Alphabet v AXA: Suing for Pre-Action Costs Not an Abuse of Process [2026] EWHC 674 (SCCO)
Fixed Costs — 2026-03-23
Costs Judge Brown confirms proceedings issued solely to recover pre-action costs are not abusive, and that the test for instructing solicitors is reasonableness not necessity. FRC Table 12 applied.
Overview
Date: 23 March 2026
Judge: Costs Judge Brown (sitting as a District Judge of the County Court)
Nature of Proceedings: Part 7 claim for pre-action costs following settlement of a vehicle damage claim
Key Issues:
- Whether issuing proceedings solely to recover costs is an abuse of process
- Whether it was reasonable to instruct solicitors in a straightforward vehicle damage claim
- Application of fixed recoverable costs (FRC) under CPR Part 45 to pre-issue settlements
- The proper approach to determining the "normal track" for FRC purposes in claims that settle before proceedings
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The Facts
The Claimant, Alphabet (UK) Limited, is a vehicle leasing company within the BMW Group. At the material time, it owned a Citroen van leased to a company called Acorn Engineering Limited ("Acorn"), which insured the vehicle with the Defendant, AXA Insurance UK PLC.
On 8 February 2023, the van was seriously damaged in a road traffic accident and subsequently written off as uneconomical to repair. Under the European Communities (Rights Against Insurers) Regulations 2002, the Claimant was entitled to pursue a direct claim against AXA. By 28 March 2023, solicitors had been instructed and wrote to the Defendant, nominating motor engineers and making a Part 36 offer to settle the vehicle damage at £12,408.70. The letter made clear that costs were also being sought.
On the same day, AXA's agent, Copart UK, responded with a counter-offer of £11,909.88 (the claimed value less a £500 policy excess). Costs were not mentioned in the counter-offer. The Claimant then delivered a bill for its solicitors' costs totalling £1,006.80 (plus VAT). When the Defendant refused to pay costs, Part 7 proceedings were issued on 12 March 2024.
The matter was transferred to the SCCO on 29 May 2025. At a directions hearing on 3 September 2025, Costs Judge Brown retained the case in the County Court as an ex officio District Judge, since the principal issue was whether a costs order should be made at all, rather than the quantum of costs.
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Abuse of Process: Can You Sue Just for Costs?
The Defendant's first argument was that issuing proceedings merely to obtain an order for costs constituted an abuse of process, there being no real dispute as to the claim for damages.
Costs Judge Brown rejected this argument decisively, noting that it was "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. He relied on three authorities:
- Birmingham City Council v Lee [2008] EWCA Civ 891, where Hughes LJ explained the importance of ensuring defendants cannot evade liability for pre-action costs by strategically conceding damages only.
- Ayton v RSM Bentley Jennison [2018] EWHC 285, where May J held that when a defendant tenders damages but refuses to pay pre-action costs, "the only option left to a claimant" was to issue proceedings.
- Moreira v French (HHJ Stewart, 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.
The Judge identified an "obvious problem" with the Defendant's position. If correct, it would mean that an unscrupulous defendant could simply pay the claimed damages, refuse to pay costs, and leave the claimant with no remedy. This would undermine the pre-action settlement regime that the CPR encourages.
Importantly, the Judge also noted that the FRC regime itself contemplates pre-issue settlements carrying costs consequences. CPR Part 36 provides for claims to settle before issue with the benefit of a costs order (CPR 36.7), and Table 12 expressly provides for fixed costs of £599 where parties reach a settlement prior to issue in fast track claims exceeding £10,000 for vehicle damage arising from road traffic accidents. Where there is an entitlement to that sum, there must be a means of obtaining it.
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Reasonableness of Instructing Solicitors
The Defendant's more substantive argument, pressed by Ms Youshani of Kennedys, was that the Claimant - a sophisticated corporate body dealing with such matters regularly - had been too quick to instruct solicitors. The submission was that if the Claimant had waited, it would have received an offer without incurring legal costs.
The Test: Reasonable, Not Necessary
Costs Judge Brown held that the correct test is whether it was reasonable to instruct solicitors, not whether it was necessary:
> "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."
The FRC Threshold as an Indicator
The Judge agreed with Mr Williams KC (for the Claimant) that the line drawn in Table 12 is "at least indicative" for the purpose of establishing reasonableness. In a claim exceeding £10,000, it is prima facie reasonable to instruct solicitors. The existence of a fixed costs provision for such claims implies the rules assume legal representation is appropriate.
Corporate Sophistication Is Irrelevant
The Judge rejected the argument that the Claimant's status as a large commercial organisation made solicitor instruction unreasonable:
> "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."
Prematurity Rejected
The Defendant's fallback argument was that even if solicitor instruction was reasonable in principle, it was premature on the facts. The Judge rejected this too, noting that much of the material relied upon by the Defendant was not known by the Claimant at the time of instruction, that there was no admission of liability, and that the prompt instruction of solicitors may have been what prompted the swift offer. The Judge observed that the argument was "predicated substantially with the benefit of hindsight."
