CPR 44.11 | 75% Costs Reduction For Egregiously Defective Bill | Solicitors Remain Vicariously Liable For Costs Draftsman Failures

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The Senior Courts Costs Office’s decision in Hyder v Aidat-Sarran [2024] EWHC 3686 (SCCO) establishes that solicitors bear full vicarious responsibility for costs draftsmen’s failures and cannot avoid severe sanctions by blaming their agents when bills contain egregious, persistent, and unrectified defects.

Background

The matter concerned detailed assessment proceedings in the Senior Courts Costs Office before Deputy Costs Judge Roy KC. The substantive litigation between the parties had concluded, and the claimant, Rashid Hyder, was seeking to recover his costs. The procedural history was marked by difficulties with the service of a compliant bill of costs by the claimant. An unless order was made requiring service of the bill by a specified date. The claimant served a bill one day after the deadline, and this bill was found to contain multiple and significant defects. The defendants, Robert Aidat-Sarran and Humwattie Aidat-Sarran, raised these defects in points of dispute served in response to the bill. The claimant then served a second, electronic bill, which not only failed to rectify the serious problems with the paper bill but added further defects. This led to the defendants making an application to strike out the claim for costs pursuant to CPR 44.11. The claimant, in turn, made an application for relief from sanctions for the late service of the initial bill.

Costs Issues Before the Court

The court was required to determine two distinct but related applications. The first was the claimant’s application for relief from sanction under CPR 3.9 for the late service of his bill of costs. The second was the defendants’ application under CPR 44.11 for the court to disallow all or part of the costs, seeking the draconian sanction of striking out the bill entirely due to the claimant’s multiple and serious failures in the preparation and service of both the original and the subsequent bill.

The Parties’ Positions

The claimant sought relief from sanction, arguing that the breach—serving the bill one day late—was neither serious nor significant when considered in isolation. It was submitted that the service of the bill, albeit defective, constituted belated compliance with the unless order. On the defendants’ application, the claimant accepted there were defects but argued that strikeout was a disproportionately severe sanction. The claimant’s counsel offered an apology for the failures at the hearing, although this came only at around midday on the day of the hearing itself.

The defendants opposed relief from sanction, contending that the bill was so seriously defective that its service could not be considered compliance with the order at all. On their own application, the defendants argued that the multiple, egregious, and persistent defects in both bills, coupled with a complete failure to address or rectify them even after they were highlighted in the points of dispute, amounted to unreasonable or improper conduct warranting the bill being struck out in its entirety. They submitted that the court could have no confidence in any future bill served by the claimant. The defendants’ witness statement of 22 August 2024 had clearly set out all these failings.

The Court’s Decision

The court granted the claimant’s application for relief from sanction. Applying the first stage of the Denton test, Deputy Costs Judge Roy KC found that the breach of the unless order was the one-day delay in service. The service of a defective bill was held to constitute belated compliance with the order, which only required “service of a bill.” The judge distinguished the situation from cases where a served document is “gibberish” or blank, citing CNM Estates (Tolworth Tower) Limited v Carvill-Biggs [2023] EWCA Civ 480. Consequently, the one-day delay was not serious or significant, and relief was granted.

On the defendants’ application under CPR 44.11, the court found that the claimant’s conduct met the threshold for the rule to be engaged. The judge made seven key findings at paragraphs 10-20 of the judgment:

      • First, the original bill contained multiple significant failures which the judge described as “egregious” when viewed in the round.
      • Second, none of these defects were rectified in the second bill, the electronic bill, which the judge found “absolutely astonishing.”
      • Third, the second bill not only failed to rectify the serious problems with the paper bill but added further defects, which was “even more astonishing” given that the need to ensure a defect-free bill had been clearly flagged in the points of dispute.
      • Fourth, all these failings were clearly set out in the defendants’ witness statement of 22 August 2024. Fifth, the claimant’s solicitors displayed a “serious and troubling lack of insight and contrition” by failing to address the defects, serve any evidence, or even acknowledge these failings before the hearing, with an apology only coming via counsel at around midday on the hearing day itself.
      • Sixth, the judge found it was not open to the claimant’s solicitor to blame the costs draftsman. As a matter of law under Gempride v Bamrah [2018] EWCA Civ 1367, the costs draftsman is the solicitor’s agent and the solicitor is vicariously responsible for all the costs draftsman’s failings as if the solicitor had performed the work themselves. In any event, there had been serious direct failings on the solicitor’s part: solicitors must apply superintendence and oversight to what a costs draftsman does, and the defects here were so obvious that the solicitor should have identified them; the solicitor should have been proactive to ensure compliance in time and properly; some failings, such as failures to certify, were purely those of the solicitor and were very basic; and by 22 August 2024 at the latest, in light of the defendants’ statement, the solicitors could not have had any basis to place reliance upon the costs draftsman, yet the compounding failures continued.
      • Seventh, the judge was satisfied that both limbs of CPR 44.11(a) and (b) were met: there had been non-compliance with the rules, and there had been unreasonable conduct, meaning conduct which does not admit a reasonable explanation. In summary, the judge found there had been “multiple compound breaches” that were “serious”, “persistent”, “unexplained”, and “inexcusable.”

While not making a positive finding of improper conduct without “the full picture,” the judge noted at paragraph 19 that serving an unchecked bill without caveat came “very close” to improper conduct and was at least arguably reckless as to the possibility of the court or defendant being misled.

Despite the seriousness of the conduct, the court declined to strike out the bill. The judge held that strikeout was the most draconian sanction and that a judge should always give “very anxious consideration” to whether any lesser sanction could properly meet the justice of the case. On a “very narrow balance,” the court was persuaded that lesser sanctions were appropriate. The court noted that in Gempride itself, despite serious misconduct, there was a substantial reduction but the bill was not struck out entirely, and this precedent tended to point against strikeout being appropriate in this case. The court also considered that the concerns about proportionality and confidence in any redrawn bill could be addressed by the orders it proposed to make.

Instead, the court imposed a severe costs sanction, disallowing 75% of the claimant’s assessed costs under CPR 44.11. This meant that whatever sum the bill was ultimately assessed at on detailed assessment, the claimant would recover only 25% of that total assessed sum. The judge described this as a “stern sanction by CPR 44.11 standards” but remained of the view that it was appropriate, noting that the claimant and his solicitors could “consider themselves quite fortunate that the bill is not struck out entirely.”

