Monthly Legal Costs Update – February 2025
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.
We start the new year with another Supreme Court judgment involving costs which was delivered just before Christmas. In Hirachand v Hirachand [2024] UKSC 43, Lord Richards held that the Court of Appeal (see [2021] Costs LR 1243) had been wrong to include in a substantive award of £138,918 for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975, an allowance of £16,750 for a success fee payable under a party’s conditional fee agreement (CFA) with her solicitors. Claims under the 1975 Act were civil proceedings subject to the Civil Procedure Rules, even if brought in the Family Division of the High Court (see CPR r 57.15). That meant that in a usual case, the losing party paid the successful party’s costs. If the court ordered the claimant’s costs to be paid by an unsuccessful defendant, it would make a nonsense of the rules about costs if the successful party could recover by way of the substantive award, the amount by which the assessed costs fell short of the costs payable on a solicitor and client basis by including the success fee. In addition, the provisions of Part 36 would be virtually unworkable in accordance with their purpose of achieving settlements, if success fees were recoverable as part of the judgment sum. Accordingly, the Supreme Court held that the Court of Appeal had erred in including the success fee in the substantive award, so its decision was reversed.
Next a lesson in indemnity basis costs involving the founder of EasyJet, Sir Stelios Haji-Ioannou. In Easygroup Ltd v Easyfundraising Ltd [2024] EWHC 3210 (Ch), Fancourt J was required to decide whether the costs of the claim and counterclaim ordered to be paid by the claimant to the defendants, should be assessed in detail on the standard basis or on the indemnity basis. What he was concerned with was whether or not the claimant had conducted its claim in an unreasonable way, which was not the ordinary way of conducting proceedings of the type in question: in doing so, he recognised that in such proceedings, there was often a degree of strength of feeling on one side or the other, or both sides, which meant that the litigation was very hard fought in commercial terms. In support of the application for indemnity basis costs, the defendants advanced eight examples of “conduct out of the norm”. Not all succeeded, but overall Fancourt J was satisfied that the claimant’s conduct of the litigation (that of Sir Stelios included) had been unreasonable, including pursuing weak arguments, bullying and intimidatory behaviour, and putting the defendants to significant expense. An indemnity basis costs order was appropriate.
Next summary assessment versus detailed assessment. In Ferko v Ealing Magistrates Court [2024] EWHC 3297 (Admin), the appellant had succeeded on all issues in a contested appeal against a decision of the Magistrates that there was no case for the landlord respondents to answer under s.82 Environment Protection Act 1982. Sweeting J, had to decide whether there should be a summary or detailed assessment of the appellant’s costs. He held that a summary assessment was appropriate as the hearing had not exceeded one day and in doing so, the proportionality of those costs was not simply about reducing the amount claimed to the lowest possible figure. The court needed to strike a balance to ensure that the receiving party was properly compensated for reasonable costs, but also that the paying party be protected from excessive and disproportionate costs. Sweeting J reduced the overall sum claimed in respect of an application to amend pleadings by 20% (to £13,521.6), and the overall sum claimed for the substantive hearing by one third (to £24,893.22).
Next, albeit not at High Court Judge level, a useful resume of the principles to apply when the court is dealing with an application to disapply the usual principles which apply when a party discontinues an action under CPR 38. In Trappit SA v GBT Travel Services UK Ltd [2024] EWHC 3285 (Ch), Chief Master Shuman upheld the default position under CPR 38.6(1) that claimants were liable for the defendant’s costs incurred up to the date of discontinuance of proceedings. The allegation that the defendants had delayed disclosure of a source code did not justify disapplying the presumption. The Master found that the claimants could have sought earlier disclosure. Costs were ordered on the standard basis, with the litigation not being sufficiently “out of the norm” to warrant indemnity costs.
Finally, the New Year would not be complete without a judgment given by the circuit judge (sitting as a High Court Judge) who would surely win a prize for sending more judgments to National Archives than anyone else. In Packer v Packer [2025] EWHC 27 (Ch), HHJ Matthews had to decide who should pay the costs consequential upon the claimant’s decision to amend the Reply in order to withdraw an allegation of fraud in contested probate proceedings. The offending pleading had said “It is the claimant’s position that the Alleged Wills have been fraudulently created by the Defendant”. It was the defendant’s case that there should be an order for costs, not only the immediate costs of dealing with the application, but also at least a proportion of the costs already expended in meeting the allegation of fraud which had now been withdrawn. That submission failed. There was no good reason not to apply the general rule for the costs of and occasioned by the application to be paid by the party amending (to be summarily assessed), but excluding any proportion of the costs already incurred in the litigation by the defendant in responding to the now abandoned allegation of fraud. That was a question to be dealt with, if at all, at the end of the trial.
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
Download here.
