Tag: #civilcosts

Parties claimed costs multiple times more than the claim was worth

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Background

In O’Sullivan v Trading 212 UK Ltd [2026] EWCC 32 (03 June 2026), the Claimant brought a claim arising from the Defendant’s closure of his trading account. The Court was highly critical of the parties’ approach to litigation, noting the apparent absence of ADR and the disproportionate escalation of a modest claim into a half‑million-pound costs dispute.

Costs awarded

Applying the usual rule, CPR 44.2(2), the Court held that the Defendant was the successful party and the Claimant should pay the Defendant’s costs.

However, the Court identified specific issues which justified departures from the default position.

  1. The Defendant’s late disclosure

Although the late disclosure did not affect the outcome, it prolonged the trial, triggered additional applications and increased costs for both parties.

The Court deprived the Defendant of its own costs for the disclosure phase and ordered the Defendant to pay the Claimant’s costs caused by the late disclosure.

The Claimant claimed £54,115, whereas a total of £27,000 plus VAT was allowed.

  1. The Defendant’s Strike-Out application

This application was pursued based on the Claimant’s alleged conduct towards witnesses. Although the application was adjourned on the basis of undertakings, the Court found it was reasonable to bring some form of application.

The Defendant claimed £59,513.67, which the Court found disproportionate. A total of £15,000 was allowed.

The Court adopted a broad‑brush approach to summary assessment, emphasising that costs should be assessed by reference to overall proportionality rather than a line-by-line analysis.

The Court declined to engage in wider conduct-based arguments advanced by both parties, considering such analysis disproportionate.

Departing from the Costs Budgets

Despite CPR 3.18, the Court found good reason to depart from the approved costs budgets, resulting in downward revisions.

The Court looked at proportionality, the value of the claim and the relatively small number of documents. The Court also observed that the case had likely been misallocated and should not have proceeded on a multi-track basis of this scale. The court also raised concern about the hourly rates, finding significant reductions necessary.

Conclusion

The table below demonstrates the disparity between costs incurred and costs allowed, highlighting the severity of the disproportion:

Party Costs incurred Costs allowed
Claimant £246,426 £32,400

(For the Defendant’s late disclosure)
Defendant £452,456.26 £128,750

 

 

Following set-off, the Claimant was ordered to pay £96,350.

This case serves as a clear reminder that the Court will closely scrutinise proportionality in litigation and may impose significant downward adjustments, even where costs budgets have been approved.

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

CRPC Annual Open Meeting (8 May 2026): Key Costs Takeaways

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The Civil Procedure Rule Committee’s Annual Open Meeting on 8 May 2026 provided useful insight into the Committee’s current thinking on civil costs. Whilst no immediate rule changes were announced, a number of important costs issues were discussed, highlighting the CRPC’s approach to future reform.

Key Costs Issues Discussed

  1. Mazur

The Committee was asked whether it intended to amend the CPR following the Court of Appeal’s decision in Mazur, particularly regarding the definition of ‘legal representative’. The Committee indicated that it wishes to observe how the industry responds to the decision before proceeding with any intervention.

  1. Costs Budgeting (Precedent H)

The meeting addressed uncertainty surrounding CPR 3.15(5)(a), specifically on whether the £1,000 or 1% cap applies only to the first draft of a Precedent H or also covers subsequent revisions prior to the first CCMC.

Master Sullivan confirmed that the intention is for the cap to cover the preparation of the budget, which is presented at the costs management hearing. She acknowledged that the wording could be clarified and suggested that the CPRC should consider whether any amendments are required.

Those in practice will know that there are occasions when multiple versions of the initial budget are required before the matter proceeds to a CCMC, which causes tension with the current wording of the CPR and fee caps which can only be lifted in exceptional circumstances.

  1. Bill Certification

Following Mazur, the Committee was asked whether the certification of a bill of costs should be extended to other authorised legal professionals such as CILEX practitioners, Costs Lawyers and barristers with the relevant rights.

