16. Costs

Question 1

For what five reasons might the court depart from the general rule that the loser pays costs?

Answer 1

1. Failure to comply with pre-action protocol
2. Failure to negotiate, or engage in ADR
3. Rejection of a Part 36 offer (discussed in chapter 17)
4. Exaggeration, or
5. Failure to succeed on the whole of the claim

Question 2

What does the indemnity principle provide?

Answer 2

A party can not recover more from an opponent than they are liable to pay their own legal representative

Question 3

What are the two bases of costs assessment?

Answer 3

1. Standard basis
2. Indemnity basis

Question 4

What occurs under the standard basis of costs assessment?

Answer 4

Court allows only proportionate costs and exercises doubt in favour of the paying party

Question 5

What triggers costs assessment on an indemnity basis, and what occurs under this?

Answer 5

Paying party incurring unnecessary costs by their conduct, or the paying party’s conduct deserves some mark of disapproval.

The court does not consider proportionality, costs only have to be reasonable and doubt is resolved in favour of the receiving party.

Question 6

What four factors will the court take into account when assessing costs?

Answer 6

1. Value of the claim
2. Complexity and importance of the claim
3. Skill and effort involved
4. Time spent

Question 7

What are the two ways a party can file their costs budget, depending on the value of the case?

Answer 7

1. £50,000 and below: filed with Directions Questionnaire
2. Over £50,000: filed 21 days before Case Management Conference

Question 8

What is the effect of the court making a Costs Management Order, and what is the % leeway afforded?

Answer 8

It means that the cost budget should not be departed from, save for a 20% leeway

Question 9

What is the possible consequence of not filing a budget?

Answer 9

Costs may not be recoverable, beyond court fees

Question 10

What are inter-parties costs?

Answer 10

A term given to describe the other party’s costs when you are obligated to pay them, to be distinguished from a party’s own costs

Question 11

In lower value cases and interim applications, how soon before (1) a hearing, and (2) a trial must a statement of costs be filed?

Answer 11

1. 24 hours
2. Two days

Question 12

In lower value cases and interim applications, how soon after the hearing must costs be paid?

Answer 12

14 days

Question 13

What three types of costs are fixed on the small claims track, departing from the general rule that orders for payment of legal costs are generally not made on the small claims track?

Answer 13

1. Low value road traffic accidents
2. Small claims cases or money claims
3. Employer’s liability cases

Question 14

What is the starting point for a detailed assessment of costs, and within what time limit must the receiving party file this document?

Answer 14

The receiving party prepares a bill of costs and notice of commencement and serves within three months of judgment or order

Question 15

After being served with a bill of costs, what does a paying party file and within what time limit after being served must they do so?

Answer 15

The paying party files their points of dispute within 21 days.

Question 16

What does it mean for a District Judge to provisionally assess the bill?

Answer 16

District Judge will consider the reasonableness of the bill

Question 17

What is the upper limit for costs, above which a provisional assessment will not occur?

Answer 17

£75,000

Question 18

What is the receiving party’s option if they are not happy with the amount in the provisional assessment, and within what time limit must they apply for this option?

Answer 18

They can challenge the provisional assessment and apply for a detailed assessment hearing within 21 days

Question 19

What must the claimant file if the bill is more the 20% over the budget?

Answer 19

A statement of reasons

Question 20

Within what time limit of the final costs certificate should costs be paid?

Answer 20

14 days

Question 21

Who is the only party that can apply for a security of costs order, and what is the logic being precluding the other party?

Answer 21

Defendant, as they cannot stop the claimant bringing proceedings, but the claimant is free to continually assess whether the defendant is worth suing

Question 22

What are the five criteria, one of which is enough, which the defendant must satisfy to make an application for a security of costs order?

Answer 22

Claimant:

1. Resides outside jurisdiction
2. Has changed address since claim started with a view to evading consequences of litigation, or provided no/incorrect address on the claim form
3. Is suing for the benefit of a third-party
4. Is corporate entity and there is reason to believe they won’t be able to pay costs
5. Has taken steps regarding their assets that would make it difficult to enforce a costs order, e.g. moving them outside the jurisdiction

Question 23

In what situation is a non-party costs order available?

Answer 23

Where the non-party funds the proceedings and controls or benefits from them

Question 24

What is qualified one-way costs shifting in personal injury claims, and what are the three situations where it will not apply?

Answer 24

In an unsuccessful personal injury claim, the claimant does not pay the defendant’s costs unless:

1. Claim was fundamentally dishonest
2. Claim was made for the financial benefit of another, or
3. Claim was struck out for disclosing no cause of action, or abuse

Question 25

When is qualified one-way costs shifting not available?

Answer 25

Where a claimant refused a Part 36 offer to settle and fails to beat that amount at trial, the defendant can recover costs up to the level of damages awarded

Question 26

How must a solicitor conduct themselves in order to have a wasted costs order made against them?

Answer 26

Improperly, unreasonably, or negligently

Question 27

In addition to improper, unreasonable, or negligent conduct, what are the two criteria for a court to make a wasted costs order against a solicitor?

Answer 27

1. Conduct caused unnecessary cost, and
2. It is just to make the order

Question 28

Within what time limit of a wasted costs order being made must a solicitor inform their client?

Answer 28

7 days