Appellant victorious in arguing indemnity costs

The Court of Appeal determined that poor conduct and a failure to accept an earlier Part 36 offer were grounds on which to award indemnity costs in the case of Lejonvarn v Burgess & Anor [2020] EWCA Civ 114. 

The appellant had provided some gratuitous help to her former neighbours in re-designing the landscape of their garden. They had a falling out and the respondent neighbours subsequently brought proceedings against the appellant on the basis that she had been negligent and owed them a duty of care. Three weeks after proceedings had commenced, the appellant made a Part 36 offer in the sum of £25,000, but this was not accepted. Although at trial it was found that the appellant had been negligent, the respondents had failed on the substantive issues and the £25,000 offer was not beaten. The respondents lodged an appeal which caused their costs to spiral as they pursued their case against the appellant. The respondents were unsuccessful at the appeal and the appellant was awarded costs on the standard basis.

The appellant then proceeded to challenge the standard costs award decision and appealed on the basis that this was incorrectly ordered and indemnity basis costs should instead have been applied. At the appeal hearing Coulson LJ considered the background and undertook a thorough review of authorities relating to indemnity costs, opining that:

No later than one month after the handing down of the judgment by the Court of Appeal…the respondents, having had time to consider the implications of the Court of Appeal judgment, should have realised that the remaining claims were so speculative/weak that they were very likely to fail, and should not be pursued any further.” 

Coulson LJ further explored the respondents’ unreasonable pursuit of the case to trial, considering it to be: 

An irrational desire for punishment unlinked to the merits of the claims” and “precisely the sort of conduct which the court is likely to conclude is out of the norm”.

It was determined overall that the first appeal trial judge had incorrectly applied the test to determine indemnity costs and indemnity costs were in fact appropriate in these circumstances from a specific point in time. 

The judgment in this case may be of assistance should you need to consider conduct and indemnity costs in a situation where a party beats their own Part 36 offer. Bear in mind however that it is nuanced to the specific facts of the case and the CPR is clear that entitlement to indemnity costs in these circumstances is not automatic.  

The outcome of this case was also interesting from a costs management angle as Coulson LJ found that costs assessed on an indemnity basis are not constrained by an approved budget. Please see my blog for further detail.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at and 0113 288 5619, or the Clarion Costs Team on 0113 246 0622

Successful appeal against a Judge’s decision in respect of the Protected Party’s Deprivation of Liberty

In the case of CB v Medway Council & Anor (Appeal) [2019] EWCOP, the Official Solicitor appealed against a decision which justified the Protected Party’s Deprivation of Liberty.

The Protected Party was a 91 year old female, who no longer lived at her own property following a fall and persistent urinary tract infections. The Protected Party resided at a care home and was provided with a care package, which ultimately was said to have not worked out. The Protected Party’s litigation friend, the Official Solicitor, made an application to enable the Protected Party to reside at her own property, however, the Judge dismissed this application using her summary power.

The Official Solicitor disagreed with the decision of the Judge and therefore appealed the same. The Official Solicitor argued that the Judge did not abide by her duty to ensure that the Protected Party’s best interests were considered as the Judge had failed to allow the Official Solicitor to gather further evidence to support the argument in relation to the feasibility of the Protected Party returning to live at her property. The Court allowed the appeal as the Protected Party’s Deprivation of Liberty should have been considered and thoroughly explored, rather than the Judge dismissing the application based on speculation and general experience within similar cases.

If you have any queries, please do not hesitate to contact Casey McGregor or the team at

Calling trumps: Sue Fox on how the court has laid its cards on the table over costs management. The interaction between costs budgeting and costs assessment – Merrix v Heart of England NHS, the appeal of the first instance ruling.

The interaction between costs budgeting and costs assessment has been considered again in Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB) – the appeal of a first Merrix v Heart of England NHS instance ruling.

