Peter O'Sullivan v Trading 212 UK Limited

This judgment deals with costs issues, following a trial and the delivery of an extemporary judgment dismissing the claim, and is in 12 parts:

Introduction

This is the Court’s judgment on the issue of what costs order(s) should be made following judgment in this case.

I gave an oral judgment on the substance of this claim on 12 February 2026, having heard closing submissions earlier that day. Because the Claimant has applied for permission to appeal, there is now an approved transcript of that judgment (which should be read in full in order to understand the context of this decision). In very brief outline, the Claimant sued the Defendant for closing his sharing trading account in August 2021, but I dismissed that claim on the basis that the Defendant had the right to do so (under the parties’ contract) and the obligation to do so (under the applicable anti-money laundering regulations, although there is no suggestion that the Claimant was involved in anything other than entirely legitimate activity). There was insufficient time to deal with consequential matters (and costs in particular) on 12 February, so I gave directions as to how they should be resolved.

I received the parties’ written submissions, together with their indications as to whether I should determine the costs issues on paper or at a hearing. The Claimant requested that I determine the costs issues on paper, whereas the Defendant asked for a hearing. Having given some consideration to the written submissions, I directed the oral hearing that then took place on 21 May, for the reasons given at the foot of my Order of 24 March 2026.

Even though I set out a provisional view on the broad shape of a costs order in those reasons of 24 March, I have approached the costs arguments afresh and with an open mind as to the outcome.

Indeed, and for reasons that are not entirely clear, both parties decided to have a full-throated attempt at reworking their written submissions and the costs bundle that had been prepared, in spite of there being no invitation or permission to do so. What had been a 54-page costs bundle grew to become a 205-page bundle (including those new written submissions) and the Claimant produced another, 14-page document. The Defendant also filed an N260 which indicated that it had spent just under £30,000 “for the hearing on 21 May 2026” (in addition to the budgeted costs, their previously incurred costs and their Precedent T costs). In other words, the ground had shifted somewhat between March and May.

Throughout the proceedings before me, up to and including the filing of his written costs submissions, the Claimant has been represented by Anthony Metzer KC and George Symes of Counsel (instructed by Andreas Laws) and the Defendant has been represented by Anna Greenley of Counsel (instructed by Winckworth Sherwood). I remain grateful to all of the legal representatives for their assistance.

As is his right, the Claimant decided to represent himself at the costs hearing, on the basis that he wished to save money. The Claimant, assisted by his wife, therefore addressed me orally and by reference to two documents that he had written (dated 18 and 21 May 2026). The Claimant addressed me with clarity and courtesy and I am grateful to him for the way that he explained his points to me. I acknowledge – and acknowledged during the hearing – that the Claimant continues to believe that he was wronged by the Defendant and therefore that he should have succeeded in his claim (and thus that I was wrong to dismiss his claim). The Claimant accepted that my decision on costs would necessarily be consistent with my substantive judgment and, where he could, he sought to explain how certain points that he was making were not inconsistent with that substantive judgment.

After the hearing concluded, at lunchtime on 21 May, the Claimant sent two long and detailed emails to the Court with further submissions. The first of these, sent at 23.55 on Friday 22 May, was acknowledged by the Court with an indication that there was no need for any response on behalf of the Defendant and an exhortation that “the parties think very carefully before sending any further correspondence to me before I give judgment”. In spite of that exhortation, the second email was sent by the Claimant at 13.26 on Thursday 28 May. It led to the same indication from the Court that there was no need for any response from the Defendant and an Order that neither party should file further submissions without applying formally (and on notice) to rely on those further submissions.

I listened carefully to everything that was said to me on behalf of each party and I have read carefully everything to which I was referred or to which I have referred. This includes the two emails (and the two attachments to the second email) that the Claimant sent after the hearing.

Even if I do not mention or expressly deal with every point that was made to me, please be assured that I have taken it into account. However, I am only going to mention the points that are the most important in reaching my decision.

Furthermore, this is a judgment on costs. Had the parties acted with more restraint, I would have expected to have been able to deliver an extemporary judgment. It is disproportionate and contrary to the overriding objective (and the allotting of no more than a fair proportion of the court’s resources) for this judgment to go through every single point made by the parties with a fine toothcomb. Similarly, when it comes to the summary assessment of costs, this is a broad brush exercise and that is reflected below.

I should add, for the sake of completeness, that, woven into the Claimant’s own submissions on costs (as distinct from the written submissions settled by counsel), there are numerous criticisms of the Claimant’s own legal team and indeed of the Court. I have no basis to conclude that any of the Claimant’s criticisms of his lawyers have any foundation but, even if I did, this would not have affected my conclusions on the costs issues. The Claimant has also suggested that he might not have received a fair hearing because the case was transferred from Hull to London; or, to quote some of his own words: “I have to say allowing this case to be relocated has been a huge mistake on my part. I do not see Undertakings with Penal Notice and Hybrid hearings being ordered in Hull. It all looks perfectly choreographed by the Defendant. It has worked very well.” I am very sorry that the Claimant sees things that way but, although this should not need to be said, his belief is entirely unfounded.

