Henderson v Henderson Abuse Of Process | Late Costs Objection Survives Despite "Perverse" Reasoning Resulting In £Multi Million Costs Assessed At Nil

A fundamental objection to costs liability raised for the first time at detailed assessment—eight years into proceedings—survived an abuse of process challenge only because the court’s own defective case management had precluded earlier determination.

WINROS PARTNERSHIP V GLOBAL ENERGY HORIZONS CORPORATION [2025] EWHC 2044 (Ch)

In The Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 2044 (Ch), Mr Justice Marcus Smith heard an appeal concerning whether a fundamental costs objection raised for the first time at detailed assessment constituted an abuse of process. The paying party contended that bills totalling millions of pounds under three conditional fee agreements should be assessed at nil because the fees remained contingent when rendered. The Senior Costs Judge upheld the objection despite finding it “could easily have been added” at earlier hearings [§15(ii)]. On appeal, Marcus Smith J found this reasoning “so wrong as to be perverse” [§16] and that the Henderson v Henderson abuse argument should have succeeded [§18]. However, the appeal was dismissed because the court’s own case management error—directing preliminary issues without first requiring liability pleadings [§25(iii)-(iv)]—meant the parties could not be criticised for not raising additional issues [§26]. The case confirms that fundamental costs liability challenges must ordinarily be raised at the earliest opportunity, with strike-out the appropriate remedy absent exceptional circumstances.

Given the process described by the Senior Costs Judge, which I have set out at [15(v)], it is incomprehensible that Objection 1 should not have been heard along with any and all other "liability" issues before Master James. Reading the Decision up to [33], the Senior Costs Judge has stated, clearly and helpfully, why (on his narrative) Objection 1 should be struck out as an abuse of process.

Citations

Henderson v Henderson (1843) 3 Hare 100 A party is precluded from raising in subsequent proceedings any matter which could and ought to have been raised in earlier proceedings between the same parties if, without sufficient justification, its late introduction causes procedural inefficiency or unfairness. Wheeldon Bros Waste Ltd v Millennium Insurance Co Ltd [2018] EWCA Civ 2403 An appellate court will not interfere with an evaluative judgment unless it is shown to be outside the range of reasonable decisions open to the lower court or is otherwise legally unsustainable. MW High Tech Projects UK Ltd v Outotec (USA) Inc [2024] EWCA Civ 844 An appeal court may overturn a lower court’s evaluative decision only where it is demonstrably flawed in process or legal principle, particularly in matters of procedural fairness during assessment.

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

Where issues go to whether there should be a detailed assessment at all (rather than quantum), standard practice is to determine those “liability” issues first, before any detailed assessment proceeds [§15(v), Decision/[31]].
The Henderson v Henderson jurisdiction focuses not on whether an issue was previously determined, but on whether the opportunity to resolve it was wrongly forsaken [§20].
Where late-raising of an objection has unnecessarily protracted proceedings by years, strike-out is ordinarily the appropriate remedy; a costs order is insufficient [§23].
However, where late-raising results from defective case management by the court itself—such as directing preliminary issues before requiring pleadings—this may excuse what would otherwise be an abuse of process [§§25–26].
Courts should require parties to plead their contentions on liability before making case management directions; directing preliminary issues when the actual issues between the parties are unknown is a “major procedural error” [§25(iv)].

“...the explanation for the late-raising of Objection 1 by Global Energy is that Global Energy (and Rosenblatt) were quite properly following the direction of the court. Courts expect their orders to be obeyed, and it would have been improper for Global Energy to shoehorn (or attempt to shoehorn) additional issues into what was expressly a preliminary issue hearing.”

