Solicitor's Costs Budget Figure, Prepared on Reasonable and Proportionate Basis, Does Not Inherently Constitute Misleading or Improper Conduct Under CPR 44.11

VARDY V ROONEY [2025] EWHC 851 (KB)

Vardy v Rooney [2025] EWHC 851 (KB) addressed procedural issues concerning costs budgeting and potential professional misconduct in legal proceedings. The case involved an appeal against a costs judge’s decision regarding the Defendant’s legal team’s conduct in completing Precedent H costs budgets. The court considered whether the Defendant’s solicitors had acted unreasonably or improperly by presenting incurred costs figures that were lower than actual costs without explicitly explaining this approach during costs management hearings. Mr Justice Cavanagh, with the assistance of Acting Senior Costs Judge Jason Rowley, applied the principles from Bamrah v Gempride to assess potential misconduct under CPR 44.11. The judgment emphasised the importance of transparency in costs budgeting while maintaining a narrow interpretation of “unreasonable” and “improper” conduct. Ultimately, the court found that while the Defendant’s legal advisers could have been more transparent, their actions did not cross the threshold of misconduct, and the appeal was consequently dismissed. The decision underscored the appellate court’s approach of judicial restraint in evaluating costs-related conduct, particularly where the first-instance judge had made a careful evaluative judgment.

“In embarking on a resolute attack on Mrs Vardy’s incurred costs, it behoved them to set out, or to explain, that the costs shown on their client’s budget as incurred costs was in fact only part of the picture. However, on balance, and I have to say only just, I cannot say, given the uncertainty of the wording of the statement of truth and the assumption that Mrs Rooney’s solicitor could have made as to the basis of Mrs Vardy’s costs, that the failure to be transparent was sufficiently unreasonable or improper within the definition as provided by the Court of Appeal in Bamrah.”

Citations

Bamrah v Gempride Ltd [2018] EWCA Civ 1367; [2019] 1 WLR 1545 Conduct is unreasonable under CPR 44.11 if it permits of no reasonable explanation and improper if it breaches professional duties or would be so regarded by consensus professional opinion; dishonesty is not a necessary element. Pan-NOx Emissions Litigation [2024] EWHC 1728 (KB) Where incurred costs in Precedent H are reduced from actual costs for proportionality reasons, transparency is required, especially if adverse comparisons are drawn with the opponent’s budget. Bailey v IBC Vehicles Ltd [1998] 3 All ER 570 Solicitors, as officers of the court, have a duty not to mislead the court in the submission of costs, and any failure to uphold this standard may constitute professional misconduct.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

In determining misconduct under CPR 44.11, the threshold for “unreasonable” conduct is conduct that permits of no reasonable explanation, whereas “improper” conduct is that which the consensus of professional opinion would regard as improper; neither concept requires proof of dishonesty. [20]
It is not inherently improper or unreasonable for a party to enter lower incurred costs in Precedent H than the actual incurred costs, provided the figures reflect what the legal adviser considers to be reasonable and proportionate for the purposes of costs management on the standard basis. [5, 7, 35]
Solicitors are under a professional duty to the court not to mislead or allow the court to be misled; this duty includes the expectations of transparency in costs budgeting and accuracy in certification of Precedent H. [20(1), 20(8), 64]
A judge determining an application under CPR 44.11 engages in an evaluative assessment that will not generally be overturned on appeal except where there has been an error of law, error in reasoning process, or a conclusion no reasonable judge could have reached. [39-41]
The burden of proving misconduct under CPR 44.11 rests with the applicant; if a real possibility of a non-culpable explanation remains, the application must fail. [20(5), 57]

“If a party is saying that its proportionate incurred costs are X pounds, whereas in fact its actual incurred costs are two X pounds, it cannot reasonably criticise its opponent for incurring two X pounds without stating that its own costs were actually two X pounds and that is where I would criticise [the Defendant’s] lawyers.”