What is and was at stake

As I explained at paragraph 122 of my Judgment of 12 February, this claim only ever appears to have been worth a few thousand pounds, when properly analysed. The Claim Form stated a value of under £30,000 and no permission was ever sought to amend it. Furthermore, it turned on the application of Regulations and the parties’ written contract to the facts of the case, materially all of which facts were apparent on a review of the contemporaneous written communications between the parties. The documents relevant to that fact finding exercise ran to no more than a few dozen pages.

The relief claimed in the prayer to the Particulars of Claim was only monetary (and pleaded at £37,106). There was no non-monetary relief sought. It may be a case that was (and remains) of considerable importance to the parties themselves, but it not a case of public importance and it is not (or certainly ought not to have been) a case where either party regarded his/its reputation as being at stake.

At the costs and case management conference, which took place before a district judge in the County Court at Hull on 11 December 2024 (where the Claimant was represented by leading counsel and the Defendant by counsel), the judge decided that the claim should remain allocated to the multi-track and made a costs management order.

That costs management order recorded that the Claimant’s budget was agreed in the amount of £59,575 (of which £8,625 had already been incurred, including the CMC phase); and the court approved a budget for the Defendant in the total amount of £188,558.98 (of which just over £88,000 had already been incurred). All of the cost figures in this judgment are net of VAT.

The Defendant applied to strike out the claim and that application was determined at a hearing on 15 September 2025. The application was adjourned with the Claimant giving undertakings to the Court regarding contact with witnesses; costs were reserved. The Claimant’s costs schedule for that hearing totalled £20,800 and the Defendant’s costs schedule totalled £59,513.67. These costs were additional to the budgeted costs.

At the pre-trial review on 16 October 2025, the circuit judge increased each party’s budget by £18,243.50. Three phases of the Claimant’s budget were increased (witness statements, PTR and trial preparation) and two of the Defendant’s phases (witness statement and trial preparation) were increased.

In other words, by the time this claim reached the first day of trial, and by reference only to the incurred costs (as stated in the budgets), approved and costs-scheduled figures, the Claimant was at risk of paying up to £266,316.15 in respect of the Defendant’s costs and the potential liability in the other direction was £98,618.50. Between them, the parties had just under £365,000 in costs on the table.

As I explained in my judgment, the Defendant gave very late disclosure (during the course of the trial) of documents which ought to have been found and disclosed much earlier. That disclosure precipitated (or was the catalyst for) much by way of additional work (including a partially successful and partially unsuccessful application to amend the Particulars of Claim, although – of course – the claim overall did not in the end succeed). Both parties filed Precedents T in respect of what they said were their increased costs. The Claimant’s increase was £54,115. The Defendant’s increase was £63,330.91 (although it stated in its written submissions of 12 March that it would only seek an order for payment of some of those costs, which it later quantified at £41,477.33).

In other words, by the time that judgment was handed down, the parties had a little over £482,000 in costs on the table, between them.

With an exhortation from me about proportionality and what I had intended to be a very clear message about the overall level of costs, the parties have not stopped spending since then. Each side submitted a further schedule of costs for the hearing on 21 May. The Claimant submitted a schedule in the amount of £1,925 (although this does not appear to include any of his lawyers’ costs, in spite of the fact that there had been some earlier involvement from his lawyers) and the Defendant submitted a schedule totalling £29,981.76.

Adding (just) those figures, the overall costs on the table now stand at over £500,000. Saying it in different words, the parties have spent over half a million pounds between them trying to get the court to decide whether the Defendant owes the Claimant in the region of £5,000. Or, for those who prefer multiples, the parties have spent around 100 times more on legal fees than the claim is actually worth.

In fact, the parties have provided me with calculations of their actual costs incurred, which are somewhat higher. The Claimant has spent just under a quarter of a million pounds (£246,426.54) and the Defendant has spent almost half a million pounds (£452,456.26).

I have set out these costs not because I need to calculate the precise figures but in order to convey the staggering level of legal fees that the parties have been willing to incur in this dispute. It is possible that I have missed something and it is also possible that there is a small element of double counting in the figures above.

Moreover, and because I have not seen a witness statement that explains why a party refused an ADR proposal made by the other party (as would have been required by paragraph 8 of the CCMC Order), I can read between the lines that neither party proposed mediation, early neutral evaluation or any other form of ADR.

Each party’s position

Of a piece with their conduct in the litigation as a whole, the parties have diametrically opposite positions in relation to costs and they have thrown everything at the arguments.

