Monthly Legal Costs Update – March 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 March 2026 update has been written by Nick McDonnell and Colin Campbell.
A bumper crop of judgments this month so our summaries are, of necessity , brief. First, Part 36. In Gagliardi v Evolution Capital Management LLC [2025] EWHC 3488 (Comm) 19, Calver J was required to decide whether the CPR 36.17(4) benefits were payable where the claimant had offered to settle for $3m and obtained judgment for $5.38m. The issue was whether 21 days had elapsed between the date of the offer and the start of trial: if not, CPR 3.17(4) could not apply. The judge held that judicial reading days relied on by the defendant in the calculation could not affect when a trial commenced for the purposes of the consequences of a Part 36 offer. The “the start of trial” for CPR 36 was the date on which the parties were required to attend court with their lawyers and the trial actually commenced. As there was nothing unjust in applying CPR 36.17(4), the claimant was entitled to its benefits.
Still with Part 36, in Smithstone v Tranmoor Primary School [2026] EWCA Civ 13, overruling Mundy v Tui UK [2023] Costs LR 153, the Court of Appeal held that a Part 36 offer to split liability 90/10 was to be treated as a genuine offer to compromise. In a case where liability was to be tried before quantum, the benefits of a liability-only offer in saving costs and court time were obvious. However, it could not be said that the outcome of the case, being a settlement for £2,650, was a finding that that was more advantageous to the claimant than a 90:10 apportionment of liability. Accordingly, without a determination on liability, CPR 36.17(4) was not engaged, and the costs fell within the fixed costs regime, since the defendant’s refusal to admit liability or to engage in settlement negotiations before reaching the door of the court, did not make it unjust for that regime to apply.
In McGann v Eldonian Community Trust Ltd [2026] EWHC 66 (Ch), the court exercised its jurisdiction under Section 194(3) Legal Services Act 2007 to order the losing petitioner in a winding up petition to make a payment of £20,325 to the Access to Justice Foundation in respect of the services provided free by counsel. The section expressly applied to proceedings in a civil court, including insolvency proceedings and there was no breach of the indemnity principle in making the order.
In Município De Mariana v BHP Group (UK) Ltd & Anor [2026] EWHC 73 (TCC), O’Farrell J determined costs issues after the Stage 1 trial in claims under Brazilian law for losses suffered following the collapse of the Fundão Dam. The claimants sought a payment on account in the sum of £113.5 million, together with pre-judgment interest. However, taking into account their failure to establish any liability under Articles 116 and 117 of the Corporate Law and the paucity of information available to the court, a very cautious approach needed to be taken for the purpose of determining any payment on account. The claimant had to be satisfied with “just” £43m with the remaining costs not to be assessed until the conclusion of the proceedings.
Next third party costs orders (TPCOs) under s.51 Senior Courts Act 1981. In Nigeria v VR Global Partners LP [2026] EWCA Civ 25, the court upheld the order below staying an application by Nigeria for a TPCO until after the conclusion the detailed assessment (“DA”) of its costs, claimed at £44m plus interest. Nigeria contended that as the defendant did not carry on business and had no assets, both matters should proceed in tandem. Males LJ held that the trial judge had been extremely familiar with the case and had not regarded it as overwhelmingly likely that Nigeria would be entitled to the £24.2 million which it claimed, over and above £20 million which it had already received. He added that the court was dismayed to be told that the DA would require at least 50 days, potentially lasting almost twice as long as the trial. That was “the worst kind of satellite litigation” and a sampling approach should be adopted, so other court users would not be prejudiced.
In Limited Liability Company Air Company Air Manas v GTLK Middle East SPV Three Ltd [2026] EWHC 177 (Comm), Bright J decided the appropriate figure for security for costs under CPR 25 where the underlying arbitration had been reasonably straightforward and did not require the most expensive solicitors on the market to conduct it. Expressing surprise that two Grade A partners were to attend trial, along with three further lawyers, it was unclear what benefit would be derived from such numerous representation. Against a claim for £300,000, the judge allowed £125,000 based upon hourly expense rates only just above the guideline rates.