The court also disallowed interest on the claimant’s costs from 30 July until whatever date it was agreed the redrawn bill should be served by. The judge’s initial inclination had been to disallow all interest, but this was rejected as it would amount to double jeopardy in circumstances where 75% of the costs had already been disallowed.

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SCCO Guide 2025 Published

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The Senior Courts Costs Office has published its 2025 Guide, with a foreword by Lord Justice Colin Birss, Deputy Head of Civil Justice.

The 2025 edition supersedes the 2023 Guide and reflects procedural reforms introduced by the Civil Procedure (Amendment) Rules 2024 and the consolidation of electronic filing provisions into Practice Direction 5C. It introduces a number of changes impleneted since 2023 affecting Court of Protection costs, detailed assessment procedures, and Supreme Court and JCPC assessments.

Court of Protection fixed costs increases

From 1 April 2024, all Court of Protection fixed cost categories were increased by approximately 27%, following a review by the SCCO and the Office of the Public Guardian (OPG). These revised rates reflect inflation and administrative cost pressures.

Solicitors’ costs in court proceedings:

      • Category I (deputy appointment) – now £1,204 (plus VAT), up from £950

      • Category II (trustee applications) – now £633 (plus VAT), up from £500

      • New Category III: applications under Practice Direction 9D paragraph 4, set at £633 (plus VAT)

Deputy remuneration:

      • Annual management fee (first year) – now £2,116 (plus VAT), up from £1,670

      • Annual management fee (subsequent years) – now £1,672 (plus VAT), up from £1,320

      • Health and welfare deputy maximum – now £703 (plus VAT), up from £555

      • Report preparation – now £336 (plus VAT), up from £265

      • Basic HMRC tax return – now £317 (plus VAT), up from £250

The threshold for the 4.5% alternative fee calculation has increased from £16,000 to £20,300 net assets. Deputies with assets below this threshold are no longer permitted to apply for assessed costs.

The 2025 Guide also clarifies that complex tax returns are now treated as specialist services requiring separate procedures rather than falling within the fixed fee categories.

Costs following P’s death | new clarification

The 2025 Guide provides detailed new guidance on costs procedure following P’s death, representing one of the most significant clarifications in this edition:

      • Deputies do not require a further Court of Protection order to seek SCCO assessment for costs incurred during P’s lifetime.

      • The SCCO has no jurisdiction to assess post-death costs under the COP Rules 2017, as the COP’s substantive jurisdiction ends with P’s death.

      • Deputies may request suspension of assessment and can agree costs directly with personal representatives.

      • The Deputy must inform the SCCO in writing whether an agreement has been reached and whether the bill is to be withdrawn or assessment continued.

      • Clear procedures are set out for handling pending assessments upon P’s death.

The Guide also notes that the SCCO may require evidence of death and of the personal representatives’ authority before proceeding.

Court of Protection payments on account | updated guidance

Section 27.17 of the 2025 Guide provides updated rules on interim payments:

      • Interim bills may be rendered provided that the cumulative total does not exceed 75% of work in progress or 75% of the OPG estimate, whichever is lower.

      • If overpaid, deputies must reimburse P’s estate within 28 days of the final costs certificate being issued.

The Guide confirms that this 75% cap applies cumulatively across all interim invoices, and any excess must be repaid even if caused by later disallowance at assessment.

Provisional assessment procedure | change to offers

There has been an important change to the handling of offers in provisional assessments. Offers must now be filed and clearly marked in the description of the document rather than being submitted in sealed envelopes.

This brings SCCO practice into line with CE-File protocols across the Royal Courts of Justice, eliminating the use of sealed envelopes entirely.

Supreme Court and JCPC assessments | new rules and portal filing

Section 36 of the 2025 Guide has been comprehensively updated to reflect new procedural frameworks:

      • Supreme Court assessments are now governed by the Supreme Court Rules 2024 (previously the 2009 Rules).

      • JCPC assessments are governed by the Judicial Committee (Appellate Jurisdiction) Rules Order 2024, with updated Part 7 (previously Part 6).

      • Bills of costs must now be filed and served via the Supreme Court portal (new mandatory requirement).

      • Points of Dispute must also be filed through the portal, not by email.

      • Updated Practice Direction references include PD 13 paragraphs 13.40–13.42 for extensions and 13.50–13.54 for reviews.

These changes align Supreme Court and JCPC procedure with digital filing obligations now in force across all appellate jurisdictions.

Electronic filing | updated practice direction

References to electronic filing have been updated from Practice Direction 51O to Practice Direction 5C, consolidating the e-filing rules following the conclusion of the pilot scheme.

This aligns the SCCO with the Civil Procedure Rules’ new structure, under which PD 5C now governs all electronic filing in the High Court and SCCO.

Regional Costs Judges | updated appointments

The list of Regional Costs Judges has been substantially revised to reflect appointments, retirements, and reassignments across all circuits.

Notably, District Judge Besford (SiR) has been added for Hull, with further changes in the North Eastern, Northern, Midlands, Wales, South Eastern and Western Circuits. The Guide provides an up-to-date list of authorised judges.

Group listing suspended

The 2025 Guide confirms that group listing remains suspended.
Cases that would previously have been group listed (shorter detailed assessments) are now listed in the same manner as other detailed assessments before a Costs Judge or Deputy Costs Judge.

This position remains under administrative review by the SCCO.

You can download the full 2025 SCCO Guide here.

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

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Background

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

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

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

Costs Issues Before the Court

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

The Parties’ Positions

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

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

The Court’s Decision

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

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

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

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

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

Background

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

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

Costs Issues Before the Court

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

The Parties’ Positions

The Second Defendant’s Position

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

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

The Second Claimant’s Position

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

The Court’s Decision

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

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

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

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

 

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Costs Judge Rejects Mathematical Approach To Proportionality Assessment | Stockler [2025] EWHC 2262

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Background

The claimants, William Thomas Stockler and Alexander Charles Stockler, were holders of permanent seats at the Royal Albert Hall. They brought proceedings against The Corporation of the Hall of The Arts and Sciences, which operates the venue, concerning payments due under the Hall’s Ticket Return Scheme (TRS). Under this scheme, introduced in 1993, seat-holders could return unwanted tickets in exchange for payment.

