Kerry Underwood

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Industrial Maintenance Engineers (IME Contracts) Ltd v Webster Miller Ltd [2026] EWHC 393 (Comm)

the King’s Bench Division of the High Court held that a defendant was bound by an admission made by its own insurer and it made no difference that the insurer subsequently withdrew its indemnity of the insured defendant. 

Following the admission and an interim payment of £173,500 by the defendant’s insurer, the insurer declined cover on the ground that the defendant’s equipment was not being used on a road or highway or in a public space.

The claimant issued proceedings and averred that the admission was binding by operation of CPR 14.1. 

The court said that the issues to be decided were: 

• Did the relevant admission of liability bind both the defendant’s insurer and the defendant?

• If so, should the defendant be permitted to withdraw the admission? 

The court held that there was an admission of liability and it bound both the defendant’s insurer and the defendant. 

The court then considered which version of CPR 14 applied to such an admission; is it the version in force when the admission was made, or the version in force from 1 October 2023? 

In other words, are procedural changes retrospective, and if so, was this a procedural change? 

• The difference between the pre-October 2023 version (“the old version”) and the post October 2023 version (“the new version”) lies in the treatment of a pre-action admission. Under the old version, I accept that most pre-action admissions could be withdrawn without the need to seek the court’s permission. The admission contained in the 5 January 2022 email, if governed by the old version could have been withdrawn without the need to seek permission. I understand this to be common ground.

• It is also common ground that there is a presumption that legislation dealing with matters of substantive law will not have retrospective effect. The presumption does not apply to legislation concerned with matters of procedure. In the latter case the presumption is in effect reversed; the relevant provision is to be construed as having retrospective effect unless there is a clear indication that was not the intention of the legislature (see para.30 of the judgment of Vos LJ, as he then was,

                                    in Wagenaar v Weekend Travel Limited [2014] EWHC Civ 1105).

• Mr Wright says the changes to CPR 14 brought about a change in the substantive law and not mere procedural change. He relies on Yew Bon Tew v Kenderaan Bas Mara [1983] AC 553, a decision of the Privy Council and on L’Office Cherifien Des Phosphates v Yamashita-Shinnihon Steamship Co. Ltd (the Boucraa) [1994] 1 AC 486 a decision of the House of Lords.

• The Privy Council in Yew Bon Tew had to consider if a statute that lengthened a limitation period had retrospective effect. The claimant had been injured in a road traffic accident. At the time of the accident the limitation period for bringing an action was 12 months. After the expiry of the limitation period, the limitation period was increased to 3 years. After the coming into force of the new and longer limitation period, the claimant issued a claim. The claim was struck out. The Privy

                                    Council upheld that decision.

• The Privy Council accepted that the limitation statute was procedural in nature, but that it could sometimes give rise to substantive rights. To determine if the statute had retrospective effect (if the longer limitation period applied), it was necessary to see whether the statute, if applied retrospectively “would impair existing rights and obligations.” It was concluded that at the time the new period came into effect, the Defendant had an existing right (to raise the time bar and so defeat the claim) and that treating the statute as retrospective would impair that right. The Privy Council found that an accrued right to plead that a claim was time barred was “in every sense a right, even though it arises under an act that is procedural.” It followed that the accrued right was not to be taken away unless the statute could only be construed to show that was the intention.

• In the Boucraa, owners of a vessel damaged on hire referred the dispute to arbitration. In 1992 the charterers applied to dismiss the claim on the ground of delay relying on a statutory provision introduced earlier that year. The charterer relied on delay from before the coming into force of the relevant provision. The arbitrator dismissed the claim, and the House of Lords eventually upheld that decision. It was held that the question in each case was whether the consequences of retrospectivity were so unfair that Parliament could not intended that as an effect.

• Mr Wright submits that the Defendant had a right to withdraw the admission when the old version was in force and the introduction of the new version took that right away and that applying the newversion would be so unfair that it could not have been intended.

• I am unable to accept those arguments. The relevant right (to plead the time bar) in Yew Bon Tew completely extinguished the claimant’s right to bring an action, it was therefore a substantive right and not a mere procedural right (even though, as the Privy Council pointed out, it arose under a procedural statute). The relevant right in the present case (to withdraw an admission) neither creates not destroys a right to sue. The right, properly understood, is not substantive it is merely procedural. In my view on that analysis, the impact of retrospectivity is not so unfair that retrospectivity cannot have been intended.

On the facts here, the court found that it would not be appropriate to permit the withdrawal of the admission. 

Part of the court’s reasoning was the fact that the defendant, and the defendant’s insurer had compromised an action against the insurer in relation to its refusal to provide cover, but the defendant and the defendant’s insurer kept the details of that compromise confidential. 

CPR 14.5 sets out the matters that a court must consider in deciding whether to allow an admission to be withdrawn. 

14.5

In deciding whether to give permission for an admission to be withdrawn, the court shall consider all the circumstances of the case, including—

(a)           the grounds for seeking to withdraw the admission;

(b)           whether there is new evidence that was not available when the admission was                made;

(c)           the conduct of the parties;

(d)           any prejudice to any person if the admission is withdrawn or not permitted to be            withdrawn;

(e)           what stage the proceedings have reached; in particular, whether a date or period          has been fixed for the trial;

(f)             the prospects of success of the claim or of the part of it to which the admission              relates; and

(g)           the interests of the administration of justice.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more. 

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

As the Solicitors Regulation Authority staggers from one crisis to another, the continued existence of solicitors holding client account money is under increased threat.

Clearly the Solicitors Regulation Authority is unable to control massive client account losses such as those in Axiom Ince and PM Law, with rumours of other major collapses on the way. 

The argument is that the solicitors’ profession cannot afford the reputational and financial damage inflicted by the theft of client money. 

Whether the Solicitors Regulation Authority was at fault in not spotting the warning signs, the fact remains that it was law firms, not the Solicitors Regulation Authority, which stole the money. 

As John Hyde put it in the Law Society Gazette: 

“At what point does the clean-up bill start outstripping the financial benefits to firms?”

Therein lies the rub. Are more firms of solicitors prepared now to lose client accounts? 

If client account interest is to be taken in part or in full away from solicitors, then it may be that the opposition to clients losing the ability to have client accounts, without interest, may reduce. 

Client account interest and the holding of client account money are different issues, which become confused in the debate about this matter. 

For firms to rely on client account interest is not a good business model, but if it is removed, then the Government and Regulators must realize that legal fees in areas such as conveyancing and probate, where much client account money is held, will need to rise sharply. 

The flight by solicitors from conveyancing work tells its own story; it is not sustainable. 

The problem, as with so much in life, is the alternatives to solicitors handling account money with or without interest. 

There can hardly be a single person in the country who thinks that any of the following could deal with holding client money: 

• Any Government, organization, or agency; 
• Any Regulator; 
• Any bank or insurance company. 

If a wonderful, efficient, and trustworthy outside body existed that could handle client account money, then there are considerable benefits to law firms, especially small and medium sized ones, in relation to a sharp reduction in regulation, regulatory work, and the cost of the same. 

Here are some readers’ comments: 

Since the eye-watering losses being charged to the profession as a whole have been incurred by out-of-control ABS entities (Axiom, PM, etc), any tampering with the client account regime by the SRA should be confined to those entities rather than implemented across the board so as to substantially interfere with the businesses of the ordinary solicitor-led firms that are not causing these problems.

Speaking with my non-solicitor friends in other highly-regulated professions, our regulator has been cited in the national press and has become a laughing stock, and alongside the people who have destroyed the livelihoods of good lawyers with their asset-stripping and criminal acts, has sadly brought our honourable profession into disrepute.

Focusing on client accounts is a classic case of deflection from what is quickly being termed the ‘lanyard class’. We should never lose sight of the fact that the vast, vast, vast majority of solicitors who manage and work in private law firms are fundamentally and profoundly honest and do not deserve a regulator who fails to separate out and punish the ‘bad apples’. Similarly, our clients do not deserve a profession that is regulated in a way that dodges real and obvious failings. The not-so new Chief Executive has a massive in-tray and needs to triage it accordingly to remove the hare-brained smokescreens commenced by her predecessor. I wish her well in this, for the benefit of all society.

The “collapse of the PM Law brand”misses the point. We have a “regulator” which time and again had proven itself inadequate to “regulate” the likes of PM Law and, just as relevant, those who screwed it up. The solutions lie in more effective (could it be worse?) regulation, and some personal responsibility for the muppets who time and again prove themselves so incapable they can’t run a profitable firm ..

Rather, Law firm collapses convince solicitors that SRA is unsustainable

A regulator in disarray …

Why are we having to continue paying for the bad actors that have not a bone of intergrity, honesty or ethics in their body? Surely the SRA should be pursuing these directors for criminal offences .

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more. 

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Airconco UK Limited v DC Air Condition and Refrigeration Limited [2026] EWHC 998 (Ch)

the Business and Property Courts of England & Wales, Intellectual Property List, part of the Chancery Division of the High Court, granted permission to appeal when the appeal notice was apparently lodged 25 days out of time and the court exercised its discretion under 

Denton v White [2014] EWCA Civ 906.

Here is the court’s statement of the sequence of events. 

9.              DC Air did file its Appellant’s Notice, apparently in Liverpool, on 30 October 2025. A set of       misunderstandings on the part of court staff led to the following sequence of events.

• DC Air’s solicitors filed the Appellant’s Notice on 30 October 2025 using form N164. This is the form for an appeal from the SCT and requires the appellant to identify the County Court from which the appeal is made. It seems to me that given the terms of CPR 63.19(3) this was the correct form. DJ Johnson’s judgment had been given in Liverpool, so for the purposes of the appeal she was deemed to have heard in the claim in the Liverpool County Court.

• On 31 October 2025 the Liverpool court rejected the filing, informing DC Air’s solicitors that the correct form was N161.  The clerk was wrong about this, see CPR 27PDA.8A, In fact, form N161 states expressly on its face that it is not the correct form for an SCT appeal.  Nonetheless, on the same day DC Air’s solicitors filed the Appellant’s Notice in Manchester on form N161, now a day out of time, including a request for an extension of time.

• On 5 November 2025 the clerk in the Manchester court rejected the filing, this time on the ground that the Appellant’s Notice should be filed in IPEC in London for my attention.

• On 6 November 2025 the solicitors for DC Air spoke to a member of the Chancery listing team in London seeking advice, after which they sent the N161 Appellant’s Notice with associated documents, asking for confirmation of the correct method and court for filing the appeal.

• On 10 November 2025 a Chancery listing officer in London replied to the email stating that I had confirmed that the appeal should be submitted as a High Court Chancery Appeal. I have no recollection of this but I would expect that a request for advice as to the correct procedure came to me via my clerk and was passed back to Chancery listing accordingly. It seems that somewhere another misunderstanding crept in. IPEC SCT appeals do indeed come to me in the first instance, to be heard by me or a Deputy Enterprise Judge, so they should be filed in this list of the High Court, in IPEC, rather than as a general Chancery appeal. However, in line with what they had been told, on the same day DC Air’s solicitors filed the Appellant’s Notice as a Chancery appeal on CE file.

• On 12 November 2025 a clerk in London Chancery, presumably the issuing section, rejected the filing on the ground that it should have been filed in Liverpool. On the same day DC Air’s solicitors contacted Chancery listing in London again in an email which displays some exasperation. There seems then to have been a conversation by phone with one of the team at Chancery listing, apparently without any immediate result.

• On 21 November 2025 DC Air’s solicitors sent an email to Chancery listing asking for an update.

• On 24 November 2025 the Appellant’s Notice was accepted as having been filed. DC Air’s solicitors were informed in an email from Chancery listing.

Here is the court’s decision on this point. 

10.           The late filing of an Appellant’s Notice cannot be dismissed as trivial or insignificant under      the first limb of the Denton v White assessment. The second limb requires the court to consider why the failure occurred and under the third the court must take into account all       relevant circumstances. It seems to me that when the first Appellant’s Notice was filed               on 30 October 2025, within time, DC Air’s solicitors did exactly what they should have              done save that the Notice should have been filed in this court. That is not in my view a                blameworthy mistake. It would very likely have been rectified in 1 or 2 days instead of 25     days if DC Air’s solicitors had received the correct advice from the Manchester and then           the London courts. I do not criticise the clerks in those courts, save to say that matters     should probably have moved forward more briskly, because the procedure for an appeal                from an IPEC SCT decision is unusual and such appeals are not within the familiar run of          business.

11.           The important point is that DC Air did nothing wrong at all and DC Air’s solicitors acted in         a reasonable manner. I have no doubt that DC Air should be granted relief from any             sanction due to the lateness of the filing of its Appellant’s Notice. Retrospective            permission is given to DC Air to file the Appellant’s Notice 25 days out of time.

12.           As noted above, this appeal is in the general Chancery Appeals list and the Appellant’s              Notice is on the wrong form. Technically, I am sitting as a High Court Judge in the Chancery                   Appeals list rather than the IPEC list of the High Court, and at the same time as an       Enterprise Judge in compliance with CPR 63.19(3). This is an unusual dual identity but I    see no formal barrier to it and DC Air have had to put up with enough delay as it is without                  further delay only for form’s sake.

COMMENT

None needed. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Dentons UK and Middle East v Solicitors Regulation Authority

the Court of Appeal ordered the Solicitors Disciplinary Tribunal to re-hear a key regulatory case concerning the powers and duties of the Solicitors Regulation Authority generally, and here, in relation to Money Laundering cases. 

The Solicitors Disciplinary Tribunal had cleared Dentons of all charged brought by the Solicitors Regulation Authority. 

The High Court quashed that decision ordering the Solicitors Disciplinary Tribunal to re-hear the matter. 

Dentons then appealed to the Court of Appeal which upheld the quashing of the original Solicitors Disciplinary Tribunal decision, but on very different grounds. 

The Court of Appeal set out the issue in Paragraph 1 of the Judgment.

1. This case concerns the correct interpretation of Principle 7 of the Solicitors Regulation Authority Principles 2011 (“the SRA Principles”):

                  “7.           You must comply with your legal and regulatory obligations and deal with your                regulators and ombudsmen in an open, timely and cooperative manner”

                  and Outcome 7.5 of the Solicitors Regulation Authority Code of Conduct 2011 (“the SRA          Code”):

                  “You must achieve these outcomes:

                  ….

                  O (7.5) you comply with legislation applicable to your business, including anti-money                 laundering and data protection legislation”

                  for the purposes of establishing whether, in disciplinary proceedings against a solicitors’          firm, any breach of the Money Laundering Regulations 2007 will suffice to give rise to a     breach of Principle 7 and Outcome 7.5, or whether the Solicitors Disciplinary Tribunal is           entitled to consider the seriousness of the breach of the Money Laundering Regulations                   2007 (“the MLRs”).

The Court of Appeal said that its findings were closer to those of the Solicitors Disciplinary Tribunal than those at the High Court, but that there was a matter that needed to be reheard by the Solicitors Disciplinary Tribunal. 

Crucially, the Court of Appeal agreed with the Solicitors Disciplinary Tribunal that: 

“there is an inherent requirement of seriousness”

in considering whether a solicitor’s conduct amounts to a breach of the Solicitors Regulation Authority’s principles or the Code of Conduct. 

That view differed from that of the High Court and the Solicitors Regulation Authority itself. 

Essentially, the Solicitors Regulation Authority argued for a zero-tolerance approach and it was that approach which was rejected by the Court of Appeal. 

However, on the facts, noting that the Solicitors Disciplinary Tribunal had found that relevant source of funds questions had not been asked of a particular client, that the Court of Appeal had

“difficulty in understanding why this entitled the SDT to characterise the breach of the MLRs [Money Laundering Regulations] by the Firm as being “entirely inadvertent””. 

A spokesperson for Dentons said: 

“The court has rejected the SRA’s argument on the interpretation of Principle 7, one of the SRA’s conduct rules. The court provided important clarification to the profession that a breach of regulatory obligations does not automatically constitute a breach of that principle and instead a threshold of sufficient seriousness must be met.”

Thus, the Solicitors Disciplinary Tribunal will determine on its existing factual findings whether the relevant conduct meets the threshold of sufficient seriousness and if so, what sanction, if any, should be imposed. 

COMMENT

This is a very important decision, effectively a rebuke of the way the Solicitors Regulation Authority has been run for the past few years. 

It raises a very interesting point in relation to firms who have not been prosecuted but have been fined by the Solicitors Regulation Authority. 

Part of the argument of the Solicitors Regulation Authority here was that they only prosecute matters which was serious, as the less serious ones were dealt with by the Solicitors Regulation Authority fining solicitors without any prosecution or hearing. 

It is well known that the costs of contesting an SRA prosecution would put many, if not most, law firms out of business and even if acquitted, it is rare for a firm to be awarded costs against the Solicitors Regulation Authority. 

There is no shadow of a doubt that many firms see the fine as an alternative to bankrupting their firms and themselves. 

It is outrageous, and everyone knows that. 

The decision of the Court of Appeal here suggests that many, if not most, of the fines imposed by the Solicitors Regulation Authority, have no legal basis as the breaches were not sufficiently serious. 

Most commentators take the view that it is only a matter of time before there is a public enquiry or Parliamentary enquiry into the conduct of the regulators, and politically, their survival seems unlikely. 

The new Chief Executive of the Solicitors Regulation Authority has made a very good start and overnight she could do much to repair the fractured relationship between the Solicitors Regulation Authority and solicitors by overturning all the fines where the breach of the Money Laundering Regulations was not serious. 

In most cases, the SRA have found that there was no threat of Money Laundering, no actual Money Laundering, and it was purely the documentation and the formalities that led to the fine. 

It could be argued that by definition, anything where there was a real threat of Money Laundering is sufficiently serious to prosecute before the Solicitors Disciplinary Tribunal and anything less serious does not involve a breach of the SRA principles or the Code of Conduct. 

Watch this space. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Magomedov & Ors v Rabinovich & Ors [2026] EWHC 962 (SCCO) 

the Senior Courts Costs Office held that the court had no power to order security for costs in relation to detailed assessment proceedings in the context of between the parties’ costs. 

Different considerations apply in relation to solicitor and own client costs under the provisions of the Solicitors Act 1974. 

Although the Senior Courts Costs Office said it had no power to order security in a between the parties’ matter, some security may be obtained by the court making an order for an interim payment on account of costs. 

The application for security for costs was made under CPR 25, and the court said that it was

“to say the least an unusual application”

to be made in a between the parties’ detailed costs assessment. 

Neither the court, nor the advocates, were aware of any such previous application and the Senior Courts Costs Office said that matters concerning security for costs were normally dealt with in the court dealing with the substantive claim. 

• The Respondents to the application (the Claimants in the original claim) object to the application on the grounds that the court lacks jurisdiction to consider the application and in any event should be dismissed on conventional principles. The court’s powers are limited to those set out in CPR 47 which provides that an order can be made in respect of the costs by way of an interim certificate. Mr. Benson, for the Respondents, said the normal way to obtain security for costs is by seeking an interim costs certificate. In any event by the terms of the provisions of CPR 25 the Respondents should be regarded as the defendants to the claim for costs and in principle the court cannot order security for a party that is in substance the claimant to a claim. Accordingly, it was not open to the Applicants (Defendants in the original claim) to seek security for their costs of the detailed assessment.

The Law

The Senior Courts Costs Office set out the relevant Civil Procedure Rules in detail. 

1. CPR 25.1 enables the court to grant an order for security for costs as one of a list of “interim” remedies that a court may make. Under the heading Timing, CPR 25.2(1) provides that “an order for an interim remedy may be made at any time, including before proceedings are started or after judgment has been given, subject to any rule, practice direction or enactment which provides otherwise” (my underlining).

1. CPR 25.26.(1) provides:

            A defendant to any claim may apply for security for their costs of the proceedings.

1. CPR 25.27 provides that:

            The court may make an order for security for costs if — (a)it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order;

1. 47.6 (1) is headed “Commencement of detailed assessment proceeding”. It provides:

            Detailed assessment proceedings are commenced by the receiving party serving on the paying party –

                        (a) notice of commencement in the relevant practice form;

                        (b) a copy or copies of the bill, as required by practice direction 47;

1. CPR 47.7 is headed “Period for commencing detailed assessment proceedings” and provides in terms:

            The following table shows the period for commencing detailed assessment proceedings.

Source of right to detailed assessmentTime by which detailed assessment proceedings must be commencedJudgment, direction, order, award or other determination3 months after the date of the judgment etc. Where detailed assessment is stayed pending an appeal, 3 months after the date of the order lifting the stayDiscontinuance under Part 383 months after the date of service of notice of discontinuance under rule 38.3; or 3 months after the date of the dismissal of application to set the notice of discontinuance aside under rule 38.4Acceptance of an offer to settle under Part 363 months after the date when the right to costs arose

1. CPR 47.8 sets out the sanction for delay in commencing detailed assessment proceedings.

1. CPR 47.10 deals with the procedure where costs are agreed. There is no procedure for obtaining judgment by default, the procedure in costs proceedings is to obtain a default costs certificate if points of dispute had not been served in accordance with the rules.

• CPR 47.14(1) under the heading Detailed Assessment Hearing provides that where points of dispute are served in accordance with this part, the receiving party must file a request for a detailed assessment hearing within three months of the expiry of the period for commencing detailed assessment proceedings.

• Under the heading Power to issue an interim certificate CPR rule 47.16 provides:

            (1) The court may at any time after the receiving party has filed a request for a detailed assessment hearing –

                        (a) issue an interim costs certificate for such sum as it considers appropriate; or

                        (b) amend or cancel an interim certificate.

            (2) An interim certificate will include an order to pay the costs to which it relates, unless the court orders otherwise.

            (3) The court may order the costs certified in an interim certificate to be paid into court.

The court then looked at the general principles in relation to applications for security of costs, stating that the purpose of the jurisdiction to order security for costs is to prevent: 

“the injustice which would result if a plaintiff [claimant] who was in effect immune from orders for costs were free to litigate at the defendant’s expense even if unsuccessful”. 

• CT Bowring v Corsi & Partners [1994] BCC 713

• He went on to say:

            Such an order can be made only against a plaintiff; it cannot be made against a defendant. That is because a plaintiff institutes proceedings voluntarily. If he chooses to bring proceedings against an insolvent company with limited liability, he does so with his eyes open; he takes the risk that he may not recover his costs even if successful, but it is his own decision to take that risk. The defendant, however, has no choice in the matter. He is compelled to litigate or submit to the plaintiff’s demands. He must be allowed to defend himself without being subjected to the embarrassment of having to provide security for the plaintiff’s costs.

• And at [727-E] said this:

            It has long been firmly established by authority that the court cannot award security for costs against a defendant, and that in considering whether a party is a plaintiff or defendant the court must have regard to the substantial and not the nominal position of the parties. The question in every case is whether the party against whom an order for security is sought is in the position of plaintiff in the proceeding in question.

An order for security for costs in intended to protect a defendant who is compelled to defend a claim at risk that it will not be able to recover its costs of doing so. 

The Senior Courts Costs Office considered the appropriate case law and the principles to be drawn from it and said that although it is not expressly stated the decisions appear to assume the “proceedings” in CPR 25.26(2), must be understood as including the detailed assessment proceedings for the purpose of determining the amount of security, presumably on the basis that such proceedings are ancillary to the main proceedings, or as it may be put, the assessment of costs a part of the “working out” of the substantive claim. 

However, it did not follow the just because the court dealing with the substantive claim could include such costs as part of the security that the court in the detailed assessment proceedings can be assumed to have the same powers under CPR 25.2 rather than the more limited power under CPR 47, once the claim has been determined. 

Detailed Assessment proceedings are a distinct phase of the proceedings and not an originating process – see – 

Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] EWHC 1205 (QB)

37.       To my mind, had it been intended that there should be a power to make orders for security in     detailed assessment proceedings the rules would have said so expressly and made clear the      circumstances in which it could be applied for, and indeed who is be regarded as the defendant   and who the claimant for these purposes (as the rules do in respect of Part 36 offers, see CPR   47.20(4)). The previous status of the parties as claimant and defendant for the purposes of the   CPR rules is changed in detailed assessment, so that the parties are referred to as receiving         party and paying party. And whilst the fact that the parties are renamed may not be decisive,           it is indicative. Indeed, it points to another problem which is that if the Applicants were right       that they should still be regarded as the defendants and CPR 25 did apply independently in            costs assessment, then both parties might be able to apply for security (as the receiving party   might say they were the defendant to the claim for costs). This would seem to be a highly            improbable interpretation.

39.       Further, and importantly, in contrast to the position when the court is dealing with the    substantive claim there is no obvious sanction to enforce an order for security. Mr Mason did            not show me any basis in law for striking out Points of Disputes (which are not, as I understand    it, regarded as statements of case, not being documents which require a statement of truth).     In any event it seems to me in many instances such an order might be a disproportionate           sanction.

40.       There are perhaps other points to be made. There is, for instance, no obvious need for any          power to order security in detailed assessment proceedings given the wide powers of the          court dealing with the substantive claim. Indeed it is far from the ordinary role of the costs          court to deal the issues such as the ‘gateways’ and broader considerations which might apply in the event that there were risks of stifling – issues which are outside the SCCO’s normal remit.     Indeed, it is difficult to see how the Costs Court can readily determine whether there has been    a material and sufficient change of circumstances when it is not the court dealing with the   substantive claim. These can be expensive and time-consuming applications.

41.       It is well recognised that an order for interim payment is a form a security Excalibur Ventures       v. Texas Keystone [2013] EWHC 4278 (Comm) at [77] – where it was considered to be an           alternative to awarding security for the costs of detailed assessment[1]. The court thus has the    express power to provide security by way of an interim costs certificate. In the circumstances,        and for the reason set out above, I am not persuaded that I can read into these provisions,        which are at least intended to be part of a self-contained code for detailed assessment, powers   that go beyond that.

