Kain Knight Case Law Update October 2026
Welcome to the Kain Knight Case Law Update for October 2026, written by Colin Campbell.
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Essendi UK Hotels 2 Ltd v London Property Company Ltd [2026] EWHC 2501 (TCC) – 2 October 2026
Following his determination of a preliminary issue in favour of the claimant, HHJ Stephen Davies was required to decide whether the court could be told of the date of the first Part 36 offer made by the defendant.
If so, the claimant could submit that it should be awarded its costs up to the expiry of the time for accepting the offer, being 21 days after it was made.
If not, it was common ground that the claimant would not be able to invite the court to award costs over that period.
Upon consideration of the rule, the judge found that CPR 36.16(2) generally prevented a trial judge from being informed of the existence or the terms of an offer until after that case had been decided. However, CPR 36.16(3)(d) and (4) provided that where an issue (emphasis added) had been decided but other issues remained, a judge could be told of the existence of a Part 36 offer, but not its terms (such as whether it was for the whole claim and/or counterclaim). However, as the matter of disclosure of the date the offer was not dealt with under the rule, the defendant argued that the prohibition on disclosing the terms on which an offer had been made also encompassed its date.
HHJ Davies disagreed. He held that (i) the date was distinct from the offer’s terms and disclosure did not reveal anything about the terms (ii) the date of the offer was part of the fact that a Part 36 offer had been made (iii) knowing when an offer had been made enabled the court to consider whether it was appropriate to determine costs at an earlier stage of the action, thereby giving effect to the approach that it was “pay-as-you-go”.
It followed that the court could be told of the date of the offer.
The judgment can be viewed here.
R. (on the application of Worsley) v Tameside Magistrates’ Court (Costs) [2026] EWHC 2518 (Admin) – 6 October 2026
The Claimant successfully sought judicial review by a single judge of a decision of Tameside Magistrates’ Court which refused to state a case for the opinion of the High Court as a result of which his conviction was quashed. In the Divisional Court (Edis LJ and Hill J), the issue was whether he could obtain an order for the payment of his costs before the Magistrates from central funds.
Ss.16 and 16A of the Prosecution of Offences Act 1985 (“the Act”) made provision for the making of defendant’s costs orders for “such amount as the court considered reasonably sufficient to compensate him for any expenses properly incurred by him in the proceedings”.
However, there was no power for a single judge to order costs be paid out of central funds (see s.16(5)(a)). Where that happened, the matter of the costs would be adjourned to be considered on the papers by a Divisional Court, constituted by the single judge who heard the case and another judge. However, the Divisional Court held that proceedings were not necessarily concluded until all outstanding matters had been resolved, including consequential costs applications.
As the issue of payment of costs from central funds had yet to be determined, it was permissible to transfer the case to the Divisional Court under CPR r. 3.1(2)(c). That Court could then determine the outstanding costs application for the purposes of section 16 of the Act. As that permitted a Defendant’s costs order to be made, the Court made an order for the claimant’s costs resulting from the procedural failing that had taken place in the Magistrates’ Court.
That sum was £750.
The judgment can be viewed here.
JBX v Frimley Health NHS Foundation Trust [2026] EWHC 2525 (KB) – 5 October 2026
In a personal injury action in which none of the parties had made any offers under CPR Part 36, the judge when dealing with “consequentials”, had to decide who should pay the costs.
The claimant had secured interim payments of £950,000, and allowing for CRU payments, damages of £4,341,302.86 plus substantial periodical payments. However, the defendant contended that the claimant should have 75% of his costs up to 17 February 2026 being the date of service of the defendant’s counter-schedule, with no order as to costs thereafter because the defendant had succeeded on the principal disputed question of future care and accommodation: that issue had taken up the greater part of the eight-day trial, whereas the lost years claim which the claimant had won had accounted for just half a day.
Andrew Kinneer KC held that it mattered that the defendant had not made a Part 36 offer to protect itself and its various offers had been made less than a fortnight before trial, by which time the bulk of the costs had been incurred.
Exercising a broad-brush approach, the defendant was ordered to pay 85% of the claimant’s costs.
The judgment can be viewed here.
Município de Mariana v BHP Group (UK) Ltd [2026] EWCA Civ 1319 – 16 October 2026
On appeal from O’Farrell J (see [2026] Costs LR 443), the issue for decision was whether the court’s power to award pre-judgment interest on costs under CPR 44.2(6)(g) could be exercised in favour of the claimants who were parties to conditional fee agreements and thus had not paid their solicitors any costs during the period in respect of which they now claimed interest.
Below, O’Farrell J had ordered the defendant to pay prejudgment interest at 1% above UK base rate on the Stage 1 costs from 1 August 2023 until 26 January 2026. The Defendant on appeal argued that under Courts and Legal Services Act 1990 Pt II s.58A(6), costs orders were prohibited from including provision for the payment by one party of all or part of a success fee payable by another party under a CFA, and that Hirachand v Hirachand [2025] Costs LR 811 decided that that prohibition could not be circumvented by including payment of the success fee in the order for substantive relief granted under the Inheritance (Provision for Family and Dependants) Act 1975.
That submission failed. Vos MR held that Hirachand did not have the effect of making it impossible for the court to make an order for pre-judgment interest on costs under CPR 44.2(6)(g) and had nothing to say about the scope of the power of the rule, nor about its interaction with s.58A(6). As to whether the court had power to award the claimants pre-judgment interest on costs on account of a potential liability to pay a success fee reflecting the costs of funding the Litigation, the court was told that the claimants’ solicitors’ own funding was provided by way of a corporate debt facility with a third-party lender.
