Costs Case Law Update – July 2026
Welcome to the Kain Knight Case Law Update for July 2026, written by Colin Campbell.
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Ward v Rai [2026] EWCA Civ 816 - 02 July 2026
On a second appeal, the issue for the Court of Appeal was whether a costs judge in detailed assessment proceedings had erred in principle in refusing to strike out Point of Dispute 23. This challenged 134.1 hours work on documents in the claimant's bill of costs, but was served in a 24-page schedule of objections only two clear business days before the hearing of the assessment.
At the first appeal (see [2025] Costs R 1143), the court held that although the costs judge's decision was a discretionary case management decision, the refusal to strike out Point 23 meant that the assessment could not be completed in the allocated two days and required an adjournment to a third day. The overriding objective required that cases be dealt with “fairly”, and any unfairness to the defendant caused by Point 23 being struck out had been entirely of his own making. It followed that the judge had erred in principle in not having struck out point 23, so the appeal was allowed.
However, the Court of Appeal disagreed holding that (1) appellate courts should not interfere with discretionary case management decisions simply because they disagreed with them or otherwise considered that they would have taken a different course, and (2) whilst the appellate judge had directed herself as to the correct principles, she had then strayed beyond the limits set by them. The costs judge had disclosed no error of principle or failure to take relevant matters into account in reaching his decision, nor did it otherwise fall outside the ambit of his discretion.
It had been open to the judge to strike out Point 23 and another judge might have taken that course, but he had not been obliged to do so and it was open to him to impose a costs sanction instead. It followed that the decision to allow the appeal had been wrong and the first instance decision was restored.
You can view the full judgment by clicking here.
Click here to view an article written by Nick McDonnell where he considers why the judgment matters for everyone involved in detailed assessment proceedings.
Wine Enterprise Investment Scheme Ltd v Crowe UK LLP (Formerly Clark Whitehall LLP) - 03 July 2026
When dealing with “consequentials” following the trial, the court was required to establish “who was the winner” before deciding the liability for the costs of the action.
The claimant had sued its former auditors in respect of 7 audit years with claims ranging between £8,423,962 and £3,352,635, but was successful only as to £101,965.95, plus interest at 3% above base rate. That meant that the claimant had failed to beat the defendant’s offers of £3.175m under Part 36 plus a costs inclusive “Calderbank” offer for £3.78 million, both made on 25 February 2025.
In terms of “who was the winner,” the Judge held that the defendant had won and would have costs up to the expiry of the Part 36 offer discounted by 15% because the defence had not been wholly successful. He further ordered that those costs be paid on the standard basis rather than the indemnity basis to reflect the fact that the case had not been speculative, grossly exaggerated, or opportunistic.
You can view the full judgment by clicking here.
Hoffman v Finalto Group Ltd [2026] EWHC 1702 (Comm) - 06 July 2026
Butcher J dealt with the costs consequences where a party withdraws a Part 36 offer. Following judgment, the success and failures of the parties had been mixed.
The first claimant had succeeded in part on his employment claims. The second claimant had failed on his employment claims. Each claimant had obtained only nominal damages in respect of management equity claims estimated at £22.8 million. Both had succeeded in entirely in defeating the counterclaim, which, on the pleaded case, was for some US$90-US$ 100 million. Butcher J held that in these circumstances, the claimants would ordinarily be regarded as the successful parties, having won something of value which could not have been achieved without fighting the action.
However, the defendants had offered to settle the proceedings for £3.5million on 27 August 2025 under Part 36, the offer expressed to expire on 29 September 2025 and withdrawn after trial. The agreed consequence of that was that the offer was a ‘without prejudice save as to costs’ offer, to be taken into account in deciding the appropriate costs order under CPR 44.2(4)(c).
Had that offer been accepted, the claimants would have recovered significantly more than they did under the judgment, and the counterclaim would have been withdrawn. Butcher J held that in those circumstances, it was unreasonable to have carried on with the litigation after that offer had been made.
Given the limited success on the claims, he awarded the claimants two thirds of their costs up to 29 September 2025, with no order as to costs thereafter because they had established that there were sums due to them under an Equity Term Sheet which had been wrongly repudiated, and they had defeated the counterclaim.
You can view the full judgment by clicking here.