45.       I should perhaps add – if only for the sake of completeness – that I was initially referred to two decisions in Solicitors Act assessments (Bugsby v Stewarts Law [2026] EWHC 275 and Pickering v Thomas v Mansfield [2025] EWHC 3021) in which, although the applications for security were rejected by the court, it appears that it was accepted that CPR 25 applied. Whatever the position under the 1974 Act, to my mind neither case really assists in dealing with the inter partes position – as both sides appeared to accept. Section 70 of Solicitors Act 1974, it seems, might be said to be a self-contained code which is distinct from CPR 25. Section 70(2) specifically prohibits a court from imposing terms as to “the costs of the assessment” when ordering an assessment within twelve months of delivery of the bill; whilst appearing to permit the court to impose terms as regards the costs of the assessment in section 70(3) when special circumstances are required for an assessment. To my mind these provisions would appear to be inconsistent with the importation of CPR 25 into such proceedings. Indeed it strikes me that the true position is that the solicitors are making a claim for their costs (and Part 8 is merely the procedure that may bring the assessment to the court) [2] so that based on the principles that underlie CPR 25 they cannot get security. However, given that in the event, neither party placed any particular reliance on these decisions, it is not necessary for me to deal with this in any further detail.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Mehta v Howard Kennedy LLP [2026] EWHC 968 (KB)

the King’s Bench Division of the High Court, on appeal from the Senior Courts Costs Office upheld the original decision that the interim bills here were interim statutory bills and that there were no special circumstances justifying assessment out of time.

There were three issues:

1. Were the invoices delivered by the Defendant to the Claimant interim statute bills, or did they comprise a series of interim invoices delivered as part of a ‘Chamberlain’ bill which became ‘final’ with the delivery of the last invoice in May 2023?
   
   
2. Further, or alternatively, was the retainer a Contentious Business Agreement (‘CBA’) within the meaning of ss59 to 63 of the 1974 Act and, if so, was it a ‘fair and reasonable agreement’?
   
   
3. Were some of the invoices ‘paid’ within the meaning of the 1974 Act? Further, or alternatively, can the Claimant demonstrate ‘special circumstances’ pursuant to s70(3) of the 1974 Act, such that it would be just to order an assessment?

In relation to Issue (ii), the High Court stayed consideration pending the Court of Appeal hearing in the case of Barnes v BDB Pitmans (CA-2025-000773) on 13 May 2026 which has issues which “strongly overlap” with those here.

The High Court set out the statute and case law in relation to Issue (i) and quoted from

Bari v Rosen [2012] 5 Costs LR 851

which is a useful reminder that the starting point is that a solicitor can only deliver a bill at the end of the case.

4. I adopt the explanation of the contractual nature of statute bills given by Spencer J. in Bari v Rosen [2012] 5 Costs LR
851 at [15]:

“The basic principle is that a solicitor’s retainer is normally an entire contract under which the solicitor is entitled to claim remuneration only when all the work has been completed or the retainer has been terminated. A solicitor is not entitled generally to any payment on account of his costs other than disbursements. However, a solicitor may contract with his client for the right to issue statute bills from time to time during the currency of the retainer. Such bills are known as “interim statute bills”. They are nevertheless final bills in respect of the work they cover, in that there can be no subsequent adjustment in the light of the outcome of the business. They are complete self-contained bills of costs to date.”

6. In Ivanishvili v Signature Litigation LLP [2024] EWCA (Civ) 901; 1 WLR 4636 the cases on statute bills under the 1974 Act were reviewed by Coulson L.J., with whom Lewison and Nugee LLJ. agreed. The Court of Appeal upheld the Costs Judge, finding that a series of interim bills rendered in commercial litigation were not statute bills because they were subject to an agreement for an uplift which depended upon particular outcomes in the litigation. The Court of Appeal reviewed the authorities in respect of statute bills and the effect of s. 70, explaining:

1. Either by natural break in the litigation or by agreement, a solicitor may deliver an interim invoice, but it is for the solicitor to demonstrate that an interim invoice is in law an interim statutory bill: see In re Romer & Haslam [1893] 2 QB 286, 298—299; [31]
   
   
2. A statute bill must be final and complete; [32-35; 48; 52];
   
   
3. The timescales are tight and put the client in an impossible position in which he either challenges the very solicitor’s costs who is representing him in hard fought litigation, or changes solicitor with the disruption to his case which that entails (see Harrod’s Ltd v Harrod’s (Buenos Aires) Ltd [2014] 6 Costs LR 975, Jacob J.); [27]
   
   
4. The effect was impractical and unfair (see Bari v Rosen, supra); [27]
   
   
5. The Court of Appeal has regularly criticised s. 70, which merits consideration of revision so that it reflects modern costs provisions and practices (see Menzies v Oakwood Solicitors Ltd [2023] 1 WLR 4495, per the Master of the Rolls at [5], citing Belsner v Cam Legal Services Ltd [2023] 1 WLR 1043 and Karatysz v SGI Legal LLP [2023] 1 WLR 1071); [28].

On the facts here, the High Court upheld the decision of the Senior Courts Costs Office that the retainer allowed for the delivery of interim bills and that the bills delivered were final statutory bills for the period in question.

The High Court made an interesting observation concerning the well-known problem facing clients of challenging final interim statutory bills while the case is still going on, and they are relying on the solicitor whose bill they are seeking to challenge.

“For the reasons which the Court of Appeal has stated several times, consistent with first instance observations, the scheme of s. 70 is problematic from the point of view of somebody in Mr Mehta’s position. The scheme of access to independent review of a solicitor’s fees is impeded by the need for the client to maintain a positive relationship with the lawyers who are dealing his case. However, those policy issues were not for the Costs Judge to resolve, nor do they form a part of this court’s role”.

Payment and Special Circumstances

• Special Circumstances

On the facts, the High Court upheld the decision of the Senior Courts Costs Office that there were no special circumstances justifying an assessment out of time.

• Payment

This remains an important and contentious and somewhat confusing area and so I set out in full the High Court’s Judgment on this issue.

23. The first part of this issue is concerned with the meaning of ‘payment’ in s. 70(4) of the 1974 Act. The Supreme Court in Oakwood Solicitors Ltd v Menzies [2024] UKSC 34; 1 WLR 4745 held, at [71]:

“…the authorities show a long established understanding as to what payment by deduction or retention requires in this context both generally and with specific reference to section 70 and its statutory predecessors. The need for a settlement of account has been consistently stated in cases from In re Bignold in 1845 to Harrison v Tew in 1987. This requires an agreement to the sum taken or to be taken by way of payment of the bill of costs. Such an agreement may in an appropriate case be inferred from the parties’ conduct and in particular from the client’s acceptance of the balance claimed in the    delivered bill. The authorities therefore provide strong support for the Client’s case of the need for an agreement as to the amount to be paid in respect of           the bill of costs and that mere delivery of the bill does not suffice.”

24. A payment by a third party at the direction of or with the knowledge of the client can indeed be payment for the purpose of s. 70: Re Jackson [1915] 1 KB 371 14, cited at [67] of Menzies.

25. Mr Dunne’s argument is founded in the fact that some invoices were paid from a variety of sources including third party companies and by Hogan Lovells in respect of an adverse costs bill. These, Mr Dunne submits, do not amount to Mr Mehta paying Howard Kennedy’s bill. Only Mr Mehta is a signatory to the retainer and he is the party chargeable for s. 70 purposes.

26. A further example is Bill 445657 which is said to be paid in full yet payment of £80,000 is said to have been made on the same day as the bill being raised. That cannot satisfy the Menzies criteria. It is not explained how or why they were part paid from client account and part paid from office and which entity paid which elements of each. This issue was not considered at all by the Costs Judge.

27. The Costs Judge  held that all payments were made in accordance with the court’s provision and scrutiny in the WFO. He found nothing irregular or ineffective in payments from a third or nonchargeable party, so long as these payments were made with the knowledge and consent of the client. The witness statement adduced in support of Howard Kennedy’s position established these payments were made with Mr Mehta’s knowledge and consent.

28. I asked Mr Dunne about the consequences of his submission. If his argument is correct, does it create an easy mechanism to avoid the terms of the agreement which the client has entered into, namely to ensure that payments are made by some legal entity other than the person signing the retainer? I think that there is such a risk and that would have a large impact on the scheme of s. 70. For this further reason, I do not accept Mr Dunne’s argument.

29. I have no good reason to interfere with the Costs Judge’s findings of fact, nor his application of the law. Moreover, they are in my judgment correct. Mr Dunne’s argument is artificial and unsupported by any factual context which suggests anything other than Mr Mehta causing his liabilities to be discharged from the variety of sources at his disposal. It would produce counter-intuitive results, contrary to the scheme of s. 70. Ground 3 and this part of the third issue is without merit and fails.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The Civil Justice Council has issued a Consultation Paper on the Reform of Part III of the Solicitors Act 1974, which is the part dealing with Solicitor and Own Client Costs.

I will be writing much more about this in due course and within the Consultation period, which closes at midnight on 16 July 2026.

The Consultation paper is here and runs to 45-pages and I set out a list of the contents which shows the areas covered and also assists you in finding any particular item of interest to you below.

The Civil Justice Council recommends that the Solicitor and Own Client Costs regime should be removed from the courts all together unless the bill is over £50,000 and so Part III of the Solicitors Act 1974 would be repealed and replaced with a statutory Code of Practice in tandem with Professional Conduct Rules and oversight by the Regulator.

Thus the Legal Ombudsman and the Solicitors Regulation Authority would deal with virtually everything.

All bills under £50,000 would be dealt with by the Ombudsman; where the bill is over £50,000, there would be compulsory Alternative Dispute Resolution before the matter could go to court.

The overarching principle would be whether the bill is fair and reasonable.

The concept of contentious and non-contentious business would be scrapped.

Paragraph 4.2 of the Consultation Paper says:

4.2       Our basic recommendation is that Part III of the Solicitors Act 1974 should be entirely

            overhauled with the objectives of achieving:

• a readily understood and principles-based statutory code that is fit for purpose,

            supplemented by professional conduct rules overseen by the regulator; and

• a process for consumers, small businesses and others within the scope of the Legal

            Ombudsman scheme to use that scheme, rather than court proceedings, for fee-related

            complaints related to more modest bills.

CONTENTS

Here is a list of contents:

CONSULTATION QUESTIONS

Here is a list of the 15 questions asked in the Consultation paper

1. Do consultees agree that any revised code for the regulation of solicitor and own-client costs should have the objectives identified in paragraph 4.2 above?

            a.         Should the revised code contain any other objectives that aren’t identified above?

            b.         If consultees disagree, why? What alternate objectives should be relied on?

1. We propose that solicitors’ charges should be subject to an overarching principle that they be ‘fair and reasonable’, judged on an objective basis, which should apply both to the amounts actually charged and to contractual terms, but not to the manner in which the agreement was reached.

            Do consultees agree with this recommendation?

1. We propose that the approach taken in reg. 3 of the 2009 Order – subject to some updating – would be a sensible approach to producing guidance on the meaning of ‘fair and reasonable’. Do consultees agree?

            Consultees should consider whether:

            a.         there is anything presently contained in reg. 3 of the 2009 Order which should be excluded when producing guidance on the meaning of ‘fair and reasonable.’

            b.         there is anything not presently contained in reg. 3 of the 2009 Order that should be                    included.

1. Do consultees agree that the distinction between contentious and non-contentious business should be removed? Do consultees perceive any disadvantage in doing so?

1. As part of our wider provisional recommendation for a graduated dispute escalation procedure, we propose a route for smaller bills, as set out above. In summary, clients must exhaust internal complaints processes and LeO’s complaints procedure before petitioning the Court, initially with an application for permission to proceed which would need to show good reason why further recourse was justified.

            Do consultees agree with this proposal?

            The WG are particularly seeking views on the proposal that clients must show good reason         before being given permission to proceed by way of Court proceedings.

1. Do consultees agree with our recommendation for a graduated dispute escalation procedure, including ADR, for those cases falling outside LeO’s jurisdiction, as a precondition to accessing the courts in disputes about solicitors’ costs?

1. Do consultees agree with our recommendation that the jurisdiction of LeO in relation to costs be clarified and expanded, in the manner suggested?

1. Do consultees consider the proposed cap of £50,000 to be appropriate?

            If consultees disagree, would they suggest a higher or a lower figure? Why?

1. Do consultees agree that the concept of the ‘statute’ or ‘statutory’ bill should be abolished, and that the content and format of bills should be set by conduct rules and rules of court?

1. Do consultees agree that requirements as the signature and delivery of bills should likewise be addressed by conduct rules, reflecting up-to-date practice?

1. Do consultees agree that there should be a single time limit for initiating proceedings of one year from receipt, regardless of whether the bill is paid, subject to a power to extend the time limit where it is fair a reasonable to do so?

            Consultees in particular are asked to consider whether the proposal of a single time limit            regardless of payment of the bill raises any concerns.

1. Do consultees agree that the matters described above at paragraphs 4.29-4.34 above do not require legislative provision, and where necessary can be addressed via conduct rules and/or rules of court?

1. Aside from the provisions in the existing legislation outlined above in paragraphs 4.29-4.34, are there any other provisions in the current Part III that consultees feel should be reviewed or removed?

1. Our recommendation is that the proposed changes can be introduced via limited primary legislation containing an appropriate enabling power. Other matters can be addressed by changes to the LeO Scheme Rules, changes to conduct rules, and changes to rules of Court. Do consultees agree?

1. In principle, would consultees support the concept of ‘fair and reasonable’ charging being extended to other legal services professionals? Please explain your answer, giving examples if possible.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

On 20 April 2026, the Law Commission announced that it has been instructed by the government to consider whether the way in which consumer laws are enforced could be strengthened by introducing a consumer class actions regime. 

It expects to start work on this project in autumn 2026 and invites advance views on an initial scoping questionnaire which will help to shape the project.  

The deadline for responses is 30 October 2026. 

 The project will involve evaluating the benefits and risks of a collective class actions regime, having regard to other mechanisms, such as alternative dispute resolution, and the need for effective consumer redress at proportionate cost.  

It will address whether any regime should allow for “opt-in” as well as “opt-out” claims. 

It will consider the government’s conclusions in its review of the current opt-out regime for competition claims in the Competition Appeal Tribunal as part of this work. 

It will also consider the scope and parameters of a consumer law claim for the purposes of the regime, the mechanics around commencing and managing class action proceedings, as well as damages, costs, settlement, and funding of claims.  

Once it has formulated its views, the Law Commission will publish for consultation any proposals for reform. 

Sources: Law Commission: Consumer class actions, Consumer Class Actions Project: Terms of Reference and Consumer Class Actions: Initial Scoping Questionnaire (20 April 2026). 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

Solicitors Regulation Authority figures show that between February 2025 and February 2026, the number of law firms dropped 2.73% from 9,165 to 8,915. 

Thus, 250 more firms closed than opened. 

Working on the basis of an average of 1.7 offices per firm – no precise figures are available from anyone – means that there are around 440 fewer offices now as compared with a year ago. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Cabo Concepts Ltd and another v MGA Entertainment (UK) Ltd and another [2026] EWHC 768 (Ch) (31 March 2026)

the High Court refused to set aside or vary an indemnity costs order imposed after the defendants’ failure to “harvest” over 800,000 documents during disclosure resulted in an adjourned trial. 

MGA applied to set aside or vary the order under CPR 3.1(7) (the courts’ general power to vary or set aside orders) based on defects in the claimants’ own disclosure, which emerged only after the order had been made.

MGA said that Cabo had failed to disclose 5,000 WhatsApp messages, and that evidence given by S, Cabo’s solicitor, in a witness statement had dishonestly misrepresented Cabo’s disclosure methodology. 

The High Court held that S was not a reliable witness and that his conduct was seriously defective: he had permitted Cabo personnel manually to search their own phones without proper instructions, without explaining their disclosure duties and without supervision and the description of Cabo’s disclosure process in his witness statement was materially inaccurate and misleading. 

However, he had not knowingly or recklessly sought to mislead the court. When drafting his statement he had been focusing on email disclosure, was out of his depth, and had forgotten how the phone disclosure had been conducted.

The judge who made the order had been “highly critical of MGA”, and 7.5 million more MGA documents had emerged after the date of the order. 

Procedurally:

• CPR 40.8A (the right of a party against whom a judgment has been given, or an order made, to apply for a stay of execution or other relief) was the proper basis for MGA’s application, in so far as it relied on the discovery of Cabo’s disclosure failings after the relevant hearing (Motorola v Hytera [2025] EWCA Civ 1667) (paragraphs 75-79, judgment).

• A costs order requiring a party to pay a sum was a final order for the purposes of CPR 3.1(7) (and/or CPR 40.8A), even where made following an interim hearing; accordingly, CPR 3.1(7) only applied in exceptional circumstances (Wright v McCormack [2022] EWHC 3343 (KB)) (paragraphs 80-90, judgment).

In any event, setting aside or varying the costs order was not justified.

The facts here were distinguishable from those in Motorola, where a subsequent event had destroyed the entire basis on which the order had been made.

 In addition, permitting revisions of earlier final costs orders in complex litigation, where disclosure deficiencies commonly emerged on both sides at different times, was unworkable. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Smart Parking v Young, Case No. M9KF59EP, 25.2.26 (1)

in a decision delivered the day before the Court of Appeal’s decision in 

Chartered Institute of Legal Executive (CILEX) & Ors v Mazur & Ors [2026] EWCA Civ 369

a Deputy District Judge held that the person attending court in a small claims track matter, had no right of audience as he was not being supervised “in any meaningful sense of the word” by the authorized person. 

The issue was whether an unauthorized person was an exempt person within the meaning of Paragraph 1(7) of Schedule 3 of the Legal Services Act 2007 which provides that a person is exempt if 

(b)            the person is assisting in the conduct of litigation 

• under instructions given (either generally or in relation to the proceedings) by an individual who is an authorized person to conduct litigation; and 

• under the supervision of that individual and the proceedings are not reserved court proceedings. 

The court held that the person attending was assisting in the conduct of litigation as an advocate and acting under instructions from an authorized person but was not under the supervision of that individual. 

This case relates to rights of audience, and not the conduct of litigation, but clearly, there is likely to be a carry over of the meaning of proper supervision and Paragraph 3 of the short Judgment of the Deputy District Judge is telling

3.          In my judgement the arrangements created by ELMS Solicitors and similar operators have the potential to undermine the integrity of the legal system. To allow unqualified persons to routinely represent parties in Court if they cannot properly be said to be supervised and are not accountable to any regulated professional body is an unsafe practice and is not permitted by the Legal Services Act 2007. I doubt that Mr Razza has ever met Mr Shoreham-Lawson or ever had a proper supervision session with him. If I am wrong about that, then it is for Mr Shoreham-Lawson to satisfy the Court that he has a proper system of supervision in place. In paragraph 195 of the judgement of Lord Justice Brooke in Hollins v Russell, he says that the Court of Appeal would not wish to be prescriptive about the form which the supervision should take, provided that an appropriate system has been set up. The practice note from ELMS Legal says that all advocates having been accepted to take instructions are provided with the requisite letters of instruction, training and support and are required to provide comprehensive attendance notes for supervisory purposes. In my judgement, this paragraph is too light on detail. The Judge is entitled to be re-assured that a proper system of supervision is in place before he permits an unqualified advocate to address him. I have no idea how many unqualified advocates are supervised by Mr Shoreham- Lawson. It could be dozens or even hundreds. I have no idea of how Mr Shoreham- Lawson arranges training and support for the advocates. He should provide sufficient information for the Court to be satisfied that the person appearing is entitled to an exemption. He has not done so in this case. I am therefore justified in not allowing Mr Razza rights of audience.

The court awarded costs against the claimant on the standard basis for reasons other than the fact that the claimant’s representative had no rights of audience. 

Rights of audience in the small claims track are nowhere near as widespread as some people in organizations believe them to be, and there are very many business models which are unlawful, which are now likely to be subject to discipline due to the tightening up of the supervision provisions following the Court of Appeal decision in Mazur. 

Here is a link to my piece

SMALL CLAIMS TRACK AND RIGHTS OF AUDIENCE: AN IMPORTANT CASE

which was a writeup of 

Vehicle Control Services Ltd v Langley [2026] EWCC 1. 

This was a separate issue but also related to carpark firms who have what are clearly unlawful business models in many instances. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Minh v Da Guang Tankers (Private) Ltd & Anor Re: OCEAN UNICORN [2026] EWHC 793

the Admiralty Court, part of the Business and Property Court, itself part of the King’s Bench Division of the High Court made a Wasted Costs Order against Clyde & Co for breach of warranty of authority, that is stating that they were instructed by the claimant’s insurers when in fact, they were not. 

The High Court found that the defendant had established that it would have acted in a very different way if they had not been incorrectly told that the insurers were involved. 

In response to the Wasted Costs Application, Clyde & Co admitted that they were not instructed by the claimant’s hull and machinery underwriters but the court found that they were instructed by the claimant himself. 

The court found that the erroneous information concerning acting for the insurers had caused the defendants substantial loss comprising, save for a small discount, the entire costs of the action. 

Fraudulent claims, whereby fishing vessels invent collisions with ocean going vessels or exaggerate damage caused in a genuine accident, are common especially apparently off the coasts of China and Vietnam. 

Because of the prevalence of false claims, the defendant takes a different approach to cases where the fishing vessel owner was representing him or herself in cases where a claim had been taken up by the fishing boat’s insurers. 

The defendant made a specific enquiry of Clyde & Co on this point, and they replied: 

“We do represent both owners and underwriters”, and 

repeated that in subsequent correspondence. 

On a failure by the claimant/claimant’s insurers to provide security for costs as ordered by the court, it emerged that that statement was wrong and Clyde & Co apologized and the claim was stayed. 

At Paragraph 13 in the Judgment here, the High Court set out the principles involved in relation to breach of warranty cases. 

1. I adopt the following paragraphs from Mr Kimbell’s skeleton argument with which Mr Happé did not take issue as representing an accurate statement of the legal principles I have to apply.

(1) Solicitors who issue proceedings thereby warrant that they have authority to do so: Yonge v Toynbee [1910] 1 KB 215.

(2) As a matter of public policy, it is an abuse of the process of the court for solicitors to issue proceedings in the name of a person who has not given them authority to do so. If they do not in fact have such authority, they are in breach of warranty and may be liable for the costs of such proceedings: Jalla v Shell [2024] EWHC 578 (TCC) at [73]. Skylight Maritime SA v Ascot Underwriting Ltd & Ors, Wurttembergische-Und Badische Versicherung AG, Houlder Insurance Services (Marine) Limited [2005] EWHC 15 (Comm) at [6] – [8].

(3) The liability for acting in breach of warranty is strict. It is not necessary to prove that the solicitor knew or should have known of the want of authority: Zoya Ltd v Ahmed [2016] 4 WLR 174 at [29].

(4) If a solicitor has failed to take proper steps to check the source of his instructions this is likely to be held to be improper and unreasonable within the meaning of PD46 even if he acted in good faith throughout: Rushbrooke UK Ltd v 4 Designs Concept Ltd [2022] EWHC 1687 (Ch) and Trehan v Liverpool Victoria [2017] 10 WLUK 21.

(5) The usual damages awarded comprise the sum of costs thrown away by the promisee on the proceedings – Skylight Maritime SA v Ascot Underwriting Ltd & Ors, Wurttembergische-Und Badische Versicherung AG, Houlder Insurance Services (Marine) Limited [2005] EWHC 15 (Comm) at [16]. [Here I interpose that this is a departure from the normal measure of damages, which would be to put the claimant into the position they would have been in if the warranty had been true; see generally McGregor on Damages, 22nd Ed at 37-021.]

(6) The wasted costs jurisdiction and the breach of warranty of authority jurisdiction are separate jurisdictions. However, they will almost always lead to the same result – see: Rushbrooke UK Ltd v 4 Designs Concept Ltd [2022] EWHC 1687 (Ch) at [24].

Civil Procedure Rule, Practice Direction 46, Paragraph 5.5 provides:

“5.5      It is appropriate for the court to make a wasted costs order against a legal representative, only    if –

            (a) the legal representative has acted improperly, unreasonably or negligently;

            (b) the legal representative’s conduct has caused a party to incur unnecessary costs, or has          meant that costs incurred by a party prior to the improper, unreasonable or negligent act or         omission have been wasted;

            (c) it is just in all the circumstances to order the legal representative to compensate that party     for the whole or part of those costs.”

1. In this case, because the breach of warranty of authority is admitted, the analysis under that jurisdiction focuses on the question of causation of loss. Expressed in the language of sub-paragraph (b), to which the breach of warranty jurisdiction on this aspect corresponds: Has the breach of the warranty of authority caused the defendants to incur unnecessary or wasted costs?

• Principle (4) in paragraph 13 above states that where a solicitor has failed to take proper steps to check the source of his instructions this is likely to be held to be improper and unreasonable within the meaning of PD46 even if he acted in good faith throughout. The only explanation that Clyde & Co have ever offered for their breach of the warranty of authority is the one given in their email of 24 July 2022. Given the seriousness of the breach, that explanation is manifestly inadequate. In addition to the defendants’ and the Club’s rights arising out of breach of warranty of authority, I find that they are entitled to an order for wasted costs pursuant to section 51(6) of the Senior Courts Act 1981 and CPR r. 46.8. Specifically, I find that Clyde & Co have acted “improperly, unreasonably or negligently” and that it is “just in all the circumstances” to order them to compensate the defendants for the whole or part of the costs wasted. I turn therefore to the amount of those costs.

The High Court ordered Clyde & Co to pay Wasted Costs of £127,577. 

In 

MT Construction Limited v Dennis Frieze & Anor Neutral Citation Number[2026] EWHC 813 (SCCO), 8 April 2026

the Senior Courts Costs Office refused to grant Relief from Sanctions and consequently refused to set aside a default costs certificate. 

The interesting part is the section from Paragraph 15 of the Judgment:

“There is no evidence about the systems in place at his firm for supervision, for receiving and distributing email and postal correspondence, no evidence about diary management systems, no explanation as to why e-mail service was initially refused and nothing to explain what the systems were to cover the work of a busy fee earner working all over the country.”

COMMENT

Expect very many cases involving the issue of adequate supervision, or the lack thereof, post-Mazur. 

This is a reminder that supervision applies throughout the firm and that Senior Partners, Heads of Department, etc. must have systems in place for supervision of their own work. 

It is not just in the context of solicitors and other authorized persons supervising unauthorized persons. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Safra v Wilmer Cutler Pickering Hale and Dorr LLP [2026] EWHC 703 (SCCO)

the former client sought detailed assessment of a bill of $35,343,213.96 – approximately £26 million. 

The Judgment runs to 76 pages, and 423 paragraphs, and is an exhaustive analysis of the law in relation to a variety of Solicitors Act 1974 matters, including Contentious Business Agreements, fairness and reasonableness of such agreements, interim statutory bills, Chamberlain bills, special circumstances, and allocation of payments. 

The defendant solicitors had delivered a large number of interim bills, and one of the issues was whether the bills were final statutory bills for the periods in question and thus, outside the time limit during which a client had an unqualified right to have the bills assessed, and related to that, if there were special circumstances justifying detailed assessment out of time. 

