Inter Partes Costs – 2018 A Year in Review

Posted 31.12.2018


The past twelve months have been a fascinating and important year in the development of costs law. Following numerous false starts the new electronic bill of costs finally became mandatory in April and as litigators, costs draftspeople and costs lawyers alike have got to grips with this significant change, the Senior Courts Costs Office released updated guidance for the first time since 2013. Consideration was given to budgeting, qualified one-way shifting and interim payments and the Courts and litigants alike once again grappled with the slippery concept of proportionality.


In this Inter Partes Costs – 2018 Year in Review Robert Kerr, Inter-Partes Team Leader and Costs Lawyer and Adam Fox, Costs Lawyer briefly examine and comment upon some of the more important cases and developments of 2018.

Download in PDF here: Inter Partes Costs – 2018 Year in Review

Robert Kerr, Costs Lawyer and IP Team Leader

 Adam Fox, Costs Lawyer


Robert and Adam are also presenting the below as in-house training seminars for fee earners. We have some availability left for limited dates in January and February at the discounted fee of £300 plus VAT. If you would like to book a session please email for remaining availability dates.



Filing of Budgets – Form and Content

Since the implementation of the costs budgeting process in April 2013 there have been numerous decisions as to the correct form and content of budgets and severe warnings as to the failure to comply with the rules, a further case has arisen this year in Page v RGC Restaurants Ltd [2018] EWHC 2688 which should serve as a significant warning in relation to the budgeting process and the preparation of costs budgets.

Prior to a CCMC in the matter the Claimant had prepared an “interim” costs budget, this left the figure for trial preparation and trial as £0.00 on the basis that a further CCMC was anticipated and further directions would be required in relation to experts at that stage.

The costs budget was largely agreed between the parties prior to the CCMC but at the hearing the Master expressed concern that the matter had not been timetabled and budgeted all the way to trial. It was held by the Master that the costs budget did not comply with the rules and the sanctions pursuant to CPR 3.14 (limitation to court fees only) was applied.

The Claimant appealed to the High Court and Mr Justice Walker delivered judgment on the matter. In brief, the Claimant’s appeal was partially successful. However, Mr Justice Walker did not grant relief from sanctions but rather found the Master at first instance had failed to consider whether the sanction under CPR 3.14 should apply to the whole budget. Instead, the sanction was applied to the parts of the budget that the Claimant had not completed (trial preparation and trial) and permitted the Claimant a budget in respect of the remaining phases.

The judgment did however make clear that the High Court did not consider that the Claimant had filed a “budget” commenting that a partially complete budget could not be construed as a budget within the meaning of the rules and further provided precedent that the Defendant’s agreement in relation to certain heads of costs under CPR 3.15 did not overrule the mandatory requirements under CPR 3.14.

The case is significant in that the failure to file a complete budget was described as “negligent but not grossly negligent” and is important guidance as to the completion of budgets. It is clear from the judgment that in all cases a full budget should be filed and the importance of assumptions to the budget defining the considered course of the litigation should not be taken lightly. The Claimant in this matter ought to have prepared a budget up to and including trial on the basis of clearly defined assumptions and, if necessary, applied to vary this budget at a later date.

In a further key decision on budgeting this year the case of Yirenki v MOD [2018] EWHC 3102 (QB) provides key and sensible guidance as to the budgeting process and the conduct of case management conferences and the correct costs budgeting procedure to be adopted.

The matter concerned a personal injury case between the Claimant and Defendant and at a Costs Case Management Conference in first instance the Master had made an order containing the following paragraph:

It was submitted by the Claimant that the Master’s approach was clearly contrary to the Practice Direction to CPR Part 3. The decision follows the rationale applied in other “budgeting” cases and Mr Justice Jacobs commented:

“it is clear…that the ultimate goal of the costs budgeting exercise is for there to be a figure which is given for the costs for each phase of the proceedings. The constituent elements are part of the road to reaching that goal, but they are not an end in themselves, and those constituent elements are not the subject of approval.”