Following amendments to the TRS payment terms in April 2018, the claimants disputed the defendant’s calculations and commenced proceedings in September 2022 seeking an account and payment of monies allegedly due. The claim was initially valued at less than £10,000, with the claimants indicating on the claim form that it fell within the small claims track limit. The defendant counterclaimed seeking, amongst other matters, a declaration as to the proper construction of the contractual arrangements.

Both parties issued applications for summary judgment in late 2022. On 23 February 2023, Deputy District Judge Kirby KC granted summary judgment to the defendant on the interpretation of the 5 April 2018 letter, stayed the balance of proceedings to enable agreement on an account, and allocated the matter to the fast track. Significantly for costs purposes, he ordered the claimants to pay the defendant’s costs of the hearing, including the summary judgment applications limited to the interpretation issue, subject to detailed assessment if not agreed.

When settlement negotiations failed, the matter returned before DJ Mauger on 24 May 2024. The judge refused the claimants permission to amend their particulars of claim, dismissed the balance of their claim, and gave judgment for the defendant on the counterclaim in the sum of £3,054.24. The judge made a further costs order requiring the claimants to pay the defendant’s costs of the claim and counterclaim on the standard basis until 8 June 2023 and on the indemnity basis thereafter.

The defendant commenced detailed assessment proceedings on 6 September 2024, serving a bill totalling £162,789.37. The bill was divided into three parts: Part 1 for standard basis costs (£76,066.38), Part 2 for indemnity basis costs, and Part 3 for bill preparation costs. Points of Dispute were served on 1 October 2024, followed by Replies, with the assessment hearing requested on 10 December 2024.

Costs Issues Before the Court

The primary issue before Deputy Costs Judge Joseph was whether the defendant’s costs should be reduced on grounds of proportionality following the line-by-line assessment. This issue arose specifically in relation to Part 1 of the bill, which covered costs incurred on the standard basis up to 8 June 2023.

The court was required to apply CPR 44.3 and 44.4, which mandate that on a standard basis assessment, only costs that are proportionate to the matters in issue should be allowed. Under CPR 44.3(5), proportionality requires costs to bear a reasonable relationship to various factors including the sums in issue, value of non-monetary relief, complexity of litigation, conduct of the paying party, and any wider factors such as reputation or public importance.

A preliminary issue concerned whether the court should assess proportionality across the entire bill or focus solely on Part 1. This was significant because Part 2 costs were assessed on the indemnity basis, where proportionality does not apply. Additionally, the court had to determine the appropriate approach to proportionality assessment following the guidance in West and Demouilpied v Stockport NHS Foundation Trust [2019] Costs LR 1265.

The line-by-line assessment had already addressed various contested issues, including the reasonableness of instructing London-based solicitors, appropriate fee earner grades, and the dismissal of numerous Points of Dispute for insufficient particularisation under Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178. Following this assessment, Part 1 of the bill had been reduced from £76,066.38 to £55,581.38.

The Parties’ Positions

The claimants, represented initially by Counsel and subsequently by the first claimant acting in person, argued that the assessed costs were manifestly disproportionate. Their primary submission was that proportionate costs should be calculated by reference to a multiple of the monetary value of the claim. They proposed that a base figure should be between one and a half to two times the £3,200 monetary claim value (producing £4,800-£6,400), with additional allowances of £1,000-£1,500 for non-monetary relief and similar amounts for conduct-related work. This methodology produced a range of £6,800-£9,400, with a mid-point of £8,100 representing their view of proportionate costs.

The claimants relied on the fact that the claim had been initially valued at less than £10,000 and would ordinarily have fallen within the small claims track. They pointed to comments by DDJ Kirby suggesting concern about costs being incurred in relation to potential claims by other seat-holders, and to DJ Mauger’s ultimate dismissal of the account claim as disproportionate. They maintained that spending approximately £55,000 on a claim worth £3,200 was wholly disproportionate regardless of other factors.

The defendant, represented by Mr Paul Hughes, rejected the claimants’ mathematical approach to proportionality. He argued that all factors in CPR 44.3(5) should be considered without giving special weight to monetary value alone. The defendant emphasised that the DDJ had allocated the matter to the fast track despite its monetary value, indicating the case’s unsuitability for the small claims track. This allocation decision suggested a total claim value, including non-monetary elements, potentially up to the fast track limit of £25,000.

The defendant highlighted the complexity of the contractual interpretation issues, evidenced by detailed skeleton arguments and the instruction of Counsel throughout. He argued that decisions already made during the line-by-line assessment – including approval of London solicitors’ instruction and appropriate fee earner grades – demonstrated reasonableness that should not be undermined through proportionality. The defendant also stressed wider factors, including potential reputational damage and the risk of similar claims from other seat-holders among the Hall’s 320 seat-holders who returned 179,000 tickets in 2022 alone.

The Court’s Decision

Deputy Costs Judge Joseph rejected the claimants’ mathematical approach to proportionality assessment. The court held that there was no basis in West and Demouilpied for calculating proportionate costs using arbitrary multiples of claim value. Such an approach was deemed fundamentally flawed and contrary to CPR requirements, which mandate consideration of multiple factors without attributing special significance to any single element.

The court determined that proportionality assessment should focus solely on Part 1 of the bill, as proportionality does not apply to indemnity basis costs. Following West and Demouilpied, the court examined the work reasonably undertaken during the relevant period, finding it included substantial tasks: reviewing proceedings, drafting pleadings, considering documents, preparing for and attending the summary judgment hearing, responding to requests for information, and conducting settlement negotiations.

On the monetary value factor, whilst acknowledging the claim’s small financial component, the court held this should not carry special weight. The DDJ’s allocation to the fast track despite the low monetary value indicated the claim’s overall significance. The court accepted that when monetary and non-monetary elements were combined, the total claim value approached £25,000.

Regarding complexity, the court found the contractual interpretation issues required specific expertise and justified Counsel’s instruction. The earlier decisions allowing London solicitors and grade B fee earners supported this assessment. The court noted that having found these costs reasonable during line-by-line assessment, it would be difficult to subsequently deem them disproportionate.

The court accepted that the defendant was entitled to consider potential reputational damage and the risk of similar claims from other seat-holders as genuine wider factors. The Hall’s considerable public status meant the defendant could legitimately take the proceedings seriously. However, this did not entitle unlimited expenditure, and the court noted the bill had already been reduced by nearly 27% during line-by-line assessment.