The Senior Courts Costs Office held that the bills were not final statutory bills and thus, the client had an automatic right to have them assessed, but nevertheless, the court considered in detail the issue of special circumstances. 

Each case will depend upon its facts, and in Issue 408 at Pages 137 – 138 I reported the case of 

Biggar v Howard Kennedy LLP [2026] EWHC 132 (SCCO),  under the heading

SOLICITORS ACT ASSESSMENT: NO COSTS UPDATES DID NOT AMOUNT TO SPECIAL CIRCUMSTANCES. 

If a bill states that it is not the final and definitive bill for work done in that period, then it is very unlikely to be a final statutory bill – the wording tells its own story. 

The court also held that the solicitors had failed to keep the client informed of costs, including two increases in hourly rates, and along with other matters, that would have justified assessment out of time under the special circumstances provision. 

The court said that it had never seen a case where such a large bill had been supported by so little information. 

It held that the firm’s invoices contained: 

• charges which are so high as to raise concerns as to the costs incurred across the board. 

The court also held that the solicitor’s letter of engagement contained too much uncertainty for the agreement to be a Contentious Business Agreement, significant facts being the failure to set a fixed fee, and the failure to have a mechanism by which the fees could be increased. 

“The consultation and complaint provisions in the Engagement Letter do not alter its straightforward provision for the Defendant to increase its hourly rates by any amount and at any time it saw fit”. 

There was accordingly a significant element of uncertainty with the Engagement Letter as to the hourly rates that the defendant would be charging from time to time. 

The court said that this was wholly inconsistent with the proposition that the Engagement Letter was a Contentious Business Agreement. 

Even if it had been a Contentious Business Agreement, the court would have set it aside as being unreasonable.

“If I had concluded that the Engagement Letter were, nonetheless, a CBA [Contentious Business Agreement], I would have found it to be unreasonable in providing for the Defendant’s hourly charging rates to be increased at times and by amounts dictated entirely by the Defendant, whilst simultaneously removing the Claimant’s rights, under section 70, to challenge those hourly rates”.

At Paragraphs 2 – 5, the court set out the issues to be dealt with: 

2.              The parties have identified a number of preliminary issues to be determined for the     purposes of the Claimant’s application, and a consent order dated 5 March 2025 provided        for the hearing of those issues.

3.              Under the heading “The Nature of the Retainer” they are:

                  (a)            Does the Engagement Letter dated 2 September 2022 constitute a contentious                               business agreement within the meaning of section 59 of the Solicitors Act 1974?

                  (b)            If it does, was it fair and reasonable (and should it therefore be enforced or set                                  aside)?

4.              Under the heading “The Status of the Invoices” they are:

                  (c)            Was the Defendant entitled to deliver interim statutory bills to the Claimant under                         the terms of the Engagement Letter?

                  (d)            Did the Invoices, as delivered, amount to interim statutory bills (compliant with                                the express and implicit requirements of such bills)?

                  (e)            In light of the answers to the above questions, when were the invoices                                                     (individually or collectively) delivered to the Claimant as a statutory bill or bills for                     the purposes of the Solicitors Act 1974?

5.              Under the heading “Entitlement to Assessment” they are:

                  (f)             When and to what extent have any statutory bills been paid for the purposes of                                 s.70(4) of the Solicitors Act 1974 (if at all)?

                  (g)            To the extent required, are there special circumstances to justify an order for                                      assessment of the Invoices pursuant to s.70(3) of the Solicitors Act 1974?

                  (h)            In light of the answers to all the questions above, should the court make an order                           for assessment of all or any of the Invoices, pursuant to the applicable provisions                     within Part III of the Solicitors Act 1974?

                  (i)              If an order for assessment is to be made, should it be made subject to any                                            conditions?

At Paragraphs 8 – 20, the court sets out the statutory provisions in relation to these matters, all which are contained in the Solicitors Act 1974. 

Paragraphs 143 – 151, the court sets out the case law in relation to Contentious Business Agreements. 

214.        There was, accordingly, a significant element of uncertainty within the Engagement Letter       as to the hourly rates the Defendant would be paying from time to time. That is wholly                 inconsistent with the proposition that the Engagement Letter was a CBA. My conclusion           is that it was not.

That disposed of that aspect of the matter, but in Paragraphs 215 – 223, the court considered, obiter, and in case it was wrong, in finding that the Engagement Letter was not a Contentious Business Agreement, whether the Contentious Business Agreement was unfair and/or unreasonable. 

The court quoted the well-known test set out in 

Re Stuart ex p Cathcart [1893] 2 QB 201

“With regard to the fairness of such an agreement, it appears to me that this refers to the mode of obtaining the agreement, and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness. But the agreement must also be reasonable, and in determining whether it is so the matters covered by the expression “fair” cannot be re-introduced. As to this part of the requirements of the statute, I am of opinion that the meaning is that when an agreement is challenged the solicitor must not only satisfy the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the Court that the terms of that agreement are reasonable. If in the opinion of the Court they are not reasonable, having regard to the kind of work which the solicitor has to do under the agreement, the Court are bound to say that the solicitor, as an officer of the Court, has no right to an unreasonable payment for the work which he has done, and ought not to have made an agreement for remuneration in such a manner.”

222.        If I had concluded that the Engagement Letter were, nonetheless, a CBA, I would have                found it to be unreasonable in providing for the Defendant’s hourly charging rates to be                increased at times and by amounts dictated entirely by the Defendant, whilst                  simultaneously removing the Claimant’s rights, under section 70, to challenge those   hourly rates.

223.        I would, accordingly, have concluded that the Engagement Letter (had it been a CBA)                  should be set aside as unreasonable, and that the Defendant’s billed costs should be         assessed in their entirety.

At Paragraphs 224 – 250, the court considered the question of whether the defendant was entitled to deliver Interim Statutory Bills under the terms of the Engagement Letter. 

The starting point is that there is no such right. 

The court held that there was although there was such a contractual right in this case. 

At Paragraphs 251 – 282, the court considered whether the invoices as delivered amounted to final Interim Statutory Bills. 

266.        The standard wording on the Defendant’s finalised (and draft) invoices is, however,     materially different in that, as the Claimant points out, each monthly invoice “Includes           only Services and disbursements posted to date.”

257.        The clear meaning of that phrase is that some of the work performed by the Defendant               during the period covered by each invoice might not have been “posted”, in other words         recorded upon the Defendant’s systems, at the time of delivery and accordingly might                have to be included in a subsequent invoice. In other words, none of the finalised invoices                 are stated to be final for the period they cover: quite the contrary.

268.        The Defendant attempts to interpret this phrase only as an indication that further charges        may be rendered for work undertaken in the subsequent month. That does not seem to         me to be a viable interpretation. There is no reason why an invoice covering work          undertaken during a specified period should incorporate a redundant warning to the              effect that that the solicitor will charge for further work undertaken during a subsequent        period.

Chamberlain Bills

283.       To explain my conclusions in this respect I need to refer to the concept of a “Chamberlain bill”. A Chamberlain bill is a series of non-statutory bills which together become a statute bill upon delivery of the last bill (Chamberlain v Boodle & King). A series of bills which, individually, do not qualify as statutory bills can nonetheless collectively comprise a Chamberlain bill (Bari v Rosen, Spencer J, at paragraph 52-59).

284.        The Defendant’s case is that all of its finalised invoices, being statutory bills, were        delivered on the dates shown in the schedule reproduced at paragraph 60 above.

285.       The Defendant however accepts that if the Defendant’s finalised invoices were not, individually, statutory bills, then as the Claimant says, the complete series of non-statutory bills delivered by the Defendant to the Claimant together comprised a statutory “Chamberlain bill”, delivered on 17 September 2024, consistently with the terms of the letter of 16 September 2024 sent to the Claimant by Mr Born and Mr Trenor.

286.        Given the conclusions I have already reached, that is the only conclusion open to me. The      effective date of delivery of a statutory bill to the Claimant by the Defendant was 17         September 2024.

When And to What Extent Have Any Statutory Bills Been Paid for the Purposes of Section 70(4), Solicitors Act 1974?

Given that the court found that the interim bills were not statutory bills, the court did not need to consider these issues for the purposes of this decision, but did so, in detail, and setting out the case law in detail, and this is at Paragraphs 287 – 328. 

The points to note are that partly paid bills for the purposes of Section 70, are treated as unpaid bills. 

Monies paid into an overdrawn account are set against, and extinguished, the earliest debts first.

Special Circumstances

329.        Because I have concluded that the Defendant’s invoices together represented a part-paid       Chamberlain bill delivered on 17 September 2024, and because the Claimant applied for the assessment of that bill on 17 December 2024, section 70(2) applies and special   circumstances are not required before an order for the assessment of that bill can be                  made. Again however I will explain what my conclusions would have been, had I found    that the Defendant’s invoices were interim statute bills.

The court then dealt with this issue in detail with an extensive analysis of the case law, at Paragraphs 330 – 408. 

The court would have found special circumstances justifying assessment of the bill out of time.

404.       I have not previously encountered a case in which such levels of costs accrued with such limited information being provided to the client. The Defendant’s failure to notify the Claimant of its hourly rate increases seems symptomatic of a lack of awareness of the importance of keeping the client fully informed of the costs position. However much he would have known about what was being done for him, and however pleased he may have been at the level of service provided, the Claimant was not regularly being kept aware of what it was costing him. That would have been unsatisfactory even if the fees finally billed had not been so far in excess of what he had clearly indicated that he could afford.

408.       For those reasons, had it been appropriate, I would have certified that there were, in this case, special circumstances that would have justified an order for the assessment of such statutory bills as fell within section 70(3).

Summary of Key Conclusions

416.       The Engagement Letter between the Claimant and the Defendant, as signed on 2 September 2022 and amended on 25 September 2023, was not a Contentious Business Agreement (CBA). Its unilateral, open-ended provisions for hourly rate increases, the amounts and timing of which were entirely at the discretion of the Defendant, are inconsistent with the requisite characteristic of certainty.

417.       If I had found that the Engagement Letter was a CBA, I would have set it aside as unreasonable because it incorporated those unilateral, open-ended review provisions whilst (as a CBA) preventing the Claimant, on any assessment, from challenging any increased hourly rates, whatever they might have been.

418.       The Engagement Letter did allow for the Defendant to deliver interim statutory bills to the Claimant in the course of the Defendant’s retainer.

419.       The invoices actually delivered were not, however, interim statutory bills, because they lacked the requisite element of finality.

420.       The invoices collectively, as a series, comprised a single Chamberlain bill delivered to the Claimant by the Defendant on 17 September.

421.       The Claimant’s application for detailed assessment having been made on 17 December 2024, this court has jurisdiction to order an assessment of the Chamberlain bill under section 70(2) of the Solicitors Act 1974.

422.       Given that Defendant’s invoices were not interim statute bills, it is not necessary for the Claimant to establish that special circumstances justify an order for assessment of such of them as would otherwise have fallen within section 70(3). If it had been necessary, I would have found that special circumstances do apply.

423.       I find it to be appropriate to make an order for assessment, under section 70(2), of the Chamberlain bill delivered by the Defendant to the Claimant on 17 September. I do not find it to be appropriate to attach any conditions to that order.

COMMENT

This is one of the most exhaustive and detailed Judgments in recent times of these Solicitors Act 1974 matters, although much of the Judgment is obiter, as it was not necessary for the decision in the case, the Judgment as a whole is of great assistance. 

I am very grateful to Howden Insurance Brokers Limited, our Professional Indemnity Insurance Brokers, for permission to publish their piece by Michael Bluthner Speight, and this is very important and very helpful. 

If your firm interacts with HMRC on behalf of clients and is paid for doing so, you will be legally required to register as a tax adviser with HMRC from May 2026. 

This is not a requirement aimed solely at specialist tax practices. It will likely apply to conveyancers, private client solicitors, corporate lawyers, family practitioners, and potentially many others – regardless of whether your firm has ever described itself as providing tax advice.

This article explains what the requirement means, who is affected, the key dates and steps your firm must take, the consequences of non-compliance, and the broader risk management implications for law firms arising from this new requirement.  

Why is this happening?

The mandatory registration regime has been introduced by the Finance Bill 2025-26 and forms part of HMRC’s wider programme to raise standards in the tax advice market. HMRC has invested £36 million to modernise its registration infrastructure, replacing the current fragmented, often paper-based registration processes with a single digital route via the Agent Services Account (ASA) system.

The government’s stated purpose is to ensure that all advisers who interact with HMRC on behalf of clients meet minimum standards, enabling HMRC to monitor and, where necessary, exclude those who are “objectively unable” to meet its standards for agents. Following a consultation in October 2024, stakeholders broadly supported mandatory registration as a mechanism to create a fairer market and deter unscrupulous operators. Crucially for law firms, despite strong opposition from both the Law Society and the Council for Licensed Conveyancers, solicitors and licensed conveyancers were not exempted from the regime.

Will this apply to your firm?

The definition of “tax adviser” in the legislation is deliberately broad. It captures any firm or individual that, as part of its business, assists others with their tax affairs, which is taken to include:

• making, or assisting with, claims or elections in connection with a client’s tax affairs;
• submitting information or returns to HMRC on a client’s behalf;
• communicating with HMRC regarding a client’s tax position; and
• providing assistance with any document likely to be relied on by HMRC to determine a client’s tax position, even where tax is incidental to the wider service being provided.

The practical consequence is that the test is not whether your firm considers itself a tax adviser in any conventional sense, but simply whether it interacts with HMRC about a client’s tax affairs and receives payment for that work. If it does, registration will be required.

Which areas of practice are affected?

An article by Kennedys LLP suggests that the following practice areas most directly affected will likely include:

Conveyancing

The submission of a Stamp Duty Land Tax (SDLT) return on behalf of a client is sufficient to bring a firm within scope, even where no tax advice whatsoever is being provided. 

Private client

Firms dealing with inheritance tax, trust administration, and estate tax compliance.

Family

Work involving capital gains tax, trust taxation, maintenance and lump sum orders wherever HMRC interaction occurs.

Corporate and commercial

Corporate transactions involving tax filings, and any VAT or PAYE queries directed to HMRC on a client’s behalf. 

Litigation

Contentious tax work, including dispute resolution involving HMRC.

The list is not exhaustive. As a general principle, any practice area in which a fee-earner communicates with HMRC on behalf of a client should be assumed to be in scope unless there is a clear exemption.

Who will be exempt?

The legislation does provide some exclusions. Firms will not need to register if they: 

• only deal with their own tax affairs or those within their own company group; 
• provide tax advice services for free (for example, charitable services); 
• interact with HMRC because the law requires it even if paid (for example, certain insolvency practitioners or pension firms); or 
• only provide payroll or tax software for clients to use without themselves interacting with HMRC. 

In-house tax teams acting only for their employer are also excluded.

These exclusions are relatively narrow. Most firms that carry out any of the practice areas set out above should assume they will be required to register.

When is the new regime coming into force?

The registration requirement is being introduced in stages:

May 2026: 

Registration opens. For most law firms (those that do not currently hold an agent services account, a self-assessment online account, or a corporation tax online account)  registration will be required from this date. The registration portal goes live in May 2026 and will be entirely online. HMRC’s policy paper published on 26 November 2025 originally stipulated a date of 18 May 2026, but the latest version now simply states “May”. 

August 2026:

Existing agents who have a self-assessment or corporation tax account but no agent services account must register by this date.

November 2026: 

Firms that provide only third-party payroll services and have no other interaction with HMRC must register by this date.

In each case, firms will have a three-month transition window from their registration date during which they may continue to interact with HMRC on behalf of clients while their application is being processed. Firms that already hold an agent services account will not need to re-register, but HMRC will contact them through their existing account to seek confirmation of compliance with the new conditions.

The critical point for most law firms is that the May 2026 date is now only weeks away. The time to start preparing is now.

What will registration involve?

Registration takes place at the level of the legal entity – i.e. the firm itself, rather than individual fee-earners. However, firms are required to identify and provide information about “relevant individuals” as part of the registration process. These are individuals who:

• are officers of the business, including partners in a partnership, members of an LLP, and directors of a company; and/or
• are employees who exercise control or significant influence over the firm’s tax-related work, or perform activities falling within the definition of tax adviser functions.

The question of who qualifies as a relevant individual is one area where detailed HMRC guidance remains outstanding. Particular uncertainty surrounds how the relevant individual concept applies in larger firms. Firms will need to work through their management structures carefully, and should err on the side of caution until further guidance is published.

Both the firm and each relevant individual will need to satisfy HMRC’s registration conditions. These include:

• no outstanding tax returns or amounts of tax due (for the firm and each relevant individual);
• no current HMRC decision to refuse to deal with the firm or any relevant individual;
• no current anti-avoidance sanctions or stop notices;
• no relevant unspent convictions for fraud or tax offences;
• not being formally insolvent or disqualified from acting as a director; and
• compliance with AML supervision requirements – the firm must demonstrate it is appropriately supervised for anti-money laundering purposes (which for SRA-regulated firms will be the SRA for the time being, pending the move over to the FCA for AML regulation).

What the consequences of non-compliance?

Failure to register is not a technical administrative oversight, but may be a matter with serious operational, financial, and regulatory consequences.

Operational Impact: 

An unregistered firm may find itself unable to interact with HMRC on a client’s behalf. In a conveyancing context, this means being unable to submit the client’s SDLT return, which in turn prevents the issue of the SDLT5 certificate, delays registration with the Land Registry, and potentially affects linked transactions. 

Financial Penalties: 

Where a firm continues to interact with HMRC without being registered, HMRC may issue a compliance notice. Failure to comply with a compliance notice carries a financial penalty of £5,000, rising to £10,000 for more serious offences. Both the firm and relevant individuals can be penalised.

Suspension and prohibition: 

HMRC has the power to suspend a firm’s registration for up to 12 months where conduct falls below expected standards. A firm subject to suspension must notify all its clients of that fact if the suspension exceeds 30 days, or if registration is prohibited outright.

Potential regulatory issues: 

The consequences of non-compliance could extend beyond HMRC’s own enforcement framework. If a firm cannot deliver an agreed service because of a preventable compliance failure, it faces exposure to client complaints and professional negligence claims, as well as the risk of SRA conduct scrutiny. An inability to complete a conveyancing transaction due to a failure to register is precisely the kind of systemic risk that the SRA would likely view as a management and compliance failure.

Practical steps for your firm: a risk management checklist

Given that the registration window is due to open in May 2026, firms should be taking the following steps now:

1. Map all areas of work affected: 

Conduct a practice area audit to map all areas of work in which your firm interacts with HMRC on behalf of clients. Conveyancing, private client, probate, corporate, family, and dispute resolution departments should all be reviewed. Do not assume that because fee-earners do not regard themselves as tax advisers, the firm is outside scope.

• Identify relevant individuals

Compile an initial list of all partners, LLP members, directors, and senior employees who either oversee or carry out tax adviser activities. Firms should work through management structures carefully, bearing in mind that the question of who counts as a relevant individual in larger or more complex practices remains a live area where HMRC guidance is incomplete. Drawing up a longlist first, and then refining it, is advisable.

• Check personal and firm-level tax compliance

Both the firm and each identified relevant individual must have all tax returns up to date and no outstanding tax liabilities before registration can be completed. Any compliance issues, however historic, should be resolved urgently.

• Review your AML supervision policies and procedures: 

HMRC will require evidence that the firm is appropriately supervised for anti-money laundering purposes. SRA-regulated firms are supervised by the SRA for AML. Confirm that your AML policies, procedures, and records are current and complete.

• Review governance documentation: 

Partnership agreements, LLP members’ agreements, and director service agreements may require review to ensure the firm has appropriate mechanisms to act if a relevant individual fails to meet HMRC’s registration conditions in a way that puts the firm’s registration at risk.

• Review and update engagement letters:

Firms should consider updating their retainer letters and client care documentation to explain that the firm is required to hold HMRC registration as a tax adviser in order to carry out relevant services, to clarify the limited nature of that designation, and to manage client expectations about the scope of the firm’s tax-related obligations. One commentator has specifically highlighted the risk of “expectation creep” among unsophisticated clients who may mistakenly assume that a firm’s registered status as a “tax adviser” implies a wider duty to advise on tax matters, so point out clearly that this is not the case. 

• Update your risk register:

The inability to interact with HMRC is not an abstract compliance risk. In practice areas such as conveyancing, it is a business-critical, transactional risk that should feature explicitly on the firm’s risk register with defined controls and a named owner.

• Prepare to register in May 2026: 

Register as soon as the portal opens. Do not wait. Firms that leave registration until late in the transitional window will have less time to resolve any issues that arise during the application process, and may find themselves unable to interact with HMRC at a business-critical moment.

Conclusion

HMRC’s mandatory registration regime is a significant development for the legal sector, and one that has arrived with less preparation time, and less detailed guidance, than the profession would have wished for. But the framework is clear enough to start acting on now. 

Firms that treat this as a background administrative matter and leave action until the last minute will be exposed to precisely the kind of operational, regulatory, and reputational risk that good risk management exists to prevent. The immediate steps required are straightforward, so the time to take them is now.  

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

On 11 March 2026, the Online Procedure Rule Committee published a summary of responses to its Consultation on the first set of Online Procedure Rules, and I wrote that up. 

In what the Master of the Rolls and the Online Zealots have pushed as being an extremely important development, it received just 23 responses, or 28 responses, depending on which version of the Online Procedure Rule Committee Minutes you read…

Just like driverless cars, no one is interested…

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In my piece

SMART GLASSES CASE: TIME TO BAN MOBILE PHONES FROM COURT ROOMS

I stated that mobile phones should be prohibited in court, and this produced a comment on my blog piece saying that litigants in person should be able to use their mobile phones to record the proceedings. 

I set out that comment, together with my response:

“One immediate step would be to ban mobile phones from court rooms.”

One step that should be taken is to allow litigants in person to use their phones to record proceedings. Unlike professional lawyers, who will normally have both the advocate and someone from the solicitors in attendance, a LIP is usually on their own. It’s therefore effectively impossible for them to both present their case and make an accurate note of the hearing. They are also, unlike professional lawyers, unable to distinguish the important parts of the judgment, so try to transcribe the entire judgment, which is impossible.

If, as is often the case, they want advice from a lawyer after the hearing the lawyer can’t provide it as they don’t know what was said by the judge. Consequently, they are forced to pay potentially hundreds of pounds and wait several weeks for a professional transcript. This means that the 21 day deadline for an appeal means that LIP’s are often forced into lodging a possibly hopeless appeal simply because their adviser can’t provide proper advice.

Allowing LIP’s – or, indeed, professional lawyers – to record hearings would not, so far as I can see, cause prejudice to anyone, and the absurd rule about such a recording being contempt of court needs to be abolished immediately.

Response: 

The recording of proceedings by anyone other than the court is prohibited, and for good reason.

I do not know where you get the information of professional lawyers will normally have both the advocate and someone from the solicitors in attendance from.

Apart from the heavier cases, it is very often solicitors who appear as advocates, and in my entire working life of over 50 years appearing in court, I doubt if I have had someone in attendance with me in more than 10% of cases where I have appeared as an advocate, and it is relatively rare now, except in heavier cases, for counsel to have another person attending to take a note.

It is bound to be the case that a litigant in person who wants advice from a lawyer after the case has been concluded will be paying a considerable sum of money for matters to be reviewed, whereas advice early on would have cost far less.

Having said all of that, I do take your point about a note of the proceedings, and that applies to advocates as well as litigants in person.

Artificial Intelligence transcripts are now fairly accurate and improving significantly.

For example, transcripts of Teams meetings are a very good base for a full note of that meeting.

AI transcripts of criminal proceedings are about to be trialled and my view is that it would be useful for the civil courts to trial the AI transcription of civil proceedings, and there is no reason why this should not be live-time with the words coming out on a screen in court so that if there is any obvious error, it can be rectified there and then.

Such a transcript could be made available to anyone appearing in court, and indeed, the press and public, within a matter of minutes of the hearing ending.

This would also help Judges in preparing their judgments, rather than having to listen to a recording or go through their own notes.

I do take your point generally, and I think that the court system, and the legal system generally, has not used technology properly, and has concentrated on digitalization, which is just replacing words on paper with words on the screen.

The danger of allowing proceedings to be recorded by anyone is that selective parts of those recordings can be released on social media, and this has happened, and matters are taken out of context.

There is also the potential for witnesses to be concerned about who is recording and using those recordings, especially in matters where one of the parties may fear for their safety, such as criminal proceedings or family proceedings.

Thank you very much for your comment.

Kerry

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Eskander v General Medical Council [2026] EWCA Civ 372 (31 March 2026)

the Court of Appeal allowed an appeal by a doctor against a decision striking out her statutory appeal under section 40 of the Medical Act 1983 against a Medical Practitioners Tribunal’s suspension order. 

The central issue was whether the appeal had been brought in time when the appellant’s notice was emailed to the Administrative Court Office on the last day of the 28-day statutory period without payment of the required fee, which was paid later. 

The Court of Appeal held that, following the reasoning in Hassan-Soudey (aka Hamilton) and others v Siniakovich [2026] EWCA Civ 215, an appeal is ‘brought’ when the appellant’s notice is delivered to the court office, even if unaccompanied by the appropriate fee.

It rejected arguments that non-payment of a fee differs from underpayment (a point left open in Siniakovich) and that statutory appeals under the Medical Act 1983 (or any other statutory appeal) should be treated differently from actions under the Limitation Act 1980 holding that there is no logical distinction between paying an inadequate fee and paying no fee, and that the question of when an appeal is ‘brought’ must be answered consistently across different statutory contexts.

It left open the question of whether Siniakovich applied to internal appeals (appealing a ruling or order made in existing proceedings) as opposed to external appeals (when the appellant’s notice is the first step in initiating proceedings).

The court admitted fresh evidence showing that the appellant had relied on advice from experienced counsel that she would receive a payment link from the court, holding that she had done all she reasonably could to bring the appeal timeously.

It noted that the surrogacy principle (whereby a party is bound by their legal representatives’ failings) did not apply, as the appellant was acting in person, albeit with advice from counsel on a direct access basis.

It also expressed the view that, although the principles in Ladd v Marshall [1954] 1 WLR 149 applied, the standard of diligence required of a litigant in an interlocutory application may not be as exacting as that required at trial.

