Alphabet UK Ltd v AXA Insurance UK PLC - Costs Dispute

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  Alphabet (UK) Ltd Insurance UK PLC [2026] EWHC 674 (SCCO) (23 March 2026)

URL: https://www.bailii.org/ew/cases/EWHC/Costs/2026/674.html
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[2026] EWHC 674 (SCCO) | | |
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| | | Neutral Citation Number: [2026] EWHC 674 (SCCO) |
| | | Case No: L22YX500, SCCO ref: SC-2025-APP-000615 |
IN THE COUNTY COURT IN WILLSDEN
But sitting
IN THE SENIOR COURTS COSTS OFFICE

| | | Thomas More Building, Royal Courts of Justice
Strand, London, WC2A 2LL |
| | | 23 March 2026 |
B e f o r e :

Costs Judge Brown
(sitting as a District Judge of the County Court)

Between:
| | ALPHABET (UK) LIMITED | Claimant |
| | - and ? | |
| | AXA INSURANCE UK PLC | Defendant |

**Benjamin Williams KC (instructed by Clifford James Consultants Limited) for the Claimant
Elahe Youshani (instructed by Kennedys Law LLP) for the Defendant

Hearing dates: 16 January and 13 March 2026**

HTML VERSION OF JUDGMENT APPROVED ____________________

Crown Copyright ©

1. Judge Brown:
3. This judgment concerns proceedings which were issued in the Civil National Business Centre on 12 March 2024 under Part 7 of the Civil Procedure Rules. The issue arising was understood to concern costs only and District Judge Worthington, sitting in the County Court in Willesden, transferred the matter to the SCCO on 29 May 2025.
6. At a directions hearing on 3 September 2025, and because the principal issue that appeared to arise was whether a costs order should be made rather than an issue only as to the amount of costs, I considered that the case should remain in the County Court where I could deal with the case as an ex officio District Judge.
9. Background
10. The Claimant is a vehicle leasing company (part of the BMW Group) and at the material time was the owner of a Citro?n van it leased to a company called Acorn Engineering Limited ("Acorn"). Acorn insured the vehicle with the Defendant insurers.
13. On 8 February 2023, the van was seriously damaged in a road traffic accident. It was subsequently written off as uneconomical to repair. Regulations 2 and 3 of the European Communities (Rights Against Insurers) Regulation 2002 permitted the Claimant to pursue a claim directly against the Defendant in respect of the loss and the Defendant was liable to the extent that it would be liable to indemnify its insured.
16. By 28 March 2023, solicitors had been apparently instructed on behalf of the Claimant. On that date the solicitors wrote to the Defendant notifying them of their instruction, nominating motor engineers to value the van and its salvage in the event of any dispute. They also made a Part 36 offer to settle the claim for vehicle damage at ?12,408.70. The final substantive paragraph of the letter made clear that they were also seeking costs.
19. On the same day, the Defendant's agent, Copart UK, responded asserting that the Defendant was entitled to credit for a ?500 policy excess, but offered to pay ?500 less than the value of the van asserted by the claimant? namely, ?11,909.88. Costs were not mentioned in the counter-offer. Thereafter, the Claimant delivered a bill for its costs totalling ?1,006.80 (plus VAT).
22. The Defendants refused to pay costs, and proceedings were issued on 12 March 2024.
25. The Claimant seeks an order for costs. Its position was that the claim as a whole had not settled. It is said that although there had been no dispute as to the value of the claim for damages, the Defendant had not agreed to pay costs in circumstances where the Claimant said it had made clear before the Defendant's offer, that there was no complete agreement.
28. The Defendant has maintained its objection to paying any costs. There was, at an earlier stage, an argument that the claim was settled before commencement of the proceedings without costs but that argument was withdrawn at the directions hearing. There was also apparently a question raised as to whether the Part 36 offer had been accepted- but it was clear that was not the case.
31. The Arguments
33. At the substantive hearing the Defendant's arguments were essentially twofold. Firstly, these that the proceedings were an abuse of process, there being no real argument as to the claim for damages (which the Defendant had paid). Further, there was no necessity to instruct solicitors, and in my discretion, I should refuse an order for costs.
36. For reasons which I set out below I reject the argument that these proceedings are an abuse. Whilst not withdrawing the contention it was not pressed by Ms Youshani who appeared to acknowledge the points made by the Claimant on this issue and the force of the authorities to which I refer (briefly) below.
39. The real thrust of the concern which underlay the Defendant's position and which was argued and pressed by Ms. Youshani at the hearing, was in reliance on events which actually happened, being the prompt settlement as to the claim, it was not necessary to instruct solicitors. The Claimant is a sophisticated corporate body and might be presumed to have had to deal with matters such as this with some regularity; in essence they were too quick in their instruction of solicitors and should have given time for the matter to be resolved. As events demonstrated, if they had waited they would have received an offer, without the need to instruct solicitors.
