Changes to the Deputy Standards 2023

Ellie Howard-TaylorLeave a comment

There has been an update to the existing Property & Finance and Health & Welfare Deputy Standards (‘Standards’), which will come into effect from mid-February 2023.

The single set of refreshed standards will apply to everyone who has been appointed as Deputy, including lay Deputies. Guidance tailored for professionals, public authorities and lay Deputies will also be published at the same time.

This is not the introduction of a new set of standards. The guiding principles of the refreshed standards remain the same and continue to be aligned with the Mental Capacity Act (MCA). The main changes are to make the standards more focused.

What has been changed?

The number of standards has been reduced from more than 40 to 8 core areas, which reflect the duties and responsibilities of all Deputies. Much of the material included in the original standards has now been re-shaped and included within the guidance documents.

The Office of the Public Guardian (OPG) has contacted all Deputies to notify them of the changes.

The refreshed standards can be found at published at https://www.gov.uk/guidance/opg-deputy-standards.

Report from the Committee of Public Accounts – Costs in Clinical Negligence

Bethany CollingsLeave a comment

The Committee of Public Accounts has published its latest report on the rising costs in clinical negligence – an important read for all those practising in this area. Notably, the report recommends that the Department for Health and Social Care clarify its position on a fixed recoverable costs scheme for lower-value clinical negligence cases at the earliest opportunity.

You can find the full report here.

Bethany Collings is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Costs in Trust Disputes: Key Insights from Seymour v Ragley Trust

Daniel MurrayLeave a comment

The High Court’s decision in William Francis Seymour v Ragley Trust Company Ltd & Ors [2025] EWHC 3400 (Ch) serves as a vital reminder of the difficulties faced by unsuccessful parties in displacing the general rule that the losing party pays the costs of the successful party. This case not only carries significant implications for family-estate and trust law but also reinforces the stringent requirements for overturning the usual costs order, i.e. the unsuccessful party pay the costs of the successful party,  particularly in the context of beneficiary disputes.

Background

In this case, the Claimant, who is the Earl of Yarmouth,  sought the removal of the existing trustees of the Ragley family trusts, aiming to replace them with independent professional trustees. After his claim was dismissed, the Claimant sought to displace the standard costs rule, arguing that he had experienced partial success and that the conduct of the Defendants warranted a different outcome under CPR 44.2(2)(a).

The Claimant contended that the costs of all of the parties should be paid out of the trust assets, alternatively that an order should be made for a payment of only a proportion of the Defendants’ costs, of no more than 50%.

The Categorisation of Trust Litigation and Costs

At the outset of his judgment, Master Brightwell provided a useful summary of the key principles governing costs in trust disputes, drawing on the Court of Appeal’s decision in Price v Saundry [2019] EWCA Civ 2261 and the longstanding authority of Re Buckton [1907] 2 Ch 406. These principles divide trust litigation into three main categories:

  1. Trustee Applications for Court Guidance
    • Trustees seek judicial assistance on matters such as trust interpretation or administration.
    • The costs of all parties are typically paid from the trust fund, as the estate is the primary beneficiary.
  2. Non-Trustee Applications
    • An outsider (e.g. a beneficiary or other interested party) seeks guidance that could have been requested by the trustees.
    • Costs are treated in the same way as trustee applications, with payments typically made from the trust fund.
  3. Beneficiary Disputes
    • A beneficiary makes a hostile claim against trustees or other beneficiaries.
    • This is treated like common law litigation, with costs generally following the event.

It was not seriously disputed that this case fell into the third category: a beneficiary dispute. The Claimant had brought a “root and branch” attack on the trustees’ conduct, which was clearly hostile in nature.

