Default Costs Certificate Upheld Despite Variation For Irrecoverable VAT

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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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Provisional Assessment Set Aside Under CPR 3.1(7) For Material Breach Of Filing Duty

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The Senior Courts Costs Office’s decision in MH v CH (By Her Litigation Friend the Official Solicitor) [2026] EWHC 238 (SCCO) confirms that CPR 3.1(7) remains available to challenge a Provisional Assessment Order where the receiving party failed to file the paying party’s complete Points of Dispute.

Background

This matter arose from detailed assessment proceedings following a costs order made in the Court of Protection. By an order dated 15 December 2023, HHJ Hilder ordered MH to pay 50% of CH’s costs. CH’s solicitors, Irwin Mitchell LLP, prepared a Bill of Costs totalling £19,233.93, which was served on MH on 1 November 2024.

On 22 November 2024, MH served his Points of Dispute by email. These comprised four documents: Precedent G; a Note in Relation to Points of Dispute; an annotated Bill of Costs; and a skeleton argument from a prior Court of Appeal application. Replies were served by CH on 13 December 2024.

On 15 April 2025, CH lodged the N258 bundle with the court to initiate a provisional assessment. It was later accepted by CH’s solicitor, Mr Cruise, in a witness statement dated 21 May 2025, that the bundle omitted two of the four documents comprising MH’s Points of Dispute — the annotated Bill of Costs and the Note — and also omitted MH’s open offer. Mr Cruise conceded the omission was a mistake and that all documents should have been filed.

Unaware of the omission, Deputy Costs Judge Bedford conducted the provisional assessment on 29 April 2025. The resulting Written Reasons repeatedly noted an inability to understand many of the objections. The judge later attributed this difficulty entirely to the absence of the complete documentation. The Provisional Assessment Order (PA Order) was issued the same day.

On 6 May 2025 — within seven days of the PA Order — MH issued an application to set aside the PA Order pursuant to CPR 3.1(7). MH declined to request an oral hearing under CPR 47.15(7). The application was heard on 24 June 2025. During that hearing a discrete question arose as to whether a provisional assessment order is final or interim prior to expiry of the 21-day period in CPR 47.15(7); the judge adjourned to receive written submissions on that point. Written submissions were filed by CH on 23 July 2025 and by MH on 28 July 2025, culminating in this judgment.

Costs Issues Before the Court

The central issue was whether a paying party may apply to set aside a Provisional Assessment Order under CPR 3.1(7) within seven days of its issue, as an alternative to requesting an oral hearing under CPR 47.15(7). Counsel informed the judge that there was no binding authority — indeed no authority at all — on this point, and the judge determined that a written judgment would therefore be of utility. Subsidiary questions included: whether the court’s general case management powers remain available where a specific procedural rule exists; whether the failure to file a complete set of Points of Dispute meant the decision was not a provisional assessment in the sense contemplated by CPR 47.15(7); and, if CPR 3.1(7) was engaged, whether the threshold test was met. The application also raised, but adjourned for later determination, issues of alleged misconduct under CPR 44.11 and whether a prior payment constituted a concluded agreement on costs.

The Parties’ Positions

MH, acting in person, argued the PA Order was null and void because CH had failed to comply with the mandatory requirements of PD 47 para 14.3 by not filing his full Points of Dispute and open offer with the N258 bundle. He submitted CPR 3.1(7) was available and drew analogies with other CPR set-aside mechanisms — including the power to set aside a default costs certificate under CPR 47.12(1) — to support the proposition that the rules provide redress where an order is obtained irregularly. MH contended that CPR 47.15(7) was not engaged because the provisional assessment process had never been properly initiated.

CH, represented by Mr Moss of Counsel, argued that the specific and self-contained code for challenging a provisional assessment was CPR 47.15(7), which required a request for an oral hearing within 21 days. MH’s failure to do so meant the PA Order had become binding. CH submitted that the general power in CPR 3.1(7) could not circumvent this specific rule, relying on the principle of lex specialis and the authorities of Terry v BCS Corporate Acceptances Ltd [2018] EWCA Civ 2422 and Deutsche Bank AG v Unitech Ltd [2016] EWCA Civ 119. In the alternative, CH argued that even if CPR 3.1(7) was available, the PA Order was a final order, the threshold was not met, and the circumstances fell woefully short of exceptional.

