Regulators Do Not Enjoy Baxendale-Walker Costs Protection on Appeals from the SDT: Normal CPR Costs-Shifting Applies
Introduction
Dentons UK And Middle East LLP v Solicitors Regulation Authority Ltd [2026] EWCA Civ 655 is a Court of Appeal (Civil Division)
costs judgment (Bean LJ, Jeremy Baker LJ, Zacaroli LJ) following the substantive appeal decision in [2026] EWCA Civ 508.
The appellant law firm (“the firm”) had succeeded on appeal against a decision of Lang J (Administrative Court), which itself arose from proceedings brought by the
Solicitors Regulation Authority Ltd (“the regulator”) before the Solicitors’ Disciplinary Tribunal (“SDT”).
The central issue was whether the regulator’s public/regulatory status should lead the Court of Appeal to make no costs order against it (or otherwise
depart from ordinary “costs follow the event” principles) in relation to the costs of (i) the appeal to Lang J and (ii) the second appeal to the Court of Appeal.
It was common ground that costs of the SDT proceedings themselves were reserved to the SDT.
Summary of the Judgment
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The Court ordered the regulator to pay 65% of the firm’s costs incurred in the High Court (Administrative Court appeal) and the Court of Appeal,
subject to detailed assessment if not agreed.
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The Court rejected the regulator’s argument that, as a regulator, it should not face an adverse costs order on appeal by analogy with the approach in SDT
proceedings under Baxendale-Walker v Law Society [2007] EWCA Civ 233; [2007] 3 All ER 330 (“Baxendale-Walker 1”).
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The Court held that Wingate v Solicitors Regulation Authority [2018] 1 W.L.R. 3969 is binding authority that the SDT “no presumption/anti-chilling”
approach does not carry over to appeals: on appeal the parties enter the ordinary CPR costs regime.
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On an interim payment, despite the firm’s claimed costs of about £793,679.60 (ex VAT) and a 65% entitlement of about £515,891.74,
the Court ordered only £200,000 on account within 21 days, reflecting likely reductions on assessment for reasonableness/proportionality.
Analysis
Precedents Cited
Baxendale-Walker 1 is the foundation for the proposition that in SDT proceedings there is no automatic “costs follow the event” presumption in favour of a
successful solicitor. The policy rationale, emphasised in the headnote passage adopted by the Court in this case, is the avoidance of a “chilling effect” on the
regulator’s performance of its public function: the SDT depends on properly brought complaints being advanced without fear that unsuccessful (but properly brought)
allegations will routinely attract adverse costs orders.
In [2026] EWCA Civ 655 the Court treated Baxendale-Walker 1 as specific to the first-instance regulatory/disciplinal setting:
the SDT is where the regulator must decide whether to bring the complaint in the first place and should not be discouraged from doing so where justified.
[2007] EWCA Civ 820 (“Baxendale-Walker 2”)
The regulator relied on Baxendale-Walker 2, a later costs decision in the same overall litigation, where (in the context of an appeal under
s.13 of the Solicitors Act 1974 concerning practising certificate conditions) Lord Phillips CJ stated that the Baxendale-Walker principle
applied equally to appellate proceedings, subject to possible appeal-specific factors.
The Court of Appeal in the present case characterised those comments as effectively obiter on the point now in issue, because Lord Phillips CJ
ultimately awarded costs to the regulator largely on the basis that the solicitor’s dishonesty had caused the costs to be incurred.
This Divisional Court authority applied the normal CPR approach to costs on an appeal from the SDT, but it did not engage with either
Baxendale-Walker decision. In the present case it served mainly as an example of appellate courts applying ordinary costs rules in SDT appeals.
Bass and Ward v SRA [2012] EWHC 2457 (Admin)
Bean J (as he then was) held that Baxendale-Walker 1 did not govern appellate costs. Baxendale-Walker 2 was not cited there.
The case supported the growing line of authority distinguishing the SDT stage from the appeal stage.
Wingate was decisive. The Court of Appeal in [2026] EWCA Civ 655 held that Wingate is binding authority that, once
the dispute is in the Administrative Court on appeal from the SDT, the parties are in a costs-shifting regime under CPR r 44.2, and
(absent special circumstances) the losing party will pay the winning party’s costs.
The regulator argued there was “tension” between Wingate and Lord Phillips CJ’s approach in Baxendale-Walker 2 and suggested Baxendale-Walker 2
was correct. The Court rejected this, holding that Wingate was not rendered per incuriam merely because Baxendale-Walker 2 was not cited,
and in any event Wingate’s analysis was correct: the Baxendale-Walker 1 rationale does not extend to appeals.
Excalibur Ventures LLC v Texas Keystone [2015] EWHC 566
This authority provided the approach to ordering a payment on account of costs: the court should make a fair estimate of likely recovery on assessment,
leaving a margin for error.