Mr Jackson, the Claimant's Used Car Operations Manager, provided unchallenged evidence that liability insurers frequently attempt to under-settle, raise liability issues, and seek to retain salvage improperly. The appointment of lawyers enabled the Claimant to operate on equal terms against major insurers with in-house legal expertise.
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Fixed Recoverable Costs: The "Normal Track" Question
The case raised important questions about the application of FRC under CPR Part 45. Both parties ultimately agreed that if costs were payable, the FRC regime applied.
Determining the Normal Track Pre-Issue
Under CPR 45.43(1), FRC apply to "any claim which would normally be or is allocated to the fast track." The Judge noted that this "normal track" is a term of art (citing Thaxton v Goodman, Costs Judge Haworth, 23 November 2010). CPR 45.43 assumes the normal track can be ascertained even where a claim settles before proceedings are issued.
The Judge concluded that for pre-issue settlements, the court should determine the normal track by reference to the amount and nature of the claim, rather than the provisions of CPR 26.9(5) concerning trial length and expert evidence - factors that simply cannot be known in a claim that never proceeds to litigation.
Under CPR 26.15, fast track claims relating to road traffic accident non-personal injury claims are normally assigned to complexity band 1. Table 12 provides that where parties reach a settlement before the claimant issues Part 7 proceedings in such claims exceeding £10,000, fixed costs of £599 are payable.
The "Swings and Roundabouts" of FRC
Although the Judge acknowledged that the costs claim appeared "unreasonably high" and the work done was "very modest," he held that parsing back costs to only what was reasonable would undermine the FRC regime:
> "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."
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The Unresolved Question: Costs of the Proceedings
The Judge identified a further difficulty that emerged during argument: what costs order should be made in respect of the proceedings themselves? This was described as "perhaps the more difficult element of the dispute."
The Claimant argued the hearing constituted a "trial" for FRC purposes, relying on CPR 45.45(1)(d), which provides that references to a "trial" in Table 12 mean a "final hearing" (see also Bird v Acorn [2017] 1 WLR 1915). If correct, this would entitle the Claimant to fixed costs plus an advocate's fee.
The Judge raised concerns about the proportionality implications of this argument. If the Claimant were right, similar proceedings involving a complexity band 4 case could attract costs of approximately £10,000 plus VAT - an outcome that "might be questioned whether Parliament can have intended."
The Judge also raised whether such claims might more appropriately be dealt with under the general provisions of Part 8, or whether they should be equated to costs-only proceedings under CPR 46.14 (though noting that the latter applies only where there is an agreement that costs are payable, which was absent here). This question was left for further submissions.
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Key Takeaways
For Costs Lawyers and Solicitors
1. Proceedings for costs alone are not an abuse of process. Where a defendant pays damages but refuses to pay pre-action costs, a claimant has every right to issue proceedings to recover those costs. The authorities on this point are well established.
2. The test for solicitor instruction is reasonableness, not necessity. Courts will not require a party to demonstrate that it was impossible to handle the matter without lawyers. The relevant question is whether it was reasonable in the circumstances.
3. The FRC threshold provides a useful indicator. Where Table 12 provides for fixed costs in claims above a certain value, the existence of that provision supports the position that solicitor instruction in such claims is prima facie reasonable.
4. Corporate claimants are not penalised for their sophistication. A large company's general commercial experience does not equate to legal expertise, and the court will not expect parties to handle claims without legal representation simply because they are commercially experienced.
5. FRC apply to pre-issue settlements by reference to claim value and nature. When determining the "normal track" for a claim that settles before proceedings, the court looks at the amount and nature of the claim rather than factors (such as trial length) that can only be known once litigation is underway.
6. Hindsight arguments will carry little weight. The court assesses reasonableness at the time the decision was made, not with the benefit of knowing what happened afterwards.
7. The costs of costs-only proceedings remain uncertain. The judgment leaves open the question of what costs regime applies to the proceedings themselves - a question with potentially significant implications, particularly in higher-value complexity bands.
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Conclusion
This decision provides important clarity on several points that regularly arise in practice. The confirmation that proceedings issued solely to recover costs are not an abuse of process gives comfort to claimants and their lawyers who find themselves in the increasingly common situation where damages are conceded but costs are refused. The articulation of reasonableness rather than necessity as the test for solicitor instruction is a helpful restatement of principle.
Perhaps most significant for costs practitioners is the Judge's treatment of FRC in the pre-issue context. The ruling that Table 12 fixed costs of £599 apply to vehicle damage claims settling above £10,000 before proceedings, and that the "normal track" should be determined by claim value and nature rather than unknowable trial factors, provides practical guidance for both sides in settling such claims.
However, the unresolved question about the costs of proceedings brought solely to recover pre-action costs highlights a gap in the FRC regime. As Costs Judge Brown observed, the current rules do not sit easily with disputes of this nature, and the potential for disproportionate costs in higher complexity bands is a concern that may require attention from the Rules Committee. Practitioners should watch for the further submissions and any subsequent ruling on this point.
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Citation: Alphabet (UK) Ltd v AXA Insurance UK PLC [2026] EWHC 674 (SCCO)
Full judgment available at: BAILII
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