Mrs Justice Carr found that the court will have ‘regard to the receiving party’s last approved or agreed budget by respecting it or finding that there is a good reason to depart from it’……………………………………………

………………………….. So, the question to be answered is – will a receiving party’s costs
be allowed in full if they are less than the budget? Yes – for now! The Merrix decision confirms that any departure from the budget applies to both downward and upward revisions, hence parties have to show a good reason to depart from the budget.

Does Mrs Justice Carr’s finding in Merrix deny the paying parties an opportunity to challenge potentially unreasonable costs, despite it being their responsibility for the costs of challenging those costs? At the moment – yes.

Is it ‘just’ for the receiving party to request their costs in full simply because they have been incurred and fall within the parameters of the budget? What safety mechanism is in place to ensure that any receiving party does not include unreasonable and disproportionate costs in their claim for costs, simply justified on the basis that they ‘fall within budget’?

Mrs Justice Carr felt that the indemnity principle was sufficient, though perhaps it is not – unreasonable costs can be claimed from the client, hence the need for Solicitors Act assessments. Or alternatively, the client may have little regard to the constraints of the budget and request that ‘out of scope’ or disproportionate and unreasonable costs are incurred in any event.

How can restraints be imposed on a spendthrift client with deep pockets, and at the same time discourage a paying party from being overzealous in their requests for detailed assessment? Perhaps the introduction of the ‘one-fifth rule’ to costs budgeted cases could be the answer. This shares the burden of the costs consequences, rather than the traditional costs shifting rule. If the bill is reduced by more than 20%, then the receiving party is responsible for those costs rather than the paying party, but if the paying party secures less than a 20% reduction to the bill, then they become responsible for those costs.

This should encourage all parties to think seriously about committing to detailed assessment, rather than the onus being on the paying party. Not only does this tie in nicely with the rules for Solicitors Act assessments, but it is also in line with the rules surrounding provisional assessment relating to the recoverability of costs for an oral
hearing (see article, page 10). Further, it embraces Jackson’s intention to reduce the number of detailed assessments, and at the same time does not deprive parties the opportunity to challenge the costs. Just a thought.

Is this the end? Perhaps only for now. Mrs Justice Carr requested that if this decision were to be appealed, then it should be heard together with any existing listings covering the same point of principle.

In her decision, she referred to Harrison, which was soon to be heard in the Court of Appeal. The Harrison decision is listed for May, and so the paying party in Merrix may be running out of time to get this listed together with Harrison – but we await with interest.

Please click here to read the full article which was published in the April edition of the Litigation Funding magazine.

Sue Fox is the Head of Costs Budgeting in the Costs and Litigation Funding department at Clarion Solicitors. You can contact her at and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB) – On appeal, Mrs Justice Carr confirms that the good reason test to depart from a budget relates to both downward and upward departures.

Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB) – On appeal, Mrs Justice Carr confirms that the good reason test to depart from a budget relates to both downward and upward departures.

The inter-action between costs budgeting and costs assessment has been considered again in the appeal of the case of Merrix v Heart of England NHS Foundation Trust [2016]. DJ Lumb found that:

It is not helpful in the context of this debate to consider “departure” within the meaning of CPR 3.18 as being upwards or downwards. It is important to understand that the departure refers to a departure from the budget not from a fixed sum. Just because a party has incurred costs that come in at under the total for a phase is not a departure from the budget. Applying the ordinary meaning of the words the party is still within the budget unless or until the Court revises the budget. It is not the replacement of one fixed sum with another fixed sum. The purpose of the form Precedent Q is to set out the differences between the actual expenditure and the budgeted figures for each phase. It is not intended to be some advanced assessment of the recoverable costs. If having completed a line by line assessment of the reasonable costs the Court considers that the costs are still disproportionate, the Precedent Q could be a useful breakdown for the Court to use to make adjustments to ensure the resulting figure is proportionate”. 

DJ Lumb concluded that the budget and the bill of costs were different tools for Courts to manage costs, which were applied at different times. Consequently, despite the cost claimed being less than the budget, DJ Lumb (Regional Costs Judge) ordered that detailed assessment was appropriate.