The Court’s Decision

Deputy Costs Judge Bedford granted the application and set aside the PA Order.

Availability of CPR 3.1(7)

The judge rejected the submission that CPR 47.15(7) ousted the general case management powers. She held that the two rules could operate cohesively, addressing different types of challenge. CPR 47.15(7) provides a mechanism to review items within a provisional assessment — decisions on hourly rates, individual bill items and the like. These items are defined by the four corners of the Points of Dispute, as illuminated by Ainsworth v Stewarts Law LLP [2020] EWCA Civ and PD 47 para 8.2. A jurisdictional challenge to whether the assessment was correctly constituted at all falls outside the scope of CPR 47.15(7) and may be addressed under CPR 3.1(7). She noted that CPR 3.1(1) expressly provides that the court’s case management powers are available in addition to those granted by specific rules, and that PD 47 para 14.2(2) — which lists the CPR provisions excluded from the provisional assessment regime — does not exclude CPR 3.1.

The authorities of Terry and Deutsche Bank were distinguished on the same ground: each confirmed that a general rule gives way to a specific rule, but that principle has no application where the two rules address distinct questions and operate in tandem.

Failure to File Complete Documents

The judge found that CH’s failure to file the complete Points of Dispute was a material breach of the mandatory obligation in PD 47 para 14.3(e). Critically, the provisional assessment is initiated unilaterally by the receiving party and the paying party has no involvement or control over what is filed. She drew an analogy to the duty of candour in without-notice applications: the duty on the receiving party to file all documents comprising the paying party’s Points of Dispute is stringent. She observed that Points of Dispute spread across multiple documents — including annotated bills and supplementary notes — are the norm rather than the exception in costs practice.

Because PD 47 para 14.3(e) had not been complied with, the resulting decision was not a provisional assessment in the sense contemplated by CPR 47.15(7). The consecutive steps in the workflow from CPR 47.15(4) onwards — including the 21-day period for requesting an oral hearing — were not properly engaged. The time for requesting a compliant oral hearing under CPR 47.15(7) and (8) had not properly begun to run.

Application of the CPR 3.1(7) Test

Applying the principles in Tibbles v SIG PLC [2012] EWCA Civ 518, and having regard to Lewison LJ’s observations in Vodafone Group PLC v IPCom GmbH and Co [2023] EWCA Civ 113, the judge found the threshold for exercising CPR 3.1(7) was met. The facts on which the PA Order was made had been misstated through omission — an incontrovertible fact accepted by CH’s own solicitor. The absence of the documents had axiomatically undermined the basis of the judgment, and the application was made promptly within seven days.

The judge declined to determine whether the PA Order was final or interim, finding it unnecessary to do so. The facts comfortably met the higher test of exceptional circumstances applicable to final orders in any event: the receiving party had failed to comply with a mandatory filing requirement in a without-notice context, the court had proceeded on an incorrect basis and wasted time on a flawed process, and a defaulting party ought not to benefit from its own default where the court has been inadvertently misled and a prompt in-time application has been made. For completeness, the judge further held that even if CPR 47.15(7) had been engaged, the same facts constituted exceptional circumstances within the meaning of that rule.

Case Management Directions

She exercised the power under CPR 47.15(6) to remove the matter from the provisional assessment regime, directing that it proceed to a one-day detailed assessment hearing. She concluded that an oral hearing was likely to be required in any event and it was more proportionate to proceed directly. All outstanding issues — including the CPR 44.11 misconduct application and the question of any concluded costs agreement — were adjourned to that hearing.

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The Technology and Construction Court’s decision in National House-Building Council v Hodson Developments Ltd & Ors [2025] EWHC 3438 (TCC) confirms that a party cannot rely on its solicitors’ withdrawal as a good reason for failing to file a costs budget on time.

Background

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

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

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

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

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

Costs Issues Before the Court

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

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

The Parties’ Positions

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

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

The Court’s Decision

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

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

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

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

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

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

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

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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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Security For Costs Under CPR 3.1(5) Ordered As Alternative Sanction To Debarring For Non-Compliance

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The Commercial Court’s decision in Serious Fraud Office v Smith (Thomas debarring application) [2025] EWHC 2876 (Comm) illustrates how, where a party’s non-compliance with procedural requirements is serious but does not justify the draconian step of debarring, the court may exercise its discretion under CPR 3.1(5) to order security for costs as a proportionate sanction.