Had the appeal been out of time, it would have granted an extension under Article 6 of the European Convention on Human Rights, noting a lack of clarity in the guidance on paying court fees in Form N161 (appellant’s notice) and leaflets EX340 and EX350.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Sikander Grocers Ltd v Secretary of State for the Home Department [2026] EWHC 883 (KB)

the King’s Bench Division of the High Court allowed an appeal against a decision of Luton County Court that an appeal had been lodged out of time as the cheque had been made payable to My HMCTS instead of HMCTS. 

A trainee solicitor had attended at court and dropped the appeal bundle in the box provided for hand deliveries. 

There was no facility for paying the court fee by card, so the trainee left a cheque for the correct fee and the court usher confirmed that all was in order. 

All documents were in order and served correctly and the correct fee had been paid. 

Subsequently, the court returned the documents to the solicitor by post on the grounds that the cheque being payable to “My HMCTS” instead of “HMCTS”. 

The court said – 

1. I have concluded there is sufficient evidence for me to conclude that Ms Khan had significant difficulties not of her own making at Luton County Court. I also conclude as is expressed in the appeal documents, that she proffered payment of the appropriate fee in a generally acceptable form, namely by card in the solicitors’ firm’s name, but that was refused. I accept she arrived wishing to speak with a member of counter staff and was refused, and also that she came armed with more than one method of payment. I further accept as set out by SGL’s solicitors that she was misled by the only available court staff (who purported to give her (erroneous) instructions about the filing of the bundles thereby representing that he knew the system and was in a position to advise), that the cheque she made out was acceptable when it was not. It is stated:

            “As there was no facility available for payment by debit card, she left the bundle with the cheque of appropriate fees. The Usher also confirmed the cheque was written correctly; therefore, Ms Khan trusted his competency as an Usher.”

The High Court pointed out that if you pay online, the correct Payee is My HMCTS. 

The court’s incompetence led to the Judge holding that the appeal was out of time. 

The Circuit Judge himself then dismissed an application to set aside that order and then dismissed an appeal against that decision. 

One might think that it is being a Judge and jury in one’s own case at several levels. 

The High Court Judgment contains a detailed analysis of the law in these circumstances. 

• In my judgement, the caselaw suggests that in order properly to bring the appeal the correct fee must be tendered with the documents submitted to the court office. That in my judgement imports the notion of a cheque naming the correct payee. So the rhetorical question as to whether the proceedings were “brought” within the meaning of the statute and rules was here, no – because of the (I accept, arguably trivial) error of the “my” added to HMCTS, which had severe consequences.

• The issue here, of course, is the fact, as I (and Ritchie J ) read the papers, that the court itself was the cause of the operative error: it refused to accept the correct payment reasonably proffered by card, and then wrongly agreed the cheque as drawn was adequate replacement payment when it was not. The papers were all properly served – by several means. The documents were correct, effective payment of the fee was produced. It was not the action of the solicitor that caused the delay occasioned by the inaccurate statement of the payee on the cheque. In these circumstances the draughtsman did not in my judgement intend that an appellant should be shut out from an appeal and without recourse.

• I accept as submitted that the tenor of the caselaw suggests it is necessary for a careful, individual assessment of the facts. It is not necessary to impose a layer of individual requirements a litigant must fulfil to succeed. It is not, in my judgement, the case either, that the appellant must show themselves to be entirely blameless – although in the present case I do so hold.

• The Court of Appeal in Lars Stuewe propounds a more nuanced approach. I have concluded that the court thwarted the litigant’s proper and reasonable attempts to bring the appeal in time. There was no error or failing on the Appellant’s solicitors’ side. However, I also accept the submission that caselaw shows it is not necessary to demonstrate a person did absolutely everything required of them as an extra test in determining whether the discretion extends in a particular case.

COMMENT

What an absurd and unfair decision by the Circuit Judge upholding his own court’s incompetence against a litigant. 

Maybe the time has come for appeals in such cases to be heard at a different County Court from the one where the staff in question works. 

The facts of the case demonstrate how inaccessible the County Court office system has become. 

And yet there are those who argue for more centralization and digitalization, and regrettably, some of those are in the senior judiciary. 

Master of the Rolls – get yourself down to Luton County Court and then reflect. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Lewis Rigley v Zurich Insurance Company (UK) Ltd, 10 February 2026, Middlesbrough County Court

the County Court considered the costs position in a Fixed Recoverable Costs matter where a Part 36 offer was made and accepted whilst the matter was in Complexity Band 2 of the Intermediate Track, but where an application for reassignment to Band 1 was pending when the Part 36 offer was made and accepted.  

It was the paying party defendant who had made both the Part 36 offer and the application to reassign the matter from Complexity Band 2 to Complexity Band 1.  

Fixed Recoverable Costs in Band 1 are considerably lower than in Band 2.  

The court reassigned the matter to Band 1 after the Part 36 offer had been accepted and ruled that the claimant should get only Band 1 costs even though the offer and acceptance had been made whilst the matter was in Band 2.  

The court did not rule on what would have happened if the application had been made after the Part 36 offer had been made, or indeed after it had been accepted.  

There are three potential scenarios: 

• Part 36 offer made after the application to reassign has been made – the position here. 

• Part 36 offer made before the application to reassign but before acceptance of the Part 36 offer. 

• Application to reassign made after acceptance of the Part 36 offer.  

Acceptance of a Part 36 offer stays the claim, but the court here held that a stayed claim is still extant and as long as the claim is in existence, stayed or otherwise, then the court has jurisdiction as set out in CPR 36.14(5)(b) which provides:  

”Any stay arising under this rule will not affect the power of the court — 

• to enforce the terms of a Part 36 offer; or 

• to deal with any question of costs (including interest on costs) relating to the proceedings.”  

I am far from convinced that the issue of reassignment is a “question of costs”.  

True it is that it has an impact on costs but its primary purpose is to ensure that the case is dealt with in the most appropriate way, given its complexity, the number of witnesses, etc. 

This decision imports great uncertainty as it means, as recognized by the court here that the parties are agreeing to settle on one basis but the court then moves the goal posts.  

Both Fixed Recoverable Costs and the Part 36 regime are intended to import certainty into the litigation process. 

This rule creates uncertainty.  

Every paying party, shortly before they make a Part 36 offer, can apply to reassign to a lower Complexity Band, and the receiving party will then not know what they are in fact going to receive.  

This can be used as a negotiating weapon by the paying party, and surely, that was not what was intended.  

The Judgment is short, and I set it out in full here.  

Rigley v Zurich Insurance Co (UK) Ltd, 2026 WL 00992487 (2026)                                                    

Lewis Rigley v Zurich Insurance Company (UK) Ltd 

 No Substantial Judicial Treatment 

Court 

County Court (Middlesbrough) 

Judgment Date 

10 February 2026 

In The County Court at Middlesbrough 

Claim No: 212DC926, 2026 WL 00992487 

Before: Deputy District Judge Gibson 

10 February 2026 

Start Time: 11.49 Finish Time: 11.57 

Representation 

             Ms Walker appeared for the Claimant 

  Mr Colin Richmond (instructed by DAC Beachcroft Claims Ltd) for the Defendant . Deputy District Judge Gibson 

1. This is an application by the defendant and I start off saying that there is some query as to whether it is to set aside an order, or to vary an order, or to vary part of an order. I think what is very clear is the application is under CPR 3.3(5) and the application relates to the banding that the court made and it is clear from the application that the defendant challenges not the fact that the case was allocated to the intermediate band or track but the fact that it was allocated to band 2 rather than band 1 and that is the basis of the order that the defendant seeks, they want that changed. I take the view, whether you are talking about variation or setting aside or whatever, that querying that is an exercise in semantics, it is quite clear what the defendant is seeking. 

• The basis upon which the defendant seeks to look at that decision under 3.3(5) is not a review of a decision, the rules are clear, it is a consideration of the issue itself and I am referred to  

Kerry Underwood 2026                  kerry.underwood@lawabroad.co.uk                                                                         427 

26.16, CPR 26.16 table 2. It is quite clear from the papers that this is a personal injury claim listed for no more than a day, the liability is not in dispute and quantum is in dispute. On the face of it that sits within complexity band 1. That does not mean to say that the court could not allocate it to a different band, as indeed the court did, allocated it to band 2, but the defendant was within its rights to challenge that and has challenged it and the application, I am satisfied, was made within seven days of the original order being received on 28 October, the application I think was made on 31 October. 

• Now, what has then transpired is, whilst that application was pending, the defendant made an offer to settle and that offer to settle under Part 36 was made on 22 December and accepted on 6 January 2026 and on behalf of the claimant it says well, 36.13 applies, we accepted your offer and the effect of our accepting your offer is that the claim is stayed, the court has no jurisdiction. I reject that argument. A claim that is stayed is still extant and within the court’s jurisdiction and as long as the claim is in existence, stayed or otherwise, the court has a jurisdiction to look at the matter. 

• However, the further argument the claimant makes is the one that I think troubles me the most and what it says is this. Look, you made an offer to settle, the claim was already at that point allocated to band 2, you made your offer and nowhere in your offer did you say subject to determination of band 2 costs or subject to the court considering your application and the point about Part 36 was you made an offer to settle under a fixed costs regime when the case was allocated to band 2 and we accepted that offer and that is the basis of our settlement and you cannot go behind it. 

• However, attractive as the argument may be upon the face, I am afraid I am against the claimant’s advocate because of the provisions of CPR 36.14(5)(b) and Mr Richmond, I think, for the defence is right to point out that provision which says:  

”Any stay arising under this rule will not affect the power of the court—to deal with any question of costs (including interest on costs) relating to the proceedings.” 

• Mr Richmond says you always have a discretion, judge, and in any event 36.14(5)(b) makes explicit that which is in question. I believe he is right. I think the court does have a discretion on costs and therefore I am prepared to set aside that part of the order putting the costs into band 2 and I am going to allocate the costs to band 1. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

Budgeting-lite

Barristers’ Guideline Hourly Rates

Solicitors Act 1974 Reforms

The Deputy Head of Civil Justice addressing the Association of Costs Lawyers in April 2026 spoke about imminent changes in relation to costs matters. 

Simplified Costs Budgeting

Lady Justice Cockerill said that feedback from the Pilot had been positive and that “costs budgeting-lite” cuts down on costs management hearings and reduces costs. 

The three-year Pilot scheme applies to Business and Property Court claims valued at less than £1 million and is being trialled in the County Courts of Manchester, Leeds, and Central London. 

The idea is that the budgeting process is proportionate to the complexity and value of claims with amended budgeting forms in place. 

“You can anticipate that it will be brought back to [the Civil Procedure Rule Committee] with a view to wider rollout, certainly across district registries.”

Solicitors Act 1974 Reforms

Lady Justice Cockerill said that the Civil Justice Council will be publishing a report in relation to the reform of the costs provisions of the Solicitors Act 1974. 

Lady Justice Cockerill said that the Solicitors Act had not kept pace with developments and costs and that 

“the status quo has made everybody very unhappy”. 

Barristers’ Guideline Hourly Rates

A Civil Justice Council report will be published soon introducing Guideline Hourly Rates for barristers, and while a less complicated issue than the others this has been a more contentious issue.

“Guideline Hourly Rates for Barristers were a bit of a shock to a number of people, but the Civil Justice Council has managed to get some very good data to consult on”. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The recently appointed Chief Executive of the Solicitors Regulation Authority has said that the body will lean less on enforcement and punishing firms for mistakes and seek to support them. 

‘We are pretty enforcement-led, we reach for investigation and enforcement quite quickly because instinctively we don’t go for other tools,’ … ‘I am really keen to test whether we as a regulator could do more to support people to be able to comply, and use other tools stopping short of enforcement to get people over the line’. 

The new Chief Executive also indicated that whatever the outcome of the appeal to the Court of Appeal in Mazur, the Solicitors Regulation Authority will be lenient with any incidences of inadvertent breaches of the rules, stating that it was not now in the business of coming after people who have made mistakes. 

However, there was no suggestion of retrospective pardon for firms penalized over the last few years by the previous regime for extremely trivial mistakes. 

The same Chair who oversaw that Star Chamber regime remains in place, and the former Chief Executive retains his pension. 

There is growing pressure for a Post Office style enquiry into the conduct of the Solicitors Regulation Authority over the last few years. 

The Legal Services Act 2007, which created this body, is almost certain to be repealed shortly after the next General Election.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The Financial Conduct Authority has announced details of its compensation scheme in relation to car buyers treated unfairly in Car Finance Agreements. 

Agreements involving minimal compensation or zero Annual Percentage Rates will not be accepted into the scheme, and no one will be better off than they would have been had they been treated fairly, resulting in around one in three cases having the compensation capped. 

Anyone pursuing court action will be automatically excluded from this scheme by the Financial Conduct Authority who expects the bill to them to be £9.1 billion. 

Generally, applicants will receive the average of their estimated loss and the commission paid, plus interest, and this is referred to as the hybrid remedy. 

This estimated loss is based on economic analysis by the Financial Conduct Authority showing the difference in the Annual Percentage Rates on these loans as compared with flat-fee arrangements. 

About 90,000 consumers whose cases align closely with the Johnson case considered by the Supreme Court will receive redress of all commission plus interest.

 These involve an undisclosed contractual tie and/or discretionary commission arrangement, and very high commission of at least 50% of the total cost of credit and 22.5% of the loan.

FINANCIAL CONDUCT AUTHORITY SEEKING TO OUST USE OF COURTS 

In yet another very worrying development, as England and Wales is scrapping many of its Courts and Tribunals, the Financial Conduct Authority has announced a new “taskforce” with the Solicitors Regulation Authority, Information Commissioner’s Office, and Advertising Standards Authority to set up action against what it calls rogue operators. 

They state that they will share intelligence on how Claims Management Companies and law firms are marketing themselves, and what they are telling clients about the value of their claim. 

They say that they are pledged to take swift action to tackle unsolicited and misleading advertising, meritless claims, multiple representation, and unfair exit fees. 

And there were those of us who thought solicitor client information and advice was confidential, and that the whole point about the Information Commissioner’s Office was to stop illegal sharing of data…

This is yet another move towards totalitarianism in this country…

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

JXX v Archibald & Anor; HLA v LXA & EUI Ltd [2026] EWHC 630 (SCCO)

the Senior Courts Costs Office, hearing two joined cases and with the medical reporting organizations joined as third parties, held that there was no requirement for medical reporting agencies to provide a breakdown of work done in the way that solicitors had to as their fees were disbursements rather than solicitors’ work outsourced to them by those solicitors. 

Having heard extensive evidence over several days, the court held that the mark up on the expert’s fee should be capped at 25% of the expert’s fee and that would be the medical reporting organization’s fee. 

Thus, if the fee paid to the expert is £1,000, then the maximum total charge including the reporting organization’s fee is £1,250 with £1,000 going to the expert and £250 to the reporting organization. 

Here, Premex said that their mark up was either 35% or 45% while for Medical and Professional Services Limited (MAPS) it ranged from 20% to 104%. 

This is the latest battle in the war which, as the Senior Courts Costs Office recognized, has been going on for decades. 

The Senior Courts Costs Office invited the parties to appeal to get a definitive ruling on the issue. 

3.      The questions posed in these cases have been aired for more than two decades now without any directly relevant High Court or higher decisions. I have said on more than one occasion during the proceedings that a determinative authority would be welcome in this area. I imagine that one, or possibly both, sides will wish to seek that determinative decision. 

4,      A number of the reported cases refer to the MROs as medical reporting agencies rather than organisations. Nothing appears to turn on this terminology and one of the MRO witnesses specifically states that the phrases are used interchangeably. For what it is worth, I have used MRO since they are, in my view, plainly actors in their own right, rather than simply acting as the agent of the solicitor or claimant.

The Judgment runs to 32-pages and 140 paragraphs and sets out in detail the competing arguments and the case law. 

An appeal is likely. 

Watch this space. 

When a client becomes bankrupt, it is the Official Receiver who takes over everything, and they do generally instruct solicitors to deal with any litigation, and sometimes, they will instruct the solicitors who were actually dealing with the matter before the bankruptcy as obviously, they will be familiar with the case and the client, and again, that is something to note for the future. 

Any costs in dealing with the bankruptcy would be payable by the Official Receiver. 

No one except the Official Receiver, or solicitors instructed on their behalf – effectively the Official Receiver – can deal with litigation for a bankrupt. 

Section 306 of the Insolvency Act 1986 provides that on the appointment of the Trustee in Bankruptcy, the bankrupt’s estate vests in the trustee and that includes property which is defined by Section 436 of the Act to include “things in action, namely the legal claim or a right to claim”. 

Not all claims vest in the trustee in bankruptcy, and one of the exceptions is general damages, and thus, a personal injury claim, including clinical negligence, where there is no claim for special damages does not vest in the trustee in bankruptcy. 

In 

Heath v Tang [1993] 3 All ER 694 

the Court of Appeal noted that the property which vests in the trustee includes “things in action”, but despite the breadth of this definition there are certain causes of action personal to the bankrupt which do not vest in his trustee. 

These include cases where 

“the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind, or character, and without immediate reference to his rights of property”.

This was restated in Ord v Upton [2000] Ch 352.

Ord was a negligence action for personal injury, including special damages, and the issue was whether the existence of the special damages claim took the case out of the exception, meaning that it vested in the trustee, or remained wholly within the exception, or could be severed so that the general damages claim remained with the bankrupt but the special damages claim vested in the trustee. 

The Court of Appeal held that that was a single, indivisible action and therefore it either all remained with the bankrupt (if it was PSLA alone) or all vested in the trustee (if there was any claim for special damages).

The Court of Appeal held that the action vested in the trustee and to fall within the exception a claim must relate only to a cause of action personal to the bankrupt, adding

“All causes of action which seek to recover property vest in the trustee whether or not they contain other heads of damage to which the bankrupt is entitled.”

In the personal injury and disease context, therefore, if the claim is for personal injury (and general damages for PSLA) alone, then it does not vest in the trustee in bankruptcy under section 306.

However, if there is any claim for special damages (even minimal travel expenses), then the entire claim (including the PSLA component) vests in the trustee in bankruptcy.

All general damages recovered, however, will be held on trust for the claimant. Special damages, meanwhile, will be for the benefit of his or her creditors.

Practical Considerations

Given that the right to claim (if not issued), or the claim (if issued), either does or does not vest in the trustee in bankruptcy on his or her appointment, this leads to a matrix of considerations for next steps.

If the claim is not yet issued:

1. Consider whether there are any material special damages.

1. If there are not then the sensible thing to do will be to waive the right for special damages and claim PSLA alone. That claim remains vested in the claimant, and he can issue in his own name.

1. If there are, and they can’t properly be waived, then the right to claim will vest in the trustee. Liaison with the trustee will be necessary. Does he or she wish to be the claimant? If not, then they should assign the right to the claim to the claimant. The claimant then issues but has to plead his right to claim further to the assignment.

1. If the claimant issues without that assignment, then the defendant should apply to strike the claim out as an abuse of process under CPR 3.4(2)(b).

If the claim is already issued at the time of the trustee’s appointment:

1. Consider whether there are any special damages at all. This might be the case in a minor RTA without treatment, loss of income, care or travel. It might be the case in an NIHL claim without advanced aiding.

1. If there aren’t, then the claim can continue in the claimant’s name. It has not vested in the trustee in bankruptcy.

1. However, if even a pound is claimed by way of special damages, then the entire claim vested in the trustee on his or her appointment. Although there is no decided authority on the point, it would be unwise simply to surrender the right to a modest claim for special damages (in an attempt to maintain the right to claim without assignment) because the vesting event would already have taken place. Simply put, it would be too late.

1. That said, assuming the claimant instructs his solicitor about the bankruptcy order, and before the appointment of the trustee, a decision could be made in that brief window to waive the right to special damages, reducing the claim to one for PSLA alone, which would remain vested in the claimant at the moment of appointment of the trustee. This would have to be done in an unequivocal fashion.

1. If there is a claim for special damages, then the entire claim is vested in the trustee, and the same steps as at 3 above are required: does the trustee wish to be substituted as claimant? He or she probably will wish to be claimant in a large claim, given the entitlement of the creditors to those special damages, such that there will be an interest in controlling the litigation. If not, the claim needs to be assigned to the claimant, and an application made to amend the claim form and particulars of claim to rely on the right to claim further to the assignment.

1. Again, if the claimant does not take these steps, then the defendant should apply to strike the claim out as an abuse of process.

What about where the negligence effectively caused the claimant to become bankrupt?

If there was any claim against the defendant in relation to the costs of the bankruptcy then in my view, it would be in damages in the sense that those were expenses incurred by the claimant as a result of the defendant’s negligence, but not legal costs in the action itself. 

It may be helpful to draw an analogy with costs of attending an inquest when claimed in a personal injury matter, and the court can order such costs against the defendant if they are costs of or incidental to the proceedings. 

However, there is clearly a direct connection between an inquest into the cause of the death of the claimant, claiming through their estate, and the personal injury action. 

I cannot see that there is a sufficient closeness between bankruptcy proceedings and the personal injury action for a court to award the costs of the bankruptcy action against the defendant in a clinical negligence action. 

Even if there was, and if those costs were claimed as damages, I suspect that there will be considerable difficulties in proving causation, that is that negligence caused by bankruptcy. 

I am unaware of any decision on the point, and that may be because no one in that situation has sought costs, but the court has a virtually unlimited discretion in relation to costs, to be exercised judicially of course. 

In 

Davies v Lettington [2026] EWCA Civ 364

the Court of Appeal allowed an appeal against the order of a Circuit Judge holding that the appellant was in breach of an injunction. 

The basis of the appeal was that the Circuit Judge had wrongly refused the appellant’s application for an adjournment to give her an opportunity to obtain publicly funded legal representation which is available as of right and without means testing to a person facing committal proceedings.

The respondent to the appeal, that is the party in whose favour the injunction had been granted, correctly served Form N600 which provides: 

“You have the right to be legally represented in the contempt proceedings.

You are entitled to a reasonable opportunity to obtain legal representation and to apply for legal aid which may be available without any means test.”

and that wording reflects the words of CPR 81.4(2)(i) and (j) which provides that a contempt application must state: 

“(i)           that the defendant has the right to be legally represented in the contempt           proceedings;

(j)             that the defendant is entitled to a reasonable opportunity to obtain legal               representation and to apply for legal aid which may be available without any                  means test.”

A leading case is 

Hammerton v Hammerton [2007] EWCA Civ 248

and there, the court set out what were already well settled principles relating to committal hearings including: 

1. Proceedings for committal are a criminal charge for the purposes of Article 6 of the ECHR, such that the defendant is entitled “to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require.”

1. The obligation to afford a defendant representation is not unlimited, and a defendant’s intransigence in unreasonably refusing it or in co-operating with legal representatives may make it impossible for legal assistance to be provided.

1. Absent such unreasonable behaviour, if the defendant is unrepresented then an adjournment should, save in circumstances of extreme urgency, be granted so that representation may be obtained.

1. A defendant to committal proceedings is not obliged to give evidence and benefits from the Article 6.1 right against self-incrimination.

At 13, Moses LJ expressed the view that “the judge was obliged to ask … questions” as to the reason for the absence of legal representation and 

“to consider, at the very outset of the hearing, whether there should be an adjournment so as to enable the defendant to be represented.”

At 14 to 18, Moses LJ also stated that the judge had erred in hearing both the application for contact and the committal proceedings at the same time, because it was for the applicant to establish his claim for contact, and adduce evidence accordingly, but there was no such obligation in the committal proceedings.

At 23, Moses LJ doubted “whether it will ever be necessary for a court to speculate as to whether representation would have made a difference in cases such as these”, continuing:

“The more serious a case, the more a defendant is likely to need persuasive and skilful representation. It is almost impossible to envisage a case where such representation will not be needed, if only, as this case demonstrates, to remind a judge of the principles which apply. Even in a case where a defendant admits each and every breach alleged, representation will be needed so as to assist the judge in considering the appropriate disposal. In my view, it will rarely be open to anyone opposing an appeal based on article 6 to contend that article 6 rights would have made no difference.”

Lord Justice Wall at [51] echoed Moses LJ’s observation that “absent the type of impossible behaviour identified …. a litigant in person who is liable to be sent to prison for contempt of court is entitled to legal representation, if necessary at public expense.”

Similar issues arose in 

Brown v London Borough of Haringey [2015] EWCA Civ 483

and the Court of Appeal came to the same conclusion for essentially the same reason. 

57.          The efforts of the courts in Hammerton and Brown notwithstanding, the problems       with ensuring that defendants in civil committal proceedings were legally                 represented continued. In O (Committal: Legal Representation) [2019] EWCA Civ         1721, in which the defendant was committed to imprisonment following a hearing          at which she did not have legal representation. Jackson LJ expressed the broad principle at [2]:

                  “The case is a reminder that respondents to committal proceedings are entitled to      be provided with legal representation if they want it and that they will qualify for                   non-means-tested legal aid. There is an obligation on the court to ensure that this        protection is made available. Where this does not happen any resulting order for   committal may be procedurally irregular.”

• All of these decisions refer to the right of a defendant to civil committal proceedings to have legal representation if they want it, and to the availability of public funding for such representation without the need to satisfy a means-test. Identifying the precise route by which such funding is to be accessed has proved a challenging task. In King’s Lynn and West Norfolk Council v Burning [2015] EWHC 3390 (QB), Baker J engaged in what McCombe LJ in Brown described as a “lengthy consideration of tortuous statutory and regulatory provisions” for the purposes of committal proceedings for breach of a High Court order, and concluded that in such cases, the High Court itself was the relevant authority to determine entitlement to legal aid.

• Chamberlain J returned to that question, once again in the context of committal proceedings in the High Court, in All England Lawn Tennis Club v McKay [2019] EWHC 3065 (QB). In that case, the judge adjourned the proceedings to allow the LAA to make submissions as to the correct position. After conducting his own review of statutory and regulatory provisions, at [12]-[13], [15] and [26] Chamberlain J concluded that:

i)               a defendant facing committal proceedings for breach of a High Court order is entitled to criminal legal aid as of right without the need for any assessment of means or merits;

ii)             such a defendant does not have to satisfy an “interests of justice” requirement; and

iii)            the “relevant authority” for the purpose of granting legal aid in respect of High Court committal proceedings is the Director of Legal Aid Casework and not, as Baker J had held, the High Court itself.

