Author: Anna Lockyer

The practicalities of costs budgeting in the B&PC when a preliminary issue or split trial may be appropriate

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The Chancery Guide at paragraphs 6.10 and 6.11 is practical: consider early (and in any event before the first CMC/CCMC) whether a decisive issue can be tried first, or whether the case should be staged (for example, liability then quantum). It is important to align the case-management proposal with (i) the DQ narrative, (ii) draft directions for the first CMC, and (iii) the costs budget, clearly setting out stage 1 work.

Paragraph 6.37D confirms that this approach also applies to PD51ZG1 and the relevant guidance is set out as follows:

6.10 Costs and time can sometimes be saved by identifying decisive issues, or potentially decisive issues, and ordering that they are tried first. A trial of a preliminary issue may also be appropriate where its determination, although not itself decisive of the whole case, may enable the parties to settle the remainder of the dispute or otherwise shorten the proceedings. An example would be a relatively short question of law which can be tried without significant delay (or much in the way of disclosure or witness evidence) but which would be determinative of one or more of the key issues in dispute.

6.11 Parties should actively consider at the earliest opportunity, and certainly in advance of the first CMC / CCMC, whether there are any issues which are suitable for determination as a preliminary issue, or which should be tried separately such as a split between liability and quantum. If possible, parties should indicate when filing DQs whether a preliminary issue or split trial is under consideration and provide a summary of the proposed approach in Section I of the DQ. Parties should give careful consideration to the approach to costs budgeting and disclosure where a preliminary issue or split trial is proposed or agreed.

Practical steps (for one party, or both parties by agreement)

  • Confirm whether PD51ZG1 applies (including any dispute about whether the claim is £1m or more / seeks only non-monetary relief) and diarise the budgeting steps.
  • Define the preliminary issue / split with precision: what is being tried first, why it is (potentially) decisive, and what it will remove from the remainder of the case.
  • Stress-test the procedural footprint for stage 1: what (if any) disclosure, witness evidence and expert evidence is genuinely required now, and what can properly be deferred.
  • Shape budgeting assumptions to match staging: make clear which work/phases are included in stage 1 and what is excluded (with a mechanism to revisit later if a second stage remains).
  • Engage early with the other side to narrow the issue(s) and, if possible, agree directions (or at least exchange short position statements before the CMC).
  • Use the DQ and draft directions to put a workable proposal before the court: issue(s), estimated hearing length, evidence/disclosure limits, listing window, and what happens after determination (ADR/stay/further directions).
  • Be ready on proportionality: a short comparison of time/cost for “single trial” vs “preliminary issue/split” is often what makes the application persuasive at the first CMC.

If you want a preliminary issue or split trial, the practical route is to define the issue tightly, demonstrate a genuinely reduced stage 1 footprint (disclosure/evidence), and present a directions and budgeting proposal the court can adopt at the first CMC.

The full guide can be found here: The Business and Property Courts of England & Wales Chancery Guide 2022

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

Changes to Rolls Building Statements of Costs

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As of 14 April 2026, more specific requirements became applicable to the filing and service and the format of statements of costs in the Chancery Division, TCC, Commercial Court and London Circuit Court of the Rolls Building.

  • Parties should file and serve an Excel version of N260 for all summary assessments, in addition to a signed read-only PDF.
  • Excel-Template-N260-Clean-1-4-26.xlsx is the correct template Excel version to use.

The relevant Practice Note can be found here:

Rolls Building Practice Note – Summary Assessments (2026) – Courts and Tribunals Judiciary

*Practice Note of 13 March 2026 (which referenced N260A and N260B) can be disregarded.

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

The importance of being ‘certain’ in a retainer, whether a Contentious Business Agreement or not

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A billionaire client (C) has been successful in an application in the High Court for an assessment of a series of invoices totalling more than $35 million, raised by C’s legal representative US firm Wilmer Cutler Pickering Hale and Dorr (D).

In Safra v Wilmer Cutler Pickering Hale and Dorr LLP [2026] EWHC 703 (SCCO), Costs Judge Leonard examined whether there was justification to order an assessment of the invoices in the context of the Solicitors Act 1974, specifically:

  • Whether the letter of engagement constituted a Contentious Business Agreement (CBA) within the meaning of Section 59 of the 1974 Act
  • If D was entitled to deliver interim statutory invoices and whether the invoices were compliant with the relevant requirements

Background

D had acted for C in a dispute over the estate of C’s father, a wealthy Brazilian banker, which involved several complex arbitrations.

