Costs

Question 1

what is the general rule regarding costs?

Answer 1

the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party

however, th court may make a different order

Question 2

regarding costs, what discretion does the court have?

Answer 2

(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.

Question 3

what types of proceedings does the general rule for costs not apply to?

Answer 3

(a) proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or
(b) proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings.

Question 4

what factors will the court consider when deciding what costs order to make?

Answer 4

(a) the conduct of all the parties;
(b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
(c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

Question 5

what does it mean by the conduct of the parties in terms of design a costs order?

Answer 5

(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction—Pre-Action Conduct or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.

Question 6

The orders which the court may make in terms of costs, can be an order that a party must pay—

Answer 6

(a) a proportion of another party’s costs;
(b) a stated amount in respect of another party’s costs;
(c) costs from or until a certain date only;
(d) costs incurred before proceedings have begun;
(e) costs relating to particular steps taken in the proceedings;
(f) costs relating only to a distinct part of the proceedings; and
(g) interest on costs from or until a certain date, including a date before judgment.

Question 7

before the court considers making a costs order for costs relating only to a distinct part of the proceedings, the court will consider ordering the party to pay what?

Answer 7

• a proportion of another party’s costs
• costs from or until a certain date only

Question 8

Where the court orders a party to pay costs subject to detailed assessment, the court will order that…

Answer 8

…party to pay a reasonable sum on account of costs, unless there is good reason not to do so.

Question 9

what is the time for a party to comply with an order for costs?

Answer 9

A party must comply with an order for the payment of costs within 14 days of—

(a) the date of the judgment or order if it states the amount of those costs;
(b) if the amount of those costs (or part of them) is decided later, the date of the certificate which states the amount; or
(c) in either case, such other date as the court may specify.

Question 10

for costs orders, where a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order, the court may —

Answer 10

(a) disallow all or part of the costs which are being assessed; or
(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.

Question 11

for costs orders, where it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper, the court may —

Answer 11

(a) the court makes an order against a legally represented party; and
(b) the party is not present when the order is made,
the party’s legal representative must notify that party in writing of the order no later than 7 days after the legal representative receives notice of the order.

Question 12

what is QOCS?

Answer 12

Qualified One-Way Costs Shifting

Question 13

what types of proceedings can QOCS be applied?

Answer 13

(a) for personal injuries;
(b) under the Fatal Accidents Act 1976; or
(c) which arises out of death or personal injury and survives for the benefit of an estate by virtue of section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934,

Question 14

what is QOCS?

Answer 14

Subject to the exceptions, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.

Question 15

Orders for costs made against a claimant may only be enforced…

Answer 15

…after the proceedings have been concluded and the costs have been assessed or agreed.

Question 16

QOCS will not be applied and a costs order may be enforced against the claimant to the full extent, without the courts permission, where —

Answer 16

(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;
(b) the proceedings are an abuse of the court’s process; or
(c) the conduct of the claimant or a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct,

one of which is likely to obstruct the just disposal of the proceedings.

Question 17

QOCS will not be applied and costs orders can be enforced against the claimant to the full extent, subject to the courts permission, where —

Answer 17

the claim is found on the balance of probabilities to be fundamentally dishonest

Question 18

for QOCS, if the claimant has brought. claim for damages for personal injury alongside a claim for non-personal injury…

Answer 18

QOCS still apply

Question 19

the meaning of “fundamentally dishonest”. Commentary 44.16.2

Answer 19

• A claim is fundamentally dishonest if the dishonesty goes to the root of either the whole of the claim or a substantial part of it; “a claim which depended as to a substantial or important part of itself upon dishonesty”
• Where a claimant was found to have failed to disclose evidence as to his ability to pay car hire charges, which formed a substantial part of his claim following a road traffic accident, the claim was fundamentally dishonest and the claimant was not entitled to costs protection
• Where a claimant had lied to his medical expert and to the court about the extent of his injuries, the claim was fundamentally dishonest because the extent of the injuries was not merely incidental or collateral but formed the very basis of the claim

Question 20

If there is a difference of 20% or more between the costs claimed by a receiving party on detailed assessment and the costs shown in a budget filed by that party…

Answer 20

…the receiving party must provide a statement of the reasons for the difference with the bill of costs.

