7. Aspects of Costs and Enforcement

Question 1

What can the court do if the losing party can’t pay the costs after winning a trial or settlement and what is this governed by?

Answer 1

The court can order a non-party to cover the costs, governed by Part 46

Question 2

What conditions must be met for a non-party to be ordered to pay costs?

Answer 2

The court must be satisfied that the non-party was the real party interested in the litigation or responsible for bringing the proceedings.

Question 3

Are external funders of proceedings like family or friends at risk of a non-party order?

Answer 3

No - an external funder with no interest in the outcome is not at risk

Question 4

Who may be at risk of non-party costs orders?

Answer 4

formal third-party funders

Question 5

What must happen with a third party before a non-party costs order can be made? And what may happen after?

Answer 5

• third party must be added as a party to the proceedings; and
• may attend the hearing when the court determines the issue of costs.

Question 6

Is there a requirement to make a finding that the non-party acted improperly before making an order?

Answer 6

no

Question 7

How does the claimant have some control over the time and expense involved in dealing with prospective and actual litigation are often considerable?

Answer 7

they make the decision whether to proceed or not

Question 8

How does a defendant has less control than a claimant?

Answer 8

litigation is imposed upon them

Question 9

In what situation with the defendant recover the full amount of costs?

Answer 9

Never.

Even if the claim is defeated and D obtain a costs order.

Question 10

What is the effect of the claimant being unable or unwilling to pay a costs order on the defendant?

Answer 10

D is left with two choices:
1. bearing their own costs; OR
2. investing further time and money in trying to enforce the order

Question 11

What are the conditions in Part 25 which the defendant can rely on for a security for costs order?

Answer 11

1. Claimant resident outside a 2005 Hague Convention State
2. Claimant is an impecunious company
3. Claimant has taken steps to make enforcement difficult

Question 12

What is the difference between individuals and companies for the following condition in Part 25: “Claimant resident outside a 2005 Hague Convention State” ?

Answer 12

Individuals: where they normally and habitually live

Companies: where their central control and management are located.

Question 13

What must a defendant establish to rely on the following condition in Part 25: “Claimant is an impecunious company”?

Answer 13

D must establish there is a reason to believe the claimant will be unable to pay the defendant’s costs if ordered to do so.

Question 14

What evidence is required when a defendant is trying to rely on the following condition in Part 25: “Claimant is an impecunious company”?

Answer 14

• company’s financial assets
• likely total costs of the litigation

Question 15

What must the defendant demonstrate for the following condition in Part 25 to be satisfied: “Claimant has taken steps to make enforcement difficult”?

Answer 15

that the claimant has taken steps in relation to their assets such that, if they lose the case and a costs order is made against them, the order will be difficult to enforce.

Question 16

What will the court consider when D is relying on the following condition: “Claimant has taken steps to make enforcement difficult”?

Answer 16

the effect of any actions by the claimant and not their motivations.

Question 17

What can establish the requirement for a freezing injunction for the following condition in Part 25: “Claimant has taken steps to make enforcement difficult”?

Answer 17

A failure to disclose assets may be sufficient.

Question 18

When making a security for costs order what factors does the court consider to be satisfied that it is jsut to make the order?

Answer 18

The strength of the claim and the defence

The claimant’s ability to provide security

The causes of the claimant’s impecuniosity

Property within the jurisdiction

The timing of the application

Question 19

How is the strength of the claim and the defence considered in terms of justness?

Answer 19

The less likely the defendant is to win at trial, the less justified they are in seeking security.

Question 20

How is the claimant’s ability to provide security considered in terms of justness?

Answer 20

where the claimant has a reasonable prospect of success, the courts will be reluctant to make an order for security with which they cannot comply as the effect will be to stifle the claim.

Question 21

How are the causes of the claimant’s impecuniosity considered in terms of justness?

Answer 21

the claimant may be able to persuade the court that their poor finances are caused by or contributed to by the defendant’s
behaviour.

Question 22

How is property within the jurisdiction considered in terms of justness?

Answer 22

where the application is made against a claimant resident
outside the EU, the court is unlikely to grant security if they have sufficient assets within the
jurisdiction that would be available to meet the defendant’s costs.