42. For reasons which I have set out below, and whilst recognising -I have to say- some force to this, I also reject this argument. As articulated, it was predicated substantially with the benefit of hindsight. I deal with the arguments which were raised on this point below.
45. Another more difficult issue arises in my mind. Whilst it had been parties' common position that if costs were payable they were to be determined on the standard basis assessment, shortly before the hearing in January it was argued that the costs are fixed recoverable costs (FRC) pursuant to CPR 45 in the sum of ?599 (on the basis that the normal track for the case is the Fast Track and that it would be assigned to complexity band 1). By the end of that hearing it appeared that if I were to make a costs order the amount payable would be subject to the FRC. Mr Williams KC contended that the hearing was a 'trial' for the purposes of the claim and that he should be entitled to the full fixed cost costs plus together with an advocate fee. Neither party had really addressed this point in their earlier submissions and I asked for some further clarification on the point.
48. I should perhaps say that having looked at the Bill of Costs the costs claim has the appearance of being unreasonably high. I am concerned that before any Part 36 offers were made the parties should first have been clear that a dispute arose. Further it is, as the Claimant effectively conceded, difficult to justify any involvement of a Grade A fee earner. Indeed it strikes me that if payable in principle it is difficult to see how the reasonable cost might have exceeded a very modest sum. It seems that (as Mr. Willams himself intimated) before the FRC regime came in, it would have been at the very least doubtful that a claim would have would have been made by the claimant to recover any costs.
51. In any event as the arguments progressed it became increasingly clear that the more difficult argument was perhaps not about the making of a costs order but as to of the costs of the proceedings.
54. I turn to the relevant rules.
58. The relevant provisions of the CPR - fixed costs on the Fast Track
60. Under the heading Scope of this Part, CPR 45.1 provides:
63. 1) This Part sets out the amounts to be allowed for costs in the categories of claim to which it applies.
64. (2) In the categories of claim to which this Part applies, the court has a discretion as to?
65. > (a) whether costs are payable by one party to another;
66. > (b)when they are to be paid; and
67. > (c) whether to make an order in the form contemplated by rule 44.2(6)... a).
68. (my underlining).
70. The nature of the direction as to costs, and the general approach to determining the incidence of costs is out in CPR 44.2 is well known. The general rule is of course that the unsuccessful party will be ordered to pay the costs of the successful party; but the court will have regard to all the circumstances, the conduct of all the parties; whether a party has succeeded on part of its case, even if that party has not been wholly successful; any admissible offer to settle. There is perhaps a qualification of the provisions of CPR 44.2 (6) in respect of the form of order that may be made but the rules appear to preserve the potential to make an order as to proportion of the costs incurred.
72. .
73. Section VI of CPR 45 deals with the application of the FRC in the Fast Track. Under the heading Scope, and so far as material, provides,
76. **45.43.?(1) This Section applies to any claim which would normally be or is allocated to the fast track.
77. . ..
78. (my underlining)
80. This makes it clear that FRC apply even before a claim is allocated, and in deciding what costs order to make and the the amount of costs, the court is concerned to ascertain whether the claim is one which would "normally" be allocated to the fast track.
83. CPR 26.9 provides, so far as material to this claim (cf certain other types of claims- clinical negligence set out in CPR 26.9 (10)),
85. (4) Subject to paragraph (1), the small claims track is the normal track for any claim which has a value of not more than ?10,000.
86. (5) Subject to paragraphs (6) and (10), the fast track is the normal track for any claim?
87. > (a)for which the small claims track is not the normal track; and
88. > (b)which?
89. > (i)is a claim for monetary relief, the value of which is not more than ?25,000; or
90. ?
91. (6) The fast track is the normal track for the claims referred to in paragraph (5) only if the court considers that?
92. > (a)the trial is likely to last for no longer than one day; and
93. > (b)oral expert evidence at trial is likely to be limited to?
94. > > (i)one expert per party in relation to any expert field; and
95. > > (ii)expert evidence in two expert fields.
96. Thus, unless a trial of the claim were not expected to last more than a day or oral expert evidence is not limited in the way provided, then the fast track is the "normal" track for a claim such as this in excess of ?10,000. It is, it might be said, difficult to see how a court could form a view about these matters in the circumstances there was never any dispute about liability or quantum. Further, and this is important for the argument raised by the Defendant, CPR 26.12 provides,
98. In considering whether to allocate a claim to the normal track for that claim under rules 26.9, ?, the court shall have regard to the matters mentioned in rule 26.13(1)?
99. Under the heading ' Matters relevant to allocation to a track', CPR 26.13. provides
101. When deciding the track for a claim, the matters to which the court shall have regard include?