Question 21

If a paying party—
(a)claims to have reasonably relied on a budget filed by a receiving party; or
(b)wishes to rely upon the costs shown in the budget in order to dispute the reasonableness or proportionality of the costs claimed

Answer 21

the paying party must serve a statement setting out the case in this regard in that party’s points of dispute.

Question 22

costs assessment and costs budgets

Answer 22

On an assessment of the costs of a party, the court will have regard to the last approved or agreed budget, and may have regard to any other budget previously filed by that party, or by any other party in the same proceedings. Such other budgets may be taken into account when assessing the reasonableness and proportionality of any costs claimed.

Question 23

what is costs in any event?

Answer 23

the party whose favour this order is made is awarded its costs of the interim hearing from the other party regardless of who eventually wins at trial

Question 24

costs in the case

Answer 24

the part who eventually gets its costs at trial (usually the winner) will recover its costs of the interim hearing from the other party, i.e. usually the party that wins at trial will recover the costs of its application

Question 25

costs reserved

Answer 25

the decision about who pays the costs of the interim hearing is put off to a later occasion. if no decision is made later then the costs will be in the case

Question 26

claimants costs in the case

Answer 26

in the case of claimants costs in the case, if the claimant is successful and receives an order that it should one entitled to its costs at the end of the trial, it can include the costs of the interim application. if the defendant is awarded costs at trial, the claimant does not have to pay the defendants costs of the interim application.

Question 27

defendants costs in the case

Answer 27

in the case of defendants costs in the case, if the defendant is successful and receives an order that it should one entitled to its costs at the end of the trial, it can include the costs of the interim application. if the claimant is awarded costs at trial, the defendant does not have to pay the claimant’s costs of the interim application.

Question 28

costs thrown away

Answer 28

if a judgment or order is set aside, the party whose favour this costs order is made is entitled to costs incurred as a result of the judgment or order being set aside. this potentially includes the hearing (including preparation and attendance) at which the original order is made, as well as the hearing at which the order is set aside. the rationale is that the judgment or order should never have been so the party at fault should be punished by having to pay the costs of it being made and set aside.

Question 29

costs of and caused by

Answer 29

a party must pay the costs resulting from something that party has done; for example costs incurred by the defendant resulting from a claimant amending its particulars of claim.

Question 30

Costs here and below

Answer 30

the party 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 that party’s costs of the proceedings in the lower court.In the case of an appeal from Divisional Court the party is not entitled to any costs incurred in any court below the Divisional Court.

Question 31

no order for costs (or if no order is made)

Answer 31

each party will bear its own costs of this hearing.

Question 32

what qualifies costs to be recoverable? Commentary 44.2.3

Answer 32

• costs are deemed recoverable when the court determines they were “of” or “incidental” to the proceedings.
• the costs “incidental to” proceedings go beyond those “of” the proceedings. In summary, his lordship stated that 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, but disputes which are in some degree relevant to the proceedings, as ultimately constituted and the other parties’ attitude made it reasonable to apprehend that the litigation would include them, could be allowed.

Question 33

judges reasons for costs. Commentary 44.2.4

Answer 33

• when making an order for costs, judges should clearly state their reasons, particularly where the costs incurred are disproportionate to the amount in issue
• The reasons for a judge’s costs order made at the end of a trial may be largely discernible from the transcript of the judgment, but where counsel are not sure they should seek from the judge a note of the reasons for the order

Question 34

Costs. Indemnity principle. Commentary 44.2.5

Answer 34

• Costs between parties are awarded as an indemnity to the party incurring them and a successful party cannot therefore recover a sum in excess of their liability to their own solicitor
• the message to be drawn from these cases is that the court is hostile to indemnity principle challenges, and will find the principle satisfied even if the liability of the beneficiary of the costs order to pay costs is close to notional

Question 35

costs orders - order displacing the general rule - “a different order”. Commentary 44.2.6

