Costs Case Law Update – September 2025
Welcome to the Kain Knight Case Law Update for September 2025, written by Colin Campbell.
This month’s case law update covers significant rulings on indemnity costs and budgets, massive budget reductions in the “Dieselgate” litigation, the unenforceability of non-compliant Damages Based Agreements, and the non-recoverability of costs for work done by unauthorised individuals.
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Xtellus Capital Partners Inc v DL Invest Group PM S.A [2025] EWHC 2168 (Comm) HHJ Bird – 18 August 2025.
Following the entry of judgment in favour of the Claimant for €1,792,247.93, the Court addressed consequentials, including interest on established principles, varying the claimant’s costs budget and whether the costs of action should be paid on the standard or indemnity basis. The Defendant had pursued a dishonest defence which was supported dishonestly. That conduct was well outside the ordinary and reasonable conduct of proceedings, and indemnity costs were ordered.
On costs budgets, relevant to the application to vary the budget under CPR 3.15A was the court’s decision about indemnity costs, whether there were significant developments in the litigation that warranted variation, and if so, what should that variation be?
When conducting a detailed assessment, the Court would not depart from the receiving party’s last approved or agreed budgeted costs for each phase of the proceedings unless satisfied under CPR 3.18 that there was good reason to do so.
However, on an indemnity basis assessment, CPR 3.18 did not apply and the Court could depart from the budget without a good reason for doing so. Since the assessing court could easily depart from the budget, there was no prejudice to the Claimant in declining to deal with the application, and leaving the decision to vary the costs budget to the costs judge.
Various Claimants v Mercedes-Benz Group AG [2025] EWHC 2307 (KB) Cockerell J, Senior Costs Judge Rowley – 10 September 2025.
When dealing with the next phase of costs budgeting in the “Dieselgate” litigation, the second costs and case management conference for Tranche 3, covering causation and quantum issues for an eight-week quantum trial, sought £55.7m for the claimants and £75.8m for the defendants.
The court approved £21m for the claimants and £55m for the defendants, holding that the Tranche 3 allowances should generally be lower, given fewer complicating factors and greater cooperation between the parties.
In addition, the Non-lead firms’ recoverable involvement was confined to narrow circumstances, and routine “keeping abreast” of the litigation was a solicitor–client matter and not recoverable inter partes.
For the costs of two CMCs and one pre-trial review, the claimants sought £3.3m and £1.5m respectively and were allowed £850,000 and £300,000, with the court stating that there had been “overlawering”. Nine in-person attendees in court were ample. “Remote monitoring” by 20 more was not and heavy reductions would be made should “overlawering” be found when the court fixed budgets at the next CMC in January 2026 for expert evidence and ADR.
The judgment can be found on Thomson Reuters™ by clicking here.
Reeves v Frain (Aka Reeves) & Anor [2025] EWHC 2311 (KB) Dexter Dias J – 10 September 2025.
In contested probate proceedings, the defendants had succeeded with 70% of their costs in their defence that a will made by the testator in 2012 had been valid, rather than a later will executed in 2014. As a result of that, they had benefitted substantially under the 2012 will at the expense of the claimant under the 2014 will.
The costs sought were £1.3m arising under two Damages Based agreements with their solicitors which provided that “If you win you agree to pay us 10% [for D1] and 24% [for D2] of any money and any non monetary award or settlement received”. However, both DBAs had not complied with Regulation 1(2) and Regulation 4 of the DBA Regulations 2013. No assets had been transferred, nothing had changed hands and nothing had been recovered by the defendants from the claimant, and accordingly, the contingent benefits were not compliant with the Regulations.
It followed that as the DBAs were unenforceable, no costs were payable under their terms.
The judgment can be found by clicking here.
Mazur v Charles Russell Speechlys LLP [2025] EWHC 2341 (KB) Sheldon J – 16 September 2025.
Below, the court had ordered the appellants (Mazur) to pay the respondent’s costs of applying to lift a stay of proceedings in the sum of £10,653.
That decision had been wrong.
The fee earner conducting the litigation had been taking part in a “reserved activity” within the meaning of the Legal Services Act 2007 (“the LSA”). A distinction was to be drawn between
(a) supporting an authorised solicitor in conducting litigation
and
(b) conducting litigation under the supervision of an authorised solicitor.
Activities falling within (a) were permitted, but those falling within (b) were prohibited by the statutory regime. Mere employment by a person who was authorised to conduct litigation was not sufficient for an employee to conduct litigation themselves, even under supervision.
It followed that as the person who had conducted the litigation under supervision had not been authorised to do so because he was not a solicitor and did not fall within one of the exempt categories under Schedule 5 of the LSA, the court below had erred in ordering the appellants to pay the respondent’s costs.
Accordingly, the judge’s order was quashed for that reason and because the maximum sum that could have been awarded under CPR 45 (absent exceptional circumstances) for such a case proceeding in the County Court intermediate track, was £303 and a court fee of £333.
The judgment can be found on Thomson Reuters™ by clicking here.
AstraZeneca v Glenmark Pharmaceuticals Europe [2025] EWHC 2406 (Pat) HHJ – 16 September 2025.
In five combined proceedings, four manufacturers and one wholesaler of generic pharmaceuticals had alleged that a patent owned by AstraZeneca in relation to dapagliflozin and its use in the treatment of type 2 diabetes, was invalid.
AZ’s case was that the patent was valid and had been infringed by those parties. Judgment was given in favour of the manufacturers with costs of the proceedings to be assessed by detailed assessment. That left four interim reserved costs orders and a consent order to be dealt with as “consequentials”.
Following decisions on each, interim payments on account of costs were ordered as to 65% of the sums sought in favour of the manufacturers.
