Monthly Legal Costs Update – February 2026
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 February 2026 update has been written by Nick McDonnell and Colin Campbell.
Much has been going on in the world of costs for us to report in terms of judgments handed down over the past few weeks. In R on the application of Public and Commercial Services Union v The Secretary of State for the Home Department [2025] EWCA Civ [1644] the Court of Appeal dismissed an appeal by the claimant (PCSU) against the order below that there be “no order as to costs” following service by PSCU of notice of discontinuance under CPR 38. This had followed repeal by the new Labour government of The Strikes (Minimum Service Levels: Border Security) Regulations 2023.
PCSU argued that it should be awarded its costs having been “wholly successful” in obtaining the repeal.
Bean LJ held that where a claim has become academic for reasons not attributable to the issue of proceedings, there is no prima facie entitlement to costs, unless it can be shown without the court having to hear detailed argument, that the claimant would have been likely to succeed at a trial. Although the judge’s reasons that the claim had become academic (for political reasons after a change of government and not because of the claim) had been expressed with ”telegraphic brevity”, the order had not been made as a result of an error of principle or of law.
Therefore, the appeal failed.
In what may be the last stage in a Solicitors Act assessment which started on 31 March 2016, in Winros Partnership v Global Energy Horizons Corporation [2025] EWHC 3362 Marcus Smith J decided whether the senior costs judge below had been correct to assess various bills at nil. The total bills had exceeded £6m for work done under various Conditional Fee Agreements (CFAs) between 2012 and 2016. Following the breakdown of their relationship, Winros had terminated the retainer before any ‘win’ occurred under the CFAs. The issue for decision was whether upon termination of a CFA by acceptance of a repudiatory breach, the solicitor was entitled to payment for work done up to the date of termination, where no success had been achieved.
The judge held that such termination was at common law, rather than under Winros’ contractual termination powers under the CFA and that no common law restitutionary claim was possible given the existence of a contractual power to terminate for cause, which Winros had deliberately chosen not to exercise.
There was no room for a claim for unjust enrichment because the retainer already articulated what was to happen in such a case. The senior costs judge had been correct to assess the bills at nil, so the solicitors’ appeal failed.
In Shufflebotham v Shuff-Wentzel [2025] EWHC 3321 (Ch) HHJ Charman dealt with the costs of a failed application to remove an executrix from an estate of a deceased. The judge held that the litigation had been hostile rather than being a trust dispute requiring a judicial determination for the benefit of all interested parties, and that the defendant was entitled to costs against the losing executrices rather than against the estate.
However, they could recoup those costs from the estate under their Indemnity, having acted honestly and reasonably in bringing the application. The fact that the court had ultimately decided not to remove the defendant as executrix did not establish that seeking her removal at all was necessarily unreasonable.
Next in the The Russian Aircraft Litigation – Operator Policy Claims [2025] EWHC 3378 (Comm), the claimants had served notice of discontinuance against the “All Risk defendants” (“ARDs”) under CPR 38, thereby engaging the presumption that the ARDs should have their costs form the claimants. Not so, argued the claimants who contended that the defendants known as the War Risks defendants(“WRDs”) should do so under a Sanderson order, or alternatively under a Bullock order whereby the WRDs would indemnify the claimants for any costs payable by them to the ARDs.
Picken J disagreed, holding that whilst the court was not hidebound under CPR 38.6 to require the party discontinuing to pay the recipient party’s costs and that the court retained a discretion, Sanderson and Bullock orders were typically made where there was a successful defendant and an unsuccessful defendant. That was not the case: whilst the ARDs had been successful, whether the claimants would succeed against the WRDs was an unknown. The right order was that the claimants would pay the costs of the discontinued claims against the ARDs on the express basis that the matter could be revisited, in the sense that a costs-sharing order, probably in the format of a Bullock order, after the trial has taken place later this year.
Next non-party costs orders.
In Thomas Barnes & Sons PLC v Blackburn With Darwen Borough Council [2026] EWHC 24 (TCC) HHJ Stephen Davies was asked to make a order under s.51 Senior Courts Act 1981 against the respondents, following the failure of the claim of the claimant’s administrators. The defendant had incurred costs of £995,000 and received £583,000 by way of security leaving a shortfall of £412,000.
The judge held that although the administrators had exercised a real degree of control as was appropriate to their position as officeholders, the respondents were the funders of the litigation and persons who were substantially to benefit, from them and were properly to be treated as the real parties to the proceedings in very important and critical respects.
It was, therefore, just that they, rather than the defendant itself as the successful defending party, should have to pay the costs. Non party costs order made!
Finally, case management and a lesson in not showing aggression to your opponent.
In Limbu & Ors v Dyson Technology Ltd & Ors [2026] EWHC 38 (KB), the court was required to make decisions in relation to strike-out and withdrawal applications concerning the Reply. It was common ground that swathes of the Reply should come out. However, it was the defendants’ contention argue that the Reply infringed the basic rules of pleading and that those passages should be struck out. Pepperall J held that the Reply had breached three cardinal principles relating to Replies, including that an additional ground of claim could not be pleaded in a Reply.
However, whilst the offending passages would be struck out pursuant to r.3.4(2)(b) and the application had been meritorious and reasonable, it had been pursued aggressively and without proper regard to the parties’ duty under CPR 1.3. Accordingly, the defendants were awarded just 50% of their costs and the Judge also held that to have spent £61,366.03 on the issue was both unreasonable and disproportionate. The proportionate costs of the application were no more than £12,000. It followed that the aggressive defendants would receive £6,000, being 50% of such costs.
An expensive win!
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
