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
4. Exaggeration, or
5. Failure to succeed on the whole of the claim

Question 2

What does the indemnity principle provide?

Answer 2

Only costs reasonably incurred and reasonable in amount are recoverable.
* if it unreasonable in amount, will reduce value.
* if it is unreasonable incurred, disallowed completely.

Any doubt is resolved in favour of receiving party.

Question 3

When is the court likely to make an adverse costs order?

Answer 3

where parties have unreasonably refused to partake in ADR.
* effect of requiring party to the proceedings to pay some or all of the other party’s costs, even if they succeed.

Question 4

What occurs under the standard basis of costs assessment?

Answer 4

Proportionate and reasonably incurred costs and doubt is exercised in favour of the paying party.

Question 5

What four factors are relevant when assessing proportionality in respect of costs?

Answer 5

(a) The sums in issue in the proceedings;
(b) The value of any non-monetary relief in issue in the proceedings;
(c) The complexity of the litigation;
(d) Any additional work generated by the conduct of the paying party; and
(e) Any wider factors involved in the proceedings, such as reputation or public importance.

Question 6

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

Answer 6

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

Question 7

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

Answer 7

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

Question 8

What is the possible consequence of not filing a budget?

Answer 8

Costs may not be recoverable, beyond court fees

Question 9

What are inter-partes costs?

Answer 9

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 10

How soon before (1) an interim hearing, and (2) fast-track trial must a statement of costs be filed?

Answer 10

1. 24 hours
2. Two days before

Question 11

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

Answer 11

14 days

Question 12

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

Answer 12

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

Question 13

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 13

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

Question 14

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

Answer 14

Where the non-party funds the proceedings and controls or stands to benefit from them

Question 15

What is the purpose of a costs management order?

Answer 15

Court sets a baseline metric for reasonable/proportionate costs for each stage of proceedings.

• In standard basis assessment, court will not depart from these set figures unless there is good reason to do so.
• Note - parties’ agreed costs cannot be changed by court.

Question 16

Can parties revise their initial costs budgets?

Answer 16

Only available if ‘significant developments’ have taken place NOT to correct mistakes/inadequacies.

Question 17

How are costs assessed on an standard basis?

Answer 17

Costs payable where:
- Proportionately and reasonably incurred and in amount
- Any doubt is resolved in favour of the paying party.

Question 18

What additional factors will the court consider when assessing costs?

Answer 18

• Parties’ conduct, including willingness to engage in ADR.
• Amount/value at stake
• Cases’ importance for parties + its complexity.
• Skill, effort, specialised knowledge, and responsibility required.
• Time spent on case
• Place/circumstances in which work was conducted (ie. type of law firm)
• Receiving party’s last approved or agreed upon costs budget.
• Difference between listed amount in budget and claimed amount now.

Question 19

How are costs generally assessed in the fast and intermediate tracks?

Answer 19

Fixed costs

Question 20

How are costs generally assessed in the multi-track?

Answer 20

Detailed assessment

Question 21

What is the procedure for a detailed costs assessment?

Answer 21

1) Provisional assessment on paper

• Party in whose favour the order was made serves notice of commencement and copy of its bill of costs to paying paty within 3 months of date of judgment/order.
• Paying party must raise disputed points within 21 days of receipt of notice.

2) Court considers points of objection
- If no agreement is reached, the receiving party must reply within 21 days from paying party’s response AND request assessment hearing within 3 months from judgement/order date.

Oral hearing wil be held where bill exceeds £75,000

Question 22

What pre-action costs recoverable where the matter becomes litigated?

Answer 22

Any costs incurred prior to the start of proceedings, provided those costs are of and incidental to the proceedings and are reasonable and proportionate.

The work for which the party seeks to recover the cost must have been:
* (a) of use and service in the claim or defence;
* (b) relevant to the matters in issue; and
* (c) attributable to the other party’s’ conduct.

oes not include consideration of options for funding the claim

Question 23

Does a litigant in person have to file a costs budget in a multi-track claim?

Answer 23

No, only parties in claims that are not litigants in person will need to file and exchange budgets.

Question 24

What is one key point to remember about when costs orders are made?

Answer 24

consequential upon an event, so require judge to come to some determination (ie. order strike out) for a cost order to follow.

Question 25

What is the effect of an order of costs in any event at the end of an interim hearing?

Answer 25

Party in whose favour the order is made, will recover their legal costs of the interim hearing irrespective of whether they lose at the final hearing.

Question 26

What is the effect of an order of costs in the case at the end of an interim hearing?

Answer 26

Loser at the at the final hearing pays

Question 27

What is the effect of an order of costs reserved at the end of an interim hearing?

Answer 27

Decision on who should pay the costs is deferred to a later date and if not dealt with then “costs in the case” applies.

Question 28

What is meant by ‘costs thrown away’ an interim hearing?

Answer 28

another version of costs in the application, but reflects the fact that one side has caused unnecessary costs to be incurred and should therefore pay them.

Question 29

What is meant by costs in the application following an interim hearing?

Answer 29

Whichever side obtains a costs order in the application will also recover the costs of the interim hearing from the other side (this usually applies where the initial hearing is adjourned to a later date).

Question 30

What is the effect of a ‘wasted costs’ order?

Answer 30

cost order made against directly against a solicitor or barrister for their negligence, failing to comply with their duties to the court, protocol, putting forward unmeritious arguments, etc.

Question 31

What is effect of a ‘No Order as to costs’?

Answer 31

If the judge makes this order or is silent on costs then neither party is entitled to recover their costs from the other.

Question 32

What are the consequences of the receiving party failing to file their bill of costs within the three month period?

Answer 32

Court has discretion to disallow all or part of the statutory interest otherwise payable.

Question 33

Which types of multi-track claims do not need to file a costs budget?

Answer 33

• minor
• life expectancy of less than 5 years
• value of claim exceeds £10 million

Question 34

What four factors are taken into account in deciding the amount of costs?

Answer 34

All the circumstances of the case including
* conduct of the parties
* complexity of the matter;
* the place where and circumstances in which the work was done
* the receiving party’s last approved or agreed budget.