Answer 35

• In the exercise of its discretion as to costs the court may make an order about costs or not make such an order. In the latter event, the costs incurred by the parties lie where they fall, leaving the matter of costs wholly for the parties to agree amongst themselves. In deciding whether to make an order about costs the court will have regard to all the circumstances.
• There are certain costs orders which the court will commonly make in proceedings before trial, for example, “costs in any event”;

Question 36

costs orders - orders which the court may make. Commentary 44.2.7

Answer 36

• As was intended, this greater level of detail invites courts to adopt a more flexible approach, in particular for the purpose of making orders for costs which more accurately reflect the level of success achieved by the receiving party.

Question 37

Cost orders - Party must pay “a proportion of another party’s costs”. Commentary 44.2.8

Answer 37

In numerous cases the Court of Appeal has stressed that the courts should be ready to make proportionate (or percentage) costs orders which reflect, not merely the overall outcome of the proceedings, but also the loss on particular issues.

Question 38

Cost orders - “issue based” orders. Commentary 44.2.10

Answer 38

• Rule 44.2(4)(b) provides that, among the circumstances which the court should take into account, in deciding what order (if any) to make about costs, is whether a party has succeeded on part of its case, even if that party has not been wholly successful.
• As the authorities referred to below indicate, in summary, the position is that, where a party successful overall has been unsuccessful on an issue (or issues), being an issue which that party raised, pursued or contested, a court (1) should consider adopting an issue-based approach, and (2) in deciding what order to make in relation to that issue (or issues) may decide (a) that 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 even (b) that that party should pay the costs of the otherwise unsuccessful party on that issue, or a proportion of those costs, or those costs from or until a certain date.

Question 39

payment on account of costs. Commentary 44.2.12

Answer 39

• The rule provides that where the court orders a party to pay costs subject to detailed assessment, “it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so”. The object of the rule is to enable a receiving party to recover part of his expenditure on costs before the possibly protracted process of carrying out a detailed assessment
• This may be important, particularly (but not only) in cases where the paying party has limited resources and the receiving party would otherwise be forced to engage in detailed assessment proceedings before receiving any money at all
• It may also avoid an application for an interim costs certificate under r.47.16 (which may only be made after the receiving party has filed a request for a detailed assessment hearing).

Question 40

Costs - The General rule - successful and Unsuccessful party. Commentary 44.2.13

Answer 40

• If, following the general rule, an unsuccessful party is ordered to pay the costs of the successful party, as opposed to part of those costs, the unsuccessful party must pay the whole of the costs, subject to assessment.
• The overall concern of the court must be to make the order which justice requires; an order in favour of the successful party is generally to be adopted as calculated to achieve this end.
• Cases have arisen in which the judge has concluded that there is no clear successful party (or “winner”) and therefore no presumption that the general rule applies.

Question 41

costs - where there is success both ways (claims and counterclaims and costs of issues). Commentary 44.2.14

Answer 41

• A counterclaim may be by way of a defence to the claim, raising the same issues as the claim, or it may be a cross-action, raising unrelated issues. In most cases therefore an order giving the overall winner a proportion of its costs may be preferable to orders for costs going in opposite directions.
• the party who is awarded the costs of the counterclaim will, on assessment, be allowed only those costs which are specifically referable to the counterclaim. All of the other costs will be costs of the claim and will not be apportioned between claim and counterclaim.
• 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.

Question 42

costs - “all the circumstances” - generally. Commentary 44.2.17

Answer 42

If the trial has been contested, generally the judge, by the process of having heard evidence and reached conclusions on factual issues arising (either agreed by the parties or determined by the judge), will be well-placed without the need for evidence to evaluate any conflicting submissions made by the parties as to circumstances relevant to “deciding what order (if any) to make about costs”, though of course frequently there will be matters relevant to such submissions (in addition to offers to settle and without prejudice communications between the parties) which will not have been ventilated at trial or during the judge’s pre-trial management of the case and which may be matters in dispute. (Whether the judge would be similarly well-placed to summarily assess the amount of costs is a different matter.)