The Claimant’s position now is that the Defendant should pay his costs in relation to “steps caused or prolonged by the Defendant’s conduct” and, save in relation to those issues, there should be no order as to costs. This is a hardening of his position as set out in his written submissions of 26 February, in which it was submitted on his behalf that “the fairest order is no order as to costs, save for those costs directly consequential on the Defendant’s late disclosure… In the alternative, any costs order made in favour of the Defendant should be drastically reduced”.

The Defendant submits that the “the correct and just order is that the Claimant pay the Defendant’s costs”, save for a “limited concession… in respect of the costs of the reconvened trial and of considering the late disclosure”.

Both parties submitted that, whatever costs order might be made, I had sufficient information to carry out a summary assessment of any costs that might require quantification. To that end, the Claimant has produced an annotated table showing the costs that he has incurred, adding up to £246,426.54 (which appears to include at least some VAT and also at least some costs incurred in relation to his application for permission to appeal the substantive judgment), together with a Precedent T dated 6 February 2026 (with the Defendant’s comments thereon); and the Defendant has produced a worked and annotated calculation of its costs, leading it to seek a total of £276,957.99 from the Claimant.

I agree that I have sufficient information to carry out a summary assessment and that this is appropriate, as it is a swifter procedure than detailed assessment and requires less of the parties’ time or money and probably less of the court’s resources.

What costs order, if any, should be made?

Costs – including the question of who, if anyone, should pay another party’s costs – are in the discretion of the court. However, it is not an unfettered discretion and the discretion must be exercised judicially.

CPR 44.2(2) provides that if the court does decide to make an order about costs the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, but the court may make a different order. The making of an order in favour of the successful party is generally to be adopted as calculated to achieve this end: BCCI v. Ali (Unreported, Chancery Division, 4 November 1999) at [7] per Lightman J.

The successful party is the Defendant, because the claim has been dismissed.

Following CPR 44.2(4), the court must have regard to all the circumstances in deciding what order to make about costs and they include the conduct of all the parties, whether a party has succeeded on part of its case (even if it has not been wholly successful) and if any admissible offer to settle made by a party which is drawn to the court’s attention and which is not an offer to which cost consequences under Part 36 apply.

In this case, there have been no admissible offers to settle to which my attention has been drawn, other than an offer from the Defendant to the Claimant, made on 29 October 2025, which was to accept just over £160,000 in respect of its costs as they then stood.

Much of the parties’ focus, in their costs submissions, has been on conduct (CPR 44.2(4)(a)), and in particular on each other’s conduct. They have lots to say, because this case has been extremely hard fought and every point that could be taken, has been taken.

One of the difficulties with conducting litigation in this way is that costs rise and, because people become polarised and irritated with each other, they take more and more points in their scramble for victory.

This is what it is, but it takes two to behave in that way and, now that the substantive claim has been determined, there is a victor. With two exceptions, I do not consider it would be just, having regard to the conduct of both the parties, to start doing a fine analysis of the impact of particular elements of conduct that might be said to have had an impact on the costs. This includes all of the “conduct”/ “misconduct” points made by the Claimant in his written submissions after the hearing and in his own written submissions relied upon at the hearing (as opposed to those settled by counsel on his behalf), to the extent that there are admissible conduct points and not impermissible challenges to the substantive judgment. Having considered and reflected upon all of them, having had the benefit of conducting the trial and having now had extensive dealings with the parties and their representatives, I have concluded that it would not be appropriate to take any of them into account in the way proposed by the Claimant and I consider, in any event, that it would be wholly disproportionate for the Court to descend into the level of detail that appears to be envisaged.

I therefore do not propose to make an adjustment to the costs order for general “conduct” points.

The two specific points that do warrant separate consideration are (i) the Defendant’s disclosure and (ii) the Claimant’s conduct leading to the Defendant’s strike out application and the hearing on 15 September 2025. I address these below.

Having considered the parties’ submissions, and subject to the two points identified in the previous paragraph, I have reached the conclusion that there is no reason to depart from the general rule that the unsuccessful party should pay the successful party’s costs.

In particular, I note that the Claimant had involved lawyers within a few weeks of the closure of his account. Even in light of my judgment and the concessions made on his behalf at trial, the Claimant remains focused on what he perceives to be the inappropriateness of the Defendant’s asking for AML documentation in July 2021 and its conduct towards him after his account had been closed. The Claimant’s attempt to rely upon the very recent witness statement of a Mr Cantwell and his extensive references to the Slack messages and to the Defendant’s asserted failure in its complaints handling are cases in point.

In his email to the Court of 23.55 on 22 May, the Claimant wrote that “I know the difference between right and wrong, and that is all that matters to me. I will either get Justice or I will end up penniless trying. I have my principles your Honour, they are expensive but I will not depart from them”.

