MoD NIHL Matrix Settlements and Costs: Why the Damages Matrix Does Not Cap Recoverable Costs

A percentage reduction to damages is not automatically a percentage reduction to costs.

Updated September 2026: this guide now reflects both Abbott judgments, the current Part 45 fixed-costs framework and the distinction between the Annex E military exclusion and ordinary fast-track and intermediate-track fixed recoverable costs.

That opening proposition sounds straightforward. In military noise-induced hearing loss claims settled under the Ministry of Defence Matrix, however, the distinction can easily become blurred. A claimant's damages may be reduced by reference to an agreed Matrix percentage; the paying party may then point to the resulting damages figure and argue that the legal costs should be similarly constrained.

That is not how the costs rules work.

The Matrix may materially affect the costs position. It may narrow the issues, reduce the value of the claim and make some later work unnecessary, and the settlement documents may contain their own costs terms. But the Matrix damages percentage is not, by itself, a costs cap. The correct analysis requires three separate questions:

1. What did the Matrix compromise?
2. What gives the claimant an entitlement to costs?
3. What costs regime determines the amount recoverable?

Keeping those questions separate is critical.

The short answer

Where an MoD NIHL claim settles by reference to the Matrix, claimant solicitors should not assume that the percentage applied to damages dictates the amount recoverable for legal costs. The damages compromise and the costs claim perform different functions. Costs may instead be governed by:

• the settlement agreement;
• a consent order;
• an accepted Part 36 offer;
• another deemed or express costs order;
• Part 45 fixed recoverable costs;
• or, where assessed costs apply, the ordinary principles of reasonableness and proportionality under CPR Part 44.

That does not mean every Matrix claim attracts unrestricted standard-basis costs. It means the answer comes from the costs entitlement and applicable procedural regime, not by mechanically applying the damages percentage to the bill. That distinction is now easier to see following Abbott and others v Ministry of Defence [2026] EWHC 941 (KB) and the subsequent costs judgment, Abbott v Ministry of Defence [2026] EWHC 2083 (KB).

What did the MoD NIHL Matrix actually compromise?

The best public account comes from Garnham J's substantive judgment in Abbott. The military NIHL litigation involved thousands of current claims and a much wider potential cohort. In spring 2024, the Ministry of Defence and the Hugh James claimant cohort reached an agreement addressing a number of recurring liability and defence issues, including:

• Crown immunity;
• combat immunity;
• breach;
• contributory negligence;
• apportionment;
• noise immission levels; and
• limitation.

The agreement was annexed to a July 2024 order and described as the Matrix. Its effect, as recorded by Garnham J, was to leave causation and quantum to be determined while applying a structured reduction to damages in return for the agreed resolution of those liability-side issues. We examine the underlying findings in our note on what the Abbott judgment means for MoD NIHL bills.

That matters. The Matrix was not a judicial tariff saying “claim worth £X, therefore solicitors may recover £Y”. It was a negotiated compromise of identified substantive issues.

How the Matrix operated in the Abbott lead cases

The lead claims illustrate the sequence clearly. For Mr Lambie, liability was admitted subject to a 10% Matrix reduction: the court assessed his damages and then applied that 10% reduction. For Mr Craggs, liability was admitted subject to a 25% Matrix reduction, although causation remained disputed; again, the court assessed the relevant damages and then applied the agreed Matrix percentage.

The sequence is: assess the individual loss, then apply the agreed liability discount. Nothing in that exercise creates a corresponding rule that says “apply the same percentage to solicitors' costs”.

But do not overstate what Abbott proves

It would be tempting to write that Abbott decided the Matrix cannot cap legal costs. It did not. The published substantive judgment did not decide the costs entitlement under an ordinary individual Matrix settlement, and the later costs judgment did not determine the meaning of a standard Matrix settlement clause. Nor does the publicly available material establish that every Matrix settlement uses identical wording or contains no costs provision.

The accurate proposition is narrower:

Nothing about applying a Matrix percentage to damages automatically makes that percentage a legal costs cap — but the individual settlement must still be read. If the parties expressly agree fixed costs, a specified figure, a global inclusive settlement, a costs cap, a waiver of costs or another contractual limitation, that wording matters. The Matrix cannot be considered in isolation from the actual agreement by which the particular claim settled.

