Category: Litigation Costs

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.

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

Actor ordered to pay Guardian News indemnity costs and a £3 million payment on account of costs

angelanakoLeave a comment

Mrs Justice Steyn in Clarke v Guardian News & Media Ltd [2025] EWHC 2575 (KB) examined the issue of costs following the dismissal of actor, Noel Clarke’s, defamation and data protection claims against the Defendant newspaper. To determine the appropriate costs, the judgment addressed the Claimant’s conduct, the costs approved in the costs budget and the various “costs reserved” orders made during the proceedings. Whether the Claimant should make a payment on account of the costs pending detailed assessment and the amount of the payment is also considered in detail.

Background

The Defendant in this case had succeeded on the defences to defamation and the issue of serious harm in respect of 8 articles published about the Claimant actor. The Court determined that the Defendant had been wholly successful and therefore entitled to an order that the Claimant pays costs subject to detailed assessment.

Indemnity Basis Costs

With regards to the basis of assessment, the Judge referred to the legal principles in relation to exercising the court’s discretion to award costs on the indemnity basis summarised within the White Book at 44.3.8 to 44.3.10. The Judge cited the importance of the Court having regard to all the circumstances of the case and the conduct of the Claimant being a key element of this.

The Judge found that the Claimant’s pleaded case and the evidence at trial contained many statements that the Judge found to be untrue and dishonest. Mrs Justice Steyn referred to Esure Services Limited v Quarcoo [2009] EWCA Civ 595, which concluded that if a court finds a claim to have been brought or maintained dishonestly then “it will be normal for a court to seek to mark its disapproval” by making an order for indemnity costs.

Further, the Judge made reference to the Claimant making “wholly unfounded allegations of dishonesty against three professional journalists” and aired those publicly.

It was also highlighted that an order for indemnity costs does not require the Defendant to show that the Claimant’s unreasonable conduct increased its costs. Consequently, the Judge ordered the Claimant to pay the Defendant’s costs of the claim to be subject to detailed assessment on the indemnity basis, if not agreed.

Payment on Account of Costs

When addressing the issue regarding a payment on account of costs, the Judge referred to CPR 44.2(8) which states: “Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs unless there is good reason not to do so.”

The Judge had regard for the way the claim had been pursued by the Claimant and the fact that costs would be assessed on an indemnity basis. The Judge also took into account the Defendant’s Precedent H of July 2024 where the total of the Defendant’s budgeted costs and incurred costs were £3,184,519.98, not including the estimated costs of disclosure, which were left to be agreed or subject to detailed assessment. This figure also did not include costs in respect of the Trial Preparation and Trial phases.

The Judge concluded that it was reasonable for a payment in the sum of £3 million to be sought by the Defendant.

Additional Costs Points

“Costs reserved” orders were made during the proceedings, regarding the Defendant’s application for an interim non-disclosure order and an Amendment and Joinder Application. The Judge concluded that the Defendant was entitled to these costs.

The Claimant asked the Judge to stay the costs order pending a potential application for permission to appeal. This was rejected as the Claimant already had more than the usual time to consider any grounds to seek leave to appeal and the Judge was not prepared to provide an extension of time to seek permission to appeal.

Conclusion

At paragraph 39 of the judgment, Mrs Justice Steyn articulates the reasoning behind her decision as she states: “Bearing in mind that the sum claimed by the Defendant on detailed assessment will be in excess of £6 million and having regard to the nature of the claim and the way in which it has been pursued by the Claimant and his lawyers; bearing in mind also the Defendant’s rates as they appear on the Precedent H forms and what appears, on the face of it at least, to be a reasonable use of more junior solicitors where appropriate; and also bearing in mind that I have ordered that costs will be assessed on an indemnity basis; it seems to me that the sum of £3 million sought by the Defendant is appropriate and no more than ought reasonably to be ordered in this case. It is a “reasonable sum” to require the Claimant to pay on account. It is substantially lower than the Defendant’s likely level of recovery on detailed assessment and so, in my judgment, it does allow for a suitably wide margin of error. Accordingly, I shall order the Claimant to make a payment on account in the sum of £3 million within 28 days.”

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

Failure to act reasonably limits private prosecutor’s costs out of central funds

Ellena HunterLeave a comment

Background

In R v BDI & Ors [2025] EWCA Crim 1289, the private prosecutors applied for an order pursuant to section 17 of the Prosecution of Offenders Act 1985 that their costs of resisting the application for abuse of jurisdiction, and of the appeal of the same, be paid out of central funds. The Lord Chancellor was permitted to intervene in the application.

The private prosecutors alleged that they had suffered financial loss as a result of dishonest activity by the respondents which crossed national borders. They made their costs application in writing to the Registrar of Criminal Appeals in which they sought costs of £187,970.