Question 23

How the timing of the application considered in terms of justness? (when should the security for costs order be applied for)

Answer 23

the order should be applied for as soon as practicable

Question 24

What is the first step in the procedure for non-party costs that the defendant should take?

Answer 24

write to the claimant first and ask for security to be provided voluntarily

Question 25

If the claimant refuses to voluntarily provide the defendant with security of costs, what should the defendant do?

Answer 25

submit a notice of application to the court with a witness statement in support

Question 26

When a defendant submits a notice of application with a statement for a security of costs order, what must the evidence establish?

Answer 26

that a condition exists

Question 27

What is the defendan’s aim of applying for a security for costs order?

Answer 27

persuade the court it is just to exercise its discretion in favour of the defendant and justify the amount sought.

Question 28

If a security for costs order is granted, what will it specify?

Answer 28

• the amount of the security
• the date by which the claimant must provide it
• the form it will take

Question 29

What is encouraged before the start of litigation?

Answer 29

Parties are encouraged to negotiate and settle the claim.

Question 30

Can the prospective claimant recover legal costs if a settlement is reached before proceedings are issued?

Answer 30

No, unless it’s agreed otherwise.

Question 31

How should settlements after litigation commence be recorded?

Answer 31

The terms should be recorded in a consent order or a Tomlin order to enable enforcement proceedings if needed.

Question 32

What are the formalities of a Part 36 offer for it to be valid?

Answer 32

offer must:
a) be in writing
b) make clear it is pursuant to Part 36
c) relevant period of 21 days or more, if offer accepted D will pay C’s costs; and
d) state relation to whole or part of claim and if accounting for any counterclaim.

Question 33

When is a Part 36 offer deemed to have been made?

Answer 33

when it is served on the other party

Question 34

Is a part 36 offer inclusive of interest?

Answer 34

Yes and until the relevant period expires.

Question 35

What costs order is a Part 36 offer treated as?

Answer 35

without prejudice save as to costs

Question 36

What is the consequence of a Part 36 offer being treated as ‘without prejudice save as to costs’?

Answer 36

trial judge will not be made aware of the offer until the case has been decided. both liability and quantum.

Question 37

In a Part 36 offer when will any relevant offer be produced to the judge?

Answer 37

only when the issue of costs fails to be dealt with

Question 38

When can a Part 36 offer be accepted?

Answer 38

At any time unless notice has been given of its withdrawal - and within the relevant period.

Question 39

What is the effect of the claimant accepting a defendants (or vice versa) part 36 offer within the relevant period?

Answer 39

C accepts D’s offer
the sum must be paid to the claimant within 14 days and, if not, the claimant can enter judgment.

*D accepts C’s offer within 21 days**
consequences are the same.

Question 40

What happens if parties cannot agree costs?

Answer 40

a judge will assess them on the standard basis.

Question 41

What costs is the claimant entitled to?

Answer 41

entitled to their costs of the proceedings up to the date on
which the notice of acceptance is served on the defendant.

Question 42

What will the court order if the claimant accepts a defendant’s Part 36 offer after the relevant period has expired?

Answer 42

Court will order that:
(a) the defendant pays the claimant’s costs up to the date on which the relevant period
expired; and
(b) the claimant pays the defendant’s costs thereafter until the date of acceptance.

Question 43

What will the court order if D accepts C’s Part 36 offer late?

Answer 43

the defendant will usually be
ordered to pay the claimant’s costs of the proceedings up to the date of acceptance.

Question 44

What will the court do in all scenarios if one party accepts a Part 36 offer?

Answer 44

proceedings will be stayed to allow for the sum offered and the costs to be paid.

Question 45

What is the effect of not accepting a Part 36 offer?

Answer 45

proceedings will continue - there may be consequences depending on who made the offer and whether it is beaten at trial.

Question 46

What is the justification for the harsh consequences of non-acceptance of an offer than is not beaten at trial?

Answer 46

that the party who made the error of judgment has caused their opponent additional costs and waster their time, as well as the Court, by not accepting an offer that they should have.

Question 47

What are penalties for non-acceptance imposed?