I also note that the Claimant did not accept the Financial Ombudsman’s conclusions in his appeal decision of 2 December 2022. Of course, that decision is not binding on the parties (nor has it influenced my own decisions in any way), in light of the Claimant’s not having accepted it, but I was struck by the following comments in the Ombudsman’s decision: “Mr O has alleged several actions by T212 are unlawful or illegal. Only a court can make a decision on the lawfulness of a business’ actions. Our service’s remit is to resolve complaints quickly and informally, based on what the ombudsman feels to be fair and reasonable. We take into account the law, alongside relevant regulations, guidance and what we consider to be good industry practice… I don’t see that T212 have done anything wrong by asking Mr O for further information, or by restricting his trading account until the information was available… Having reviewed the correspondence between Mr O and T212 I don’t find the service Mr O received to have been unreasonable. I appreciate Mr O found the experience incredibly frustrating, and as mentioned previously this was at a difficult time for him… Overall, I don’t find that T212 have done anything substantially unfair or unreasonable in restricting and then closing Mr O’s account in the manner they did. I understand Mr O feels very strongly about his complaint, but I don’t find that he’s been treated unfairly by T212 and as such I’m not asking them to do anything further.”

The Claimant’s principles appear to have caused him to lose sight of the fact that this is and always has been a claim for civil compensation. It is not and was never going to be a public inquiry into the probity or business standards of the Defendant.

Indeed, the very fact that the Claimant had received all of his money back from the Defendant within a couple of months of his account closure means that he has been free to reinvest since then. He has chosen not to say what he did with the money that was previously invested in Royal Caribbean Cruises (which were the only shares that were particularised in his lost profits claim, according to Response 1 of the Claimant’s Further Information dated 27 November 2024). If, by happy coincidence, the forced sale of these shares has led the Claimant to make a more profitable investment than he would have had if he had remained a shareholder in RCL, then it might fairly be said that he is better off as a result of what happened.

However, and as I explained in my main judgment, it struck me that this was always a very modest claim, in terms of value, because the Claimant only lost control of his money (and had his shareholdings liquidated and turned into GB£ against his wishes) for a relatively short period of time. He was not prevented from reinvesting in the markets (with a different share trading service), nor has he suffered any stigma as a consequence of the closure of his account. Any publicity that falls upon the Claimant will only come as a consequence of the litigation that he has initiated.

In making the points above, I do not for one second wish to suggest that the Defendant has covered itself in glory. It has not. Most obviously, it failed to discharge its disclosure obligations until a very late stage and when it did produce previously undisclosed documents, they contained some rude and unprofessional internal messages.

This was nevertheless a claim brought by the Claimant. He has been legally represented for almost all of the litigation (save for a brief period when the claim was first issued) and I accept the Defendant’s submission that he is to be taken as having understood that he was likely to face an adverse costs order in the event that his claim was dismissed.

That is in contrast to the position as it was in his complaint to FOS, which was a “one way bet he cannot lose” (to quote the Defendant’s written submissions), because there is no costs jurisdiction in complaints to the Ombudsman. Before the parties made their submissions, my first instinct was “A plague o’ both your houses!” and that no order as to costs might be appropriate disposal. Whilst this does not form part of my reasoning, it might have accentuated a sense of unfairness if the Claimant had been able to avoid the costs consequences of losing the same dispute not once but twice.

Subject to the two points below, the Claimant will therefore be required to pay the Defendant’s costs of the claim.

The Defendant’s disclosure

As I explained in my substantive judgment, the Defendant had not complied with its (standard) disclosure obligations until the trial had almost concluded. In particular, it failed to carry out a search for internal “Slack” messages as part of its initial disclosure searches, in spite of the fact that these might have revealed the internal communications that led to the decision to close the Claimant’s account. That there were no such messages in the Defendant’s disclosure led its witness (who had left the Defendant’s employment in 2022, years before the disclosure exercise was undertaken) to give evidence that was wrong, to the effect that there was no paper trail. It was evident that the witness said this because of the absence of any disclosed communications (and nothing having been shown to the witness during the preparation of the witness statement) and not because the witness was trying to hide anything.

Even now, it is not really clear why the Defendant failed to disclose those Slack messages as part of its standard disclosure and, in fairness to its Company Secretary and Legal Counsel, who made an explanatory witness statement during the course of the trial, even she does not appear fully to understand what went wrong.

But something did go wrong on the Defendant’s side and it led to this case taking up a great deal more court time and the incurring of a great deal more expense on both sides.

In reaching that conclusion, I also reflect my earlier conclusion that there were no adverse inferences that ought to be drawn from the non-/late disclosure and that, by the time I gave judgment on the substantive claim, the Defendant was compliant with its disclosure obligations. It follows that the Defendant’s late disclosure did not change the outcome of the litigation. I also have no basis to conclude that the late disclosure might have altered either party’s approach to the litigation (and neither party invited such a conclusion).

