CPR 46.4 | Protected Parties | Court Rejects 'Light Touch' Approach To Assessement Of Solicitor-Client Costs Shortfall

CFB V AXA INSURANCE UK PLC [2025] EWHC 915 (SCCO)

CFB v AXA [2025] EWHC 915 (SCCO) concerned an application to approve settlement of inter partes costs (£378,000, approximately 85% of the claimed £439,167) and solicitors’ claims for additional costs including a “shortfall” claim and “pure” solicitor-client costs. The Costs Judge scrutinised the proposed settlements, particularly focusing on the procedural requirements under CPR 46.4 for protecting the interests of a protected party. While approving the inter partes costs settlement, the judge declined to approve the solicitors’ shortfall and “pure” solicitor-client costs claims, identifying significant concerns including: potentially unreasonable hourly rates, excessive time recording, limited work delegation, high counsel fees, and questionable claims for immigration and deputy appointment work. The judgment emphasised the court’s obligation to critically examine costs claims against protected parties, rejecting arguments for a “light touch” approach and highlighting the inherent potential conflict of interest between solicitors and vulnerable clients. The court mandated a detailed assessment of the solicitors’ additional costs claims to ensure the protected party’s interests were appropriately safeguarded.

Mr. Roy says on behalf of the Claimant that he is independent counsel and that this independence should provide me with appropriate reassurance. But again counsel will generally acting on the instructions of the solicitors and may have an interest in a particular outcome. I mean no slight to Mr. Roy but it is plain that there are large sums of money to be gained if ultimately decisions were made to order a deduction by way of “light touch” on the part of the court and reliance, in the way suggested, on counsel’s advice. The fundamental difficulty is however that the court needs to be satisfied that the proposed settlement is in the interests of the protected party and to my mind that requires the court to consider the merits of the proposed claim against the protected party. This cannot be delegated to counsel.

Citations

- Dunhill v Burgin [2014] UKSC 18 The court’s approval is required for any settlement involving a protected party to provide an external check that ensures it is in the claimant’s best interests. - Minkin v Landsberg [2015] EWCA Civ 1152 A solicitor’s duty extends to advising on matters reasonably incidental to their instructions, particularly where client vulnerability requires broader consideration. - Herbert v HH Law Ltd [2019] EWCA Civ 527 Informed client approval affects the presumptions of reasonableness in solicitor-client assessments; agreement must be shown to be fully informed to be binding. - McDougall v Boote Edgar Esterkin [2001] 1 Costs LR 118 Client approval of costs must be informed for it to give rise to a presumption that the costs were reasonably incurred or reasonable in amount. - ST v ZY [2022] EWHC B6 (Costs) A solicitor must inform clients if costs are unusual so as to avoid the presumption that they are unreasonable under CPR 46.9(3). - Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178 Points of dispute must be sufficiently particularised to allow a fair and transparent assessment; the court should not be required to identify objections not raised by the parties. - BCX v DTA [2021] 12 WLUK 234 The court may reduce solicitors’ costs claimed against a protected party where work does not appear to be progressive or is otherwise unreasonable, notwithstanding the litigation friend’s agreement. - EVX v Smith [2022] EWHC 1607 (SCCO) A solicitor’s entitlement in a solicitor-client assessment requires scrutiny of reasonableness beyond the terms of any retainer, even if on the indemnity basis. - JXC v NIS [2023] EWHC 1000 (SCCO) Solicitors may be denied recovery of costs from a protected party where budgetary control was lacking and the litigation friend was not kept properly informed of expenditure. - AKS v NFU Mutual [2025] EWHC 125 (SCCO) The court may require scrutiny of deduction claims from damages, even where a settlement is said to have been agreed, to safeguard the protected party’s interests. - Hadley v Pryzybylo [2024] EWCA Civ 250 Cost judges’ scrutiny of costs incurred on non-litigious activities such as rehabilitation is supported where those costs may not be recoverable inter partes. - Ralph Hume Garry v Gwillim [2000] EWCA Civ 1500 Proper and contemporaneous time records are critical to supporting claims for costs; estimates may be heavily discounted or disallowed. - Clare v Joseph [1907] 2 KB 369 Solicitor-client assessments are governed by established principles of consumer protection, requiring clear evidence before costs can be presumed reasonable. - Roach v Home Office [2009] EWHC 312 (QB) Solicitors’ attendance at inquests or fact-finding hearings may be recoverable if the work is ancillary and contributes to the litigation. - In re Gibson’s Settlement Trusts [1981] Ch 179 For costs to be recoverable from a trust or fund, they must provide benefit to that fund or be incurred for a proper purpose linked to it. - Motto v Trafigura Ltd [2011] EWCA Civ 1150 Routine funding or administrative costs linked to maintaining a CFA or similar arrangements are not usually recoverable as they fall within firm overheads.

FERNANDEZ V FERNANDEZ [2025] EWHC 2373 (Ch)

Section 51 Costs Jurisdiction Injunction Without Claim Form | Gotti

Being 'Annoying and Difficult' Not Sufficiently 'Out Of The Norm' For Indemnity Costs In Failed Liquidator Challenge

STOCKLER AND ANOTHER V THE CORPORATION OF THE HALL OF ARTS AND SCIENCES [2025] EWHC 2262 (SCCO)

Key Points

Where solicitors seek to recover shortfall costs from a protected party’s damages, the court is required to conduct a merits-based assessment unless satisfied that it is in the protected party’s best interests to dispense with detailed assessment. [29, 33, 38]
The court’s approval of a deduction from damages under CPR 46.4 requires active scrutiny of the solicitor’s costs claim and cannot be delegated to counsel, regardless of their experience or judicial appointment. [49, 50]
Claims by solicitors for costs against protected parties are subject to assessment on the indemnity basis, but CPR 46.9(3) presumptions apply; costs may be deemed unreasonable if they are unusual in nature or amount and the solicitor fails to warn the client of their irrecoverability inter partes. [51–53]
The absence of Points of Dispute does not preclude the court from conducting a fair and valid detailed assessment of costs claimed against a protected party. The solicitor must be notified of the court’s concerns and given an opportunity to respond. [57–62]
In solicitor/client assessments, the costs of seeking approval for a deduction from damages are generally borne by the solicitor, particularly where the protected party does not object. This approach reflects the statutory framework under section 70(9) of the Solicitors Act 1974. [17, 72]

"Albeit my analysis is necessarily somewhat impressionistic it strikes me that the recovery of about 85% of the cost claimed on the electronic bill may well be reasonable on the indemnity basis. In any event I do not accept that I should permit the solicitors the margin of error that is sought at least without some greater degree of analysis as to what would happen in detailed assessment. Of course it may well be that on closer consideration many of the concerns turn out to be unwarranted. But as I have explained part of the problem that arises is that I have not been given the sort of analysis I require."

Key Findings In The Case

The proposed deduction from the protected party’s damages in respect of the solicitors’ shortfall costs was not approved, as the court was not satisfied that the sum sought was in the best interests of the Claimant and found the supporting material insufficiently detailed to justify dispensing with detailed assessment under CPR 46.4 [85–86, 105].
The litigation friend (the Claimant’s wife) and the appointed deputy (a partner in the solicitors’ firm) both consented to the deduction sought by the solicitors, but the court found that neither possessed the requisite independence or expertise in costs matters to provide informed consent to the claims advanced against the protected party [3, 45, 47].
The claim for “pure” solicitor/client costs—including immigration advice and the deputyship application—was not approved, as the court doubted whether such work was covered by the CFA, fell within the concept of ancillary work to a personal injury claim, or was recoverable outside the appropriate forum (e.g., the Court of Protection) [87–102].
The court identified significant concerns with the reasonableness of time claimed, delegation, supervisory work, counsel’s fees, and hourly rates in the electronic bill, raising issues typically addressed on assessment; the judge concluded the bill could be subject to substantial reduction, even on an indemnity basis [80–84 and Appendix].
The court accepted the parties’ compromise of inter partes costs in the sum of £378,000 (approximately 85% of the electronic bill for £439,167.62), finding it reasonable to approve that compromise in the interests of the protected party given the litigation risks and concessions made [9, 74].

