High Court Slashes Claimants’ Costs Budgets by 62% In NOx Emissions Litigation

The High Court applied robust costs management under CPR 3.15, slashing claimants’ costs budgets by 62% in the NOx emissions group litigation’s second costs management hearing, criticising persistent “over-lawyering” including 32 fee earners attending case management conferences and rejecting attempts to exceed previously approved Tranche 2 baselines.

VARIOUS CLAIMANTS V MERCEDES-BENZ GROUP AG AND OTHERS; FORD MOTOR COMPANY AND OTHERS; NISSAN MOTOR CO., LTD AND OTHERS; STELLANTIS AUTO SAS AND OTHERS AND OTHERS [2025] EWHC 2307 (KB)

In Various Claimants v Mercedes-Benz Group AG & Ors, the High Court conducted its second costs management hearing for the NOx emissions group litigation, addressing budgets for Tranche 3 (Quantum Trial) and Second General costs. The central costs issue was whether claimants had learned from previous judicial criticism of “over-lawyering” – they had not. Despite claiming to have absorbed lessons, claimants sought £55.7m for Tranche 3 and £19.8m for Second General costs, including 32 fee earners attending case management conferences. The court applied Tranche 2 budgets as comparators, ruling that shorter, less complex proceedings should attract lower costs, not higher ones. It established a 20% tolerance principle for defendants performing similar tasks and severely restricted non-lead solicitors’ recoverable common costs. The court deferred Expert Reports and ADR phases due to irreconcilable differences between parties’ assumptions. Final approved budgets represented dramatic reductions: £21m for claimants and £48m for defendants in Tranche 3. The decision reinforces that unprecedented litigation scale does not justify unlimited budgets and demonstrates robust judicial control over group litigation costs through comparative analysis and proportionality principles.

“This summary illustrates the collision between over analysis of process and over lawyering... it cannot be reasonable for the Lead Solicitors to be regularly working for 84 hours per 45 minute meeting... The purpose of having Lead Solicitors is for them to carry out the legal work in an efficient and cost effective manner... If this level of communication... is considered necessary... they will need to make a contribution to those communications. They are far beyond what is reasonable and proportionate in this litigation.”

Citations

Kazakhstan Kagazy Plc v Zhunus [2015] EWHC 404 (Comm) Recoverable costs must be both reasonable and proportionate, even if the actual costs incurred by a party were justified from their own perspective. Mastercigars Direct Ltd v Withers LLP [2009] EWHC 651 (Ch) A solicitor’s estimated costs are conventionally treated as accurate where the final bill does not exceed the estimate by more than 20%, supporting this margin as a threshold for acceptability. Vardy v Rooney [2025] EWHC 1027 (KB) Incurring higher-than-budgeted costs may be relevant only if an indemnity basis costs order is made, permitting recovery beyond formally approved budgets.

FERNANDEZ V FERNANDEZ [2025] EWHC 2373 (Ch)

Section 51 Costs Jurisdiction Injunction Without Claim Form | Gotti

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

Key Points

When assessing costs budgets in comparable litigation phases, the figures allowed in prior tranches of the same proceedings serve as a strong benchmark and may act as a ceiling unless material differences in scope or complexity are demonstrated. [25–27]
Budgets exceeding comparable precedent figures by more than 20% require specific justification; otherwise, they fall outside the reasonable and proportionate range of figures and may be reduced. [31–33]
Costs claimed for work by non-lead solicitors in group litigation are recoverable only where justified by necessity, non-duplication, and clear benefit to the litigation; general monitoring or parallel input typically falls outside recoverable common costs. [39–41]
In group litigation, budgeting for hearing attendance must be limited to personnel whose presence is necessary for efficient case progression; attendance figures must reflect proportionate resourcing and should not include excessive in-person or remote participants. [20, 50]
Budgeting for phases such as expert evidence or settlement/ADR should be deferred where assumptions on scope and approach remain speculative or deeply contested, as meaningful costs management requires a common factual framework. [124–126]

If this level of communication between solicitors at the various levels on the claimants’ side (as well as their clients) is considered necessary by them, then they will need to make a contribution to those communications. They are far beyond what is reasonable and proportionate in this litigation. There appears to be no attempt to provide an update that could be used by all in some cost effective manner.