C’s application of 17 December 2024 disputed the invoices rendered between 10 December 2022 and 17 September 2024 in relation to this matter.

C contended that “$35 million is an unusually large sum to incur over less than two years in even the heaviest of litigation”. Not only did C submit that time charges were high, they argued expenses and disbursements were also “of a surprising nature and amount”.

It was common ground that the work undertaken was ‘contentious business’ for the purpose of the 1974 Act and that the engagement letter did not need to be a labelled a CBA, to be a CBA.

Notably, the engagement letter contained a right to apply for assessment, which is not consistent with a retainer being a CBA.

The benefits of a CBA for D

It would have suited D if the engagement letter had been deemed a CBA because under section 60(1) of the 1974 Act, costs incurred under a CBA shall not be subject to assessment. D could have resisted the application on that basis.

That said, 61(4B) of the Act allows for assessment of the number of hours worked and whether they are excessive, when a CBA is relied on and when the client objects to the costs generally, providing the client has not alleged the CBA is unfair or unreasonable; the scope for C to challenge would be limited in these circumstances.

Engagement Letter not a CBA as lacked certainty

Despite D submitting that the terms of the engagement letter were negotiated with C – an experienced and commercially sophisticated client with very experienced lawyers, and that the  arbitrations had been extremely complex; their likely course unpredictable at the time of the engagement letter; and the full scope of the work unknown at the outset, it was determined by the Costs Judge that D’s engagement letter did not amount to a CBA.

There was acknowledgment that the long hours and expenses were commensurate with the nature and scale of work and with the value, weight and complexity of the litigation, but the judge expressed concern with the lack of financial information provided to C:

“unilateral, open-ended provisions for hourly rate increases, the amounts and timing of which were entirely at the discretion of the Defendant, are inconsistent with the requisite characteristic of certainty.”

D had not kept C informed of costs and failed to advise of rate increases of up to $2,095 per hour. The engagement letter provided for only a broad range of current hourly rates, capable of unilateral alteration by D. No fixed fee provision or a fee fixing mechanism existed.

It was made clear that certainty is paramount when determining whether a retainer is a CBA.

The Judge went on to say that if he had found the engagement letter to be a CBA, he would have set it aside in any event, because the unreasonably incorporated unilateral open-ended provisions, prevented C from challenging increases to hourly rates.

Chamberlain Bill, not Interim Statutory Invoices

Although it was determined that the engagement letter allowed D to deliver interim statutory invoices, and that monthly statements had been provided, the description of the monthly statements in the engagement letter and the invoices did not correspond.

The invoices were found to lack “the requisite element of finality” to be compliant interim statutory invoices.

Instead, they were held to collectively constitute a single Chamberlain bill, delivered to C on 17 September 2024, capable of assessment in its entirety under section 70(2) of the Solicitors Act 1974, as the bill had already been partially paid.

The Judge made clear that he would have exercised the court’s discretion and established that “special circumstances” as per section 70(3) were applicable, to justify an order for assessment in any event, as there was an evident failure by D to provide adequate costs information.

“The Defendant’s failure to notify the Claimant of its hourly rate increases seems symptomatic of a lack of awareness of the importance of keeping the client fully informed of the costs position. However much he would have known about what was being done for him, and however pleased he may have been at the level of service provided, the Claimant was not regularly being kept aware of what it was costing him.”

Costs Judge Leonard identified numerous failings throughout this matter relating to communications between lawyer and client regarding costs, which ultimately resulted in the order for assessment. Concluding the judgment with a determination that special circumstances would have been established due to inadequate costs information, even if the invoices had met the interim statutory invoice criteria, exemplifies the extent of potential consequences if clients are not kept clearly and fully informed on costs.

