Author: Helen Appleby

Can a Claimant claim interest on costs not yet paid?

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Município De Mariana v BHP Group (UK) Ltd & Anor [2026] EWHC 73 (TCC)

In this case, the Claimants had succeeded at trial on a preliminary issue and were awarded an interim payment on account of costs of £43 million. However, the assessment of costs was deferred until the conclusion of the overall case.

The Court had to determine whether interest could be awarded on costs, when those costs were not payable to the Solicitor until the successful conclusion of the claim.

The Defendants’ Position

The Defendants objected to the Claimants’ application for interest on costs. Their argument was that since the Claimants had not paid any legal fees or disbursements, and were not out of pocket at this stage.

The Legal Framework

CPR 44.2(6)(g) gives the court discretion to award interest on costs from or until a specific date, including a period before judgment. The rationale for awarding interest, as explained in Jones v Secretary of State for Energy and Climate Change [2014] EWCA Civ 363, is to compensate a party who has been deprived of the use of their money or has had to borrow to fund litigation.

The Judgment and Key Principles

Mrs Justice O’Farrell determined that, although the Claimants had not yet paid out costs, they had incurred a liability. If and when damages are paid, the Claimants will have to pay their Solicitor out of those damages. The fact that the Solicitors and funders had shouldered the risk of non-payment did not mean the Claimants were not ultimately liable.

The Judge determined that the Claimants should be compensated for the funding expenses incurred, which required payment from their damages. On this basis, the court exercised its discretion and awarded pre-judgment interest on costs at 1% above the base rate, calculated from the date when half the fees were incurred (1 August 2023).

Summary

The judgment confirms that even where payment is contingent on success, interest can be awarded on the liability incurred. This decision reflects the evolving realities of litigation funding and ensures that compensation for funding expenses is not arbitrarily withheld due to the timing or structure of payment.

Helen Appleby is an Associate in Clarion’s Costs and Litigation Funding Team and can be contacted at helen.appleby@clarionsolicitors.com or on 07774 045105.

Without Prejudice…..or is it?

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In the case of Cardiff City Football Club Limited v William Arthur McKay & Ors [2025] EWCH 1439, the significance of the “without prejudice” principle was examined. This principle protects settlement discussions from disclosure in court, encouraging parties to negotiate disputes without fear of repercussion.

The case arose when Cardiff City FC filed a Contempt Application, alleging that the Defendants had failed to comply with a disclosure order. in response, the Defendants, in their extensive Skeleton Argument, accused Cardiff City FC of abuse of process, and sought to rely upon without prejudice communications without obtaining consent or determining its admissibility.

The Court reviewed past decisions to underline the importance of protecting without prejudice communications and considered exceptions such as misrepresentation or explicit impropriety. The Defendants’ failure to formally challenge the Contempt Application and their premature disclosure of privileged communications led the Court to focus on whether these communications could be used to support their arguments.

The Defendants argued the Claimant’s use of the Contempt Application amounted to unambiguous impropriety, attempting to force disclosure they weren’t otherwise entitled to, however, the Court disagreed. The Court found no unambiguous impropriety and the without prejudice communications remained protected and inadmissible as evidence in the Defendants’ Application to strike out the Claimant’s Contempt Application as an abuse of process.

Ultimately, the Court emphasized the need for procedural correctness, requiring parties to seek a separate privilege hearing before attempting to rely on without prejudice discussions.

For further information and a detailed consideration of the case, please refer to our June 2025 newsletter

Allege fraud by all means….but do so at your own risk – the allegation must be tenable

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The recent case of Farol Holdings Limited and ors -v- Clysedale Bank PLC and ors has attracted significant press coverage and for good reason.

The case was heard by the Honourable Mr Justice Zacaroli. The substantive action concluded on 19 March 2024, where Judgment was handed down. By consent, the Claimants were ordered to pay the Defendant’s costs, and the hearing was adjourned to consider other consequential matters.

Amongst the matters to be addressed were:-

1) Whether the costs payable by the Claimants should be on the Standard or Indemnity basis;

2) What interim payment should be paid by the Claimants on account of costs;

In relation to Point 1, the Judge noted that “an award of costs on an Indemnity basis is different from a Standard basis costs order for three reasons: cost management orders are disapplied; there is no proportionality requirement and the burden of proof on the question of reasonableness is reversed”.

In relation to the question of reasonableness, the parties agreed on the test to be applied, taken from Three Rivers DC v The Governor and Company of the Bank of England [2006] EWHC 816 (Comm), per Tomlinson J:

“(1) The Court should have regard to all the circumstances of the case and the discretion to award Indemnity costs is extremely wide.

(2) The critical requirement before an Indemnity order can be made in the successful Defendant’s favour is that there must be some conduct or some circumstance which takes the case out of the norm.

