O'Sullivan v Trading 212: £500,000 of Costs on a £5,000 Claim and Departing from the Budget [2026] EWCC 32
costs budgeting — 2026-06-03
A claim worth a few thousand pounds generated over £500,000 in costs. The County Court found good reason under CPR 3.18 to depart downward from the defendant's approved budget and cut City hourly rates on proportionality grounds.
Overview
Date: 3 June 2026
Judge: Recorder Benjamin Wood
Court: County Court at Central London
Citation: [2026] EWCC 32
Claim Number: K6QZ6F6W
Nature of Proceedings: Costs judgment following dismissal of claim, summary assessment and departure from approved budgets
Representation: The claimant appeared in person (written submissions previously settled by Anthony Metzer KC and George Symes); Anna Greenley (instructed by Winckworth Sherwood LLP) for the defendant
Key Issues:
- Proportionality where costs vastly exceed the value of the claim
- Whether there is good reason to depart from approved costs budgets under CPR 3.18
- The treatment of City hourly rates on a modest, regionally issued claim
- Costs consequences of late disclosure and a failed strike out application
- Broad brush summary assessment on the standard basis
In O'Sullivan v Trading 212 UK Limited [2026] EWCC 32, the County Court at Central London delivered a costs judgment after dismissing a claim worth, on the court's analysis, only a few thousand pounds, in respect of which the parties had run up more than £500,000 in legal costs between them. Recorder Benjamin Wood found good reason under CPR 3.18 to depart downward from the defendant's approved budget, cut City hourly rates that were not justified by a claim that began life in Hull, and assessed the costs on a broad brush basis dominated throughout by proportionality. The decision is a vivid cautionary tale and a useful authority for paying parties resisting a budget that was set on a mistaken view of the case.
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The Facts
The claimant, Mr Peter O'Sullivan, sued Trading 212 UK Limited after it closed his share trading account in August 2021. The claim was dismissed following trial, the court holding that the defendant had both the right, under the parties' contract, and the obligation, under the applicable anti-money laundering regulations, to close the account. There was no suggestion that the claimant had been involved in anything other than entirely legitimate activity.
The relief sought was monetary only, pleaded at £37,106. The court found that the claim was in reality worth only a few thousand pounds, because the claimant lost control of his money for a relatively short period, was free to reinvest elsewhere, and suffered no stigma. It turned on a small body of contemporaneous documents, the AML regulations and the written contract.
The costs were of a wholly different order. At the costs and case management conference in the County Court at Hull on 11 December 2024, the claimant's budget was agreed at £59,575 and the defendant's approved at £188,558.98. At the pre-trial review each budget was increased by £18,243.50. A strike out application generated further schedules of £20,800 for the claimant and £59,513.67 for the defendant. Both parties filed Precedents T after late disclosure, the claimant claiming a £54,115 increase and the defendant £63,330.91. By the time judgment was handed down the parties had over £482,000 of costs on the table, and with the costs of a single contested costs hearing on 21 May the figure passed £500,000.
The court set out the actual spend to convey its scale: the claimant had spent £246,426.54 and the defendant £452,456.26. As Recorder Wood put it:
> the parties have spent around 100 times more on legal fees than the claim is actually worth.
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The Costs Order
The general rule and conduct
Costs are in the discretion of the court, but under CPR 44.2(2) the general rule is that the unsuccessful party pays the costs of the successful party, an approach endorsed in BCCI v Ali. The defendant was the successful party, the claim having been dismissed. Although both sides advanced extensive conduct arguments under CPR 44.2(4)(a), the Recorder declined to descend into a fine grained analysis of conduct, which he considered would be disproportionate, and made no general conduct adjustment. Two specific matters were carved out: the defendant's late disclosure and the claimant's conduct leading to the strike out application.
Late disclosure
The defendant failed to disclose internal "Slack" messages until the trial had almost concluded, a failure that even its own Company Secretary could not fully explain. The court ordered that the defendant recover none of its costs of the disclosure phase and pay the claimant's costs consequent on the late disclosure, including the unsuccessful elements of his re-amendment application, on the standard basis.