Key Findings In The Case

The Claimants’ budgets for the Co-ordination, CMC and PTR phases were found to be substantially excessive due to overstaffing and inflated estimates of necessary attendance and preparation work; for example, 32 fee earners were listed for attendance at CMCs, resulting in a claimed £3.3 million, which the court reduced significantly as disproportionate and indicative of continued “over-lawyering” despite earlier judicial criticism [20, 50–51, 104].
Costs incurred by non-lead solicitors acting for Claimants in group litigation were ruled as not recoverable under common costs unless strictly justified; the court held that time spent by such firms monitoring or duplicating the work of lead solicitors did not confer a recoverable benefit and should generally be claimed as individual costs or not at all [39–41].
In the Second General phases, the Claimants’ claimed £8.7 million in costs (excluding ADR), which the court reduced to £1.43 million, finding that detailed breakdowns only revealed unjustified and wasteful duplication, particularly in relation to excessive coordination updates and internal reporting structures such as Steering Committees and Claimant Committees [110–113].
The Tranche 3 witness statement and disclosure phases saw the Claimants’ budgets reduced markedly as the court found that the complexity and scale of work had been significantly overstated relative to Tranche 2, with no sufficient justification for higher figures; for example, nearly £1 million sought for disclosure for each Claimant GLO was reduced where expert/counsel input had been inappropriately budgeted [73, 80–83, 88–89].
The court refused to approve budgeting for the Expert Reports and ADR phases, on grounds that they remained speculative and insufficiently defined; it ruled that without consensus or defined procedural direction on expert types or settlement processes, meaningful costs management could not yet occur in those phases [124–126].

The allowed budget for the claimants requires them to look at how they are dealing with these meetings and to scale the process back. The same applies to the defendants and, as such, we think the reduced figure of £2,000 per meeting satisfies that approach rather than remaining with the figure from Tranche 2.

The High Court’s decision in Various Claimants v Mercedes-Benz Group AG & Ors [2025] EWHC 2307 (KB) demonstrates the court’s continued determination to control excessive costs in large-scale group litigation through robust budgeting reductions.

Background

The judgment concerns the second Costs Management Hearing (CMH) in the NOx Emissions Group Litigation, a series of consolidated Group Litigation Orders (GLOs) concerning claims against various vehicle manufacturers. The litigation is being case managed in tranches. The first trial (Tranche 1) on “KBA Issues” took place in October 2024. The second trial (Tranche 2) on “Prohibited Defeat Devices” (PDD) is scheduled for October 2025. The costs for these tranches were managed at the first CMH.

This second CMH dealt with the costs budgets for the third tranche of the litigation (Tranche 3) and a second period of general costs (Second General). Tranche 3, the “Quantum Trial”, concerns issues of causation and loss and is listed for eight weeks in October/November 2026. The Second General budget covers the period from Spring 2026 up to the Quantum Trial. The court was required to approve budgets for 63 Precedent Hs, comprising 390 costed phases, with total sums claimed of £55.7 million (claimants) and £75.8 million (defendants collectively) for Tranche 3, and £19.8 million (claimants) and £3.6 million (defendants) for the Second General phase.

The Lead GLO involves claims against Mercedes-Benz. Additional Lead GLOs (ALGLOs) involve Ford, Peugeot/Citroën (PCD), and Nissan/Renault. Claims against other manufacturers (e.g., BMW, Vauxhall, Volkswagen) are designated as Non-ALGLOs. The case management directions limited the participation of Non-ALGLOs in the upcoming trials, which was a key factor in the costs budgeting exercise. The claimants structured their budgets to distinguish between “Pan NOx” work (involving all GLOs), “Lead and ALGLO” work, and “GLO specific” work.

Costs Issues Before the Court

The primary task for the court was to determine the reasonable and proportionate budgeted costs for the future phases of the litigation, namely Tranche 3 and the Second General period. The key costs issues included:

1. The appropriate level of reduction to the claimants’ budgets to address continued “over-lawyering”, a criticism made in the first CMH judgment.
2. The relevance of the budgets approved for the longer and more complex Tranche 2 trial as a comparator for setting Tranche 3 budgets.
3. Whether to allow standard figures for defendants performing similar tasks or to recognise a range of reasonable and proportionate costs.
4. The recoverability of common costs claimed by numerous non-lead solicitors’ firms instructed by individual claimants within the GLOs.
5. The reasonableness of the high number of fee earners the claimants had budgeted to attend hearings such as CMCs, the PTR, and the trial.
6. Whether to approve budgets for the Expert Reports and ADR/Settlement phases at this stage or to defer this decision.

The Parties’ Positions

The defendants’ overarching position was that the claimants had failed to learn lessons from the first CMH and continued to advance unrealistic budgets characterised by excessive manpower and duplication. They argued that the budgets for Tranche 3 should generally be lower than those for the longer and more complex Tranche 2 trial. They criticised the claimants’ structure of involving multiple law firms and the vast number of fee earners budgeted for hearing attendance. For their own budgets, defendants generally sought to justify their figures based on the specific work required, though the claimants alleged some defendants were budgeting at lower rates than they were actually incurring.

