What is CPR 44.11?

CPR 44.11 gives the Court the power to adjust costs orders if a party (or their legal representative) has engaged in unreasonable or improper conduct during litigation.

CPR 44.11 states the following:

“44.11

(1) The court may make an order under this rule where –

(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or

(b) it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.

(2) Where paragraph (1) applies, the court may –

(a) disallow all or part of the costs which are being assessed; or

(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.

(3) Where –

(a) the court makes an order under paragraph (2) against a legally represented party; and

(b) the party is not present when the order is made,

the party’s legal representative must notify that party in writing of the order no later than 7 days after the legal representative receives notice of the order.”

When Can CPR 44.11 Be Applied?

The Court can make an adverse costs order if a party’s conduct is:

Unreasonable or Improper

This includes misleading the Court, abusive litigation tactics, or breaching procedural rules. An example of this may include persistently failing to comply with court orders without justification.

Likely to Cause Wasted Costs or Delay

If a party’s actions increase costs unnecessarily or cause significant delays, the Court may intervene and make an adverse costs order. An example of this includes failing to disclose key evidence in time, leading to adjournments.

Potential Costs Consequences Under CPR 44.11

If a court finds misconduct, it can:

• Reduce or deny costs recovery – A party may not be able to recover their legal costs, even if they win.
• Order a party to pay additional costs – If a parties’ misconduct caused extra expense to the other side, they may be ordered to pay additional costs.
• Make wasted costs orders against legal representatives – If a solicitor’s actions contributed to the improper conduct, a wasted costs order may be made by the court.
• Removal of QOCS – CPR 44.11 can remove QOCS protection in personal injury cases if the claimant has acted dishonestly or improperly. This means that a claimant could be ordered to pay the defendant’s costs, despite QOCS, if their conduct meets the threshold of misconduct.

Andrews v Retro Computers Ltd

The case of Andrews v Retro Computers Ltd [2019] EWHC B2 (Costs) provides recent guidance on the application of CPR 44.11(1)(b) and the court’s power to disallow costs due to unreasonable or improper conduct. Deputy Master Friston clarified that CPR 44.11 is primarily considered when making a costs order, rather than during a costs assessment.

The case involved a dispute among directors and shareholders of Retro Computers Ltd over payments, public relations consultancy, and alleged financial misconduct. The dispute led to litigation, where the claimants sought injunctive relief against the defendants for harassment and intimidation.

After trial, Proudman J ruled in favour of the claimants and ordered the defendants to pay the claimants’ costs, except for limited areas related to conduct. The claimants’ costs were provisionally assessed at £38,392.80.

The paying party argued that the Claimants’ conduct was unreasonable and improper, and sought to have some or all of the claimants’ costs disallowed. Their allegations included:

• Lying in witness evidence.
• Concealing evidence.
• Misappropriating company funds.
• Intercepting confidential emails.
• Preventing the company from operating effectively.

The Defendants relied on CPR 44.11(1)(b), which allows the Court to disallow costs if a party has engaged in unreasonable or improper conduct before, during, or after proceedings.

The Defendants’ application was dismissed, however for a number of reasons, including:

CPR 44.11 should be applied when making a Costs Order, not during Assessment

Conduct issues should be raised when costs orders are originally made, and not during the subsequent detailed assessment. The appropriate rule for general conduct concerns in costs assessments is CPR 44.4, not CPR 44.11. Since Proudman J had already considered conduct in making the original costs order which gave the right to detailed assessment, the Defendants could not re-litigate the issue at the assessment stage.

Double Jeopardy and the Overriding Objective

Allowing conduct issues to be re-examined at the assessment stage would create a “second bite of the cherry”, which contradicts the overriding objective of efficiency and fairness in litigation. This principle was reinforced by case law, including Lahey v Pirelli Tyres Ltd [2007] and Gempride v Bamrah [2018].

Lack of Sufficient Evidence

Many of the Defendants’ allegations were unproven or outside the scope of the claim. Without strong evidence, there was no basis to reduce the claimants’ costs under CPR 44.11.

The Claimants’ costs remained assessed at £38,392.80 (inclusive of VAT but excluding interest).

Ridehalgh v Horsefield : Wasted Costs and Solicitor Misconduct

The case of Ridehalgh v Horsefield [1994] Ch 205  is a leading authority on wasted costs orders, which can be made against solicitors who act improperly or unreasonably in litigation. It provides key guidance on how courts should assess misconduct under CPR 44.11 and its predecessor rules.

Mr. Ridehalgh (a solicitor) acted for a Claimant in litigation. The Defendant, Mr. Horsefield, alleged that the Solicitor had pursued a hopeless case that was an abuse of process.

The Defendant sought a wasted costs order, arguing that the Solicitor had acted unreasonably and should be personally liable for the costs.

The Court of Appeal considered:

1. What constitutes “improper, unreasonable, or negligent” conduct by a solicitor?
2. When should a solicitor be ordered to pay wasted costs?
3. How should courts balance discouraging misconduct while not unfairly penalizing legal representatives?

If found the following:

Definition of improper, unreasonable, or negligent conduct

• Improper conduct: Acting in a way that is dishonest or misleading.
• Unreasonable conduct: Actions that no reasonable Solicitor would take.
• Negligence: A failure to meet reasonable professional standards. 

Solicitors are not liable for clients’ conduct (unless they knew or encouraged it)

It was found that a Solicitor is not automatically responsible for a weak case brought by their client. However, if they knowingly pursue a hopeless case, they may face a wasted costs order.

High Threshold for Wasted Costs Orders

Courts should be cautious when making wasted costs orders against Solicitors. Solicitors must be given a chance to explain their actions before being penalised.

Purpose of Wasted Costs Orders

The purpose is not to punish solicitors, but to ensure that unnecessary legal costs caused by their misconduct are not unfairly passed onto the opposing party.

Outcome

The Court of Appeal dismissed the wasted costs order against Mr. Ridehalgh (the solicitor). The court found that while the claim was weak, there was no clear evidence that the solicitor had acted improperly, unreasonably, or negligently. The Solicitor had acted within their professional duty by representing their client, even if the case ultimately failed.

The Court clarified the test for wasted costs orders but did not impose a blanket rule. The case set the foundation for modern applications of CPR 44.11 in penalising improper or unreasonable conduct in litigation.

This case helps define what counts as unreasonable or improper conduct for the purposes of costs penalties under CPR 44.11. It established that wasted costs orders should only be used where necessary and must not be imposed unfairly. Courts must balance fairness with discouraging misconduct in litigation.

What is the Extent that Orders can be made in Detailed Assessment Proceedings under CPR 44.11?

A practical example can be found here whereby in Kapoor v Johal [2014] EWHC 2853 the conduct of the Receiving Party was considered so poor, that the Bill was assessed at nil.  Such issues that arose included:

• The inclusion of VAT on Solicitor fees when it was not recoverable;
• Serious breaches of the indemnity principle, whereby more costs were sought from the other side than had been invoiced to the client;
• Claiming for attendances by senior fee earners at events that either a) they did not attend or b) a junior file handler had in fact attended.

 The Receiving Party was found to have contributed to significant misconduct in the detailed assessment proceedings, and the Costs Draftsman responsible for drafting the Bill was criticised for substantial fabrication of the Bill.

Costs Judge James’ conclusion was that the only appropriate sanction was for the Bill to be assessed at £nil, and the responsible Solicitor was referred to the SRA for investigation.

How can ARC Costs Assist?

ARC Costs are an experienced and independent team of specialised Costs Draftsmen and Costs Lawyers. As independent experts, we can assist either Paying or Receiving parties in resolving costs matters. Our Costs Lawyers have experience in advocating in costs disputes in relation to CPR 44.11, generally as part of advising on conduct of detailed assessment proceedings and allegations raised in Points of Dispute. As independent experts, we can also assist Paying Parties in challenging any costs claims received, and can raise CPR 44.11 submissions if appropriate, if a Bill has been produced in a defective fashion.

For Receiving Parties, we provide assistance with anything relating to your legal costs claim, whether it be preparing a Costs Budget, to preparing the Bill of Costs and negotiating recovery of your outstanding fees.

If you require any free initial advice, or our assistance with regards to any aspect of costs, please email us at info@arccosts.co.uk, or contact us via the Contact Us page and one of the team will get in touch on the same working day. Alternatively, speak to one of the team on 01204 397302.

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