Costs entitlement comes before costs assessment

This is perhaps the most important practical distinction. A detailed assessment does not create a right to costs which did not previously exist. Before asking “how much is recoverable?”, ask “why is the Defendant liable to pay costs at all?” The answer may come from a court order, an accepted Part 36 offer, a consent order, a written settlement, another deemed costs order or an applicable rule. Only after establishing the entitlement should the parties move to quantification.

Silence about costs and silence about the basis are different things

These concepts are sometimes confused. Where an order itself is silent about costs, CPR 44.10 ordinarily provides that there is no entitlement to costs in relation to that order. That is different from a situation where there is an entitlement to costs, but the order does not specify the basis of assessment; there, CPR 44.3 ordinarily means the costs will be assessed on the standard basis. Those are two very different forms of silence. Claimant firms should therefore avoid relying upon vague assumptions such as “the damages settled, so costs obviously follow”. Check the instrument.

What if the MoD agrees to pay costs but the amount is not agreed?

This is where CPR 46.14 costs-only proceedings can become relevant. If the substantive dispute has been resolved and the parties have a written agreement that one party will pay the other's costs, but cannot agree the amount, a costs-only claim under Part 8 may provide the procedural route to obtain an order for assessment. The written agreement must establish the underlying costs liability. CPR 46.14 is therefore another illustration of the central distinction: agreement that costs are payable is not the same as agreement about how much those costs are worth.

What did the Abbott costs judgment actually decide?

The second Abbott judgment was handed down on 7 August 2026. This is often where the Matrix and costs discussion becomes oversimplified. The court was dealing with the common costs of the generic issues and test cases, not conducting a detailed assessment of every individual military hearing loss file. The claimants sought 95% of the relevant costs; the Ministry of Defence argued for no order, or alternatively an order reflecting its own successes.

Garnham J, sitting with Master Brown as assessor, concluded that the claimant side had been very largely successful on the major issues, while recognising that the MoD had obtained significant successes of its own. The resulting order was 60% of the relevant common costs, subject to detailed assessment. The full figures — the roughly £9.74 million common-costs claim and the £2,515,194.95 payment on account — are covered in our note on the Abbott costs judgment and payment on account.

The 60% award was not a Matrix percentage

This distinction is particularly useful. The Matrix reductions applying to the two successful lead claimants were not 40%; they were 10% and 25%. The later 40% reduction in the costs order arose because the court looked at the parties' relative success across the generic and test-case litigation under CPR 44.2. It was an exercise of the ordinary costs discretion — an entirely different mechanism.

Abbott also shows that an entitlement to costs does not validate the bill. When considering the payment on account, the court had concerns about hourly rates, the number of hours claimed, seniority, delegation and disbursements, and therefore took a cautious approach: after applying the 60% costs order, it ordered an interim payment representing 50% of the resulting net figure. There can be an entitlement to costs and still be substantial scrutiny of amount, rate, seniority, time, delegation, disbursements, reasonableness and proportionality.

Standard-basis costs: the Matrix is context, not the formula

Where an individual claimant has an entitlement to non-fixed costs on the standard basis, CPR 44.3 applies. The assessing court will disallow costs that are unreasonably incurred, unreasonable in amount, disproportionately incurred or disproportionate in amount, and doubts are resolved in favour of the paying party (PD 44 paragraph 6.2 states the position expressly). The Matrix does not displace those controls. It becomes part of the factual history against which they are applied.

“The damages were modest, so the costs must be too high”

This will often be the paying party's most attractive argument, and it cannot simply be dismissed. The sums in issue are expressly relevant to proportionality, and the amount ultimately recovered informs the broader assessment under CPR 44.4. A modest Matrix-adjusted damages award can therefore create genuine proportionality risk.

But it is not the whole test. Under CPR 44.3(5), proportionality considers a range of factors, including the sums in issue, non-monetary relief, complexity, additional work generated by the paying party's conduct, wider factors such as reputation or public importance, and additional work or expense caused by vulnerability. There is no prescribed rule that costs may not exceed damages, or that costs must bear the same percentage reduction as the Matrix. The assessment is broader than that.

