Joanna Lemos & Ors v Church Bay Trust Company & Ors

Under the Civil Procedure Rules 1998, rule 47.20, the usual order is that the receiving party is entitled to the costs of detailed assessment. The court may make some other order, potentially involving an interested party, but the rule concerns entitlement to assessment costs; it does not rewrite an existing costs order or dictate the source of funds used to discharge a crystallised liability. A costs-shifting application based on conduct requires evidence that the alleged conduct caused or materially increased the assessment costs. ATE insurance does not, without more, transfer control or funding of the proceedings to the insurer. Detailed assessment remains part of the underlying proceedings, and success on a preliminary issue does not determine the overall costs order. The application was dismissed because the alleged conduct and causation were not established.

The underlying proceedings were a section 423 claim under the Insolvency Act 1986, dismissed after trial. The claimants and defendants agreed the principal costs liability, but the second and third claimants applied for an order that BCR Legal Assist Limited, an interested party and ATE insurer, should be jointly and severally liable with them for the defendants’ costs of detailed assessment and should contribute 100% between the parties.

The application relied on CPR 47.20(1)(b) and (3), alleging that BCR had taken control of the costs process, delayed settlement and caused the assessment costs. BCR disputed the jurisdiction and the factual case. The central issues were whether detailed assessment was part of the existing proceedings, whether CPR 47.20 permitted the proposed order, and whether BCR’s conduct justified it.

The application was dismissed. The court declined to make BCR liable for the defendants’ assessment costs or to order a 100% contribution.

1. The detailed assessment flowed from the costs order in the section 423 action and was part of the existing proceedings, not a new set of proceedings. The claimants remained primarily liable under the existing order.
2. Under the Civil Procedure Rules 1998, rule 47.20(1) states the usual entitlement of the receiving party to assessment costs. The exception in rule 47.20(1)(b) concerns entitlement, not the source of funds or the later discharge of a crystallised liability. It could, in principle, be applied to an interested party because its wording was not restrictive, but it could not be used to alter the existing main-action costs order.
3. Rule 47.20(3) requires regard to all the circumstances and identifies common, non-exhaustive matters. The rule is directed principally to conduct in the claim. The reasonableness of claiming a particular item concerned the defendants as receiving party; the disputed items had been raised on behalf of the claimants. The points of dispute, including the preliminary issue, were legitimate and were not shown to be unreasonable.
4. The court rejected the submission that the ATE insurer had become the funder or controller of the proceedings. Insurance indemnity was not equivalent to outside funding. BCR and the claimants had a mutual interest in reducing the bill, and the indemnity limit was not a war chest or target. The consent order of 14 August 2025 added BCR as an interested party subject to defined permissions; those permissions were prospective and did not retrospectively govern its earlier non-party status.
5. The claimants had not pursued a non-party costs order, but the court considered the analogy in the alternative. Applying the approach in Travelers Insurance v XYZ [2019] UKSC 48, involvement short of control could suffice only where the involvement was wanton or officious. That threshold was not established. There was no sufficient evidence that BCR acted aggressively, obstructively or against the claimants’ will.
6. A receiving party retains control over when to commence and progress detailed assessment. The claim that assessment would have been avoided without BCR was speculative. A preliminary issue within a detailed assessment does not produce a separate costs event or make its de facto winner the overall winner; the overall result, offers and conduct govern the costs order. The parties were directed to liaise within seven days for a consequential issues hearing addressing costs consequences and the summary assessment of the defendants’ assessment costs.

This was a first-instance costs application. The underlying claim was dismissed after trial, and an order dated 18 October 2023 required the claimants to pay the defendants’ costs, subject to detailed assessment.

A preliminary issue concerning the relationship between costs budgeting orders and detailed assessment was determined at a hearing on 23 September 2025, with judgment handed down on 18 November 2025. This judgment decided the later application concerning liability for the assessment costs.