The Claimant’s Attempts to Displace the usual Costs Rule

Partial Success

The Claimant’s argument regarding partial success was based on the fact that he had succeeded in achieving a change in the composition of the directors of the trust companies. However, this argument was swiftly dismissed by the Court. Master Brightwell referenced earlier correspondence from the Claimant’s solicitors, which indicated that the appointment of a fourth director did not have any significant value or impact on the administration of the trust. As such, the partial success argument did not carry any weight. The application of an issue based order was dismissed, on the grounds that the Court must also be able to identify, at least in broad brush or in general terms, a part or proportion of the costs of the unsuccessful party which were incurred because of the unreasonable conduct which is complained about.

Conduct of the Parties

The Claimant also sought to challenge the Defendants’ conduct during the litigation. Specifically, he argued that the trustees had acted unreasonably by vigorously defending the allegations made against them, despite suggestions that they were open to stepping down or being removed from their positions. He also pointed to the fact that the trustees did not personally attend a settlement meeting, implying a lack of engagement.

However, the Court rejected these submissions. Master Brightwell noted that in beneficiary disputes, where allegations of misconduct are dismissed, the general costs rule is the starting point. Had the allegations been substantiated, the situation would have been different. There would have been strong arguments in favour of the trustees losing their indemnity from the trust assets and possibly being required to pay the Claimant’s costs. However, as the allegations were not proven, the trustees were entitled to defend themselves fully, and no misconduct was found.

Quantum and the Claimant’s Procedural Challenges

In addition to the issues of partial success and conduct, the Claimant raised concerns about the quantum of costs. Specifically, he questioned the fairness of the costs given that the claim had been brought under the Part 8 procedure, which did not involve the cross-examination of witnesses. The Judge noted that these concerns were a matter for detailed assessment rather than something that should automatically reduce the costs. Consequently, the Claimant was ordered to pay the Defendants’ costs on the standard basis, to be assessed if not agreed.

Indemnity from Trust Assets

The judgment also addressed the issue of indemnity for the trustees. Master Brightwell confirmed that, to the extent the costs were not recovered from the Claimant (whether due to an assessment down or non-recovery), the trustees were entitled to an indemnity from the trust assets. This was to be given effect by the trustees having their costs assessed on the indemnity basis, ensuring that they could recover their legal fees from the trust fund.

Key Takeaways for Trust Litigation and Costs

  1. Costs in Beneficiary Disputes: In beneficiary disputes, the general rule is that costs will follow the event. Even if a Claimant achieves some minor or peripheral benefit from the litigation, unless that translates into substantive relief, they are likely to bear the costs of the successful parties.
  2. No Leniency for Conduct: A party’s conduct during proceedings will rarely alter the costs order unless there is clear misconduct. Trustees defending claims against them are entitled to act robustly without the risk of bearing the costs, provided their actions are not unreasonable.
  3. Indemnity for Trustees: Trustees who successfully defend claims will usually be indemnified from the trust fund for their costs, provided they act in good faith. This indemnity ensures that trustees are not financially burdened by their legal fees when defending their position in the trust.
  4. Cost Assessments: Even if a Claimant challenges the quantum of costs, this will be dealt with at the assessment stage, not as a reduction in costs as a matter of principle.
  5. Issue Based Costs Orders: Parties seeking issue based costs orders, must be prepared to substantiate their arguments, so the Court can make an informed decision.

The case highlights the importance of understanding the nuanced rules surrounding costs in trust litigation, especially for beneficiaries considering challenging trustees. The default position remains clear: losing a claim means paying the costs, and partial success or the conduct of the parties is unlikely to alter that outcome unless specific conditions are met.

Daniel Murray is a Senior Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Warning that future non-compliance with the requirements set out in the Criminal Procedure Rules may result in the Court simply declining to make a costs order

Ellena HunterLeave a comment

Background

In Taktouk v The King [2025] EWCA Crim 1473, the Court of Appeal (Criminal Division) delivered an important judgment on the recovery of costs by private prosecutors from central funds following a confiscation appeal. Although the underlying confiscation appeal had succeeded earlier in 2025, this decision concerned how, when, and to what extent private prosecutors may recover their costs under section 17 of the Prosecution of Offences Act 1985 (‘POA 1985’).