Practice Direction 3 para 7.10 reads as follows:

Mr Justice Jacobs found that the rationale and approach of the Master was flawed in providing for the aforementioned paragraph and that the “decision to leave the rates open for argument with consequence that the parties have a lack of certainty”. This falls in line with the rational approach on conclusion that budgeted costs are to be spent as the party sees fit, the party is not constrained by their own assertions as to hourly rates to be claimed, time to be spent or disbursements to be incurred but can, save as for when there is adjudged to be good reason to depart from the budget, expect to be recompensed in full so long as the costs of a phase fall within the approved budget total.

Impact of Costs Management Orders – Interim payments

The Costs Budgeting process, for all of its flaws, does provide detail and a level of certainty as to the level of costs a party may expect to pay another in the event of failing in the litigation. It is for this reason that the decision in Cleveland Bridge UK Ltd v Sarens (UK) Ltd [2018] EWHC 827 (TCC) reflects practical use of the costs budgets and costs management order when dealing with payments on account of costs/interim payments.

The judgment in Cleveland Bridge related to the level of costs to be paid “on account” following the successful conclusion of the matter in the Claimant’s favour at trial. The matter was a budgeted case and the Claimant sought to rely on the decision of Coulson J in the 2017 case of MacInnes v Gross in which the Claimant was awarded 90% of their approved budget figure with 10% considered to be “the maximum deduction that is appropriate in a case where there is an approved costs budget”.

The Defendant contested the matter and the Court of Appeal examined the earlier judgment concluding that the 10% reduction was reasonable but that the Claimant should recover only 90% of the estimated/budgeted costs as it was only these costs and not the incurred costs which had been subject to prior court approval. In reaching this decision the Court had regard to the major decision of 2017, that of Harrison.

The court thereafter proceeded to determine a reasonable sum to be allowed in respect of the Claimant’s incurred costs ultimately concluding that it was not appropriate to consider the hourly rates claimed in detail at that hearing nor conduct a detailed assessment of the costs in an application of this nature. Ultimately the decision reached was to apply a 30% reduction to the incurred costs. In total allowing for an interim payment of £98,000 as against an “approved budget” of approximately £128,000.

The decision should be considered precedent for the amount to be sought in budgeted matters when making an application for payment on account of costs.

Whilst clearly not the main element of the decision an important point of note is that No Order as to Costs was made in respect of the application given that neither party was wholly successful in their assertions and this should be a careful consideration as to the approach taken and costs incurred in respect of any such application. 

Impact of Costs Management Order on Assessment

The impact of Costs Management Orders on the assessment of hourly rates was once again considered in the case of Nash v Ministry of Defence [2018] EWHC B4 (Costs). The latest in a series of judgments on the issue, the paying party had sought to argue that a reduction to the hourly rates claimed in respect of the incurred costs constituted a good reason to depart from the Costs Management Order. In rejecting this argument Master Nagalingam found that the paying party was effectively inviting him to go behind or to second guess how the constituent elements were balanced when the Court made the Costs Management Order. Further, in doing so the paying party was seeking to assign an elevated status to hourly rates over and above all of the other constituent elements/underlying details in the budget”. The concern expressed was that the adoption of such an approach would give rise to a risk of double jeopardy and that re-opening of the constituent elements on assessment would reduce certainty and defeat one of the key purposes of costs budgeting.

Whilst this is only a first instance decision it is one of a growing number of cases where the Courts have found that reductions to incurred hourly rates are not a good reason to depart from the budget. Whilst there have been decisions to the contrary, most notably by Master Campbell in RNB v London Borough of Newham [2017] EWHC B15 (Costs), it does appear that consensus is now being reached. Whilst it would be useful to have High Court authority on the point (RNB settled in advance of the listed appeal) the weight of case law would appear to indicate that Courts will give effect to the Costs Management Order on assessment and not seek to interfere with the reasonable and proportionate allowance made on assessment.  


Availability of Interim Payments

At a time where numerous law firms are facing the challenges of cash-flow and the timely recovery of costs in contentious matters where inter-partes costs orders are made the decision in Culliford v Thorpe [2018] EWHC 2532 (Ch) is a welcome one.

His Honour Judge Matthews found in a High Court judgment that there was no bar to the court making an order for an interim payment on account of costs after the date on which judgment was given.