The claimant pressed for indemnity costs, relying on Finsbury Food Group plc v Axis Corporate Capital UK Ltd, where the conduct in question had been described as "profoundly unsatisfactory". The Recorder refused. The late disclosure had not changed the outcome and was not "unreasonable to a high degree" or "out of the norm" so as to justify indemnity costs. He sought to mark the court's disapproval of a sophisticated financial institution's procedural failure while not encouraging the innocent party to respond disproportionately.
The strike out application
The defendant's application to strike out the claim, based on the claimant's conduct towards witnesses, was adjourned on undertakings with costs reserved. Although it failed as a strike out, the Recorder was satisfied that an application of some kind was appropriate to secure a fair trial and the giving of best evidence, and ordered the claimant to pay the defendant's costs of it on the standard basis. He went on to assess those costs at £15,000 against a schedule of £59,513.67, observing that it was "grossly disproportionate to spend more than twice the amount stated on the Claim Form" to pursue the application.
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Good Reason to Depart from the Budget Under CPR 3.18
The centrepiece of the judgment is the treatment of the approved budgets. CPR 3.18 requires the court, on a standard basis assessment, to have regard to the last approved or agreed budgeted costs for each phase and not to depart from them unless satisfied there is good reason to do so.
The Recorder rehearsed the certainty rationale for the rule. In Merrix v Heart of England NHS Foundation Trust Carr J described the words of CPR 3.18 as "clear" and "mandatory" and emphasised, at [90], that fidelity to the rule secures predictability of costs exposure and recovery as "a central pillar of access to justice". In Harrison v University Hospitals NHS Trust the Court of Appeal confirmed that budgets give clients certainty as to what they will pay or recover. Neither decision, however, defines what amounts to a good reason to depart.
On that question the Recorder examined two first instance decisions that are difficult to reconcile. In RNB v London Borough of Newham the court held that, where hourly rates for incurred costs are reduced on assessment, that is a good reason to apply the same reduction to the budgeted costs. In Nash v Ministry of Defence the court declined to treat hourly rates as having special status, but recognised that a change in facts and circumstances, or a disproportionately high overall figure, could engage the proportionality "safety valve" in CPR 44.3(2)(a).
The hourly rates were striking. The defendant's Grade A rate was £605, rising to £650, against a 2025 London 1 guideline rate of £566, with the rates for senior fee earners higher even than those for very heavy commercial work by centrally based London firms. The National 2 rates that would apply to work done in Hull, where the claim began, were £282 at Grade A.
The Recorder found good reason to depart, reaching the same conclusion by three routes:
1. Hourly rates, following RNB. A modest claim that started in Hull did not justify London 1 solicitors, and arguably did not require London solicitors at all. The rates of the more senior solicitors required reduction by something between a third and a half, and the more junior by between a quarter and a third, with the same reduction flowing into the budgeted phases.
2. The safety valve, following Nash. There had been a simplification of the issues such that the total level of expenditure was disproportionately high.
3. First principles. As the trial judge, he had a far better view of the case than the costs managing judge. His conclusion was blunt:
> the judge who made the costs management order did so on a basis that has turned out to be completely wrong. Had the judge known what I know now, it is vanishingly unlikely that this case would have been allocated to the multi-track and it is all but inconceivable that the parties would have been allotted 3.5 days of court time for the trial.
He was careful to record that this was no criticism of the case managing judge, who had dealt with a busy list on the limited information provided. Although it might seem hard to visit the claimant's misjudgement on the defendant as receiving party, the Recorder gave three reasons why departure remained appropriate: every party, not just a claimant, must help the court manage a case proportionately, so a defendant who over-eggs a claim at the budgeting stage shares responsibility; departure does not ignore the budget but treats it as one factor under CPR 44.4(3)(h); and the additional work generated by the paying party was better evaluated at the end of the case than at the budgeting stage.
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Summary Assessment
Both parties agreed that the court could carry out a summary assessment, a swifter and cheaper procedure than detailed assessment. The Recorder emphasised that this was a broad brush exercise, allowing only costs that were reasonable and proportionate, with any doubt resolved in favour of the paying party under CPR 44.3(2).
The results reflected the proportionality theme throughout:
- The claimant's costs of the late disclosure, claimed at £54,115, were assessed at £27,000 plus VAT, a gross figure of £32,400.