The proceedings arose out of a private prosecution for fraud. Following conviction, confiscation proceedings were pursued, resulting in a confiscation order. On 5 February 2025, the Court of Appeal allowed an appeal against the confiscation order on the basis of fresh evidence that may have undermined the trial court’s assessment of the available amount. The private prosecutors applied for an order that their costs of resisting the confiscation appeal, amounting to almost £200,000, be paid out of central funds under section 17(1) POA 1985.

Application for costs out of central funds

The private prosecutors’ application made no reference to any attempts made to ensure that the case was prosecuted by an appropriate state prosecutor. Furthermore, no information was given regarding how the private prosecutors were selected to conduct the prosecution, or whether there was any tendering process involving either them or counsel. The Memorandum of Costs lodged in support of the application merely provided a breakdown of the total profit costs, Counsel’s fees, and disbursements.

Upon receipt of the application, the Court gave directions giving the Lord Chancellor leave to intervene and to lodge written submissions. This resulted in further information about the costs incurred being provided by the private prosecutors, by way of a witness statement. The private prosecutors provided details of how they came to be instructed, they confirmed that there was no tendering process and stated that the chance of the CPS agreeing to prosecute was very slim. It was further confirmed that the CPS and police were not provided with the results of the private prosecutors’ investigation until after the appellant succeeded in his appeal.

Therefore, the key points to be determined were the consequences of:

  • The private prosecutors’ failure to supply the information required by rule 45.4 of the Criminal Procedure Rules;
  • The failure to attempt to involve the police and state prosecuting authorities in bringing the case; and
  • The failure to engage in a tendering process for solicitors and counsel.

The Court noted that it was open to them to decline to make any costs order under section 17 because of the serious failure in presenting the claim. However, it instead ordered that the private prosecutors be allowed only 50% of the costs which the costs officer determined as reasonably sufficient. This reduction was to reflect:

  • The failure to lodge an adequate claim for costs in compliance with CrimPR 45.4(6)(c), and to state the law accurately in it. The specific failures being:
  • The failure to communicate with the state prosecuting authorities either at the point when the prosecution begun in 2018 or at the point when confiscation proceedings were begun following conviction with a view to them conducting the proceedings.
  • The failure to test the market at either of the points identified at (a) above to establish the lowest amount which the prosecutor could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances.
  • The failure to disclose intelligence reports until the appeal proceedings were in progress.
  • The failure to communicate with the state prosecuting authorities either at the point when the prosecution was begun in 2018 or at the point when confiscation proceedings were begun following conviction with a view to them conducting the proceedings.
  • The failure to test the market at the point when confiscation proceedings were begun to establish the lowest amount which the prosecutor could reasonably have been expected to spend in order to have its case conducted and presented proficiently, having regard to all the relevant circumstances.

Whilst the Court did not exercise its discretion to disallow the private prosecutors costs, it did warn that the judgment in the present case and in BDI should serve as an explanation to how the Courts would approach the issue and future-non compliance with the requirements set out in the Criminal Procedure Rules may well result in the Court simply declining to make any order.

Ellena Hunter is an Associate in Clarion’s Costs and Litigation Funding Team and can be contacted on 07979 199145 or Ellena.hunter@clarionsolicitors.com

Does a paying party have to pay VAT on costs if an insurer is no longer trading?

ujjainimistryLeave a comment

The case of Shmuel Moller & Ors v One Touch Solution Limited & Anor [2026] was a routine summary assessment of costs arising from an interlocutory hearing where the Court was required to undertake a focused examination of VAT recoverability where the receiving party was in liquidation.

Background information

The proceedings arose out of a commercial claim brought by the Claimants against One Touch Solution Limited and its insurer, Hiscox Insurance Company Limited. During the litigation, the Claimants were granted permission to amend their statement of case.