Lord Chancellor’s Position

The Lord Chancellor submitted that the court should reduce the amount of the private prosecutor’s costs on the basis that there were serious deficiencies in the application for costs, and that the costs should be limited to those which would have been charged to the state if the CPS had conducted the prosecution. Alternatively, it was submitted that the costs of the solicitors’ work should be based on the guideline hourly rates and that counsel’s fees should only be allowed at a competitive market rate. Furthermore, the Lord Chancellor submitted that the private prosecutors failed to state in their application that they had taken no steps to involve the police and the CPS before commencing prosecution, and they failed to set out what steps they had taken to test the market before instructing their solicitors and counsel. Therefore, it was submitted that, in light of the failure to involve the police and ask the CPS to prosecute before issuing the summonses, the costs should be capped at CPS rates.

In summary, the Lord Chancellor’s core submission was that “the public purse should not have to pay increased costs when the private prosecutors took no steps to involve the state prosecuting authorities.”

Private Prosecutor’s Position

The private prosecutors denied that the application for costs was defective and submitted that there was no basis for the court to limit the costs to CPS rates. The private prosecutors referred to the correspondence with the CPS in which the CPS stated that the way in which the case had been handled to date demonstrated that the international reach of the solicitors could have benefits to a prosecution which a public prosecutor would find hard to match. Furthermore, the CPS had been offered the opportunity to take over the prosecution and declined to do so.

Judge’s Determination

Having considered the submissions of both parties, the Judge confirmed that its view was that:

“Any private prosecutor who fails to take appropriate steps or fails sufficiently to inform the court about them in his application for an order… puts himself at risk that the application will be refused, or that any award will be reduced… to the level of costs which would have been incurred if the state authorities had prosecuted the case.”

The Judge considered that it would always be important for the court to know whether the state prosecuting authorities were given a reasonable opportunity to make an informed decision as to whether they should undertake the prosecution. On this point, the Judge held that there were two points to consider. The first being that CPS rates may properly be considered if a private prosecutor acted without regard to whether the state was willing and able to prosecute (citing Fuseon Ltd v Senior Courts Costs Office [2019] EWHC 126 (Admin), [2020] Costs LR 251). The second point being that even if it was reasonable for the private prosecutor to undertake the prosecution, it may still be relevant to consider what expenses would have been incurred if the case had been conducted by the state prosecuting authority.

In analysing the facts and circumstances of the present case, the Judge made note that the private prosecutors did not inform the police or invite the CPS to consider the evidence relied upon until directed to do so by the District Judge who issued the summonses. By this point, significant work had been undertaken. Furthermore, within the letter to the CPS the private prosecutors expressed that they did not wish for the CPS to take over conduct of the proceedings. Whilst the private prosecutors were entitled to take the approach that they did, they thereby put themselves at risk in relation to recovering their costs from the public purse.

It was accepted by the Judge that the case was a complex one and had been well conducted by the private prosecutors. However, the Judge determined that the fundamental difficulty the private prosecutors faced was that they had failed to show that the police and the CPS, if given an appropriate opportunity at an appropriate stage, could not or would not have undertaken the prosecution. Therefore, they failed to show that they had acted reasonably in incurring expenses in excess of those which would have been incurred by the CPS. On that basis, the Judge was satisfied that there were circumstances which made it inappropriate for the private prosecutors to recover the full amount of costs which would otherwise have been awarded.

The Judge, therefore, ordered that the private prosecutors be paid out of central funds but be limited to the expenses which would have been incurred if the prosecution had been undertaken by the CPS.

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

CPRC update – Flexibility in summary assessments of costs

Bethany CollingsLeave a comment

The Civil Procedure Rule Committee (CPRC) has approved amendments to CPR Part 44 and Practice Direction 44 following consideration of the Court of Appeal’s decision in R (Isah) v Secretary of State [2023] EWCA Civ 268.

Background

Ordinarily, a summary assessment of costs is undertaken at the end of a hearing. Practice Direction 44, paragraph 9.7, allows for an assessment at a later date, but requires it to be before the same Judge. In Isah, the Court of Appeal confirmed that the current rules do not permit summary assessments to be carried out by a different judge.

This created difficulties in practice, particularly where:

  • the original judge is unavailable;
  • the assessment has been adjourned and listing before the same judge is impractical; or
  • similar issues arise across multiple hearing.

The proposed amendment

The CPRC agreed to amend the rules to introduce flexibility, and this is now reflected in The Civil Procedure (Amendment No. 2) Rules 2025 allowing the court to give directions for the summary assessment of the costs to be made at a later date by “another judge who could have decided the claim or application” where there is “good reason” for doing so.