The Defendant has partially conceded that it should not recover its own costs in relation to its late disclosure, nor of the reconvened trial. The Claimant submits that he should have his costs consequent upon this misconduct on the indemnity basis, on the basis that the conduct is analogous to that of the defaulting claimant in Finsbury Food Group plc v. Axis Corporate Capital UK Ltd [2023] EWHC 1559 (Comm), whose conduct was described by the Deputy Judge at [16] as “profoundly unsatisfactory”.

In my judgment, the just costs order in relation to disclosure is that the Defendant should not receive its costs of the disclosure phase and that it should pay all of the Claimant’s costs consequent upon the late disclosure, on the standard basis, including the costs of the unsuccessful elements of his re-amendment application.

In making this order, I seek to strike a balance between marking the court’s disapproval of a sophisticated financial institution’s failure to comply with its procedural obligations and the undesirability of encouraging an “innocent” party to act disproportionately in response. I am not persuaded that the Defendant’s conduct is “unreasonable to a high degree” and “out of the norm” such that nothing less than an indemnity costs order would be appropriate and I am also not persuaded that the Claimant should be deprived of any of his consequential costs so as to reflect the outcome of the work that was carried out. To the contrary, it seems to me that the additional costs were precipitated by the Defendant’s conduct in circumstances where they would otherwise probably have been avoided altogether (or swept up imperceptibly into the rest of the give and take of this attritional litigation). It also seems to me that the Defendant should not have any of its costs of a phase that it failed to conduct properly, even though I recognise that at least an element of this phase will reflect costs incurred in carrying out its own review of the other side’s disclosure.

I am not, in making these costs orders, trying to draw a sharp line around the costs that go in each direction but to work with a rather broader brush.

Thus, the costs orders that I make in relation to disclosure are made after having stood back and in order to reflect the overall justice of the case.

For the sake of completeness, I should also record my rejection of the Defendant’s submission that I ought to take account of what it says is “significant disclosure outstanding from the Claimant despite repeated requests”. There was no application by the Defendant for specific disclosure (or specific searches), none of the Claimant’s disclosure (or allegedly non-disclosed material) was relevant to the issues that I was or am now required to decide and he is not a sophisticated financial institution with in-house lawyers.

The Defendant’s strike out application

The Defendant applied to strike out the Claimant’s claim on the basis that his conduct, in seeking to interfere with witnesses and intimidate the Defendant’s employees, jeopardised the fairness of the proceedings. That application was heard on 15 September 2025 and adjourned on the basis of undertakings being offered by the Claimant to the Court, with costs reserved.

The Defendant submits that it should have its costs in relation to that application, on the basis that it was necessarily made. It relies upon the matters set out in the witness statement of a partner at Winckworth Sherwood (the Defendant’s solicitors) dated 10 June 2025, which sets out what were said (at paragraph 8) to be “a continuous pattern of threatening conduct by the Claimant to the Defendant from December 2021 to at least March 2025 (and possibly to May 2025 through anonymous communications). The effect of the Claimant’s threatening contact with the Defendant and its former employees… has been to (i) prevent key witnesses giving evidence, and (ii) cause current members of the Defendant considerable anxiety about giving evidence and becoming known to the Claimant. This jeopardises a fair trial”.

The Claimant submits that he should have his costs of the application, primarily on the basis that the Defendant failed to get the claim struck out and, in pursuing such an optimistic application, failed to consider witness summonses or special measures for the hearing, with the consequence that the application as framed was doomed to fail.

Furthermore, in his more recent submissions, the Claimant draws attention to what he says were contradictory and unsatisfactory signals from the Defendant and its legal team which, he submits, undermine the assertion that there was any need for the application and instead (says the Claimant) indicate that the Defendant was trying to present an “aggressive fear narrative”. I note that the Claimant did not deny any of the conduct that was directly attributable to him.

The Claimant is also very aggrieved by the order that was made at the pre-trial review, in relation to special measures, which resulted in his having to observe the trial by video (from his counsel’s chambers) and only to attend the courtroom when he was giving evidence. The Defendant’s witness was in the same position. Although the Claimant was able to communicate electronically with his legal team, he submits that this was very difficult and meant that he could not correct mistakes and give other instructions as the trial proceeded.

Again, I pause to note that (a) according to the Defendant, the hybrid hearing proposal was made on behalf of the Claimant at the PTR; (b) there was no challenge to the arrangements, either by way of appeal or by application to me during the course of the trial; (c) the person who became the Defendant’s only live witness was reported to be fearful and I later received evidence of the witness’s emotional state shortly after their evidence had concluded; and (d) the court is required to consider special measures for vulnerable witnesses, as set out in Practice Direction 1A.

I reject any implication by the Claimant that the special measures directed by the Court at the PTR came about as a result of any cynical attempt by the Defendant to gain a tactical advantage.

