Jamie Tucker (who did not participate in the assessment), to bear any part of the burden of the unnecessary costs incurred through the Claimants’ actions.

Recoverability of VAT

The court first held that the Claimants were barred from raising a VAT challenge to the main bill itself, having failed to raise the point in their Points of Dispute. CPR 47.14(6) provides that only items specified in the points of dispute may be raised at the hearing unless the court gives permission, and no such permission had been sought or granted.

On the substantive question of VAT on the costs of the assessment, the court found no basis for the self-supply argument. Mr Keeley and Freeths LLP are separate entities capable of entering into a contract of retainer. Freeths had provided services to Mr Keeley under two contracts of retainer, and VAT was payable on their charges in the usual way. The termination of Mr Keeley’s appointment as administrator did not affect this analysis. On Mr Keeley’s own time costs (Part 10 of the bill), the court held there was no question of self-supply because his services as administrator were supplied to the estate, not to himself. As for the costs of the assessment, Mr Keeley had been represented by counsel instructed by Freeths; he was not representing himself. He had a liability to Freeths for the attendant costs, and they had an obligation to add VAT to their fees and disbursements. The inclusion of Freeths’ address on bills or estate accounts was not to the point.

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CFAs & Success Fees, Detailed Assessment, New Costs Blog, Solicitor & Client Costs

The High Court’s decision in The Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 3362 (Ch) confirms that contractual risk allocation in a CFA precludes unjust enrichment claims where the agreement already provides for the consequences of termination.

Background

The case concerned an appeal by The Winros Partnership (formerly Rosenblatt Solicitors) against a decision of Senior Costs Judge Gordon-Saker in the Senior Courts Costs Office. This was the second appeal in the long-running costs dispute between these parties; the procedural history and the abuse of process challenge to late-raised objections was considered in the First Judgment, covered in our earlier post.

The underlying dispute arose from a series of conditional fee agreements (CFAs) between Rosenblatt and its client, Global Energy Horizons Corporation, for litigation services. Three CFAs were entered: CFA-1, CFA-2, and CFA-3. The relationship deteriorated, leading Rosenblatt to terminate CFA-3 by accepting Global Energy’s repudiatory breach in a letter dated 24 February 2016. This termination was subsequently held to be valid by Trower J in earlier proceedings [§7].

In April 2016, Global Energy commenced proceedings under the Solicitors Act 1974 seeking detailed assessment of four bills rendered by Rosenblatt [§9]. The key bills were a 2012 bill (for work under CFA-2) and a 2016 bill (for work under CFA-3). Trower J had already determined that the 2012 bill was not a statute bill and conferred no immediate right to payment [§11]. The appeal focused on the 2016 bill, delivered shortly after termination, which Rosenblatt sought to have assessed. Rosenblatt had also commenced separate Chancery proceedings for damages arising from the termination, which were stayed pending the outcome of the costs assessment [§12, §37].

At the detailed assessment hearing, Global Energy raised “Objection 1”, contending that Rosenblatt was not entitled to payment of its fees for work done up to the termination date where no “win” had been achieved under the CFA [§4, §13]. The Senior Costs Judge framed the issue as: where a CFA retainer is terminated following the client’s repudiation, is the solicitor entitled to payment of fees if no success fee had been achieved? He concluded that Rosenblatt was not entitled to deliver the 2016 bill, that Global Energy was not liable to pay it, and therefore the bill must be assessed at nil [§65–66]. It was against this decision that Rosenblatt appealed.

Costs Issues Before the Court

The core costs issue was the entitlement of a solicitor to payment of fees under a conditional fee agreement terminated due to the client’s repudiatory breach, where the condition for payment of the success fee (a “win”) had not been met. The appeal required the court to determine:

1. 1. Whether the Senior Costs Judge erred in law in concluding that a solicitor could not recover fees (absent a success fee) following termination for repudiation, distinguishing the position from termination of an “ordinary” retainer for good cause.
  2. Whether Rosenblatt had an alternative claim in unjust enrichment (a quantum meruit) for a total failure of basis, which could found an entitlement to payment, and if so, whether such a claim could properly be determined within a detailed assessment proceeding under the Solicitors Act 1974.