• It is helpful to trace through the provisions to which Chamberlain J referred¸ and to consider their application by reference to committal proceedings in the County Court, in the hope that these observations may be of assistance to others should a similar issue arise in the future:

i)           Legal aid for civil committal proceedings is treated as criminal legal aid for the purposes of s.14(h) of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (“LASPO”) (Regulation 9 (v) of the Criminal Legal Aid (General) Regulations 2013 (SI 2013/9). As McCombe LJ noted in Brown, [29], this applies to committal proceedings in the County Court as well as the High Court.

ii)          Section 16 of LASPO provides for representation to be available for the purpose of criminal proceedings if “the relevant authority has determined …. that the individual qualifies for such representation”. The relevant authority means “the person who is authorised under section 18, 19 or 20 to determine (provisionally or otherwise) whether the individual qualifies under this Part for representation)”.

iii)        While s.17(1) of LASPO provides for the relevant authority to determine eligibility by reference to the means test and the interests of justice test, in criminal proceedings other than those in the magistrate’s court or the Crown Court, the relevant authority must determine that the individual’s financial means are such that they are eligible for representation (Regulation 39 of the Criminal Legal Aid (Financial Resources) Regulations 2013 (SI2013/471)). As this provision operates by reference to “any criminal proceedings other than (a) magistrates court proceedings and (b) Crown Court proceedings,” the effect of that provision is that there is no means test for legal aid funding for representation for committal proceedings in the County Court as well as the High Court.

iv)        So far as the “interests of justice” test is concerned, Regulation 31 of the Criminal Legal Aid (General) Regulations 2013/9 provides

              “For the purposes of a determination under section 16 of [LASPO], making representation available to an individual for the purposes of criminal proceedings is taken to be in the interests of justice when the proceedings are before—

(a)       the Crown Court, to the extent that such proceedings do not relate to an appeal to the Crown Court;

(b)       the High Court;

(c)       the Court of Appeal; or

(d)       the Supreme Court.”

v)          It will be apparent that Regulation 31 does not address committal proceedings in the County Court. We were not referred to any legislative provision addressing this issue. I would note that the very reasons which make legal representation in the interests of justice in the High Court will generally make legal representation in the interests of justice in committal proceedings in the County Court.

vi)        Regulation 7 of the Criminal Legal Aid (Determinations by a Court and Choice of Representative) Regulations 2013/614, which were made under the regulation-making power conferred by s.19 of LASPO, limits the power of the High Court to make a determination under s.16 of LASPO to certain cases which do not include civil committal proceedings before the High Court. As a result, determinations regarding legal aid in civil committal cases are to be made by the Director of Legal Aid Casework. This follows from s.18 of LASPO which provides that the Director is determine “whether an individual qualifies under this Part for representation for the purposes of criminal proceedings, except in circumstances in which a court is authorised to make a determination under regulations under section 19”.

vii)       This led Chamberlain J to reach a different conclusion to Baker J in relation to the determining authority in High Court committal proceedings. His logic applies equally to County Court committal proceedings, there being no regulations made under s.19 conferring a determination authority in such cases on the County Court. That accords with the conclusion reached by McCombe LJ in Brown, [35]. He noted at [36] that:

                                    “Unfortunately, although nothing could be simpler, there is no clear                                            legislative provision providing in straightforward terms that applications for                            publicly funded representation for committal proceedings in the County                         Court are to be made to the Director.”

That appears to remain the position.

• Finally, an application for legal aid is made through a solicitor, who will help the client complete the application and then submit the application on paper or electronically to the LAA. The LAA publishes a document entitled “How to apply for legal aid in civil contempt – committal proceedings Guidance for providers” (“the Guidance”), the current version of which is dated October 2025. The Guidance explains to solicitors the process by which they should apply for a representation order, with different routes for solicitors who are, and are not, registered crime providers.

• For applications made through solicitors who are registered crime providers, the Guidance refers to various fields which appears on the LAA portal for applications.

• The first is the “Means Information” field where the guidance states:

                  “Civil contempt proceedings heard in civil venues are not means tested. You should therefore answer No to this question. This will ensure that the Apply for criminal legal aid service does not present any questions about your client’s financial circumstances. It will also direct the application to a dedicated non-means work queue administered by designated caseworkers.”

• The second is the “Interests of justice test”, field where the Guidance states:

                      “Use this section to explain why the case meets the IOJ test.”

• This field on the portal appears to involve ticking one or more of nine reasons for seeking legal aid. It would appear from the paper copy of form CRM 14 (which is completed by solicitors who are not registered crime providers) that one of the nine factors is:

                                    “It is likely that I will lose my liberty if any matter in the proceedings is                                        decided against me.”

COMMENT

Despite at least three clear Court of Appeal decisions on the point, the Judge here was unaware of the law and I suspect that very many solicitors and counsel are too. 

Knowledge of the fact that a party facing committal proceedings is entitled as of right and without means testing to legal aid is essential for civil litigators, both for the fact itself, and, when responding to a party, often an insurance company, which is threatening committal proceedings. 

In 

M, Re (A Child: Costs) [2026] EWCA Civ 381

the Court of Appeal allowed an appeal by the father from an order for costs made against him in the Family Court in relation to an appeal and cross appeal from a decision of two lay magistrates in private law proceedings under the Children Act 1989. 

It is relatively rare for the Court of Appeal to become involved in any costs issues, and as the starting point in the Family Court is that there is no order for costs, Court of Appeal decisions involving Family Court costs are very rare and this Judgment provides detailed and helpful guidance. 

The Court of Appeal referred to the interaction between the Civil Procedure Rules (CPR) and the Family Proceeding Rules 2010 (FPR). 

FPR 28.2 disapplies the general rule in CPR 44.2(2) that the unsuccessful party will be ordered to pay the costs of the successful party, but that the court may make a different order and that is often described as the general rule that costs follow the event. 

FPR 28.1 simply says: 

“The court may at any time make such order as to costs as it thinks just”. 

The Court of Appeal said: 

“As a matter of jurisdiction, therefore, the discretion to order costs under the FPR could hardly be wider, with the only stated criterion being what the court considers to be just”.

The Court of Appeal quoted from 

Re E (Children: costs) [2025]  EWCA Civ 183

“There is a general practice of not awarding costs against a party in family proceedings concerning children, but the court retains a discretion to do so in exceptional circumstances. These include cases in which a party has been guilty of reprehensible or unreasonable behaviour in relation to the proceedings. This practice applies equally in public law and private law proceedings, and irrespective of whether a party is legally aided. Nor is there any difference in principle between fact-finding hearings and other hearings. The court can make costs orders at any time: FPR r 28.1.”

Nevertheless, FPR 28.2 then incorporates by reference most of the provisions of CPR Part 44, including (importantly) rules 44.2(4) and (5). Rule 44.2(4) provides that:

“In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

                  a) the conduct of the parties;

                  b) …”

Rule 44.2(5) then explains what is meant by “conduct” in this context, saying that it includes: “(a) conduct before, as well as during, the proceedings …; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended its case or a particular allegation or issue; …” There is accordingly a close focus on the litigation conduct of the parties.

The Court of Appeal had this to say: 

• The next point to which I draw attention is the underlying rationale for the general          rule in children’s cases. According to Lady Hale in Re S at [19], the “classic     explanation” is that given by Wilson J in Sutton London Borough Council v Davis              (No 2) [1994] 1 WLR 1317, 1319:

                                    “Where the debate surrounds the future of a child, the proceedings are                                    partly inquisitorial and the aspiration is that in their outcome the child is the                                  winner and indeed the only winner. The court does not wish the spectre of                            an order for costs to discourage those with a proper interest in the child                        from participating in the debate. Nor does it wish to reduce the chance of                                     their co-operation around the future life of the child by casting one as the                              successful party entitled to his costs and another as the unsuccessful                              party obliged to pay them. The proposition applies in its fullest form to                                      proceedings between parents and other relations; but it also applies to                                   proceedings to which a local authority are a party.”

• Lady Hale then enlarged on this theme at [20] to [26]. For example, she observed          at [21] that “it can generally be taken for granted that each of the persons          appearing before the court has a role to play in helping the court to achieve the               best outcome for the child”, and “No one should be deterred by the risk of having            to pay the other side’s costs from playing their part in helping the court achieve the      right solution”. Lady Hale added, at [23]: “Another consideration is that, in most               children’s cases, it is important for the parties to be able to work together in the     interests of the child both during and after the proceedings” and “Parents need to         be able to co-operate with one another after the case is over … Stigmatising one party as the loser and adding to that the burden of having to pay the other party’s    costs is likely to jeopardise the chances of their co-operating in the future.”

• Finally, it is important to bear in mind what Lady Hale said in [29] about the position    where, as in Re S itself, the disputed costs are those of an appeal:

                                    “Nor in my view is it a good reason to depart from the general principle that                          this was an appeal rather than a first instance trial. Once again, the fact that                           it is an appeal rather than a trial may be relevant to whether or not a party                             has behaved reasonably in relation to the litigation. As Wall LJ pointed out                     in In re M (A Child) [2009]  EWCACiv 311, there are differences between                   trials and appeals. At first instance, “nobody knows what the judge is going                          to find” (para 23), whereas on appeal the factual findings are known. Not                            only that, the judge’s reasons are known. Both parties have an opportunity                           to “take stock” (para 24), and consider whether they should proceed to                                    advance or resist an appeal and to negotiate on the basis of what they now                      know. So it may well be that conduct which was reasonable at first instance                       is no longer reasonable on appeal. But in my view that does not alter the                           principles to be applied: it merely alters the application of those principles                            to the circumstances of the case.”

The Court of Appeal held that the mere fact of resisting an appeal, even if brought on grounds that appear to be strong is very unlikely to amount to unreasonable conduct. 

• The second and third factors taken into account by the Judge also relate to the father’s conduct in relation to the appeal from the magistrates. The second factor is the father’s decision to cross-appeal, which the Judge criticises in para 27 apparently on the basis that he was acting inconsistently in attacking the reasoning of the magistrates in his appeal on the one hand, while at the same time seeking to uphold their approach and reasoning in resisting the mother’s appeal. I do not think this is a fair criticism. The cross-appeal was responsive in nature, and once it was clear from the mother’s grounds of appeal that there was going to be a comprehensive challenge made by her to the magistrates’ decision, raising issues of procedure as well as the substantive merits of the timetable for moving towards shared overnight care for M, it was clearly incumbent on the father to raise by way of a respondent’s notice all the further points which he wished to run so that the appellate court would be fully able to adjudicate on the matter in the round. It is also commonly the case that a litigant wishes to run arguments in the alternative which are mutually inconsistent, and it is not normally an abuse of process to do so. Here, the father was in my view fairly entitled to make the point that the timetable decided upon by the magistrates was in some respects slower than that recommended by Mr Walker, with no apparent explanation for the discrepancy, and to cross-appeal on that basis.

• The Judge’s third related factor (para 29) was the alleged failure of the father to take stock and decide whether it was reasonable to oppose the mother’s appeal. The implication is that the strength of the appeal should have been so obvious to him and his lawyers that he should have made an open offer to concede the appeal at an early stage (presumably subject to the court’s approval, given the involvement of a child) and that his failure to do so was again unreasonable. In the light of what I have already said about the Judge’s first and second factors, and with the greatest respect to her, I am again unconvinced by this argument which is heavily dependent on the benefits of hindsight. Nor does the Judge anywhere explain precisely why, or how, in her words “[w]hat was reasonable at first instance became, in this case, unreasonable on appeal”.

• The Judge’s fourth factor (para 28) relates to the solicitor’s letter sent on behalf of the father to the mother’s solicitors on 23 June 2025, putting her on notice that the father would be seeking a costs order if her appeal was unsuccessful. The Judge thought that this letter showed an acceptance by the father that costs should in principle follow the event, and he nowhere explained why the reverse proposition should not apply if the mother’s appeal succeeded. In truth, however, there can be no place for routine tit-for-tat reasoning of this nature to play any part where costs in children’s cases are in issue. The threat in the letter of 23 June was, in my view, at worst an inept (though familiar) tactical manoeuvre which may merit some censure, but it cannot in itself come anywhere near to justifying a departure from the general rule of no order as to costs. Nor can it reasonably be treated as a tacit admission of liability, whether by estoppel or otherwise.

• The Judge’s final factor, before she turned to quantum, was that money paid by the father on costs could not be spent on M, but it was his choice “to take the gamble of an appeal in the face of the merits” (para 30). It is unclear whether in the Judge’s view the gamble taken by the father was in deciding to resist the mother’s appeal, or in his own decision to cross-appeal. I incline to the view that the Judge probably meant the former, but in either case this factor adds nothing to those which I have already discussed apart from the obvious point that any costs order made against a parent in a case concerning the welfare of their child will prima facie reduce the money available to be spent by the paying parent on the child’s welfare. This melancholy fact of forensic life cannot, however, itself be a reason for making an adverse costs order against one of the parents, although it is one of the considerations which cumulatively justify the existence of the general rule in the normal run of cases: see Re S at [24].

• Having reviewed the reasons which led the Judge to order the father to pay the mother’s costs of the appeal, I am reluctantly driven to the conclusion that, although the Judge directed herself correctly on the law, she erred in principle in distinguishing as she did between the costs of the first instance hearing before the magistrates and the costs of the appeal. In my judgment there were no grounds of sufficient weight to justify the distinctions which she drew, and there was, on the contrary, every reason to make the same order for costs on the appeal as she rightly did in relation to the first-instance costs below. All the considerations which explain the existence of the general rule apply in my judgment with equal force to the costs of the appeal, including in particular those so eloquently stated by Wilson J (as he then was) in the Sutton case, quoted in Re S by Lady Hale at [19].

Lord Justice Peter Jackson :

• I agree that the appeal should be allowed for the reasons given by my Lord. His account of the background shows that this was a parental dispute of a sadly familiar kind and that, whatever the outcome of the first appeal might have been, there was no indication that the litigation conduct of the unsuccessful parent was likely to be characterised as reprehensible or unreasonable. Nevertheless, on receipt of the Main Judgment, the mother applied for an order that the father should pay her costs in both courts on the indemnity basis in a total amount of some £80,000. Even the Judge’s order granted her barely half that sum, and now that that order is to be set aside she must also bear her own costs of this appeal, which are in the region of £20,000. This case and the very recent decision in Pringle are unfortunate reminders of why satellite litigation about costs in child welfare cases is to be discouraged by maintaining the general principle that there should be no order for costs unless there has been reprehensible or unreasonable conduct in relation to the proceedings.

In 

Waterside Class Limited v Mowi ASA & others [2026] CAT 32

the Competition Appeal Tribunal refused an application for a collective proceedings order stating that the litigation would “principally benefit the lawyers and the funders” and expressing concern about “the proposed legal costs of the proceedings against the anticipated sums which will be returned to the class”. 

The Tribunal said that the estimated loss was between £3.10 and £16.91 per household and that these figures were

“dwarfed by the proposed cost of these proceedings”

which would exceed £20 million. 

It said that the application raised immediate concerns about what proportion of damages will be distributed to members of the class and said:

‘We find the costs spent by [Waterside Class Limited, the proposed class representative] to date, and the proposed costs to be spent in the future, to be inexplicably high,’ the judgment said. ‘It is incumbent upon a class representative and their legal advisers actively to address these matters and look for the most cost-efficient manner of pursuing this litigation. This has not been done.’

The Tribunal referred to sums returned to the lawyers and litigation funders as being likely 

“to swamp the relatively small sums that would be returned to the class. The litigation in those circumstances would have principally benefitted the lawyers and funder”.

17. We are alert to the reality that the principal motivation to pursue collective proceedings will sometimes be the benefits those proceedings bring to lawyers and funders. In a non-funded private action, an astute litigant will have in mind the costs and benefits of bringing legal proceedings and will continuously review the balance of these factors to ensure the litigation makes sense to its business. In a funded class action, the importance of striking this balance may be overlooked. Experience suggests that class representatives, who may not consider themselves personally at risk of an adverse costs order, may pay insufficient attention to such matters.

The Competition Appeal Tribunal here also referred to the case of 

Gutmann v First MTR Southwestern Trains Limited [2025] CAT 72

and the findings of the court there clearly played a key part in the decision of the Competition Appeal Tribunal here. 

It also criticized the class representative Anne Heal for charging £300 an hour and described that as a sum which 

“vastly exceeds the remuneration that would ordinarily be expected for a person engaged in public service’. 

The costs budget submitted estimated her charges as up to £316,950.

Ms Heal is not a lawyer and was simply the class representative and the Tribunal said

‘We consider that the trend towards class representatives self-authorising fees of this magnitude is undesirable and gives rise to a potential blurring of the lines between the interests of the class representative and the interests of the legal advisers and funders which they are required to scrutinise.

‘If the class representative is, by reason of the existence of the claim, engaged in a highly profitable activity, their interests are not the same as those of the class. Ordinarily we would expect the remuneration of a class representative to be in line with levels of remuneration received for work in the public sector.’

COMMENT

The Competition Appeal Tribunal did not appear to recognize the key Human Right of people to buy salmon. 

Just think of those poor households who have lost £3.10, maybe 75p per person over a six-year period. 

That could be as much as 00 .25p per week. 

It is making me reconsider whether I should be the class representative for the caviar lobster thermidor and champagne litigation, which is a shame as the queue of potential litigants stretched for miles down the streets of Hemel Hempstead. 

Surely, if we abolished jury trials, abolished Immigration Tribunals, abolished Special Educational Needs Tribunals, and virtually abolished Legal Aid, we could get our priorities right and fund these claims. 

I have not got any evidence, but I think that some of my potential clients have lost far more than in this case – some of them may have lost a penny a week due to the price of bubbly. 

SERIOUS COMMENT

An excellent decision. 

There should be a minimum average award of at least £250 in any class action or collective proceedings order before any costs are recoverable. 

Class representatives should be limited to litigant in person rates, which is of course what they are. 

Paid McKenzie friends should be scrapped. 

Opt out actions should be a criminal offence with only people who have positively consented in writing to be part of an action being included in it. 

The Competition Appeal Tribunal should be given the power to make a restraint order against a class representative who it believes is acting improperly. 

This would not apply to other civil proceedings, but only proceedings within the Competition Appeal Tribunal. 

If a collective proceedings order is granted, then the class representative should have to pay into court, by way of security for costs, £100 per member of the group. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In granting the claimant’s application for summary judgment on part of her claim, and injunctive relief in

Manek v Sintl Ventures Ltd [2026] EWHC 600 (Ch) (15 January 2026)

the court considered a point concerning the filing of a defence where summary judgment is sought on only part of a claim.

CPR 24.4(4) provides that, where summary judgment is sought before a defence has been filed, the defendant need not file a defence before the hearing.

The issue came up as to what, if anything, the court should do about the filing of a defence where the claimant was seeking summary judgment on only part of the claim.

The claimant submitted that although the defendants did not need to file a defence before the hearing, if they did not do so, she could immediately enter judgment in default on the balance of the claim.

The court held that that was wrong; it could not be intended that, once the hearing had taken place, a defendant would immediately be in default of defence as that would defeat the provision that the defendant need not file any defence before the summary judgment application was heard.

It concluded that the answer was in CPR 24.6(a), which provides that, when the court determines a summary judgment application, it may give directions as to the filing and service of a defence. 

White Book commentary (paragraph 24.6.9) states that, where the court dismisses a summary judgment application or makes an order not completely disposing of the claim, it will give case management directions regarding future conduct of the case.

The court found that, in furtherance of the overriding objective, in any case where a summary judgment application does not completely dispose of the claim, the court should give directions for the filing and service of any defence. 

Otherwise, the claim would be left in limbo. 

The judgment also provides an example of an award of indemnity costs due to the defendants’ high degree of unreasonable conduct falling outside the norm for commercial litigation. This included the fact that the defendants spun out the hearing of the application from 21 August 2025 to 15 January 2026, made serious allegations against the claimant’s solicitors to the Solicitors Regulation Authority, and only indicated, days before, that they did not plan to attend or make representations at the hearing, still not conceding the application.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

Hammond v Herrington Carmichael LLP [2026] EWHC 701 (SCCO)

the Senior Courts Costs Office considered whether interim bills delivered by the defendant’s solicitors were final statutory bills for the period covered, or Chamberlain bills. 

If the bills were final statutory bills for the period covered, then the Solicitors Act 1974 timetable for challenging them started running then, whereas if they are not final statutory bills, then time only runs for all the bills from when the final bill is delivered. 

The court held that there were two key issues: 

(i)         Were the invoices delivered by the Defendant to the Claimant Interim Statute Bills (‘ISBs’) or did             they comprise a series of interim invoices delivered as part of a ‘Chamberlain’ bill which became   ‘final’ with the delivery of the last invoice in August 2025?

(ii)        Further, or alternatively, can the Claimant demonstrate, insofar as it may be necessary for him to           do so, ‘special circumstances’ pursuant to s.70(3) of the SA 1974, such that it would be just to        order an assessment?

The court said that three relevant general principles emerged from case law. 

• The burden of proving that the retainer provides for the delivery of interim statutory bills in contrast to requests for interim payments generally, falls on the receiving party, that is the solicitor. 

• In construing the retainer, it is necessary to refer to the relevant contractual provisions as a whole. 

• In determining whether a retainer allows the solicitor to render interim statutory bills any ambiguity must be resolved in favour of the client under the general principle of contra proferentem. 

The court held that the retainer clearly gave the solicitors the right to deliver interim statutory bills, and I set out the wording here which was approved by the court. 

Invoicing

In many cases, we will normally render our invoice at or towards the end of your matter (a Final Bill). However, if your matter becomes protracted or we have notified you that Interim Statutory Bills (ISBs) will be issued regularly as the case progresses, we will deliver an ISB to you from time to time. An ISB is an invoice covering the work carried out up to the date of the ISB or a specified earlier date, and issued before the matter ends. This will help you to budget for costs. Also, we may ask you for further payments to settle disbursements that are in excess of the initial payment on account. The initial sum paid on account will not be accounted for in an ISB but will be shown as a credit in the Final Bill. Any reference in correspondence or on invoices to “an interim invoice” means an ISB.

Kerry Underwood 2026              kerry.underwood@lawabroad.co.uk                                                              372

The bills contained a very detailed breakdown of work done by date, time, and fee earner, with an accompanying narrative and clearly contained all necessary information to make them Solicitors Act compliant statutory bills. 

16. I am satisfied, on the proper contractual interpretation of the retainer(s) that the invoices delivered by the Defendant to the Claimant were ISBs, and not just a series of interim invoices delivered as part of a Chamberlain bill. The Terms of Engagement are, in my conclusion, unequivocally clear. They provide for the delivery of interim invoices and state that they have the status of ISBs. Indeed, the ‘Invoicing’ provision provides for no real, alternative characterisation, given that: ‘Any reference in correspondence or on invoices to “an interim invoice” means an ISB’. Invoices delivered by the Defendant to the Claimant exhibited all the relevant requirements of ISBs. They were, in fact, drafted with considerable detail, meaning that the Claimant was provided with a clear breakdown of the costs, expenses and disbursements. They were signed, provided a payment due date and displayed clearly his right of assessment under the SA 1974. I find accordingly that the 29 invoices delivered by the Defendant to the Claimant between 25 August 2023 and 7 August 2025 were interim statute bills within the meaning of the 1974 Act.

That disposed of that aspect. 

The client’s submission that there were special circumstances under Section 70(3) of the Solicitors Act 1974, meaning that the court could order detailed assessment even after a year had expired from the delivery of the bills was rejected by the court. 

The court considered the case law in relation to special circumstances. 

30. I am not satisfied that the Claimant has demonstrated the existence of special circumstances. There is nothing, in my conclusion, that ‘calls for an explanation’ or the scrutiny of the court. Pursuant to the retainer(s), the Defendant delivered regular, itemised invoices that exhibited very detailed breakdowns of the profit costs, expenses and disbursements that the Claimant had incurred during each relevant period. These costs were incurred pursuant to his instruction and he was aware of his ongoing, accumulating liability. Most of the invoices delivered by the Defendant were paid, within the meaning of the SA 1974. Although the substantive parties’ costs may well have been incurred (individually and collectively) to a level that was disproportionate inter partes, that is of no general relevance to a solicitor/client assessment, which proceeds on the indemnity basis. It is hard to foresee that the presumption of reasonableness would be dislodged on the particular facts of this case. No identifiable or sustainable criticism is made of the Defendant during the period(s) of representation, and the fact that the Claimant was content to be represented by the firm is illustrated by his willingness to re-engage the Defendant after March 2025.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

I have recently updated the Model Client Care Letter which appears as Document 1 of the Documents, Videos, Agreements and Advices Menu. 

This is in any event freely available on our website, and I now attach a link to the new Model Client Care Letter. 

NOTE TO SOLICITORS USING THIS TEMPLATE

Sections requiring completion are marked in square brackets and highlighted in yellow.

Each firm of solicitors should insert the relevant details for their firm, including the firm name, and client details.

To complete these sections, simply delete the highlighted text and insert the appropriate information as agreed between the firm and the client.

There is always room for improvement, and so, if you have any suggested additions, amendments, or improvements, then please let me know . 

My strong advice is to have a single Client Care Letter with a separate CONDUCT OF YOUR CASE, COSTS, NEXT STEPS & TIMETABLE, and a template appears in this Newsletter.

Time and time again I have seen cases where solicitors have a variety of documents covering these issues, such as: 

• Terms of Business; 
• Service Level Agreement; 
• Initial Letter to Client; 
• Client Care Letter; 
• Separate Funding Agreement. 

I have seen instances where there have been five different charging rates in the various documents because they have not been prepared by the same person, or not checked and unified. 

The link to the Model Client Care Letter is here. 

-1A-

CONDUCT OF YOUR CASE, COSTS, NEXT STEPS & TIMETABLE

CONDUCT OF YOUR CASE

This matter is being conducted by [INSERT NAME OF CONDUCTOR), a [INSERT STATUS AND QUALIFICATION OF AUTHORIZED PERSON, E.G. SOLICITOR, APPROPRIATELY QUALIFIED CHARTERED LEGAL EXECUTIVE, COSTS LAWYER]

COSTS, NEXT STEPS & TIMETABLE

[INSERT CLIENT NAME] [FILE NUMBER) [MATTER)

COSTS

[INSERT COSTS INFORMATION]

NEXT STEPS

[INSERT NEXT STEPS IN MATTER]

TIMETABLE

[INSERT ESTIMATED TIMEFRAMES OR KEY DATES FOR THE NEXT STEPS IN THE MATTER]

SIGNED:

[INSERT CLIENT NAME]

DATE

[INSERT DATE]

NOTE TO SOLICITORS USING THIS TEMPLATE

Sections requiring completion are marked in square brackets and highlighted in yellow.

