Group litigation costs budgets don’t often make headlines, but the Pan Nox Emissions Group Litigation has become required reading for anyone managing costs on a large-scale claim. In Various Claimants v Mercedes-Benz Group AG & Ors [2026] EHC 267 (KB) – Claimants v Mercedes-Benz – the High Court’s King’s Bench Division imposed a 20% reduction on the claimants’ recoverable costs of preparing and attending a costs management hearing, after finding their budget submissions unrealistic.

The ruling against Mercedes Benz Group AG is one of several diesel emissions cases, alongside long-running litigation involving Volkswagen AG, testing how far courts will go to control costs on group actions of this scale.

The Pan Nox Emissions Group litigation

The claim is understood to be the largest collective action ever brought before the courts of England and Wales, bringing together 13 Group Litigation Orders against multiple manufacturers, including Mercedes-Benz, Ford, Peugeot/Citroen and Nissan/Renault, over the alleged use of defeat devices, and the court has not held three separate costs management hearings to keep the budgets under control.

Why the Court Reduced the Claimants’ Recoverable Costs by 20%

Following the second costs management hearing, the court turned to the costs of that hearing process itself. Despite earlier and significant criticism of the claimants’ approach, the budget submissions remained unrealistic and disproportionately high, making the hearing longer and more complex than it needed to be.

Rather than disallowing those costs entirely, the courts applied a targeted 20% deduction to reflect the additional time and cost caused by the unrealistic budgeting, while recognising some of the process was always going to be time-consuming given the litigation’s complexity. The court rejected the suggestion that a more severe sanction was warranted, taking the view that disallowing the costs of the budgeting process altogether would be disproportionate.

Costs in the Case, With a Twist

Ordinarily, the costs of a costs management hearing are treated as costs in the case, recoverable in full by whichever party ultimately succeeds. Here, the court departed from that approach: the defendants’ costs remain costs in the case in full, but the claimants’ recoverable costs are reduced by 20% even if they are ultimately successful; the usual order still applied, but on an asymmetric basis reflecting the parties’ conduct.

This shows just how far the court’s discretion over costs budgeting can reach – the general rule can be modified to fit specific conduct, rather than applied mechanically regardless of how the budgeting process was actually conducted.

What This Means for Group Litigation Costs Budgeting

For solicitors involved in group actions, the case reinforces a point worth remembering: courts scrutinise costs budgets in large-scale litigation closely, and unrealistic submissions carry a real financial consequence, not just a procedural inconvenience.

The same discipline covered in our guide to costs budgeting in group actions above the £10 million threshold applies equally to the costs of managing those budgets. It’s a similar theme to the one running through Seladore Legal’s recent fee dispute with Pogust Goodhead; however, a retainer or budget is structured, precision matters once costs come under scrutiny.

Quick FAQs

What is a Group Litigation Order?

A case management mechanism allowing multiple claims raising common issues to be managed together, as in the Pan NOx litigation.

Are costs of a costs management hearing usually recoverable?

Generally yes, as costs in the case, though this case shows the court will depart from that where budgeting conduct has been unreasonable.

How Greener Costs Can Help

Our team of costs lawyers and costs draftsmen advises solicitors on costs budgeting in complex and group litigation, including preparing realistic, defensible budgets ahead of costs management hearings.

Get in touch with the Greener Costs team today for a free, no-obligation discussion – call 01204 263047 or email info@greenercosts.co.uk.