102. > (a)the financial value, if any, of the claim;
103. > (b)the nature of the remedy sought;
104. > (c)the likely complexity of the facts, law or evidence;
105. > (d)the number of parties or likely parties;
106. > (e)the value of any counterclaim or additional claim and the complexity of any matters relating to it;
107. > (f)the amount of oral evidence which may be required;
108. > (g)the importance of the claim to persons who are not parties to the proceedings;
109. > (h)the views expressed by the parties; and
110. > (i)the circumstances of the parties.
111. ?
113. Where a party represents itself, the FRC do not apply (see CPR 45.4). But subject to this exception (which might be relevant where it is said that no representation was reasonable) the amount of costs is dealt with at CPR 45.44which provides:
115. For so long as the claim is allocated neither to the small claims track, the intermediate track or the multi-track, the only costs allowed in any claim which would normally be or is allocated to the fast track are
116. > (a)the fixed costs in Table 12; and
117. > (b)the disbursements as set out in Section IX of this Part.
118. By CPR 26.15 fast track claims in road traffic accident related, non-personal injury claims will normally be assigned to complexity band 1. Table 12 provides in respect of such claims that "[w ] here parties reach a settlement prior to the claimant issuing proceedings under Part 7" and the damages are more than ?10,000 the fixed costs payable are ?599. Where the claim does not exceed ?10,000 no costs are payable.
120. Discussion and reasons
121. Are the proceedings an abuse of process? **
123. In essence the Defendant's point was that it is an abuse to issue proceedings merely to obtain an order for costs. In my judgment it is clear that such proceedings are not an abuse.
126. It is well-established that where a defendant refuses to pay costs properly incurred in the pre-action process, a claimant may issue proceedings to recover them. This was recognised by the Court of Appeal in Birmingham City Council v Lee [2008] EWCA Civ 891, where Hughes LJ explained the importance of ensuring that defendants cannot evade liability for pre-action costs by strategically conceding damages only, [37] and [38]. Similarly, in Ayton v RSM Bentley Jennison [2018] EWHC 285, May J held that when a defendant tendered damages but refused to pay the claimant's pre-action costs, " the only option left to a claimant " was to issue proceedings, see [48]. This reasoning was echoed in Moreira v French (HHJ Stewart as he then was, CC, 30 September 2008), where the court observed that absent agreement, a claimant would have to issue proceedings for a nil-damages claim merely to recover costs, see [21].
129. There is an obvious problem with the Defendant's position. Whilst the instruction of solicitors in this claim might be open to some debate, in many other claims (I think of damages claims by victims of mesothelioma) it is plainly not. Obviously many such claims are settled before proceedings- and parties are encouraged in various pre-action protocols to settle their claims without the need for litigation. If the Defendant in this case were right, an unscrupulous defendant could simply pay damages which are claimed and refuse to pay costs and there would be no remedy for the claimant.
132. Further, the provisions of Part 36 contemplate that the claim may be settled before issue with the benefit of costs order (see CPR 36.7). Indeed, as I have pointed out the rules anticipate that in respect of a claim when the normal track is the fast track for a claim for vehicle damage arising out of a road traffic accident, in the event of the claim being settled before proceedings are commenced the claimant would ordinarily be entitled to costs of ?599. Where there is an entitlement to an order for payment of this amount there must be a means of obtaining it. Accordingly, and in the absence of any other apparent means of doing so, a claimant whose claim for damages is settled before proceedings are commenced must be able to issue proceedings for an order for costs.
135. Should I make a costs order in the claimant's favour? Was it reasonable or necessary to instruct solicitors?
137. The Claimant's case is that it was reasonable to instruct solicitors, that they had been successful in recovering damages in excess of ?10,000 and in the absence of any other relevant circumstances it follows that I should make cost order in their favour in the exercise of my discretion.
140. There is no dispute that in principle a court may make an order for costs for work done before the issue of proceedings [1] . It is common ground that the making of an order is a matter of discretion. That discretion is necessarily fact sensitive. Obviously people resolve disputes between themselves without recourse lawyers all the time. But neither party provided me with any authority which provided any principled or binding determination on the issue that arose here as to whether it was reasonable or indeed necessary to instruct solicitors.
143. In general, if there were a contract between parties those parties would seek to resolve their dispute by the terms of the contract. There is, I assume, a contract between the Claimant and Acorn but I have not been shown it and assume it does not assist.