The CPRC indicated that when the overall consequences of Mazur become clear, it will consider whether any rule changes are required. Therefore, the current process is preserved.

  1. Fixed Recoverable Costs (FRC)

Several concerns were raised about the operation of the extended FRC regime:

  • Clinical Negligence FRC – No update was provided on extending FRC to lower-value clinical negligence claims. The Committee confirmed that this remains a matter for the Department of Health and Social Care, indicating that there will be no imminent procedural changes.
  • Fast Track – v – Intermediate Track Costs – Concerns were raised about the potential for higher recoverable costs on the Fast than Intermediate Track due to differences in staging and case types. Mr Justice Trower clarified that the structure of the two tracks is based on proportionality rather than linearity, meaning that the figures correspond to how each track is intended to operate rather than forming a single ascending scale. The two tracks constitute separate frameworks designed to provide predictable fixed costs within their respective scope and that their differing outcomes arise from their distinct structures, rather than from inadvertence.
  • Intermediate Track Band 1 – Specific concerns were expressed about the low costs recovery for liability-admitted personal injury claims in Intermediate Track Band 1. Mr Justice Trower indicated any reform will depend on the government’s consideration of the Fixed Recoverable Costs stocktake and forthcoming post-implementation review.
  • Interim Application Costs under FRC – It was suggested that the current fixed costs for interim applications no longer reflect the reality of practice, as many now require extensive preparation, contested hearings and advocacy. As a result, the fixed recoverable amounts often fall short of the work involved. The Committee advised that these concerns would be considered as part of the broader post-implementation review.
  • Further FRC Issues – Questions were raised in relation to late acceptance of Part 36 offers under FRC, as well as the specific issues outlined in Attersley v UK Insurance Limited [2026] EWCA Civ 217, and inconsistent judicial allocation of cases to Complexity Bands. It was advised that these issues will be considered/responded to out-of-committee.

Although no immediate reforms were announced, the meeting demonstrated that the CPRC is monitoring the recent costs reforms made. The Committee’s current approach seems to be to allow recent developments to settle prior to considering further procedural amendments, with many of the issues raised expected to be considered by the

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 Proposed Amendments to the Costs Rules in the Employment Tribunal

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On 6 May 2026, the Tribunal Procedure Committee (TPC) launched a consultation on potential reforms to costs rules across the First-tier Tribunal, Upper Tribunal and employment tribunals. The proposals are intended to promote greater consistency between tribunals and focus, in particular, on payments on account of costs and pro bono costs orders.

Payments on Account of Costs

At present, employment tribunals have authority to make costs orders under Part 13 of the Employment Tribunal Procedure Rules 2024, however they do not have specific legal authority to order a payment on account of costs before a detailed assessment has taken place.

The TPC is proposing to address this gap by permitting employment tribunals to require the paying party to make a reasonable payment on account, where a costs order has been made and where a detailed assessment is to follow, in advance of that assessment being concluded. In line with other tribunals, employment tribunals would be required to take the approach that best achieves justice in each case.

Pro Bono Costs Orders

Employment tribunals already possess the power to make pro bono costs orders, as outlined by Section 194A of the Legal Services Act 2007 (LSA 2007). The TPC proposes incorporating a short permissive rule in the Employment Tribunal Procedure Rules 2024 to make express reference to this existing Tribunal power. The TPC is also consulting on whether employment tribunals should take additional factors into account when deciding whether to make a pro bono costs order and on what terms, its preliminary view being there are no other required matters.

Interest on Costs

No proposals are made regarding interest on costs in employment tribunals because that power remains with the government not the TPC. However, the consultation notes that the government is sympathetic to aligning the approach between the employment tribunal and other tribunals on the issue of interest on costs and will consider the outcome of the consultation.

Conclusion

The proposed amendments represent a potentially significant development in the employment tribunal costs regime as the consultation reflects efforts to improve consistency across tribunal jurisdictions.