A significant factor was the dismissal of numerous Points of Dispute for insufficient particularisation. The court held it would be inherently unfair to allow the claimants to achieve through proportionality what they had failed to achieve through properly formulated challenges. This would effectively permit reduction “through the back door” despite the claimants’ procedural failures.

The court concluded that the assessed costs of £55,581.38 for Part 1 were not disproportionate when all factors were properly considered. The reasonable costs were also proportionate costs, and no further reduction was warranted. The court emphasised that proportionality had already been partially considered during line-by-line assessment, particularly regarding hourly rates and fee earner grades, making further reduction inappropriate.

Implications

This case demonstrates several principles for costs practitioners. Mathematical formulae based on claim value multiples will not survive scrutiny – courts must consider all CPR 44.3(5) factors without giving special weight to monetary value alone. Track allocation decisions carry weight in proportionality assessment, particularly where judges depart from normal expectations based on case characteristics.

The decision reinforces that properly particularised Points of Dispute remain essential. Attempting to achieve reductions through proportionality arguments after failing to mount specific challenges during line-by-line assessment will not succeed. Courts will consider whether allowing such reductions would be unfair to the receiving party.

The case also shows how wider factors like reputational damage and potential satellite litigation can influence proportionality assessment, provided the receiving party can demonstrate genuine concerns rather than speculative risks.

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‘Henderson v Henderson’ Abuse Of Process | Late Costs Objection Survives Despite “Perverse” Reasoning Resulting In £Multi Million Costs Assessed At Nil

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Update, 12 September 2026: this decision has been considered by the Court of Appeal and it stands. In The Winros Partnership v Global Energy Horizons Corporation [2026] EWCA Civ 654 the court refused permission to appeal the Abuse of Process Decision, holding that the appeal had “no real prospect of success” and that “even if permission were granted, I do not consider that the appeal would have been allowed”. The analysis below is unaffected.

The High Court’s decision in The Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 2044 (Ch) addresses when late-raised costs objections constitute a Henderson v Henderson abuse of process and the consequences of defective judicial case management in solicitor-client assessments.

Background

The case centres on three conditional fee agreements (CFAs) under which Rosenblatt Solicitors (now The Winros Partnership) acted for Global Energy Horizons Corporation in Chancery Division proceedings against a former associate, Mr Robert Gray, concerning alleged misappropriation of technology [§1]. The underlying dispute achieved mixed results: in December 2012, Vos J granted declarations that Mr Gray was in breach of fiduciary duty; in July 2015, Asplin J ordered Mr Gray to pay approximately £3.6 million; but Arnold J in May 2019 valued certain assets at nil and found no further sums payable [§2].

Three CFAs governed the retainer: CFA-1 (dated 8 December 2009), CFA-2 (dated 31 October 2010), and CFA-3 (dated 6 March 2013) [§§3–7]. Each contained provisions for an “Advance Fee” to be retained by Rosenblatt regardless of outcome, with additional fees and a success fee payable only on a “win”. CFA-3’s clause 14 set out termination provisions, including clause 14.3 which entitled Rosenblatt to end the agreement if it believed the client did not meet its responsibilities, in which case the client would pay fees for work done to the termination date and disbursements [§6(iv)].

The relationship between solicitor and client broke down, and Rosenblatt terminated the retainer by letter dated 24 February 2016. Trower J, on appeal from Master James, held that this termination was not pursuant to clause 14.3 but by Rosenblatt’s acceptance of Global Energy’s repudiatory breach [§9(v)].

Global Energy issued Part 8 proceedings on 1 April 2016 seeking detailed assessment [§25(i)]. This led to a 10-day preliminary issues hearing before Master James in 2019 [§15(i)], an appeal to Trower J determined in December 2021 [§§8–9], and ultimately an eight-day hearing including a five-day detailed assessment before Senior Costs Judge Gordon-Saker in 2024 [§10]. At that final hearing, Global Energy raised “Objection 1” for the first time, contending that the bills should be assessed at nil because when delivered, Global Energy was not liable to pay them as the fees remained contingent [§10]. The Senior Costs Judge upheld the objection, resulting in Rosenblatt’s costs being assessed at nil [§12].

Costs Issues Before the Court

The appeal concerned whether raising Objection 1 for the first time at detailed assessment—some eight years after proceedings commenced—constituted a Henderson v Henderson abuse of process. The court was required to determine:

  1. Whether Global Energy’s failure to raise Objection 1 at earlier hearings (including the 10-day preliminary issues trial before Master James) amounted to an abuse of process that should result in the objection being struck out [§§15–20].
  2. If abuse was established, whether there were exceptional circumstances excusing the late raising of the objection [§§24–27].
  3. The appropriate remedy if abuse was found [§§22–23].

The Senior Costs Judge had refused permission to appeal on the abuse of process ground; Joanna Smith J ordered that permission be considered at the appeal hearing [§13].

The Parties’ Positions

Rosenblatt’s Position: Rosenblatt argued that raising such a fundamental objection at this late stage was a clear Henderson v Henderson abuse [§11]. The Senior Costs Judge’s own findings supported this conclusion:

  • He found that Objection 1 “could easily have been added” to Global Energy’s case at the preliminary issues hearing [§15(ii), Decision/[25]]
  • He stated that “standard practice” in solicitor-client assessments is to determine liability issues first, before any detailed assessment [§15(v), Decision/[31]]
  • He expressly found that Global Energy “should have pleaded what is now Objection 1 in the Particulars of Claim” [§15(iv), Decision/[28]]

Rosenblatt contended that where a party has had the opportunity to raise an issue and failed to do so, strike-out is the appropriate remedy, and that a costs order was an insufficient sanction [§§22–23].

Global Energy’s Position: Global Energy raised two points by respondent’s notice [§22]. First, it argued that even if there was an abuse, the Senior Costs Judge had applied an appropriate sanction in the form of a costs order and striking out should not follow automatically [§22]. Second, and primarily, Global Energy argued the Decision could be upheld on other grounds: namely, that Global Energy could not properly be criticised for raising Objection 1 late because the court’s own procedural directions had precluded earlier raising of the issue [§24].

The Court’s Decision

Mr Justice Marcus Smith granted permission to appeal, finding that on the facts stated in the Decision itself, he could see “no clearer case of a Henderson v Henderson type abuse of process” [§16]. The court was highly critical of the Senior Costs Judge’s reasoning, stating it was “so wrong as to be perverse” [§16].