146. Mr Jackson, who is employed by Claimant with the title of Used Car Operations Manager, has provided a witness statement in support of the claim for costs. In it he says that the Claimant habitually engages solicitors to recover its losses and aims in cases where the claim exceeds ?10,000 to recover the costs of doing so. He says liability insurers frequently attempt to under-settle, raise liability issues, and seek to retain salvage to which they have no entitlement (he notes that in this case liability was in fact at some point challenged, and return of the salvage had to be chased). He says it is commonplace for insurers to make offers limited to the remaining finance (an issue in which the Defendant should have no interest) rather than the pre-accident value of the vehicle less the salvage value. The appointment of lawyers enables the Claimant to operate on equal terms against major insurers like the Defendant, which, he says, have in-house expertise in legal claims whereas the Claimant does not. The Claimant's' experience, Mr Jackson tells me, is that appointing lawyers leads to expeditious and efficient claims resolution (as in fact turned out to the case here). Appointing lawyers also enables the Claimant to police the terms on which vehicles are written off and their salvage is disposed of correctly by licensed agents, which is of considerable importance to the Claimant ? being an important public safety requirement.
149. There has been no cross examination of Mr. Jackson on the contents of his witness statement.
152. As I have indicated the settled position of the Claimant has, as this case has developed, become that the FRC under CPR 45 apply. This was said by Mr, Williams KC to enhance his claim. The normal track for the claim would be fast track and if the claim had settled the Claimant would be entitled to ?599 as fixed costs. In contrast to the position in respect of claims of no or more that ?10,000, the court rules at least appear to indicate that the instruction of solicitors in a claim of this sort for vehicle damage was reasonable - otherwise there would be no provision for fixed costs. Mr. Williams says that in general such claims are be assumed to be 'costs-bearing'. He suggested that there could be no enquiry into whether a party could have represented itself ? but in any event even if there could be such an enquiry, the rules indicated that on the facts of this case costs should be paid.
155. I am not satisfied that the test is, as Ms. Youshani suggested at one stage, whether or not it was necessary for the Claimant to instruct lawyers. There appeared to be no basis in law for such a high hurdle. If she were right it would be open to a losing party to argue that it would have been possible for someone to represent themselves (in many cases that may be so) and that the costs they actually and reasonably incurred would not be recoverable. The question it seems to me is whether it is reasonable for solicitors to be instructed -albeit it might be said that that test inherently imports at least some element of need.
158. I also agree that the line drawn in Table 12 is at least indicative for this purpose, so that in a claim for in excess of ?10,000 it is prima facie reasonable to instruct solicitors. I do not think merely because the Claimant is a commercial organisation, possibly of some size, with a degree of sophistication or that they will be dealing with these matters on, what might be assumed to be, a regular basis, makes it unreasonable to instruct solicitors. Just because the company has experience and expertise in car leasing does not mean it has the expertise to deal with a claim for damages. Such a claim might involve consideration as to whether there is responsibility as matter of law for an accident. Moreover the higher the value of the claim the more important the claim can be assumed to be, and the more important and complex, I suppose, it may be.
161. Perhaps recognising the force of these points, Ms. Youshani's emphasis was on the assertion that it was premature to instruct solicitors even if it were reasonable in general to instruct solicitors in a claim such as this claim.
164. True it was, as Ms Youshani pointed out, that arrangements were being made to deal with the damaged vehicle with solicitors and agents were appointed to deal with uninsured losses arising out of the accident. However much of the material she relied on was not known by the Claimant at the material time. Moreover, there was no admission of liability by the date of instruction and it seems to me not unreasonable for the Claimants to instruct lawyers from the outset of any potential claim.
167. On the limited information available, I am unable to conclude that there was any degree of certainty that the Defendant would accept liability or make an offer in the amount claimed. In the event the Defendant made an offer for the full sum the Claimant said was due on same day as the various letters sent by the Claimant's solicitors, and this happened very rapidly after solicitor's instruction. Had the Claimant delayed instruction they may not have received an offer so quickly. In fact liability was somewhat transiently put in doubt at some point thereafter. It appears that whilst the Defendant acted promptly once solicitors were instructed whether they would have acted so quickly if no solicitors were instructed and costs were not payable, is perhaps a matter of speculation.
170. I could readily understand if there were a protocol or mutual understanding by which insurers were required unilaterally to inform interested parties, such as the owner of the vehicle, if liability is disputed and make a suitable offer within a certain period, things might be different. I was not however made aware of any such protocol or understanding. The Claimant was entitled to proceed with the claim promptly and I can see why the prompt resolution of these claims is important for their business. It was not suggested that it was improper or unreasonable for them to press for an admission of liability.