Previously it had been regularly and consistently argued and thought that once an order for costs had been made, drawn up and sealed, that no further application could be made to the court for an order for a payment of a sum on account of those costs. His Honour Judge Matthews disagreed, stating:

The judgment also serves as warning to those parties refusing to consider or discuss the making of a payment on account of costs. In the judgment HHJ Matthews considered the Claimant’s submission that the Defendant had not sought a payment on account of costs at the time of making the costs order and had they done so, the interim payment application would likely have been unnecessary. However, HHJ Matthews commented:

The issue of payments on account were again considered in Finnegan v Spiers [2018] EWHC 3064 (Ch), this time in the context of a deemed Order arising out of acceptance of a Part 36 Offer. The Claimant had issued proceedings arising out of professional negligence which had concluded by way of the Claimant’s acceptance of the Defendant’s Part 36 Offer. Following settlement the Claimant issued an application for an interim payment on account of costs in the sum of £19,000.00. At first instance this was refused on the grounds that the District Judge considered that the Court had no power to make such an order on the grounds that Part 36 is a complete code. The Claimant appealed and the question put to the High Court was “whether the court has power to order a payment on account of costs in a situation in which a Part 36 offer has been accepted under rule 36.13 and so by rule 44.9(1) it is deemed that a costs order has been made on the standard basis”.

The Claimant’s case, inter alia, was that the Court did have the power to order payments on account and that CPR 44.2 was not displaced by virtue of the Order having been made in accordance with CPR 44.9. The Claimant’s position was that the reasoning in Barnsley v Noble [2012] EWHC 3822, whereby Proudman J found that the Court did have the power to order for payment on account following discontinuance, applied to all cases where deemed Orders had been made and should therefore be followed.

In response the Defendant’s position was that Part 36 is a complete code and that the consequences upon acceptance are clearly detailed at CPR 36.13. Provisions as to payments on account were simply not there and should not be imported from the general law. In respect of the approach in Barnsley this was distinguishable on the basis that CPR 38.6 provided the Court with a discretion that did not exist in the instant case.

Having considered arguments Birrs J concluded that the Court has no power to order payment on account of costs after a party had accepted a Part 36 Offer. The Judge considered that the place to find the court’s ability to make a payment on account order after acceptance of a Part 36 offer is in Part 36 itself. However, given the absence of any such provisions there is no reason to read rule 44.2(8) to make a payment on account applicable when a Part 36 offer is accepted. In terms of the decision in Barnsley this was distinguished and limited to discontinuances only.

The decision in this case is perhaps surprising bearing in mind the more general principles detailed in in Culliford. What it does again make clear is the primacy of Part 36 and that it represents a clear exception to the general rule. It may be that one consequence of the decision is that receiving parties will be incentivised to have settlements reflected in a Consent Order or even to avoid the operation of CPR 44.9, and engage the Court’s discretion, by accepting the Part 36 Offer out of time.

QOCS and Tomlin Orders

CPR44.14 provides that in proceedings which include a claim for personal injury, orders for costs made against a Claimant may be enforced without permission, to the limit of orders for damages made in the Claimant’s favour. The decision in Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654 provides guidance as to the definition and interpretation of the rules and is a warning to litigators who pursue multiple Defendants where sufficient prospects may not exist.

Prior to Cartwright it was unclear as to whether a successful Defendant could seek to enforce a claim for costs against a Claimant where damages had been paid by an unsuccessful Defendant. The matter at hand concerned a noise induced hearing loss claim in which, prior to a limitation trial, the Claimant settled against 3 Defendants and promptly discontinued against Venduct, giving rise to a deemed costs order in Venduct’s favour.

The Claimant argued that the definition of “proceedings” in the context of QOWCS meant a claim between a Claimant and a single Defendant. Coulson LJ however disagreed, giving the argument short thrift, and was critical as to this approach and found to the opposite commenting:

Further guidance was required as to the importance of the matter settling by Tomlin Order and by way of a “global” settlement including costs and damages.

No issue was taken by the Defendant with the established principle of confidentiality attached to the schedule to a Tomlin order but arguments were raised that the simple assessment to be undertaken was as to whether the Claimant had recovered damages and that “order” should be interpreted as “a sum payable by way of damages that is compellable by (court) order”.

