23. Costs Flashcards
Who are costs officers?
- Costs judges (taxing masters)
- DJs
- An authorised court officer (could be from CC, family, district registry, high court, or costs office, so long as they have been authorised by the LC)
These are the people who can undertake a detailed assessment of costs
What is a detailed assessment of costs?
An assessment of costs by a costs officer in accordance with Part 47
What is a summary assessment of costs?
The procedure whereby the judge who heard the case/app makes the assessment.
What can constitute costs?
It includes fees, charges, disbursements, expenses, remuneration, reimbursement allowed to a litigant in person under rule 46.5 and any fee or reward charged by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track
Does part 44-47 apply to proceedings before an arbitrator/umpire?
Yes, such costs may be assessed
Does part 44-47 apply to proceedings before a tribunal/stat body?
Yes, such costs may be assessed
Does part 44-47 apply to costs payable to legal reps?
Yes, such costs may be assessed
Does part 44-47 apply to costs payable under terms of a contract?
Yes, such costs may be assessed
Does part 44-47 apply to costs where a conditional fee agreement applies?
Yes, such costs may be assessed
What discretion does the court have re costs?
- Whether costs are payable by one party to another
- The amount of those costs; and
- When they are to be paid
What is the general rule where the court decides to make an order about costs?
- That the unsuccessful party will be ordered to pay the costs of the successful party
(the court can make a different order)
Is the court limited to the general rule when assessing costs?
No. it can make a different order or none at all.
What proceedings does the general rule about costs not apply to?
Proceedings in the CoA on an application or appeal re proceedings in the family decision OR
Proceedings in the CoA from a judgment, direction, decision, or order given or made in probate or family proceedings
What will the court be considering when deciding whether to order costs?
All of the circumstances, including:
1. The conduct of all parties
- Whether a party has been successful, either wholly or partly
- Any admissible offer to settle, and which is not an offer to which cost consequences under Pt 36 apply
When assessing costs, what does ‘the conduct of the parties’ include?
- Conduct before, as well as during, the proceedings and compliance with any PAP
- Whether it was reasonable for a party to raise, pursue, or contest a particular allegation or issue
- The manner in which a party has pursued or defended its case or a particular allegation or issue
- Whether a successful claimant exaggerated its claim; and
- Whether a party failed to comply with an order with ADR, or unreasonably failed to engage in it.
What orders may a court make re costs?
An order a party must pay:
1. A proportion of another’s costs
2. A state amount in respect of another’s
3. Costs from or until a certain date only
4. Costs incurred pre-action
5. Costs relating to particular steps in the proceedings
6. Costs relating only to a distinct part of the proceedings; and
7. Interest on cost from or until a certain date, including a date before judgment
Where a court is considering making an order to give costs relating to only a distinct part of the proceedings, what will it consider first?
Whether it is practicable to instead order:
1. A proportion of another party’s costs
2. Costs from or until a certain date only
Where the court orders a party to pay costs subject to detailed assessment, what will it order?
- That party to pay a reasonable sum on account of costs, unless there is good reason not to do so
Where does the power to order costs come from?
Section 51 of the Senior Courts Act 1981
What does section 51 of the Senior Courts Act 1981 give the court in regard to costs?
Full power to determine costs.
Such costs include ‘the costs of’ and ‘the costs incidental’ to all proceedings (there is no definition of this), though this can be taken to include the fact that costs may be incurred pre-action.
Does part 44-47 apply to all costs awardable under s51 SCA 1981?
Yes
Can costs incurred prior to proceedings be awarded?
Yes
Do courts award costs for any costs incurred by a party in seeking litigation funding?
No
What guidance is given on whether costs are ‘incidental’ to proceedings?
They go beyond those ‘of’ the proceedings.
Disputes antecedent to the proceedings which bear no real relation to the subject of the litigation, could not be regarded as part of the costs of the proceedings.
However, those which are in some degree relevant, as ultimately constituted, and the other parties’ attitude made it reasonable to apprehend the litigation would include them, could be allowed.