However, I recognise that the Defendant’s strike out application probably raised, rather than lowered, the temperature of the dispute and that it will have created even more polarisation between the parties. The Defendant (or its legal team) does not appear to have sought alternative relief (such as special measures, an order preventing contact or similar) short of strike out.

Nevertheless, I am satisfied on the basis of the material that has been shown to me and the submissions of both parties that an application of some sort was appropriate and it was appropriate to seek the Court’s intervention so as to facilitate the giving of best evidence by witnesses and so as to enable both sides to have a fair trial.

I will therefore order the Claimant to pay the Defendant’s costs of such an application (and the resulting hearing), on the standard basis.

The budgeted costs and CPR 3.18

Some of the costs in respect of which I have decided to make a party/party costs order have been the subject of costs management orders (made at the CCMC and at the PTR). Others (including the costs incurred prior to the CCMC, those of the strike out application and those consequent upon the Defendant’s late disclosure) have not been managed by the court.

CPR 3.18 is in the following terms:

Carr J (as she then was) drew attention to the importance of this Rule in Merrix v. Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), [2017] 1 WLR 3399. Her Ladyship pointed out, at [67], that the words are “clear” and “mandatory” and explained the purpose and effect of the Rule at [88]-[90]:

Costs budgets serve the important function of giving certainty to clients, in the form of knowing what costs they are likely to face, in terms of payment or recovery: Harrison v. University Hospitals NHS Trust [2017] EWCA Civ 792,[2017] 1 WLR 4456 per Davis LJ at [32] (who also approved the decision in Merrix, at [28]).

However, neither of these decisions contains any guidance as to what would constitute a “good reason” to depart from an agreed or approved budget. The editors of the White Book (at 3.18.3) invite judges to have in mind the Denton test. They go on to identify two decisions which are said to “support the view that a costs judge may depart from the last approved or agreed budget if satisfied that the total costs incurred are disproportionate”.

Although the question of whether to depart from the budgets loomed large, neither party referred to me to these decisions and so I have not heard argument about them. I have considered whether to invite submissions on their effect but I have decided that to do so would be disproportionate, adding yet further cost and delay to an already protracted and overly expensive dispute.

In RNB v. LB Newham [2017] EWHC B15 (Costs), the Deputy Costs Judge concluded that, if a court on assessment reduces the hourly rates for incurred costs, then this is a good reason to depart from the approved budget (to reflect the hourly rate reduction within the budgeted costs). At [24] of the judgment, the Deputy Costs Judge drew support for that conclusion from paragraph [73] of Merrix, noting that the rates allowed for incurred costs would need to be applied to the budgeted costs.

In Nash v. Ministry of Defence [2018] EWHC B4 (Costs), the Costs Judge took a different view, concluding that hourly rates should not be treated as holding a special status. However, at [88], he drew attention to the wording at the end of CPR 3.18 as “in recognition that the facts and circumstances in which a costs management order was made may have subsequently changed without revisions being made to the budget”. He went on to give an example where “a change in facts and circumstances led to simplification of matters” without budgets being revised to reflect this such that the addition of the assessed incurred costs to the budgeted costs led to a disproportionately high total. At [90], he described CPR 44.3(2)(a) as “an effective safety valve for paying parties to seek a further reduction” and concluded at [91] that “a paying party… retains the ability to argue that the overall sum of assessed incurred costs plus budgeted costs is disproportionate such that the overall sum should be reduced”.

It is right at this point to identify the hourly rates of the Defendant’s solicitors. Prior to 1 May 2025, the Grade A rate was £605 (rising since then to £650). The Grade B rate was formerly £460 (rising to £495). Grade C actually decreased, from £345 to £340, and Grade D went up from £175 to £205.

The 2025 Guideline Hourly Rates for London 1 for grades A to D were £566, £385, £299 and £205, respectively. “London 1” is defined as “very heavy commercial and corporate work by centrally based London firms”. The rates for London 2 (City and Central London – other work) were £413 (A), £319 (B), £269 (C) and £153 (D). The National 2 rates (which would apply to work carried out in Hull, where this claim began life) were £282 (A), £242 (B), £196 (C) and £139 (D).

The hourly rates of the Defendant’s more senior solicitors are significantly higher than any of the guideline rates, and higher even than the guideline rates for very heavy commercial work conducted by centrally based London firms. The Claimant has drawn attention in his submissions to the fact that his solicitor was a grade B, working for £300 per hour, but I do not find this comparison to be of any assistance.

I have spent some time reflecting upon whether there is a “good reason” to depart from the approved budgets and I have come to the conclusion that there is, both working from first principles and by parity of reasoning with each of the costs judges’ decisions (hard to reconcile though they might be).

Starting from the position of hourly rates (and so following the reasoning in RNB), I cannot see any justification for the Defendant being entitled to recover its solicitors’ time at the hourly rates claimed. This was a claim that started in Hull (and was case managed there) and was always of modest value. Even though the Defendant is based in the City of London, and is a financial organisation, this case did not justify the involvement of “London 1” solicitors. I am far from convinced that it required London-based solicitors at all, given how many firms operate outside London, including those with financial services specialisms (if that was required).