Coulson LJ found that whilst this was argued, he was constrained by the word “order” within CPR 44.14 as a literal interpretation and that it was beyond the remit of the court as to whether the CPR should be amended.

Suggestions have been made from the judgment that a settlement by a Tomlin Order or by way of late acceptance of a Defendant’s Part 36 offer do not fall under CPR44.14 but settlement by way of a typical Consent Order is. As such it is suggested that Defendants could “collaborate” and refuse to settle matters by way of Tomlin Order or conventional Part 36, instead offering to submit to judgment for damages, although this may not always be a commercial or attractive way of compromising a claim.

Cartwright has already been applied however in the matter of MG v Street (1) and Governors of St Augustine Canterbury RC High School to deprive a successful Claimant of his damages.

Applicability of QOWCS or QOCS in “Mixed claims”

Over the last few years a number of decisions have both clarified and muddied the waters when it comes to the scope of the applicability of One Way Costs Shifting. For example, in Ketchion v McEwan (Newcastle CC) it was held that a counterclaiming Defendant had the benefit in both the claim and counterclaim whereas in Waring v McDonnell (Brighton CC) it was held it could apply to the counterclaim only.

One other area where there has been some useful guidance relates to what can be termed as “mixed claims”. CPR 44.13 provides the Qualified one way Costs Shifting applied to proceedings which include a claim for damages for personal injuries, damages under the Fatal Accidents Act 1976 or under Law Reform (Miscellaneous Provisions) Act 1934. However, CPR 44.16 (2) provides that where a claim has been made for the benefit of the Claimant (or other person) other than personal injury the Court may make an order for costs against the Claimant (or other person) to the extent that it considers just.

In The Commissioner of Police of the Metropolis v Brown [2018] EWHC 2046 (Admin) the Claimants brought an action against the Defendant police forces for breach of the Data Protection Act 1998, breach of the Human Rights Act 1998, tortious wrongdoing and Misfeasance in Public Office. The Claimants succeeded on the first three grounds but failed on the final ground. The Defendants sought to recover the costs of the same from the Claimants and at first instance the Court found that the claims included a claim for personal injury and accordingly the Claimants had the benefit of Qualified One Way Costs shifting.

The Defendants appealed and the matter came before Mrs Justice Whipple. The Court concluded that CPR 44.16(2) applies in any proceedings where a claim has been made for damages for personal injuries as well as for something else i.e. a “mixed claim”. Mixed claims are within the scope of Qualfied One Way Costs Shifting but CPR 44.16(2)(b) provides a mechanism to deal with mixed claims, which, simply put, is to leave it to the Court at the end of the case to decide whether, and if so to what extent, it is just to permit enforcement of a defendant’s costs order.

A useful example of how the Court is to carry out this exercise is to be found in Siddiqui v University of Oxford [2018] EWHC 536 (QB). Here the Claimant brought an unsuccessful action against the Defendant University arguing that inadequate teaching had led to his receiving lower marks than he should. This in turn hampered his subsequent legal career and allegedly caused financial loss and psychiatric harm. The Court determined that part of the claim was a free-standing claim for economic loss which was unrelated to the psychiatric injury and hence CPR 44.16(2)(b) was satisfied. In considering how to exercise the discretion afforded Foskett J concluded that a broad brush had to be applied taking account of various factors such as the time spent dealing with various elements of the claim. Upon consideration of the same the Claimant was order to pay 25% of the Defendant’s costs.

PART 36 and Fixed Costs

The decision in Britned Development Ltd v ABB AB & Anor [2018] EWHC 3142 (Ch) relates to the withdrawal of Part 36 offers and should be serious food for thought for any solicitor thinking of doing so.

The parties in the matter had gone to trial with the Claimant obtaining judgment failing to beat a Part 36 offer made by the Defendant. However, in the interim period between trial but before judgment was handed down the Defendants saw fit to withdraw the Part 36 offer.

It was held that withdrawal of the offer meant that the Defendants could not rely on the consequences of Part 36 and therefore were not entitled to their costs. However, the judge did take into consideration the fact that an offer had been made and as such made an Order of No Order as to Cost throughout the proceedings.