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

Drafting Costs Management Orders

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There can be uncertainty around the content and wording to include in draft costs management orders, a point reinforced by Senior Master Cook in Baroness Lawrence & Ors v Associated Newspapers Limited [2025] EWHC 3207 (KB) when he ordered a re-draft of an incorrectly drawn costs management order, observing “parties seldom draft proper or effective costs management orders”, despite his King’s Bench Division Guide note on Cost Management Hearings, setting this out at Paragraph 13 of Annex 8:

Essentially, confirmation of any agreed/not agreed incurred costs, the amounts by which the budgeted costs of each party have been agreed or approved (as required by CPR 3.15(2)) and any comments made by the court at the hearing with regards to the predications the assumptions are based on, should be clearly recorded on the Order. These statements may include the extent of disclosure; the number of days any experts will attend trial; and whether a mediation or some other settlement meeting is anticipated.

There are occasions when a table can be included in the costs management order that sets out the budgets’ figures, distinguishing those agreed from those approved.

If directed by the court, costs set out in this tabular form, may replace the requirement for front sheet costs budgets.

There are also certain judges who prefer an additional provision in a costs management order, referring to how departures from budgets would only be allowed with good reason, as per CPR 3.18(b). This may be provided for as follows:

“This costs management order is without prejudice to any issue which a party wishes to take on detailed assessment save that the court will not depart from the receiving party’s last approved or agreed budget unless there is good reason to do so.”

In recent years, templates have remained mostly unchanged, but the courts seem increasingly focused on ensuring costs management orders are properly prepared. Having a correct draft ready ahead of a costs management hearing, can be crucial to obtaining the desired outcome.

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

Budgeting GLOs: Second CMC (Mark 2), Tranche 3

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“Over-lawyering” was the key criticism of the High Court in another round of costs budgeting the Pan Nox Emissions group litigations.

In this third Tranche, the Claimants’ budgets were reduced from £55.7m to £21m and the Defendants’ budgets from £75.8m to £48m with Mrs Justice Cockerill DBE and Senior Costs Judge Rowley deciding that in respect of the Claimants’ budgets “the largest reductions stem from the layers of representation leading to, for example, claims for individual, non-lead firms to audit or replicate work already being done by the Lead firms”.

The full judgment can be read here: Various Claimants v Mercedes-Benz Group AG & Ors (Re Pan NOx Emissions Litigation) [2025] EWHC 2307 (KB) (10 September 2025)

Costs Budgeting Pilot Scheme for QOCS Cases

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PD51ZG3 will apply to Part 7 multi-track claims in the High Court District Registries at Manchester and Birmingham to which CPR 44.13 (Qualified One-Way Costs Shifting) applies. It is not intended to apply to County Court cases and there will be no financial limit on the value of the claims.

The commencement date of this pilot is the 6 April 2025 and it will run for 3 years (subject to Parliamentary approval), aligning with the Business and Property Court Pilot and the less than £1 million non-BPC/non-QOCS Pilot.

In terms of the new process, all parties (save for Litigants in Person) will file a Precedent Z 21 days before the first CMC. In most cases, the Defendant will then file a Precedent RZ, within a prescribed timescale.  The Claimant will not however be required do so because, apart from in a very small number of cases, they will have QOCS protections and will not be called on to pay the Defendant’s costs. The Claimant does not therefore generally need to comment on the Defendant’s budget.

QOCS protections means there is generally no need to costs manage the Defendant’s costs (because the Claimant will not be called on to pay the Defendant’s costs). The Court retains the power to manage the Defendant’s costs in appropriate cases. The CPRC sub-committee’s view is that this is most likely to happen if the Defendant has pleaded (or otherwise raised) a credible case that the claim (or Claimant) is fundamentally dishonest.

For information relating to the Pilot Schemes under PD51ZG1 and PD51ZG2 see: https://clarionlegalcosts.com/2025/02/10/costs-budgeting-light-pilot-schemes-179th-practice-direction-update/

The new Precedent Cost Forms for all 3 Costs budgeting “light” Pilot Schemes are available here: Precedent Cost Forms – Justice UK

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

Costs Budgeting Light Update

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As discussed at the CPRC meeting last month, two draft costs budgeting pilots have now been prepared in respect of:

  1. Business and Property Court (BPC) cases; and
  2. Certain other cases valued at under £1m.

A new Precedent costs form (modelled on the existing Precedent H) has been drafted and approved in principle.