The court identified fundamental errors in the Senior Costs Judge’s approach. The consideration of whether Objection 1 had been previously determined by Master James or Trower J missed the point entirely: “the point is not whether Objection 1 was previously determined (obviously it was not) but whether the opportunity to resolve it was wrongly forsaken (which, on the Decision’s findings, it clearly was)” [§20]. Similarly, asking whether the earlier decisions would have been different had Objection 1 been argued, or noting that those hearings would have taken place anyway, “misses the point” [§20]. Had Objection 1 been dealt with at those hearings, “later stages in these proceedings would have been unnecessary, and considerable cost and time would have been saved for all concerned” [§20].

The court rejected Global Energy’s argument that a costs order was an appropriate alternative to strike-out. Had the Senior Costs Judge properly found an abuse of process, “striking out would be – on the basis of the facts found in the Decision – the only appropriate course in this case” [§23].

However, the appeal ultimately failed because of facts not properly addressed in the Decision [§§24–27]. Examination of the procedural history revealed that by an order dated 16 June 2016, Master James had acted of her own motion to direct only two preliminary issues, without first requiring the parties to plead their cases on liability [§25(iii)]. Marcus Smith J found this to be “a major procedural error on the part of the court” [§25(iv)]:

  • The court disregarded Rosenblatt’s suggestion of dealing with all questions of “liability” first [§25(iv)(a)]
  • The court directed only two preliminary issues, apparently considering these were the only possible liability issues—but Objection 1 was not identified [§25(iv)(b)]
  • The court should have required pleadings first, then made case management directions in light of the issues taken; instead, “case management preceded pleadings, with the result that the true issues between the parties were never identified until it was too late” [§25(iv)(c)–(d)]

In these circumstances, Global Energy and Rosenblatt “were quite properly following the direction of the court” [§26]. It would have been improper for Global Energy to shoehorn additional issues into an expressly limited preliminary issues hearing. There was therefore “nothing in Global Energy’s conduct to criticise, and it would be unfair to prevent Global Energy from taking Objection 1 now” [§26].

For these reasons—which were “not the reasons of the Senior Costs Judge”—permission to appeal was granted, but the appeal was dismissed [§28].

Court Orders Inspection In s70 Solicitors Act Assessment Post Service Of Points Of Dispute In The Absence Of Informative Replies

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In Diagnostics.AI Limited v Dentons UK & Middle East LLP [2025] EWHC 2071 (SCCO), Costs Judge Nagalingam addressed a critical procedural issue in solicitor-client assessments: can the court order inspection of a solicitor’s files after points of dispute have been served? The case involved disputed bills exceeding £2 million (even after a substantial credit note) and demonstrates the costs risks of adopting an “obstructive” stance in assessment proceedings.

The Costs Dispute | An Unusual Procedural Position

The assessment proceedings had taken an unusual procedural route. The parties had agreed by consent to dispense with the standard inspection stage before service of points of dispute under CPR 46.10. This collaborative approach initially appeared constructive, with multiple consent orders and stays for settlement negotiations.

However, the cooperation foundered when the claimant served comprehensive 72-page points of dispute raising detailed objections to the bills. The defendant’s response was limited to a four-page reply addressing only preliminary points, declining to engage with any item-by-item challenges. This minimal engagement prompted the claimant’s application for inspection to break the negotiation deadlock.

The Jurisdictional Challenge | Multiple Routes to Inspection

The defendant, represented by Jamie Carpenter KC, mounted what the judge described as an “all or nothing response”, arguing the court lacked jurisdiction to order inspection at this procedural stage. The defendant contended that:

    • CPR 31.12(1) provided the only mechanism for ordering inspection
    • The application was defectively drafted
    • The request was “far too wide” and sought inspection of their “entire file”

Costs Judge Nagalingam rejected these arguments, finding multiple jurisdictional routes:

    1. CPR Part 31: Following Edwards v Slater & Gordon UK Ltd [2022] EWHC 1091 (QB), the judge held that “there is no express rule set out in Part 8 dispensing with the disclosure provisions of CPR Part 31.”
    2. Inherent jurisdiction: The court recognised the inherent jurisdiction to order inspection in solicitor-client assessments, citing the approach in Hanley v JC&A.
    3. General case management powers: CPR 3.1(2)(p) provided sufficient authority to make the order as part of managing the case and furthering the overriding objective.

The Costs of Preparing for Inspection | A Pyrrhic Objection

The defendant estimated the costs of preparing files for inspection at between £15,000 and £25,000. The judge was notably unimpressed by these figures, observing that:

    • These costs would “by and large be incurred in preparing the file for detailed assessment” anyway
    • Documents should already be organised in a firm of the defendant’s stature
    • Confidential materials subject to existing confidentiality orders ought to be kept in separate files
    • The estimate was either “hugely pessimistic or otherwise adopts an entirely unrealistic stance”

The Discretionary Decision | Obstructive Conduct Has Costs Consequences

The judge’s criticism of the defendant’s stance was particularly pointed: “I consider the Defendant’s stance and conduct to be somewhat obstructive whilst claiming in correspondence a desire to compromise.”

The combination of refusing inspection whilst providing only minimal replies made “a very lengthy detailed assessment hearing inevitable” – contrary to the overriding objective. The judge noted that inspection might either demonstrate to the claimant that their prospects were low or “cause the Defendant to reflect on the extent to which their work can be demonstrated at all.”

The Costs Order | The Price of Obstruction

Most significantly for costs practitioners, the judge ordered that the costs of the claimant’s application be paid by the defendant, to be summarily assessed if not agreed. This adverse costs order reflected the court’s view that the defendant’s opposition to inspection was unreasonable in the circumstances.

The judge also directed that:

    • The claimant should bear the cost of isolating documents already in their possession
    • Otherwise, the costs of inspection would be costs in the assessment

Practical Implications for Solicitor-Client Assessments

This decision reinforces several important principles for costs practitioners:

    1. Procedural flexibility exists: The court has multiple routes to order inspection in solicitor-client assessments, even after points of dispute have been served. Rigid adherence to one procedural interpretation will not prevent appropriate case management.
    2. Minimal engagement carries risks: Providing only cursory replies to detailed points of dispute, particularly on substantial bills, may be viewed as obstructive conduct warranting adverse costs consequences.
    3. Inspection costs arguments need substance: Generic objections about the burden of preparing files for inspection are unlikely to succeed, particularly where those costs would be incurred for detailed assessment preparation anyway.
    4. The overriding objective applies: Conduct that makes lengthy detailed assessment hearings inevitable runs counter to the overriding objective and may attract costs sanctions.
    5. Technical objections rarely succeed alone: Arguments based solely on alleged drafting defects or narrow procedural interpretations are unlikely to succeed where the substantive application has merit.