The Court ordered that the Claimants should pay the Defendants’ reasonable costs of responding to the amendment, including the costs of preparing an amended defence, such costs to be assessed if not agreed.

By the time the costs issue arose, One Touch Solution Limited had entered creditors’ voluntary liquidation. This gave rise to a dispute as to whether VAT on the Defendants’ legal costs was recoverable as part of the costs order. The Claimants argued that VAT should not be included because it was recoverable by the Defendant (or its estate). The Defendants contended that liquidation meant VAT was irrecoverable and therefore payable by the Claimants.

The Court was therefore required to determine, in the context of a costs assessment, whether VAT on the relevant legal services was recoverable where the receiving party was a company in liquidation, and whether any additional costs should be awarded in relation to the VAT dispute itself.

The Parties’ arguments

The Claimants argued that VAT was only recoverable if the receiving party cannot recover it as input tax from HMRC and that the First Defendant had been VAT-registered at the relevant time legal services were supplied. They also argued that the liquidation did not change the VAT position; insolvency and VAT deregistration on liquidation does not automatically render VAT irrecoverable.

Furthermore, they argued that in respect of the First Defendant’s costs that were funded by the insurer, the insurer was not the entity that incurred the legal services and had no independent right to recover VAT as costs.

The Defendants argued that VAT was irrecoverable and therefore recoverable from the Claimants as part of the costs order. They stated that the liquidation rendered VAT irrecoverable and that VAT could not be recovered in an ordinary way.

Conclusion

The Court held that the First Defendant’s liquidators can recover VAT by filing appropriate VAT returns, meaning neither Defendant has suffered a recoverable loss for VAT in their costs. The Court’s decision was based on the wording of the Regulation 111(5) of the Value Added Tax Regulations 1995. The wording clearly supported the Claimant’s position, and it was held that the Defendants’ position flew in the face of the regulation and was unexplained.

The Claimants sought £1,000 (excluding VAT) for the costs of preparing submissions on the VAT issue. The court noted that the issue had been fully argued in correspondence, the Claimants succeeded on the point, and the Defendants could have avoided further costs by addressing it clearly at the earlier hearing.

Although the Court did not hear submissions from the Defendants on these costs, it found that the Claimants were clearly successful, that the usual CPR Part 44 costs principles applied, and that the amount claimed was reasonable and proportionate.

Accordingly, the Court ordered the Defendants to pay the Claimants’ costs of £1,000, subject to the Defendants’ right to apply in writing to set aside or vary the order, with any such application to be determined on the papers and with modest further costs expected.

Key Takeaways

Although the decision in Moller is not groundbreaking, it is a timely reminder that insolvency does not simplify VAT issues—it often complicates them. VAT recoverability turns on tax entitlement, not litigation status and insurers cannot assume VAT will be recoverable from the opposing party.

VAT on costs remains a technical issue requiring proper analysis. Treating it as an afterthought can prove an expensive mistake.

The Court rejected the common assumption that where a company is in liquidation, VAT on its legal costs must be irrecoverable and therefore payable by the opponent as part of a costs order.

Therefore, the key principle remains unchanged: VAT is only recoverable as part of costs if the receiving party cannot recover it as input tax. Liquidation or VAT deregistration does not, without more, make VAT irrecoverable.

Ujjaini Mistry is a Paralegal in the Civil and Commercial Costs Team at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com.

Re ACC and Others: Guidance from the OPG

Laura SugarmanLeave a comment

On 9 January 2026, the Office of the Public Guardian published new guidance on Re ACC & Others, setting out their position on this judgement. This guidance explains how Deputies should apply the Re ACC and Others judgment from the Court of Protection and what actions the Office of the Public Guardian expects Deputies to take to remain compliant.

 

For background, this judgement sets out positions on issues concerning the authorities a professional Deputy will need to obtain legal services and how to manage any conflicts of interests.

