Monthly Legal Costs Update – July 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.
This Monthly Legal Costs Update July 2025 has been written by Nick McDonnell and Colin Campbell.
A busy month for the Court of Appeal, with two judgments delivered and one reserved. Following a two day hearing in Commercial and Interregional Card Claims Ltd v Mastercard, the court indicated that it would hope to deliver its decision by the end of July in seven linked appeals from the Competition Appeal Tribunal, about whether various funding arrangements were unenforceable. The cases all raise issues stemming from PACCAR v CAT [2023] UKSC 28 in which it was held that litigation funding agreements pursuant to which the payment to the funder is calculated as a percentage of the damages award, are unenforceable insofar as they relate to opt out collective proceedings.
Meanwhile in Shorts International Ltd v Google LLC [2025] EWCA Civ 653 – following the dismissal in the Intellectual Property Enterprise Court (IPEC) of a trade mark infringement claim against Google, Shorts had applied for a costs-capping order for its appeal under CPR 52.19. Google cross-appealed for £200,000 for security for costs. Lewison LJ held the IPEC had been established to facilitate access to justice by small and medium sized enterprises, and that that tipped the balance. The recoverable costs of the appeal and the cross-appeal were to be limited £60,000, but to be paid as security for costs.
Secondly, in Tescher v Direct Accident Management Ltd [2025] EWCA Civ 733 , Birss LJ considered the issue that if a credit hire case fails, when and in what circumstances should the non-party credit hire company be made liable for the defendant’s costs? In two conjoined appeals, the claimants had lost their personal injury actions which included large claims for credit hire, but the effect of the QOCS scheme meant that costs orders made against them could not be enforced. The court held that as a matter of reality – practical and economic – the credit hire company was the real beneficiary of the litigation for the damages in respect of charges for credit hire. The fact that payment of the sums obtained in a successful claim to the credit hire company benefited the claimants by extinguishing their debt to that company, did not alter this reality. It followed that the just outcome was that non-party costs orders should be made against the credit hire companies for the costs ordered to be paid by the claimants, all of whom had QOCS protection and thus would pay nothing personally.
Next costs in the CAT. The pioneering case of Merricks v Mastercard Inc [2025] CAT 28 is finally drawing to a close, at least until the battle of the costs begins. Roth J approved the settlement agreement reached between Mastercard and the class representative (CR), and opposed by the litigation funder (LF), which argued that the £200m payment was too low. Of that sum, £100m was ringfenced for class members, and of the other £100m, £45,567,946.28 was ringfenced for the LF, with the remaining £54,432,053.72 available to give the LF its return, subject to any further sums that needed to be distributed if take-up by the class members exceeded 5%. The former senior costs judge was also appointed to prepare a report as to the reasonableness of the CR and LF’s costs on a solicitor and own client basis, and also those fees of the experts. The CAT will then determine the costs in the light of the report.
Still in the CAT, Christine Riefa Class Representative Limited v Apple Inc. & Others [2025] CAT 34is a case in which the Tribunal refused the application of the PCR for a collective proceedings order. Dealing with “consequentials”, the CAT awarded Apple and Amazon their costs, and pending assessment, requested costs schedules before ordering payments on account. Amazon claimed £3,368,812.94 (solicitors £2,472,337.91, counsel £302,758.75, experts £629,784.36.) Apple sought £2,697,523.58 (solicitors £1,798,418.69, counsel £586,592.94, experts £311,071.96). Bacon J commented that the hourly rates for Amazon’s solicitors were “very high” with the Grade A at £1,254.78 (Guideline Hourly Rates £512–£566). By contrast, those of Apple were below the GHR except for the A at £803. A 30% uplift was appropriate. For the experts, for the purpose of the interim payments, £250,000 per party was allowed. No reductions were made for counsel! After adjustments, 65% was ordered, resulting in £1,695,797.16 for Apple and £1,405,834.41 for Amazon.
Okuashvili v Ivanishvili [2025] EWHC 1267 (Ch) concerns issue-based costs orders. To reflect the relative success or failures at trial, all parties requested that the costs of the action be issue-based under CPR 44.2(6((f). Rajah J held that none of the issues upon which one party or another had failed were discrete and could be isolated. The fact that along the way the claimants had scored some hits did not detract from the outcome or justify an issue-based order. For interim payments, they were payable in a sum that erred on the side of caution, so that they would not exceed the costs recovered on an assessment.
In Lloyds Developments Ltd v Accor Hotel Services Ltd [2025] EWHC 1238 (TCC), Constable J gave guidance about the effectiveness of the security for costs to be given by way of an After-the-Event insurance policy. The parties had agreed (Lloyds being in administration) that security for costs should continue to be provided, £2m having already been ordered. Lloyds submitted that £617,336 should be provided by an ATE policy. Accor contended for a further £1,162,336. Constable J held that the suggested policy did not provide equal protection as a payment into Court. Lloyds was given 10 days to refine the policy to meet two areas of judicial concern, with any dispute on the refinements to be dealt with by way of written submissions. The total security ordered for the policy to secure was £882,336.
Next Aina Khan Law Ltd v The Legal Ombudsman [LEO][2025] EWHC 1319 (Admin). This is a rare case for these columns which concerns the judicial review of a LEO’s decision that the claimant law firm should repay its client £51,192, representing £35,500 for failing to update her on the escalating costs of her divorce proceedings, and £15,692 for having failed to assess her litigation capacity adequately. David Pievsky KC upheld the LEO’s finding that the solicitors had failed to tell the client that the initial budget had been exceeded until long after the event, which had amounted to poor service. However, the decision about the client’s capacity had been irrational because it had conflated mental illness with a lack of capacity: the fact that she had been referred to a psychiatrist did not in itself indicate capacity issues. That aspect of the award was quashed, with the solicitors being awarded 40% of their costs of the JR.
Next Part 36. In H & P Advisory Ltd v Barrick Gold (Holdings) Ltd (Re Consequential Matters) [2025] EWHC 1330 (Ch), the Claimants failed on their substantive contractual case, but demonstrated that they were entitled to a restitutionary quantum meruit of US$2m. The Defendants had made a Part 36 offer on 5 May 2023 to pay US$2m plus US$230,000 interest accrued to date. That meant that the Claimant had failed to beat the offer albeit “by a whisker” according to the judge, who held that there was nothing unjust about the consequences of CPR 36.17(4) applying. The defendant was ordered to pay 50% of the claimant’s costs up to 26 May 2023 being the date of expiry of the relevant period under the rule, with the claimant to pay the defendant’s costs thereafter.
Finally, Qualified One Way Costs Shifting. In Samrai v Kalia [2025] EWHC 1449 (KB) , Martin Spencer J was asked to disapply the QOCS rules against various claimants whose action had failed on the grounds that the claims were not “in the round” for personal injury. The judge held that the personal injury claim was an important aspect. However, the fact that the personal injury aspects and the other aspects could be distinguished, as clearly shown by the fact that claims were brought by three of the claimants without there being any personal injury aspect at all. In addition, monies paid pursuant to loans for purchase of cars, travel expenses, monetary donations to the temple and to third parties for services to participate in temple events, all said to result from the Defendant’s undue influence, could be separated out and came within the exception provided by rule 44.16(2)(b). It followed that the defendant, which had spent about £2m in costs, could enforce its costs order.