Background

The matter concerned long-running proceedings under the Criminal Justice Act 1988 to enforce a confiscation order made against Gerald Martin Smith. A key element of the litigation was the resolution of competing proprietary claims to assets alleged to be Dr Smith’s realisable property. This included claims by Harbour Fund II LP, which had funded underlying litigation (“the Orb Litigation”) pursuant to a Harbour Investment Agreement. A substantial trial took place before Foxton J in 2021 (“the Directed Trial”), which determined the beneficial interests in the assets, including the establishment of the “Harbour Trust” under which Harbour had priority and Mr Nicholas Thomas was a residual beneficiary. Mr Thomas had fully participated in the Directed Trial, adopting Harbour’s arguments. Following the trial, Mr Thomas engaged in a series of applications and actions which Foxton J found formed part of a co-ordinated attempt to frustrate the outcome of the Directed Trial. In response to this conduct, Foxton J made the Debarring Directions Order (“DDO”) on 31 March 2023. The DDO provided that if Mr Thomas brought a “Relevant Claim”, the claim would be automatically stayed until a “Debarring/Stay Application” was determined. Before that application could be heard, Mr Thomas was required to file evidence addressing the involvement of Dr Smith or his associates in the claim and identifying his source of funding. Following the Supreme Court’s decision in PACCAR, Mr Thomas indicated an intention to challenge the enforceability of the Harbour Investment Agreement. Harbour subsequently issued the Harbour Enforceability Application on 31 October 2024, seeking to confirm the finality of the Directed Trial orders. Mr Thomas issued a cross-application on 28 November 2024, seeking declarations that the Harbour Investment Agreement was unenforceable. Mr Thomas accepted that his cross-application was a “Relevant Claim” under the DDO, triggering the requirement to file evidence and the automatic stay of his application pending the determination of Harbour’s Debarring/Stay Application. Harbour contended that Mr Thomas had failed to comply adequately with the DDO’s conditions and sought orders debarring him from participating in the forthcoming Enforceability Hearing, or, in the alternative, an order for security for costs.

Costs Issues Before the Court

The court was required to determine Harbour’s Debarring/Stay Application, which sought to debar Mr Thomas from bringing further claims or applications connected to the subject matter of the Directed Trial. The specific costs-related issues arising were: (1) whether Mr Thomas’s failure to provide satisfactory evidence concerning the involvement of Dr Smith and his associates, as required by the DDO, warranted debarring him from participating in the Enforceability Hearing; (2) whether Mr Thomas’s history of non-payment of outstanding costs orders justified debarring him; and (3) whether, in any event, Mr Thomas should be required to provide security for the costs of his cross-application as a condition of being permitted to participate further. Harbour’s fallback application, filed on 1 August 2025, sought security for costs in the sum of £290,700.

The Parties’ Positions

Harbour’s position was that Mr Thomas should be debarred from participating in the Enforceability Hearing. It argued that his evidence filed pursuant to the DDO was vague, incomplete and unsatisfactory, particularly regarding the involvement of Dr Smith. Harbour pointed to metadata in Mr Thomas’s witness statements identifying Dr Smith as the “author” and the failure to produce a document Dr Smith had allegedly provided. Harbour also cited a history of unpaid costs orders against Mr Thomas, arguing that a litigant should not be able to continue claims without satisfying existing costs orders. Harbour submitted that an immediate debarring order was appropriate given Mr Thomas’s multiple opportunities to comply and the serious adverse findings already made against him. In the alternative, Harbour sought an order that Mr Thomas could only participate if he provided full further evidence, satisfied all outstanding costs orders, and provided security for costs. Harbour quantified its security for costs application at £290,700, representing a proportion of its costs incurred to date and estimated future costs attributable to Mr Thomas’s cross-application.