This decision has been appealed to the High Court and the appeal has been allowed, with Mrs Justice Carr finding:

“In my judgment, the answer to the preliminary issue is as follows: where a costs management order has been made, when assessing costs on the standard basis, the costs judge will not depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so. This applies as much where the receiving party claims a sum equal to or less than the sums budgeted as where the receiving party seeks to recover more than the sums budgeted”.

This decision now falls in line with LJ Jackson’s report and the cases of Slick Seating and Safetynet. In 2012, in the case of Safetynet Security LTD v Coppage [2012] EWHC B11, HHJ Simon Brown QC stated that “since the Claimant’s costs were within the budget approved by the court, a detailed assessment would be an unnecessary and expensive course of action to take”. Costs were awarded in the Claimant’s favour, in the amount of the budget. Later in the case of Slick Seating Systems & Ors v Adams & Ors [2013] EWHC B8 (Mercantile), HHJ Simon Brown QC observed that the Claimant had “laudably kept within the budget and exercised due control over their activities and expenditure in an exemplary fashion” and that their budget was proportionate to what was at stake, he awarded the claimant their costs as claimed.

LJ Jackson’s view of how cost budgeting would work was explained at Chapter 40 1.4 (iv) of his report:

“At the end of the litigation, the recoverable costs of the winning party are assessed in accordance with the approved budget

And at Chapter 40 1.5 of his report:

“Issues for consideration. If costs management becomes a feature of civil litigation in the future, many issues will have to be considered before any set of costs management rules is drawn up. In particular: (iv) In so far as the last approved budget is binding, should it operate as an upper limit upon recoverable costs or should it operate as a form of assessment in advance? “

At Chapter 45 of his final report the Law Society noted that:

”If the costs management proposals set out in the Preliminary Report are accepted, it would seem that detailed assessment will have a place only in the context of cases where RP’s costs significantly exceed the budget”. The Commercial Litigation Association (“CLAN”) believed that “detailed assessment will become less common if costs management is adopted”.

That said, the case of Troy Foods v Manton [2013] EWCA Civ 615, Lord Justice Moore-Bick warned that an approved budget is not a licence to conduct litigation in ‘an unnecessarily expensive way’. He added that: “I do not accept that costs judges should, or will, treat the court’s approval of a budget as demonstrating, without further consideration, that the costs incurred by the receiving party are reasonable or proportionate simply because they fall within the scope of the approved budget.”

So, the question to be answered is – will your costs be allowed in full if they are less than the budget? Yes, unless parties can show a good reason to depart from the budget – Merrix  now confirms that this applies to both downward and upward revisions to the budget.

Sue Fox is the Head of Costs Budgeting in the Costs and Litigation Funding department at Clarion Solicitors. You can contact her at and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

When a Costs Budget is appealed – Havenga –v- Gateshead NHS Foundation Trust

We now have some guidance regarding the approach which the Court may adopt regarding appealing the amount of an approved Costs Budget.

 In Havenga –v- Gateshead NHS Foundation Trust [2014] EWHC B25 (QB), the Court found that it was ‘not the role of the appellate Court to tinker with Costs Budgets’ and ‘the role of the appellate Court, in these circumstances, is to decide whether the Budget as revised by the District Judge was reasonable and proportionate. Only if I conclude that the revised Budget was outwith what can be described as reasonable and proportionate and that, therefore, the District Judge had exceeded his wide ambit of discretion can I interfere with the overall Budget’.

Although the Judge did feel that he may have been more generous in some areas of the Budget, he considered that as a whole, the Budget was both reasonable and proportionate and the appeal was dismissed.

Perhaps this approach will avoid unnecessary and unreasonable requests for appeals and will ensure a cost effective and pragmatic approach to Costs Budgeting, or will it result in increased costs?  This may encourage more Lawyers to have both Counsel and the Costs Lawyer at the costs management hearing, so that any risk of comprehensive arguments not being made is avoided.

If you have any questions or queries in relation this blog please contact Sue Fox ( and 0113 3363389) or the Clarion Costs Team on 0113 2460622.