 

The judgement sets out the position on the general authority of a Deputy. This is defined as the common or day to day tasks that are required to be undertaken to administer P’s estate effectively. Deputies have legal authority to act on behalf of someone who lacks capacity, but that authority is defined strictly by the court order that appointed them. The Re ACC judgment clarified what Deputies can and can’t do without asking the court for extra permission. The guidance explains how Deputies should act within those rules and manage legal work or potential conflicts of interest.

 

 

Deputies automatically have general authority to carry out everyday financial tasks if the court order includes those powers. That generally covers things like:

 

  • Managing bank accounts and investments
  • Letting or maintaining property
  • Preparing tax returns
  • Ensuring care costs are paid

 

 

However, this only applies as long as the activity is within the scope of authority granted by the court order. Deputies acting outside their authority do so at personal risk. Tasks which fall out of the general authority as outlined in the Deputyship Order template include:

 

  • Purchase of freehold or leasehold property
  • Sell, lease or charge freehold or leasehold property
  • Appoint an investment manager
  • Use P’s funds to provide for others
  • Make gifts to charity
  • Obtain a grant of representation
  • Execute or sign deeds or documents

 

It is important to note that unless specific authority is granted in the Deputyship Order, a property and affairs Deputy does not have authority to perform any of the above tasks. If a task isn’t expressly allowed by the Court Order, you must apply to the court for specific authorisation.

 

Litigation

 

Deputies cannot initiate litigation on behalf of P without specific authorisation from the Court of Protection. If a Deputy has specific authorisation to carry out certain tasks, they have authority to engage up to the point of receiving the Letter of Response, but no further.

 

If the contentious litigation may relate to personal welfare decisions, a Deputy cannot initiate litigation but can seek directions from the Court of Protection. Further, the general authority in a property and affairs Deputyship Order does not include appealing against a decision in an Education, Health and Care Plan. This is because this is a personal welfare issue.

 

Whereby urgent litigation is required, the Deputy may proceed at risk but should seek retrospective authorisation. However, this is not guaranteed to be given.

 

Conflicts of Interest

 

This guidance confirms the position on conflicts of interest should a Deputy wish to instruct a member of their own firm. To do so, prior authorisation from the Court must be obtained to carry out this work. If specific authority has not been granted, a Deputy should obtain three competitive quotes from suitable providers and choose the provider that best meets the person’s interests.

 

If these costs are expected to exceed £2,000 plus VAT, authority from the Court is required.

 

Position of the Office of the Public Guardian

 

The Office of the Public Guardian has a statutory duty to supervise all court appointed Deputies. They expect all Deputies to clearly demonstrate they have authority to undertake the work, show how conflicts of interest have been managed and include relevant decisions with respect to Re ACC in the annual Deputyship report. If a Deputy wishes to instruct a member of their own team, they must apply to the court for authorisation whereby projected costs are likely to exceed £2,000 plus VAT.

 

If a case has completed prior to the release of this judgement, the Office of the Public Guardian does not expect applications for retrospective authority to be necessary. However, the Office of the Public Guardian takes the stance that the conflict of interest set out in Re ACC extends to any instance whereby the Deputy is considering utilising services for P from their own firm and this constitutes a potential conflict of interest.

 

In Summary

 

This new guidance reinforces the importance of staying within the authority granted by the court, seeking specific court authorisation for litigation or other high value actions, managing conflicts of interest transparently and reporting properly to the Office of the Public Guardian about decisions made on behalf of P.

 

If you have any questions or would like further information about any of the above, please contact Laura Sugarman on laura.sugarman@clarionsolicitors.com

 

 

 

 

 

The Government’s measures to clarify the uncertainties surrounding LFAs following the 2023 PACCAR ruling

angelanakoLeave a comment

The Minister of State for Justice, Sarah Sackman KC MP, announced that the government will take action to limit uncertainties surrounding third-party litigation funding agreements (LFAs) following the 2023 Supreme Court ruling in PACCAR. The government will also implement proportionate regulation of LFAs, in line with the Civil Justice Council’s (CJC) recommendations.