Each firm of solicitors should insert the relevant details for their firm, including the firm name, client details, costs information, next steps and timetable.

To complete these sections, simply delete the highlighted text and insert the appropriate information as agreed between the firm and the client.

Worthing or Hornchurch are champions – yeah I know – but turning round a 28 (Dorking) or 38 (Hemel)  goal difference on the last day – I think not.

If Hemel Hempstead Town beat Salisbury, they are in the top 4

 and will be in the top 3 if 

• Dorking do not win; or
• Hornchurch lose 

 and second if 

• Dorking do not win; and 
• Hornchurch lose

If Hemel, Hornchurch and Dorking all win, then Hemel are fourth whatever the other results. 

If Hemel draw, they will be out of the playoffs if Torquay, Ebbsfleet, Weston and Maidenhead all win. 

If Hemel lose, they are out of the playoffs if Torquay, Ebbsfleet, and Weston draw and Maidenhead win. 

Relevant Fixtures

Hornchurch v Maidenhead

Worthing v Ebbsfleet

Weston v Dorking

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In opt out class actions, citizens are made parties to an action without their consent or knowledge and can, for example, end up unwittingly suing a company that they have shares in, and against their will. 

The amounts awarded to individuals are trivial and most do not bother claiming them. 

The only true beneficiaries are lawyers and third-party funders, and that is a widely recognized fact. 

Rather than the unclaimed damages awarded to hallucinatory and invented fictitious non-claimants being refunded to the defendant, they are paid to the Access to Justice Foundation. 

This is because under the Consumer Rights Act 2015, the Access to Justice Foundation is the nominated recipient of unclaimed, unasked for damages awarded in opt out proceedings in the Competition Appeals Tribunal. 

Whether or not one is in favour of the Access to Justice Foundation and its work is not the point. 

What is happening is that citizens are being forced to bring claims that they do not want to bring and any of their damages are then awarded to an organization that they may or may not have heard of and may or may not approve of. 

A change of political wind may see the nominated beneficiary as a body that many people object to and yet they would be forced into litigation as claimants and forced to hand over their money to an organization they disapprove of. 

Forced is the right word. If you are unaware of the existence of proceedings and some interfering meddler backed by profiteering litigation funders and lawyers has the legal right to add your name without your knowledge, then that is force.

Class Actions are a legal disgrace and an obvious breach of the Human Rights Act virtually every legal convention that this country has signed up to. 

The day may come when the slave claimants bring a Class Action against the interfering meddlers who forced them into litigation…. hopefully not an opt out action!

Scrap opt out Class Actions now. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

I am grateful to the Law Society Gazette for its report concerning the lack of transparency shown by the Legal Services Board while at the same time, it insists on transparency amongst law firms and the regulators that it regulates or rather appears not to regulate. 

Here is that report. 

Transparency champion LSB forgets to open its own files

The Legal Services Board, the oversight regulator which provided conspicuously little oversight of regulators’ mistakes of recent years, is a vocal advocate for transparency.

It has been a keen supporter of efforts to force firms to be more open about pricing and service quality and has been ‘disappointed with the lack of progress’ on transparency measures in the profession.

Its approach to transparency among regulators is no less stringent. In its performance assessment for the frontline regulators last March, the LSB lamented that some bodies were still falling short of expectations.

The overseer wrote: ‘We are concerned that some regulators (CLC, FO and ICAEW) still fail to consistently publish board papers and minutes, or provide stakeholders, including the profession and others, with information about their regulatory policy activities in a timely manner.’

And yet. Last month, chief executive Richard Orpin in his regular report revealed there had been an extraordinary board meeting held on 11 February to discuss issues around the collapse of PM Law. A further board meeting was scheduled for an unknown date this month. (Regular LSB meetings are, rather opaquely, always held behind closed doors.)

Despite numerous requests from the Gazette, the LSB has been unable to provide minutes or even an agenda for this crisis meeting, despite the obvious public interest. Other than Orpin’s passing reference, there is no mention of the extraordinary meetings anywhere on the LSB’s page, nor indeed any information about the LSB’s response on PM Law.

Obiter welcomes any attempt to wring a little transparency out of the regulatory bodies. But perhaps the LSB might want to get its own windows in order first.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The latest Solicitors Disciplinary Tribunal annual report shows that in 2025, it received 102 cases from the Solicitors Regulation Authority, that is down 33% on the 2024 figure. 

40 applications were received from members of the public, up from 13 in 2024 and 16 in 2025. 

Of those 40, just one was allowed by the Solicitors Disciplinary Tribunal to proceed to a hearing. 

The Tribunal sat for 275 days in 2025, up from 209 days in 2024. 

In 2025, the Solicitors Disciplinary cost £2.9 million.

The sharp rise in applications by members of the public, in a year when Solicitors Regulation Authority prosecutions dropped by 33%, is put down by some as being due to the emergence of generative Artificial Intelligence being used by lay people. 

I Law think Mathe n SRA is not March fit for 2026 purpose. 

And generally, yet, is  according sky-high. to the consumer-facing  quango, satisfaction with solicitors

Funny that.

Don’t want to pay that tiresome bill. Download our easy to use Al generated grounds of complaint which covers most cases. Newly expanded disappointment clause with a menu of detriments to choose. What have you got to lose?

Or are we very much mistaken?

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Dhillon v Orchard & Anor [2026] EWCA Civ 346

the Court of Appeal, on a second appeal, allowed an appeal against the decision of the High Court which had allowed an appeal against the decision of a Circuit Judge and the Court of Appeal restored the decision of the Circuit Judge. 

The Court of Appeal held that the High Court Judge was wrong to allow the appellant to raise a new point on appeal which had not been raised at the original hearing. 

It set out the law in relation to the principles covering the issue and said that one of the factors was whether the other party to the appeal could be adequately protected in costs. 

• The Judge evidently assumed that “equity in the Property” would be available to the Orchards to satisfy any order as to costs. The assumption was not warranted, however. Even on the basis of the Judge’s analysis of FSMA, it was by no means a foregone conclusion that the Orchards would recover the Property and, if they did not, they could not be entitled to any equity in it. The Judge himself gave directions for a number of issues to be determined at a further hearing (see paragraph 14 above) and their resolution could have precluded the return of the Property to the Orchards.

• What the Judge needed to consider was whether the Orchards would be able to meet an adverse costs order (including, potentially, in respect of costs incurred in relation to the further hearing for which the Judge provided) in circumstances where they had not recovered the Property. There was no reason to believe that they could. In the course of the hearing before us, Mr Howarth accepted that a costs order might be of little practical benefit to Ms Dhillon if the Orchards were unsuccessful at the further hearing.

• As Mr Howarth pointed out, the circumstances in which this Court will interfere with a decision to allow a new point to be run are limited (compare e.g. Re Sprintroom [2019] EWCA Civ 932, [2019] 2 BCLC 617, at paragraph 76). However, it seems to me that this is a case in which there is an “identifiable flaw in the judge’s treatment of the question to be decided” (to use the words of McCombe, Leggatt and Rose LJJ in Re Sprintroom) and that the Judge was, with respect, wrong to entertain the new argument.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The Tribunal system is way ahead of the conventional court system in addressing the opportunity and threats associated with the use of Artificial Intelligence in courts and Tribunals. 

This may be because the citing of hallucinatory Judgments started in the Tribunal system, although there has been a flood of such cases in the conventional court system recently. 

Indeed, a Tribunal Judge is suspected of citing hallucinatory Judgments in a High-Profile case and the investigation into the Judge’s conduct in that matter is ongoing. 

The citing of hallucinatory Judgments and texts is now becoming common in the High Court, where one might have thought the quality of representation would be higher. 

Two recent High Profile High Court cases are: 

Kamal v Tax Policy Associates Ltd & Anor [2026] EWHC 551 (KB)

Brightwaters Energy Ltd v Eroton Exploration and Production Company Ltd (Rev1) [2026] EWHC 296 (Comm)

These are now so common that I will not report them all, but, where appropriate, I will supply links to the Judgments. 

In Issue 419 at Page 327, I wrote about the Administrative Justice Council’s final report on digitisation and the user experience in the Tribunal System. 

Here is the link to that piece and here is the link to that report. 

Appendix B to that report is entitled

MAPPING AI TYPES TO TRIBUNAL STAGES – APPENDIX B

I set it out below in full as it is the most detailed guidance yet as to how the Courts and Tribunals themselves plan to use Artificial Intelligence as compared with how practitioners and parties in court may use it. 

I will be conducting a Zoominar on this subject at 4pm on Tuesday, 28 April 2026. 

ARTIFICIAL INTELLIGENCE: LIKELY CIVIL PROCEDURE RULES AND INTERNAL PROCEDURES THAT LAW FIRMS NEED TO SET UP

•               Current law

•               Proposed new Civil Procedure Rules 

•               Definition of Artificial Intelligence

•               Google AI Overview: Some Problems

•               Websites generally

•               Internal Procedures and Recordings

•               Conditional Fee Agreements

You can book that individual Zoominar here for £100 plus VAT. 

You can book a Season Ticket for everyone in your organization for £750 plus VAT here and that covers at least 13 Zoominars as well as all Newsletters for 2026. 

MAPPING AI TYPES TO TRIBUNAL STAGES – APPENDIX B     Tribunal StageAl TypeFunction / UseCaseBenefitsControls / Oversight     Case Submission / Intake Document Classification & Pattern Recognition       Rules-Based Automation      OCR/ Al-Enhanced OCR  Automaticallyidentify andcategorise incomingdocuments (appealforms, evidence,letters) Flag missing or misfiled documents.   Check deadlines, file formats, andcompliance withsubmission requirements   Convert scanned or handwritten evidence into machine-readable text.  Ensures procedural completeness, reduces admin backlog, accelerates case registration    Reduces administrative errors; ensures compliance with tribunal rules   Enables digital processing, search, and indexing of all evidence. Human verification of flagged issues; Al onlysuggests checks, does notapprove cases.       Human oversight; maintain audit trail.      Quality checks to ensureaccurate conversion; human review for low-quality scans.    2. Case Management/ Pre-Hearing         NLP/Large Language Models          Document Classification & Pattern recognition     Rules-Based AutomationSummarize individual documents or bundles, extract timelines, key facts, and parties involved; create structured case briefs.     Maintain organized digital bundles; identify redundant or irrelevant files; flag new evidence    Trigger alerts for incomplete bundles or missing responses; manage case workflowReduces preparation time for administrators and judges; improves organization of evidence      Improves consistency and retrieval efficiency; reduces risk or missing key evidence.   Ensures timely progression and reduces administrative delays.    Outputs clearly labelled as AI-generated summaries; judges retain full discretion; human review mandatory.          Regular validation against manual audits; human oversight.       Human intervention required for exceptions or disputes 3. Hearing PreparationNLP/Large Language Models     OCR/ Al­Enhanced OCR      Document ClassificationProduce condensed briefs, highlight key evidence, identify precedents, generate timelines or summary tables  Enable text search across large evidence volumes, including legacy scanned files.    Ensure all required hearing documents are present; track updates or supplementary evidence.Supports judges’ efficiency; enables faster comprehension of complex cases.  Quick retrieval of relevant information; reduces time spent manually reviewing documents.  Prevents procedural delays; maintains bundle integrity.AI outputs advisory only; judges verify and approve content, full audit trail retained.    Accuracy checks; human verification for critical evidence.      Human confirmation before hearings.     4. Post-Hearing ReportingNLP/LLM AnalyticsAssist in generating anonymised case reports, performance summaries, and trend analysis.Provides insights for tribunal administration, quality assurance, and departmental feedback.Human validation of any analytical conclusions; outputs for administrative purposes only, not judicial decisions.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more. 

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

As we have seen before, Housing Disrepair cases is subject to very different rules as compared with any other type of Civil Litigation. 

Here is my writeup

HOUSING DISREPAIR AND PRE-ALLOCATION COSTS

The main difference is that they are not subject to Fixed Recoverable Costs and that exception will last until at least 2028. 

Another key difference is that the small claims track limit for Housing Disrepair cases is £1,000 as compared with £10,000 in most other cases although Personal Injury claims generally have a lower small claims limit, but Personal Injury claims valued at £100,000 or less, are subject to Fixed Recoverable Costs and have a portal system for claims valued at £25,000 or less. 

The combination of these differences means that Housing Disrepair cases are subject to open costs once they have a value of £1,000 as compared with £100,000 in virtually any other type of Civil Litigation. 

Unsurprisingly, this is leading to costs disputes. 

In 

Smith v Wigan Borough Council [2026] EWHC 660 (SCCO)

there were two issues, one of which is of potential importance outside the field of Housing Disrepair cases. 

Strictly, the only issue is whether the matter would have been allocated to the small claims track in which case the starting point is that costs are not recoverable. 

For reasons specific to Housing Disrepair cases, the court held that it probably would not have been allocated to the small claims track, and that the fast-track would have been the appropriate track had the matter been allocated. 

I consider that to be a separate issue peculiar to Housing Disrepair cases, although that general principle does apply elsewhere. 

The point of general importance relates to Part 36. 

Part 36 has no application in the small claims track and the successful claimant here argued that the very fact that the defendant had made a Part 36 offer, albeit for £1,000 which would be a small claims track matter, meant that the defendant implicitly accepted that the matter would have been allocated to the fast-track and not the small claims track. 

The court found that the wording of the offers was also significant. 

The claimant had originally offered to accept £1,400 plus repairs, and accompanied that offer with a statement: 

“Your client will pay our client’s reasonable and proportionate legal costs and disbursements”. 

The defendant rejected that offer and stated: 

“…the value of the repairs in the claim are below £1,000 and the claim should be allocated to the small claims track”.

The defendant then counter-offered £500 plus carrying out repairs accompanied by a statement: 

“The Council will pay small claims costs in respect of your client’s legal costs and disbursements”.

Matters developed with several new offers but the wording from the defendant changed to: 

“The Defendant will pay the Claimants reasonable legal costs, to be assessed if not agreed.”

The matter was settled by the claimant accepting a defendant’s Part 36 offer of £1,000. 

The court said that there was no doubt that the defendant’s developing choice of words likely led to the claimant assuming that no form of Fixed Costs argument would be advanced at the detailed assessment stage. 

The court pointed out that in all three formal Part 36 offers put forward, the defendant used the words

“to be assessed if not agreed”

regarding costs. 

It also recognized that CPR 27.2(1)(g) provides that Part 36 does not apply to small claims. 

“57.      Notwithstanding the phrasing of the Defendant’s offers, the points of dispute now plead CPR       46.13(3), which provides:

            “Where the court is assessing costs on the standard basis of a claim which concluded without      being allocated to a track, it may restrict those costs to costs that would have been allowed on   the track to which the claim would have been allocated if allocation had taken place.”.

58.       One firstly observes that the rule is discretionary, not mandatory. Secondly, the rule is not            framed in terms which require that the settlement sum only be taken into account, but rather    invites a retrospective hypothetical analysis using the language of “would have” and “if”. That     analysis necessarily engages consideration of CPR 26.9(1)(b).

• What is not clear from any of the correspondence I have seen, nor from the points of dispute or any other documents the Defendant has filed, is a cogent explanation as to why I should accept that this is a claim which “would have” been allocated the Small Claims Track, save for the settlement sum agreed.

• CPR 46.13 is a rule which is specifically constructed to invite retrospective consideration. There is no reference to the settlement sum within the rule, and one observes that such a provision would likely have been included by the legislature were the settlement sum intended to be a definitive measure of retrospective allocation.

• Equally, CPR 46.13 does not reference “value” but in exercising my discretion, I am satisfied that I should not give the settlement sum the elevated status the Defendant would have me apply.

84.       Where parties agree a financial dispute by way of compromise, the settlement sum may be          one measure of value but it is not definitive. Context and circumstance are important.

85.       The colloquial “man of means” is far better placed to negotiate a favourable deal than a “man     of straw”, because whilst the former can likely afford to wait for their compensation and hence           hold out for the best bargain, the latter will come to a point earlier where their immediate           needs outweigh the additional time and resources necessary to secure what a Claimant with     deeper pockets may consider fair compensation.

87.       The terms ultimately accepted included an agreement to effect the repairs within 8 weeks, plus    damages of £1,000. However, I am in no doubt that the facts and circumstances as at the date   of acceptance were such that had proceedings instead been commenced, this claim would not     have been allocated to the Small Claims Track on the basis that pursuant to CPR 26.9(1)(b)(iii)            the Small Claims Track would not have been the normal track for a “claim which includes a         claim by a tenant of residential premises against a landlord” where the value of the claim for       damages would have reasonably been pleaded at more than £1,000 based on the         circumstances presented at the time.

89.       The conduct of the Defendant in this matter is such that, if permitted, future agreements would   likely be imperilled due to a lack of trust between parties or otherwise result in the undesirable      practice of horse-trading offers which either by pennies or a few pounds exceed the threshold      to escape ‘would-be’ allocation to the Small Claims Track.

90.       Further, the overriding objective is not best served by an approach to litigation which, in effect,    requires Claimants to issue proceedings in order to achieve certainty as to costs recovery.

NB – The hazard in Social Housing (Prescribed Requirements) (England) Regulations 2025 are widely known as Awaab’s Law and these Regulations came into force on 27 October 2025 and require a social landlord to fix damp, mould and other emergency hazards within strict statutory timescales. 

Note the reference to Awaab’s Law is a reference to the death of a child, Awaab Ishak following prolonged exposure to mould in his family’s social housing. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

UAB Business Enterprise v Oneta Ltd [2026] EWHC 543 (Ch) (11 March 2026)

the High Court made findings regarding the evidence of several witnesses, in a trial to determine the ownership of a company called Oneta Limited and these included rejecting the second claimant’s evidence entirely, largely because he was found to be receiving coaching during cross-examination, through his smart glasses, and rejecting the joint expert’s opinion. 

The claimants were seeking a declaration that they were the owners of Oneta Limited. 

The second defendant claimed ownership based on an oral agreement with a former director, a written investment agreement and a settlement agreement with the second claimant. The claimants disputed these agreements, asserting that the latter two were fraudulent.

The court found the second claimant fundamentally unreliable and untruthful after discovering that he wore smart glasses connected to his mobile phone while giving evidence.

Call logs revealed that the second claimant made numerous calls to a contact saved as “abra kadabra” immediately before entering the witness box and giving evidence, and his explanation that this was a taxi driver lacked credibility.

The court found that the second claimant was being assisted or coached during cross-examination until this was stopped by the court.

 The judge went on to reject his evidence in its entirety, particularly given his blatant disregard for disclosure obligations under Practice Direction 57AD, and inconsistencies in signing English-language documents despite claiming poor comprehension of English.

The part of the Judgment dealing with the use of smart glasses is at Paragraphs 110 to 128 and is worth reading in full. 

The smart glasses were connected to the witness’ mobile phone and the person coaching the witness was watching the proceedings remotely via a video link. 

The witness himself was giving live evidence in court from the witness box. 

The Judge had the video link turned off once he found out what was going on, having been alerted by the lawyers in court. 

The use and misuse of technology in courts needs looking at in a wider context than just Artificial Intelligence. 

One immediate step would be to ban mobile phones from court rooms. 

That does not deal with the problem of witnesses giving evidence remotely and being coached while giving that evidence remotely. 

This has always been recognized as a problem in that the court cannot see who is in the remote room and what they are saying and doing. 

There have been well publicized stories of witnesses giving evidence from their cars while driving, from public houses etc. 

Clearly, there can be benefits in evidence being given remotely, but courts will no doubt be considering applications to give evidence in that way much more carefully now. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In 

JXX v Archibald & Anor; HLA v LXA & EUI Ltd [2026] EWHC 630 (SCCO)

the Senior Courts Costs Office, hearing two joined cases and with the medical reporting organizations joined as third parties, held that there was no requirement for medical reporting agencies to provide a breakdown of work done in the way that solicitors had to as their fees were disbursements rather than solicitors’ work outsourced to them by those solicitors. 

Having heard extensive evidence over several days, the court held that the mark up on the expert’s fee should be capped at 25% of the expert’s fee and that would be the medical reporting organization’s fee. 

Thus, if the fee paid to the expert is £1,000, then the maximum total charge including the reporting organization’s fee is £1,250 with £1,000 going to the expert and £250 to the reporting organization. 

Here, Premex said that their mark up was either 35% or 45% while for Medical and Professional Services Limited (MAPS) it ranged from 20% to 104%. 

This is the latest battle in the war which, as the Senior Courts Costs Office recognized, has been going on for decades. 

The Senior Courts Costs Office invited the parties to appeal to get a definitive ruling on the issue. 

3.      The questions posed in these cases have been aired for more than two decades now without any directly relevant High Court or higher decisions. I have said on more than one occasion during the proceedings that a determinative authority would be welcome in this area. I imagine that one, or possibly both, sides will wish to seek that determinative decision. 

4,      A number of the reported cases refer to the MROs as medical reporting agencies rather than organisations. Nothing appears to turn on this terminology and one of the MRO witnesses specifically states that the phrases are used interchangeably. For what it is worth, I have used MRO since they are, in my view, plainly actors in their own right, rather than simply acting as the agent of the solicitor or claimant.

The Judgment runs to 32-pages and 140 paragraphs and sets out in detail the competing arguments and the case law. 

An appeal is likely. 

Watch this space. 

This is most certainly NOT as you were. The Court of Appeal’s judgment requires a much higher level of supervision, management, and control of unauthorised persons than many law firms have been applying. 

One hour video recording and detailed notes and checklists now available. 

£100 plus VAT – order here.

This includes detailed advice once the regulators and Law Society publish updated guidance.

In 

CILEX and others v. Mazur and others 

the Court of Appeal said that the case concerned the proper meaning of the words: 

“carrying on the conduct of litigation”

in the Legal Services Act 2007. 

The question is whether people working in a law firm or a law centre, who are not themselves authorised individuals under the 2007 Act (unauthorised persons), are carrying on the conduct of litigation if they do so under the supervision of an authorised individual. (my bold)

The High Court, whose decision was under appeal here, distinguished between an unauthorized person: 

• supporting ( or assisting) an authorised solicitor in conducting litigation; and 

• conducting litigation under the supervision of an authorised solicitor. 

The High Court had held that (b) was unlawful. 

The Court of Appeal held that that distinction was wrong, ruling that an unauthorized person can lawfully conduct litigation if they did so under the supervision of an authorized individual. (my bold)

The role of an unauthorized person in the conduct of litigation is not limited merely to assisting or supporting an authorized individual. 

It is lawful for an unauthorized person to act for and on behalf of an authorized individual to conduct litigation under their supervision, provided that the authorized individual puts in place appropriate arrangements for the supervision and delegation to the unauthorized person (my bold). 

Carrying on the Conduct of Litigation: Meaning

The Court of Appeal said that prior to the Legal Services Act 2007

“there was a widespread and well-regulated practice of delegation by solicitors to unqualified individuals”. 

It was a matter for the solicitor principal to decide what tasks should be delegated and to whom, and to put in place proper arrangements for the management and supervision of that work. 

Delegation does not absolve solicitors of their professional responsibilities for the performance of the person conducting delegated tasks. 

The 2007 Act was not intended to, and did not, make a significant change from the Courts and Legal Services Act 1990 in this area. 

“Conduct of Litigation” means the tasks to be undertaken

“Carry On” refers to the direction and control of, and responsibility for those tasks

The cases of 

Ndole Assets v Designer M&E Services [2018] EWCA Civ 2865

(Ndole) and Baxter v Doble [2023] EWHC 486 (Baxter)

are distinguished for reasons set out in the Court of Appeal’s Judgment and are not relevant to solicitors and not relevant to this issue. 

An unauthorised person can, therefore, lawfully perform any tasks, which are within the scope of the conduct of litigation, for and on behalf of an authorised individual such as a solicitor or appropriately authorised CILEX member. 

The authorised individual retains responsibility for the tasks delegated to the unauthorised person.

The authorised individual is the person carrying on the conduct of litigation. 

The unauthorised person is not carrying on the conduct of litigation and does not commit an offence. 

The delegation of tasks by the authorised individual to the unauthorised person requires proper management supervision and control, the details of which are a matter for the regulators. 

In some circumstances the degree of appropriate control and supervision will be high, with approval required before things are done.

 In other, for example routine, circumstances, a lower level of control and supervision will be required.

 In such cases, it may be sufficient for the authorised individual to conduct regular meetings with the unauthorised person and to sample their work. 

The authorised individual retains the responsibility envisaged by the 2007 Act.

 That includes both: 

• the formal responsibility for the task, such as service, performed by the unauthorised person, and 

• the responsibilities identified at section 1 (3) of the 2007 Act as the professional principles which it is the regulatory objective to promote and maintain (see section 1(1) of the 2007 Act). 

The authorised individual retains the responsibility:

• to act with independence and integrity (section 1(3)(a)),

•  to maintain proper standards of work (section 1 (3 )(b ))

•  to act in the best interests of their clients (section 1(3)(c)), and 

• to comply with their duty to the court to act with independence and in the interests of justice (section 1(3)(d)). 

Acts that amount to conducting litigation

The Court of Appeal said that it had not been equipped to give an exhaustive definition of the Acts constituting conducting litigation and referred to the three limbs in Paragraph 4 of Schedule 2 to the 2007 Act. 

• Issuing proceedings before any court in England and Wales

• The commencement, prosecution and defence of such proceedings

• The performance of any ancillary functions in relation to such proceedings (such as entering appearances to actions)

The Court of Appeal said that (i) is 

clear and narrow

(iii) is also limited to formal steps, such as service of documents such as Statement of Case. 

It said that (ii) was less clear

and could not be resolved on this appeal. 

Acts that are not the Conduct of Litigation

The following 7 steps are unlikely to fall within the statutory definition of “conduct of litigation”:

• pre-litigation work, 

• giving legal advice in connection with court proceedings, 

• conducting correspondence with the opposing party on behalf of clients,

• gathering evidence, 

• instructing and liaising with experts and counsel, 

• signing a statement of truth in respect of a statement of case, and 

• signing any other document that the Civil Procedure Rules permit to be signed by a legal representative, as defined by CPR Part 2.3. 

The above key points are taken from the Judgement Summary dated 31 March 2026 and itself prepared by the Court of Appeal and the link is here.

The full Judgment runs to 45 pages and 199 paragraphs and is here.  

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The issue of Client Account interest remains a hot topic following the closure of the Government’s Consultation on this topic in March 2026. 