(3) Insofar as the conduct of the unsuccessful Claimant is relied on as a ground for ordering Indemnity costs, the test is not conduct attracting moral condemnation, which is an a fortiori ground, but rather unreasonableness.

(4) The Court can and should have regard to the conduct of an unsuccessful Claimant during the proceedings, both before and during the trial, as well as whether it was reasonable for the Claimant to raise and pursue particular allegations and the manner in which the Claimant pursued its case and its allegations.

(5) Where a claim is speculative, weak, opportunistic or thin, a Claimant who chooses to pursue it is taking a high risk and can expect to pay Indemnity costs if it fails.

(6) A fortiori, where the claim includes allegations of dishonesty, let alone allegations of conduct meriting an award to the Claimant of exemplary damages, and those allegations are pursued aggressively inter alia by hostile cross examination.

(7) Where the unsuccessful allegations are the subject of extensive publicity, especially where it has been Courted by the unsuccessful Claimant, that is a further ground.

(8) The following circumstances take a case out of the norm and justify an order for Indemnity costs, particularly when taken in combination with the fact that a Defendant has discontinued only at a very late stage in proceedings;

(a) Where the Claimant advances and aggressively pursues serious and wide ranging allegations of dishonesty or impropriety over an extended period of time;

(b) Where the Claimant advances and aggressively pursues such allegations, despite the lack of any foundation in the documentary evidence for those allegations, and maintains the allegations, without apology, to the bitter end;

(c) Where the Claimant actively seeks to Court publicity for its serious allegations both before and during the trial in the international, national and local media;

(d) Where the Claimant, by its conduct, turns a case into an unprecedented factual enquiry by the pursuit of an unjustified case;

(e) Where the Claimant pursues a claim which is, to put it most charitably, thin and, in some respects, far-fetched;

(f) Where the Claimant pursues a claim which is irreconcilable with the contemporaneous documents;

(g) Where a Claimant commences and pursues large-scale and expensive litigation in circumstances calculated to exert commercial pressure on a Defendant, and during the course of the trial of the action, the Claimant resorts to advancing a constantly changing case in order to justify the allegations which it has made, only then to suffer a resounding defeat.”

In this case, the Judge found that the Claimants had put fraud at the front and centre of their case. Depite the Claimant’s strong resistance to an award of Indemnity Costs, the Judge found nothing improper in the Claimant’s legal representatives’ behaviour in pleading and pursuing the fraud claims, however, this did not satisfy a claim for Indemnity Costs. The Judge went on to state that the “allegations of deceit were weak and subject to inherent flaws, but were nevertheless pursued to the bitter end. The allegation of fraud at the heart of the break costs claims was one which I described in the Judgment as facing insurmountable hurdles, requiring inherently improbable conclusions to be made against four senior executives with otherwise good reputations and no obvious (or suggested) motive for deceiving customers”

An additional factor the Judge found to support an award of Indemnity costs was where large-scale and expensive litigation is pursued in circumstances to impose commercial pressure on the Defendants. The claims were managed by a claims management group – RGL Management Limited (“RGL”). The Judge noted that RGL had conducted a large publicity effort, with its own dedicated website (sueclydesdale.com) and extensive use of social media posts and press releases and whilst there was nothing intrinsically wrong with this, the manner in which it had done so, undoubtedly raised the stakes and,  was something which supported an award of Indemnity costs.

Taking the above into consideration, the Judge determined that the Claimant’s actions took the case “out of the norm” and justified an Indemnity Costs award.

In relation to the Interim payment on account, whilst cost management had been dispensed with, the Defendants had filed a Cost Budget. The Judge considered the parties Budgets and determined this to be the starting point when considering the issue of a payment on account of costs.

The Defendants costs were noted to be £33.46 million (more than double those of the Claimants). Despite which, the Judge acknowledged that the Claimants had chosen to sue each Defendant individually and therefore each Defendant was entitled to defend itself from such serious allegations. The Judge also accepted that the Defendants had the greater burden of disclosure and witness evidence work.

Taking both parties submissions into account, the Judge awarded an interim payment on account of costs in the sum of £19.1 million.

This is a costly lesson for the Claimants to learn and one which should be at the forefront of litigators minds when the issue of fraud/misrepresentation is raised. If the allegations made against your client are so substantial that it takes the case out of the norm, an award of costs on the Indemnity basis is a possibility.

Clarion’s Costs and Litigation Funding team and can be contacted at civilandcommercialcosts@clarionsolicitors.com.

Costs reduced by 54% at Summary Assessment: Leading and/or Junior Counsel?

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Summary assessment takes place following a trial or hearing. It is a broad brush approach to deciding how much should be paid. The parties provide brief details of the costs they are claiming, via a costs schedule/N260, the Judge hears from the parties and then reaches a decision.

Saudi Arabian Airlines Corporation v Sprite Aviation No. 6 DAC [2024] provides a brief in-sight as to what may be considered during the Summary Assessment process.

