The County Court at Central London’s decision in O’Sullivan v Trading 212 UK Limited [2026] EWCC 32 addresses the circumstances in which a court may depart from approved costs budgets under CPR 3.18 when conducting a summary assessment following trial.
Background
This matter concerned a claim brought by Mr Peter O’Sullivan against Trading 212 UK Limited, arising from the closure of his share trading account in August 2021. The substantive judgment, delivered orally by Recorder Benjamin Wood on 12 February 2026 at the County Court at Central London, dismissed the claim. The recorder found that the defendant had both the contractual right and the regulatory obligation to close the account, the latter arising under the applicable anti-money laundering regulations, though no suggestion was made that the claimant had been involved in anything other than entirely legitimate activity.
The claim had been valued at under £30,000 on the Claim Form, with the prayer to the Particulars of Claim pleading monetary relief of £37,106. No non-monetary relief was sought. As the recorder noted in the costs judgment, when properly analysed, the claim was only ever worth a few thousand pounds. It turned on the application of the relevant regulations and the parties’ written contract to a set of facts that were largely apparent from contemporaneous written communications, with the relevant documents running to no more than a few dozen pages.
The claim was initially issued and case managed in Hull. A costs and case management conference took place before a district judge at the County Court at Hull on 11 December 2024, at which the claim was allocated to the multi-track and a costs management order was made. The claimant’s budget was agreed at £59,575 (of which £8,625 had already been incurred), and the defendant’s budget was approved at £188,558.98 (of which just over £88,000 had already been incurred). All figures in the judgment were stated net of VAT.
The defendant applied to strike out the claim on the basis that the claimant’s conduct, which was said to involve attempts to interfere with witnesses and intimidate the defendant’s employees, jeopardised the fairness of the proceedings. That application was heard on 15 September 2025 and adjourned, with the claimant offering undertakings to the court. Costs were reserved. The claimant’s costs schedule for that hearing totalled £20,800 and the defendant’s totalled £59,513.67, both figures being additional to the budgeted costs.
At the pre-trial review on 16 October 2025, a circuit judge increased each party’s budget by £18,243.50. Three phases of the claimant’s budget were increased (witness statements, PTR and trial preparation) and two of the defendant’s phases (witness statements and trial preparation) were increased.
During the course of the trial itself, the defendant produced late disclosure of documents, including internal “Slack” messages, which ought to have been identified and disclosed considerably earlier. That late disclosure generated a significant volume of additional work, including a partially successful and partially unsuccessful application to amend the Particulars of Claim. Both parties filed Precedents T in respect of their increased costs: the claimant’s increase was £54,115 and the defendant’s was £63,330.91, though the defendant later indicated it would seek only £41,477.33 of that figure.
By the time judgment was handed down on the substantive claim, the parties had, between them, a little over £482,000 in costs on the table. The recorder noted that the parties’ actual costs incurred were somewhat higher: the claimant had spent just under £246,426.54 and the defendant had spent £452,456.26, giving a combined total of approaching £700,000 in actual costs incurred in a dispute worth, on the recorder’s analysis, around £5,000.
There being insufficient time to deal with consequential matters on 12 February 2026, the recorder gave directions for the resolution of costs issues. Written submissions were received from both parties. The claimant requested that costs be determined on paper; the defendant requested a hearing. Following consideration of the written submissions, the recorder directed an oral hearing, which took place on 21 May 2026. The costs bundle, which had originally been 54 pages, had grown to 205 pages by the time of the hearing, with both parties having produced further written submissions without invitation or permission to do so. The defendant also filed an N260 indicating costs of just under £30,000 for the hearing on 21 May alone. The claimant filed a costs schedule of £1,925 for that hearing.
Throughout the proceedings, the claimant had been represented by Anthony Metzer KC and George Symes of counsel, instructed by Andreas Laws. The defendant was represented by Anna Greenley of counsel, instructed by Winckworth Sherwood LLP. At the costs hearing itself, the claimant chose to appear in person, assisted by his wife, on the basis that he wished to save money. Following the conclusion of the hearing, the claimant sent two further detailed emails to the court containing additional submissions, the second of which prompted an order that neither party should file further submissions without applying formally and on notice.
The recorder noted that, so far as could be discerned from the absence of any witness statement explaining a refusal of an ADR proposal (as would have been required by the CCMC order), neither party had proposed mediation, early neutral evaluation or any other form of ADR at any stage.