The claimants argued they had responded to the first judgment by providing more detailed justification for their figures and by reallocating work within their budget structure. They contended that the “lived experience” of Tranche 2 had demonstrated that more work was required than initially anticipated, justifying higher figures for some Tranche 3 phases. They defended the involvement of non-lead firms, citing a solicitor’s duty to keep clients informed and the right of clients to choose their representation. For the defendants’ budgets, the claimants often made standard offers to groups of defendants (e.g., all Non-ALGLOs), arguing a single figure could be reasonable and proportionate for similar tasks.

The Court’s Decision

The court, applying the overriding objective and the principles of costs budgeting, made significant reductions to the budgets of both parties, particularly the claimants. The approved figures are set out in the conclusion below. The court’s key findings and rationale were as follows:

- Over-lawyering and Lessons from the First CMH: The court found that the claimants’ efforts to provide more detail did not justify the “enormous amounts of time claimed”. It upheld the criticism of “over-lawyering”, citing as an example the claimants’ budget for 32 fee earners to attend CMCs at a cost of £3.3 million. The court found the claimants’ approach, particularly the layers of representation and involvement of multiple non-lead firms, led to duplication and inefficiency.
- Comparison with Tranche 2: The court agreed with the defendants that the budgets approved for Tranche 2 were a relevant starting point and that, given the shorter length and less complex nature of the Quantum Trial, Tranche 3 budgets should generally be lower, not higher. The court expected improved cooperation and lessons learned from Tranche 2 to lead to more economical working.
- Standard Figures vs. a Range: The court held that where defendants were undertaking the same tasks, a standard figure could be reasonable and proportionate. It noted that figures within 20% of a reasonable comparator could be considered within an acceptable range. However, figures more than 20% above a reasonable comparator required specific justification, which was often lacking.
- Non-Lead Solicitors’ Costs: The court severely restricted the common costs recoverable by non-lead firms. It held that work such as keeping abreast of developments for client advice was primarily a solicitor-client matter, not recoverable between the parties. For sample claimants represented by non-lead firms, the cost of drafting witness statements or pleadings should be no more than if the work had been done by the lead solicitor.
- Hearing Attendance: The court drastically reduced the claimants’ budgets for hearing attendance. It found the number of fee earners budgeted (e.g., 9 in person and 21 remotely for CMCs) to be unreasonable. For the trial, the court approved a team of only 4 fee earners from each lead firm attending in person, with no allowance for attendance by fee earners from other firms.
- Specific Phase Reductions: The court made detailed reductions across all phases. For example, the claimants’ sought £3.3m for two CMCs was reduced to £850,000; their £1.4m for the PTR was reduced to £300,000. The defendants’ budgets were also reduced in many phases where they were found to be excessive, such as Vauxhall’s budget for reviewing statements of case.
- Deferral of Expert Reports and ADR Phases: The court declined to budget the Expert Reports phase because the scope and necessity of this evidence was still to be determined at a future CMC. The ADR/Settlement phase was also deferred because the parties’ assumptions were too far apart (£11m claimed by claimants vs. £1.8m by defendants) to make sensible budgeting possible at this stage. The court proposed to reconsider these phases in January 2026.
- Second General Costs: The court found the claimants’ claimed management costs of nearly £20m to be “frankly staggering” and illustrative of a “wildly inefficient” approach. The budget was based on assumptions of excessive monthly updates to a vast number of lawyers and clients. The court allowed only a modest sum for essential register updates and communication, significantly reducing the budget to £1.43m.

In conclusion, the court approved the following total budgets:

- Tranche 3: Claimants: £21,024,850.01 (from £55.7m claimed); Defendants: £48,058,002.04 (from £75.8m claimed).
- Second General: Claimants: £1,430,000.00 (from £19.8m claimed); Defendants: £1,319,114.70 (from £3.6m claimed).

CPR 3.15A | Costs Budget Revisions | Significant Developments And The Need To Act Promptly

Directly relevant as it covers CPR 3.15A budget revision applications which relate to the costs management framework applied in the NOx case

Costs Management Hearing | Unrealistic Budgets May Face Adverse Costs Orders

High Court decision (2025) discussing excessive costs budgets and judicial warnings about “unrealistic” budgets, highly relevant to the over-lawyering theme

Costs Budgeting and Costs Management – What You Need To Know

Essential background on CPR 3.15 costs management rules and procedures that practitioners need to understand the NOx judgment

Reasonable Joint Costs Recoverable In Full Regardless Of Number Of Defendants

Recent High Court decision (2025) on common costs in multi-party litigation, relevant to the GLO cost recovery issues

Budgets, Hourly Rates, Good Reason and Proportionality

Analysis of how courts assess reasonable and proportionate costs under CPR 3.18, relevant to the budget assessment principles

Significant developments and incurred costs

Chief Master Marsh decision examining costs budgeting practicalities and significant development applications

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