Christopher Hancock KC sitting as a High Court Judge had considered a preliminary issue and agreed with the Defendant’s submissions that the matter should be reserved to the trial Judge. As a result, the Claimant was ordered to pay the Defendant’s costs.

The Defendant’s Bill of Costs totalled £42,267.31. The Claimant argued that this should be reduced to £9,540.92 for several reasons:-

(1) Hourly rates (the rates claimed exceeded Central London SCCO Commercial Guideline rates);

(2) Inappropriate use of grade A fee earners and failure to delegate. The Claimant argued that some work should have been delegated to more junior members of staff;

(3) Excessive time spent; and

(4) Excessive Counsel’s fees on the basis that the hearing did not require two Counsel. Junior Counsel alone would have been sufficient and that if junior Counsel alone been instructed, the fees could have been reduced from £22,000 to about £5,000, a saving of £17,000.

In response, the Defendant stated that the Claimant’s arguments took no account of the fact that there had had to be two hearings and not one, through no fault of the Claimant or Defendant. It was the Defendant’s view that the criticism of the hourly rates was misplaced given the very specialist nature of the dispute and the fact that both parties were instructing similar firms in this regard. Furthermore, it was their view that the choice to use higher rate fee earners served to reduce rather than increase costs, because those fee earners had enjoyed a closer contact with the dispute.

Finally, in relation to utilising both Leading and Junior Counsel, it was the Defendant’s submission that leading Counsel had conducted the advocacy at the hearing itself with Junior Counsel undertaking the additional tasks.

The Judge considered the issues. He adopted a broad brush approach and reduced the Claimant’s costs to £22,000.00. His reasoning for this reduction was that he remained of the view that only Junior Counsel was necessary and therefore struck out Leading Counsel’s fees. Given the significance of such a reduction, the Judge was content to determine that no very significant reduction should be made in relation to the other points (i.e. hourly rates/time/delegation).

Clarion’s Costs and Litigation Funding team and can be contacted at civilandcommercialcosts@clarionsolicitors.com.

 

It’s a final Statutory Invoice…..but only if your retainer allows it

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Ivanishvili -v- Signature Litigation LLP (2023)

This case concerns the legitimacy of interim statute bills and potential difficulties in rendering the same. In the substantive action, the Claimant issued proceedings seeking Judgement that 79 invoices (totalling £12,781,354.66) rendered by his previous Solicitors  over a period of more than six years, were not statute bills and should therefore be subject to a Solicitor/Client Detailed Assessment.

It was the Claimant’s position that his retainer with the Defendant firm incorporated a Discounted Conditional Fee Agreement and therefore, the invoices produced only represented a portion of the potential fees that would become due to the firm for the work undertaken. Furthermore, the retainer indicated that a final bill would be rendered upon conclusion of the claim. Therefore, the invoices produced could never be considered as final statute invoices.

The Defendant submitted that the invoices rendered were complete and final bills. It was their submission that only the last bill, dated October 2022, could be open to assessment, but otherwise they had all been paid and therefore the Claimant had no right to challenge them.

Cost Master Leonard did not give a concluded view on whether it was possible to render an interim statute invoice under the terms of a CFA. Rather, he found it ambiguous as to whether the retainer allowed for statute interim bills at all. In this case, he found that none of the invoices could be considered as statutory bills ‘because any such agreement would have been inconsistent with the terms of the retainer under which they were rendered and paid’.

Furthermore, under the retainer the parties had entered into, Master Leonard confirmed “the invoices could be finalised, only when either the firm delivered a bill for any additional fees due (ie success fee), or, the firm accepted that nothing more was due and finalised its billing on that basis. The default position for a contract between a solicitor and the client who retains that solicitor is that it is an “entire contract”.

Therefore, the Solicitor is only entitled to render a statutory bill at the end of the retainer, the completion of a transaction or the conclusion of litigation. As these invoices had been produced throughout the lifetime of the litigation as opposed to the conclusion, Master Leonard allowed the Solicitor/Client Detailed Assessment.

Whilst of course, cash flow for any firm is paramount, this case highlights the importance of truly understanding the pre-existing funding arrangement in place, before attempting to render final statute invoices.

Helen Appleby is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors.

You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Estimated time or pure imagination?

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In Ikin -v- Shawbrook Bank Limited (2023) the judgment of Senior Costs Judge Gordon Saker looks at the issues surrounding estimated time and contains many points for litigators to take on board. Remember, the responsibility lies not just with the person preparing the Bill but with the Solicitor certifying the accuracy of the Bill.

Brief background

This case involved several Claimants, who brought claims of misrepresentation by finance companies regarding the installation of solar panel systems. 9 Claimants were represented by the same Solicitor. One claim for costs was assessed (at nil) by Regional Costs Judge Baldwin, “The Kinder Claim”. The remaining 8 claims were transferred to the SCCO, to assess counsel’s fees, the expert’s fees and profit costs.

