The Short Point
A defendant who settles the damages and then refuses the costs cannot treat proceedings to recover those costs as an abuse. And a claimant does not have to prove that instructing solicitors was necessary — only that it was reasonable when the decision was made.
What the case does not do is turn that entitlement into open recovery. The claimant here won both arguments and was awarded £599 against a claim of £1,006.80 plus VAT.
What Happened
Alphabet (UK) Ltd v AXA Insurance UK Plc [2026] EWHC 674 (SCCO), Costs Judge Brown, 23 March 2026. A vehicle leasing company instructed solicitors in a pre-action road traffic claim and made a Part 36 offer of £12,408.70. The insurer settled the damages at £11,909.88 but refused the pre-action costs of £1,006.80 plus VAT. The claimant issued proceedings to recover them.
AXA ran two arguments: that issuing proceedings where damages were not in dispute was an abuse of process, and that instructing solicitors had been premature and unnecessary for a commercial party that could have waited for an offer. Both failed.
1. Is Issuing for Costs Alone an Abuse?
No. Where a defendant refuses to pay costs properly incurred before action, a claimant may issue proceedings to recover them. The refusal creates the dispute; bringing it to court is the ordinary consequence, not a misuse of process.
2. Necessary, or Merely Reasonable?
The test is reasonableness. The judge found no authority supporting a necessity threshold and considered such a threshold too high: it would allow defendants to resist costs by arguing that acting in person was theoretically possible.
There is a neat piece of reasoning worth borrowing. The existence of fixed costs provisions in Table 12 of CPR Part 45 for claims exceeding £10,000 was itself treated as indicative that instructing solicitors in such claims is prima facie reasonable. The rules contemplate solicitors being instructed, so instructing them needs no special justification.
The practical shift is about timing. The question is whether incurring the cost was reasonable when the decision was taken, not whether it turned out to be needed once the defendant settled quickly. Hindsight is not the test.
3. So Is Every Pound Recoverable?
No, and this is the part worth reading twice. Entitlement, the applicable regime and quantum are three separate questions, and winning the first two decides very little about the third.
The normal track for this claim was the fast track, so Table 12 of CPR Part 45 applied and the award was £599 — the fixed sum for pre-issue settlement in a vehicle damage claim exceeding £10,000.
The judge acknowledged the costs claimed looked unreasonably high for the work actually done. He declined to reduce them on that basis, because parsing fixed costs back to case-specific reasonableness would undermine the integrity of the scheme. Fixed costs run on swings and roundabouts, and a party cannot take the benefit of the scheme in one case and ask for it to be disapplied in another.
That cuts both ways, which is why it is useful rather than merely favourable.
A Distinction Worth Keeping
Alphabet was a Part 7 claim. It was not a costs-only claim under CPR 46.14, and it should not be cited as though it were. The reasoning on entitlement and on reasonableness is directly useful to anyone weighing costs-only proceedings under CPR 46.14, but the procedural routes are different and conflating them produces an argument that will not survive contact with a Costs Judge.
What to Do With It
- Record why solicitors were instructed at the time, not after the outcome is known.
- Do not accept a necessity framing when the test is reasonableness.
- Identify the normal track early — it decides the regime, and the regime decides the sum.
- Where fixed costs apply, expect the fixed figure rather than an assessment of what the work was worth.
- Settle the costs position in the settlement wording wherever possible.
How DMD Costs Can Help
We prepare and negotiate claimant costs for solicitor firms, including where damages have settled and only the costs remain in dispute. Our stage-by-stage recovery checklist starts with the settlement wording, because that is where this problem is usually created.
Send us the file and we will confirm the fixed fee before any work begins.
A Note on Sources
Citation, court, date, judge, the sums and the reasoning were checked against independent reports of the judgment before this note was written. Figures are given as reported.