Costs Issues Before the Court
The recorder was required to determine a number of distinct costs issues following the dismissal of the claim. The principal question was what costs order, if any, should be made, and in particular whether the general rule under CPR 44.2(2) should apply so as to require the unsuccessful claimant to pay the defendant’s costs, or whether the conduct of the parties, and in particular the defendant’s late disclosure and the circumstances surrounding the strike out application, justified a departure from that general rule or a modification of any order made.
Two specific conduct-related issues were identified as warranting separate treatment. The first concerned the defendant’s failure to comply with its standard disclosure obligations until the trial had almost concluded, specifically its failure to search for and disclose internal Slack messages. The second concerned the claimant’s conduct in the period leading up to the defendant’s strike out application, which had been heard on 15 September 2025 and adjourned on the basis of undertakings.
A further significant issue arose in relation to the costs management orders made at the CCMC and PTR, and specifically whether there was good reason, within the meaning of CPR 3.18, to depart from the approved and revised budgets when carrying out the summary assessment. The recorder considered the competing approaches in RNB v LB Newham [2017] EWHC B15 (Costs) and Nash v Ministry of Defence [2018] EWHC B4 (Costs), as well as the principles established in Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 WLR 3399.
The court was also asked to carry out a summary assessment of the costs of both parties in respect of the various elements of the order. The claimant sought assessment of his costs arising from the defendant’s late disclosure, as set out in his Precedent T dated 6 February 2026, totalling £54,115. The defendant sought costs of the claim as a whole, including the costs of the strike out application (£59,513.67), budgeted and incurred costs, Precedent T costs and the costs of the hearing on 21 May 2026 (approximately £30,000), though the latter figure was not included in its formal quantification document.
Finally, the claimant raised the question of whether any order for payment of costs should be stayed pending the determination of his application for permission to appeal the substantive judgment.
The Parties’ Positions
The claimant’s position, as developed through his written submissions settled by counsel and his own oral and written submissions at the costs hearing, was that the defendant should pay his costs in relation to steps caused or prolonged by the defendant’s conduct, and that, save in relation to those issues, there should be no order as to costs. This represented a hardening of the position set out in his earlier written submissions of 26 February 2026, in which it had been submitted on his behalf that the fairest order was no order as to costs save for those costs directly consequential on the defendant’s late disclosure, with any costs order in favour of the defendant being drastically reduced in the alternative.
In relation to the defendant’s late disclosure, the claimant submitted that he should have his costs consequent upon this misconduct on the indemnity basis, on the basis that the conduct was analogous to that of the defaulting claimant in Finsbury Food Group plc v Axis Corporate Capital UK Ltd [2023] EWHC 1559 (Comm), whose conduct was described by the Deputy Judge as “profoundly unsatisfactory“.
The defendant’s position was that the correct and just order was that the claimant pay the defendant’s costs, save for a limited concession in respect of the costs of the reconvened trial and of considering the late disclosure. The defendant submitted that it should have its costs in relation to the strike out application on the basis that it was necessarily made, relying upon the matters set out in the witness statement of a partner at Winckworth Sherwood dated 10 June 2025.
The General Rule and Conduct
The recorder began by noting that costs are in the discretion of the court, but that the discretion must be exercised judicially. CPR 44.2(2) provides that if the court does decide to make an order about costs the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. The successful party was the defendant, because the claim had been dismissed.
Following CPR 44.2(4), the court must have regard to all the circumstances in deciding what order to make about costs, including the conduct of all the parties, whether a party has succeeded on part of its case (even if it has not been wholly successful) and any admissible offer to settle. In this case, there had been no admissible offers to settle other than an offer from the defendant to the claimant, made on 29 October 2025, which was to accept just over £160,000 in respect of its costs as they then stood.
Much of the parties’ focus in their costs submissions had been on conduct, and in particular on each other’s conduct. The recorder observed that the case had been extremely hard fought and every point that could be taken had been taken. One of the difficulties with conducting litigation in this way is that costs rise and, because people become polarised and irritated with each other, they take more and more points in their scramble for victory.