What should courts do when ordering costs?
Give clear reasons, particular where such costs are disproportionate.
If they are not readily/surely discernible from the transcript of a judgment, counsel should seek from the judge a note of any reasons.
What is the indemnity principle of costs?
That costs are awarded as an indemnity to the party incurring, and a successful party can therefore NOT recover a sum in excess of their liability to the own solicitor.
Can the indemnity principle for costs be challenged?
Generally no, the court is hostile to it.
It will find the principle satisfied even if the liability of the beneficiary of the costs order to pay costs is close to notional (i.e. the solicitor will not ask for payment).
The relevant question for the court is whether the receiving party has become liable for the costs claimed. Who actually pays them is not relevant.
Can the court refuse to order costs? If they can, what happens to costs if they do so?
Yes. They will consider all the circumstances to consider whether to displace the general rule and make or not make a different order.
If no order is made as to costs, they lie where they fall, leaving the matter to be decided between the parties themselves.
What guidance is there on making a party pay a proportion of another’s costs?
The CoA has stressed that the court should be ready to make proportionate (or percentage) costs order which reflect not merely the overall outcome but also the loss on particular issues (i.e. if they have lost on 90% of their allegations, make it proportionate).
What should the court do re costs where a party successful overall has been unsuccessful on an issue which they raised, pursued, or contested?
Court should consider an issue-based approach AND they may decide:
1. The party should be deprived of his costs of that issue, or a proportion of those costs, or those costs from or until a certain date or
2. That they should pay the costs of the otherwise unsuccessful party on that issue, or a proportion, or from a certain date
There is not entirely clear guidance on this.
If a party is ordered to pay costs in accordance with the general rule, what must they pay?
The whole of the costs, subject to an assessment
What is the concern of the court when considering whether to stick with the general rule on costs?
To make the order which justice requires. Therefore, if the general rule’s order does this, it may be ordered.
Who does the benefit of the general rule on costs accrue to?
The successful party
What happens re the general rule on costs if there is no clear overall winner?
No presumption of the general rule’s applicability applies.
Is the failure to beat or beating of a part 36 offer relevant when considering who the overall winner is re the general rule on costs?
No. it is its own self-contained procedural code and has to be applied as such.
What is the usual costs order where there is a claim and a CC and both are successful?
The usual order is that they will be made to pay the costs of the claim in which they have succeeded. However, in most cases it will be desirable that the judge should consider whether a special order should be made as the usual order does not always give a just result.
Therefore, it may be more appropriate (esp in a set-off case) to make just an order for the overall winner.
It may also want to consider the rule in Medway Oil that the apry who is awarded the costs of the counterclaim will be allowed only those which are specifically referable to the counterclaim. All others will not be of the claim. Therefore, they may be at a particular disadvantage if similar issues arise in both claims.
The headnote, which has always been taken as accurate, states: (1) where a claim and counterclaim are both dismissed with costs, upon the taxation of the costs, the true rule is that the claim should be treated as if it stood alone and the counterclaim should bear only the amount by which the costs of the proceedings have been increased by it, (2) no costs not incurred by reason of the counterclaim can be costs of the counterclaim, (3) in the absence of special directions by the court there should be no apportionment, (4) the same principle applies where both the claim and the counterclaim have succeeded.
It is conceded that the principle “may work out apparently harshly in exceptional cases”; the remedy in such an event is for the aggrieved party “to apply at the trial for special directions as to issues and details” (above). Further, to avoid harshness, the costs judge should supervise the costs of claim and counterclaim closely and “split up” (i.e. divide) costs of items which are required by both (e.g. by splitting a single brief fee for both claim and counterclaim into two notional fees, one attributable to the claim and the other to the counterclaim)
What guidance is there on what the court should consider for costs in ‘all of the circumstances’?
Evidence relating to costs if already given at trial, or any other relevant evidence.
Generally no evidence will be needed if assessment made by the trial judge, though there may be without prejudice e.c.t. matters which will have not been raised.