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

When High-Value Claims Still Require Budgeting: Garry White & Ors v Uber London Limited & Ors

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The Claim

In the case of Garry White & Ors v Uber London Limited & Ors, approximately 13,000 London black cab drivers issued group proceedings against companies within the Uber group, claiming losses of around £199 million. A further claim, valued at approximately £141 million, was brought by the assignee of two private hire operators, Kabbee and Iride.

Although the total value of the litigation is around £340 million, each driver’s individual claim is relatively modest (circa £15,000), making group litigation a proportionate approach.

The claims arise from allegations that Uber unlawfully obtained a private hire vehicle operator licence by misrepresenting its operating model. It is said that this enabled Uber to compete directly with licensed black cab drivers while undercutting regulated fares, causing substantial financial loss between 2012 and March 2018.

The Preliminary Limitation Issue

Uber denies liability and argues that the claims were issued outside the six-year limitation period.

The Claimants rely on Section 32 of the Limitation Act 1980, arguing that time did not begin to run until they could reasonably have discovered the relevant facts, which they say occurred in June 2018 following a licensing appeal hearing.

The court has ordered that limitation be determined at a standalone five-day preliminary trial. A representative sample of 20 Claimants (10 chosen by each side) will be used to assess when sufficient knowledge arose. If the Defendants succeed, the litigation may conclude at that stage.

The Costs Budgeting Decision

A significant procedural issue to be determined was whether costs budgeting should apply.

Although claims valued at £10 million or more are ordinarily excluded from the costs management regime, the court retains discretion. The Defendants sought to disapply budgeting, relying on the overall high value of the claim, the existence of litigation funding and ATE insurance, and the alleged additional burden budgeting would impose.

The Claimants argued that, despite the aggregate value, the case is fundamentally a mass claim by individuals of limited means. They required clarity regarding potential adverse costs exposure and future funding requirements.

The Court agreed with the Claimants. While acknowledging that very high-value claims are generally unsuitable for costs management, this case was considered materially different. The modest individual claims and group structure justified greater costs oversight and transparency.

Why This Matters

This decision reinforces that the £10 million threshold is not decisive. Courts will look beyond the headline value of proceedings and consider the nature of the parties and the practical impact of costs exposure.

In large-scale group actions involving individuals with limited financial resources, costs budgeting may be viewed as an important tool to promote fairness, proportionality and effective case management and there are steps you can take ahead of the first CMC if you consider a CMO to be useful in your case.

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988 925 or at Katie.Spencer@clarionsolicitors.com.

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

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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

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

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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

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

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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

Part 36 consequences following judgment, where judgment is given in a sum other than sterling

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The Claim

It is not unusual for claims in the Commercial Courts to be denominated in currencies other than sterling. However, that gives rise to challenges where an effective Part 36 offer has been made by a Claimant, as Part 36 of the Civil Procedure Rules assumes that judgment will be given in sterling. Recent case law has given an indication of how the Court may exercise its discretion whilst respecting the importance and intention behind Part 36 offers.

In the recent case of Sanlam General Insurance Ghana Ltd v Sustainable Growth Fund II SCSP SICAV-SIF [2025] EWHC 559 (Comm) (14 February 2025), a claim was made for $1 million said to be due under a promissory note or corporate counter guarantee governed by English law.

On behalf of the Defendant, Ms Wick acknowledged the debt through a series of letters, either explicitly or implicitly confirming the obligation to repay the claimed sums. Despite repeated promises to pay, the Defendant failed to do so, prompting the Claimant to initiate legal proceedings.

Jurisdiction and Defence

The proceedings were served in Luxembourg in accordance with local law. The Defendant filed an Acknowledgment of Service, indicating an intention to defend the claim and contest jurisdiction. However, no formal application to challenge jurisdiction was made.

Claimant’s Application for Summary Judgment

The claimant sought summary judgment on multiple grounds:

  1. Entry of default judgment against the Defendant,
  2. Striking out the Defendant’s Defence,
  3. Summary judgment on the basis that the Defendant had no real prospect of successfully defending the claim.