Criminal Legal Aid And The Indemnity Principle | No Escape From Legal Aid Rates In Contempt Proceedings

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Background

The underlying proceedings concerned a contempt application brought by MBR Acres Limited and Others against Ms Gillian McGivern, a solicitor, for alleged breaches of an injunction order dated 10 November 2021. The application was heard before Mr Justice Nicklin on 21 and 22 July 2022, who dismissed it entirely, exonerating Ms McGivern. He awarded her costs on the indemnity basis and certified the application as “totally without merit”, additionally making a civil restraining order against the Respondents.

Ms McGivern had instructed Scott Moncrieff & Associates Ltd (SMA) on approximately 6 July 2022 and secured legal aid for her representation under the criminal legal aid regime, as contempt proceedings are classified as “criminal proceedings” for legal aid purposes under section 14(h) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Her application to instruct King’s Counsel (Mr Ashley Underwood KC) under legal aid was refused by Nicklin J, but she proceeded to instruct him privately.

The assessment of Ms McGivern’s costs between the parties came before Costs Judge Whalan in the Senior Courts Costs Office on 4 December 2023. Ms McGivern’s bill totalled £120,292.21. The Respondents had made a Calderbank offer of £21,000 on 12 August 2022 and a Part 36 offer of £33,000 on 5 September 2023.

Following his judgment of 18 July 2024, at a further hearing on 20 November 2024, Costs Judge Whalan assessed the bill at £20,673.34 – significantly below both the claimed amount and the £28,556.58 that the Legal Aid Agency (LAA) had assessed as payable. As this was less than both settlement offers, the Judge ordered Ms McGivern to pay the Respondents’ costs of the assessment proceedings. The Respondents had claimed £80,048.74 for their participation in the assessment and were awarded £53,044.65 (on the standard basis until 26 September 2023, and on an indemnity basis thereafter due to the Part 36 offer).

The net result was that Ms McGivern owed a balance to the Respondents. She appealed to the High Court, where the matter was heard by Mr Justice Sweeting sitting with Senior Costs Judge Rowley as an assessor on 3 July 2025.

Costs Issues Before the Court

The primary issue was whether a party with criminal legal aid defending civil contempt proceedings could recover costs from their opponent at private client rates, or whether recovery was limited to the rates prescribed under the Criminal Legal Aid (Remuneration) Regulations 2013. This raised fundamental questions about the application of the indemnity principle in criminal legal aid cases.

Specifically, the court needed to determine whether the indemnity principle – which prevents a party from recovering more in costs than they are liable to pay their own representatives – was disapplied in criminal legal aid cases. In civil legal aid, Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013 expressly disapplies this principle, allowing costs to be determined “as if that party were not legally aided”. No equivalent provision exists in the criminal legal aid framework.

The court also had to consider whether Ms McGivern could rely on her retainer with SMA, which purportedly provided for a between the parties rate of £400 per hour, and whether she could retrospectively revoke her legal aid to claim at higher rates. Additionally, the court examined whether the LAA’s assessment of costs at a higher figure than ultimately allowed was binding on the costs judge.

A subsidiary issue concerned the recoverability of leading counsel’s fees, which had been privately incurred after the refusal of legal aid funding for King’s Counsel. The appeal also raised an application for a costs capping order in respect of the appeal proceedings.

The Parties’ Positions

Ms McGivern argued that she should recover costs at private client rates, contending that her retainer with SMA provided for £400 per hour. She submitted that preventing recovery at between the parties rates would lead to an absurd result and undermine access to justice. She relied on observations in R (on the application of E) v Governing Body of JFS [2009] UKSC 1 and King’s Lynn and West Norfolk Council v Bunning [2016] EWCA Civ 1037, which emphasised the importance of solicitors being able to recover remuneration at commercial rates when undertaking publicly funded work.

Ms McGivern further argued that paragraph 8.10 of the Criminal Contract Specification authorised providers to retain costs recovered from other parties exceeding LAA payments, and that Regulation 9 of the Criminal Legal Aid (Remuneration) Regulations 2013, which restricts payments from other sources, did not apply to High Court proceedings. She also contended that the LAA’s assessment at £28,556.58 should be treated as the minimum recoverable amount.

Regarding her retainer arrangements, Ms McGivern submitted that she could revoke her legal aid retrospectively and rely on the private retainer to claim higher rates. She argued that if counsel’s fees were refused under legal aid provisions, there was no prohibition against incurring them privately and recovering them at between the parties rates.

The Respondents maintained that the indemnity principle strictly limited recoverable costs to those payable under the legal aid scheme. They emphasised the absence of any provision equivalent to Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013 within the criminal legal aid framework. They relied heavily on Liverpool Victoria Insurance Co Ltd v Khan and others [2022] EWHC B8 (Costs), where Costs Judge Leonard concluded that criminal legal aid does not disapply the indemnity principle.

The Respondents argued that any attempt to claim higher rates through the retainer with SMA constituted an unlawful attempt to “top up” legal aid payments, contrary to section 28 of LASPO. They submitted that paragraph 8.10 of the Criminal Contract Specification could not override statutory provisions, and that the LAA had no discretion to enhance the rates set in Schedule 4 of the Regulations. They characterised the suggestion of retrospectively revoking legal aid as “unprecedented and remarkable” and contrary to the principle in Radford v Frade [2018] EWCA Civ 119.

The Court’s Decision

Mr Justice Sweeting upheld Costs Judge Whalan’s decision, confirming that the indemnity principle applies to criminal legal aid cases without any statutory disapplication. The court found that whilst civil legal aid contains express provisions (Regulation 21) permitting recovery as if the party were not legally aided, no equivalent provision exists in the criminal legal aid framework.