Key points include:

  • The Committee rejected a higher threshold of “exceptional circumstances”, preferring a test that strikes a balance between flexibility and preventing a shift towards routinely reassigning assessments.
  • The Committee reaffirmed the distinction between summary and detailed assessment. Delegating summary assessment to costs officers was considered inappropriate, as it would risk eroding that distinction.
  • The Chair stressed that the amendment is not creating a new route for delegation but addressing an inflexibility highlighted by the Court of Appeal’s judgment.
  • Where appropriate, the direction for summary assessment at a later date should be given when the substantive decision is made, though the choice of judge does not need to be determined immediately.

This change is due to come into effect on 1 October 2025 along with, subject to finalisation, the proposed changes to PD 44.

The amendment should ease case management difficulties by providing courts with greater flexibility while maintaining the important distinction between summary and detailed assessment. Practitioners should expect that while the power will remain sparingly exercised, it will offer a pragmatic solution where rigid adherence to the same judge requirement would cause delay or injustice.

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

An Insight into the Court’s Approach to Disproportionate Costs following a line-by-line assessment

angelanakoLeave a comment

Introduction

The judgment of Costs Judge Nagalingam in XX & Anor v Young & Anor [2025] EWHC 2073 (SCCO), provides a useful breakdown on how a bill might be reduced after a line-by-line assessment to yield a proportionate figure by taking into account the factors in CPR 44.3(5) and the Court of Appeal’s approach in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220.

Background

Costs Judge Nagalingam, undertook a three-day line-by-line assessment of the costs in XX v Young as the Defendant had raised the issue of proportionality. He held that the costs were disproportionate and therefore the bill of costs total was reduced from £517,985.00 to £339,565.16, a reduction of almost 35%. Despite this reduction, the Judge held that the total sum remained disproportionate and subsequently further reduced the bill following the line-by-line assessment.

The Judgment

CPR 44.3(5)

In order to assess proportionality, the Judge relied on several factors outlined in CPR 44.3(5) which states that “Costs incurred are proportionate if they bear a reasonable relationship to:

  • the sums in issue in the proceedings;

In this case the Judge considered the realistic range of possible outcomes in the case to be £149,000 (the settlement sum) to £2.5million (the pleaded sum). The likely value of the claim was determined by considering the accident circumstances, the factor of contributory negligence and the complexity of the case. The Judge concluded that the sums in issue would realistically have been closer to £149,000 than the £2.5million fully pleaded claim.

(c) the complexity of the litigation;

The Judge made clear that whilst the litigation was not complex it was also not straightforward. Liability was in dispute, significant injuries were sustained and the medical complexity created legal complexity in quantifying the general damages and past and future losses. Liability also remained a factor under consideration.

(d) any additional work generated by the conduct of the paying party; and

In this case, the Defendant disputed liability until the joint settlement meeting and did not make a good and early Part 36 offer or protective settlement proposals prior to the joint settlement meeting. Therefore, it was determined that the Claimant could not be criticised for continuing with the litigation.

(f) any additional work undertaken or expense incurred due to the vulnerability of a party or any witness.

The Judge concluded that the receiving party’s solicitors were at times dealing with a vulnerable client due to factors such as injury recovery, isolation, the Claimant’s age and language barriers.

Surveillance / Exaggeration

In West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220 (17 July 2019) it was outlined that the factors in CPR 44.3(5) are not an exhaustive list. Surveillance evidence and the Defendant’s attempts to seek findings of misconduct and exaggeration were also considered.

The allegation based on surveillance evidence was that that the Claimant had recovered more than reported to the experts and consequently the claim settled at a sum far less than pleaded. However, the Judge declined to engage in a de facto retroactive trial of exaggeration as an issue and noted that if the Defendant had wished to pursue this factor of exaggeration, then they should not have settled or should have negotiated settlement terms which included a percentage based costs order.

Internal Communications

The Judge referred to West in XX v Young, opining that a line-by-line assessment must be completed first and that “one must be careful not to facilitate a result which would amount to double-counting of deductions”. Therefore, reductions were only applied where it was considered that costs were unreasonably incurred or unreasonable in amount. Although concerns were raised regarding the internal time claimed, this did not mean that internal communications were to be reduced irrespective of the circumstances.

Whilst the costs of internal communications had already been reduced from £27,724.50 plus VAT to £22,946.15 plus VAT following a line-by-line assessment, it was later concluded that the costs for internal communications were to be further reduced to £10,000 plus VAT using a broad-brush approach based on the facts and circumstances in the case. The bill total was therefore reduced to £324,029.77.

Conclusion

Overall, the Judge concluded that the assessed sum was “disproportionate in all the circumstances” through considering the factors within CPR 44.3(5) as well as the points of dispute, replies, skeleton arguments and submissions.

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