The appeal proceeded on the agreed basis that CFA-3 was an entire contract and had completely replaced CFA-2 [§20, §23].

The Parties’ Positions

Rosenblatt’s Position: Rosenblatt contended the Senior Costs Judge erred. It argued that the long-established common law rule, as stated obiter in Richard Buxton (a firm) v Mills-Owens [2010] EWCA Civ 122, entitled a solicitor terminating an entire contract for good cause to be paid for work done [§27–28]. It submitted this principle should apply equally to CFAs. Crucially, Rosenblatt argued that its primary case on appeal was now a claim in unjust enrichment [§38, §57]. It contended that the basis for its work under CFA-3—performance leading to a “win” or, if not, termination under the agreement’s specific clauses—had totally failed when Global Energy’s repudiatory breach forced termination outside the contractual framework. Rosenblatt submitted that this created a vacuum allowing a restitutionary quantum meruit for the value of services rendered. It argued this claim could and should be determined within the detailed assessment.

Global Energy’s Position: Global Energy supported the Senior Costs Judge’s reasoning. It argued that CFA-3’s express terms, particularly clause 14.3, constituted a detailed contractual scheme allocating risk for termination due to the client’s failure to meet responsibilities, while leaving the common law damages remedy intact. Clause 14.3 provided [§14]:

“Rosenblatt can end this agreement if it believes the Client does not meet its responsibilities. If this happens, the Client will have to pay Rosenblatt’s fees for the work done to the termination date and disbursements.”

By choosing to accept a repudiatory breach instead of invoking clause 14.3, Rosenblatt elected a different remedial path (a claim for damages) [§37]. The contract had anticipated and provided for the scenario, allocating the risk that Rosenblatt would recover no fees if it did not use the clause 14.3 mechanism. Consequently, there was no room for a claim in unjust enrichment, as to allow one would upset the parties’ contractual risk allocation [§47–48]. Global Energy also argued that a freestanding unjust enrichment claim was not a matter for determination on a Solicitors Act assessment.

The Court’s Decision

Mr Justice Marcus Smith dismissed the appeal, upholding the Senior Costs Judge’s decision that the 2016 bill should be assessed at nil [§56]. The court’s analysis focused on two key areas: the claim in unjust enrichment and the propriety of the detailed assessment forum.

On the unjust enrichment claim, the court held there had been no total failure of basis. Applying principles from Dargamo Holdings Ltd v Avonwick Holdings Ltd [2021] EWCA Civ 1149 and Barton v Morris [2023] UKSC 3, the court emphasised the “Obligation Rule” and the importance of respecting contractual risk allocation [§41–49]. CFA-3’s clause 14 was a detailed provision anticipating various contingencies, including client non-performance (clause 14.3). This clause expressly stipulated the financial consequence: payment of normal fees and disbursements, but no success fee [§53].

The court found that while the common law remedy for repudiatory breach co-existed with these contractual terms, its existence did not create a vacuum allowing a restitutionary remedy that duplicated or circumvented the specific risk allocation in clause 14.3 [§54–55]. The parties had expressly agreed what would happen if Rosenblatt ended the agreement because Global Energy did not meet its responsibilities. To permit a quantum meruit claim in these circumstances would unjustly redistribute the risks expressly allocated by the contract. The court concluded that the common law remedy was a “last resort”, really intended for those cases not anticipated in clause 14 [§55]—and since clause 14.3 specifically addressed this scenario, there was no gap for restitution to fill. For substantially the same reasons as the Senior Costs Judge, Rosenblatt’s restitutionary claim failed [§56].

Obiter, the court also addressed the appropriateness of determining such a claim within a detailed assessment [§57–64]. Relying on Jones v Richard Slade and Co Ltd [2022] EWHC 1968 (QB), it held that the Solicitors Act assessment process is a regulatory review of a bill’s reasonableness, not a vehicle for enforcing debts or determining generalised claims such as unjust enrichment [§60–61]. While the court had jurisdiction to decide the point, it was not the appropriate forum [§63]. Such claims, if genuinely arguable, should be pursued in separate High Court proceedings, with the assessment potentially stayed. The effective dismissal of the claim within the assessment was therefore correct [§64].