"I reject the contention that my approach is too detailed or over demanding. It is essentially broad brush. By using the search and filtering function of a properly phased electronic bill it should be possible to see where and how costs are claimed. The points that I have raised are the sort of points or matters that would be looked at on inter partes assessment and a solicitor/client assessment. Consideration, for instance, as to whether the Claimant is in fact liable for the costs claimed is elementary and the solicitor should have checked when certifying a bill (indeed receives payment for doing so- 2 hours are claimed here I think for this work- see item 928). Indeed I would expect a costs draftsman when preparing a bill to have very good idea as to what sums might be vulnerable to reduction on an assessment, whether on the standard or indemnity basis. It seems to me that what I have done is little more than a basic check, involving some sampling. Based on my experience in dealing with this kind of case, this exercise is well within the capacity of costs lawyer or costs draftsman used to preparing Bills of Costs and Points of Dispute. Indeed where a shortfall is pursued I understand that other solicitors are able to provide the court with a similar sort of analysis. In any event it does not require any consideration of difficult issues of principle just an awareness and experience of what is liable to happen on detailed assessment. It seems to me that this is a task carried out regularly by those handling everyday costs claims."

Background

In CFB v AXA Insurance UK PLC the Claimant, CFB, a protected party represented by a litigation friend due to a severe brain injury sustained from a fall at a construction site on 12 March 2019, succeeded in obtaining a £1 million settlement from AXA Insurance under the Third Party (Rights against Insurers) Act 2010.

During the proceedings, complex issues arose, including the denial of employment by the employer and AXA’s attempt to avoid the insurance cover based on non-disclosure of the Claimant’s immigration status.

The settlement precipitated two claims for costs: one inter partes claim (the Claimant’s costs against the Defendant) and one solicitor-client claim for costs (Prince Evans Solicitors LLP’s costs against the Claimant). The hearing for the costs determination took place over multiple dates: 7 August 2024, 12 December 2024, and 24 January 2025.

The settlement of inter partes costs stood at £378,000 (inclusive of interest and assessment costs) against a claim of £439,167.62. The solicitor-client costs included additional liabilities such as a success fee of £31,413.80 and an ATE premium of £1,680, along with a shortfall in costs recovered from the Defendant and a separate sum for “pure” solicitor-client costs amounting to over £23,000.

Costs Issues Before the Court

The costs issues before the court involved two primary claims. The inter partes claim needed approval for the settlement reached, involving a recovery percentage of approximately 85%. The more contentious issue was the solicitor-client claim.

Prince Evans Solicitors LLP (PE) sought recovery for additional liabilities, a shortfall in costs not recovered from AXA, and separate “pure” solicitor-client costs. These claims encompassed work related to the solicitor-client relationship beyond the settlement proceedings, specifically covering issues such as immigration advice and costs related to the Claimant’s appointment of a deputy under the Court of Protection.

The Parties’ Positions

Regarding the inter partes costs, the parties agreed on a settlement of £378,000 against a claim of £439,167.62. The negotiations for settlement appeared to have considered various vulnerabilities and potential deductions on assessment.

In addressing the solicitor-client costs, Prince Evans Solicitors LLP, through Mr. Roy KC, advocated for the court to take a “light touch” approach to approval, heavily relying on counsel’s advice. The solicitors argued that the current procedure for determining these claims was flawed, suggesting that a more lenient process aligned with the treatment of damages claims be adopted. They highlighted potential conflicts of interest given the litigation friend’s dual role as the solicitor’s spouse and the solicitor’s preference for a senior fee earner allaying concerns on the firm’s behalf.

The Court’s Decision

Costs Judge Brown scrutinised both the procedural aspects and the substantive costs claims put forward by Prince Evans Solicitors LLP.

In his decision, Costs Judge Brown addressed several criticisms raised by Mr Roy KC and Mr Smith, particularly regarding the scrutiny of solicitor-client cost claims. The Judge rejected the notion of a heavy presumption against approving settlements and underscored the necessity of detailed scrutiny in such cost matters given the potential conflicts of interest and the need to protect the interests of the protected party.

The court dismissed the suggested “light touch” approach, explaining that the existing rules mandated a meticulous examination of the costs claimed to ensure they were reasonable and in the interest of the protected party. Key to the judgment was the necessity to consider the merits of the costs claimed, not merely rely on the advice of learned counsel without further interrogation.

Concerns were raised over the high hourly rates charged, the substantial reliance on counsel, and the lack of delegation, which all contributed to an inflated costs claim. Furthermore, the claims for “pure” solicitor-client costs, including immigration advice and the appointment of a deputy, were considered highly unusual and possibly outside the scope of what could reasonably be charged under the CFA.

Ultimately, while the court approved the inter partes costs settlement, it refused to approve the solicitor-client cost deductions without a detailed assessment. The judgment emphasised that proper scrutiny and assessment were indispensable to safeguarding the interests of vulnerable parties and ensuring fair and reasonable solicitor remuneration.`

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