Key Takeaways
- Professional negligence costs can leave claimants worse off even when they technically win, particularly where the recovery is only a small percentage of the claim.
- Rejecting a reasonable Part 36 offer and failing to achieve a better result at trial means you may end up paying the defendant’s legal costs from the expiry of the offer onwards, plus interest.
- Courts focus on who is the true “successful party” in substance and reality, not just who is awarded some damages.
- Winning part of a professional negligence claim but recovering little, or failing on the core claims, can result in a Pyrrhic victory with an adverse costs order that erases any compensation recovered.
- Failing to value your case realistically, or pursuing weak claims alongside good ones, exposes claimants to significant costs risk.
If you need pragmatic advice on professional negligence costs, book a free consultation with our team.
Winning the Case, Losing on Costs – The Pyrrhic Victory
Picture this: you sue your auditor, accountant, or solicitor for professional negligence. After a lengthy, expensive trial, the court finds in your favour and awards you damages. Have you truly won?
Not always. In a striking High Court decision handed down in July 2026, a company in liquidation was ordered to pay 85% of its former auditor’s legal costs up to the settlement offer deadline, and all costs thereafter, despite technically winning and securing a money judgment.
The twist? The company had claimed up to £8.4 million, but recovered just £101,965.95 plus interest (around £138,000) – less than 2% of its maximum claim. The judge concluded it was only a “Pyrrhic victory”.
The judgment in The Wine Enterprise Investment Scheme Limited (In Liquidation) v Crowe U.K. LLP [2026] EWHC 1662 (Ch) is a cautionary story for any business or individual bringing, or defending, professional negligence claims in England and Wales. The lesson: litigation risk and the costs consequences of rejecting a strong settlement offer can transform technical victory into financial defeat.
Background: A £3.175 Million Offer Rejected, Less Than £139,000 Recovered
The Claim
- Claimant: The Wine Enterprise Investment Scheme Limited, a wine investment scheme placed into liquidation following allegations of “Ponzi”-type fraud by its directors.
- Defendant: Crowe U.K. LLP, the company’s former auditor.
- Allegation: Professional negligence. Crowe was accused of failing to uncover fraud through negligent audits conducted over seven successive years.
- Structure: Seven distinct causes of action, one for each audit year.
- Claim Value: The company’s maximum claim was over £8.4 million, depending on the claim formulation.
The Settlement Offers
Before trial, in February 2025, Crowe made two offers to settle:
- Part 36 offer: £3.175 million plus costs.
- Calderbank offer: £3.78 million, inclusive of costs (outside the Part 36 framework).
The company rejected both offers and responded with counter-offers of £6 million plus costs (July 2024) and £7 million inclusive of costs (September 2025).
The Judgment
The matter proceeded to full trial. The judge found Crowe negligent in respect of just one of the audit years.
- Damages Awarded: £101,965.95 plus interest (about £36,482), totalling roughly £138,448.
- One out of seven claims succeeded.
- Recovery: About 1.6% of the maximum sum claimed.
- The company failed on numerous issues that occupied substantial court time and drove up costs.
The Court’s Decision on Costs: Who Was the True “Successful Party”?
The General Rule: Who Bears the Costs?
Under the Civil Procedure Rules, the losing party is generally ordered to pay the legal costs of the successful party. However, courts have discretion to make a different order depending on who has “won” in substance. This is more than a formality: it could mean the winner still pays substantial costs.
The Company’s Argument: “We Won Money – We’ve Succeeded”
The company insisted it was the successful party because it had received a damages award. They argued that in a claim for money, the key test is “who has to write the cheque at the end of the day?”, and that Crowe could have protected itself by making a strong Part 36 offer.
The company relied on the case of Fox v Foundation Piling Ltd [2011] 6 Costs LR 961, where a claimant who recovered a modest sum was awarded its costs for beating a Part 36 offer.
Crowe’s Argument: “Who Really Won?” – Substance and Reality
Crowe disagreed, citing Roache v News Group Newspapers Ltd [1998] EMLR 161 and a consistent line of cases. They argued that the focus must be on substance and reality – who came out ahead based on the result of the trial? In their view, it was clear they’d “won”:
- The company recovered only a tiny fraction of its claim.
- The claim would never have been issued for so little.
- Six out of seven audit years were lost, and numerous sub-issues failed, using up substantial court resources.
The Judge’s Analysis: Form Versus Substance
Judge Richard Spearman KC examined the competing authorities.