In 2 of the bills (Ikin and Walsh), there were identical generic time entries claimed (18 in total). They were identical in both wording and time claimed.

Part 18 Requests were served, requesting clarification as to whether any time within the Bills was estimated. The response was bland and the Claimants were asked to provide a schedule of estimated time – this was never produced.

On Assessment

The first Bill to be assessed, Scott, was found to be riddled with issues. No time recording ledger was provided and it was evident that no time had been recorded within the substantive action. In truth, almost all the profit costs claimed had been estimated by the Costs Draftsman, some of which were not supported by the file of papers.

The Judge requested an explanation from the Claimants’ Solicitor. A Witness Statement from the conducting Solicitor confirmed she “had no experience of dealing with costs in this type of claim and so had instructed KE Costs (“KEC”), a firm of costs lawyers, “who indicated they had experience of dealing with similar costs arising out of solar claims in the North East”. Miss Wall said that she had assumed “that the descriptions given [of the work recorded in the bill] were fair representations of the work that had been done”. When checking the bill before signing it, she made sure that all the disbursements had been included and “that each stage of the case has been accurately identified”. However she did “not sit there and look at every single line individually and check the accuracy of every single line, because that just seems disproportionate”. She had relied on the expertise of the people she was instructing.

Amended Bills were lodged with the Court where by the descriptions to the time had been updated, however, the sums and time claimed remained unchanged. The amended Bill in Ikin was claimed at £29,774.90 and assessed at £9,250.00.

Ruling and Conduct point

The judge considered the issues relating to the Claimants’ Solicitor’s conduct.  In particular the importance of the Solicitor’s signature on a bill of costs. In this case, there was a clear misconduct point, the Judge found the bills were not accurate and claimed costs the Claimants would not have been liable to pay to Parkerwall (their instructed Solicitor). The Judge imposed two sanctions. The assessed costs were reduced by 60% and the Claimant’s Solicitor was ordered to pay 75% of the Defendant’s costs of the assessment on the Indemnity Basis.

Civil Procedure Rules

“This is an appropriate case in which to disallow costs under r.44.11(2)(a). The Claimants’ legal representatives have claimed costs which their clients were not entitled and have attempted to mislead the Court. In Gempride Ltd -v- Bamrah (2018), the Court of Appeal substituted an order that one half of the profit costs otherwise payable under Part 1 of the Claimant’s bill should be disallowed. That followed findings that the Claimant Solicitor had certified a bill which claimed an hourly rate in excess of the rate that she was obliged to pay and had wrongly stated in her replies that BTE insurance was not available to her. There was no finding of dishonesty.

It seems to me that the present cases are comparable. Eight bills have either been reduced significantly or have been agreed in significantly reduced amounts as a result of the misleading entries and the overestimation of time. As the parties have agreed global figures for profit costs and disbursements in the six unassessed cases, rather than disallow one half of the profit costs I would disallow a smaller proportion of the total figures.”

Costs follow the event

The Judge’s attention then turned to the costs of the detailed assessment. “Clearly this is a case where the court should make a different order to the usual order that the paying party pays the costs of the receiving party (CPR 47.20(1)). The conduct of the receiving parties’ solicitors reasonably required investigation. That led to a significant lengthening of the detailed assessment hearings. But for that investigation, the hearings might have been avoided completely. The conduct has been found to be wanting, and the bills have been reduced substantially.

Without an order under r.44.11(2)(b), the appropriate order under r.47.20 would have been that the Claimants should pay at least a proportion of the Defendants’ costs of the detailed assessment proceedings. As between the Claimants and their solicitors, the latter should bear those costs.

Some time was spent investigating the fees of counsel and the experts, which, in the event, did not lead to significant reductions. Whatever apparent irregularities there were in billing, the work had been done and the Claimants were entitled to recover the costs of that work. The Claimants should be entitled to the costs of those issues, but they were a relatively small part of the whole. The appropriate order under r.47.20 would have been that the Claimants should pay 75 per cent of the Defendants’ costs.

The fault, however lies, at the door of the Claimants’ Solicitors, rather than the Claimants, and so the appropriate order is that the Claimants’ Solicitor should pay those costs under r.44.11(2)(b). On any view the conduct of the Claimants’ Solicitor has taken these cases “out of the norm” and it is appropriate that the costs should be assessed on the indemnity basis.”

Summary

This brings home the importance of accurate time recording and certification by Solicitors. It remains the Solicitors responsibility to ensure that the certificate of accuracy guarantees the accuracy of the costs claimed.

Helen Appleby is an Associate in Clarion’s Costs and Litigation Funding Team. You can contact the team at civilandcommercialcosts@clarionsolicitors.com