In my view, when it comes to an assessment of costs, it will be necessary to reduce the solicitors’ rates by something between around a third and a half, in the case of the more senior solicitors, and by something between around a quarter and a third, in the case of the more junior solicitors. If that is required for the incurred (and not budgeted) costs, then it would, applying RNB, be a good reason to depart from the approved budgets in order to apply the same reductions.

If, on the other hand, I adopt the reasoning in Nash, then I would need to ask myself whether there has been a change in facts and circumstances so as to justify the use of the “safety valve” of seeking a further reduction. As I understand the reasoning in Nash, a change of circumstances would need to be required if the Court were considering reducing the overall level of costs below the total of the approved costs. I take the view that, in spite of the parties’ best efforts, there was a simplification of the issues, such that the total level of expenditure was disproportionately high.

Finally, I reach the same outcome from first principles. As the trial judge, I had the opportunity to review the material and form conclusions about the issues to a far greater degree than the costs managing judge.

I have been able to form views about the factors set out in CPR 44.3(5). I have formed a view about how much this case was really worth. I know that this is and was only a money claim. I know that this case turns on a relatively small number of documents, the application of the anti-money laundering regulations and the interpretation of the written contract between the parties. I also know the ways in which each side has generated additional work (which cannot have been envisaged when the costs management order was made). There are no wider factors of reputation or public importance. The vulnerability of the Defendant’s witnesses came to light (and became an issue) only after the costs management order was made.

Put shortly, I take the view that the judge who made the costs management order did so on a basis that has turned out to be completely wrong. Had the judge known what I know now, it is vanishingly unlikely that this case would have been allocated to the multi-track and it is all but inconceivable that the parties would have been allotted 3.5 days of court time for the trial. Even if it had been treated as a multi-track trial, the shorter time estimate ought to have led the court to approach the cost budgeting exercise in a very different way. The parties would have been expected to cut their cloth much better to reflect the pleaded value of the claim.

I wish to emphasise that nothing in the previous paragraph is intended as any criticism whatsoever of the case managing judge (who will no doubt have dealt with this case as part of a busy list and on the basis of the limited information provided by the parties) nor to suggest that there was any impropriety on the part of any of the lawyers.

I recognise that this was the Claimant’s claim and that it might be thought unfair to visit his misjudgement upon the Defendant as the receiving party.

However, there are three main reasons why this does not prevent me from concluding that I ought to depart from the approved budgets.

First, it is the duty of all parties (and not just a claimant) to assist the court to manage a case proportionately. If a defendant falls into the same errors as a claimant (or different errors with the same consequences) in over-egging a claim at the case management stage, then that defendant shares responsibility for the consequences.

Second, the effect of this decision is not to ignore the approved budget altogether, but to permit departure from it. In that regard, the Defendant is right to draw attention to the fact that the Claimant has been well aware of the potential scale of his liability for a long time. And a receiving party’s last approved or agreed budget is one of the factors that the court will have regard to, applying CPR 44.4(3)(h).

Third, and in the particular circumstances of this case, it seems rather more appropriate to evaluate the ways in which the paying party has generated additional work at the end of the claim, rather than at the case management stage.

I have therefore concluded that there is a good reason to depart from the Defendant’s approved (and revised) cost budget.

The Court’s approach to summary assessment

Having reached conclusions about what costs orders to make and as to the effect of the costs management orders, I now turn to the summary assessments that both parties agree should be carried out.

In undertaking a summary assessment, my task is not to undertake a detailed, item by item analysis, but to arrive at a figure which reflects, on a broad-brush basis, costs which were reasonably incurred and reasonable in amount, having regard to the overriding objective and the principle of proportionality. The court must have regard to the factors identified in CPR 44.4(3).

Since the assessment is on the standard basis, the court will only allow costs which are proportionate to the matters in issue, even if they were reasonably or necessarily incurred, and if there is any doubt as to whether costs were reasonably and proportionately incurred or reasonable and proportionate in amount, then that doubt will be resolved in favour of the paying party: CPR 44.3(2).

Summary assessment of the Claimant’s costs

The Claimant claims £54,115 in respect of his costs caused by the Defendant’s late disclosure. These are set out in his 3-page Precedent T, dated 6 February 2026, with his solicitor’s comments and those of the Defendant’s solicitors (together with their offer in respect of each line) on the pages that follow. The amount offered by the Defendant in respect of the variation to the budget was £18,000.

Having read all of the comments and considering the work that was necessitated by the late disclosure, with a cross-check for proportionality, I assess these costs at £27,000 (plus VAT).

Summary assessment of the Defendant’s costs

I turn next to the Defendant’s costs, which I will deal with in two parts.

