Kerry Underwood


with 8 comments

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

Permanent Stay of Costs


Raja v Van Hoogstraten & Ors [2018] EWHC 3261 (Ch) (29 November 2018)

the Chancery Division of the High Court refused an application permanently to stay costs orders pursuant to its power under CPR 40.8A, stating that the effect would be the same as setting aside the orders under CPR 3.1(7).

The court doubted that any court would set the orders aside under that provision on these facts and therefore declined to exercise its discretion permanently to stay the orders.

Here the judge had previously ordered interim stays of the costs orders of its own initiative, because the defendant was trying to enforce orders in its favour while at the same time flouting costs orders against it.

The defendant had failed to comply with orders requiring it to send to Her Majesty’s Revenue and Customs a transcript of a previous hearing together with an explanation of tax treatment of certain trust incomes.

It also applied to set aside adverse costs orders, and after the interim stays of the costs orders in these proceedings, the defendant made an application relating to the adverse costs orders and that application was dismissed as totally without merit and the claimant was awarded indemnity costs.

The claimant submitted that the defendant’s conduct, and non-compliance with the adverse costs orders, amounted to matters occurring since the date of the costs orders, making it just to stay them permanently.

Here the court said that the orders were not conditional on the defendant complying with the adverse orders which had been made in the public interest and not for the benefit of the claimant.

The defendant’s non-compliance did not affect the claimant and therefore the defendant’s conduct since the costs orders should not affect the claimant’s liability to pay costs.

A person in contempt could be denied access to a court where that contempt would prevent justice from being done to the other party, but there was no suggestion of that here and therefore the application should be refused.

CPR 40.8 reads:

“40.8A – Without prejudice to rule 83.7(1), a party against whom a judgment has been given or an order made may apply to the court for—

(a) a stay of execution of the judgment or order; or

(b) other relief,

on the ground of matters which have occurred since the date of the judgment or order, and the court may by order grant such relief, and on such terms, as it thinks just.”

This appears to be the first authority in relation to the court’s discretion under CPR 40.8A.

Quantifying Security for Costs


Tugushev v Orlov & Ors [2018] EWHC 3471 (Comm) (14 December 2018)

the Commercial Court made an order for security of costs for £1.5 million, as compared with the sum of £2.7 million sought by the defendant.

The application was on the basis that the defendant’s costs were £3.389 million and the security sought represented 80% of certain incurred and estimated future costs of applications relating to the continuation of a worldwide freezing order.

Here the court held that on an application for security of costs the court should consider the applicant’s estimates of incurred and future costs in the same way as they would deal with a summary assessment of costs, or a costs budgeting exercise.

An applicant for security for costs must provide a sufficiently detailed breakdown to satisfy the court that the security ordered will avoid unnecessary prejudice to the other party, and any uncertainty arising from an inadequate breakdown should be resolved in favour of the party having to give the security.

Here the court set out ten principles to take into account when quantifying security for cost.

These were set out in paragraph 23 of the judgment as follows:

“23. The principles discussed in these authorities provide some assistance. However, at best, they provide guidance in what I believe both parties accepted was a “broad-brush” approach to assessing the quantum of security for costs. Nevertheless, I would venture the following principles which I shall take into account in undertaking this general quantification exercise:

(1) The purpose of an order for security for costs is to provide protection to a defendant who is being sued by a claimant who may well not be in a position to satisfy a costs order made against the claimant at the conclusion of the action or of a particular stage of an action.

(2) That protection must be suited for the purpose and therefore cannot exceed any sum which goes beyond what may reasonably be expected to be recovered by the defendant in the event that the claimant is ordered to pay the defendant’s costs.

(3) In determining what may reasonably be expected to be recovered by way of a costs order, the Court should take into account the nature of the litigation, or the stage of the litigation, to which the proposed security relates, what that litigation entails in terms of the provision of legal services by both counsel and solicitors, the production of factual and expert evidence, and other associated costs and disbursements.

(4) The costs associated with such litigation, or the relevant stage of the litigation, and for which security is sought should be costs which, as an estimate, can be considered by the Court to be both reasonably and proportionately incurred and reasonable and proportionate in amount. Costs which are unreasonably incurred or are unreasonable in amount should not be included in a security for costs order.

(5) By CPR rule 44.3(5), costs incurred are proportionate if they bear a reasonable relationship to (a) the sums in issue in the proceedings, (b) the value of any non-monetary relief in issue in the proceedings, (c) the complexity of the litigation, (d) any additional work generated by the conduct of the paying party, and (e) any wider factors involved in the proceedings, such as reputation or public importance.