In Fox, it was “common ground” the claimant was successful. The Court of Appeal didn’t have to decide the point about substance. More recent cases, including Magical Marking Ltd v Ware & Kay LLP [2013] 4 Costs LR 535 and Brent London Borough Council v Davies [2018] EWHC 3129 (Ch), confirm that the true test is substance and reality: “Which party, as a matter of substance and reality, has won?”
In this case:
- The company brought seven claims and succeeded on only one.
- It was not disputed the company would not have started proceedings for just £139,000.
- The “plethora of issues” lost led to extensive court time and costs.
- The percentage recovery compared to the claim was minuscule.
- No important principle or legal precedent was established.
Judge’s Conclusion:
“The outcome may properly be described as a Pyrrhic victory… I have no doubt that the Company was not, in substance, the successful party.”
Costs Order: The company was ordered to pay 85% of Crowe’s costs up to the expiry of the Part 36 offer. The 15% reduction recognised Crowe was not successful on all points.
Part 36 Consequences: The “Formidable Obstacle” to Escaping Usual Costs Order
The Power of a Part 36 Offer
Courts treat Part 36 offers with weight. If a claimant fails to obtain a judgment better than the defendant’s Part 36 offer, the default is that the claimant pays the defendant’s legal costs from the expiry of the offer, with interest, unless it would be “unjust” to do so.
The Company’s Attempt to Show “Injustice”
Here, the company admitted it would have to pay Crowe’s costs after the expiry of the Part 36 offer but argued for a reduction. They pointed to Crowe’s conduct in raising and abandoning arguments late, and running points later withdrawn, causing the company unnecessary costs.
The company claimed Crowe’s approach was so unreasonable that it should reduce their costs recovery.
The High Hurdle: The Judge’s Decision
The judge rejected this argument. The court confirmed the “formidable obstacle” to escaping standard Part 36 consequences.
“It would erode the effectiveness of the Part 36 regime if courts were to engage in detailed consideration of whether the offeree had succeeded on part of its case or whether the offeror had lost on some issues before applying the usual costs consequences.”
Crowe’s conduct may not have been flawless, but nothing took it beyond the usual rough and tumble of hard-fought litigation. The judge made no reduction for “injustice”.
Final Costs Order: The company had to pay all of Crowe’s costs from 25 February 2025 onwards, plus interest, in line with the Part 36 regime.
A Technical Win Can Be a Costly Loss
The Wine Enterprise decision reinforces critical points for any party bringing or defending a professional negligence claim:
Substance Over Form: Roache and Its Legacy
The courts ask: “Which party, as a matter of substance and reality, has won?” It is not enough to receive a small damages award. The scale of your win must reflect the core of the issues and the magnitude of your claim.
Proportionality: Recovery Versus the Claim
When a claimant recovers only a small fraction of their claim (for example, 1% to 3%), the court will scrutinise whether proceeding was proportionate, and may treat the defendant as the winner for costs.
Considerations include:
- Would the claim have been brought if only the actual amount recovered was at stake?
- Is the true substance of the win in line with the original aims and costs of the litigation?
- Do the justice and commercial sense of the outcome justify shifting the costs burden?
Reported authorities taking this approach include Medway Primary Care Trust v Marcus [2011] 5 Costs LR 808 and Pepe’s Piri v Junaid [2019] 2 Costs LR 1881.
Multiple Claims: Partial Wins are Often Not Enough
Running multiple claims and only succeeding on one (out of many) puts you at risk of an adverse costs order. Courts look at overall success, not isolated victories.
Part 36 Offers: The Default is Strict Unless Unjust
Rejecting a strong Part 36 offer and failing to do better at trial will almost always mean paying the other side’s costs from the expiry of the offer, plus interest. The “unjust” exception is reserved for truly exceptional circumstances outside routine litigation behaviour.
Practical Lessons for Claimants and Defendants
For Claimants
1. Value Your Claim Honestly
Do not inflate claims. Honestly appraise the strongest and weakest aspects of your case. Weigh up the most likely, worst-case, and best-case outcomes. If the smallest plausible outcome would not justify litigation, reconsider.
2. Take Part 36 Offers Seriously
Do not dismiss meaningful Part 36 offers as merely “negotiation tactics”. The costs risk is real and difficult to unwind later. Seek specialist costs advice before rejecting a major offer.
3. Proportionate Strategy Wins
Costs are assessed with proportionality in mind. If the cost of litigation is wildly out of step with your likely recovery, the court may penalise excess or satellite claims with adverse costs orders.
4. Focus on Strong Claims
Bringing everything but the kitchen sink dilutes your strongest arguments and creates a heavy costs risk if only marginally successful.