How will the guidance is there on costs whether a party has been ‘successful on part of its case’?
They may pray in aid of this part, even where it has not been wholly successful, or by a D where they are saying it should not pay on the unsuccessful parts and that C should pay D’s costs on those parts. In these scenarios, this may result in a proportion of costs awarded or costs relating to only specific issues.
This part is only relevant where the general rules applies (so, for example, would not be relevant where proceedings are regarding children).
As a practical matter, the principal significance of r.44.2(4)(b) is that it provides a clear basis upon which the court may order an unsuccessful party to pay the costs of the successful party in accordance with the general rule, even though the latter party has not been wholly successful. Put the other way around, the general rule does not cease to apply simply because the successful party raises issues or make allegations on which it fails. But where the raising of issues or making allegations on which a successful party fails has caused a significant increase in the length or costs of the proceedings that party may be deprived of the whole or part of the costs, whether or not that party acted unreasonably or improperly in so doing
Do offers to settle have any bearings on part 44 cost consequences? Should we look at older authorities on this?
Yes, they do where they are NOT a part 36 offer.
Older authorities are not of much help as the rules have been substantially changed.
What relevance is the conduct of all the parties on part 44 costs?
Party conduct will have a dual relevance, first as to the exercise of the discretion and secondly as to the question of whether costs should be assessed on the indemnity basis.
The conduct mentioned in the provisions of the CPR is not exhaustive, though particular attention may be paid to them.
What relevance is an unreasonable refusal to agree ADR on part 44 costs?
- The court’s discretion includes power to deprive successful parties of some or all of its costs on the ground it has refused ADR
- The burden is on the unsuccessful party to show why, for reason of such conduct, there should be a departure from the general rule
- Such departure is not justified unless it is shown they acted unreasonably in refusing ADR
- In determining unreasonableness, they should consider all the factors of the case
- Such factors may include:
a. The nature of the dispute
b. The merits of the case
c. The extent to which other settlement methods have been attempted
d. Whether ADR costs would be disproportionately high
e. Whether any delay in setting up ADR would be prejudicial
f. Whether ADR had a reasonable prospect of success
Silence in the face of an offer, as a general rule, is unreasonable regardless of whether a refusal might have been justified.
This produces no automatic cost consequences, but is merely a factor in the balancing exercise
The proper response to silence for costs may range from disallowing all or only a modest party of the costs.
The court may go even further in principle, but this should be reserved for only the most serious and flagrant failures to engage in ADR.
A stated desire by a party to have his rights determined by a court of law in preference to mediation may not be said to be unreasonable, particularly when those rights are ultimately vindicated.
A decision about what the court should do for an unreasonable refusal is fact specific. Therefore, precedents will be of limited use.
Can the court order the disclosure of without prejudice negotiations for the purposes of seeing whether ADR was unreasonably refused for costs purpose?
No if they are covered by without prejudice for costs.
For the purposes of costs, is party conduct pre-proceedings relevant?
Potentially yes. Therefore, PAP work may be relevant.
There is no strict rule to the effect that PAP conduct is relevant only if causative of the bringing of the unsuccessful claim or of increased expense (although that would be of extreme relevance).
What can happen re costs where a claimant is successful against D1 but not D2?
May be a “Bullock” order, in which C pays D2’s costs BUT is recompensed for this by D1 (in addition to C’s own costs)
A court may also do a “Sanderson” order, in which D1 (unsuccessful defendant) pays D2s costs (successful defendant) directly to D2.
A “Bullock order” describes both situations
There is no general principle that describes what should be made. There is a discretion.
The point of this is that it avoids injustice to the claimant, in being made to pay costs when he has reasonably sued both defendants and did not know which is liable. It does have to be recognised, however, that this power may be of some injustice to the unsuccessful defendant.
Of course, if both defendants are successful then there is no question of a sanderson or bullock order.
The dominant consideration on whether an order of these types should be made is whether the original joinder of the successful defendant was a reasonable one. If unreasonable, C cannot seek to pass costs over to D1.