The court rejected Ms McGivern’s argument that Regulation 9’s non-application to the High Court created a general disapplication of the indemnity principle. The judge reasoned that Regulation 9 merely provided specific examples where payments outside standard LAA funding were permitted; its limited scope reinforced rather than undermined the requirement for express legislative provision to disapply the indemnity principle.

Regarding paragraph 8.10 of the Criminal Contract Specification, the court agreed with the reasoning in Khan that whilst this provision authorises retention of costs recovered from other parties exceeding LAA payments, it cannot disapply the indemnity principle. The court emphasised that the indemnity principle is a rule of law requiring primary or secondary legislation for its disapplication, not merely contractual terms between the LAA and providers.

The court acknowledged the policy arguments raised, particularly the Supreme Court’s observations in JFS about the financial sustainability of publicly funded work. However, it distinguished these cases as concerning the court’s general discretion to award costs rather than directly analysing whether the statutory scheme disapplied the indemnity principle in criminal legal aid contexts. The judge stated that the function of courts is to apply the law as enacted by Parliament, not to rewrite it based on perceived policy shortcomings.

On the LAA assessment point, the court endorsed Costs Judge Leonard’s finding in Khan that the LAA “has no discretion to enhance the rates and fees set by paragraph 7(b) of Schedule 4” of the Regulations. Any purported agreement to pay enhanced rates was a matter between solicitors and the LAA with no bearing on amounts recoverable from the paying party.

The proposition that Ms McGivern could retrospectively revoke her legal aid was rejected as “untenable”. The court applied the principle from Radford v Frade that retrospective variation of a receiving party’s costs liability after a costs order cannot increase the paying party’s liability. Such an attempt would breach the statutory prohibition on topping up and be contrary to public policy.

The court refused the application for a costs capping order, finding that the criteria under CPR 3.20(2) were not met. Whilst acknowledging the wider implications for access to justice, the judge determined it would be unjust to require the Respondents to defend a costs order in their favour whilst potentially bearing their own reasonable costs. The court found that summary assessment provided adequate safeguards against disproportionate costs in the appeal.

CPR 44.3(5) Factors Considered | Proportionality Reduction Applied To Internal Communications Following Line-By-Line Assessment

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The Senior Courts Costs Office has provided valuable guidance on proportionality principles in a personal injury case where a bill totalling £517,985 was reduced by over £193,000 following detailed assessment. In XX v Jordan Young & Aviva Insurance Limited [2025] EWHC 2073 (SCCO), the court examined how vulnerability factors under CPR 44.3(5)(f) interact with proportionality considerations, whilst also clarifying the court’s jurisdiction regarding retrospective conduct allegations.

The Costs Context

The costs dispute arose from personal injury proceedings that settled for £149,000 net of contributory negligence, having been pleaded at up to £2.5 million. Leigh Day’s bill comprised profit costs of £349,826.92, counsel’s fees of £39,638.54, other disbursements of £43,783.05, and VAT of £84,736.49. The defendants challenged whether costs exceeding £500,000 bore a reasonable relationship to the settlement achieved.

Following a three-day detailed assessment before Costs Judge Nagalingam, the initial line-by-line assessment reduced the bill to £339,565.16, representing a 34.4% reduction. However, the court’s proportionality analysis resulted in further cuts, ultimately bringing the total down to £324,029.77.

The Proportionality Assessment | West v Stockport Applied

The court applied the mandatory approach established in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220, completing the line-by-line assessment before considering proportionality. Having given a preliminary indication that the costs as claimed appeared disproportionate, Costs Judge Nagalingam analysed each factor under CPR 44.3(5).

Sums in Issue | Beyond Settlement Figures

The court rejected any limitation to the £149,000 settlement figure. Instead, it adopted a “notional bracket” approach spanning £149,000 to £2.5 million as representing the range of possible outcomes. The judge concluded, however, that whilst the true value exceeded £149,000, it was realistically closer to that figure than the pleaded maximum.

The court noted that the settlement terms expressly referenced contributory negligence, indicating the gross value exceeded the net settlement regardless of any conduct arguments.

Complexity and Conduct Factors

The litigation was neither straightforward nor particularly complex. Liability remained disputed throughout, with significant injuries creating medical complexity that generated legal complexity in quantifying damages. The court recognised that the defendants’ conduct in keeping liability live without making early settlement proposals generated additional work for the claimants.

Claimant Vulnerability | Multiple Contributing Factors

The court determined that claimant vulnerability was a relevant factor under CPR 44.3(5)(f). The judge identified several contributing factors:

  • Significant physical injuries sustained by the claimant
  • Impact on family members from the same incident
  • Isolation during Covid-19 lockdowns affecting a previously sociable individual
  • Language barriers requiring interpreters for documentation
  • The claimant’s age and specific dialect requirements

The court emphasised there is “no automatic presumption that a Claimant of advanced years alone equates to vulnerability,” but found the combination of factors meant the solicitors were dealing with a vulnerable client requiring additional work.

Surveillance Evidence and Retrospective Conduct Allegations | Court’s Jurisdictional Limits

The defendants tried to use the assessment proceedings to establish misconduct and exaggeration based on surveillance evidence, despite having already agreed settlement terms and a standard basis costs order. The court firmly rejected this approach, stating: “I rejected the assertion that on an assessment of costs I could retroactively conduct a trial of an issue that the Defendant had alleged but neglected to run to trial as an argument.”

The judgment clarifies that agreed terms in costs orders referring to conduct do not create a gateway for retrospective determinations of issues not pursued at trial. Such clauses are unnecessary as parties can always raise conduct issues in points of dispute.

The Final Proportionality Reduction | Internal Communications Targeted

Despite finding vulnerability factors, the court concluded the assessed sum remained disproportionate. Rather than applying a broad percentage reduction, the court adopted a targeted approach, identifying internal communications as requiring further scrutiny.

This element had already been reduced from £27,724.50 to £22,946.15 during line-by-line assessment but was cut further to £10,000 plus VAT on a broad brush basis. The court considered this reasonable for the case circumstances, resulting in base profit costs (excluding assessment costs) of £169,534.99 plus VAT.

Amazon CPO Applications | Funding Arrangements And Costs Control In Collective Proceedings

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The Competition Appeal Tribunal’s recent decision to grant collective proceedings orders in two substantial Amazon cases provides valuable guidance on several key costs issues affecting collective proceedings. The judgment establishes important principles for funding arrangements, costs oversight, and funder remuneration whilst addressing practical concerns about costs control in complex multi-million pound litigation.