The MR observed that an award of pre-judgment interest on costs under was not an exceptional or unusual step for the court to take and was intended to compensate one party for the loss of the time value of money. However, there was nothing in the wording of the rule or elsewhere to suggest that such interest could only be awarded if the receiving party had actually expended money on costs or had borrowed to pay such costs. The power in the rule provided a broad discretion to compensate for the loss of the time value of money, which was for the purpose of compensating the receiving party either for having been kept out of its money or for itself being liable to compensate someone else (whether the solicitors providing the legal services themselves, an insurer or a third-party funder) for the fact that legal services had been provided on credit.
For those reasons, the appeal was dismissed.
The judgment can be viewed here.
FAZ v MAZ (Costs) [2026] EWFC 301 – 19 October 2026
In family proceedings in which the mother made allegations against the father involving the alleged sexual abuse of their daughter, two were withdrawn and none proved. The father sought a costs order in the sum of £256,667.80 up to the conclusion of a finding of fact hearing on 24 April 2026.
Under the Family Proceedings Rules 2010 (‘FPR’) r28.2, the general rule that costs follow the event was disapplied, but by FPR r28.1, the court could make at any time, such order as to costs as it saw fit. Poole J held that there had been inconsistencies in the mother’s evidence, that she had planted the idea in the minds of professionals that the father had a propensity to abuse the daughter sexually and that she embellished her evidence. As a result, the husband had been sorely wronged.
The wife’s unreasonable conduct caused or contributed to the proceedings being prolonged and a finding of fact hearing being necessary. However, the court took into account that a costs order against the mother would deplete the funds available to her to support the daughter and would cause friction at a time when the court was anxious for relations between the parents to improve so that they could better advance their daughter’s best interests.
Poole J ordered her to pay 25% of the father’s costs, subject to assessment, attributable to the fact-finding exercise concerning the allegations of sexual abuse.
Assessing the costs summarily, the case was sensitive and the positions of the parties entrenched. However, it did not involve a large number of witnesses, complex medical issues, or voluminous documentation, but only three allegations for determination at the fact-finding hearing.
It was a case suitable for experienced Junior Counsel acting without a leader. Some of the hours spent concerned matters other than the allegations of sexual abuse. Having regard to the issues in the case, the sums claimed were disproportionate.
The solicitors’ time was, accordingly, allowed at £40,000 with £50,000 for junior counsel with the mother to pay 25% of that within 14 days.
The judgment can be viewed here.
The Russian Federation v Hulley Enterprises Limited & Ors [2026] EWCA Civ 1353 Phillips, Fancourt LJJ – 22 October 2026
The Court of Appeal gave judgment in respect of an application for security for costs under CPR 25.29 against the Russian Federation. The background was that arbitration awards had been made in favour of Hulley and others in the Netherlands in region of $50 billion. Protracted proceedings followed in The Netherlands relating to the validity of the awards and a preliminary issue relating to state immunity heard in the Commercial Court.
Further preliminary issues were subsequently tried by Bright J who gave Judgment in favour of Hulley plus costs of the trial and ordered a payment on account of £2.5 million which sum was paid into court late and without interest. Following the grant of permission to appeal, Hulley sought security for costs of £ 3.6m including £2,360,000 for leading counsel. Russia argued that CPR 52.18(3) provided that where a party had been present when permission to appeal was given, that party could not subsequently apply for a condition to be imposed under r.52.18(1)(c).
Fancourt LJ held that an application under r.25.29 was not an application for a condition to be imposed under r.52.18(1)(c). The rules were intended to operate distinctly and the application was a rare case in which the court could conclude without evidence that there was self-evidently a real risk of inability to enforce a costs judgment against the Russian Federation in Russia. However, the amount of security sought was extraordinarily high for a four day appeal and counsels’ fees astonishing: Security was granted in the sums of £375,000 for the solicitors and £600,000 for disbursements including counsel.
The judgment can be viewed here.
Parsons v Convatec Ltd [2026] EWCA Civ 1357 – 26 October 2026
The Court of Appeal gave judgment on appeal from Richards J (see [2026] Costs LR 1507) about whether, and if so how, the court should take an employee’s financial position into consideration when determining costs budgets in a patent action. That depended upon the proper interpretation of s.106(1) Patents Act 1977 which provided that in proceedings to which the section applied, the court, in determining whether to award costs or expenses to any party and what costs or expenses to award, should have regard to all the relevant circumstances, including the financial position of the parties.
Below, Richards J approved future costs at £4.7 million for the claimant and £6.5 million for the defendant respectively. He had then decided that s.106(1) did not apply to costs budgeting at all, but the court of appeal held that that was wrong.
Arnold LJ held that an unreported decision of Floyd LJ sitting as a single judge in Shanks v Unilever plc (unreported) who had said that s.106 had no application at a stage of the proceedings prior to “when costs are awarded”, was not binding on the Court of Appeal.
Determining what costs to award in s.106(1) embraced each step to a decision as to the amount of costs, including costs budgeting. Arnold LJ continued that the natural meaning of the words supported that conclusion and that was the case, as did the application of s.106(2), which provided for the court to “settle the amount of the costs” and suggested that the financial position of the potential paying party could, and should, be taken into account.
It followed that the court found that Richards J’s exercise of discretion had been infected by his erroneous interpretation of s.106(1). He had failed to take into account the claimant’s need for a reasonable degree of certainty that the defendant would not recover the full extent of its provisionally approved budget if it succeeded.
The exercise of his discretion was set aside, the appeal allowed and the defendant’s budget set at £4m, being a sum which ought properly to be sufficient to enable it to defend the claim.
The judgment can be viewed here.
