Senior judges have delivered another sharp reduction in claimant costs at a recent Costs and Case Management Conference in the long-running “Dieselgate” litigation, after rejecting a proposal in the costs budget that up to 30 fee-earners might need to attend Court.

Mrs Justice Cockerill DBE, sitting with Senior Costs Judge Rowley, considered the Tranche 3 Budgets for the litigation, and described the costs claimed within the Budgets as a “frankly remarkable proposition” in a judgment handed down today in Various Claimants v Mercedes-Benz Group AG & Ors.

Background to the Costs Dispute

The £6bn collective action concerns allegations that diesel vehicles sold by 16 manufacturers were fitted with software designed to circumvent emissions controls.

Claimants are represented by solicitors from Pogust Goodhead and Leigh Day. Legal costs in this claim have been contentious since early budgeting stages. Back in 2024, the High Court cut the claimants’ proposed budget from £208m to £52m, and reduced the defendants’ figure from £212m to £114m.

The most recent decision on 10th September 2025 concerned the second and third tranches of costs claimed for the pre-trial review and trial preparation.

Attendance at Court: “More than Ample”

One of the most contentious issues in the recent costs case was that the claimant solicitors argued that nine fee-earners formed the “core team” who should attend in person. Meanwhile, another 21 would follow proceedings remotely with real-time transcription, ready to step in if required.

The judges were unpersuaded by this argument and stated the following:

“Such an approach is plainly not realistic: nine members of a team should be more than ample to deal with any points arising and the need for any ‘full-time’ remote attendance is hard to discern.”

The costs budget for attendance at the hearings was therefore considerably reduced.

Over-engineered meetings

The court also questioned costs claimed for fortnightly pre-trial meetings, for which the claimants had sought £40,000 each. Ten meetings were planned, each lasting around 45 minutes, yet 84 hours were claimed for preparation, attendance and follow-up work. This included seven partner hours preparing simply to discuss the prior week’s developments.

The judges described this as “a collision between over-analysis of process and over-lawyering”, observing that the estimates suggested the meetings had become “over-engineered”.

Outcome of the Costs & Case Management Conference

Across these tranches, the claimants’ figures of approximately £75m  were reduced to around £22.5m. Defendants’ costs were also reduced from £79m to about £49m.  Overall there were significant concerns raised as to “over-lawyering” of the litigation.

It is also interesting to note that the Defendant’s costs were allowed at a significantly higher amount than the multiple Claimants.  Whilst this is not unique, it is unusual for such discrepancies to arise in litigation, given that it is the Claimants that are driving the litigation forward to Trial.

The ruling reinforces the court’s willingness to apply robust scrutiny to disproportionate budgets in complex group litigation. For practitioners, it underlines the importance of:

• Keeping attendance numbers at hearings under tight control.
• Ensuring internal meetings remain proportionate in scope and cost.
• Providing evidence that budgets reflect genuine requirements rather than defensive over-staffing.

As well as costs in relation to Trial, the judgment stipulates there were serious concerns concerning other phases, including the costs of CMC being £3.3 million for 2 hearings, and £1.5 million for PTR.

With the Dieselgate trial approaching, the latest judgment offers a clear warning that only reasonable and necessary costs will survive detailed examination.

What is the Relevance of CPR Practice Direction 44?

An interesting passing comment is made by the Court in Paragraphs 31 – 33 of the judgment, whereby the old 20% variation from an estimate rule is relied upon by the Court as a marker stick as to what may be reasonable (Practice Direction 44, paragraph 3.5).

Specifically, it is suggested that if an opponent’s offer for phases of the Budget fell within 20% of the amounts claimed, then such costs should be considered reasonable and proportionate.  It is subsequently stated that this is not a firm rule for the purposes of determining the Budgets in the subject case, but it did cause the writer to raise an eyebrow. 

This old rule was generally in relation to costs estimates given at the PTR stage, in that if costs in the final bill deviated from the estimate by more than 20%, a written justification had to be provided to the Paying Party and Court to explain the same.

The rule has somewhat fallen away since the introduction of Costs Budgets in the 2013 Jackson Reforms, but Paragraph 3.5 still exists though is rarely ever cited or relied upon, given that the “good reason” rule applies for seeking to vary from an approved Costs Budget (though if a Budget is never approved, the 20% variation rule can still be relied upon).

Nevertheless, the Court’s guidance is somewhat unusual in referring to the 20% rule.  Though the point is vested in a sensible thought process, one questions whether this could give credence to “game-playing” with budget negotiations and Precedent R, with representatives at CCMCs suggesting that because an offer is not within 20% of the other side’s sought costs, that such costs must be unreasonable and proportionate.

How ARC Costs Can Assist?

Large-scale group litigation often generates complex and sometimes inflated budgets. The Dieselgate ruling shows how closely the courts scrutinise proportionality, attendance levels, and internal management time.

At Arc Costs we:

• Prepare and challenge costs budgets in high-value group actions, making sure figures are realistic, evidence-based and defensible.
• Represent clients at CCMCs, detailed assessments and costs appeals, giving clear, strategic advice on proportionality and reasonableness.
• Audit internal processes to ensure time spent on meetings, preparation and attendance is properly recorded and justifiable.
• Support settlement discussions through robust analysis of what is likely to survive judicial scrutiny.

Whether you are a receiving or paying party, our experienced costs team can help you with budgeting and assessment, safeguard recoveries, and control exposure in complex, multi-party litigation.

If you would like more information on any of our services or wish to speak to a member of our expert costs team about your legal costs, then please do not hesitate to contact us. Please call one of our independent experts at 01204 397302, or email one of our costs experts direct on info@arccosts.co.uk.

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