Undoubtedly the judgment does not set a precedent that where an offer is withdrawn that is not ultimately beaten that the effect will be no order as to costs between the parties and the judgment ought to be viewed as case specific as to this costs order being made. However, the judgment is clear affirmation from the court that parties are unable to rely on the costs consequences of a Part 36 offer which they have ultimately chosen to withdraw. Withdrawing an offer should clearly only be done with serious consideration as to the potential costs consequences on both sides.

A further decision on the implications of Part 36 was handed down this year in Hislop v Perde [2018] EWCA Civ 1726. In this matter it was argued that late acceptance of a Part 36 offer by a Defendant could entitle the Claimant to costs on the indemnity basis and thereby allow t hem to escape the fixed costs regime at least for the period following expiry of the offer.

Reference was made by the Court of Appeal to Sharp v Leeds City Council which expressed the primacy of the fixed costs regime in CPR 45 and Solomon v Cromwell Group Plc in which CPR 45 had been held to take precedence over Part 36. Consideration was thereafter given to the case of Broadhurst v Tan, which was not on all fours with the situation in Hislop as the Claimant had beaten a Part 36 offer at trial and had been awarded indemnity costs as a result.

The issue to be decided was whether the late acceptance of the offer gave rise to the same outcome as in Broadhurst. The court was unanimous in its decision that it could not. Consideration was given to the relevant provisions of Part 36 at the time relating to the acceptance of offers in cases to which CPR 45 applied, these were CPR36.10 and 36.10A (now 36.20), neither of which made provision for the Claimant to receive costs on the indemnity basis by virtue of late acceptance. It was considered that it may be possible for the Claimant to argue that the Defendant’s late acceptance was exceptional, pursuant to CPR45.29J but this was deemed not to apply in Hislop.

The decision appears to mean that it is potentially open to Defendants to ignore a Part 36 offer until the eve of trial with little risk of having to pay anything other than fixed costs that would have to be paid if it had been accepted within the relevant period.

The decision in Bentley Design Consultants Ltd v Sansom [2018] EWHC 2238 (TCC) considered a novel point as to the construction of a Part 36 offer. In brief, a Part 36 offer made by a Claimant could not be construed to cover matters that the Claimant added to the action later when the particulars of claim were amended.

The Claimant had made a Part 36 offer in April 2015 which was accepted by the Defendant in November 2016, it was asserted by the Defendant that the acceptance covered both plot 1 and plot 2, which had been added by the Claimant to the claim after the making of the offer.

HHJ Cotter QC held initially:

This decision was appealed by the Defendant but the appeal failed. The decision of Mrs Justice Jefford DBE commenting:

The decision is a rational and clear one and can be considered as judicial guidance as to the necessity to consider the context of an offer and when it was made, both when accepting the offer and seeking to rely on the consequences of that offer. It is clear discouragement against sharp practice attempts to try and conclude a claim based on an offer where that claim has substantially changed.


A further year has passed without any definitive guidance from the courts as to proportionality with different approaches being applied across the courts as to whether the test should apply at the commencement of the assessment or the conclusion when costs had been fully considered.

Nicholas Bacon QC has in a recent interview branded it “unacceptable” that there is still no guidance, judicial or otherwise, on the proportionality test more than five years after it has come into force. It is certainly the case that proportionality remains a fluid concept with no definitive nor consistent application to assessments of bills of costs or budgets and that the influencing factor is not the circumstances of the case but the interpretation and opinion of the judge or Master before whom the bill or budget falls to be assessed.

Whilst not strictly a costs judgment there are important observations within the WG v HG [2018] EWFC B66 judgment of Mr Justice Francis as to the approach to be taken to litigation.

The matter concerned divorce proceedings between WG and HG. The Applicant wife had made an application for financial provision against her former husband and had incurred legal costs of over £900,000. Between them the parties had spent circa £1.4 million on legal fees.

A submission was made by the Applicant’s Counsel, Jonathan Southgate QC that the wife ought to be entitled to full indemnity in respect of all of her costs, the rationale being that her costs were a debt that needed to be paid and that in a needs case, her needs were required to be met. This was in contrast to the usual outcome in a sharing case that each party would pay his and her own respective costs.