If it is reasonable, it does not entitle C to a Sanderson or Bullock order but is certainly a factor to consider.
Something else to consider is the relation between the claims, whether the claims were alternatives, or whether both defendants blamed each other.
It is also relevant if D1 has not done anything to cause D2 to be joined.
When must a party comply with an order for costs?
Within 14 days of :
1. The date of judgment or order stating the amount of costs
2. If decided later, the date of the certificate which states the amount or
3. Such other date as the court may specify
What is ‘misconduct’ for the purposes of part 44 costs?
- A party or their rep, in connection with a summary or detailed assessment, fails to comply with a rule, PD, or court order; or
- It appears to the court that the conduct of them before or during the proceedings or the assessment was unreasonable or improper.
What may the court do re costs where it finds there is misconduct?
The court may:
1. Disallow all or part of the costs which are being assessed; or
- Order the party at fault to pay costs which they have caused any other party to incur
What should occur where the court exercises its costs powers re misconduct with the party not there but their legal rep there?
The legal rep must notify that party in writing of the order no later than 7 days after the rep receives notice of the order.
When assessing costs under part 44, what should the court do where set off is applicable?
It may:
1. Set off the amount assessed against the amount the party is entitled to be paid and direct that party to pay any balance; or
- Delay the issue of a certificate for the costs to which the party is entitled until the party has paid the amount which that party is liable to pay.
What is qualified one-way costs shifting?
Where there is a claim for proceedings for damages:
1. For personal injuries
- Under the Fatal Accidents Act 1976; or
- Which arises out of death or personal injury and survives for the benefit of an estate by virtue of s1(1) of the Law Reform Act 1934
EXCEPT FOR APPLICATIONS FOR PRE-ACTION DISCLOSURE
(AND IS FOR ANY CLAIMANT, WHETHER CCing OR CLAIMING ON BEHALF OF AN ESTATE OR PART 20 ADDITIONAL)
The costs may be shifted, in that:
- Subject to the exceptions, order for costs made against a claimant may be enforced without the permission of the court BUT only to the extent that the aggregate amount of such orders does not exceed the aggregate amount the claimant has won/the defendant has agreed to pay.
- Orders made against a claimant may only be enforced after the proceedings have concludes and costs assessed/agreed
- Setoff applies
What are the exceptions to qualified one-way costs shifting?
- Cost orders can be enforced FULLY WITH NO PERMISSION Where the proceedings have been struck out on the grounds that:
a. The claimant has disclosed no reasonable grounds for bringing the proceedings
b. The proceedings are an abuse of process
c. The conduct of
i. The claimant or
ii. A person acting on the claimant’s behalf and with their knowledge of such conduct
Is likely to obstruct the just disposal of the proceedings
- Such cost orders can be enforced FULLY WITH PERMISSION where:
a. The claim is found on the balance of probabilities to be fundamentally dishonest (wording is may be enforced to the full extent w/ permission where…)
b. May be enforced UP to the full extent of the orders with the permission AND to the extent the court considers just WHERE:
i. The proceedings include a claim which is made for the financial benefit of a person other than a claimant or dependent (other than a claim in respect of gratuitous provision of care, earnings paid by employer, or medical expenses); or
ii. The claim is made for the benefit of the claimant other than a claim to which this section applies (applies in a case where, in the same proceedings, the claimant has brought a claim for damages for personal injuries and has also brought a claim or claims other than a claim for damages for personal injuries. If proceedings can fairly be described in the round as a personal injury case then, unless there are exceptional features (for example a grossly exaggerated car hire claim), it is likely that the court will exercise its discretion in such a way that qualified one-way costs shifting will continue to apply to the whole claim)
For 2(b)(i), the court may make an order for costs against a person other than the claimant for whose financial benefit the whole or part of the claim was made.
Where is a clam fundamentally dishonest for the purpose of qualified one-way costs shifting?
If the dishonesty goes to the root of either the whole claim or a substantial part of it.