With two exceptions, the recorder did not consider it would be just, having regard to the conduct of both the parties, to start doing a fine analysis of the impact of particular elements of conduct that might be said to have had an impact on the costs. This included all of the conduct points made by the claimant in his written submissions after the hearing and in his own written submissions relied upon at the hearing, to the extent that there were admissible conduct points and not impermissible challenges to the substantive judgment. The recorder considered that it would be wholly disproportionate for the court to descend into the level of detail that appeared to be envisaged.
The recorder therefore did not propose to make an adjustment to the costs order for general conduct points. The two specific points that did warrant separate consideration were the defendant’s disclosure and the claimant’s conduct leading to the defendant’s strike out application.
The recorder also noted the claimant’s position as expressed in his email of 22 May 2026: “I know the difference between right and wrong, and that is all that matters to me. I will either get Justice or I will end up penniless trying. I have my principles your Honour, they are expensive but I will not depart from them.” The recorder further noted that the claimant had not accepted the Financial Ombudsman’s decision of 2 December 2022, which had concluded that the defendant had not done anything substantially unfair or unreasonable in restricting and then closing the claimant’s account.
Having considered the parties’ submissions, and subject to those two points, the recorder concluded that there was no reason to depart from the general rule that the unsuccessful party should pay the successful party’s costs.
The Defendant’s Disclosure
As the recorder had explained in his substantive judgment, the defendant had not complied with its standard disclosure obligations until the trial had almost concluded. In particular, it failed to carry out a search for internal “Slack” messages as part of its initial disclosure searches, in spite of the fact that these might have revealed the internal communications that led to the decision to close the claimant’s account. The absence of such messages in the defendant’s disclosure led its witness (who had left the defendant’s employment in 2022, years before the disclosure exercise was undertaken) to give evidence that was wrong, to the effect that there was no paper trail. It was evident that the witness said this because of the absence of any disclosed communications and not because the witness was trying to hide anything.
Even at the time of the costs judgment, it was not really clear why the defendant failed to disclose those Slack messages as part of its standard disclosure and, in fairness to its Company Secretary and Legal Counsel, who made an explanatory witness statement during the course of the trial, even she did not appear fully to understand what went wrong. But something did go wrong on the defendant’s side and it led to this case taking up a great deal more court time and the incurring of a great deal more expense on both sides.
In reaching that conclusion, the recorder also reflected his earlier conclusion that there were no adverse inferences that ought to be drawn from the non-disclosure or late disclosure and that, by the time he gave judgment on the substantive claim, the defendant was compliant with its disclosure obligations. It followed that the defendant’s late disclosure did not change the outcome of the litigation. The recorder also had no basis to conclude that the late disclosure might have altered either party’s approach to the litigation.
The defendant had partially conceded that it should not recover its own costs in relation to its late disclosure, nor of the reconvened trial. The claimant submitted that he should have his costs consequent upon this misconduct on the indemnity basis.
In the recorder’s judgment, the just costs order in relation to disclosure was that the defendant should not receive its costs of the disclosure phase and that it should pay all of the claimant’s costs consequent upon the late disclosure, on the standard basis, including the costs of the unsuccessful elements of his re-amendment application.
In making this order, the recorder sought to strike a balance between marking the court’s disapproval of a sophisticated financial institution’s failure to comply with its procedural obligations and the undesirability of encouraging an “innocent” party to act disproportionately in response. The recorder was not persuaded that the defendant’s conduct was “unreasonable to a high degree” and “out of the norm” such that nothing less than an indemnity costs order would be appropriate and was also not persuaded that the claimant should be deprived of any of his consequential costs so as to reflect the outcome of the work that was carried out. To the contrary, it seemed to the recorder that the additional costs were precipitated by the defendant’s conduct in circumstances where they would otherwise probably have been avoided altogether. It also seemed that the defendant should not have any of its costs of a phase that it failed to conduct properly, even though the recorder recognised that at least an element of this phase would reflect costs incurred in carrying out its own review of the other side’s disclosure.
The recorder was not trying to draw a sharp line around the costs that go in each direction but to work with a rather broader brush. The costs orders in relation to disclosure were made after having stood back and in order to reflect the overall justice of the case.
For the sake of completeness, the recorder also recorded his rejection of the defendant’s submission that he ought to take account of what it said was “significant disclosure outstanding from the Claimant despite repeated requests”. There was no application by the defendant for specific disclosure or specific searches, none of the claimant’s disclosure (or allegedly non-disclosed material) was relevant to the issues that the recorder was or is now required to decide and he was not a sophisticated financial institution with in-house lawyers.
The Defendant’s Strike Out Application
The defendant applied to strike out the claimant’s claim on the basis that his conduct, in seeking to interfere with witnesses and intimidate the defendant’s employees, jeopardised the fairness of the proceedings. That application was heard on 15 September 2025 and adjourned on the basis of undertakings being offered by the claimant to the court, with costs reserved.
The defendant submitted that it should have its costs in relation to that application, on the basis that it was necessarily made. It relied upon the matters set out in the witness statement of a partner at Winckworth Sherwood dated 10 June 2025, which set out what were said to be “a continuous pattern of threatening conduct by the Claimant to the Defendant from December 2021 to at least March 2025 (and possibly to May 2025 through anonymous communications). The effect of the Claimant’s threatening contact with the Defendant and its former employees has been to (i) prevent key witnesses giving evidence, and (ii) cause current members of the Defendant considerable anxiety about giving evidence and becoming known to the Claimant. This jeopardises a fair trial“.
The claimant submitted that he should have his costs of the application, primarily on the basis that the defendant failed to get the claim struck out and, in pursuing such an optimistic application, failed to consider witness summonses or special measures for the hearing, with the consequence that the application as framed was doomed to fail.
Furthermore, in his more recent submissions, the claimant drew attention to what he said were contradictory and unsatisfactory signals from the defendant and its legal team which, he submitted, undermined the assertion that there was any need for the application and instead indicated that the defendant was trying to present an “aggressive fear narrative“. The recorder noted that the claimant did not deny any of the conduct that was directly attributable to him.
The claimant was also very aggrieved by the order that was made at the pre-trial review, in relation to special measures, which resulted in his having to observe the trial by video (from his counsel’s chambers) and only to attend the courtroom when he was giving evidence. The defendant’s witness was in the same position. Although the claimant was able to communicate electronically with his legal team, he submitted that this was very difficult and meant that he could not correct mistakes and give other instructions as the trial proceeded.
The recorder paused to note that, according to the defendant, the hybrid hearing proposal was made on behalf of the claimant at the PTR; there was no challenge to the arrangements, either by way of appeal or by application to the recorder during the course of the trial; the person who became the defendant’s only live witness was reported to be fearful and the recorder later received evidence of the witness’s emotional state shortly after their evidence had concluded; and the court is required to consider special measures for vulnerable witnesses, as set out in Practice Direction 1A.
The recorder rejected any implication by the claimant that the special measures directed by the court at the PTR came about as a result of any cynical attempt by the defendant to gain a tactical advantage.
However, the recorder recognised that the defendant’s strike out application probably raised, rather than lowered, the temperature of the dispute and that it would have created even more polarisation between the parties. The defendant (or its legal team) did not appear to have sought alternative relief (such as special measures, an order preventing contact or similar) short of strike out.
Nevertheless, the recorder was satisfied on the basis of the material that had been shown to him and the submissions of both parties that an application of some sort was appropriate and it was appropriate to seek the court’s intervention so as to facilitate the giving of best evidence by witnesses and so as to enable both sides to have a fair trial.
The recorder therefore ordered the claimant to pay the defendant’s costs of such an application (and the resulting hearing), on the standard basis.
The Budgeted Costs and CPR 3.18
Some of the costs in respect of which the recorder had decided to make a party/party costs order had been the subject of costs management orders (made at the CCMC and at the PTR). Others (including the costs incurred prior to the CCMC, those of the strike out application and those consequent upon the defendant’s late disclosure) had not been managed by the court.
CPR 3.18 provides that in any case where a costs management order has been made, when assessing costs on the standard basis, the court will have regard to the receiving party’s last approved or agreed budgeted costs for each phase of the proceedings, not depart from such approved or agreed budgeted costs unless satisfied that there is good reason to do so, and take into account any comments made pursuant to rule 3.17(3) and recorded on the face of the order.
Carr J (as she then was) drew attention to the importance of this Rule in Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 WLR 3399. Her Ladyship pointed out at paragraph 67 that the words are “clear” and “mandatory” and explained the purpose and effect of the Rule. Real emphasis needs to be placed on the importance of certainty on costs in the context of access to justice. Costs budgets serve the important function of giving certainty to clients, in the form of knowing what costs they are likely to face, in terms of payment or recovery: Harrison v University Hospitals NHS Trust [2017] EWCA Civ 792, [2017] 1 WLR 4456 per Davis LJ.
However, neither of these decisions contains any guidance as to what would constitute a “good reason” to depart from an agreed or approved budget. The editors of the White Book (at 3.18.3) invite judges to have in mind the Denton test. They go on to identify two decisions which are said to “support the view that a costs judge may depart from the last approved or agreed budget if satisfied that the total costs incurred are disproportionate”.
Although the question of whether to depart from the budgets loomed large, neither party referred the recorder to these decisions and so he had not heard argument about them. The recorder considered whether to invite submissions on their effect but decided that to do so would be disproportionate, adding yet further cost and delay to an already protracted and overly expensive dispute.
In RNB v LB Newham [2017] EWHC B15 (Costs), the Deputy Costs Judge concluded that, if a court on assessment reduces the hourly rates for incurred costs, then this is a good reason to depart from the approved budget (to reflect the hourly rate reduction within the budgeted costs). At paragraph 24 of the judgment, the Deputy Costs Judge drew support for that conclusion from paragraph 73 of Merrix, noting that the rates allowed for incurred costs would need to be applied to the budgeted costs.
In Nash v Ministry of Defence [2018] EWHC B4 (Costs), the Costs Judge took a different view, concluding that hourly rates should not be treated as holding a special status. However, at paragraph 88, he drew attention to the wording at the end of CPR 3.18 as “in recognition that the facts and circumstances in which a costs management order was made may have subsequently changed without revisions being made to the budget“. He went on to give an example where “a change in facts and circumstances led to simplification of matters” without budgets being revised to reflect this such that the addition of the assessed incurred costs to the budgeted costs led to a disproportionately high total. At paragraph 90, he described CPR 44.3(2)(a) as “an effective safety valve for paying parties to seek a further reduction” and concluded at paragraph 91 that “a paying party retains the ability to argue that the overall sum of assessed incurred costs plus budgeted costs is disproportionate such that the overall sum should be reduced“.
It was right at this point to identify the hourly rates of the defendant’s solicitors. Prior to 1 May 2025, the Grade A rate was £605 (rising since then to £650). The Grade B rate was formerly £460 (rising to £495). Grade C actually decreased, from £345 to £340, and Grade D went up from £175 to £205.
The 2025 Guideline Hourly Rates for London 1 for grades A to D were £566, £385, £299 and £205, respectively. “London 1” is defined as “very heavy commercial and corporate work by centrally based London firms“. The rates for London 2 (City and Central London, other work) were £413 (A), £319 (B), £269 (C) and £153 (D). The National 2 rates (which would apply to work carried out in Hull, where this claim began life) were £282 (A), £242 (B), £196 (C) and £139 (D).
The hourly rates of the defendant’s more senior solicitors were significantly higher than any of the guideline rates, and higher even than the guideline rates for very heavy commercial work conducted by centrally based London firms. The claimant had drawn attention in his submissions to the fact that his solicitor was a grade B, working for £300 per hour, but the recorder did not find this comparison to be of any assistance.
The recorder spent some time reflecting upon whether there was a “good reason” to depart from the approved budgets and came to the conclusion that there was, both working from first principles and by parity of reasoning with each of the costs judges’ decisions (hard to reconcile though they might be).
Starting from the position of hourly rates (and so following the reasoning in RNB), the recorder could not see any justification for the defendant being entitled to recover its solicitors’ time at the hourly rates claimed. This was a claim that started in Hull (and was case managed there) and was always of modest value. Even though the defendant was based in the City of London, and was a financial organisation, this case did not justify the involvement of “London 1” solicitors. The recorder was far from convinced that it required London-based solicitors at all, given how many firms operate outside London, including those with financial services specialisms (if that was required).
In the recorder’s view, when it came to an assessment of costs, it would be necessary to reduce the solicitors’ rates by something between around a third and a half, in the case of the more senior solicitors, and by something between around a quarter and a third, in the case of the more junior solicitors. If that was required for the incurred (and not budgeted) costs, then it would, applying RNB, be a good reason to depart from the approved budgets in order to apply the same reductions.
If, on the other hand, the recorder adopted the reasoning in Nash, then he would need to ask himself whether there had been a change in facts and circumstances so as to justify the use of the “safety valve” of seeking a further reduction. As the recorder understood the reasoning in Nash, a change of circumstances would need to be required if the court were considering reducing the overall level of costs below the total of the approved costs. The recorder took the view that, in spite of the parties’ best efforts, there had been a simplification of the issues, such that the total level of expenditure was disproportionately high.
Finally, the recorder reached the same outcome from first principles. As the trial judge, he had the opportunity to review the material and form conclusions about the issues to a far greater degree than the costs managing judge.
The recorder had been able to form views about the factors set out in CPR 44.3(5). He had formed a view about how much this case was really worth. This was and was only a money claim; the case turned on a relatively small number of documents, the application of the anti-money laundering regulations and the interpretation of the written contract between the parties; each side had generated additional work (which could not have been envisaged when the costs management order was made); there were no wider factors of reputation or public importance; the vulnerability of the defendant’s witnesses came to light (and became an issue) only after the costs management order was made.
Put shortly, the recorder took the view that the judge who made the costs management order did so on a basis that had turned out to be completely wrong. Had the judge known what the recorder knew at the time of the costs judgment, it was vanishingly unlikely that this case would have been allocated to the multi-track and it was “all but inconceivable” that the parties would have been allotted 3.5 days of court time for the trial. Even if it had been treated as a multi-track trial, the shorter time estimate ought to have led the court to approach the cost budgeting exercise in a very different way. The parties would have been expected to cut their cloth much better to reflect the pleaded value of the claim.
The recorder wished to emphasise that nothing in the previous paragraph was intended as any criticism whatsoever of the case managing judge (who would no doubt have dealt with this case as part of a busy list and on the basis of the limited information provided by the parties) nor to suggest that there was any impropriety on the part of any of the lawyers.
The recorder recognised that this was the claimant’s claim and that it might be thought unfair to visit his misjudgement upon the defendant as the receiving party.
However, there were three main reasons why this did not prevent the recorder from concluding that he ought to depart from the approved budgets.
- First, it is the duty of all parties (and not just a claimant) to assist the court to manage a case proportionately. If a defendant falls into the same errors as a claimant (or different errors with the same consequences) in over-egging a claim at the case management stage, then that defendant shares responsibility for the consequences.
- Second, the effect of this decision was not to ignore the approved budget altogether, but to permit departure from it. In that regard, the defendant was right to draw attention to the fact that the claimant had been well aware of the potential scale of his liability for a long time. And a receiving party’s last approved or agreed budget is one of the factors that the court will have regard to, applying CPR 44.4(3)(h).
- Third, and in the particular circumstances of this case, it seemed rather more appropriate to evaluate the ways in which the paying party had generated additional work at the end of the claim, rather than at the case management stage.
The recorder therefore concluded that there was a good reason to depart from the defendant’s approved (and revised) cost budget.
Summary Assessment
Having reached conclusions about what costs orders to make and as to the effect of the costs management orders, the recorder turned to the summary assessments that both parties agreed should be carried out.
In undertaking a summary assessment, the recorder’s task was not to undertake a detailed, item by item analysis, but to arrive at a figure which reflected, on a broad-brush basis, costs which were reasonably incurred and reasonable in amount, having regard to the overriding objective and the principle of proportionality. The court must have regard to the factors identified in CPR 44.4(3).
Since the assessment was on the standard basis, the court would only allow costs which are proportionate to the matters in issue, even if they were reasonably or necessarily incurred, and if there was any doubt as to whether costs were reasonably and proportionately incurred or reasonable and proportionate in amount, then that doubt would be resolved in favour of the paying party: CPR 44.3(2).
The Claimant’s Costs
The claimant claimed £54,115 in respect of his costs caused by the defendant’s late disclosure. These were set out in his three-page Precedent T, dated 6 February 2026, with his solicitor’s comments and those of the defendant’s solicitors (together with their offer in respect of each line) on the pages that followed. The amount offered by the defendant in respect of the variation to the budget was £18,000.
Having read all of the comments and considering the work that was necessitated by the late disclosure, with a cross-check for proportionality, the recorder assessed these costs at £27,000 (plus VAT, giving a net figure of £32,400).
The Defendant’s Costs
The recorder turned next to the defendant’s costs, which he dealt with in two parts.
First, he considered the costs of the strike out application, which costs were not the subject of any costs management order and which totalled £59,513.67 (of which £45,772 were solicitors’ costs). 98 solicitors’ hours were spent on the application, including 30.8 hours at grade A and 35.9 hours at grade B.
In the recorder’s judgment, this application could and should have been conducted much more modestly. It was unsuccessful, inasmuch as it was framed as a strike out application, and it was grossly disproportionate to spend more than twice the amount stated on the Claim Form to try to achieve that end.
Using the information available to him, the recorder took the view that the amount that the defendant should recover in respect of this application was £15,000 and he assessed its costs in that amount.
The recorder turned next to the defendant’s costs of the claim as a whole, noting that some of those costs were budgeted and others were not. He also noted that the defendant sought a further £30,000-odd for the hearing that took place on 21 May (which were not included in its “Quantification of Costs” document).
With that additional £30,000, but removing the costs arising out of the late disclosure and of the strike out application, the total costs claimed by the defendant was around £225,000.
The recorder had already explained that the solicitors’ hourly rates required a significant reduction, regardless of the time that was deemed to be recoverable. These accounted for roughly £165,000, with counsel’s fees being the other £60,000.
Having been through the defendant’s analysis more than once, and having performed his own calculations on the figures with which he had been provided, the recorder reached the conclusion that this “rump” of the defendant’s costs should be assessed at £113,750.
He arrived at that figure having conducted a more detailed review, during which he analysed all of the information provided to him for each phase, albeit with a broad brush. In particular, he assessed the disclosure phase at £0 (reflecting his earlier conclusion); he applied very significant reductions to the first two phases (arriving at a figure of £30,000 between them); and he reduced the witness statement phase to £15,000, to reflect his view that one of the defendant’s witness statements should not have been prepared (because that witness had very little, if any, relevant evidence to give) but acknowledging that the task of preparing the statement of the person who became the defendant’s only live witness was not straightforward. He made more modest reductions to the other phases and he allowed only a further £8,000 in respect of the costs on the schedule for the hearing on 21 May.
In arriving at that figure of £113,750, the recorder considered proportionality and concluded that it was a reasonable and proportionate amount in respect of the costs and the work that were the subject of the assessment.
Stay of the Order for Payment
At the end of the parties’ submissions, the claimant asked what would happen if, as turned out to be the case, the recorder were to order him to pay a sum of money in respect of costs and his application for permission to appeal the substantive judgment had not been determined.
The recorder enquired of the claimant whether there was any temporary issue that might prevent him from paying or if there were grounds for believing that the defendant might be unable to repay him, in the event that an appeal were successful and the costs order reversed. The claimant did not identify anything specific that he wanted the recorder to take into account.
In those circumstances, and as the recorder indicated at the time, he said that he would not grant a stay, but that, unless the defendant objected, he would allow a period of 35 days for the claimant to pay the sum ordered, which was considerably longer than the default period of 14 days. He chose that period because it ought to allow sufficient time for the claimant to obtain advice on whether to apply for permission to appeal from the High Court and, if appropriate, to apply for and receive a decision on an application for a stay (from the High Court), whether in the context of his pending application for permission to appeal the substantive judgment or, if he decided that there were grounds for challenging it, in what might become his application for permission to appeal the costs judgment.
Given that the defendant did not object to the claimant’s having 35 days within which to pay any costs that might be ordered, the recorder allowed that timeframe rather than ordering any stay of execution or enforcement.
Conclusions
The recorder observed that the claim had exacted a high price, financially and emotionally, on those involved. It should never have reached this point. Neither side would regard himself or itself as the winner.
The defendant was ordered to pay the claimant’s costs arising from its late disclosure, which the recorder summarily assessed at £27,000 (plus VAT, giving a net figure of £32,400).
However, the claimant was ordered to pay the defendant’s costs of the claim (including its strike out application but excluding the disclosure phase), which the recorder summarily assessed at £128,750.
There was a setting-off of those two amounts, with the consequence that the claimant was required to pay the defendant £96,350. He was given five weeks, until 8 July 2026, within which to make payment.
▶ Watch the case summary
Costs budgeting trumps detailed assessment… to an extent
CPR 3.18(b): Good Reason To Depart?
The Correct Approach To Summary Assessment | Guideline Hourly Rates Up By 35%?
CPR 3.15A | Costs Budget Revisions | Significant Developments And The Need To Act Promptly