Legal Reasoning
(1) Why “regulator protection” stops at the SDT door
The Court accepted the core public interest rationale from Baxendale-Walker 1—avoiding a chilling effect on the regulator’s willingness to bring properly
justified complaints to the SDT. But it drew a sharp distinction between:
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Initiating and prosecuting disciplinary proceedings before the SDT, where the regulator’s unique public role and investigative discretion justify
a different approach to costs; and
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Appealing a decision (or resisting an appeal) in the Administrative Court/Court of Appeal, where the regulator has the benefit of a tribunal decision
and is no longer performing the same “gatekeeper” function of bringing matters forward for first-instance adjudication.
In the appeal context the regulator’s position is, in the Court’s words, “more akin to that of a normal litigant”. That analogy triggers the ordinary CPR approach:
the appellate court is not the SDT; it is a court applying the civil costs regime unless statute/rules provide otherwise.
(2) The binding force of Wingate and treatment of Baxendale-Walker 2
The Court resolved the alleged doctrinal “tension” by orthodox precedent reasoning:
- Wingate directly addressed whether the SDT costs approach should apply on appeal, and answered “no”.
- Baxendale-Walker 2 contained remarks supportive of extending the principle to appeals, but they were not treated as binding on a later Court of Appeal.
- Wingate was not per incuriam for not citing Baxendale-Walker 2, because (as treated here) it did not bind the Court of Appeal in any event.
(3) The 65% order: success, but remittal
Although the firm was “substantially the successful party” on the appeals, the Court had quashed the SDT decision and remitted the case for determination under a
different test (as set out in [2026] EWCA Civ 508). That mixed outcome justified a percentage order rather than full recovery.
The Court selected 65% as best balancing:
- the firm’s substantial success; and
- the fact that the matter was being remitted for re-determination (so the ultimate “winner” on the merits was not finally decided).
(4) Payment on account: reasonableness and proportionality, not “what was spent”
The firm’s claimed costs (~£793k) were about 4.5 times the regulator’s costs (~£180k combined). Applying Excalibur Ventures LLC v Texas Keystone [2015] EWHC 566,
the Court emphasised it was not conducting a full assessment, but estimating likely recovery with an error margin.
Importantly, the Court distinguished:
- whether it was reasonable for the firm to instruct expensive lawyers; from
- whether it was reasonable to impose those resulting costs on the opponent inter partes.
Given (i) the scale of the bills for a one-day High Court hearing and a Court of Appeal hearing of less than two days, and (ii) the extent to which arguments were repeated,
the Court anticipated a “substantial discount” on assessment. It therefore ordered only £200,000 on account, despite the higher 65% headline figure.
Impact
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Clear rule for SDT appeals: Regulators cannot generally avoid adverse costs orders on appeal by invoking their public interest function. Once in the
Administrative Court/Court of Appeal, the matter is governed by the normal CPR costs regime (CPR r 44.2), subject to case-specific “special circumstances”.
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Litigation strategy for regulators: The decision increases the costs risk for regulators when pursuing or defending appeals from the SDT,
encouraging careful selection of appeal points and proportional conduct.
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Practical costs discipline for appellants/respondents: Even a successful party may face significant reductions on detailed assessment where costs
appear disproportionate to the length/complexity of the hearings or are duplicative across appeal stages.
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Precedent hierarchy reaffirmed: The Court emphasised how binding authority operates and how per incuriam arguments will be approached,
particularly where the allegedly omitted authority is not binding or is obiter on the point in issue.
Complex Concepts Simplified
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“Costs follow the event”: The usual civil rule that the losing party pays the winning party’s legal costs, subject to the court’s discretion.
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“Costs-shifting regime” (CPR r 44.2): The Civil Procedure Rules framework where the default is loser pays, adjusted for partial success, conduct,
and proportionality.
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“Chilling effect”: The risk that fear of paying the other side’s costs discourages a regulator from bringing proper disciplinary cases that protect
the public.
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“Obiter”: A judicial statement not necessary to decide the case; it can be persuasive but is not binding in the same way as the ratio decidendi.
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“Per incuriam”: A narrow doctrine allowing departure from a previous decision if it was made in ignorance of binding law; not established merely because
some potentially relevant material was not cited.
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“Payment on account of costs”: An interim payment ordered before final assessment/agreement, based on a reasonable estimate of what will ultimately be recovered.
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“Detailed assessment”: A process where a court assesses what costs were reasonably and proportionately incurred and are recoverable from the other party.
Conclusion
[2026] EWCA Civ 655 consolidates the appellate costs position in professional discipline litigation: the special SDT-stage approach in
Baxendale-Walker v Law Society [2007] EWCA Civ 233; [2007] 3 All ER 330 does not extend to appeals. On appeal, regulators and solicitors stand on an
equal footing under CPR r 44.2, and adverse costs orders will ordinarily follow success, subject to discretion. The judgment also signals robust
scrutiny of proportionality at the interim-payment stage, particularly where claimed costs appear high relative to the scope and duration of appeal hearings.