Further background information regarding the ruling in PACCAR can be found in Anna Lockyer’s blog post here.

The Government’s next steps

The Supreme Court Judgment in PACCAR created uncertainty around the validity and enforceability of LFAs. The government has now announced that legislation will be introduced to clarify that LFAs are not damages based agreements. They have said this will be implemented with “prospective effect” (the CJC recommendation was for prospective and retrospective effect). In doing so the government hopes this will reassure funders that LFAs can continue to be used to fund cases, the government recognising that LFAs can enable individuals to bring complex claims against better-resourced organisations and that the uncertainty post-PACCAR might be preventing claimants from pursuing claims.

In addition, proportionate regulation of LFAs will be introduced, to improve transparency and fairness for claimants. Legislation will be introduced when “parliamentary time allows”. Once these two changes have been implemented, the Civil Justice Council’s wider litigation funding recommendations will be considered, and further changes will be announced.

Conclusion

When it came into office the new government made clear it would wait for the CJC report before taking decisions on any legislation concerning litigation funding. While we must still wait to see the government’s proposed timetable and the text of draft legislation, the government has said its priority is to remove the uncertainty introduced by PACCAR and ensure the litigation funding sector works fairly and efficiently for all.

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

The expensive mistake of not engaging with Part 36 offers

Bethany CollingsLeave a comment

The recent High Court decision in Learning Curve (NE) Group Ltd v Lewis & Anor [2025] EWHC 2491 provides an important reminder of the consequences of making or failing to accept a settlement offer under CPR Part 36.

Underlying proceedings

The case concerned a Share Purchase Agreement dated 29 October 2021, under which the Claimant acquired shares from the Defendants. The Claimant brought a claim for breach of warranty under an indemnity contained in the Share Purchase Agreement.

On 7 February 2024, the Claimant made a Part 36 offer to settle for £5,211,625, with which the Defendants did not engage. This was unusually the exact same amount that was awarded within the judgment dated 4 August 2025.

Consequential Judgment

The central issues before the Court were whether the Part 36 offer was valid and clear, the application of Part 36 consequences under CPR 36.17(4), the appropriate interest rates on the judgment sum and costs, and the bases of assessment for the costs Orders.

The Defendants argued that the offer was unclear because it did not explicitly take into account their prior payment, while the Claimant contended that the offer was clear and should trigger Part 36 consequences.

HHJ Russen KC held that the Claimant’s Part 36 offer was valid and that the amount awarded under the judgment matched the offer. This meant that the full consequences of CPR 36.17(4) were triggered. The Court rejected the Defendants’ argument that the offer was unclear, noting that they could have sought clarification under CPR 36.9.

Interest was awarded at 2% above the base rate for the period until the expiry of the relevant period, and 8% above the base rate thereafter until the judgment date. The Court ordered costs on the standard basis for work done prior to the expiry of the relevant period and on the indemnity basis thereafter. The Judge ordered a payment on account of costs amounting to £1,257,382, representing 100% of the budgeted costs, and awarded an additional Part 36 amount of £75,000 (which is the maximum amount that can be awarded in accordance with CPR 36.17).

Practical implications

This case highlights the importance of making effective Part 36 offers. A carefully considered and timely offer that is not accepted can lead to substantial additional costs, interest and other consequences. Although the Part 36 offer in this case did not explicitly address the prior payment, the Court found it was sufficiently clear that the Part 36 offer was in respect of the entire claim, including the prior payment. Parties should therefore seek clarification promptly if they are unsure on the terms of a Part 36 offer.

Bethany Collings is an Associate in the Costs and Litigation Funding Team at Clarion Solicitors and can be contacted at bethany.collings@clarionsolicitors.com or on 07774 951949.

Understanding the consequences of serving a defective bill of costs

ujjainimistryLeave a comment

In Hyder -v-Aidat-Sarran [2024] EWHC 3686 (SCCO), Deputy Costs Judge Roy KC dealt with two applications: from the Claimant for relief from sanctions for late service of the bill of costs; and from the Defendants who applied under CPR 44.11 to strike out the Claimant’s claim for costs due to serious and repeated failures to comply with rules, practice directions and Court orders and/or unreasonable or improper conduct during the detailed assessment proceedings.

Background Information

The applications were made against a background of procedural failures by the Claimant. A defective bill of costs, which had been prepared in the wrong format, had been served late. The Defendants served Points of Dispute in response to the defective bill, which highlighted numerous other failings, including a failure to certify and claims for costs to which the Claimant was not entitled. In the absence of Replies to Points of Dispute, the Defendants applied for an Unless Order.

As there was no serious dispute that the Claimant’s bill was defective, and on the strength of assurances given by the Claimant that an amended bill of costs had been prepared which would be served at the same time as the request for detailed assessment was filed, an Unless Order was made by consent. The Unless Order required the Claimant to file a request for detailed assessment hearing by 13 August 2024. In default of which the Claimant’s costs would be disallowed, and the Claimant would be required to pay the Defendants’ costs of the detailed assessment proceedings.

In the event, the Claimant filed the bill of costs together with a request for detailed assessment 1 day late by email, notwithstanding that the use of CE-File is compulsory in the Senior Court Costs Office. Although by this time the bill was in the correct format, none of the previously identified defects had been rectified and the filed bill introduced further defects in addition to those previously identified.

The Claimant was therefore required to apply for relief from sanctions. The Defendants opposed the application on grounds that the bill was so severely defective the Claimant could not properly be said to have belatedly complied with the Unless Order and they also applied for an order to strike out the claim for costs under CPR Rule 44.11, in any event.

The Judge dealt with each application in turn.

  1. The Claimant’s application for a relief from sanctions

The Judge referred to the Denton Principles, which is a three stage test used to guide the Court when deciding applications for a relief from sanctions under CPR 3.9.

Stage 1 was considered in relation to whether the service of a defective bill a day late was non-compliance with the order and whether that was a serious or significant breach.

The Judge stated that he was ‘ultimately against’ the Defendants submissions that the bill was so defective it should not be described as complying with the order because the bill was served within the meaning of the order in that the Unless Order did not specify a requirement to serve a fully compliant bill. Relief from sanctions was therefore granted.

  1. The Defendants’ application under CPR 44.11 to strike out the Claimant’s claim for costs

CPR 44.11(1) sets out the Court’s powers to address misconduct, which may apply where:

(a) a party or their legal representative fails to comply with a rule; or

(b) a party’s or legal representative’s conduct is unreasonable or improper.

If either limb of CPR Rule 44.11 are met, then the Court may apply one of the sanctions in CPR 44.11(2), which are:

  • disallow all or part of the costs which are being assessed; or
  • or order the party at fault or that party’s legal representative to pay costs which they have caused another party to incur.

The Judge found that both limbs of CPR 44.11(a) and (b) were made out. He found that in addition to the defects identified in the original bill, the Claimant had served an electronic bill which failed to comply with most of the requirements of electronic bills in Practice Direction 47.

The Judge agreed there were multiple significant failures within the bill, with some more serious than others. He also found it ”beyond belief” that the defects were not rectified in the electronic bill, despite being identified in the Points of Dispute. The Claimant also failed to serve evidence to explain or address the failings and failed to apologise for (or even acknowledge any of the failings) before the hearing. This was described as “serious and troubling lack of insight and contrition on behalf of the Claimant’s solicitors.”

It was also held that it was not appropriate for the Claimant’s solicitor to blame their costs draftsman for the errors on the basis that the costs draftsman is the solicitor’s agent, and the solicitor is vicariously liable for the draftsman’s failings (Gempride v Bamrah [2018] EWCA Civ 1367). The solicitor also had direct supervisory responsibilities which they did not fulfil in relation to reviewing and checking the bills of costs.

The Judge therefore found that “there have been multiple compound breaches. They have been serious. They have been persistent. They are unexplained, and they are inexcusable for the most part.”

It was then left to the Judge to decide upon the severity of the sanction to impose. Although a complete strike out of the claim for costs was possible, the Judge decided against that on grounds that the Court of Appeal had found that sanction to be draconian, even in cases of serious misconduct. Instead, the Judge recognised that a severe sanction was warranted and Ordered that the Claimant’s assessed costs would be subject to a 75% reduction.

Ujjaini Mistry is a Paralegal in the Civil and Commercial Costs Team at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Can an arbitrator make a costs award when they have determined they lack jurisdiction to deal with an arbitration?

Joanne ChaseLeave a comment

The recent decision of Ravfox Ltd v Bexmoor Ltd [2025] EWHC 1313 (Ch) explored whether an arbitrator had jurisdiction to make a costs award when it had been found that they lacked jurisdiction to deal with the matter.

Background

By way of background, the parties were in dispute as to the amount of service charge the defendant (Bexmoor Ltd) was required to pay the claimant (Ravfox Ltd) in respect of individual units which the defendant sublet from the claimant on an industrial estate. The defendant referred the matter to arbitration and alleged that the claimant (the respondent in the arbitration) failed to comply with its obligations under the sublease.

Within the arbitration, the respondent, Ravfox Ltd, filed a statement in reply to Bexmoor Ltd’s statement of claim, challenging the arbitrator’s jurisdiction on the basis there was no binding sublease between the parties. Ravfox Ltd sought their full costs and expenses of the arbitration from the applicant.

Arbitral Decision

The arbitrator found that there was no binding contract containing an arbitration clause and that he did not, therefore, have jurisdiction to hear the dispute. Further, he found that, in light of his lack of jurisdiction in the dispute, he lacked jurisdiction to make any determination as to costs. He added, however, that having read the submissions filed by the parties, he would have found in favour of the claimant (Ravfox Ltd), and he would have ordered that no costs were payable. As a result of this finding, he recommended that the matter be put before the Court to determine the costs of the jurisdictional challenge.

Court Decision

His Honour Judge Keyser KC reviewed the relevant provisions of the Arbitration Act 1996 and determined that the arbitrator was wrong to determine he had no jurisdiction to deal with costs. He went on to explain that:

“It would mean that a respondent making a jurisdictional challenge would be at risk of an adverse costs order if the jurisdictional challenge failed and would necessarily bear its own costs if the jurisdictional challenge succeeded, whereas the referring party would be able to recover the costs of successfully defending a jurisdictional challenge but would be at no risk of an adverse costs order if the jurisdictional challenge succeeded.”

Clarification to section 61 of the Arbitration Act 1996

The Law Commission’s Consultation Paper 257, Review of the Arbitration Act 1996, considered this point further and recommendations were made to insert a new subsection (1A) to section 61 of the 1996 Act. Effective from 1 August 2025, section 61 of the Arbitration Act 1996 now reads:

“61. Award of costs

(1) the tribunal may make an award allocating the costs of the arbitration as between the parties, subject to any agreement of the parties.

(1A) it is irrelevant for the purposes of subsection (1) whether the tribunal has ruled, or a court has held, that the tribunal has no substantive jurisdiction or has exceeded its substantive jurisdiction.”

The Law Commission considered that the inclusion of this new subsection simply “put the matter beyond doubt” rather than changing the law, to which HHJ Keyser KC agreed.

This decision makes the position clear; that where an arbitrator accepts a challenge that they do not have jurisdiction to hear a dispute, they are still able to deal with the costs arising out of such a challenge.

 

Joanne Chase is a Legal Director in Clarion’s Costs and Litigation Funding Team and can be contacted on 07826 166300 or Joanne.Chase@clarionsolicitors.com