First, I will consider the costs of the strike out application, which costs were not the subject of any costs management order and which total £59,513.67 (of which £45,772 were solicitors’ costs). 98 solicitors’ hours were spent on the application, including 30.8 hours at grade A and 35.9 hours at grade B.

In my judgment, this application could and should have been conducted much more modestly. It was unsuccessful, inasmuch as it was framed as a strike out application, and it was grossly disproportionate to spend more than twice the amount stated on the Claim Form to try to achieve that end.

Using the information available to me, I take the view that the amount that the Defendant should recover in respect of this application is £15,000 and I assess its costs in that amount.

I turn next to the Defendant’s costs of the claim as a whole, noting that some of those costs were budgeted and others were not. I also note that the Defendant seeks a further £30,000-odd for the hearing that took place on 21 May (which are not included in its “Quantification of Costs” document).

With that additional £30,000, but removing the costs arising out of the late disclosure and of the strike out application, the total costs claimed by the Defendant is around £225,000.

I have already explained above that the solicitors’ hourly rates require a significant reduction, regardless of the time that is deemed to be recoverable. These account for roughly £165,000, with counsel’s fees being the other £60,000.

Having been through the Defendant’s analysis more than once, and having performed my own calculations on the figures with which I have been provided, I have reached the conclusion that this “rump” of the Defendant’s costs should be assessed at £113,750.

I arrived at that figure having conducted a more detailed review, during which I analysed all of the information provided to me for each phase, albeit with a broad brush. In particular, I assessed the disclosure phase at £0 (reflecting my conclusion at paragraph 59 above); I applied very significant reductions to the first two phases (arriving at a figure of £30,000 between them); and I reduced the witness statement phase to £15,000, to reflect my view that one of the Defendant’s witness statements should not have been prepared (because that witness had very little, if any, relevant evidence to give) but acknowledging that the task of preparing the statement of the person who became the Defendant’s only live witness was not straightforward. I made more modest reductions to the other phases and I allowed only a further £8,000 in respect of the costs on the schedule for the hearing on 21 May.

In arriving at that figure of £113,750, I have considered proportionality and I have concluded that it is a reasonable and proportionate amount in respect of the costs and the work that are the subject of the assessment.

Stay of the order for payment

At the end of the parties’ submissions, the Claimant asked what would happen if – as has turned out to be the case – I were to order him to pay a sum of money in respect of costs and his application for permission to appeal the substantive judgment has not been determined.

I enquired of the Claimant whether there was any temporary issue that might prevent him from paying or if there were grounds for believing that the Defendant might be unable to repay him, in the event that an appeal were successful and the costs order reversed. The Claimant did not identify anything specific that he wanted me to take into account.

In those circumstances, and as I indicated at the time, I said that I would not grant a stay, but that – unless the Defendant objected – I would allow a period of 35 days for the Claimant to pay the sum ordered, which was considerably longer than the default period of 14 days. I chose that period because it ought to allow sufficient time for the Claimant to obtain advice on whether to apply for permission to appeal from the High Court and, if appropriate, to apply for and receive a decision on an application for a stay (from the High Court), whether in the context of his pending application for permission to appeal the substantive judgment or, if he decides that there are grounds for challenging it, in what may become his application for permission to appeal this costs judgment.

Given that the Defendant did not object to the Claimant’s having 35 days within which to pay any costs that might be ordered, I will allow that timeframe rather than ordering any stay of execution or enforcement.

Conclusions and consequences

This claim has exacted a high price, financially and emotionally, on those involved. It should never have reached this point. Neither side will regard himself or itself as the winner.

The Defendant must pay the Claimant’s costs arising from its late disclosure, which I have summarily assessed at £27,000 (plus VAT, and so a net figure of £32,400).

However, the Claimant must pay the Defendant’s costs of the claim (including its strike out application but excluding the disclosure phase), which I have summarily assessed at £128,750.

There will be a setting-off of those two amounts, with the consequence that the Claimant will be required to pay the Defendant £96,350. He has five weeks, and so until 8 July 2026, within which to make payment.

Because of the history of this litigation, this judgment has not been circulated in draft. Instead, it has been handed down at an unattended hearing, listed at short notice to the parties (once I knew when I was going to be in a position to hand down judgment).

To avoid (or mitigate) any perceived adverse impact of this on either party, I will extend the time for filing an appellant’s notice at the High Court by 7 days and to permit either party, if he/it wishes to seek permission to appeal from me, to email the concise grounds of appeal and points made in support (limited, in total, to no more than 4 sides of A4). Such an application should be delivered to the Court as soon as possible and in any event by 5pm on Friday 5 June. Without needing to hear from the other side, I will then deal with any such application as promptly as possible. That timeframe is necessarily short, because of the need for finality in this (and any) litigation and it does not affect any other routes that may be open to the parties.