Key Findings In The Case

The court found that Rosenblatt’s 2012 and 2016 costs invoices, delivered under CFAs whose conditions for payment had not crystallised at the time of billing, did not constitute statute bills and were therefore not enforceable at the time of delivery, warranting assessment at nil [10], [15(iii)], [20].
The relevant CFAs (CFA-1, CFA-2, and CFA-3) were deemed enforceable under section 58 of the Courts and Legal Services Act 1990, with the Advance Fees retained by Rosenblatt in any event, but the entitlement to further payment remained contingent upon success or other specified contractual events [9(iii)].
The retainer under CFA-3 was found to have been terminated by Rosenblatt by accepting Global Energy’s repudiatory breach, rather than under clause 14.3 or any other express termination provision of the CFA [9(v)].
Although Rosenblatt’s costs should have been determined at the preliminary “liability” stage of proceedings, the court accepted that Global Energy’s failure to raise Objection 1 at that time was attributable to the procedural directions given by the court, which limited the scope of preliminary issues and deferred the pleading of certain objections [25]-[27].
The Senior Costs Judge assessed Rosenblatt’s three invoices subject to detailed assessment (dated 21 December 2012, 5 February 2013, and 29 February 2016) at nil, on the basis that at the time of delivery, no enforceable entitlement to the fees claimed existed under the relevant CFAs [12].

“Striking out on Henderson v. Henderson grounds is only appropriate where this is the procedurally fair course. If Objection 1 has been raised late consistently with due process, then that is a very material fact supporting (on other grounds) the decision of the Senior Costs Judge.”

The High Court’s decision in The Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 2044 (Ch) addresses when late-raised costs objections constitute a Henderson v Henderson abuse of process and the consequences of defective judicial case management in solicitor-client assessments.

Background

The case centres on three conditional fee agreements (CFAs) under which Rosenblatt Solicitors (now The Winros Partnership) acted for Global Energy Horizons Corporation in Chancery Division proceedings against a former associate, Mr Robert Gray, concerning alleged misappropriation of technology [§1]. The underlying dispute achieved mixed results: in December 2012, Vos J granted declarations that Mr Gray was in breach of fiduciary duty; in July 2015, Asplin J ordered Mr Gray to pay approximately £3.6 million; but Arnold J in May 2019 valued certain assets at nil and found no further sums payable [§2].

Three CFAs governed the retainer: CFA-1 (dated 8 December 2009), CFA-2 (dated 31 October 2010), and CFA-3 (dated 6 March 2013) [§§3–7]. Each contained provisions for an “Advance Fee” to be retained by Rosenblatt regardless of outcome, with additional fees and a success fee payable only on a “win”. CFA-3’s clause 14 set out termination provisions, including clause 14.3 which entitled Rosenblatt to end the agreement if it believed the client did not meet its responsibilities, in which case the client would pay fees for work done to the termination date and disbursements [§6(iv)].

The relationship between solicitor and client broke down, and Rosenblatt terminated the retainer by letter dated 24 February 2016. Trower J, on appeal from Master James, held that this termination was not pursuant to clause 14.3 but by Rosenblatt’s acceptance of Global Energy’s repudiatory breach [§9(v)].

Global Energy issued Part 8 proceedings on 1 April 2016 seeking detailed assessment [§25(i)]. This led to a 10-day preliminary issues hearing before Master James in 2019 [§15(i)], an appeal to Trower J determined in December 2021 [§§8–9], and ultimately an eight-day hearing including a five-day detailed assessment before Senior Costs Judge Gordon-Saker in 2024 [§10]. At that final hearing, Global Energy raised “Objection 1” for the first time, contending that the bills should be assessed at nil because when delivered, Global Energy was not liable to pay them as the fees remained contingent [§10]. The Senior Costs Judge upheld the objection, resulting in Rosenblatt’s costs being assessed at nil [§12].

Costs Issues Before the Court

The appeal concerned whether raising Objection 1 for the first time at detailed assessment—some eight years after proceedings commenced—constituted a Henderson v Henderson abuse of process. The court was required to determine:

Whether Global Energy’s failure to raise Objection 1 at earlier hearings (including the 10-day preliminary issues trial before Master James) amounted to an abuse of process that should result in the objection being struck out [§§15–20].
If abuse was established, whether there were exceptional circumstances excusing the late raising of the objection [§§24–27].
The appropriate remedy if abuse was found [§§22–23].