5. Get Specialist Advice Early
Professional negligence claims often turn on difficult causation and quantum issues. Get an early and honest strengths and weaknesses assessment from a specialist solicitor.
For Defendants
1. Make Thoughtful Part 36 Offers Early
If you consider the claim inflated or speculative, a well-judged Part 36 offer provides valuable costs protection. It must be realistic; courts ignore token “ritual” offers.
2. Proportionate and Focused Defence Pays Off
Late or weak arguments can reduce your recoverable costs if you win or succeed on most points. Focus on core defence issues and abandon hopeless arguments early.
3. Avoid Over-Defending
Running every possible defence may prolong litigation and drive up costs, harming your chances of full costs recovery in the end. Concede what you must, and contest what matters.
What This Means for Professional Negligence Claims
The Wine Enterprise case highlights the realities of high-value professional negligence litigation:
- Causation and loss are complex and uncertain. Even after proving negligence, you must show what would have happened but for the breach.
- Claims often cover multiple years or categories, with elaborate calculations. The more causes of action you include, the higher your risk of heavy costs if few or only marginal claims succeed.
- Large professional defendants (e.g. auditors, lawyers, surveyors) usually make strong Part 36 offers, often supported by professional indemnity insurers. If you turn down a substantial offer and fail to beat it at trial, your own recovery can vanish as you end up paying the other side’s costs.
How Go Legal Can Help
Go Legal represents claimants and defendants in high-value professional negligence cases across England and Wales. Our cases include claims against:
- Solicitors: negligent advice, missed deadlines, conflict of interest, breach of undertaking.
- Accountants and auditors: negligent audits, tax, and valuation matters.
- Surveyors and valuers: negligent reporting or advice on property transactions.
- Financial advisers: mis-selling, unsuitable investments or pension advice.
- Insolvency practitioners: negligent conduct of liquidations or administrations.
- Tax advisers: errors in tax structure, HMRC penalty exposure.
Our Approach
- We combine senior litigation experience with:
- Fixed-fee, hourly, and no-win-no-fee arrangements (where suitable).
- Typically up to 50% more cost-effective than comparable City firms.
- Pre-action case assessment focusing on legal strengths, weaknesses, and realistic valuation.
- Comprehensive settlement and Part 36 offer advice – including rigorous analysis of settlement risk.
- Honest case management and tailored advocacy through all stages of litigation and mediation.
Our Service
- Strategic, practical advice before and during litigation.
- Clarity on the costs, risks, deadlines, and likely outcomes upfront, not just after a judgment.
- Early focus on pre-action protocol compliance, cost control, and mediation or settlement opportunities.
Book a free consultation with one of our senior solicitors to discuss your claim, defence, or settlement options. Our approach is realistic and proportionate, designed to avoid Pyrrhic outcomes.
Frequently Asked Questions
What are professional negligence costs?
Professional negligence costs are all the legal fees and disbursements incurred in bringing or defending a professional negligence claim. They include your own lawyers’ and experts’ costs, court fees, and sometimes paying the other side’s legal costs.
When will I have to pay the other side’s costs?
If you lose or only achieve minimal success in your professional negligence claim, you may be ordered to pay most or all of the defendant’s costs. Adverse costs orders are also common if you fail to beat a Part 36 offer or breach court rules.
What is a “Pyrrhic victory” in professional negligence litigation?
A Pyrrhic victory is winning your case at trial in name, but ending up with financial loss after paying a large share of the other side’s legal costs, leaving your damages effectively wiped out or exceeded by costs liabilities.
How do courts decide who is the “successful party” for costs?
Courts look at the true substance and reality of the outcome: who achieved meaningful objectives, what was genuinely in dispute, and whether the recovery justifies the litigation.
Does winning some claims but losing others affect costs?
Yes. If you succeed only on minor or incidental claims, or lose on most issues, the court may treat the other side as the real “winner” and allocate costs accordingly.
Can a strong Part 36 offer protect me from costs?
Yes. Making a serious, sensible Part 36 offer means that if the other side fails to do better at trial, you may recover your costs for the period after your offer expired.
Are there funding or insurance options for professional negligence claims?
Funding can include fixed or hourly fees, no-win-no-fee conditional fee agreements in certain cases, and after-the-event (ATE) insurance to protect against adverse costs risk.
How can I avoid a Pyrrhic victory?
- Value your claim honestly against the evidence and likely recovery.
- Take settlement offers, especially Part 36 offers, seriously.
- Focus your case on the strongest issues.
- Comply with all rules and protocols.
- Seek early advice from experienced professional negligence solicitors.