Suppose a claim was investigated while liability remained contested, service records required review, military audiograms needed analysing, causation remained unresolved, tinnitus was disputed, specialist evidence was required and future loss was potentially substantial. A later Matrix agreement may remove some issues, but that does not retrospectively mean the earlier reasonable work was unnecessary simply because the final damages were discounted. The reverse also applies: once issues have been compromised, continuing to work on them may become difficult to justify. That is why the chronology matters so much.

The paying party still has strong arguments

A claimant-side article should not pretend otherwise. After a Matrix compromise, the MoD can properly ask whether:

• liability work continued after liability issues had been resolved;
• common work was duplicated in the individual file;
• excessive senior time was used;
• routine work was insufficiently delegated;
• audiology or other expert work was disproportionate;
• repeated reviews added anything;
• causation work went beyond what remained genuinely in dispute;
• and the ultimate damages recovery makes the overall bill disproportionate.

Those are proper assessment questions. The answer is not “Abbott says the costs are recoverable”; it does not. The better claimant response is evidence.

What a claimant MoD NIHL Bill should show

For Matrix-settled claims, the bill should make the chronology easy to understand. Where relevant, distinguish:

• Pre-Matrix work — what had to be investigated before the recurring liability issues were compromised;
• Common or cohort work — what was undertaken centrally, and how any benefit or allocation has been dealt with;
• Individual work — what remained specific to the claimant;
• Causation — what medical or audiological issues still required determination;
• Quantum — what work was required to value the individual loss;
• Post-Matrix work — what genuinely remained necessary once the agreed concessions took effect.

That structure is much more persuasive than presenting one continuous block of work and arguing that the Matrix is irrelevant. It is not irrelevant. It simply is not the costs formula.

Fixed recoverable costs: the qualification claimant firms must check

This is the part that should not be omitted from any current article about MoD NIHL costs. Military NIHL claims are expressly excluded from the special NIHL fixed recoverable costs regime in Annex E of the Pre-Action Protocol for Disease and Illness Claims: paragraph E4(a) excludes military claims, that is claims by members of the armed forces in respect of their service career.

Annex E is only the special NIHL scheme

It is very easy to read that and conclude “military NIHL is excluded from fixed costs”. That is too broad. CPR 45 contains several different fixed-costs regimes. Section VIII contains the special NIHL scheme linked to Annex E, and the military exclusion takes MoD claims outside that particular route. It does not necessarily prevent the ordinary fast-track FRC regime under Section VI, or the intermediate-track FRC regime under Section VII, from applying where the rules and transition provisions bring an individual claim within them.

So the correct statement is: the Matrix does not impose the costs cap, but Part 45 might.

For the whole NIHL fixed costs picture, including the Table 15 figures and every Annex E exclusion, see our guide to NIHL fixed costs.

CPR 45.1(3) is also important. Where the relevant fixed-costs section applies and the parties agree, or the court orders, that costs are payable, the court ordinarily awards the applicable fixed costs unless both parties expressly agreed that Part 45 should not apply. This is not a minor technicality. Before advising on costs following a Matrix settlement, claimant firms should check when the Letter of Claim was sent, when proceedings were issued, the claim value, the actual or likely track, the complexity band, which version of the rules applies, whether Part 45 is engaged, and whether there is an express bilateral agreement disapplying it. Do not assume “military claim” answers all of those questions.

For disease claims, the transitional rules for the expanded FRC regime make the date of the Letter of Claim particularly important, so that date should be part of the costs review from the beginning. It sits alongside the other rate and quantum questions, including the 2026 Guideline Hourly Rates, when a bill is built.

How should Points of Dispute approach a Matrix-settled claim?

A generic Point saying “costs are disproportionate because damages were only £X” identifies a relevant consideration. It does not complete the analysis. A stronger Point may identify work undertaken after the relevant Matrix issue had been conceded, duplicated common and individual work, particular expert work said to be unnecessary, senior fee-earner time on routine tasks, specific phases which should have reduced after the compromise, an applicable Part 45 regime, the likely track in an unallocated claim, or why the overall costs are disproportionate when the CPR 44.3 factors are considered together.

