PD57AD | Costs Consequences Of Disclosure Guidance Applications | When Matters Become Formal And Contested

VOLTAIRE CAPITAL HOLDINGS LIMITED & ORS v WATSON & ORS [2025] EWHC 1948 (Comm)

In Voltaire Capital Holdings Limited & Ors v Watson & Ors [2025] EWHC 1948 (Comm), the court considered whether to depart from the default costs position under PD57AD para 11.5 (costs in the case) following a disclosure guidance application that escalated into a contested hearing. The Second Defendant sought additional search terms for electronic disclosure, but the Claimants largely succeeded, with the court ordering only limited exceptions. The Claimants sought costs of £94,159.75, citing the Second Defendant’s unreasonable approach, while the Second Defendant resisted, relying on PD57AD’s cooperative intent and the Claimants’ failure to serve a pre-hearing costs statement under PD44 para 9.5(4)(b). The court held the default position should be displaced, finding the hearing had effectively become a contested disclosure application, with the Claimants substantially successful despite the Second Defendant’s narrow wins on minor issues. The procedural failure on costs statements was immaterial, as costs were foreseeable. On quantum, the court reduced solicitors’ fees from £59,862.75 to £46,000, citing excessive rates and time spent, and cut counsel’s fees by £10,000, finding leading counsel unnecessary. A further 10% reduction (to £63,267) reflected the Second Defendant’s limited success. The final order required the Second Defendant to pay the Claimants’ costs summarily assessed at £63,267.

Paragraph 11.5 sets out the ordinary position in relation to costs, namely that unless otherwise ordered, the costs of an application for disclosure guidance will be costs in the case and no order from the court to that effect is required... A similar position arises in the present case. Although the application is one for disclosure guidance, the manner in which it has been conducted by the parties is consistent with a heavily contested disclosure application rather than an application for informal guidance envisaged by PD57AD.”

Citations

London & Quadrant Housing Trust & Ors v WPHV Ltd & Ors [2024] EWHC 1122 (TCC) Applications raising substantive disputes about privilege or redactions that fall outside the scope of informal guidance under PD57AD should be brought as formal disclosure applications, and in such cases, the usual default costs rule of costs being in the case may be displaced. Excelerate Technology Ltd v West Midlands Ambulance Service NHS University Foundation Trust [2024] EWHC 177 (TCC) Where a disclosure application goes beyond the informal scope anticipated by PD57AD, particularly due to complexity and contentiousness, a party may recover costs on grounds of success, notwithstanding the usual costs-in-the-case presumption.

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

The standard costs position under paragraph 11.5 of Practice Direction 57AD is that the costs of a disclosure guidance application will be costs in the case, but the court has discretion to depart from this where appropriate.
The court may depart from the default costs position where a disclosure guidance hearing is conducted in a manner akin to a fully contested application, particularly in complex or substantial litigation.
A party’s failure to serve a statement of costs before a disclosure guidance hearing, while a procedural irregularity, does not preclude a successful application for costs where no prejudice or procedural disadvantage arises.
In determining costs liability, the court may consider the relative success of each party at the hearing, including the time spent on successful issues and the material difference between the orders sought by each side.
The court may summarily assess costs, making proportionate reductions having regard to guideline hourly rates, reasonableness of counsel’s instruction, and the overall necessity and utility of the work undertaken.
Where leading counsel is instructed but the court finds this unnecessary, the appropriate reduction should reflect either that junior counsel’s fees would have been higher if appearing alone, or that more senior junior counsel might have been instructed, rather than simply deducting leading counsel’s fees.

"In the context of what is on any view, substantial and complex multi-party litigation, the DGH was inevitably significantly more onerous than the type of guidance hearing ordinarily envisaged by paragraph 11. In line with the estimate in the Application Notice, the hearing was listed for 2.5 hours and in fact took slightly longer. Both parties appeared by counsel; the Claimants by both leading and junior counsel and the Second Defendant by junior counsel. There was a substantial hearing bundle running to some 900 pages... There were significant skeleton arguments from both parties; the skeleton argument of the Claimants running to some 16 pages and... the skeleton argument of the Second Defendant running to some 39 pages."

Key Findings In The Case

The nature and scale of the Disclosure Guidance Hearing (DGH) significantly exceeded what is ordinarily contemplated by PD57AD paragraph 11, involving substantial counsel participation, voluminous bundles, and protracted hearing time. On this basis, the court treated the application as akin to a full disclosure application, justifying departure from the default costs rule. [5], [13], [20]
The Claimants were found to have been successful on the majority of the contested issues in the DGH, including resisting wider search terms proposed by the Second Defendant. The court acknowledged that more time was spent on issues where the Claimants prevailed, and that the disclosure scope ordered was materially narrower than that sought by the Second Defendant. [6], [7], [18]
The Claimants’ delayed provision of hit counts was not found to have caused any prejudice to the Second Defendant’s position, nor would earlier provision have altered the Second Defendant’s approach. Accordingly, no cost adjustment was made on this basis. [16], [21]
The Second Defendant’s limited success on certain discrete points, such as securing the application of search terms to an additional email account, warranted a modest 10% reduction in the Claimants’ overall cost recovery. [18(iii)], [21]
The court summarily assessed the Claimants’ costs at £70,297.00, with proportional reductions applied to solicitor time for exceeding guideline hourly rates and excess time on certain witness statement preparation, as well as to counsel’s fees on the basis that retaining leading counsel was not strictly necessary for this application. [24], [25], [26]

“So far as the costs of counsel are concerned, there is considerable force to the submission that it was not necessary for the Claimants to instruct leading counsel for the hearing notwithstanding the level of very helpful assistance to the Court provided by Mr. Barden KC. It is not, however, appropriate for me to simply deduct Mr. Barden's fees. The appropriate reduction should reflect (i) the likelihood that Ms. Green's fees would have been higher if she was appearing on her own or (ii) the possibility that the Claimants would have instructed a more senior junior counsel for the hearing. Overall, I consider it appropriate to reduce counsels' fees by £10,000 to £24,000. Overall, therefore, I summarily assess the Claimants' costs in the sum of £70,297.00. Applying the 10% reduction referred to in paragraph 21 above, this figure reduces to £63,267.00.”