Also with security for costs in an action for damages for personal injuries, in Choksi v India [2026] EWHC 217 (KB) Mansfield J stated that three elements were relevant to the exercise of discretion (i) the merits of the claim (ii) the risk of non-enforcement of an order for costs against a Claimant resident out of the jurisdiction and (iii) the Claimant’s ability to provide security and continue the claim. On the facts, there was no evidence that the claimant had assets in the jurisdiction and he was on remand in Belgium pending proceedings to extradite him to India. Without any real evidence that an order for security would stifle the claim, the judge ordered security in the sums of £425,000 for the second and fourth Defendants and £252,000 for the fifth and sixth Defendants.
Next a case about the costs of an intervenor. In CR Construction (UK) Ltd v Barclays Bank Plc (Costs) [2026] EWHC 228 (TCC), the issue before HHJ Stephen Davies was whether a party intervening in proceedings for an injunction involving a tripartite contract should be entitled to costs and to a summary assessment. He held that in principle the intervenor should have its reasonable costs of its involvement in the proceedings but limited to reading into the case on receipt of the evidence, of responding via witness evidence and submissions, and of attending the hearing. Those costs he summarily assessed at £75,000.
In Cubic Transportation Systems Ltd v Transport for London [2026] EWHC 211 (TCC), in a procurement case, Roger Ter Haar KC considered the factors to take into account in deciding whether costs an interested party’s costs should be reserved to the trial judge, with no payment on account. He held that within the costs of £233,599 claimed, a significant sum was unrelated to the application to an application to lift an automatic stay. It followed that it was appropriate to reserve the issue of those costs to the trial judge.
Next costs budgeting and a lesson against “overlawyering”. In Various Claimants v Mercedes-Benz Group AG [2026] EWHC 267 (KB) the court considered whether there should be a departure from the usual order in costs management hearings that the costs should be in the case. Cockerill LJ held that the claimants’ conduct had taken them onto the wrong side of the line by resolutely pursuing an unrealistic or overly ambitious budget. It followed that the appropriate order was that the claimants’ costs of and incidental to the costs budgets, budget discussion reports and Precedents R, if awarded, would be allowed at 80% (the defendant’s to be 100%) with the costs of attending the CMH to be costs in the case.
Also with costs budgeting, Parsons v Convatec Ltd [2026] EWHC 300 (Pat) concerns complicated patent litigation in a specialist area, relating to seven patent families and 73 individual patents with the trial listed for 27 days. Having helpfully set out the applicable principles (as many as 13), Richards J made the interesting observation that with the benefit of only a partial snapshot of what had happened so far, he could not form any view on the reasonableness or proportionality of the costs incurred to date. As regards hourly rates claimed by Freshfields’ solicitors, he held that the mere fact that £1,100 per hour was claimed for Grade A , did not, of itself, mean that this was unreasonable or disproportionate if the partner was able to do a task in one hour that a more junior member of staff would take three hours to do. The judge went on to set the budget for both parties, making reductions where appropriate, as has become customary at costs management hearings.
For an interesting decision on discontinuance under CPR 38, see KXO & Anor v Devon County Council [2026] EWHC 203 (Admin). Paul Bowen KC had to decide whether permission of the court was needed to discontinue (on the facts, it was not) where the claimants had been minors acting through their litigation friend. He held that only if the discontinuance amounted to a settlement or compromise was court approval needed under CPR 21.10. Where notice was served otherwise than on agreed terms, it was not.
Finally, in R (on the application of ABB) v SS for the Home Department (SSHD), the Court of Appeal make a rare intervention when it overruled the decision of the court below to allow the applicant in judicial review proceedings just 75% of his costs. He had got what he wanted, was wholly successful and was entitled to recover his costs in full unless there was some good reason to the contrary or some special circumstance. As there were none, a 100% costs order was made with Nugee LJ observing that in legal aid cases, the ability to recover costs at inter partes rates where the claim had succeeded, had a practical importance in terms of the financial viability of running a legal aid practice, and hence in terms of access to justice. It was of real importance that where an order for full costs was merited, that such an order was duly made.
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