(6) In determining a security for costs application, the Court should exclude from any security amount costs which the Court is not satisfied can be justified on any view as reasonable and proportionate. That is, the exercise of assessing the quantum of a security for costs order should not be influenced by any costs which a party chooses to incur over and above what is reasonable and proportionate in the circumstances.

(7) The quantification of security is an objective assessment to be carried out by the Court as best it can based on the available evidence and information.

(8) Although I accept that the quantification of an order for security for costs is necessarily a “broad-brush” exercise of assessment, bearing in mind the possible prejudice to the respondent of too much security being ordered, the Court must interrogate the estimates of incurred and future costs provided by the applicant. This exercise will of course not nearly approximate a detailed assessment of costs, but it will be similar to a summary assessment or a costs budgeting exercise. To this end, it is incumbent on the applicant to provide a sufficiently detailed breakdown of costs in support of its application to satisfy the Court that the amount of security which will be ordered will provide the necessary protection to the applicant and avoid any unnecessary prejudice to the respondent. In the event that a sufficiently detailed breakdown is before the Court, in order to ensure that the security ordered provides the necessary protection to the applicant, the Court should resolve any doubt in favour of the applicant. However, if there is no sufficiently detailed breakdown of costs before the Court, any uncertainty arising from the inadequate breakdown should be resolved in favour of the respondent.

(9) An allowance should be made for any reduction of costs which would be made in an eventual assessment of costs. In the ordinary course, costs will be assessed on the standard basis. However, it is relevant to consider whether or not there is a real possibility, whether probable or not, that an order for indemnity costs might be made against the claimant. That does not mean that the Court must decide whether the assessment of costs on an indemnity basis is likely to be appropriate. It is the realistic possibility of such an assessment being ordered which justifies the Court taking this into account in determining the quantum of any security to be provided.

(10) The applicant for security for costs will bear the burden of satisfying the Court that the amount of the security for costs to be ordered is in accord with these considerations.”


Airways Pension Scheme Trustee Ltd v Fielder & Anor [2019] EWHC 29 (Ch) (15 January 2019)

the Chancery Division of the High Court limited the appellant’s costs of an appeal to the Supreme Court in advance of the appeal, restricting its costs to the same as those of the respondent.

This is a useful reminder of the little used powers of the court to cap costs in advance.

Do not get too excited – this is hardly a breakthrough in trying to make litigation costs reasonable, as the courts still allowed over £1 million for each side in relation to a single point of law with a time estimate of 1.5 days.

I would have thought £50,000 about the right figure.

Another Non-Party Costs Order Against an Insurer


Various Claimants v Giambrone & Law (a firm) and others (defendants) and AIG (Europe) Limited – Section 51 respondent [2019] EWHC 34 (QB)

the Queen’s Bench Division of the High Court made a non-party costs order against the insurers for the defendants.

The claimants succeeded in a professional negligence action against the defendants over legal advice given in relation to the purchase of properties in Italy.

They made an application under section 51 of the Senior Courts Act 1981 for a non-party costs order against the insurers AIG (Europe) Limited.

The judge held that AIG’s funding of the defence increased the claimants’ costs and ordered AIG to pay half of their total costs.

Although success in a section 51 application requires there to be exceptional circumstances, the threshold is lower than it may seem, as in

Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807

the Judicial Committee of the Privy Council said:

“Although costs orders against non-parties are to be regarded as “exceptional”, exceptional in this context means no more than outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense. The ultimate question in any such “exceptional” case is whether in all the circumstances it is just to make the order. It must be recognised that this is inevitably to some extent a fact-specific jurisdiction and that there will often be a number of different considerations in play, some militating in favour of an order, some against.”

(Quoted at Paragraph 11 of this judgment.)

Here the court said:

“78. In my view, where an indemnity insurer substantially relinquishes control of the conduct of the litigation to the insured (or fails to take steps to control it when there are grounds for intervening), and does so in the expectation that it will be immune from a costs liability towards the opposing party if the opposing party is successful, that expectation is open to be falsified by the court in a section 51 application, particularly if the prospects of success for the insured are assessed as poor.”


Given that actively controlling the litigation is a key factor in making a non-party potentially liable for costs, we are now close to the position that, in reality, the starting point is that an insurer will be liable for costs, either because it does control, or fails to control, the litigation.

Although this lengthy decision usefully examines in detail the relevant case law, it does not establish any new legal principle.

Consent Order Trumps Fixed Costs


Adelekun v Lai Ho Case No: A06YQ205 Central London County Court (18 October 2018)

a Circuit Judge held that in a fixed costs case under CPR 45, Section III A, where the parties had entered into a consent order providing for the claimant’s reasonable costs to be paid on the standard basis, the claimant succeeded in escaping the fixed costs regime.