Question 43

costs. Whether party “has succeeded on the part of its case”. Commentary 44.2.18

Answer 43

• Among the circumstances to which the court will have regard, in deciding what order (if any) to make about costs, is whether a party has succeeded on part of its case, even if that party has not been wholly successful
• 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
• it may be called in aid by an unsuccessful party (D) submitting (1) that it should not be required to pay the costs incurred by the successful party (C) on those parts of its case on which it (C) failed, and/or (2) that C should pay D’s costs on those parts

Question 44

Costs. Conduct of all the parties. Commentary 44.2.20.

Answer 44

• That the exercise of the court’s discretion as to costs should take into account all the circumstances including the conduct of all the parties is obvious enough and it might be thought that it would be sufficient if the rule stopped there.
• “to support the conduct of litigation in a proportionate manner and to discourage excesses”,for example, by using the discretion to render more effective the (then innovative) pre-action conduct Practice Direction and pre-action protocols, and the particular recommendation that courts should pay greater regard to the manner in which “the successful party has conducted the proceedings”

Question 45

Costs. admissible offer to settle. Commentary 44.2.19

Answer 45

• “all the circumstances” includes “any admissible offer to settle” made by a party which is drawn to the court’s attention and which “is not an offer to which costs consequences under Part 36 applies”.
• Generally, parties who negotiate on a wholly “without prejudice” basis do so in the faith and expectation that what they say cannot be used against them, even on the question of costs; thus offers to settle made entirely without prejudice are not admissible for the purposes of costs unless the parties agree
• The term “Calderbank offer” is used to describe an offer made without prejudice save as to costs, and is commonly applied to any offer outside Part 36

Question 46

Costs. Party’s silence in the offer to ADR. what will the court consider?

Answer 46

(1) silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds,
(2) a finding of unreasonable conduct constituted by a refusal to accept an invitation to participate in ADR or a refusal even to engage in discussion about ADR, produces no automatic results in terms of a costs penalty, but is simply an aspect of the parties’ conduct which needs to be addressed in a wider balancing exercise,
(3) the proper response in any particular case may range between the disallowing of the whole, or only a modest part of, the otherwise successful party’s costs,
(4) in principle, the court might go further and order the otherwise successful party to pay all or part of the unsuccessful party’s costs, but that Draconian sanction should be reserved for only the most serious and flagrant failures to engage with ADR.

Question 47

Costs. Party’s conduct before proceedings. Commentary 44.2.25

Answer 47

• conduct of the parties includes conduct “before, as well as during, the proceedings”, and refers specifically to the extent to which parties followed Practice Direction (Pre-Action Conduct and Protocols) or any relevant pre-action protocol.
• Generally it will be the case that the requirements imposed on parties by the Practice Direction and any relevant pre-action protocol will have exhausted themselves before proceedings are commenced, but that will not always be the position.
• So the extent to which parties complied with those requirements not only before but also during the proceedings may be relevant.
• There is no strict rule to the effect that pre-action conduct is relevant to costs only if causative of the bringing of an unsuccessful claim, or of increased expense in the subsequent litigation, although that would plainly be of primary relevance in the court’s decision to what extent to penalise a party for inappropriate pre-action conduct when making or refusing an order for costs

Question 48

what is a Sanderson Order?

Answer 48

An order that D1 (the unsuccessful defendant) should pay the costs of D2 (the successful defendant) directly to D2

Question 49

what is a bullock order?

Answer 49

Where in the same proceedings a claimant (C) sues two defendants (D1 and D2) and succeeds against one only (say D1) there are two successful parties (C and D2) and two unsuccessful parties (C and D1); C is both a receiving party and a paying party. A strict application of the general rule as to costs would require that C should pay D2’s costs and that D1 should pay C’s costs. But the court’s discretion “as to whether costs are payable by one party to another” is wide enough to enable it to order that the costs payable by C to D2 should be recoverable by C from D1 as part of C’s costs in the proceedings. So C pays to D2 and recovers from D1.

Question 50

normal rule for costs of ADR

Answer 50

each party will bare their own unless they have arranged otherwise.

