SCCO Rules That Solicitors Act Proceedings Qualify As "Claims" For CPR 25.26 Purposes But Dismisses Security Application On The Facts

Costs Judge Nagalingam confirms solicitors may seek security for costs in Solicitors Act assessments, but dismisses application where client’s conversion of liquid funds into unencumbered property and debt repayment did not constitute putting assets beyond reach under CPR 25.27(b)(vi).

Security for costs Solicitors Act CPR 25.27 asset dissipation detailed assessment proceedings

PICKERING V THOMAS MANSFIELD SOLICITORS LIMITED [2025] EWHC 3021 (SCCO)

In Pickering v Thomas Mansfield Solicitors Limited, Costs Judge Nagalingam dismissed a solicitor firm’s application for £150,000 security for costs in detailed assessment proceedings under the Solicitors Act 1974. The firm sought security under CPR 25.27(b)(vi), arguing the client had dissipated assets by using £650,000 from gold and jewellery sales for mortgage repayments, property investments, and debt settlements. The court held that Solicitors Act proceedings, though initiated by statutory application rather than traditional claim form, constitute a “claim” for CPR 25.26 purposes, permitting security applications. However, the condition in CPR 25.27(b)(vi) was not satisfied. The client’s transactions converted liquid funds into other enforceable assets—including unencumbered properties—rather than placing assets beyond reach. The court rejected adverse inferences, noting the evidential burden rested on the applicant solicitor, who had failed to utilise disclosure procedures. Given substantial payments already made, the client’s compliance with prior orders, and the assessment’s imminence, ordering security would not be just under CPR 25.27(a). The firm was ordered to pay the client’s costs.
Link to full judgment

The ultimate question is has ‘the claimant has taken steps in relation to their assets that would make it difficult to enforce an order for costs against them.’ On the evidence before me the answer is no. None of LP’s assets have been put beyond the reach of TM… I consider that both in the drafting of the application, and preparation for the hearing, it has dawned on TM that they may have been better served by making an application for a further payment on account rather than pursuing the more onerous route of seeking an order for security for costs.

Citations

Keary (1995) Cited in relation to the court’s ability to draw inferences concerning a party’s financial position when considering an application for security for costs.  
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Key Points

  • An application for security for costs under CPR 25.26 is procedurally permissible in Solicitors Act 1974 assessment proceedings because the proceedings as a whole constitute a “claim” for the purposes of the rule, even though they are initiated by the party who owes money to the solicitor. [32-34, 37-40, 44]
  • For an order for security for costs to be made under CPR 25.27(b)(vi), the applicant must demonstrate that the claimant has taken positive steps in relation to their assets that would make it difficult to enforce a costs order; the mere conversion of liquid funds into other forms of property, such as paying down a mortgage or purchasing real estate, does not of itself satisfy this condition if the new assets remain available for enforcement. [61, 63, 69-70, 87, 94]
  • The court will not infer that a party has taken steps to put assets beyond reach under CPR 25.27(b)(vi) where the applicant has not utilised available procedural mechanisms, such as a request for further information under Part 18 or an application for specific disclosure, to obtain evidence supporting such an inference. [46-47, 59, 85]
  • When considering whether to attach an automatic sanction for non-compliance to an order under CPR 3.1(3), the court will generally prefer to order payment by a certain date with liberty to apply for an unless order in the event of default, rather than imposing an immediate sanction, even where there has been a prior history of late payment. [16-17]
  • The court’s discretion to order security for costs under CPR 25.27(a) must be exercised justly, taking into account all circumstances, including substantial payments already made by the respondent on account, the imminence of the final hearing, and the reasonableness of the applicant’s own estimated costs of the proceedings. [95-97, 99]

"In so far as CPR 25.27(b)(vi) refers to 'assets', not cash or liquidated sums...taking steps to make one asset (Westholme Farm) mortgage free, and another (Hopewell House) a nearly unencumbered property, arguably amounts to the taking of steps which makes it easier to enforce an order for costs."

Key Findings In The Case

  • The claimant, Lisa Pickering, had already paid over 57% of the total fees claimed by the defendant solicitors, Thomas Mansfield, on account at the time of the application, including compliance with an unless order that had been imposed for late payment, thus significantly reducing any justification for further protective costs measures [11, 13, 96].
  • The court found there was no evidence that the claimant had taken deliberate steps to place her assets beyond the reach of the defendant, as her financial transactions—such as property acquisitions, mortgage repayments, and the transfer of funds to a relative’s business—left the assets readily available for enforcement in the event of an adverse costs order [61, 67, 82, 87].
  • The defendant’s application for security for costs lacked supporting new or clarifying evidence, relying solely on the claimant’s voluntary financial disclosures and failing to utilise procedural avenues such as Part 18 requests or applications for specific disclosure to reinforce their position regarding enforceability concerns [46-47, 49, 59, 85].
  • The court rejected the defendant’s estimated £400,000 costs of assessment as lacking persuasive justification, noting that such a quantum raised serious doubts as to proportionality and would likely be subject to considerable scrutiny and reduction at any subsequent detailed assessment [21, 97].
  • In exercising its discretion under CPR 25.27(a), the court held that it would not be just to make a security for costs order in light of the substantial payments already made, the procedural compliance by the claimant, the imminent detailed assessment hearing, and the alternate remedies available to the defendant that were not pursued [95-97, 99].