The judge held that the consent order, following acceptance of a Part 36 offer of £30,000, was incompatible with fixed costs and overruled them and that the Deputy District Judge had been wrong to vary what the parties had agreed.

The relevant wording in the order was:

“The defendant do pay the reasonable costs of the claimant on the standard basis to be subject of detailed assessment if not agreed.”

This wording, in the view of the Circuit Judge on appeal, allowed him to distinguish previous cases such as

Bratek v Clark-Drain Limited, Cambridge County Court, 30 April 2018

where it was held that a consent order settling a fast-track employers’ /public liability claim, and which provided for payment of costs on the standard basis, could not overrule the mandatory provisions of CPR 45.29D.

The facts here were slightly unusual in that the claimant had applied to re-allocate the claim to the multi – track the day before the Part 36 offer was made and the defendant agreed to the terms of the consent order after making the Part 36 offer.

The Circuit Judge held that the costs consequences were consistent with that, and would have been in the parties’ minds when signing the order.

The court suggested that it might have been sensible to include the issue of re-allocation to the multi-track as a term of the consent order.

In fact re-allocation never took place.

The hearing of the application to re-allocate would have taken place within the 21 day period for accepting the Part 36 offer, had the parties not settled.


Solomon v Cromwell Group Plc [2011] EWCA Civ 1584 (19 December 2011)

the Court of Appeal held that, as a matter of construction, general rules gave way to specific rules in the Civil Procedure Rules, and therefore the general Part 36 rules gave way to the specific rules in CPR 45, Section II.

True it is that in that case the relevant wording was “reasonable costs” without mention of the standard basis.

It is also correct that in Solomon the Court of Appeal recognised the possibility of the parties agreeing costs outside the fixed costs regime, even in a fixed costs case.

Here, the Deputy District Judge held that that principle applied in this case and that the order to the contrary was ultra vires and should not have been approved by the court.


Qader v Esure Services Ltd [2016] EWCA Civ 1109

the Court of Appeal held that fixed costs in an ex-portal case, as here, applied unless and until a matter has been allocated to the multi-track, whatever the settlement value.

That principle was subsequently enshrined by Parliament in an amendment to the Civil Procedure Rules.

A potential, but not actual, allocation to the multi-track is clearly capable of being an exceptional circumstance allowing an escape from fixed costs under CPR 45.29 (J)(1), a point accepted in this case, but that was not the issue here.

Indeed the Deputy District Judge, while holding that fixed costs applied here, specifically left it open for the claimant to argue that there were exceptional circumstances in the case, and these exceptional circumstances provisions are within the fixed costs rules themselves.


Sharp v Leeds City Council [2017] EWCA Civ 33 (01 February 2017)

the Court of Appeal held that the costs of an application for pre-action disclosure were governed by the fixed costs regime, although there, there was no agreement apparently to the contrary.


Hislop v Perde [2018] EWCA Civ 1726 (23 July 2018)

the Court of Appeal held that late acceptance of a Part 36 offer by a defendant did not allow a claimant to escape fixed costs.

Again, unlike here, there was no issue of contracting out of the fixed costs regime, and in any event many commentators believe that the decision in Hislop is wrong as a matter of law – see my blog


The Circuit Judge here held that the parties had consensually varied the usual rule, as envisaged in Solomon as being possible, and that the consent order was not vitiated by fraud, mistake, misrepresentation or incapacity,  and indeed it was not suggested otherwise.

He also held that the Deputy District Judge had no power to vary that consent order.

Matters were further complicated by the case of

Conlon v Royal Sun Alliance Insurance Plc [2015] EWCA Civ 92 (26 February 2015)

where the Court of Appeal held that the court had power, even after the end of a case, retrospectively to re-allocate it and thus retrospectively to alter the basis of assessment of costs.

Here the Deputy District Judge declined to re-allocate to the multi-track, which, in the absence of the issue of consensual variation would have left the case firmly caught by the Qader decision.


I have found this an extremely difficult matter to form a view on and have enormous sympathy with the judges having, yet again, to grapple with the mind-numbing contradictions of the Civil Procedure Rules.

It may be that the case, ultimately, is of limited importance moving forwards, as clearly the defendant’s solicitors were ill advised to leave the matter in any doubt by using the wording in the consent order.

The claimant’s solicitors may have been better advised to have delayed accepting the Part 36 offer until after re-allocation, although that would hardly have been consistent with the overriding objective of saving court time and costs.