Carl v Limbani [2026] EWCA Civ 856 - 06 July 2026
The Court of Appeal overturned a costs order made by a trial judge following the trial of claims by the claimant that money he had paid over to intermediaries to acquire historic sports cars had been misappropriated. The action had been dismissed with the judge making no order as to costs.
His reasoning included the fact that the defendant was an unsatisfactory witness, who clearly knew a great deal more than he was prepared to disclose.
Conscious of the troubled procedural history of the case and hoping to avoid incurring unnecessary costs, the judge offered preliminary views on costs, namely that there should be no order, but that he was prepared to hear further submissions before making a final determination. At a consequentials hearing, the Judge refused to entertain submissions from the defendant’s counsel on the basis that the issue had already been finally determined.
The Court of Appeal set aside his decision because the Judge had misdirected himself and occasioned a serious procedural irregularity in having refused to allow the parties to make further submissions. The discretion of the Court was exercised afresh under CPR 44.2(4)(a). In doing so, it was appropriate for the costs order as between the claimant and defendant both to reflect the consequences of the defendant's conduct in the proceedings, and to constitute a proportionate sanction for that conduct.
Looking at the matter afresh, the appropriate order was no order as to costs, and there was nothing in the claimant's conduct to make that order inappropriate.
You can view the full judgment by clicking here.
Fuschillo v Johnson & Johnson [2026] EWHC 1925 (KB) - 24 July 2026 (paragraphs 71 - 78)
In proceedings issued on 13 and 14 October 2025 in which the Claimants (or where they were deceased, their estates/dependants) were seeking damages from the Defendants in negligence (contending that they had contracted malignant mesothelioma or ovarian cancer due to their exposure to mineral talc-based Baby Powder carrying Johnson & Johnson branding), the issue for Hill J was whether costs budgeting should apply.
The Defendants requested an order for budgeting to enable the Court to retain control over the parties’ costs, and to ensure that the costs remained proportionate and reasonable. The Claimants’ counterargument was that the suggestion for costs budgeting was premature, and that budgeting might ultimately prove to be a disproportionate exercise, since budgeting in and of itself was expensive and effectively “front-loaded” costs, and was likely only to lead to contested disputes about variations, for which the use of court time was not proportionate.
Hill J held that there would be an order for costs budgets because
(1) costs budgeting was proportionate given both the sums at stake and the level of costs likely to be incurred by the parties. A process by which the parties merely provided the Court with costs updates provided transparency over the costs incurred but did not enable the Court to have any control over them.
(2) CPR PD 3D, paragraph 2(f) provided that an order for the provision of costs budgets, with a view to a costs management order being made, “may be particularly appropriate in personal injury and clinical negligence cases where the value of the claim is £10 million or more” and this was such a case.
(3) The parties had been able largely to agree directions through to trial, such that there was no reason to believe that there was any greater risk of there being extensive disputed variations than in any other piece of substantial litigation.
You can view the full judgment by clicking here.
Orton v Barclays Bank UK Plc [2026] EWCA Civ 1025 - 31 July 2026
The Court of Appeal dealt with the costs consequences where a claim allocated to the small claims track, had been discontinued very shortly before trial. The proceedings concerned a claim for damages in respect of losses arising from alleged mis-selling of payment protection insurance and non-disclosure of commission.
The bank’s defence relied on limitation, absence of unfairness because of a redress payment it had made, and quantum issues. In addition, the bank invited the claimant to discontinue the claim with no order as to costs on several occasions, warning that if no notice of discontinuance was served, it would seek its costs including an order under CPR 27.14(2)(g) based on the appellant's unreasonable behaviour. Following the discontinuance, the bank sought and was awarded £2,138 in costs.
The Court of Appeal set aside the order.
The claimant had an arguable case and chose to discontinue only because the bank did not want to settle and the cost/benefit analysis was so marginal. However, if the claimant had fought the case at trial and lost, there would have been no costs. It followed that a litigant should not be worse off if they decided to discontinue because of the absence of representation than they would be if they turned up in person and lost.
It was clear from the reference in CPR 27 to "the special procedure" for dealing with claims allocated to the small claims track that the track was designed to be different. A key part was the "costs neutral" environment which extended to disapplying the costs consequences both of discontinuance under CPR 38 and under Part 36. Allowing the bank its costs would open the doors to well-resourced parties corresponding their way out of the costs neutral regime and blow the scheme of the Small Claims Track to bits, so the appeal was allowed.
You can view the full judgment by clicking here.