A court may conclude a claim is fundamentally dishonest even if that has not been pleaded, provided the claimant has had fair notice of the challenge to his or her honesty and an opportunity to deal with it.
Failure to disclose evidence may lead to this. Equally, a lie to their medical expert can also mean the claim is fundamentally dishonest.
Where a party has filed a cost budget but there is no costs management order but there is a difference between that and the final costs in a detailed assessment, what should that party do?
If there is a difference of 20% or more between the costs in a detailed assessment and a budget, the receiving party must provide a statement of the reasons for the difference
Where there is a budget but no costs management order, what should the other party do if they wish to rely on the budget to in some way dispute the final costs?
Where they claim to have reasonably relied upon it, or wish to rely upon the budget to dispute the reasonableness or proportionality of the costs:
The paying party must serve a statement setting out the case in this regard in that party’s point of dispute.
What is the relevance of a budget when assessing costs?
To see whether the costs claimed are reasonable or proportionate
What may the court do re costs when there is a discrepancy of 20% or more between the filed budget and the final costs?
They may restrict the recoverable costs to such sum as is reasonable in light of the paying party reasonably relying upon the budget, even where that sum is less than the costs reasonably and proportionately incurred
They may also regard the difference as disproportionate or unreasonable if the explanation is not satisfactory.
When may a court make an order as to costs?
At any point of the proceedings
What are ‘costs in any event’?
The party who’s favour the order is made in is entitled to their costs of the relevant part of the proceedings the order relates to
What are costs in the case/costs in the application?
The costs of the proceedings/the application
What are Claimant’s/Defendant’s costs in case/application?
If the party in whose favour the costs order is made is awarded costs at the end of the proceedings, that party is entitled to that party’s costs of the part of the proceedings to which the order relates. If any other party is awarded costs at the end of the proceedings, the party in whose favour the final costs order is made is not liable to pay the costs of any other party in respect of the part of the proceedings to which the order relates.
What are ‘costs thrown away’?
Where, for example, a judgment or order is set aside, the party in whose favour the costs order is made is entitled to the costs which have been incurred as a consequence. This includes the costs of —preparing for and attending any hearing at which the judgment or order which has been set aside was made; preparing for and attending any hearing to set aside the judgment or order in question; preparing for and attending any hearing at which the court orders the proceedings or the part in question to be adjourned; any steps taken to enforce a judgment or order which has subsequently been set aside.
What are ‘Costs of and caused by’?
Where, for example, the court makes this order on an application to amend a statement of case, the party in whose favour the costs order is made is entitled to the costs of preparing for and attending the application and the costs of any consequential amendment to his own statement of case.
What are ‘costs here and below’?
The party in whose favour the costs order is made is entitled not only to that party’s costs in respect of the proceedings in which the court makes the order but also to that party’s costs of the proceedings in any lower court. In the case of an appeal from a Divisional Court the party is not entitled to any costs incurred in any court below the Divisional Court.
What may the court do re counsel when making an order for costs?
State that the case was not fit for the attendance of counsel.
Will do so only generally where:
1. The paying party asks it to do so
- More than one counsel appeared for a party
- The court wishes to record its opinion that the case was not fit for attendance of counsel
Where the court refers any matter to the conveyancing counsel of the court, how are costs for their fees assessed?
In accordance with rule 44.2
Can costs be shifted for ADR?
Yes, such as through:
1. As part of a settlement
2. Through the use of a part 36 offer
3. In an adjudicative ADR process, if that process is given the pwer to award costs by agreement
4. If a case is litigated, through general powers of the court to make reasonable use of it
5. If proceedings have been issued and the action is discontinued. Unless intended, if a case is settled after issue, it is important that the claimant should not agree to discontinue but take an alternative course like an indefinite stay.
Is there a general rule for costs in adr?
No, not least because there is generally no ‘loser’.
In any event, a lawyer is entitled to be paid for work done, even if the client settles a dispute personally without issuing proceedings.