"In so far as Mr Thomas references the court's entitlement to draw inferences as "Per Keary (1995) quoted in Practical Law" at paragraph 2(vi) of his skeleton argument, I am not assisted because the Claimant is not denying she has the funds to satisfy a security for costs order. Thus I reject that the burden is on LP. That burden only arises where she is claiming "insufficient funds to provide the security"."

The Senior Courts Costs Office’s decision in Pickering v Thomas Mansfield Solicitors Limited [2025] EWHC 3021 (SCCO) confirms that security for costs applications are procedurally permissible in Solicitors Act assessment proceedings and applies CPR 25.27(b)(vi) to conclude that mortgage repayments and property investments did not constitute putting assets beyond reach.

Background

The matter concerned an application by Thomas Mansfield Solicitors Limited (TM) dated 25 September 2025 for security for costs in the sum of £150,000 against Lisa Pickering (LP). The application arose within detailed assessment proceedings under the Solicitors Act 1974, where TM’s invoices totalling £2,533,579.14 were subject to assessment. TM had already received payments on account amounting to £1,175,849.50. [§8]

A previous order dated 9 April 2025 had required LP to make a payment on account of £276,000 in instalments. LP had initially failed to comply with that order, leading to an unless order. However, she had since complied with the instalment schedule, and at the time of the hearing was not in breach. The final instalment was due by 4 November 2025. [§9-11]

The detailed assessment hearing was scheduled to commence on 25 November 2025, with preliminary issues to be determined, followed by further hearing days in January 2026. The application for security for costs was made approximately two months before the detailed assessment was due to begin, despite the notice of detailed assessment hearing having been issued on 15 April 2025. [§5-7]

Costs Issues Before the Court

The court was required to determine TM’s application for security for costs, which was brought under CPR 25.27(b)(vi), and alternatively under CPR 3.1(3)(a) & (b), CPR 3.1(5)(a) and (b), and CPR 25.21(2). [§4]

The primary issue was whether LP had taken steps in relation to her assets that would make it difficult to enforce an order for costs against her, pursuant to CPR 25.27(b)(vi). [§51, §61]

A threshold procedural issue arose as to whether the application was permissible in Solicitors Act proceedings at all, given that such proceedings are initiated by a client’s statutory application for assessment under Section 70 of the Solicitors Act 1974 rather than by traditional claim form. This raised the question of whether they constitute a “claim” for CPR 25.26 purposes. [§32-37]

Additional issues included whether the court should exercise its general case management powers under CPR 3.1 to impose conditions or order a payment into court, and whether an automatic sanction for non-compliance should be attached. [§15-22]

The Parties’ Positions

TM’s Position

TM argued that security for costs was justified under CPR 25.27(b)(vi) because LP had taken steps in relation to her assets that would make enforcement of a costs order difficult. They pointed to LP’s voluntary financial disclosures, which showed she had realised approximately £1.8 million from the sale of gold bars, coins, and jewellery between February 2023 and July 2025. TM highlighted that LP had used £650,000 of these funds to repay alleged debts, pay off mortgages early, purchase a bed and breakfast property for her son, and make other expenditures, without setting aside funds for her liability to TM. [§53-54]

TM submitted that these actions amounted to a dissipation of assets and sought to rely on Keary to support drawing adverse inferences from LP’s financial disclosures. They also contended that the court should use its powers under CPR 3.1 to order a payment into court with an automatic sanction for non-compliance. [§55, §62, §15-18]

LP’s Position

LP opposed the application on multiple grounds. Firstly, she argued that Solicitors Act proceedings did not constitute a “claim” for the purpose of an application for security for costs under CPR 25.26. [§33]

On the substantive issue, LP maintained that her financial transactions did not meet the threshold under CPR 25.27(b)(vi), as she had not taken steps to put assets beyond TM’s reach. LP explained that her actions, such as paying down mortgages on properties like Westholme Farm and Hopewell House, were legitimate financial management that increased equity in enforceable assets. Similarly, the purchase of a bed and breakfast for her son and the repayment of a £215,000 loan to Yorkshire Metal Recycling were investments or debt reductions that did not dissipate assets. [§63-81]