Key Findings In The Case

The Defendant’s solicitors entered incurred cost figures in Precedent H that were materially lower than the Defendant’s actual incurred costs at the time, on the basis that they reflected only those amounts which, in their view, would be reasonable and proportionate and recoverable on a standard basis; this was accepted as a legitimate approach under the Precedent H framework. [5, 23, 35]
The Judge found that it was a plausible assumption, open to the Defendant’s solicitors, that the Claimant’s solicitors had adopted the same “reasonable and proportionate” basis in preparing their own Precedent H costs, and that there was insufficient evidence to prove that they knew the Claimant’s costs figures were based on actual expenditure. [9, 16, 18, 49-55]
The Judge accepted that the Defendant’s legal representatives heavily criticised the Claimant’s incurred costs during the costs and case management hearings, but concluded that none of the written or oral submissions clearly or necessarily indicated that they knew the Claimant’s figures were actual rather than adjusted figures, and therefore they had not intentionally misled the court. [6, 27-34, 68]
While the Judge criticised the Defendant’s solicitors for a lack of transparency in failing to clarify that their incurred costs in Precedent H were discounted, he ultimately held that this omission did not cross the threshold of “unreasonable or improper” conduct required under CPR 44.11. [8, 17-18, 64]
The Judge found that, given the ambiguity in the wording of the Precedent H statement of truth and the lack of direct evidence rebutting the explanation offered by the Defendant’s solicitors, the Claimant had failed to discharge the burden of proof required to establish professional misconduct under CPR 44.11. [9, 18, 20(5), 57]

“In my judgment, the Judge was entitled to find that the assumed misunderstanding as to the approach taken in Precedent H was a real possibility and, on that basis, the conduct concerned, whilst deserving of criticism for lack of transparency, did not cross the line into misconduct as understood under CPR 44.11 and clarified in Bamrah.”

Background

The Vardy v Rooney case concerned defamation proceedings brought by Rebekah Vardy (the Claimant) against Coleen Rooney (the Defendant). The Claimant’s claim was unsuccessful, leading to an order by Steyn J requiring the Claimant to pay 90% of the Defendant’s costs on an indemnity basis. A subsequent hearing from 7 to 9 October 2024 before Senior Costs Judge Andrew Gordon-Saker examined preliminary issues concerning the Defendant’s Bill of Costs. The present appeal, brought by the Claimant, contested one aspect of the judgment dated 8 October 2024 concerning allegedly improper or unreasonable conduct by the Defendant’s legal team under CPR 44.11(1)(b). Specifically, the appeal focused on whether the Defendant’s solicitors had created a misleading impression during costs budgeting by understating incurred costs and criticising the Claimant’s higher figures without full transparency.

Costs Issues Before the Court

The core issue was whether the Senior Costs Judge was correct in declining to find that the Defendant’s legal representatives acted improperly or unreasonably under CPR 44.11(1)(b). If such conduct had been established, the court would then consider whether to impose a sanction under CPR 44.11(2)(a) by disallowing some of the Defendant’s recoverable costs. The appeal’s focus was strictly on the conduct of the Defendant’s legal representatives in submitting Precedent H, a costs budgeting document which must include a statement of truth. The Claimant argued that the Defendant’s lawyers created a misleading impression by providing understated incurred costs figures without clarifying that these figures were estimates of what would be recoverable on a standard basis, not the actual costs incurred.

The Parties’ Positions

The Claimant contended that the Defendant’s legal team failed to be transparent about their Precedent H figures, leading to a misleading comparison with the higher costs figures in the Claimant’s Precedent H. This lack of clarity allegedly prevented an accurate assessment of costs and improperly influenced the costs budgeting process. The Claimant argued that this constituted unreasonable and improper conduct, warranting a sanction under CPR 44.11.

Conversely, the Defendant maintained that their Precedent H figures were prepared accurately based on a reasonable and proportionate assessment of costs, as they believed was required by CPR guidelines. The Defendant’s team posited that they assumed the Claimant’s figures were similarly prepared, thus negating any intent to mislead. The Respondent’s Notice added that no adverse inferences could be drawn against the Defendant’s counsel or their solicitors without waiving privilege or having sought cross-examination.

The Court’s Decision

The High Court upheld the Senior Costs Judge’s decision, finding that the Claimant had not met the burden of proving that the Defendant’s legal team acted improperly or unreasonably. The judge acknowledged some lack of transparency but concluded it fell short of misconduct under CPR 44.11. The court identified no misleading conduct that would meet the narrow definitions of “unreasonable” or “improper” as clarified in Bamrah v Gempride Ltd. The court reasoned that the Defendant’s legal team might reasonably have assumed the Claimant’s costs figures were similarly adjusted for proportionality. Therefore, the submission that the Defendant’s legal team should have been more transparent was accepted as a justified criticism but did not rise to the level of unreasonable or improper conduct requiring a sanction.
Ultimately, the appeal was dismissed, reinforcing the importance of clear and transparent communication in costs budgeting while recognising that failure to provide perfect transparency does not inherently constitute actionable misconduct under CPR 44.11.

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