The Solicitors Regulation Authority has said that it is not a priority as far as it is concerned following resistance from the legal profession to Client Account interest being taken. 

This followed a Solicitors Regulation Authority Consultation in 2024 and the new attitude may also reflect the departure of the hardline anti-solicitor Chief Executive who has been replaced by someone with what are present, has a more reasonable approach. 

The Government now proposes to take 50% of the interest generated on individual Client Accounts and 75% on pooled Client Accounts had to go into central funds; in other words, an additional tax on clients and solicitors. 

It has been widely described as legalized theft. 

There is a debate to be had about Client Account interest and who it should go to, but the idea of it simply being taken by the Government is not a popular solution. 

Personally, I would favour solicitors’ firms not being in any way reliant on Client Account interest, but to combine that with a return to scale fees in conveyancing, increasing those fees to a realistic amount, probably around four times the current average. 

That system worked here before and works well in other jurisdictions. 

The current system is not working and the number of firms offering conveyancing services has slumped by around 80% and is expected to drop further. 

The Solicitors Regulation Authority in its response to the Government’s Consultation, has warned the Government that it will result in extra costs to the Solicitors Regulation Authority, which it will recover from solicitors, then solicitors will in turn recover it from clients. 

At present, there is simply not enough margin for solicitors to carry out conveyancing work without Client Account interest, and indeed it is questionable whether solicitors offering conveyancing is a sustainable option at current fees. 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more. 

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The recently appointed Chief Executive of the Solicitors Regulation Authority has said that the body will lean less on enforcement and punishing firms for mistakes and seek to support them. 

‘We are pretty enforcement-led, we reach for investigation and enforcement quite quickly because instinctively we don’t go for other tools,’ … ‘I am really keen to test whether we as a regulator could do more to support people to be able to comply, and use other tools stopping short of enforcement to get people over the line’. 

The new Chief Executive also indicated that whatever the outcome of the appeal to the Court of Appeal in Mazur, the Solicitors Regulation Authority will be lenient with any incidences of inadvertent breaches of the rules, stating that it was not now in the business of coming after people who have made mistakes. 

However, there was no suggestion of retrospective pardon for firms penalized over the last few years by the previous regime for extremely trivial mistakes. 

The same Chair who oversaw that Star Chamber regime remains in place, and the former Chief Executive retains his pension. 

There is growing pressure for a Post Office style enquiry into the conduct of the Solicitors Regulation Authority over the last few years. 

The Legal Services Act 2007, which created this body, is almost certain to be repealed shortly after the next General Election.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Cooper & Ors v Ludgate House Ltd [2026] EWHC 484 (Ch)

the Chancery Division of the High Court was dealing with Part 36, and in particular, whether a defendant’s offer attempting to deal with matters not pleaded, was a valid Part 36 offer and whether the defendant could show that the claimant had not beaten that offer.

The facts are complicated and set out briefly in this Judgment on costs, the substantive Judgment having been delivered earlier.

Taking into account the partial nature of the claimants’ success, the court ordered two of the claimants’ two thirds of their costs of the action and the other claimant one third of his costs.

On the facts, the court held that the Part 36 offer by the defendant was valid but that the defendant had not discharged the evidential burden that falls on a defendant who has made a Part 36 offer of showing that the winning claimants had failed to beat it.

I have seen comments to the effect that the decision of the High Court here in relation to the validity of the Part 36 offer is obiter, that is not binding on other courts, but I disagree.

It was part of the court’s function in this case to determine whether the offer was a valid Part 36 offer and if it was not, then it would not need to consider whether it had been beaten, as there would be no offer to beat.

The fact that the defendant lost on the Part 36 point for a different reason, a straightforward one that the claimants had not failed to beat it, does not affect the validity and importance of the court’s finding that there was a valid offer here.

Thus, the High Court held that a Part 36 offer dealing with matters other than those pleaded can be a valid Part 36 offer, and that the offer here was indeed a valid Part 36 offer.

The High Court said that it was unaware of any decision on whether a Part 36 offer can state that it relates to the whole of the claim and another claim, or possible claim, other than a counterclaim.

This is an important High Court decision which disagrees with other decisions on the point, and my view is that the reasoning of the High Court here is correct, and I set out that reasoning in full, and I also discuss below that another case which I reported recently, which came to a different view, and which cited any authorities which the High Court here disagrees with.

This is yet another area of Part 36 where there is uncertainty on a very important issue and the sooner Part 36 is re-written clarifying all of the areas of uncertainty identified by the courts, the better.

1. The fact that, in order to perform the comparison required by rule 36.17 between the value of what was offered and that which was obtained by the judgment, I would have to address the value of matters whose value was not in issue in the claim, and which was therefore not decided in the judgment, suggested to me that there must be a doubt about whether the November 2024 offer was a valid Part 36 offer. It seemed surprising if, in order to decide the question of costs liability following judgment, the court had to embark on the valuation of matters that were completely extraneous to the issues in the claim on which judgment had been given, in order to see whether a claimant obtained by judgment something more than they were offered.

1. However, after taking additional time to consider the matter fully, I have come to the conclusion that the words “relates to the whole of the claim” are not to be read as meaning “relates only to the whole of the claim and nothing more” or as imposing a limit on the content of the offer, for the following reasons.

1. The relevant parts of Part 36 are the following. Rule 36.2(2) provides:

                  “Nothing in this Section prevents a party making an offer to settle in whatever way that              party chooses, but if the offer is not made in accordance with rule 36.5, it will not have          the consequences specified in this Section”

                  This in my view is to make clear that (1) a party can offer to settle a case in any way that            they like outside the confines of Part 36, but (2) only an offer that complies with rule 36.5     has effect as a Part 36 offer. Rule 36.5 therefore describes the mandatory requirements           of a Part 36 offer.

1. Rule 36.2(3) provides:

                  “A Part 36 offer may be made in respect of the whole, or part of, or any issue that arises             in—

                  (a) a claim, counterclaim or other additional claim; or

                  (b) an appeal or cross-appeal from a decision made at a trial.”

                  This describes the different kinds of Part 36 offer that may be made, namely an offer in              relation to the whole of a claim, a part of that claim, or even an issue in the claim, and            similarly for any counterclaim, additional claim, appeal or cross-appeal separately.

1. Rule 36.5(1) provides:

                  “A Part 36 offer must—

                  (a) be in writing;

                  (b) make clear that it is made pursuant to Part 36;

                  (c) specify a period of not less than 21 days within which the defendant will be liable for            the claimant’s costs in accordance with rule 36.13 or 36.23 if the offer is accepted;

                  (d) state whether it relates to the whole of the claim or to part of it or to an issue that arises    in it and if so to which part or issue; and

                  (e) state whether it takes into account any counterclaim.”

                  These are the mandatory provisions and are the only ones that apply under rule 36.5, save     in relation to a personal injury claim. Paragraph (d) concerns what an offer must state, so                   that the scope and potential effect of the offer is understood by the offeree.

1. Rule 36.13 makes provision for costs where a Part 36 claim is accepted, and includes different provisions depending on whether the offer related to the whole of the claim, or a part, or an issue. Rule 36.14 provides that if a Part 36 offer is accepted, the claim is stayed on the terms of the offer, or where the offer relates to part only of a claim, the claim is stayed in relation to that part on the terms of the offer.

1. Rule 36.17 includes the following:

                  (1) Subject to rule 36.24, this rule applies where upon judgment being entered—

                  (a) a claimant fails to obtain a judgment more advantageous than a defendant’s Part 36            offer; or

                  (b) judgment against the defendant is at least as advantageous to the claimant as the                proposals contained in a claimant’s Part 36 offer.

                  (2) For the purposes of paragraph (1), in relation to any money claim or money element of        a claim, “more advantageous” means better in money terms by any amount, however                   small, and “at least as advantageous” shall be construed accordingly.

                  Rule 36.17 goes on to specify the consequences in each of the cases (a) and (b) in rule              36.17(1), which the court will order to apply “unless the court considers it unjust to do so”.

1. In Hertel v Saunders [2018] 1 WLR 5852, Coulson LJ said at [33]:

                  “…I would construe the words ‘claim’, ‘part of a claim’ and ‘issue’ as referring to pleaded claims, parts of claims or issues, and not other claims or issues that may have                 been intimated in some way but never pleaded. Once proceedings have started, the certainty required for Part 36 to operate can only be achieved by this interpretation.”

1. In that case, an offer to settle only a claim that was intended to be introduced by amendment was held not to be a Part 36 offer. This means that an offer must be made to settle the pleaded claim (or part of it).

1. In Calonne Construction Ltd v Dawnus Southern Ltd [2019] 1 WLR 4793, the Court of Appeal held (following its earlier decision in AF v BG [2010] 2 Costs LR 164) that the reference (now in rule 36.5(1)(e)) to taking into account a counterclaim included a counterclaim that had not yet been issued. That was because a counterclaim is a “claim” within the meaning of Part 36 and an offer to settle can be made in respect of a claim that has not yet been issued.

1. Rule 36.5(1)(e) makes clear that, in making an offer to settle, an offeror may take into account any counterclaim, even though that is strictly a separate claim in respect of which a separate Part 36 offer to settle could be made. The value of a counterclaim is therefore something that can be taken into account in making an offer under Part 36 in relation to a claim. In such a case, the offer would have to state that it relates to the whole or part of the claim and that it takes into account a counterclaim. There is no decision, so far as I am aware, on whether a Part 36 offer can state that it relates to the whole of the claim and another claim, or possible claim, other than a counterclaim.

1. In Coldunell Ltd v Hotel Management International Ltd [2022] Costs LR 1873, a Deputy High Court Judge held that a pre-existing order for costs in a previous claim (which costs had not yet been assessed) could be taken into account in an offer to settle a claim because it gave rise to a defence of set-off (which had been pleaded), and therefore was an issue that arose in claim 1. The Deputy Judge also said, obiter, that there was nothing that expressly precludes the inclusion of terms in an offer to settle under Part 36, and that it was therefore open to the claimant to include such a term in its offer as long as it complied with rule 36.5 (by stating that the offer related to the whole of the claim).

1. That obiter observation was based on dicta of Asplin LJ in the Calonne Construction case, addressing a specific question of whether including in an offer a rate of interest that would apply following the expiry of the relevant period meant that the offer was not a Part 36 offer, because it included something for which Part 36 then made no express provision. Unsurprisingly, Asplin LJ held that it did not, and cited the terms of rule 36.2(2), which preserves the ability to make an offer in whatever way the party chooses. She stated:

                  “Secondly, there is nothing that expressly precludes the inclusion of terms in addition to          the requirements in CPR r 36.5(1) and CPR r 36.2(2) expressly preserves the ability to              make an offer to settle in whatever way the party chooses, albeit that it provides that if              CPR r 36.5 is not complied with the offer will not have the costs consequences set out in             that Section.”

1. The decision on interest in Calonne Construction is now enshrined in rule 36.5(5), which removes any doubt about it.

1. The final decision to which it is necessary to refer is that of Hildyard J in Grant v FR Acquisitions Corporation (Europe) Ltd [2022] EWHC 3366 (Ch). In that case, Hildyard J had to address an argument that the term of an offer stipulating for payment of a sum of money within 14 days meant that the offer included relief that did not “relate to” the claim within the meaning of rule 36.5. It was argued that if the claimants had succeeded in the litigation they could not have received the money before certain other contingencies had been satisfied. Hildyard J rejected that argument. He said:

                  “I have concluded that … the test (in CPR 36.5) that the offer must “relate” to the           claim/part/issue is less exacting and does not require the exact correlation suggested… it means simply that the offer must be made by reference to identified claims and offer             proposals in respect of it/them” [21]

                  “… in my judgment, the fact that in this case the Administrators’ Offer included a term for         accelerated payment of a debt not yet due, which acceleration could never have been      part of or obtained by the claim (or prospective claim) but for which a discount for early            payment was offered, did not prevent it being complaint with CPR 36.5”. [30]

1. Mr Lees submitted that the fact that the Defendant offered to settle for £500,000 not just the whole of the existing claim but included terms about the property rights that would give Mr Cooper a claim in future to an uncertain amount of statutory compensation, does not mean that it was not an offer to settle that relates to the whole of the claim. The offer stated that it was in relation to the whole of the claim, and set out the terms on which the offer was made. He submitted that this was an offer to settle the whole of the claim on terms, and that acquisition of Mr Cooper’s property rights was a term that the Defendant was entitled to offer, which does not take it outside Part 36.

1. Mr Lees relies on the words of rule 36.2(2) and Asplin LJ’s reference to them, the obiter view of the Deputy Judge in the Coldunell case, and the conclusion of Hildyard J that offering something that the claimant could not obtain by pursuing the claim to be settled does not mean that the offer is not an offer in respect of the whole of the claim.

1. In so far as the offer made involves the release of rights of light in relation to Permitted Development, which could not have been an outcome of the claim even if Mr Cooper had lost, Mr Lees makes the same point, namely that these are the terms of an offer to settle the whole of the claim.

1. Mr Calland submitted that an offer to settle that in substance was an offer to settle the claim and another future claim, or an offer to settle the claim on terms that involved other property rights in addition to the claim, was not “an offer that relates to the whole of the claim” because it relates to the whole of the claim and something else, namely the future claim or the property rights.

1. In my judgment, Mr Lees is correct. The requirement in rule 36.5(1)(d) that the offer state whether it relates to the whole of the claim, a part of the claim or an issue in it, means just that. It is a requirement for one of those descriptions to appear on the face of the offer, and for any part or issue to be identified. The reason is that the consequences that follow from a valid Part 36 offer, whether accepted or not accepted, depend on which of those offers it is: see [41] above. The offeree needs to know which it is.

1. If the offeror states in its offer that it is an offer in relation to a part of a claim, identifying the part, then it is such an offer, subject to complying with the other mandatory requirements of rule 36.15; if the offeree accepts it, the offeror cannot argue that it is not an offer in relation to a part of a claim only. Similarly, if the offer is expressed to be in relation to the whole of the claim, acceptance of it stays the whole claim; if the offer is not accepted, the offeree cannot contend that it was not an offer to settle in respect of the whole claim, if it was in all other respects a valid Part 36 offer.

1. The particular terms on which an offer to settle is made do not determine, for the purpose of Part 36, whether it is an offer in relation to the whole claim or a part of a claim or only an issue in the claim. Nor does what is offered have to correlate to what is claimed. If whatever is offered is stated to be an offer in relation to the whole claim, then it is such an offer. Although an offer will usually comprise some part of what is claimed, there is no requirement for exact correlation, nor are terms that go beyond the exact basis on which the claim is pleaded disallowed: see Calonne Construction, per Asplin LJ.

1. The safeguard for the offeree, if one is needed, against unusual or burdensome terms being offered, particularly terms that bring in extraneous matters, is that it is the offeror who will have to prove that the offeree has failed to obtain a more advantageous judgment, or that the offeror has obtained a judgment that is at least as advantageous, as the case may be. As my decision in this case illustrates, that will not be a straightforward matter if other rights and claims extraneous to the claim that is to be settled are brought into the terms of the offer.

1. Even if the offeror is able to prove that the relevant comparison is in its favour, if the terms of the offer made it one that the offeree was not reasonably able to evaluate within 21 days of the offer, on account of the unusual terms included, the court can disapply the standard consequences of non-acceptance specified in rule 36.17 if it considers it unjust that they should follow. Rule 36.17(5) expressly requires the court, when considering whether to disapply those consequences, to consider the terms on which the offer was made, the information that was available to the offeree at the time of the offer, any refusal by the offeror to give information that would enable the offer to be evaluated, and whether the offer was a genuine attempt to settle the proceedings.

1. It is, in short, unnecessary to impose an additional constraint on the terms which a Part 36 offer may contain, and difficult to do so by identifying from the language of Part 36 a clear line between terms that are permitted and those that are not. I respectfully agree with the words used by Hildyard J in [21] of his judgment in the Grant v FR Acquisitions case, set out at [52] above. The words “it relates to” have no greater significance as regards the terms of the offer.

1. I therefore conclude that the November 2024 offer to Mr Cooper was a valid Part 36 offer, but, for the reasons that I have given, the Defendant has not proved that Mr Cooper has failed to achieve a more advantageous outcome by the terms of the judgment and so the consequences specified in rule 36.17(3) do not apply.

In Issue 418, at Pages 310 – 312, I wrote a piece

PART 36 OFFER CAN ONLY COVER PLEADED MATTERS.

That was a County Court decision.

The facts are slightly different in that there, two actions had been brought and in the first action, settled by an apparently all-embracing defendant’s Part 36 offer, the claimant had specifically excluded a personal injury claim, which was then the subject matter of the second action, and that is where the argument about the validity of the all-embracing Part 36 offer in the first action came to be discussed.

It is not clear to me why the second action was allowed in any event, taking into account the rule in

Henderson v Henderson (1843) 3 Hare 100.

I set out below my write as although this is a County Court decision and the one above is a High Court decision; the County Court refers to Court of Appeal authority supporting its findings.

As stated above, these issues need addressing by the Civil Procedure Rules Committee and soon.

Most lawyers do not mind which side of the argument Civil Procedure Rules Committee comes down on; the key for all of us is certainty.

PART 36 OFFER CAN ONLY COVER PLEADED MATTERS

In

Fraser -v- Sanctuary Housing Association, HHJ  Wendy Owen, sitting at the County Court in Mold, 26th February 2026

a Circuit Judge was considering a case where the defendant argued that the second action against it was an abuse of process because an earlier action had been settled by the claimant accepting a Part 36 offer.

However, the claim in the second action had been specifically excluded from the first action and although the defendant had attempted to make an all-embracing Part 36 offer in the first action, the court here held that a Part 36 offer could not cover matters which had not been pleaded.

It should be noted that pre-action offers can be made in respect of unpleaded matters, but the position changes once a claim or a counterclaim has been pleaded.

In

Hertel & Anor v Saunders & Anor [2018] EWCA Civ 1831

the Court of Appeal held that offers in extant proceedings must be made by reference to the pleaded issues, and accordingly an offer made in respect of an intimated but unpleaded head of claim was not a Part 36 offer.

This means that pre-action Part 36 offers can retrospectively become ineffective, or less effective, once proceedings are issued, which is not satisfactory.

THE FACTS

The claimant brought a claim for damages for personal injury against the defendant because of poor housing conditions and wrote a letter of claim setting out the claim for disrepair and stating that the claimant had suffered personal injuries. 

The claimant issued proceedings (“the first action”) seeking damages for disrepair and that action had a specific pleading

“The health of the Claimant and her children has been impacted although any personal injury claims will be pleaded in separate proceedings to these present proceedings.”

THE DEFENDANT’S PART 36 OFFER IN THE FIRST ACTION

 The letter was stated to be a Part 36 in the heading and set out the Part 36 consequences in detail and ended with the words.

“If you consider, for any reason, that this offer is in any respect unclear or does not comply with the relevant provisions of Part 36, we invite you to make your position plain so that we may consider the same promptly. If you do not do so but subsequently seek to assert that the offer is either unclear or does not comply with the provisions of Part 36, we shall invite the court to treat the offer as if it were clear and compliant with the provisions of Part 36 whatever subsequent objections are raised.”

The Part 36 offer was to

 “settle the whole of your Client’s claims arising out of year Client’s occupation of the Property, past and present, howsoever arising including her alleged claims as set out in her letter of claim”.

The claimant accepted the Part 36 offer.

The parties continued to deal with the claimant’s claim for personal injury, and the claimant issued a second set of proceedings for damages for personal injury.

The court rejected the defendant’s submission that the second action, for personal injury, was an abuse of process and upheld the claimant’s submission that a Part 36 offer could not cover matters that were specifically excluded in the Particulars of Claim.

This follows from the clear wording of various parts of Part 36 and is in accordance with the decision of the Court of Appeal in

Hertel & Anor v Saunders & Anor [2018] EWCA Civ 1831

where the defendant made a Part 36 offer whilst an application to amend the Particulars of Claim to include other matters was pending.

DECISION

(1)            This appeal raises a potential point of importance regarding the meaning of ‘claim or part        of [a claim] or an issue’ as these words are used in CPR Part 36. It arises in circumstances                 where an offer was made by the defendants in respect of a new claim which had been               indicated by the claimants by way of a proposed amendment to the particulars of claim,    but which had not yet been the subject of a court order granting permission.”

(2)            The Court of Appeal made the point that Part 36 is a “carefully structured, highly           prescriptive and self-contained code”

(3)            The Court of Appeal were concerned with what was meant by “claim” in the context of               Part 36. The judgment was clear in the view that claim could only be construed by            reference to the pleaded case.

1. “The next question is whether, in a case where proceedings are ongoing, the words ‘claim’, ‘a part of a claim’ or ‘an issue’ should be construed as meaning claims, parts of claims or issues which can be identified in or which arise from the pleadings, or whether they would also include claims, parts of claims or issues which have not been pleaded but which, for example, may have been mentioned in correspondence or in an informal conversation between solicitors.

1. In my view, this question only has to be posed for the answer to become immediately apparent. In civil proceedings, claims/parts/issues can only properly be defined by reference to the pleadings. Indeed, that is the principal purpose of pleadings. It would introduce unnecessary and unwelcome uncertainty if claims/parts/issues were given a wide definition that did not seek to anchor them to the pleadings which the parties have exchanged.

1. To take an extreme example, Mr Smith suggested in his oral submissions that, if the claimant’s solicitor introduced a possible new claim in a letter to his opponent, then that would be caught by the words of the rule, even if it had not been the subject of any formal amendment, and even if it had not been the subject of any kind of response by the defendant. I consider that such an interpretation would lead to uncertainty and confusion; it may even encourage the potential abuse of the Part 36 regime.

Accordingly, like Morgan J, I would construe the words ‘claim’, ‘part of a claim’; and ‘issue’ as referring to pleaded claims, parts of claims or issues, and not other claims or issues which may have been intimated in some way but never pleaded.

Once proceedings have started, the certainty required for Part 36 to operate properly can only be achieved by this.

A new claim which has been intimated, but which is not part of the pleadings, is not therefore caught by r.36.2(2)(d) (current r.36.5(2)(d)).

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Court v Beyond Housing Ltd [2026] EWCC (Teesside)

a Circuit Judge considered an appeal in relation to pre-allocation costs in a Housing Disrepair claim seeking specific performance and damages meaning that on issue of proceedings, the fast track was the appropriate track, but when the matter was allocated to the small claims track, as the repairs had been completed by the time of allocation.

This is a very common situation in Housing Disrepair cases.

The court made an order preserving the claimant’s entitlement to costs prior to the completion of repairs, on the fast-track basis and not the small claims track basis.

Housing Disrepair cases are excluded from the Fixed Recoverable Costs regime until at least 2028, and so this is the difference between no costs and open costs, that is the difference between the small claims track and the fast track outside the Fixed Recoverable Costs scheme.

The small claims limit in Housing Disrepair cases is £1,000 and not the usual £10,000 and thus, the decision affects a very large number of Housing Disrepair cases.

The Circuit Judge overturned the order of the District Judge which was clearly wrong and not in line with the well-known Court of Appeal decision in

Birmingham City Council v Lee [2008] EWCA Civ 891.

The court here recited key passages from the Birmingham City Council case.

27. Birmingham City Council v Lee sets out that permission had been granted to enable the Court of Appeal to consider a matter of principle (at paragraph 2):

    “There is a pre−action protocol applicable under the Civil Procedure Rules to such cases. It requires the tenant to give early notification to the landlord that a claim is being made, rather than commence immediate proceedings. The question which we have to consider arises where, on receipt of that notification, the landlord promptly carries out the repairs. If he does, that will remove from the tenant’s claim in the court action subsequently brought any application for specific performance of the repairing covenant, but will, very often, leave outstanding in that action only a claim for consequential damages. It may often be the case that if the landlord had not carried out the repairs, and thus the tenant had sued for specific performance as well as for consequential damages, the effect of the Civil Procedure Rules (“CPR”) would have been that the action was allocated to the fast track. By contrast, if the action is for the consequential damages alone, because the repairs have now been done, the action will very often fall to be allocated to the small claims track. The issue for us is this: what if any order ought to be made in such a case as to pre−allocation costs? In particular, ought some order to be made which reflects the fact that until the repairs were carried out the tenant’s claim (notified under the protocol) was for specific performance as well as for damages, and would potentially have been for allocation to the fast track?”.

28. The judgment proceeds (at paragraph 13) to explain the importance of the Pre-Action Protocol:

“The protocol proceeds by stipulating that the tenant should give notice of the claim either by way of an “early notification letter”, or by way of a “letter of claim”. The difference between the two does not need detailed analysis here, but it is material to note that both require some detail. They require the listing of the defects, by way of schedule if appropriate, the setting out of why the tenant says that the landlord knows the defects are there, the identification of a proposed single joint expert, a copy of the proposed letter of instruction to that expert and disclosure of relevant documents in the hands of the tenant. The protocol continues by requiring a response from the landlord within, ordinarily, 20 working days. In its response the landlord is expected to say whether liability is admitted or not, to schedule any work which will be done, and to say when it will be done”.

29. Whilst the Protocol has changed slightly since 2008, it now being titled ‘The Pre-Action Protocol for Housing Condition Claims’ (“the Protocol”), the essence of it as captured in the above paragraph remains. The current Protocol includes, at Annex A, 2 specimen letters of claim – one for use by solicitors and one for use by tenants.

30. The Protocol also sets out the following in respect of costs:

“If the tenant’s claim is settled without litigation on terms which justify bringing it, the landlord will pay the tenant’s reasonable costs”.

31. Returning to Birmingham City Council v Lee, at paragraph 34 Hughes LJ states:

“Without some order as to the early−incurred costs, it would be open to a landlord who is in fact and in law liable for want of repairs to adopt a deliberate policy of omitting to repair until the protocol letter is received, but then of repairing without admission of liability so as to ensure that any subsequent court claim fell to the small claims track. The result of that would be that fast track costs which would otherwise have been due to the tenant would no longer be payable. We do not say that this is what has happened here; it may well not be. But that very possible scenario illustrates the necessity for some order in relation to the costs of advancing the protocol claim. Moreover, quite independently of the possibility of any such deliberate manipulation of the process by a landlord, such an order is necessary if the protocol is not to operate as a means of preventing recovery of reasonably incurred costs. The tenant who has a justifiable claim for disrepair needs legal assistance in advancing it. He must initiate it in accordance with the protocol. If the effect of the claim is to get the work done, then providing that the landlord was liable for the disrepair the tenant ought to recover the reasonable costs of achieving that result”.