LP noted that TM had not used procedural mechanisms such as Part 18 requests or specific disclosure applications that were available to obtain further financial information from LP. She emphasised that she had never claimed impecuniosity and therefore bore no burden to prove her financial position. [§46-47, §58-59]

LP also criticised TM’s estimated costs of assessment of £400,000 as excessive and unjustified. [§97]

The Court’s Decision

The court dismissed TM’s application for security for costs. [§100]

The Jurisdictional Point

On the threshold procedural point, the court held that Solicitors Act proceedings, though initiated via a Part 8 application under Section 70 of the Solicitors Act 1974, qualified as a “claim” for the purposes of CPR 25.26. [§39-41]

Costs Judge Nagalingam reasoned that whilst a client’s application for assessment is not a claim in the traditional sense, the “case in question” is the Solicitors Act proceedings as a whole, in which the solicitor is defending a challenge to their fees. The court noted that the word “claim” is not defined in CPR 25.26, but the White Book editorial guidance indicates it “usually refers to the whole of the case in question.” [§38]

The court concluded that whilst such applications are unusual and seldom invoked, this did not render them procedurally barred. The court held that CPR 25.26 is permissive and that, on balance, TM had a right to make the application. [§40-44]

CPR 25.27(b)(vi) | The Asset Dissipation Test

The court found that TM had not satisfied the condition under CPR 25.27(b)(vi), which requires proof that “the claimant has taken steps in relation to their assets that would make it difficult to enforce an order for costs against them.” [§87, §94]

The court emphasised the critical distinction between asset dissipation and asset preservation or conversion. LP’s steps in relation to her assets—including selling gold and jewellery, paying off mortgages, investing in property, and repaying debts—did not make it difficult to enforce a costs order. Instead, these actions converted liquid funds into other enforceable assets, such as unencumbered properties, which remained available for realisation. [§87-90]

Specifically, the court found:

      • Mortgage repayments: Paying down mortgages on Westholme Farm (to achieve a mortgage-free property) and Hopewell House (reducing encumbrances) converted liquid funds into increased equity. The court held that “taking steps to make one asset (Westholme Farm) mortgage free, and another (Hopewell House) a nearly unencumbered property, arguably amounts to the taking of steps which makes it easier to enforce an order for costs.” [§64-67, §70]
      • Property investment: The purchase of a bed and breakfast property, which LP’s son intended to use to run a business, represented a conversion of funds into property rather than dissipation. The court observed that “that is still an asset which is available to be enforced against,” though the precise ownership structure and enforcement mechanisms were not examined. [§68, §91]
      • Loan repayment: The £215,000 repayment to Yorkshire Metal Recycling (LP’s brother’s company) was explained by evidence that Yorkshire Metal Recycling had earlier advanced £285,000 to fund LP’s case by making direct payments to TM. This arrangement was secured by an undertaking drafted by TM themselves, requiring that TM’s fees take priority over repayment to Yorkshire Metal Recycling from proceeds of the sale of Edlington Wood. The court accepted that the net effect of the repayment “must be that more of the proceeds of the sale of Edlington Wood may be redirected to paying off any further costs orders achieved in TM’s favour.” The court concluded “it cannot reasonably be described as a dissipation of funds.” [§76-81]
      • Car purchase: The net expenditure of approximately £17,000 to replace one depreciating asset (a car sold for £15,500) with another (purchased for £31,995) was “not a dissipation of funds but conversion to an asset that may be sold if necessary to meet any later order for costs.” [§71-72]
      • Gold and jewellery sales: The court found that LP’s evidence showed “a trail of payments coming her way as a consequence of her selling ‘investment gold and jewellery,'” and TM had not explained “how the sale of those assets make it difficult for TM to enforce an order for costs against LP.” [§74-75]

The court noted that LP retained substantial assets, including multiple properties (Westholme Farm, Hopewell House, The Barn, a 50% interest in Edlington Wood, a 50% interest in Pondfield House, and the bed and breakfast property). Based on TM’s own analysis of the figures, substantial liquid funds remained available to LP, which the court observed “may be in excess of £1m even after the various payments out,” though no precise quantum was determined. None of these assets had been put beyond TM’s reach. [§82-83, §90-91]

Evidential Burden

The court held that the evidential burden under CPR 25.26(2) rested squarely on TM as the applicant. LP was not claiming impecuniosity and therefore bore no obligation to prove her ability to pay. The court stated: “LP has never claimed impecuniosity and as such is under no obligation to make the type of financial disclosures TM appears to be expecting.” [§45-47, §58-62]

The court noted that TM had not used procedural mechanisms such as Part 18 requests or specific disclosure applications that were available to obtain further financial information from LP. [§59, §85]

The court held that Keary was not relevant to the application because that case concerned a claimant claiming insufficient funds to provide security, whereas LP had made no such claim. The court stated: “I reject that the burden is on LP. That burden only arises where she is claiming ‘insufficient funds to provide the security.'” [§62]

Alternative Grounds

The court also rejected TM’s reliance on alternative CPR provisions:

CPR 3.1(3): Whilst the court has power to attach conditions and sanctions to orders, the court declined to attach an automatic sanction. The court stated it “would not be minded to attach an automatic sanction” and instead preferred to grant liberty to apply for an unless order in case of future non-compliance. [§17]

CPR 3.1(5): No order was made as TM had not identified any specific rule, practice direction, or pre-action protocol that LP had breached. The court found TM “do not make clear which rule, practice direction or relevant pre-action protocol they say LP has not complied with.” [§19-22]

CPR 25.21(2): This provision, which permits multiple interim payment applications, was irrelevant as the application was for security for costs, not an interim payment. The court stated “I do not consider that an application for an interim payment order is before me.” [§23-24]

The Justice Requirement Under CPR 25.27(a)

Separately and in any event, the court held it would not be just to order security for costs under CPR 25.27(a), considering all circumstances of the case. [§95-99]

The court noted:

      • LP had already made substantial payments on account. With the final instalment, TM would have received “just over 57% of the fees they seek from LP.” [§11-13, §96]
      • She had complied with the previous unless order and was not in default of the instalment schedule at the time of the hearing. [§10, §96]
      • The detailed assessment hearing was “very nearly upon us.” [§97]
      • TM’s estimated costs of assessment of £400,000 “strike me as highly excessive and likely to be substantially reduced (if indeed TM are the party who secures an order for costs in their favour).” [§97]
      • TM had alternative procedural options available, including “steps TM could otherwise have taken, whether in the form of an application for a further payment on account or to obtain evidence that might have better supported a subsequent application for security.” [§98]

The court observed that TM “may have been better served by making an application for a further payment on account rather than pursuing the more onerous route of seeking an order for security for costs.” However, the court stated it would “only deal with the application before me,” which left “no realistic scope for compromise of the application itself.” [§92-93]

Costs of the Application

TM was ordered to pay LP’s costs of the application, to be summarily assessed at the start of the preliminary issues hearing if not agreed. In the alternative, the court offered to arrange a short 15-minute remote hearing purely to conduct the necessary summary assessment exercise. [§100]

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PICKERING V THOMAS MANSFIELD SOLICITORS LIMITED [2025] EWHC 3021 (SCCO) | COSTS JUDGE NAGALINGAM | CPR 25.26 | CPR 25.27(B)(VI) | CPR 3.1(3)(A) | CPR 3.1(3)(B) | CPR 3.1(5) | CPR 3.1(6) | SECURITY FOR COSTS | PAYMENT ON ACCOUNT | SOLICITORS ACT 1974 SECTION 70 | DETAILED ASSESSMENT | PART 8 PROCEDURE | UNLESS ORDER | JUSTICE TEST UNDER CPR 25.27(A) | WRITTEN EVIDENCE REQUIREMENT | SCOPE OF “CLAIM” UNDER CPR 25 | ASSET DISSIPATION | VALUATION OF ENFORCEABLE ASSETS | FINANCIAL DISCLOSURE | LIQUIDATED ASSETS | USE OF PART 18 REQUESTS | COSTS OF ASSESSMENT | CONDITIONAL ORDER SANCTIONS | NOMINAL CLAIMANT | ENFORCEABILITY OF COSTS ORDERS | PRACTICAL LAW KEARY (1995) PRINCIPLE | TYPICAL USE OF SECURITY FOR COSTS IN SOLICITORS ACT CLAIMS | LUMP SUM MORTGAGE PAYMENTS | THIRD PARTY FUNDING | REPAYMENT TO SUPPORTING RELATIVES | EDLINGTON WOOD UNDERTAKING | EASTERN DISTRIBUTION OF MONIES | REMOTE HEARING DIRECTIONS | TIME OF APPLICATION RELATIVE TO HEARING DATE | CRITERIA FOR SECURITY UNDER CPR 25 | DEFINITION OF “ASSETS” UNDER CPR 25.27 | UNUSUAL CHARACTER OF APPLICATION WITHIN SCCO | TIMING OF FINAL INSTALMENT PAYMENT | NON-COMPLIANCE CONSEQUENCES UNDER CPR | PROCEDURAL PATH UNDER SOLICITORS ACT | LIQUID VERSUS NON-LIQUID ASSETS | SUMMARY ASSESSMENT OF APPLICATION COSTS