It also seems pretty obvious as a matter of contract law that the parties were not, to use the old phrase, ad idem which means a meeting of the minds.

If two parties to a contract understand the terms and conditions of a contract in the same manner, then it is said that the parties are “ad idem”.

Such “meeting of minds” is essential to a valid contract.

How can that possibly have been the case here?

The point was seemingly not argued, – certainly it is not referred to in a very impressive and comprehensive judgment-  possibly because everyone involved seemed to be looking at the issue from a costs and personal injury point of view, rather than basic contract law.

Also, it is not clear why an agreement to pay standard costs in a fixed costs case means anything other than fixed costs.

After all they are the “standard” that is usual, or normal, costs for that type of work.

The true differentiation is between standard costs and indemnity costs, not between standard costs and fixed costs.


There are no score draws at court, or in my blogs.

On balance, but we are talking 51-49, my view is that the Deputy District Judge was right, that the Circuit Judge was wrong, and that the Court of Appeal should reinstate the Deputy District Judge’s decision, that is that fixed costs apply.

My unanimous decision, a 100-0, is that the Civil Procedure Rules Committee is not fit for purpose.

£550 An Hour Allowed In Budget


Arcadia Group Ltd & Ors v Telegraph Media Group Ltd (Rev 1) [2019] EWHC 96 (QB) (23 January 2019)

the Queen’s Bench Division, in a costs budgeting exercise, allowed a rate of £550 per hour on a between the parties basis for a partner in injunction proceedings concerning restraining the Telegraph Media Group from publishing information about the claimants.

The rate was reduced from £690.

A trainee rate of £190 per hour was allowed.

The decision was by a full High Court Judge.

Leaving aside the actual rates, it is of concern that the Judge referred to the Guideline Hourly Rates, which were never meant to apply to this type of case, and which have not been uprated since 2010.

Counter-Offer Is Not a Rejection of Original Offer In The Portal Process


Cox v Pace, Birmingham County Court, 23 October 2018, Claim D82YM554

a Deputy District Judge held that a counter-offer within the portal process did not amount to a rejection of the original offer, thus treating the portal rules as a self-contained code in the same way as Part 36.

As a matter of common contract law, a counter-offer acts as a rejection of the original offer, but that is not the case within the Part 36 regime, nor in the portal process.

I am grateful to Kevin McGough of MJP Solicitors for information about this case.

On Assessment Court Not To Re-visit Conduct of Case


Andrews and Smith v Retro Computers Limited and others [2019] EWHC B2 (Costs)

Deputy Master Friston held that generally courts dealing with detailed assessment proceedings should not revisit matters relating to the conduct of the case itself, as compared with the conduct of the assessment proceedings.

Although establishing no new principle of law, the judgment contains a very detailed and helpful analysis of all of the relevant authorities.

Third Party Funders, The Arkin Cap And ATE Insurance


Bailey & Others v GlaxoSmithKline UK Limited [2017] EWHC 3195 (QB)

the Queen’s Bench Division of the High Court ordered the claimants’ litigation funder Managed Legal Solutions Limited (MLS) to pay security for costs pursuant to CPR 25.14, and in excess of the Arkin cap.

MLS had been joined as an Additional Party for the purposes of responding to this application.

The application covered costs from the date that MLS started funding the case and was made on the basis that the defendant intend to seek orders against it at the end of the case, if successful, pursuant to section 51 of the Senior Courts Act 1981, which deals with non-party costs orders.

In fact the key issue here was the amount of security, and the relevant factors to be taken into account in fixing that amount.

The claimants had ATE insurance of £750,000 and argued that all of that sum should be taken into account in relation to the security issue, relying on

Premier Motorauctions Limited v. PWC LLP & another [2017] EWCA Civ 1872.

The claimants also argued that any sum ordered should be limited by the approach referred to in

Arkin v Borchard Lines Limited (Nos 2 and 3) [2005] 1 WLR 3055

generally known as the Arkin cap, that is that the third party funder’s liability for adverse costs should be limited to the same sum as its own investment in the case.

CPR 25.14 specifically provides for security for costs orders to be made against third party funders.

“(1) The defendant may seek an order against someone other than the claimant, and the court may make an order for security for costs against that person if –

(a)  it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and

(b)  one or more of the conditions in paragraph (2) applies.

(2)  The conditions are that the person –

(a) has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against him; or

(b) has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property which the claimant may recover in the proceedings; and

is a person against whom a costs order may be made.”

Managed Legal Solutions was balance sheet insolvent.

On the facts the court here held that two thirds of the value of the ATE insurance cover should be utilized to reduce the level of security for costs.

As the ATE cover was £750,000, the level of security that would otherwise have been made was reduced by £500,000.