173. It is perhaps to be borne in mind that the Claimant does not have an in house lawyer to handle these claims (even if they did it may not follow that they are unable to charge following in Re Eastwood [1975] Ch 112 ]). But I see no reason why I should proceed on the basis that it was reasonable to have expected the Claimants to have an inhouse legal department to deal with these claims.
176. I agree that the normal track for this claim was the fast track. A District Judge may, I suppose, have allocated this matter to the small claims track having regard to the factors in CPR 26.13. The claim may have had limited complexity. But merely because that might have happened is not relevant for the purposes of CPR 45.43. For these purposes the term "normal track" is a term of art (see para. 47 of Thaxton v Goodman - decision unreported of Costs Judge Haworth 23 November 2010).
179. It appears from Table 12 there even if there is settlement of the claim before issue, some view must be taken as to whether the claim " would normally be" allocated to the fast track. Plainly at that stage nobody would have known how long the trial would be, or indeed as to whether there might be the need for expert evidence, so the parties and the court cannot ascertain whether it was the normal tack for the purposes of allocation. CPR 45.43 assumes that the "normal track" can be ascertained even in a claim which settles before issue. It seems to me that the drafter of the rules must have assumed that in deciding whether the Table 12 fixed costs apply to claims which settle pre-issue the parties, the court should look to the amount of the claim and the nature of the claim but not the provisions of CPR 26.9 (5) (length of trial etc.) in deciding the track to which the claim would normally be allocated.
182. For the reasons set out above and accepting Mr. Jackson's evidence as to the reasonable business need to instruct solicitors I accept that it was reasonable to instruct solicitors. Ultimately it should benefit the insurers to have claims presented with the benefit of some legal assistance.
185. I should add that I am not sure that it is open to the Defendant to complain that the costs are too high in this case, albeit the work actually done was very modest. It is in the nature of a fixed costs regime that there will be instances where the payment exceeds that which would be assessed as being reasonable; but there may be other more difficult cases where the fixed costs payable are less than would be reasonable. If I were to parse back the costs so that only reasonable costs were allowed it would undermine the 'swings and roundabouts' nature of the scheme.
188. It follows that in my judgment if the claim is treated as having settled the Claimant was entitled to ?599. Had the Defendant accepted that in principle that would have been the end of the matter.
191. What order do I make as to costs?
193. This emerged as perhaps the more difficult element of the dispute between the parties. It is a matter for further submissions.
196. Both parties, at least in their written submissions following the hearing in January, appeared to indicate that if I were to accept the Claimant's case on the above two points, it ought to follow that the FRC apply and indeed that that hearing should be treated a "trial" for these purposes. Reference being made to CPR 45.45 (1) (d) which provides that the reference in Table 12 to a 'trial' is reference to a 'final hearing' (CPR 45.45) (and see too Bird v Acorn [2017] 1 WLR 1915).
199. As both advocates observed, the current dispute does not sit easily within the FRC as drafted. The difficulty is perhaps not so obvious in this case given the sums involved but if in principle the Claimants were right about this, and the costs of these proceedings can only be awarded on the basis that the hearing that took place were a 'trial' then the costs payable in similar circumstances involving a Complexity Band 4 case might be said to be highly disproportionate (c. ?10,000 plus VAT). It might be questioned whether Parliament can have intended such an outcome.
202. Ms Youshani made it clear that she was not arguing that the Claimant acted unreasonably when issuing the claim under Part 7. I am told that in other cases insurers appear to have equated the position to that which applies in Costs-only proceedings, when there is an agreement that costs are payable (see CPR 46.14). Here there was no agreement that costs were payable. But since, on one view, the only real issue was about costs I have raised the question as to whether this claim could be dealt with under the more general provisions of Part 8. If there is, as the parties agree, a discretion as to whether pre-issue costs are payable then it might be said that there must be a proportionate way of resolving any issue that might arise as to the exercise of that discretion.
205. It is not necessary or appropriate for me to determine the issue as to the order as to costs at this stage and the above comments are not intended to do anything more than indicate some concern, not binding determinations.

Note 1   If authority were required, Pecheries Ostendaises v Merchant Marine Insurance co [1928] 1 KB 750 [Back]

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