Answer 47

From the day after the relevant 21 day period (day 22)

Question 48

When will penalties apply for non-acceptance of part 36 offer that is not beaten?

Answer 48

will apply always unless the court rules that it would be unjust to do so.

Question 49

When is it just to make an order under Part 36 and if beaten, how much more does it need to be beaten by?

Answer 49

An order will be made in the vast majority of cases and it will be the exception not to do
so.

It is irrelevant by how small an amount the offer is beaten.

Question 50

When is it unjust to make an offer under part 36?

Answer 50

May be unjust where the offeror has not provided sufficient disclosure to allow the offeree to make an informed decision

OR

For example, the Part 36 offer expired only days
before the trial and crucial allegations that had not been pleaded were raised in the
opening of the case.

Question 51

Where the claimant makes a Part 36 offer, what are the three possible outcomes?

Answer 51

(a) win at trial and be awarded a sum that equals or beats their own offer;
(b) win the case but obtain a judgment that is less than their own offer; or
(c) lose at trial.

Question 52

What are the possible sanctions on a defendant who refused a part 36 offer they did not beat at trial?

Answer 52

1. Interest on costs up to 10% above base rate
2. Interest on whole or part of any sum of money (excluding interest) up to 10% and starting from when the relevant period expires.
3. An additional amount of 10% on first 500k and 5% on additional 75k

Question 53

What is the sanction on the defendant of paying an additional amount (percentage of damages)?

Answer 53

damages up to £500,000 = 10% additional amount of sum awarded

£500,000 < damages < £1m = 10% on first £500k and 5% up to a max of £75,000

Question 54

What is the sanction on the defendant of paying an interest on damages? (up to day 21)

Answer 54

• interest on the damages from the date of loss claimed in the POC
• costs on the standard basis from the date C incurred them

Question 55

What is the sanction on the defendant of paying an enhanced interest on damages? (from day 22 to judgment)

Answer 55

• interest on the damages at a maximum of 10% above base rate
• costs on an indemnity basis
• interest on the costs at a max of 10% above base rate

Question 56

What is the effect the claimant winning at trial but does not beat their own offer under part 36?

Answer 56

No extra penalty is imposed on either party

Part 36 has no effect

Question 57

What is the effect of the claimant losing at trial on an offer they made under Part 36?

Answer 57

C will not be awarded damages and will pay D’s costs on a standard basis

Part 36 has no effect

Question 58

Where the defendant makes a Part 36 offer, what are the three possible outcomes for the claimant?

Answer 58

The claimant:
(a) wins at trial and beats the defendant’s Part 36 offer;
(b) wins at trial but fails to beat the defendant’s Part 36 offer; and
(c) loses at trial

Question 59

What is the effect of the claimant winning at trial and beating the defendants Part 36 offer?

Answer 59

Defendant will be ordered to pay:
* the amount of the judgment plus interest as claimed in the particulars of claim; and
* the claimant’s costs on the standard basis.

Part 36 has NO EFFECT

Question 60

What is the effect of the claimant winning at trial but fails to beat the defendants Part 36 offer?

Answer 60

A split costs order may be made:
* up to the expiry of the relevant period (up to day 21) D will pay the claimant’s costs on the standard basis
* From the date of the expiry until the judgment (from day 22 onwards) C will pay D’s costs on the standard basis and will pay interest on those costs.

Question 61

What is the effect of the defendant making a Part 36 offer and the claimant losing at trial?

Answer 61

the court will order that D’s costs be paid on the standard basis with interest from day 22 until judgment - at 1% or 2%

Question 62

What does it means for costs to be assessed on an indemnity basis and how are doubts resolved?

Answer 62

Court will decide if the costs were:
* reasonably incurred
* reasonable in amount

no test of proportionality - any doubts are resolved in favour of receiving party

Question 63

What does it means for costs to be assessed on the standard basis and how are doubts resolved?

Answer 63

court will consider every item of costs claimed and decide:
* if the item was proportionately and reasonably incurred
* if the item was proportionate and reasonable in amount

any doubts are resolved in favour of paying party

Question 64

what is the difference between costs assess on the standard basis and the indemnity basis?