Mr Thomas’s position was that he should not be debarred. He contended that his evidence had complied with the DDO, confirming that Dr Smith’s involvement was limited to providing ad hoc, voluntary assistance and background information. He explained the metadata issue by stating his solicitors had used a document from Dr Smith as a “template” but had overwritten all its content. He argued that his cross-application was not an abuse of process but a legitimate attempt to rely on the Supreme Court’s decision in PACCAR. He noted that he had, albeit belatedly, discharged the outstanding costs orders owed to Harbour. He opposed the security for costs application, arguing there had been delay in bringing it and that his funder, LitFin, was under no obligation to submit to the jurisdiction or offer security. He indicated he was in the process of arranging After The Event insurance to address costs concerns.

The Court’s Decision

The judgment was delivered by Henshaw J in the Commercial Court on 5 November 2025. The court refused to debar Mr Thomas from participating in the Enforceability Hearing but granted Harbour’s application for security for costs in a reduced sum.

On the issue of debarring, the court held that while Mr Thomas’s explanation for Dr Smith’s involvement was “unsatisfactory and incomplete” [§69], his misconduct did not make it just to debar him from defending Harbour’s application and pursuing his cross-application. The court observed that Mr Thomas’s previous conduct in the proceedings had been persistent and collusive, aimed at avoiding the consequences of the Directed Trial judgment [§93]. Nonetheless, the discrete PACCAR issue was not itself an abuse of process – it was a distinct legal point arising from a subsequent Supreme Court decision and distinguishable from an obvious abuse involving recycled arguments [§97].

While Mr Thomas had belatedly paid the outstanding costs orders owed to Harbour and most others, the court noted that compliance had been slow and some residual uncertainty remained over a small sum [§85-86]. The court found that the outstanding costs orders, while relevant, did not have a sufficient nexus with the Enforceability Hearing to justify debarment [§99]. The court emphasised that a debarring order is “draconian in its effect” [§59] and, as stated in Byers v Samba, “must be a sanction of last resort” [§60].

On the application for security for costs, the court held it had jurisdiction under CPR r.3.1(5) due to Mr Thomas’s failure to comply with court orders, including the DDO and costs orders [§107]. Henshaw J rejected the argument that Harbour’s application for security had been delayed, finding that the issue had been raised consistently since early 2025 [§108]. However, the court reduced the amount of security sought from £290,700 to £200,000, finding this to be the just amount attributable to Mr Thomas’s cross-application [§110]. The court ordered that security be provided promptly by payment into court or a first-class UK bank guarantee, with the possibility of it being replaced by acceptable ATE insurance if agreed by the parties or directed by the court [§111] and, noting that Mr Thomas had been adjudged bankrupt on 23 September 2025, indicated it would hear further submissions on whether that development affected the form of order [§112].

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

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Background

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

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

The Costs Cross-Appeal

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

The Parties’ Positions

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

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

The Court’s Decision on Costs Cross-Appeal

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

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

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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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Professional Negligence Claim Survives Partial Strike-Out Despite Procedural Deficiencies | Limited Relief From Sanctions Granted

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Background

Since before 2010, the Claimant, Miss Michele Carrington, has been the owner of a house at 46 Thatcher Avenue, Torquay, Devon. The house is a two-storey dwelling located adjacent to the sea overlooking Torbay. Over the years, Carrington has experienced significant medical conditions, rendering her largely housebound, although she has been able to live independently with the assistance of a full-time live-in carer.

In 2010, Carrington retained Mr Godfrey, an architect, surveyor, and contract administrator, operating through two companies: Godfrey Partnership Limited (GPL) and Godfreys Architects and Surveyors Limited (GAS). Though GAS had dissolved by the time proceedings were initiated, GPL was dissolved thereafter. Initially, GPL was the First Defendant, with American International Group UK Limited (AIG) sued as the professional indemnity insurer of GAS under the Third Parties (Rights against Insurers) Act 2010. Following GPL’s dissolution, AIG became the sole Defendant.

In 2010, Carrington accepted a proposal from Godfrey to provide professional services to extend and refurbish her property. The agreed services encompassed full architectural, surveying, and contract administration over the entire project life (RIBA stages A to L). Under a JCT Minor Works contract (JCT MWC), Ease Development Services Limited (Ease) was appointed for a contract sum of £231,425.21 plus VAT. The works began in May 2012, but multiple issues ensued, leading to Godfrey’s cessation of services and Ease’s termination of the contract in mid-2013. The Claimant contends that very little work was done and that what was done was defective, necessitating substantial remediation which she could not afford.

