Chapter 16: Costs

• Litigation


  An expensive process
• Loser pays the winner's costs


  The general rule in litigation
• Costs


  Fees incurred in the case, plus disbursements expenses incurred by the solicitor on behalf of their client
• Overriding objective


  To ensure parties are on an equal footing, to save expense, and to deal with claims in a proportionate manner
• Discretion of the court

  • Costs are always at the discretion of the court
  • The court may depart from the usual costs rules in certain situations
• Indemnity principle


  A party cannot recover more from an opponent than they are liable to pay their own legal representative
• Bases of costs assessment

  • Standard basis
  • Indemnity basis
• Standard basis


  The court allows only proportionate costs and exercises any doubt in favour of the paying party
• Indemnity basis


  The court does not consider proportionality, making it difficult for the paying party to object to costs
• Costs assessment examples


  • Example 1: Standard basis applied in a routine road traffic accident case
  • Example 2: Indemnity basis applied when the defendant failed to follow protocol
• Assessing costs


  • Parties should seek to agree the costs
  • If not possible, the court will have a hearing to determine the costs
  • The court will consider the value of the claim, complexity, importance, skill and effort involved, and time spent
• How costs are calculated

  Parties calculate the time spent by fee earners on various tasks, using different rates for different levels of fee earner
• Types of costs order

  • A stated amount for costs
  • Payment of costs up to a certain date or up to certain steps in the case
  • An order to pay only a proportion of the other party's costs
• Costs management and budgeting

  Aim is to limit costs by requiring parties to file and exchange costs budgets
• Costs and Case Management Conference

  The court considers the parties' costs budgets and may make a costs management order
• Costs management order


  Once made, the costs budget should not be departed from (with a small percentage leeway)
• No budget, no costs

  If no budget is filed, the risk is that no costs will be awarded, only the applicable court fees
• Inter-partes costs


  Costs awarded against another party in the claim, as opposed to a party's own costs
• Summary assessment


  In lower value cases and interim applications, the judge will make a summary assessment of the costs payable at the conclusion of the hearing
• Detailed assessment


  In larger value claims or cases of greater complexity, the court is likely to order a detailed assessment of costs
• Exceptions - no order for costs and fixed costs

  • No order for costs on the small claims track
  • Fixed recoverable costs in lower value road traffic accident claims
  • Fixed costs in small claims and money claims
  • Fixed trial costs in fast track claims
• Process for detailed assessment of costs

  1. Receiving party prepares a detailed bill of costs

  2. Paying party files points of dispute

  3. Provisional assessment by District Judge

  4. Final costs certificate issued
• Fluctuations from budget


  If the bill is over 20% more than the costs budget, the claimant must file a statement with reasons
• Security for costs


  A defendant may apply for an order requiring the claimant to pay money into court or provide a bond, if the defendant is concerned the claimant will not be able to pay the defendant's costs
• When security for costs is available

  • Claimant resident outside the jurisdiction
  • Claimant is a company or other body and there is reason to believe it will be unable to pay
  • Claimant has changed address to evade consequences
  • Claimant failed to provide or gave incorrect address
  • Claimant is a nominal claimant
  • Claimant has taken steps to make enforcement difficult
• Non-party costs orders


  The court can award costs against a non-party who funds and controls the proceedings for their own benefit
• Procedure for non-party costs orders

  1. The non-party must be added as a party to the proceedings for the purposes of costs only

  2. The non-party must be given the opportunity to attend a hearing
• Wasted costs orders


  The court can make an order against a solicitor whose conduct has been improper, unreasonable, or negligent, causing unnecessary cost
• Example of wasted costs order

  • Claimant's solicitors fail to amend defective Particulars of Claim, leading to trial adjournment, so defendant awarded wasted costs
• Wasted costs orders made at conclusion of hearing

  The solicitor must advise the client within seven days of the court making the order