- The defendant's costs of the strike out application, claimed at £59,513.67, were assessed at £15,000.
- The defendant's remaining costs of the claim, a "rump" of around £225,000 including some £30,000 sought for the 21 May hearing, were assessed at £113,750. The disclosure phase was allowed at nil, the witness statement phase reduced to £15,000 to reflect that one statement should not have been prepared, and only £8,000 of the £30,000 claimed for the 21 May hearing was allowed.
After setting off the two awards, the claimant was ordered to pay the defendant a net £96,350, with 35 days to pay, to 8 July 2026. No stay was granted pending the claimant's application for permission to appeal, the claimant having identified no specific reason why he could not pay or why the defendant could not repay if an appeal succeeded.
The Recorder also noted, having seen no witness statement explaining any refusal of an ADR proposal as the CCMC order required, that he could read between the lines that neither party had proposed mediation or any other form of alternative dispute resolution.
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Practical Implications
For Costs Lawyers
1. A route to depart from an approved budget on assessment. This decision holds that a trial judge, with the benefit of knowing what the case was really worth, can find good reason under CPR 3.18 to depart downward from a budget that was set on a fundamentally mistaken footing. Paying parties should keep it in mind where an approved budget looks divorced from the claim that actually unfolded, while recognising that receiving parties will rely on Merrix and Harrison to resist.
2. RNB remains usable despite Nash. The court applied RNB: reduce the hourly rates on incurred costs and the same reduction is good reason to adjust the budgeted phases. The two authorities pull in different directions, so cite RNB squarely and be ready to meet the argument that hourly rates have no special status.
3. Guideline rates as a brake on City rates. London 1 rates were not justified for a modest claim issued in Hull. Where a paying party faces metropolitan rates on a regional or low value matter, the guideline rates and the origin of the claim provide a clean basis for reduction.
4. Proportionality drives summary assessment. The reductions here were severe, roughly half on the main costs and around three quarters on the strike out. On a half million pound spend over a few thousand pound claim, proportionality under CPR 44.3(2) did the heavy lifting and doubt was resolved for the paying party.
5. The indemnity threshold stays high. A serious disclosure failure that did not change the result attracted a standard basis consequence, not indemnity costs. Reserve the indemnity argument for conduct that is genuinely out of the norm.
For Litigation Practitioners
1. Budget to the real value of the claim. A defendant who over-budgets shares responsibility for a disproportionate total and cannot assume the approved figure is safe. Both sides must help the court manage proportionately.
2. Disclosure failures carry a direct costs price. The defendant recovered nothing for the disclosure phase it conducted improperly and paid the consequent costs of the other side. Get standard disclosure right, including searches of internal messaging systems.
3. Frame interim applications proportionately. Spending more than twice the value of the claim on a strike out invites a heavy reduction even where some application was justified. Consider whether lesser relief, such as special measures or a contact order, achieves the aim.
4. Engage with ADR and record it. The absence of any witness statement explaining a refusal of ADR drew adverse comment. Propose ADR, respond to proposals, and keep the paper trail.
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Conclusion
O'Sullivan v Trading 212 is, on one level, a stark illustration of attritional litigation gone wrong, a few thousand pound dispute that consumed over half a million pounds and left, in the Recorder's words, neither side able to regard itself as the winner. Its enduring interest for costs practitioners lies in the willingness of the trial judge to look behind an approved budget and find good reason to depart from it because the budget had been built on a view of the case that the trial showed to be wrong.
The financial outcome was severe for both sides. The defendant, though successful, recovered only £113,750 of a roughly £225,000 rump and nothing for its disclosure phase, while the claimant, having lost, still extracted £32,400 for the disclosure default before a net £96,350 fell due in the other direction. Every figure in the assessment was driven down by proportionality.
This is a County Court decision of a Recorder, persuasive rather than binding, and it sits well below appellate or Senior Courts Costs Office authority. But the clarity of its reasoning on CPR 3.18, the use of guideline rates to discipline City charging, and its uncompromising application of proportionality make it a decision that paying parties will want to deploy and receiving parties will need to distinguish.
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Citation: Mr Peter O'Sullivan v Trading 212 UK Limited [2026] EWCC 32
Full judgment available at: BAILII
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