In response, the Defendant submitted another document incorrectly labelled a ‘Defence’ despite having already filed one.

The Defendant raised various points, including an assertion that it was not a legal “person” and therefore could not be sued, and that Ms Wick lacked authority to sign legal documents alone.

The Court considered these arguments but was ultimately satisfied that the Defendant had no real prospect of success.

 Court’s Ruling on Costs and Interest

The Claimant had made a Part 36 offer to settle the claim for $1 million, inclusive of interest, plus costs. The Defendant did not accept the offer, which was subsequently beaten.

Although the Court declined to order that all the Claimant’s costs should be assessed on the indemnity basis, it did award the usual Part 36 consequences following judgment, including costs on the indemnity basis following expiry of the offer, enhanced interest on costs and the judgment sum, and an uplift on damages capped at £75,000.

However, the claim was denominated in US dollars and Part 36 of the Civil Procedure Rules assumes that a judgment will be given in sterling. To quantify interest on the judgment sum, the Court therefore used the US dollar prime rate as the starting point, rather than the Bank of England base rate, and awarded an uplift of 7.5%. In doing so, the Court followed the guidance given in OMV Petrom SA v Glencore International AG [2017] 1WLR 3465, where it was recognised that the Court has a discretion as to interest, but it was nevertheless important to incentivise Defendants to engage in reasonable settlement negotiations.

There were fewer difficulties regarding interest on costs, which were denominated in sterling, and a 10% uplift was awarded. However, the uplift on the judgment sum presented the same difficulties as interest on the judgment amount as it was denominated in dollars. The Court rejected a submission that the uplift could not be awarded where the judgment was denominated in a currency other than sterling, as that would defeat the purpose and intention of Part 36; the approach adopted therefore was to notionally convert the judgment sum into sterling at the applicable exchange rate on the date of judgment and to calculate the uplift on those sums.

Costs Assessment for the Summary Judgment Application

Costs were assessed on the indemnity basis following expiry of the Part 36 offer and on the standard basis up to expiry of that offer . The Court therefore had to take both bases of assessment into account in the summary assessment of the Claimant’s costs:

  • Hourly rates: The Claimant claimed £700/hr for a Grade A fee earner, £528/hr for a Grade C fee earner, and £260/hr for a Grade D fee earner. The Grade A hourly rate was assessed at the London 1 rate (£566). The Defendant’s delay and the cross-border aspect involving Luxembourg law supported this rate. Other fee earners were compensated at London 2 rates (£269/hr for a Grade C and £153/hr for a Grade D).
  • Work done on documents: Document preparation costs were reduced by £3,000 to reflect that the Witness Statement and Application Notice were prepared at a time when the assessment should technically have been on the standard, not indemnity, basis. All other document-related costs were allowed as claimed. Additionally, a £7,000 brief fee was found to be reasonable as it included work on documents.
  • Attendance at the hearing: Only the Grade A fee earner’s attendance at the hearing was deemed reasonable. The Grade C fee earner’s attendance time was disallowed as it was unreasonable, even where costs were being assessed on the indemnity basis.

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988925 or at katie.spencer@clarionsolicitors.com.

Defendant Barred from Arguing Costs – Except Wasted Costs

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In the recent judicial review case of Ayinde, R (On the Application of) v The London Borough of Haringey, the Defendant was barred from making submissions on general costs after failing to comply with key procedural requirements.

Background

Following the Claimant’s issuance of judicial review proceedings, the Defendant failed to acknowledge service and did not file a statement of facts and grounds of defence. As a result, the Defendant applied for relief from sanctions in an attempt to participate in arguments on costs.

Costs consequences for the Defendant

The Court refused the application, underlining the importance of strict compliance with procedural rules. Consequently, the Defendant was barred from making submissions on general costs.

Wasted Costs

However, the Court did allow the Defendant to make submissions on wasted costs. This exception arose due to the Claimant’s legal representatives citing five fictional legal authorities in their application. In response, the Court issued a wasted costs order, describing the actions as professional misconduct.