Background | Two Major Collective Actions

The Tribunal considered applications for CPOs by Robert Hammond (representing consumers) and Professor Andreas Stephan (representing retailers/merchants), both alleging abuse of dominant position by Amazon companies. Both actions followed successful carriage disputes and involved substantial funding arrangements with commercial third-party funders.

The cases raised several costs-related challenges that required determination before the CPOs could be granted under the authorisation condition in section 47B of the Competition Act 1998.

The Costs Issues Before the Court

The Tribunal was required to assess whether the funding arrangements in both cases were adequate and appropriate for collective proceedings purposes. This involved examining several interconnected costs considerations:

First, whether the litigation funding agreements (LFAs) provided sufficient funding levels and appropriate control mechanisms. Professor Stephan had funding of up to £32.9 million guaranteed by Elliott group entities, whilst Mr Hammond had just under £16.7 million from FourWorld Global Opportunities Fund Ltd.

Second, whether adequate mechanisms existed for scrutinising and controlling legal costs during proceedings. The Tribunal expressed particular concern that neither proposed class representative appeared to have sufficient independent support for reviewing lawyers’ invoices.

Third, in Mr Hammond’s case specifically, whether the funder’s remuneration structure was excessive. Following the Supreme Court’s PACCAR decision, the LFA had been amended from percentage-based to fixed fee remuneration, but this resulted in a complex fee structure that Amazon challenged as potentially “wildly excessive.”

Fourth, whether adverse costs cover was adequate, though Amazon did not challenge the sufficiency of either the £15 million ATE insurance in Hammond’s case or the guarantee arrangements in Stephan’s case.

The Parties’ Positions on Costs

Amazon’s primary costs-related objection focused on Mr Hammond’s funding arrangements. Amazon argued that the funder’s return was “excessive” and in several scenarios “wildly excessive” and “indefensibly high,” relying on the Tribunal’s observations in Gormsen v Meta that funding arrangements with sufficiently extreme provisions could warrant refusal to certify.

Amazon particularly criticised the “Commitment Fee” element of 15% per annum on committed funds of £16.9 million, arguing it was inappropriate to calculate returns on committed rather than drawn-down funds, which inflated the funder’s return.

Amazon also suggested that Mr Hammond’s agreement to such arrangements demonstrated unsuitability to represent the class’s interests, drawing parallels with Riefa v Apple where certification was refused due to the proposed class representative’s lack of understanding of their LFA.

Neither party initially addressed the Tribunal’s concerns about independent oversight of legal costs, but following prompting during the hearing, both proposed class representatives agreed to instruct independent costs specialists.

The Court’s Decision on Costs Issues

Independent Costs Oversight | New Standard Practice

The Tribunal held that independent scrutiny of legal costs should become standard practice in collective proceedings. The Tribunal stated it was “important for proposed class representatives to be in a position independently to subject claims for costs to proper scrutiny, as the funder’s interests were not identical to those of the class.”

The Tribunal referenced its recent observation in Bulk Mail Claim Ltd v International Distribution Services that measures may need to be put in place to ensure PCRs get costs specialist advice on legal fees.

Professor Stephan agreed to instruct independent costs lawyers to provide monthly oversight reports and assist in determining whether clarification or adjustment of invoices was required. Mr Hammond committed to instructing a costs draftsman to review interim invoices quarterly with “the level of scrutiny that a corporate client would apply.”

Funder Remuneration | Deferred Assessment Approach

On Mr Hammond’s funder remuneration, the Tribunal declined to reject it as excessive at the certification stage whilst emphasising this was not approval. The Tribunal found the fee structure could potentially result in an exceptionally high return and specifically rejected FourWorld’s justification for the Commitment Fee element.

However, the Tribunal held that clause 9.2 of the LFA, making payment “subject to an order of the [Tribunal] to the contrary,” meant the reasonableness of the total funder’s fee was a matter for more detailed consideration at a later stage.

The Tribunal endorsed the approach from the Federal Court of Australia in Money Max Int Pty Ltd v QBE Insurance Group Ltd that court approval of reasonable funding commission rates should be left to a later stage when more probative and complete information would be available, typically at settlement approval or damages distribution.

The Tribunal referenced the Court of Appeal’s judgment in Gutman v Apple, which emphasised the Tribunal’s discretion at the time of judgment, and the recent Merricks v Mastercard decision, which demonstrated exercise of that discretion to allow a funder considerably less than provided under an LFA where proceedings had a poor result.

Costs Documentation Requirements

The Tribunal established that proposed class representatives should address in evidence the steps taken to secure LFAs on appropriate terms as standard practice. Mr Hammond provided a detailed witness statement explaining the evolution of his LFA following PACCAR and the competing Hunter application.

The Tribunal also noted that LFAs should be posted on claim websites with only minimal redactions for confidentiality, stating “this should be standard practice for all opt-out proceedings.”

Implications for Costs Practice

This judgment establishes several important precedents for costs practice in collective proceedings:

Independent Costs Oversight: The requirement for independent costs specialists to assist proposed class representatives in scrutinising legal fees is now established as standard practice. This addresses the inherent conflict between funders’ interests (who are reimbursed from recoveries) and class interests.

Deferred Funder Remuneration Assessment: The Tribunal’s approach of deferring detailed scrutiny of potentially high funder returns until settlement or judgment provides greater certainty for the certification process whilst preserving ultimate control over excessive fees.

Evidential Requirements: Proposed class representatives must now provide evidence of steps taken to secure appropriate funding terms, and LFAs should be published with minimal redactions.

Costs Control Mechanisms: The judgment demonstrates the Tribunal’s willingness to impose specific conditions regarding costs oversight as part of the authorisation process.

Multiple Solicitor Arrangements: Where two firms work together, the Tribunal accepted this could be appropriate given complementary capabilities, but emphasised that costs assessment would need to scrutinise claims to ensure no unreasonable overlap.

The decision reflects the Tribunal’s developing approach to balancing the need for adequate funding of collective proceedings against protection of class interests from excessive costs and funder returns. The establishment of independent costs oversight as standard practice represents a significant development that will affect all future collective proceedings applications.

For costs practitioners, the judgment provides valuable guidance on the level of scrutiny expected in collective proceedings and confirms the Tribunal’s commitment to maintaining effective control over costs whilst enabling meritorious claims to proceed.