The court also held that the Arkin cap did not apply.

This was on the basis that at the end of the case the court had a discretion to disapply that cap

“unless I take into account now the possibility that the cap will not be applied, there is a risk that the security ordered will be insufficient and the ultimate intention of the court of trial (and, perhaps, the Court of Appeal on appeal) so far as the costs are concerned will be frustrated.” (Paragraph 60)

Reading the decision as a whole, it comes close to saying that it thinks that Arkin was wrongly decided.

There is another interesting feature of the case.

Managed Legal Solutions was 49% owned by Mr Michael Hunt.

Mr Hunt was the sole shareholder of a company called Corporate Administration Management Limited, a creditor of Managed Legal Solutions to the tune of £3,465,299 – see paragraph 29 of the judgment.

The court had this to say at paragraph 9:

“Although it is some while ago, and the circumstances were different from those obtaining in the present situation, Mr Hunt, who had been managing director of Nissan UK, was sentenced to 8 years’ imprisonment and disqualified from being a company director in June 1993 following his conviction for serious dishonesty involving many millions of pounds. The press reports exhibited to Ms Caswell’s 5th witness statement indicate that at the time of his sentence, Mr Hunt was aged 59. He must now be in his mid-80s. The substantive assertions concerning his conviction and sentence have not been controverted.”

At present there is no statutory regulation of third party funders.

Maybe there should be.

Contingency Fees, Experts And Tribunals


Merlin Entertainments Group Limited v Cox (Valuation Officer) [2018] UKUT 406 (LC) 11 December 2018

the Upper Tribunal (Lands Chamber)(UT), in a valuation appeal, held that a party’s attempt to present expert evidence as factual evidence was an abuse of process as the objective was to hide the fact that the expert was acting under a Contingency Fee Agreement, which would normally result in the Upper Tribunal refusing to receive that evidence.


Gardiner and Theobald LLP v Jackson (Valuation Officer) [2018] UKUT 253 (LC)  

the Upper Tribunal stated that it was wholly unacceptable for an expert witness in tribunal proceedings to enter into a Contingency Fee Agreement without disclosing it to the tribunal and other parties, and here the Upper Tribunal stated that that applies when experts disclose information and give evidence on factual issues, as well as when they give an expert opinion.

The Upper Tribunal held that there was no distinction between an expert using her or his expertise to assemble information and data to assist a court or tribunal in deciding an issue, and an expert giving evidence for the same purpose.

It could not be right for an expert to present even purely factual evidence without disclosing to the court or tribunal, and to the other parties, that she or he was remunerated under a Contingency Fee Agreement.  

Written by kerryunderwood

January 29, 2019 at 12:02 pm

Posted in Uncategorized

8 Responses

Subscribe to comments with RSS.

  1. In Andrews DM Friston appears to have omitted CPR 29.4.1.


    February 4, 2019 at 2:28 pm

    • Mole

      No such rule in my version of the Civil Procedure Rules.



      February 5, 2019 at 1:41 pm

      • 2017 Page 895–896.


        February 5, 2019 at 3:26 pm

  2. Of what? Unless I am missing something – always possible -there is no CPR 29.4.1 – it stops at CPR 29.4, which is not relevant anyway.

    Perhaps you could explain what point of law it is that you think that we are missing.




    February 5, 2019 at 3:40 pm

    • Civil Procedure Rules 1998

      CPR Pt 29.4 Steps taken by the parties.
      29.4.1 Effect of rule.
      This rule provides a practical demonstration of one of the biggest cultural changes made by the new rules. Parties are expected to co-operate with each other in the conduct of the proceedings. Co-operation of this sort is something the court must encourage in order to further the overriding objective (see r1.4(2)(a)). The parties are expected to help the court to further the overriding objective (r1.3). Parties who take reasonable steps to co-operate will be rewarded in costs if they later obtain an order for costs (see 44.2(4)(a)). Parties who persist in the old combative style of litigation can expect to be penalised in costs whether or not their case succeeds at trial.


      February 5, 2019 at 5:43 pm

      • Think you are getting confused between CPR and someone’s commentary on it, and a commentary that I do not necessarily agree with given recent case law, although every case will be fact sensitive.



        February 5, 2019 at 8:44 pm

  3. The extract is verbatim from the CPR white book 2017 page 895–896. I agree ‘Andrews’ is fact sensitive.


    February 6, 2019 at 11:29 am

    • The White Book is very often wrong. I don’t have it or use it. Always best to go to the source – the rules and cases interpreting and applying those rules.



      February 6, 2019 at 12:00 pm

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: