Costs Case Law Update – October 2025
Welcome to the Kain Knight Case Law Update for October 2025, written by Colin Campbell.
This month’s update features a landmark Supreme Court decision on the currency for an award of costs in Process & Industrial Developments Limited v The Federal Republic of Nigeria, where the court held that costs billed and paid in sterling should be awarded in sterling, dismissing arguments about currency fluctuations.
Further rulings cover the successful application of Part 36 offers, including one case resulting in an interim payment of 100% of budgeted costs and another in a contentious probate dispute leading to indemnity costs.
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Pharos Offshore Group Ltd v Keynvor Morlift Ltd [2025] EWHC 2496 (TCC) Constable J – 1 October 2025
A Part 36 offer of £550,000 (inclusive of VAT and interest) was more advantageous than the judgment obtained and CPR 36.17(4) applied. Interest at 10 % above base rate applied to the principal sum (including VAT) from the expiry of the relevant period to judgment.
Interest on costs was fixed at 5 % above base rate, reflecting the timing of the offer and the reasonableness of the defendant’s decision to proceed to trial. No percentage reduction was justified on those costs: although the defendant achieved some reduction in the claim and limited success on its counterclaim, they did not justify any departure from the general rule that costs follow the event.
The judgment can be found on Thomson Reuters™ by clicking here.
Learning Curve (NE) Group v Lewis [2025] EWHC 2491 (Comm) – 3 October
HHJ Russen gave judgment for the claimant in respect of the defendant’s breach of warranty for £5,211,625 which had been reduced by a prior payment of £783,325 resulting in a net judgment of £4,428,300. The claimant had offered to accept £5,211,625. That offer was valid, and the CPR 36.17(4) benefits were payable. The judge also ordered an interim payment of 100% of budgeted costs (£1,257,382) departing from the usual percentage of about 80%.
Aercap Ireland v AIG Europe SA [2025] EWHC 2529 – 6 October
In the litigation involving aircraft stranded in Moscow following Russia’s invasion of Ukraine, Aercap recovered $1 billion but just 65% of its costs. Having dealt with interest, Butcher J addressed the complicated division of those costs in circumstances where AEG had brought alternative claims against different insurers and succeeded against some but not others. The judge considered the extent to which and the principles to apply where the court makes a Sanderson order, that an unsuccessful defendant is ordered to pay a successful defendant’s costs.
R. (on the application of Bates) v Highbury Corner Magistrates’ Court [2025] EWHC 2532 (Admin) – 6 October
The Divisional Court (Whipple LJ, Yip J ) held that the High Court had jurisdiction under s.51 Senior Courts Act 1981 to order that an interested party should pay the successful claimant’s costs in judicial review proceedings, where the judicial review concerned a criminal matter. That criminal matter had been a summons based on allegations of fraud made by a shareholder and director of a company that had been vexatious and an abuse of process.
In so far as Murphy v Media Protection Services Ltd ([2012] 3 CMR 3) had held that the High Court should only make costs orders under s.51 in criminal causes in exceptional cases, it had been wrongly decided. The interested party was ordered to pay the costs claimed at £235,922 subject to assessment.
Qatar Investment and Projects Development Holding Co v Phoenix Ancient Art SA [2025] EWCA Civ 1300
Males and Zacaroli LJJ ordered security for costs under CPR 25 in favour of the claimants (as respondents to an appeal) where there was a risk of the first to third defendants (as appellants) dissipating their assets to avoid paying a judgment against them. The claimant’s costs of the application were disproportionately high for a one day appeal at £225,000 and were summarily assessed at £70,000.
Ellis v Ellis & Ors [2025] EWHC 2609 (Ch) – 14 October
In contentious probate, HHJ Michael Berkley dealt with consequentials following his giving judgment in favour of the claimant. The first probate exception that the testator had caused the litigation, was inapplicable; the second probate exception, that there were reasonable grounds for an investigation, were applicable on a “no order as to costs basis” for limited periods.
For the remaining costs, these were to be paid by the third defendant (DIII) on the standard basis up to 5 February 2024 and the indemnity basis thereafter being the expiry of the relevant period for accepting the claimant’s Part 36 offer. That offer, two fields, two tractors and £20,000, had been genuine representing 14.6% of the estate value, and the CPR 36.17(4) benefits applied. In addition, DIII and not the estate, was ordered to pay the executor’s costs who had remained neutral, so that justice required that the challenger pay them.
The claimant’s delay in agreeing to mediation made no difference: the period was six months during which key documents had been withheld and there was nothing unreasonable in the claimant declining to mediate until after the CCMC and disclosure.
The judgment can be found by clicking here.
Spender & Ors v F.I.T. Nominee Ltd & Anor [2025] EWCA Civ 1319 – 17 October
Nugee and Birss LJJ refused to make a costs capping order under CPR 52.19 in favour of 76 tenants (out of a total of 436) who were proposing to appeal in a service charge dispute with their landlords, and whose submission was that their appeal would be stifled without one.
After considering the principles, including s.19 and 20C Landlord & Tenant Act 1985, the court held that if the landlords successfully defended the appeal, their costs would be recoverable from the tenants who were not subject to the cap, meaning that the those who had chosen not to be involved in the appeal would bear the costs risk. That was not a result which accorded with justice or the overriding objective so the application failed.
The judgment can be found by clicking here.
Process & Industrial Developments Limited v The Federal Republic of Nigeria [2025] UKSC 36 – 22 October
In an action to set aside two arbitration awards, Nigeria incurred unassessed costs of £44.217 million (excluding interest) in relation to an eight-week trial in the Commercial Court, payable by P&ID. The costs were billed by Nigeria’s solicitors in sterling and Nigeria paid in sterling between November 2019 and November 2024. P&ID sought to have the costs denominated in naira because for several years, the naira had fallen markedly against other currencies, and that if Nigeria received costs in sterling, it would gain a substantial windfall at its expense.
That was because the sterling sums which Nigeria paid to its solicitors were worth 25 billion naira when they were paid, whereas they were now the equivalent of 95 billion naira. P&ID argued that costs should be awarded in the currency that most accurately reflected the loss suffered by the party in funding its litigation.
The Justices, (Lord Reed, President Lord Hodge, Deputy President Lord Stephens Lord Richards Lady Simler), dismissed P&ID’s appeal. An award of costs was a discretionary contribution towards the liability incurred to lawyer. It was not compensation for a party’s underlying financial loss, such as currency conversion losses. Nigeria was entitled to a costs order in sterling, as its solicitors had billed in sterling and it had paid those bills in sterling.
Jon Flowith & Partners v Greaves [2025] EWHC 2738 (Ch) – 22 Oct 2025
Following a strike out application involving several parties, Jonathan Hilliard KC dealt with costs orders. Where separately represented parties had distinct interests from the primary opposing party, the loser would generally be liable for the costs of the successful party, and could also be liable for the costs of other parties who supported the successful position, where those parties had separate interests requiring representation.
Before Mr Hilliard, the claimant [C] lost the third defendant’s [DI] application to strike out various claims unless amended particulars were served. DII and DIII sought their costs of the application from C, who contended for no order.
The judge held that the hearing could have been avoided had C submitted a draft amended pleading earlier, and the failure to do so had caused the parties to incur avoidable costs. C was ordered to pay DI and DII’s costs from the date on which they received the C’s skeleton argument as their support for DIII and their representation was justified by their distinct legal interests and responsive submissions at the hearing.
The judgment can be found on Thomson Reuters™ by clicking here.
