Monthly Legal Costs Update – October 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 October 2026 update has been written by Nick McDonnell and Colin Campbell.
The most high-profile case of the month, and possibly of the year after Mazur, is Nicklin J’s decision on the costs payable by Prince Harry and his six co-claimants following their unsuccessful privacy action against Associated Newspapers Ltd (“ANL”) after a 41-day trial: Baroness Lawrence of Clarendon v Associated Newspapers Ltd [2026] Costs LR 1323.
It was common ground that the claimants would pay ANL’s costs and a payment on account of £9.5m was ordered. The real issue was whether those costs should be assessed on the standard or indemnity basis and, if indemnity, whether that should apply throughout. Alternatively, the claimants argued that ANL’s recoverable costs should be capped.
In a lengthy costs judgment, Nicklin J went the whole hog. ANL was awarded its costs on the indemnity basis throughout. Importantly, that means ANL is no longer constrained by its last approved costs budget of £13.46m and can seek to recover the £34.5m it says it actually spent defending the proceedings without having to establish a “good reason” under CPR 3.18 for departing from that budget. That creates a potentially eye-watering problem for the claimants. Their ATE insurance provides cover of £16.2m, leaving a potential shortfall of around £18.3m between the cover and ANL’s claimed costs, subject of course to what is ultimately allowed on detailed assessment. There is also an interesting costs management point lurking beneath the headline figures. ANL did not seek to revise its budget upwards under CPR 3.15A. Had it done so, the claimants would have known that their potential exposure had increased substantially and could potentially have increased their ATE cover accordingly.
Should an indemnity costs order effectively provide a route around the consequences of failing to revise a budget? That may provide plenty more for the Costs Judge to consider. This case is certainly not over yet.
Arguably the second most high-profile case of the year (or rather it should be because it’s yet it’s yet another Kain Knight success in the Court of Appeal !) is Turner v Coupland Cavendish Ltd [2026] EWCA Civ 1204.
Kain Knight acted for the successful Appellant in this important second appeal concerning solicitor-client assessments under s.70 of the Solicitors Act 1974, the function of the cash account and the use of CPR Part 18 Requests for Further Information. The dispute concerned whether a former client could use Part 18 within a solicitor-client assessment to require solicitors to provide information about possible commission received in connection with a £245 ATE premium. The Senior Costs Judge refused to order the Request to be answered, but that decision was reversed by Sweeting J on appeal.
The Court of Appeal has now allowed the solicitors’ second appeal.
Andrews LJ held that the court had no power within the s.70 assessment to make the order sought. The cash account is separate from the bill and its function is essentially to enable the Costs Judge, following assessment, to calculate what remains due to or by the solicitor. It does not permit a wider investigation into every transaction appearing – or allegedly missing – from it. Importantly, Part 18 can only be used in relation to a genuine “matter in dispute in the proceedings”. A client cannot simply assert that the cash account is disputed and use that as a vehicle for enquiries into possible secret commissions or other potential claims.
As Andrews LJ put it, raising the hypothetical possibility of a failure to account for a secret commission is “not good enough”. The Court also held that Edwards/Raubenheimer, previously relied upon to support such enquiries, was wrongly decided and per incuriam.
The result is an important decision defining the boundaries of Solicitors Act assessments and, in particular, where legitimate requests for information end and Part 18 fishing expeditions begin.
Next, a lesson in making unfounded allegations against your opponent and expecting to recover 100% of your costs. In Quidpay Finance Ltd v Settlego Solutions Ltd T/A OpenPayd [2026] EWHC 2199 (Ch), QuidPay succeeded in obtaining the release of monies held in a reserve account, but its original case had included unsustainable allegations about beneficial ownership, together with threats to report OpenPayd to the FCA and publicise its conduct. Lance Ashworth KC regarded those steps as entirely illegitimate and reduced QuidPay’s recoverable costs by 35%. Separately, OpenPayd’s £15,503 costs of a Preliminary Issue Application were considered excessive, particularly with hourly rates 255% above the Guideline Hourly Rates, and £7,000 was ordered on account.
Next, an unusual case involving the costs of Alternative Dispute Resolution. In Bidco Ltd v Roberts [2026] EWHC 2312 (Comm), a court-ordered Early Neutral Evaluation failed after the Defendants advanced an argument which had not been pleaded and could not properly be pursued without amending their Defence. The Claimants sought their ENE costs on the indemnity basis. HHJ Pearce declined to make that order, holding that the starting point should be that ENE costs are costs in the case unless compelling factors justify another approach. Penalising inadequate preparation too readily could discourage parties from participating in ADR. As the Claimants’ own late amendment may also have contributed, the ENE costs remained costs in the case.
Finally, R (Barclays Bank UK Plc) v Financial Ombudsman Service Ltd [2026] EWHC 2298 (Admin) concerned successful judicial review proceedings brought by four banks challenging the FOS’s interpretation of its jurisdiction over complaints about allegedly unaffordable credit. Having quashed the relevant decisions for error of law, Dexter Dias J turned to costs. FOS argued against the usual costs order on the basis that imposing costs on a public dispute-resolution body might have a “chilling effect” on its decision-making. The judge was unpersuaded. He considered that an adverse costs order would instead promote good administration and discourage bad or obviously flawed points. The successful banks therefore recovered their costs, together with payments on account.
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