In Voltaire Capital Holdings Limited & Ors v Watson & Ors [2025] EWHC 1948 (Comm), Nigel Cooper KC (sitting as a Deputy Judge) departed from the default costs position for disclosure guidance applications under PD57AD, ordering the unsuccessful applicant to pay £63,267 in costs. This decision provides valuable guidance on when courts will treat supposedly informal disclosure guidance hearings as contested applications warranting inter partes costs orders.

The Default Costs Position Under PD57AD

Paragraph 11.5 of Practice Direction 57AD establishes a clear default position: costs of disclosure guidance applications are costs in the case unless otherwise ordered. This reflects the intended informal and cooperative nature of the disclosure guidance procedure, which envisages:

- Maximum 60-minute hearings with 30 minutes pre-reading
- Legal representatives with direct disclosure responsibility rather than counsel
- Resolution through guidance rather than formal determination

The Practice Direction aims to foster a “new culture of disclosure stressing the imperative nature of party cooperation” – an aspiration that carries direct costs implications.

When Guidance Becomes Litigation | The Costs Turning Point

The judge identified several factors that transformed this disclosure guidance application into something warranting departure from the default costs position:

Scale and Complexity

- 2.5+ hour hearing (versus standard 60 minutes)
- 900-page hearing bundle including 261 pages of correspondence
- Substantial skeleton arguments (16 and 39 pages)
- Instruction of counsel, including leading counsel for the claimants

Nature of Contest The judge found the application was “conducted in a manner consistent with a heavily contested disclosure application rather than an application for informal guidance envisaged by PD57AD.” This characterisation proved crucial to the costs decision.

Relative Success The court conducted a detailed analysis of success:

- Claimants substantially succeeded on the main issues
- More hearing time spent on issues where claimants succeeded
- Volume of documents from ordered searches significantly smaller than sought
- Second Defendant’s limited success occupied minimal hearing time

The Costs Assessment | Significant Reductions Applied

The summary assessment demonstrates the court’s rigorous approach to costs recovery even for successful parties:

Solicitors’ Costs

- Claimed: £59,862.75
- Assessed: £46,000
- Key reductions:
  - Hourly rates exceeding guideline rates without sufficient justification
  - £4,000 specific reduction for excessive time on witness statement preparation

Counsel’s Fees

- Claimed: £34,297 (including leading counsel)
- Assessed: £24,000
- £10,000 reduction reflecting that leading counsel was unnecessary for the hearing

Final Calculation

- Total assessed: £70,297
- 10% reduction for opponent’s limited success: £63,267
- Overall reduction: approximately 33% from amount claimed

Key Costs Principles Emerging

Procedural Defaults and Costs

The court dismissed the respondent’s reliance on the claimants’ failure to serve a statement of costs before the hearing (contrary to PD44 paragraph 9.5(4)(b)). The judge found:

- Both parties could foresee costs applications would follow
- The default caused no difficulty to either party or the court
- Late submission did not prevent the claimants seeking costs

This pragmatic approach suggests procedural defaults in costs procedure may not defeat otherwise meritorious costs applications.

Attribution of Delay

The court rejected arguments that claimants’ delays necessitated the hearing, finding it “impossible to assign any responsibility for any delay.” This reinforces the difficulty of establishing causation for costs purposes where both parties contribute to procedural history.

Proportionality in Success

The 10% reduction for the opponent’s limited success demonstrates the court’s nuanced approach to “relative success” – even substantially successful parties may face reductions where opponents achieve discrete wins.

Implications for Costs Practice

This decision reinforces several important costs principles:

For Disclosure Applications

- Courts will look beyond labels to substance when determining costs
- Default positions are starting points, not immutable rules
- The scale and manner of conduct matters more than the procedural vehicle

For Summary Assessment

- Guideline rates remain starting points requiring justification for departure
- Courts will scrutinise time spent on specific tasks
- Necessity of leading counsel must be demonstrable, not assumed

Strategic Considerations

- Parties escalating “informal” procedures risk adverse costs consequences
- Providing hit counts and engaging cooperatively may influence costs outcomes
- Limited success on discrete issues can reduce costs recovery even for substantially successful parties

The Broader Context | Costs and Cooperation

This judgment sits within the broader framework of disclosure reform emphasising cooperation and proportionality. The costs consequences here serve as a reminder that parties who transform cooperative procedures into adversarial contests may face financial penalties.

The decision also demonstrates the interplay between different costs regimes – whilst PD57AD creates specific defaults for disclosure guidance, the court retains discretion to apply general costs principles where the nature of proceedings warrants it.

Conclusion

Voltaire Capital Holdings provides clear guidance on when courts will depart from default costs positions in disclosure contexts. The message for practitioners is straightforward: approach disclosure guidance as intended – cooperatively and proportionately – or risk bearing the costs consequences of unnecessary escalation. The 33% reduction in assessed costs further reinforces that even successful parties must demonstrate both necessity and proportionality in their costs claims.

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