Mr Justice Francis made the following comments that ought to be kept firmly in mind when entering into any litigation:

It is of note that the husband had offered to pay the wife’s costs on the standard basis to be subject to assessment at an earlier stage in the year and Francis J noted that his position was far closer to the likely outcome at trial than his ex-wife’s. It followed that Francis J awarded the Applicant Wife £400,000 in respect of costs, effectively leaving her with some £500,000 to find to meet her legal team’s costs.

Mr Justice Francis’ final comment in the matter, “Parties cannot spend £1million on their representation without being prepared to face the consequences of their decision to incur that level of expenditure.” is an important guide as to how parties should approach the funding of litigation, and should also be considered important as to the advice solicitors should, in a privately paying matter, be expected to provide their client.


Reminder of the importance of competent costs professionals

One of the more important decisions to come out this year is that of Gempride Ltd. V Bamrah & Anor [2018] EWCA Civ 1367 which held that solicitors who instruct costs draftsman and others remain ultimately responsible for the acts and omissions of those to whom they delegate parts of the conduct of litigation, particularly when those to whom such work is delegated are not authorised”. In this case, miscertification was found to constitute misconduct under CPR44.11 and the appropriate order was to disallow half of the profit costs claimed within the bill.

The Claimant in the matter was a solicitor and sole practitioner. After being injured in an accident she instructed her own firm to represent her in a personal injury action and work was done under a CFA. The matter settled for £50,000 and the Defendant was to pay costs.

On assessment the Defendant queried the hourly rate applied to the matter and whether before the event insurance was available to the Claimant, the assessment came, initially, before Master Leonard, sitting as a District Judge. The Master considered that there had been issues relating to a failure to disclose the availability of before the event insurance and the hourly rate and an application was issued by the Defendant seeking permission to resile from the concession regarding the unavailability of alternative funding and alleging that the Claimant’s conduct was unreasonable or improper and seeking relief.

The application proceeded to a hearing and the same was allowed with the Master noting comments from the Claimant’s costs draftsman as to the alteration and retrospective application of the hourly rate of £280 and that the Claimant had certified a misleading bill of costs. Criticism was further levelled as to the Claimant’s recording that BTE was available but assertions made to the Defendant that it was not. No express finding of dishonesty was made but a sanction was imposed that in respect of Part 1 of the Bill, the profit costs were to be disallowed insofar as they exceeded the fixed hourly rate recoverable by a litigant in person.

The matter proceeded to an Appeal before a Circuit Judge and assessor which lasted 13 days. The Claimant proceeded to blame her costs draftsmen and a re-hearing was held with the Defendant ordered to pay the Claimant’s costs on an indemnity basis and to pay the Claimant’s personal costs of attending the Appeal to the Circuit Judge.

This decision was subsequently appealed to the Court of Appeal which overturned the Circuit Judge’s decision and re implemented the decision of Master Leonard albeit varying it to reduce the sanction to a reduction of 50% of the Claimant’s profit costs as opposed to limitation to a litigant in person rate which was deemed to be a disproportionate response.

The extremely lengthy judgments levelled criticism against the Claimant and her draftsmen for their conduct in the matter but provided clear guidance that the Claimant as a solicitor was to retain responsibility for acts and omissions of those to whom she chose to delegate the conduct of litigation.

This case is a reminder, if ever one was needed, that work ought to be delegated only to regulated professionals.

Here at Bidwell Henderson we are always happy to help with any costs queries or costs litigation which you may have. We offer flexible and competitive terms and have an extensive team of draftspeople and Costs Lawyers across the country specialising in all aspects of Legal Aid and Inter-Partes work.

In 2019 we will be offering training and seminars to clients on a number of the above topics as well as other developments so please look out for notices regarding availability and

Please don’t hesitate to get in touch via one of the following methods:

T: 03333 441 654



Our Inter Partes team: Mark Bidwell, Head of IP, Robert Kerr, IP Team Leader, Adam Fox, Costs Lawyer, Melissa Aspin, Costs Lawyer, Owen Jones, Senior Advocate

For further information or to book an in-house seminar email or call 03333 441 654 and ask for Rebecca Bidwell, Director

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