Despite being restricted from general cost arguments, the Defendant was still permitted to address the issue of wasted costs—a distinct category aimed at compensating parties for costs incurred due to improper or negligent conduct by legal professionals.

Summary

This ruling serves as a strong reminder that non-compliance with court orders or procedures can lead to severe consequences, including the loss of the right to contest key aspects of a case, particularly on costs.

Practitioners must act promptly and diligently in complying with court directions. Failure to do so risks being excluded from critical elements of litigation, especially those with significant financial impact.

Katie Spencer is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors and can be contacted on 07741 988925 or at katie.spencer@clarionsolicitors.com.

An Insight into the General Principles and Rationale of the Costs Budgeting Process

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Introduction

The judgement of Master Brightwell in Atlantic Ways Holding SA v Freetown Terminal Holding Ltd [2025] EWHC 674 (Ch), provides an insight into the costs budgeting process and emphasises the importance of proportionality in the costs management process, regardless of whether costs in the first instance were reasonable in nature.

Background of the case

A cost management hearing took place on 25 February 2025, where there was a disparity between the budgets of the Claimant and the Defendant. The Claimant’s budget had been agreed at £449,000 and the Defendant’s budget was drawn at £808,000 and was disputed. Due to this disparity, Master Brightwell set out the general principles of each parties’ proposals, in comparison to the principles of costs management.

The Judgement

Master Brightwell made clear that a budget is set by the Court without undertaking a detailed assessment in advance. However once set, the Court would not depart from this without adequate reason, and it is the role of the Court to set the budget “with an eye to what would be permitted on a detailed assessment on the standard basis” meaning any doubt will be resolved in favour of the paying party. It was also highlighted that the Court is to avoid comparing parties’ budgets, whilst acknowledging that it remains impossible to fix one budget and ignore the other. The Master went on to confirm that the budgeted costs are still considered reasonable and proportionate if they fall at the outer end of the range.

In respect of hourly rates, Master Brightwell emphasised that it is not for the Court to set or approve the charging rates or the time spent by each level of fee-earner and Counsel. However, if the charging rates are not within a reasonable range, then this would affect the reasonableness and proportionality of the budget. The rates used in the Defendant’s costs budget significantly exceeded even the London 1 rates which are for “the heaviest corporate and commercial work,” and whilst the claim was not insignificant, it still was not the most substantial case type dealt with by the Court. Therefore, the London 1 guideline rates would be the maximum permitted.

Master Brightwell then explained his rationale for the budget set for the Defendant by applying the principles of reasonableness and proportionality to each phase.

Each phase of the budget was reduced. However, whilst the amount sought by the Defendant for the expert reports is unclear, the Master granted the Defendant’s budget for this phase at £55,000 in comparison to the Claimant’s budget at £40,000 to allow margin for error. This itself is another useful insight into the budgeting process and acknowledges that the Courts are willing on occasion, to allow variations during a hearing where developments justify it.

Duplication and involvement of multiple fee-earners was addressed by the Court, with reductions made due to fears regarding duplication. The Master noted Practice Direction 57AC, highlighting that witness detailed investigations of documents were not to be conducted and what was said in documents was not to be recited, rather the idea of the witness statement phase is to take the witness’ own evidence. Attendance at trial by multiple fee earners was also reduced by the Court, with attendance by two fee-earners and another present for assistance being provisioned, as opposed to four fee earners that were sought.

Despite DKH Retail Ltd and others v City Football Group Ltd [2024] EWHC 3231 (Ch) where the court ordered for mediation to occur before trial, Master Brightwell in this case reduced the budget for ADR to exclude the assumption of mediation. Master Brightwell explained that if mediation was to occur, then the budget could be revised on the basis of a substantial development.

Conclusion

Overall, the case provides a useful step by step approach to each phase of a costs budget during the cost management process and emphasises the application of the principle that proportionality trumps reasonableness, even at the cost budgeting stage.

 

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