The Senior Costs Judge had refused permission to appeal on the abuse of process ground; Joanna Smith J ordered that permission be considered at the appeal hearing [§13].

The Parties’ Positions

Rosenblatt’s Position: Rosenblatt argued that raising such a fundamental objection at this late stage was a clear Henderson v Henderson abuse [§11]. The Senior Costs Judge’s own findings supported this conclusion:

He found that Objection 1 “could easily have been added” to Global Energy’s case at the preliminary issues hearing [§15(ii), Decision/[25]]
He stated that “standard practice” in solicitor-client assessments is to determine liability issues first, before any detailed assessment [§15(v), Decision/[31]]
He expressly found that Global Energy “should have pleaded what is now Objection 1 in the Particulars of Claim” [§15(iv), Decision/[28]]

Rosenblatt contended that where a party has had the opportunity to raise an issue and failed to do so, strike-out is the appropriate remedy, and that a costs order was an insufficient sanction [§§22–23].

Global Energy’s Position: Global Energy raised two points by respondent’s notice [§22]. First, it argued that even if there was an abuse, the Senior Costs Judge had applied an appropriate sanction in the form of a costs order and striking out should not follow automatically [§22]. Second, and primarily, Global Energy argued the Decision could be upheld on other grounds: namely, that Global Energy could not properly be criticised for raising Objection 1 late because the court’s own procedural directions had precluded earlier raising of the issue [§24].

The Court’s Decision

Mr Justice Marcus Smith granted permission to appeal, finding that on the facts stated in the Decision itself, he could see “no clearer case of a Henderson v Henderson type abuse of process” [§16]. The court was highly critical of the Senior Costs Judge’s reasoning, stating it was “so wrong as to be perverse” [§16].

The court identified fundamental errors in the Senior Costs Judge’s approach. The consideration of whether Objection 1 had been previously determined by Master James or Trower J missed the point entirely: “the point is not whether Objection 1 was previously determined (obviously it was not) but whether the opportunity to resolve it was wrongly forsaken (which, on the Decision’s findings, it clearly was)” [§20]. Similarly, asking whether the earlier decisions would have been different had Objection 1 been argued, or noting that those hearings would have taken place anyway, “misses the point” [§20]. Had Objection 1 been dealt with at those hearings, “later stages in these proceedings would have been unnecessary, and considerable cost and time would have been saved for all concerned” [§20].

The court rejected Global Energy’s argument that a costs order was an appropriate alternative to strike-out. Had the Senior Costs Judge properly found an abuse of process, “striking out would be – on the basis of the facts found in the Decision – the only appropriate course in this case” [§23].

However, the appeal ultimately failed because of facts not properly addressed in the Decision [§§24–27]. Examination of the procedural history revealed that by an order dated 16 June 2016, Master James had acted of her own motion to direct only two preliminary issues, without first requiring the parties to plead their cases on liability [§25(iii)]. Marcus Smith J found this to be “a major procedural error on the part of the court” [§25(iv)]:

The court disregarded Rosenblatt’s suggestion of dealing with all questions of “liability” first [§25(iv)(a)]
The court directed only two preliminary issues, apparently considering these were the only possible liability issues—but Objection 1 was not identified [§25(iv)(b)]
The court should have required pleadings first, then made case management directions in light of the issues taken; instead, “case management preceded pleadings, with the result that the true issues between the parties were never identified until it was too late” [§25(iv)(c)–(d)]

In these circumstances, Global Energy and Rosenblatt “were quite properly following the direction of the court” [§26]. It would have been improper for Global Energy to shoehorn additional issues into an expressly limited preliminary issues hearing. There was therefore “nothing in Global Energy’s conduct to criticise, and it would be unfair to prevent Global Energy from taking Objection 1 now” [§26].

For these reasons—which were “not the reasons of the Senior Costs Judge”—permission to appeal was granted, but the appeal was dismissed [§28].

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