The Point
Proportionality is not a defence to an indemnity costs order, and it is not an argument at an indemnity basis assessment either. Those are two different stages, and this judgment closes both doors in the same paragraph or two.
The New Lottery Company Limited & Anor v The Gambling Commission [2026] EWHC 1311 (TCC), Mrs Justice Joanna Smith DBE, 22 May 2026.
What Happened
The claimants had brought what the judge described as a “huge and important claim” arising from what was called the most financially significant procurement process in UK history, seeking damages of over £1 billion. They lost, and the defendant and interested parties sought their costs on the indemnity basis.
The conduct relied on was substantial rather than technical:
- a very large claim pursued in an “apparently unfocused manner”;
- 64 issues abandoned in the Process Claim and 17 in the Modifications Claim, without proper notice or explanation;
- “numerous serious and wide-ranging allegations” including bias, conflicts of interest and dishonesty, later dropped; and
- “wholly unpleaded and unparticularised allegations at trial”.
Indemnity costs were awarded in full: “an award of indemnity costs in favour of both the defendant and the IPs is appropriate in respect of the entirety of the proceedings”.
The Proportionality Argument, and Why It Failed Twice
The claimants argued that the defendants’ costs were disproportionately high, and sought a reduction of around £4 million. The judge rejected it, and the reasoning is the reason this case is worth keeping:
“There is nothing in the authorities to suggest that proportionality is a relevant factor in considering whether to make an order for indemnity costs.”
So the size of the receiving party’s costs does not bear on whether the order should be made. And once it is made, the position at assessment follows: the claimants had “forfeited the right to any assessment based on arguments of proportionality”.
Why This Matters When a Bill Is Drawn
The basis of assessment changes what a bill has to survive, and it changes it more than most summaries suggest.
- Standard basis — proportionality is a live control on recovery, and doubt is resolved in favour of the paying party. It is the single most common line of attack, as our note on the twelve recurring reductions shows.
- Indemnity basis — proportionality drops out, and doubt is resolved in favour of the receiving party. The argument that dominates a standard basis assessment is simply unavailable.
For a receiving party that is worth real money, and it is worth pleading for. Where conduct supports an application, the indemnity basis removes the objection most likely to reduce the bill.
Where It Sits Among the Conduct Cases
Read with two others already covered here, a pattern emerges about how courts treat costs conduct:
- Ward v Rai — a paying party who served a vague point of dispute and a late schedule won the point and still collected an adjournment and costs sanctions.
- HD v North Devon — signing a bill making very high and unsustainable claims was itself unreasonable, and produced orders under CPR 44.11.
- New Lottery — conduct in the underlying litigation moved the whole assessment onto the indemnity basis.
The consistent theme is that how a party litigates is itself a costs issue, and it is priced at the end.
How DMD Costs Can Help
We prepare and negotiate claimant costs for solicitor firms, and the basis of assessment shapes how a bill is built rather than merely how it is argued. Send us the file and we will confirm the fixed fee before any work begins.
A Note on Sources
Citation, court, judge, date, the conduct findings, the figures and the quoted reasoning were taken from the approved judgment. One further quotation about a party being made to reformulate its case was ambiguous as to whom it referred, and has been left out rather than attributed on a guess.