The same discipline applies to Replies. The claimant should not respond “Matrix damages are irrelevant to costs”; they are not irrelevant. The better answer is that the Matrix damages figure is one part of the costs analysis, but it does not constitute the legal measure or contractual cap on recoverable costs. Then address the actual work challenged.

Abbott is useful — but use it for the right proposition

There are three different propositions practitioners should avoid conflating:

• Proposition 1. The Matrix compromised recurring substantive issues in return for a structured damages reduction. Supported by the substantive Abbott judgment.
• Proposition 2. The claimant side obtained 60% of the common and test-case litigation costs after the court considered relative success. Supported by the August 2026 costs judgment.
• Proposition 3. An individual Matrix settlement entitles every claimant to unrestricted standard-basis costs. Not decided by Abbott.

That third proposition goes too far. The individual costs entitlement still depends on the settlement, the order, the procedural route and any applicable fixed-costs regime. That distinction makes the claimant argument stronger, not weaker, because it avoids asking Abbott to decide something it did not decide.

What claimant firms should check before accepting an MoD costs offer

Before accepting a global offer after a Matrix settlement, we would check at least:

• What does the executed settlement actually say about costs?
• Is there an order?
• Was Part 36 used?
• Does Part 45 apply?
• When was the Letter of Claim sent?
• What track would the case occupy?
• What complexity band applies?
• What work pre-dated the Matrix?
• What work remained afterwards?
• Was common work duplicated?
• Are the fee-earner grades defensible?
• Are the hourly rates defensible?
• Are the audiology and medical disbursements evidenced?
• Is the overall bill proportionate?
• What reductions are realistically likely on assessment?
• What are the costs of continuing the dispute?
• Is CPR 46.14 required if costs liability is agreed but quantum is not?

A low offer is not necessarily a bad offer. A high bill is not necessarily a recoverable bill. The correct question is what the file is realistically worth under the regime that actually applies. This checklist should be completed before the bill is served, not after the paying party has raised Points of Dispute.

The practical conclusion

A Matrix settlement answers the issues its terms actually resolve. It should not be treated as shorthand for the entire costs position. The sequence is: what did the Matrix settle; what creates the entitlement to costs; which costs regime applies; and what amount is reasonable and proportionate under that regime?

For claimant firms, the important point is not that damages are irrelevant — they plainly are not. It is that a damages discount does not do the legal work of a costs clause, a Part 45 rule or a detailed assessment. That is why an MoD NIHL bill should be built around the actual chronology and entitlement, not around an assumed relationship between two percentages.

How DMD Costs can help

DMD Costs acts for claimant solicitor firms, not individual claimants. When we receive an MoD NIHL costs instruction, we start with the costs entitlement and chronology rather than simply converting the time ledger into a bill. Depending on the file, that includes reviewing the settlement wording, the Matrix position, the Letter of Claim and issue dates, Part 45 applicability, service-history work, audiology and medical evidence, fee-earner grades and rates, disbursements, offers, common and individual work, proportionality and the likely assessment risks. We can then deal with:

• bills of costs;
• Precedent S electronic bills;
• N252 and Notice of Commencement;
• Points of Dispute and Replies;
• costs negotiations;
• CPR 46.14 costs-only matters;
• hourly-rate challenges;
• audiology and expert-fee disputes;
• and settlement through to conclusion.

Our MoD NIHL costs service sets out how we prepare and negotiate military hearing loss costs. Instructions can be sent through the DMD Costs secure client portal — also available as a mobile app — so your team can upload the papers and track progress from the web or a phone. If you have settled a MoD NIHL claim and the defendant is pushing a low costs offer, send us the file and we will review the costs position and help you progress the matter towards recovery.

Source: Abbott and others v Ministry of Defence [2026] EWHC 941 (KB), Garnham J, handed down 24 April 2026, and David Abbott and others v Ministry of Defence [2026] EWHC 2083 (KB), Garnham J sitting with Master Brown as assessor, handed down 7 August 2026, together with CPR Parts 44 to 47, CPR Part 45 and Annex E to the Pre-Action Protocol for Disease and Illness Claims. Figures and quotations are taken from the approved judgments and the current Civil Procedure Rules.