A costs judge has dismissed an attempt by two claimants to make their own ATE insurer pay the other side's assessment costs.
The decision, handed down on September 18, 2026, arose from the aftermath of a failed insolvency claim. The claimants had brought a section 423 action under the Insolvency Act 1986 against Church Bay Trust Company and two individual defendants. That claim was dismissed after a nine-day High Court trial in mid-2023, and an order followed requiring the claimants to pay the defendants' legal costs on the standard basis.
The claimants had after-the-event insurance - ATE cover with a £1 million limit of indemnity, issued by BCR Legal Assist Limited and underwritten by Financial & Legal Insurance Company Limited. That policy was activated to meet the adverse costs order.
From there, the story becomes a dispute about who should have been running the costs negotiations.
The defendants made an initial Part 36 offer in November 2023, seeking roughly £1.37 million to settle costs across all three claimants. The claimants' solicitors, Gowling WLG, began engaging with the offer and requesting breakdowns of the defendants' costs.
Within days, BCR's costs arm - BCR Costs Limited - stepped in and took over conduct of the costs negotiations. The claimants later said this happened over their "strong objections," though the court found no documentary evidence to support that claim.
What followed was a protracted process. A formal bill of costs was served in June 2024 in the sum of roughly £1.66 million. Points of dispute were filed. BCR Legal Assist Limited was formally added as an interested party by consent in August 2025, and a preliminary issues hearing took place the following month to resolve questions about costs budgeting orders.
One of the sharpest exchanges in the judgment concerned a £600,000 settlement offer made by BCR Costs Limited on behalf of the claimants in January 2025. The claimants' own counsel described it as "absurd." The defendants' counsel called it unrealistic.
The court disagreed. The defendants had ultimately settled for £957,814 against the bill - and when the earlier settlement with the first claimant was factored in, the global figure of roughly £1.11 million was far closer to £750,000 (the £600,000 offer plus the first claimant's £150,000 settlement) than to the £1.66 million originally claimed. The court found the offer was genuine, consistent with the arguments being run, and could not reasonably be called absurd.
The turning point came in January 2026. Following the preliminary issues judgment in November 2025, the defendants made a dramatically reduced offer - accepting settlement at £957,814, the amount already paid on account, plus a bill drafting fee and the costs of the assessment itself. Freeman Harris, acting for BCR Legal Assist Limited, wrote to the claimants setting out two options: either take the remaining £809,023.33 from the indemnity and handle negotiations themselves, or let BCR accept the defendants' offer on their behalf.
The claimants chose to take the money and resume control. Gowling WLG came back on the record on January 15, 2026, and on the same day accepted settlement of the bill at £957,814 - leaving the bill drafting fee and costs of assessment to be agreed separately.
That speed became central to the claimants' case. They argued it proved the insurer had been the obstacle all along.
The claimants then applied for BCR Legal Assist Limited to be made jointly and severally liable for the defendants' costs of the assessment proceedings, with a 100% contribution order between the insurer and the claimants. Both the claimants and the defendants supported the application.
The claimants pitched it under CPR 47.20(1)(b), which allows the court to make "some other order" about the costs of assessment. They explicitly abandoned any argument under section 51 of the Senior Courts Act 1981 and said it was not a non-party costs order application - because BCR Legal Assist Limited had been formally joined as an interested party.
The court accepted that CPR 47.20(1)(b) was not so restrictively drafted that it could never apply to an interested party. But it found no justification for making the order on the facts. The judge held that CPR 47.20 is fundamentally about entitlement to costs, not about how a paying party funds its liability - and that the claimants were in reality seeking to transfer their own liability to their insurer, rather than challenging who was entitled to the costs of assessment.
On the conduct arguments, the court went through the claimants' allegations point by point.
On delay, the judge found the receiving party defendants were always in control of when to commence formal proceedings, and any periods of inactivity would have generated minimal costs.
On the points of dispute, the court noted it had made no adverse findings about merit in its earlier November 2025 judgment, and described the issues raised as "legitimate areas of doubt which required judicial interpretation." They were points that "may well have found favour with a different judge."
On the claim that costs would have settled without the insurer's involvement, the judge called the proposition "frankly incredible." There was no evidence the defendants' decision to reduce their position from over £1.19 million to £957,814 was driven by Gowling WLG's return rather than by the points of dispute and preliminary issues hearing that had preceded it. On the contrary, the court found the insurer's involvement had played a central role in convincing the defendants to come down significantly from the sums originally sought.
The court also rejected any suggestion the insurer had acted against its insured's interests. The interests of BCR Legal Assist Limited and the claimants were, the court found, "aligned and mutual" - both wanted the defendants' costs as low as possible.
The application was dismissed. But the judgment ended with a pointed observation: the defendants' own costs of assessment were described as "frankly astonishing," and the court put the defendants on notice that they would need to "work incredibly hard" to avoid significant reductions when those costs came to be assessed.
For claims teams and ATE providers, the decision is a practical marker: an insurer's active involvement in costs proceedings - including instructing its own costs specialists and running preliminary arguments - does not automatically expose it to liability for the other side's assessment costs, particularly where its interests are aligned with its insured's.
The allegations in the underlying section 423 claim were dismissed at trial in 2023. The costs judgment deals solely with liability for the costs of the subsequent assessment proceedings. A consequential issues hearing is to be listed.