Answer 64

there is no test of proportionality for costs on an indemnity basis only reasonableness.

Question 65

When should the question of enforcement be considered and why?

Answer 65

When: before proceedings are issued
Why: to avoid wasting time and money on a debtor who cannot or will not pay.

Question 66

What can a creditor do if further details are required on a debtor’s finances?

Answer 66

the creditor can apply to the court for an order to obtain information

Question 67

What should a creditor consider when enforcing the judgment?

Answer 67

the most cost efficient way to do so

Question 68

What can a creditor do if the debtor has assets with some value?

Answer 68

The creditor can apply for an order to take control of those goods, considering that some may be exempt from seizure.

Question 69

What can be done over the judgment debtor’s interest in land or specified securities?

Answer 69

A charging order may be made.

Question 70

When can a third-party debt order be made?

Answer 70

It can be made against a bank or building society account in the sole name of the judgment debtor or a trade debt owed solely to the debtor.

Question 71

What enforcement method may be effective if the debtor is employed?

Answer 71

An attachment of earnings order.

Question 72

How does the procedure for enforcing an English judgment in a foreign country depend?

Answer 72

It depends on the location of enforcement. If arrangements are not in place, the law of the foreign State will apply.

Question 73

What are the four methods of enforcement ?

Answer 73

1. Taking control of goods
2. Charging order
3. Third party debt order
4. Attachment of earning order

Question 74

What is the ‘taking control of goods’?

Answer 74

seizure and sale of debtor’s goods

Question 75

what is a charging order?

Answer 75

a charge on the debtor’s land or securities

Question 76

What is a third party debt order?

Answer 76

An order requiring a third party who owes money to the debtor to pay it directly to the creditor

Question 77

What is an attachment of earning order?

Answer 77

An order requiring the debtor’s employer to make deductions from their earnings and pay them to the creditor

Question 78

Under ‘taking control of goods’ who carries out the enforcement in the High Court and in the County Court?

Answer 78

In the High Court, the task is carried out by a High Court Enforcement Officer (HCEO) and

In the County Court, by enforcement officers (often referred to as bailiffs).

Question 79

What are the powers of enforcement officers when taking control of goods under part 83?

Answer 79

• cannot force entry into a debtor’s home
• they can use reasonable force to enter business premises if they believe the debtor’s goods are inside

Question 80

When taking control of goods what may be seized?

Answer 80

usual contents of a home or business premises

Question 81

What is exempt from being seized under taking control of goods?

Answer 81

necessary items - required for the basic needs of the debtor and their family

Question 82

Who does the ‘necessary items exemption’ apply to?

Answer 82

individuals and not to a judgment debtor that is a partnership.

Question 83

Where will a judgment sum of less than £600 be enforced, by who, and what documents are required?

Answer 83

Country Court, by an enforcement officer (bailiff), and a warrant of control document is required.

Question 84

Where will a judgment sum of £600 or more but less than £5000 be enforced, by who, and what documents are required?

Answer 84

Either the County or the High Court.
If the High Court is chosen, the
judgment must be transferred from
the County to the High Court.

Enforced by the enforcement
agent applicable to the court

A Warrant or writ of control as appropriate to the court is required

Question 85

Where will a judgment sum of £5000 or more be enforced, by who, and what documents are required?

Answer 85

High Court (except for proceedings
under the Consumer Credit Act
1974)

Enforced by the High Court Enforcement Officer

A writ of control document is needed.

Question 86

What are the three staged to the procedure for charging orders?

Answer 86

Stage 1: interim charging order
Stage 2: final charging order
Stage 3: order for sale

Question 87

What is the purpose of making

Answer 87

incase a party has a judgment against another party to pay costs, it’s security to ensure that costs will be paid

Question 88

Who makes an application for security of costs?

Answer 88

the defendant to a claim or counterclaim

Question 89

What is the two part test for a non-party costs prder?

Answer 89

1. Must come under one or more of the conditions in Part 25
2. Must be just to make the order

Question 90

When are costs paid on the standard basis?

Answer 90

Up until day 21

Question 91

When are costs paid on the indemnity basis?

Answer 91

From day 22 until the judgment as a penalty.