The claim was filed in November 2022 and has encountered significant procedural challenges, largely due to Carrington’s failure to plead her case with sufficient specificity and detail concerning breaches of duty, causation, and limitation defenses. Despite multiple amendments, strike-out applications, and directions for adequate particulars, the Defendant persisted that Carrington had not met the required standard in her pleadings.

Costs Issues Before the Court

The court was tasked with determining whether the amended particulars of claim served by Carrington complied with the court’s previous orders and whether those amendments allowed the case to progress or justified a strike-out application. The Defendant’s strike-out or summary judgment application was premised on Carrington’s alleged failure to articulate a coherent and viable claim, especially in the context of causation and the limitation periods applicable to the alleged breaches.

Additionally, costs issues encompassed previous orders that required Carrington to bear the costs of amendments due to her procedural deficiencies. Specific attention was also needed to assess whether the incurred costs justified relief from sanctions against Carrington, considering the history of non-compliance and delays attributable to her re-drafted pleadings.

The Parties’ Positions

Claimant’s Position: Carrington maintained that Godfrey’s professional negligence in failing to provide adequate construction information, inspect, and review works during the build period, caused extensive damage and financial loss. She submitted that despite procedural deficiencies in earlier pleadings, her current amended particulars clarified these claims sufficiently to proceed to trial. Carrington also sought relief from sanctions for any remaining deficiencies, emphasizing her health, financial status, and the severity of the alleged professional breaches.

Defendant’s Position: AIG argued that the amended particulars still failed to meet the detailed pleading standards required. They contended that Carrington’s case lacked coherence, particularly regarding causation, and reiterated that many of her claims remained statute-barred. AIG further highlighted that, as a matter of procedural rigor and fairness, Carrington should face the strike-out sanction for failing to substantively comply with the court’s unless orders.

The Court’s Decision

The court recognised that, barring the exception relating to the claim for inspection duties, the amended particulars newly served by Carrington presented a substantially compliant case. The court determined that there was a failure to provide a detailed, quantifiable link between breaches of duty concerning inspection and the resultant financial impact, necessitating a partial strike-out of those components.

While acknowledging that Carrington’s pleadings suffered from historical deficiencies, the court applied the three-stage test from Denton v TH White Ltd. It found that while the breaches were serious and without good reason, striking out the entire claim would be disproportionate compared to rectifying specific non-compliant aspects. The court decided that the breaches related to the inspection duties should be struck out, but Carrington’s detailed claims related to review duties were sufficiently coherent to proceed to trial.

On costs, the court noted Carrington’s previous penalties in costs for earlier amendments and confirmed those liabilities. However, noting the complexity of the professional negligence issues and the documented nature of evidence supporting her core claim (post September 2012 breaches), the court granted relief from the broader strike-out sanction. Consequently, Carrington was ordered to serve a final set of amended particulars to correct minor identified errors and eliminate the non-compliant inspection-related claim within fourteen days.

No Relief For Late Filed Costs Budget | Application To Set Aside Appeal Order Refused

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Zhang and anor v Deng and anor [2024] EWHC 2392 (KB) addressed an application to set aside an order relating to costs budgeting. At a CCMC, Master Yoxall had granted the First Respondent relief from sanctions, allowing reliance on a late-filed Precedent H and dispensing with costs budgeting. The Appellants successfully appealed, arguing the costs budget wasn’t properly filed or served, and that dispensing with budgeting was erroneous. Saini J overturned Master Yoxall’s order, applying CPR 3.14 to treat the Claimant’s budget as comprising only court fees. The First Respondent, absent from this appeal hearing, then sought to set aside Saini J’s order, claiming he was unaware of the appeal hearing. Mrs Justice Hill considered whether to admit a late witness statement (Bahia 2) explaining the non-attendance and whether to set aside Saini J’s order. Ultimately, she admitted Bahia 2 but dismissed the application to set aside, upholding Saini J’s decision, finding that the First Respondent lacked a good reason for non-attendance at the appeal hearing, had weak prospects on the merits of the appeal, and that setting aside the order would be inconsistent with the overriding objective.

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