32. The Court of Appeal proceeded to set out the form of order to be used (at paragraph 36):

“We would accordingly replace the order made by the judge with the following:

“Pursuant to CPR 44.9(2), the claimant shall have her costs in the cause on the fast track basis up to 26 September 2006.”

That means that if she wins, she will have fast−track costs of making the claim up to that date. If she fails, she will have nothing. Any costs order, in favour of either side, relating to the period after 26 September will remain governed by the allocation to the small claims track. The certain knowledge that that order will stand if she succeeds can inform any efforts to settle. In future cases of a similar kind, the expectation of an order such as this should have a similar effect, and it is to be hoped, without the need for litigation beyond the protocol negotiations”.

The District Judge did not address the decision in the Birmingham case even though it was brought to attention and was binding upon her.

Consequently, the Circuit Judge on appeal varied the order of the District Judge by adding:

“Pursuant to CPR 44.2(1), the claimant shall have her costs in the case on the fast track for costs incurred prior to completion of repairs of the property subject to this claim”.

The court then gave guidance on how parties should deal with such matters in the future.

75. To prevent the situation arising as has in this case, it would be useful in future for parties to set out within any case summary in readiness for an allocation hearing:

a. whether there are any outstanding repairs (and if repairs have been completed, the date     of this),

b. confirmation or otherwise of compliance with the Pre-Action Protocol for Housing Conditions Claims (England),

c. a brief chronology of the pre and post-issue steps which have been undertaken and

d. whether in the event of the claim being allocated to the small claims track the claimant       seeks a direction pursuant to Birmingham City Council v Lee [2008] EWCA Civ 891, and if          so whether the defendant consents to the same.

COMMENT

A correct decision, but with some disturbing aspects.

The District Judge was clearly wrong even though she had had a Court of Appeal decision, binding on her, drawn to her attention.

To compound her error, the District Judge then refused permission to appeal.

This Circuit Judge also refused permission to appeal having considered the matter on the paper.

It was only at the oral hearing of the permission to appeal application that permission was granted and of course, the appeal was successful as it was obvious all along that it would be.

This passage is also worrying.

“39. I say at the outset that I have great sympathy for the District Judge. She had clearly read the papers before her and was expecting to determine matters of allocation and instead was faced with a cost issue unique to housing disrepair claims and which had not been notified to her in any of the material submitted on behalf of the appellant. Whilst the position may not have been known about at the time of filing directions questionnaires, it emerged by the time repairs had been completed, I am told some 5 weeks or so before the hearing, and commensurate with the duty to further the overriding objective of the CPR (as per CPR 1.3) it was incumbent upon the appellant to have raised it with the court in advance of the hearing. It did not do so.

40. Whilst the District Judge could not have been criticised had she determined to adjourn the matter such that Birmingham City Council v Lee and any other relied upon case law could have been provided to her, although I would not promote adjournments as it causes delay, she instead listened to the submissions and then considered the case law herself before returning to deliver a judgment. She considered that case law within the confines of the time available, within what is likely to have been a typically busy day in the county court. In considering the judgment she did deliver, I now come to analyse it away from those specific circumstances and in the comfort of the appellate court with the benefit of detailed skeleton arguments and an authorities bundle, along with the luxury of time to prepare, hear and reflect.”

A rough translation of that is

Judges are under time pressure and cannot be expected to consider the law and reach the right decision.

This is at a time when the regulators and the courts are adopting a Taliban-style approach to any solicitors that make the slightest mistake.

Physician heal thyself.

There is still time to book!

There will be a special Zoominar at 4pm on Thursday, 9 April 2026 to discuss this and the practical consequences of the decision. 

A recording and notes will be made available afterwards and as many as you want from your organization can attend. 

To book for this individual Zoominar for £100 plus VAT, click here.

To book a Season Ticket for at least 14 Zoominars this year, including this one, for £750 plus VAT, to include at least 100 issues of the Newsletter, KERRY ON COSTS, REGULATION, LEGAL SYSTEMS AND SO MUCH MORE…, click here.

If you have already purchased a Season Ticket or you are a Consultee or subscribed to the Documents Service, then this Mazur Special is included. 

 A reminder that the minimum wage went up on 1 April 2026. 

Changes to statutory sick pay come in on 6 April 2026 removing the current three-day waiting period and making statutory sick pay payable from day one. 

The so-called Vento bands covering injury to feelings awards in discrimination cases go up from 6 April 2026. 

NATIONAL MINIMUM WAGE FROM 1 APRIL 2026 

The National Minimum Wage (Amendment) Regulations 2026 (SI 2026/357) came into force on 1 April 2026 and were increased as follows from that date:

• National living wage (21 and over): from £12.21 to £12.71.

• 18-20 year old rate: from £10.00 to £10.85.

• 16-17 year old rate: from £7.55 to £8.00.

• Apprentice rate: from £7.55 to £8.00.

• Accommodation offset: from £10.66 to £11.10.

Sources: Presidential Guidance: Employment tribunal awards for injury to feelings: Ninth addendum (30 March 2026) and Practice Directions and Guidance for Employment Tribunals (England and Wales) 

EMPLOYMENT RIGHTS ACT 2025: THIRD COMMENCEMENT REGULATIONS MADE BRINGING INTO FORCE SSP REFORMS

The Employment Rights Act 2025 (Commencement No 3 and Transitional Provisions) Regulations 2026 (SI 2026/373) bring sections 10 and 11 of the Employment Rights Act 2025 into force on 6 April 2026, subject to transitional provisions.

Section 10 of the Act makes statutory sick pay payable from day one of sickness absence by removing the current three-day waiting period.

Section 11 removes the lower earnings limit for eligibility but, to avoid the rate being more than the actual earnings of eligible employees, it amends the scheme so  the weekly rate will be the lower of the prescribed weekly rate and 80% of the employee’s normal weekly earnings.

 They contain transitional provisions which deal with the following situations in relation to employees whose sickness absence spans both before and after 6 April 2026:

• Employees who are serving waiting days before 6 April 2026.

• Employees who have normal weekly earnings between £125 and £154.05 before 6 April 2026.

• Employees who were earning below the lower earnings limit before 6 April 2026.

 HMRC has produced Guidance, Sickness absences that start before and end on or after 6 April 2026.

INCREASES TO VENTO BANDS FOR INJURY TO FEELINGS AWARDS FROM 6 APRIL 2026

On 30 March 2026, the Presidents of the Employment Tribunals in England and Wales and in Scotland issued the Ninth Addendum to the joint Presidential Guidance on employment tribunal awards for injury to feelings. 

It sets out the following updates to the Vento bands which have been adjusted to take account of the Retail Prices Index changes published on 20 March 2026:

• Lower band of £1,300 to £12,600 (increasing from £1,200 to £12,100) for less serious cases.

• Middle band of £12,600 to £37,700 (increasing from £12,100 to £36,400) for cases which do not merit an award in the upper band.

• Upper band of £37,700 to £62,900 (increasing from £36,400 to £60,700) for the most serious cases.

• Amounts more than £62,900 can be awarded in the most exceptional cases.

In Scotland the bands remain subject to paragraph 12 of the Presidential Guidance as issued on 5 September 2017, which concerns whether the Simmons v Castle uplift should apply in Scotland.

The new bands apply to employment tribunal claims presented on or after 6 April 2026.

Sources: Presidential Guidance: Employment tribunal awards for injury to feelings: Ninth addendum (30 March 2026) and Practice Directions and Guidance for Employment Tribunals (England and Wales) 

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Fraser -v- Sanctuary Housing Association, HHJ  Wendy Owen, sitting at the County Court in Mold, 26th February 2026

a Circuit Judge was considering a case where the defendant argued that the second action against it was an abuse of process because an earlier action had been settled by the claimant accepting a Part 36 offer.

However, the claim in the second action had been specifically excluded from the first action and although the defendant had attempted to make an all-embracing Part 36 offer in the first action, the court here held that a Part 36 offer could not cover matters which had not been pleaded.

It should be noted that pre-action offers can be made in respect of unpleaded matters, but the position changes once a claim or a counterclaim has been pleaded.

In

Hertel & Anor v Saunders & Anor [2018] EWCA Civ 1831

the Court of Appeal held that offers in extant proceedings must be made by reference to the pleaded issues, and accordingly an offer made in respect of an intimated but unpleaded head of claim was not a Part 36 offer.

This means that pre-action Part 36 offers can retrospectively become ineffective, or less effective, once proceedings are issued, which is not satisfactory.

THE FACTS

The claimant brought a claim for damages for personal injury against the defendant because of poor housing conditions and wrote a letter of claim setting out the claim for disrepair and stating that the claimant had suffered personal injuries. 

The claimant issued proceedings (“the first action”) seeking damages for disrepair and that action had a specific pleading

“The health of the Claimant and her children has been impacted although any personal injury claims will be pleaded in separate proceedings to these present proceedings.”

THE DEFENDANT’S PART 36 OFFER IN THE FIRST ACTION

 The letter was stated to be a Part 36 in the heading and set out the Part 36 consequences in detail and ended with the words.

“If you consider, for any reason, that this offer is in any respect unclear or does not comply with the relevant provisions of Part 36, we invite you to make your position plain so that we may consider the same promptly. If you do not do so but subsequently seek to assert that the offer is either unclear or does not comply with the provisions of Part 36, we shall invite the court to treat the offer as if it were clear and compliant with the provisions of Part 36 whatever subsequent objections are raised.”

The Part 36 offer was to

 “settle the whole of your Client’s claims arising out of year Client’s occupation of the Property, past and present, howsoever arising including her alleged claims as set out in her letter of claim”.

The claimant accepted the Part 36 offer.

The parties continued to deal with the claimant’s claim for personal injury, and the claimant issued a second set of proceedings for damages for personal injury.

The court rejected the defendant’s submission that the second action, for personal injury, was an abuse of process and upheld the claimant’s submission that a Part 36 offer could not cover matters that were specifically excluded in the Particulars of Claim.

This follows from the clear wording of various parts of Part 36 and is in accordance with the decision of the Court of Appeal in

Hertel & Anor v Saunders & Anor [2018] EWCA Civ 1831

where the defendant made a Part 36 offer whilst an application to amend the Particulars of Claim to include other matters was pending.

DECISION

(1)            This appeal raises a potential point of importance regarding the meaning of ‘claim or part        of [a claim] or an issue’ as these words are used in CPR Part 36. It arises in circumstances                 where an offer was made by the defendants in respect of a new claim which had been               indicated by the claimants by way of a proposed amendment to the particulars of claim,    but which had not yet been the subject of a court order granting permission.”

(2)            The Court of Appeal made the point that Part 36 is a “carefully structured, highly           prescriptive and self-contained code”

(3)            The Court of Appeal were concerned with what was meant by “claim” in the context of               Part 36. The judgment was clear in the view that claim could only be construed by            reference to the pleaded case.

1. “The next question is whether, in a case where proceedings are ongoing, the words ‘claim’, ‘a part of a claim’ or ‘an issue’ should be construed as meaning claims, parts of claims or issues which can be identified in or which arise from the pleadings, or whether they would also include claims, parts of claims or issues which have not been pleaded but which, for example, may have been mentioned in correspondence or in an informal conversation between solicitors.

1. In my view, this question only has to be posed for the answer to become immediately apparent. In civil proceedings, claims/parts/issues can only properly be defined by reference to the pleadings. Indeed, that is the principal purpose of pleadings. It would introduce unnecessary and unwelcome uncertainty if claims/parts/issues were given a wide definition that did not seek to anchor them to the pleadings which the parties have exchanged.

1. To take an extreme example, Mr Smith suggested in his oral submissions that, if the claimant’s solicitor introduced a possible new claim in a letter to his opponent, then that would be caught by the words of the rule, even if it had not been the subject of any formal amendment, and even if it had not been the subject of any kind of response by the defendant. I consider that such an interpretation would lead to uncertainty and confusion; it may even encourage the potential abuse of the Part 36 regime.

 Accordingly, like Morgan J, I would construe the words ‘claim’, ‘part of a claim’; and ‘issue’ as referring to pleaded claims, parts of claims or issues, and not other claims or issues which may have been intimated in some way but never pleaded.

 Once proceedings have started, the certainty required for Part 36 to operate properly can only be achieved by this.

 A new claim which has been intimated, but which is not part of the pleadings, is not therefore caught by r.36.2(2)(d) (current r.36.5(2)(d)).

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Siniakovich v Hassan-Soudey & Ors [2026] EWCA Civ 215 

the Court of Appeal, in a decision which it recognizes as being of general importance, held that a claim is brought for the purposes of the Limitation Act 1980 and other time limits when it is received by the court, even if the wrong fee has been paid.

In a 34-page Judgment, running to 136 paragraphs, the Court of Appeal said that the issue, previously not considered at this level, was whether failure to pay the correct fee for issuing the claim meant that an “action” is not brought for limitation purposes when the claim is received in the court office.

The Court of Appeal held that an action is successfully brought when lodged at court, even if the wrong fee has been paid.

It considered the case law and at Paragraph 122, said that if, unlike the present case, the claim has been deliberately undervalued in order to avoid payment of the correct fee:

“there are plenty of other sanctions available to the court, including, in a particularly egregious case, striking out the claim”.

The Court of Appeal declined the comment on what the position would be if, for whatever reason, no fee was paid or proffered and there was no application for fee remission.

It stated that that situation was very unlikely to occur now as electronic filing has become the norm and it is impossible to deliver documents to the court electronically without either lodging an application for fee remission or paying some fee, and it said that it would prefer to leave consideration of that scenario to a case in which it directly arises.

In relation to the substantive and important issue here, the Court of Appeal said

120. It is one thing to miss a deadline for filing; that is generally inexcusable. That is quite different from making a mistake in the payment of the fee, which can easily occur. The fees may have been increased without the solicitors being aware of the date on which the most recent statutory instrument amending the Fees Order came into force, or they may not appreciate that a claim for “further or other relief” attracts an additional fee. There is also plenty of scope for a litigant in person to make an error of this nature. Mr Wills points out that there is guidance to assist litigants, and that litigants in person are expected to comply with the rules of practice and procedure in the same way as everyone else, but that does not mean that they necessarily understand them, and they quite often get things wrong.

121. All these considerations seem to me to point clearly to the position stated in Barnes and Page and reiterated by Turner J in Liddle, as being the correct one, irrespective of whether the court fee has been paid in full by the time the limitation period expires, and irrespective of the reason for any shortfall. Page (No 2) was wrongly decided. An action is brought when the claim form is first delivered to the court office, even if the office legitimately refuses to issue it (or, if filed electronically, it fails Acceptance) because the whole of the appropriate fee has not been paid. The delay in issuing the claim form, even if it is attributable to that failure, is immaterial, and the risk of being time-barred by reason of the shortfall in payment does not fall on the claimant. If a fee is proffered, or paid (as it must be in order for the documents to be filed electronically) or a help with fees form is lodged, the action will be brought when the claim form is received in the court office.

COMMENT

A sensible, practical and just decision.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

Solicitors are being fined up to six times more than their accountancy counterparts for breaches ofanti-money laundering regulations.

The Office for Professional Body Anti-Money Laundering Supervision published its annual review of the effectiveness of the 25 organisations tasked with preventing financial crime in the accountancy and legal sectors.

The figures in the report relate to the 2023/24 year. During the year, law firms received 453 onsite visits – the highest number since before the Covid lockdown – and were far more likely to be visited than accountancy firm.

Indeed, the number of visits in 2023/24 was slightly lower than in 2022/23 for the accountancy sector supervisors, whereas in contrast, the legal sector supervisors have collectively and consistently increased their number of onsite inspections.

In 2023/24, the legal regulators issued fines totalling £470,859 – some £90,000 more than the accountancy regulators, despite the larger number of accountancy firms.

Fines imposed in the legal sector averaged £12,073, compared with £1,892 in the accountancy sector.

The report states:

“The total sum of fines issued collectively by the accountancy sector is similar to the legal sector, but the average fine amount is over six times lower. This suggests lower average penalties. We are looking at this closely, with the accountancy sector generally receiving lower scores that the legal sector in their enforcement effectiveness scores in this cycle.”

The number of suspicious activity reports – which help law enforcement to detect and prevent financial crime – fell in the legal sector to 36.

This was the fourth annual drop in succession, although it was noted that the sample SARs submitted for the review were of good quality.

As ever, the readers of the Law Society Gazette are spot on.

I wish the SRA would concentrate on their ‘core’ advertised duty. Holding the incompetent and corrupt of the legal profession to account for their actions in miss-leading and defrauding members if the general public. Or isn’t that what the SRA do? Little evidence of any protection for the GP from SRA lately the PM Law fiasco a case in point.

It’s a transparent and disgusting exercise in larceny; the profession gets fleeced by an out of control regulator; we are viewed as monied sitting ducks. It’s nonsense.

SPOT the SRA staff member at Anonymous @1 .12pm

Over four years ago we reported a firm to the SRA that was involved in taking many millions of pounds from investors in a Ponzi scheme which had obvious signs of AML breaches (funds coming from non-clients) … we hear periodically that the investigation is still ongoing and the person dealing has now changed! How on earth is the SRA going to manage to increase the level of AML scrutiny if it takes so long to investigate those who really do need investigation?

It is just as well that the SRA is on top of the important stuff and regularly commended by its own regulator.

Yes it was Stan Laurel that coined it wasn’t it ?

Anonymous @12.15pm – You may be familiar with the old phrase “You can lead a horse to water but you can’t make it drink.”

Why … its the banks you should be targeting.

Has the SRA been “approached for comment”?

It would be good to know what the current management of the SRA has to say about this.

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

The highly controversial subject of Class Actions is in the news again.

 Just 14 have been certified by the Competition Appeal Tribunal under the Competition Collective Proceedings Regime, and most of us take the view that the only real beneficiaries are funders and lawyers with the claimants, forced into the litigation like modern day slaves, getting paltry sums, if anything.

Two more have hit the rocks.

In

Professor Carolyn Roberts and others v. Severn Trent Water Limited & Severn Trent PLC and others [2026] EWCA Civ 222

the Court of Appeal, by a majority, dismissed an appeal against the decision of the Competition Appeal Tribunal declining to make a Collective Proceedings Order under Section 47B(4) of the Competition Act 1998, and that dismissal of the appeal prevents the claim from proceeding.

At the end of this piece, I set out the Judgment Summary, prepared by the Court of Appeal itself, which sets out the issue.

That Judgment Summary has a link to the full and lengthy Judgment.

In another Class Action, this one seeking damages for losses allegedly suffered by passengers on the London to Brighton Main Line because of the pricing by Govia Thameslink Railway Limited, with the Secretary of State for Transport intervening, the claimants have been unable to obtain After the Event Insurance.

This has led to the person intending to be the replacement Class Representative – the first one died – withdrawing from the case.

A hearing is due to take place on 15 April 2026, and the court order requires:

“a realistic assessment of the prospects of securing a replacement class representative and the necessary funding and insurance arrangements”.

The court order also requires a timetable in relation to the above matters.

Here is the Judgment Summary in the water company cases.

5 March 2026

Professor Carolyn Roberts and others v. Severn Trent Water Limited & Severn Trent PLC and others

Neutral Citation Number: [2026] EWCA Civ 222

JUDGMENT SUMMARY

Important note for media and public: this summary forms no part of the court’s decision. It is provided so as to assist the media and the public to understand what the court decided. The full judgment of the Court of Appeal is the only authoritative document. Judgments are public documents and are available at:

www.judiciary.uk, https://caselaw.nationalarchives.gov.uk

Introduction

1. This appeal concerned opt-out collective claims sought to be brought in the Competition Appeal Tribunal (the Tribunal) against six water and sewerage undertakings (the water companies) on behalf of the many consumers served by those statutory monopoly suppliers. The proposed class representative, Professor Roberts, claims that each of the six water companies abused their dominant positions by misleadingly understating the number of incidents of water pollution in their areas, leading the regulator (Ofwat) to allow them to charge consumers more than would otherwise have been the case.

• The Tribunal refused to make a Collective Proceedings Order under section 47B(4) of the Competition Act 1998, so preventing the claims from proceeding. It did so on the basis that the claims were excluded by section 18(8) of the Water Industry Act 1991 (the WIA).

• In outline, section 18(8) (set out at in the judgment at [4]) may operate to prevent a claim being brought where the act complained of contravenes a condition of a water company’s appointment under the WIA (its licence conditions) and the claim also depends on that act having constituted such a contravention. This is because the closing words of section 18(8) limit remedies to “those that are available in respect of [an act] otherwise than by virtue of its constituting … a contravention”. In the context of claims in nuisance, the Supreme Court has interpreted these words as precluding remedies where the contravention is an “essential ingredient” of the claim (United Utilities Water Ltd v Manchester Ship Canal Co Ltd (No 2) [2024] UKSC 22, [2024] 3 WLR 356).

• It was common ground that the provision of misleading information about pollution incidents would have contravened the conditions under which the water companies were appointed. This was because information about pollution incidents had been sought by Ofwat under a condition of appointment that empowered it to require information to be provided for the purposes of price reviews. The issue was whether, as Professor Roberts maintained, the claims for abuse of dominance were available otherwise than by virtue of the provision of misleading information constituting a contravention. The Tribunal decided that they were not.

• Professor Roberts appealed to the Court of Appeal (Sir Geoffrey Vos, Master of the Rolls, Lady Justice Falk and Lord Justice Zacaroli). The issue on the appeal was whether the Tribunal was correct to conclude that section 18(8) precluded the claims.

The Court of Appeal’s decision in outline

• The majority (Sir Geoffrey Vos, Master of the Rolls and Lady Justice Falk) concluded that the Tribunal had reached the correct conclusion, although they did not adopt the same reasoning. Lord Justice Zacaroli delivered a dissenting judgment. The result is that Professor Roberts’s appeal is dismissed.

• The majority gave three main reasons for its decision. First, Ofwat could only have been misled because it assumed that the information supplied to it was accurate. The basis of that assumption was the existence of the requirement in the water companies’ conditions of appointment to provide information for the purposes of price control reviews. It was the failure to comply with the obligation to report that led Ofwat to be misled into assuming that the information was accurate (judgment at [15] and [62]-[72]).

• Secondly, the legislation must in any event be applied realistically. Approaching the matter realistically, the remedy sought did ultimately depend on a contravention of a condition of appointment. The breach was fundamental to the complaint of abuse. In essence, the complaint was that the regime had been misused to abuse a dominant position. The nature of the alleged misuse was that there was a contravention of the conditions of appointment (judgment at [16] and [73]-[79]).

• Thirdly, the claims needed to be understood in the context of the regulatory regime, under which the water companies enjoy statutory monopolies on conditions which are designed to protect customers from the excessive pricing that such monopolies would otherwise permit. Absent the conditions to which they were subject, the water companies would have had no need or requirement to report pollution incidents to Ofwat at all. In a real sense, therefore, the claims depended on the existence and breach of the conditions of appointment. Other elements of the regime relied on by Professor Roberts did not affect this conclusion (judgment at [17]-[18] and [80]-[88]).

1. Lord Justice Zacaroli disagreed with these reasons, concluding that the essential ingredients of Professor Roberts’s claims did not include the contravention of the conditions of appointment. The fact, assuming it was correct, that Ofwat relied on the existence of the licence conditions in operating the price control regime did not render the fact of their contravention an essential ingredient of the claim (judgment at [125]-[127]). The analysis of the majority also risked conflating manipulation of the price control regime with breach of a licence condition (judgment at [129]-[134]). Further, he did not agree that the fact that the claims could not be divorced from the operation of the regulatory regime meant that they depended in a real sense on the breach of the licence conditions. Section 18(8) had a narrower effect than excluding claims because they cannot be divorced from the operation of the regulatory regime (judgment at [135]-[143]).

This first appeared in my Newsletter Kerry on Costs, Regulation, Legal Systems and so much more.

Subscriptions are £250 + VAT for 2026, which is over 100 issues. Buy here.

In

Lukins and another v Quality Part X Ltd and another [2026] EWHC 301 (KB) (18 February 2026)

the High Court granted reverse summary judgment on the basis that the claimants’ negligence and nuisance claims arising from a fire on 6 April 2018 were time-barred under section 2 of the Limitation Act 1980.

The central issue was whether proceedings were “brought” within the six-year limitation period when the claimants’ solicitors sent claim forms by post to the court on 25 March 2024 , received 26 March 2024, rather than using the mandatory electronic filing system as required by Practice Direction 51O for legally represented parties since 1 July 2019.

The court returned the claim forms on 28 March 2024, which were not received by the claimants’ solicitors until 9 April 2024, when they filed electronically after the limitation period expired on 6 April 2024.

The court held that there was a clear line of Court of Appeal authority to the effect that, in cases such as this, a claimant must do at least all that could reasonably be expected to ensure proceedings are issued within time.

The test of reasonableness depends on factors including the requirements of rules and practice directions, whether the claimant is legally represented, and any communication with the court.

Here, the claimants’ solicitors had not done all that was reasonably expected, having failed to comply with a mandatory electronic filing requirement which had been in place for over five years.

The court rejected the claimant’s arguments regarding the effect of Practice Direction 7A.6.1, which provides that a claim is “brought” when received by the court office if received earlier than the issue date.

 It did not follow that because proceedings would have been “brought” within the meaning of that provision if a litigant in person had sent the claim forms by post, they would similarly have been “brought” for a legally represented person.

The legally represented person would, in sending the claim form by post, be failing to comply with a mandatory requirement which the claimants’ solicitors should have been familiar with.

The procedural error could not be remedied under CPR 3.10, which only applies to errors during extant proceedings, not to matters occurring before commencement.

 The court distinguished R (Lawrence) v London Borough of Croydon [2024] EWHC 3061 (Admin), noting that the judge in that case had not been taken to the full line of Court of Appeal authority and had applied a narrower interpretation of the relevant principles, without assessing the reasonableness of the party’s actions.

There will be a special Zoominar at 4pm on Thursday, 9 April 2026 to discuss this and the practical consequences of the decision. 

A recording and notes will be made available afterwards and as many as you want from your organization can attend. 

To book for this individual Zoominar for £100 plus VAT, click here.

To book a Season Ticket for at least 14 Zoominars this year, including this one, for £750 plus VAT, to include at least 100 issues of the Newsletter, KERRY ON COSTS, REGULATION, LEGAL SYSTEMS AND SO MUCH MORE…, click here.

If you have already purchased a Season Ticket or you are a Consultee or subscribed to the Documents Service, then this Mazur Special is included.