Each pilot maintains the exclusions set out in CPR 3.12 (claims of £10m or more and claims brought by children).

The draft BPC Practice Direction provides for where the court does not make a CMO and allows court discretion, incorporating “unless the court orders otherwise” in the interests of clarity.

The BPC Pilot is intended to cover BPC of England and Wales (i.e. the Rolls Building) and at least two BPC District Registries (including Business and Property work in the county courts in those District Registries).

The non-BPC under £1m pilot mirrors the BPC under £1m position.

Various implementation issues, including the pilot courts, numbering of the Precedent and Practice Direction, and the commencement and duration of the pilots are yet to be finalised.

Costs Budgeting Reform Gains Momentum

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Flexible budgeting recommendations made by the CJC’s report of May last year have been accepted by the Master of the Rolls and more recently discussed at last month’s CPRC meeting.

Key points:

  • A new Precedent H costs form has been proposed, modelled on the existing Precedent H
  • A draft new Practice Direction includes budgeting claims with a value of over £10m
  • A draft pilot Practice Direction provides for 5 categories of case, each limited in certain courts:

– Business & Property Courts (BPC) claims with a value of £1m or more;

– BPC claims with a value of less than £1m;

– Qualified One-Way Costs (QOCS) claims;

– Non-QOCS claims; and

– Certain other non-BPC claims.

It was agreed in principle that each case category may have its own Practice Direction and the implementation dates need not be the same.

Watch this space for further updates…

Master orders Labour Party to present common and non-common elements in single costs budget

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On the basis it would be “expensive and speculative” to produce separate costs budgets for the defended claim and the Part 20 claim, Master Dagnall decided only one budget would be required at the CCMC stage.

By way of background, Taylor and others v Evans (as representative of the Labour Party) and others (Named Third Parties) [2023] EWHC 2490 (KB) is a data protection claim relating to an internal report that was compiled when the Labour Party was being investigated by the Equality and Human Rights Commission regarding allegations of anti-Semitism.

The draft report was leaked soon after the last general election at a time when Jeremy Corbyn was being replaced by Sir Keir Starmer. The Defendant’s main defence and premise on which their Part 20 claim is brought, is that third parties, who at the material time were employees and officers of the Defendant but aligned with Mr Corbyn, leaked the internal report and were engaged in a conspiracy to undermine Sir Keir Starmer.

In relation to budgeting Master Dagnall took the view that “if the main claim and the Part 20 claim are to be tried together as I have directed is to be the case, then, unless there is some particularly good reason, they are simply producing figures for each phase.”

Master Dagnall then went on to say “at this point the underlying purpose of the budgeting process is to tell parties, what is reasonable and proportionate for each party to spend; and this is done by the court and the other parties simply being given proposed figures for each phase, and the figures for each phase then being settled by agreement or court approval.”

“It seems to me it would be perfectly possible for a judge at trial to say that a particular costs order should be made which reflects the fact that some issues were, it turns out, not the concerns of the claimants and they have sought to distance themselves from those issues. It seems to me those are decisions which can only be taken at trial itself and I am not convinced myself at this point that it is clear that such is going to be the situation, and do not think that I should be directing the budgeting process on the basis that such is likely to occur.”

“I also bear in mind that it is always open to the judge to consider that there is good reason to depart from the costs budgets, and the judge can deal with such a situation at trial in a number of different ways, by making a variety of different costs orders or simply directing that the cost budgets will, in one way or another, be given no or only limited weight. But it seems to me that these are all matters pre-eminently for the trial judge. Costs budgeting may effectively limit the spending decisions taken by parties as they go along, but the actual consequences as to what should happen to costs should be matter for the trial judge.”

“In any event, I do not regard it as clear enough that there are uncommon costs to make a specific direction about any particular category of costs.”

“The parties are under their ordinary duties when preparing costs budgets to consider whether or not the ordinary form of them is inappropriate. If they do so consider, and consider that there are costs which simply relate only to one of the other sides and not another, then the court would normally expect them to refer to that and, in some way or other, reflect it in their material.”

“For me to lay down any rule at this point seems to me as inappropriate, so I am not going to do so.”

“In my judgment, the parties should just simply provide costs budgets on the ordinary basis.”

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