Monthly Legal Costs Update – March 2025
Here, in Kain Knight Costs Lawyers’ regular monthly legal costs update, we focus on those cases which we believe are likely to have a practical relevance for its members. We welcome feedback and if there is an area, topic or case you would like us to address, please let us know.
We begin with developments in costs and case management (CCMC) hearings when the court is approving costs budgets under CPR 3.13. In common with traditional directions hearings, the usual costs order at the conclusion has been “costs in the case”. Not anymore! A brace of decisions has demonstrated that a party who advances an exaggerated costs budget does so at their own risk as to costs where the figures put forward have been “unrealistic and ambitious”.
In GS Woodland Court GP 1 Ltd v RGCM Ltd [2025] EWHC 285 (TCC), the claimants had sought approval of £8.74m for their costs budget against a pre-CMC offer of £3.539m and had come away with £4.212m. Constable J observed that the scale of that reduction had meant that the Claimants’ Precedent H had been unrealistic both in terms of reasonableness and proportionality. In these circumstances, there was no particular reason why the costs order should not be the ordinary order that would be made when a party had lost. It followed that the “losing” claimants were deprived of their costs and ordered to pay the defendants costs’ (excluding D1 and D6) of the attendance of counsel and one solicitor at the hearing.
In Zavorotnii v Malinowski [2025] EWHC 260 (KB) HHJ Walden-Smithwas more merciful to the claimant, but only just. The claimant had been overly ambitious in the sums it sought to have approved in its costs budget. However, the claimant had achieved 60% of that which it asked for and had obtained approval to expend costs which were 18% above that offered by the defendant. That meant that it could not be said that the claimant had been entirely unrealistic, but they had come “…. very close to such a finding. Clearly it had been a lucky escape!
Finally on costs budgeting, a case where both sides had been unrealistic and over ambitious. In Baroness Lawrence of Clarendon v Associated Newspapers Ltd [2025] EWHC 106 (KB), Master Cook, giving judgment in conjunction with Nicklin J, observed that the costs budgets totalling £38.8m (including £12.2m spent already) for all parties, were “manifestly excessive”. They went on to state that in carrying out costs budgeting, the court would not engage in an overly elaborate analysis of each phase, but instead, should stand back and look at the bigger picture. Costs management was not an exercise of reducing the parties’ costs to an irreducible minimum but setting reasonable and proportionate parameters. Having applied those principles, the court approved budgets of just £4,084,000 for the Claimants and £4,445,000 for the Defendant, meaning that together, the parties had been allowed £18.05m less that they had asked for.
Next a judgment which deals with hourly expense rates on summary assessment in heavy commercial litigation. In Motorola Solutions v Hytera Communications [2025] 1 WLUK 474, Sean O’Sullivan KC was carrying out a summary assessment, which involved a “finger in the air” exercise. He declined to allow a rate that reflected what might now be the market rate for City of London firms, but rather one that included an uplift to the London 1 rate for all of the factors which made the type of international commercial dispute out of the norm even for London litigation but still retained some relationship with the guideline rates. That rate was £650 an hour for the Grade A, and £350 per hour for the Grade C.
In Magomedov v TPG Group Holdings (SBS) LP [2025] EWHC 304 (Comm) Bright J 14 Feb 2025 was dealing with payments on account which also addressed hourly expense rates, but without expressing a figure when deploying the court’s powers under CPR 44.4(3). In doing so, he reminded the paying claimants that “the guideline hourly expense rates are not used in detailed assessment” (a point often overlooked by parties challenging a bill), and that anyway, the case in question was “of a kind that may be thought to justify rates above even the highest guideline bands.” To preserve a healthy margin for error in case the interim payments proved to be excessive, the judge awarded 70% of indemnity basis costs and 60% of standard basis costs based upon the costs schedules provided. That meant payments ranging between £211,281 and £1,616,315 depending upon the defendant in question.
Finally Qualified One Way Costs Shifting (QOCS) – Birley v Heritage Independent Living Ltd [2025] EWCA Civ 44. In a complicated judgment, the main question was whether the cost provisions relating to certain media claims, which did at one time permit recovery of a success fee together with an after the event (ATE) insurance premium, could be applicable at the same time as QOCS which applies in (but only in) personal injury claims. As Birss LJ held, the short answer was “Yes”, but the judgment requires detailed consideration beyond the scope of this short update in order to understand and digest the court’s reasoning.
As always, these are a selection of the principal recent cases which are likely to be of use to practitioners and if any further information is required, please contact either Nick McDonnell or Colin Campbell at Nick.McDonnell@kain-knight.co.uk or Colin.Campbell@kain-knight.co.uk.
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