Question 51

what are the ways costs may be shifted in ADR?

Answer 51

• settlement is reached through negotiation and mediation and parties have agreed costs there.
• in adjudicative processes, the third party can order costs

Question 52

general discretion to award indemnity costs - principles. Commentary 44.3.8

Answer 52

• the making of a costs order on the indemnity basis would be appropriate in circumstances where: (1) the conduct of the parties or (2) other particular circumstances of the case (or both) was such as to take the situation “out of the norm” in a way which justifies an order for indemnity costs
• (1) in the context of previous decisions where the argument mounted was that under the CPR indemnity costs should only be ordered where there was some sort of lack of probity or conduct deserving of moral condemnation on the part of the paying party, (2) that the word “norm” was not intended to reflect whether what occurred was something that happened often, so that in one sense it might be seen as “normal”, but was intended to reflect “something outside the ordinary and reasonable conduct of proceedings”, (3) that to bring a dishonest claim and to support a claim by dishonesty cannot be said to be the ordinary and reasonable conduct of proceedings”
• But it was also recognised that in cases falling short of such behaviour an order may be appropriate; for example, conduct which could properly be categorised as unreasonable “to such a high degree that it could be categorised as exceptional”

Question 53

what are the factors to be taken into consideration when deciding the amount of the costs?

Answer 53

(a) the conduct of all the parties, including in particular conduct before, as well as during, the proceedings and the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case;
(g) the place where and the circumstances in which work or any part of it was done; and
(h) the receiving party’s last approved or agreed budget.

Question 54

when deciding the amount of costs on a standard basis, the guidance the court has to consider is that the costs are —

Answer 54

• proportionately and reasonably incurred;
  or
• proportionate and reasonable in amount,

Question 55

when deciding the amount of costs on a indemnity basis, the guidance the court has to consider is that the costs are —

Answer 55

• unreasonably incurred;
  or
• unreasonable in amount.

Question 56

If costs are awarded on the standard basis, the court assessing costs will disallow any costs—

Answer 56

(a)which it finds to have been unreasonably incurred;
(b)which it considers to be unreasonable in amount;
(c)which it considers to have been disproportionately incurred or to be disproportionate in amount; or
(d)about which it has doubts as to whether they were reasonably or proportionately incurred, or whether they are reasonable and proportionate in amount.

Question 57

the types off procedure for assessing costs

Answer 57

• summary assessment
• detailed assessment

Question 58

when must a detailed assessment for costs be carried out?

Answer 58

The general rule is that the costs of any proceedings or any part of the proceedings are not to be assessed by the detailed procedure until the conclusion of the proceedings, but the court may order them to be assessed immediately.

Question 59

No stay of detailed assessment where there is an appeal

Answer 59

Detailed assessment is not stayed pending an appeal unless the court so orders.

Question 60

An order for costs will be treated as an order for the amount of costs to be decided by…

Answer 60

…a detailed assessment unless the order otherwise provides.

Question 61

Whenever a court makes an order about costs which does not provide only for fixed costs to be paid the court should consider…

Answer 61

…whether to make a summary assessment of costs.

Question 62

The general rule is that the court should make a summary assessment of the costs—

Answer 62

(a)at the conclusion of the trial of a case which has been dealt with on the fast track, in which case the order will deal with the costs of the whole claim; and
(b)at the conclusion of any other hearing, which has lasted not more than one day, in which case the order will deal with the costs of the application or matter to which the hearing related. If this hearing disposes of the claim, the order may deal with the costs of the whole claim,

Question 63

who should assist the judge in a summary assent of costs?

Answer 63

legal representatives

Question 64

Each party who intends to claim costs must prepare a written statement of those costs showing separately in the form of a schedule, what factors can the schedule contain?

Answer 64

(a)the number of hours to be claimed;
(b)the hourly rate to be claimed;
(c)the grade of fee earner;
(d)the amount and nature of any disbursement to be claimed, other than counsel’s fee for appearing at the hearing;
(e)the amount of legal representative’s costs to be claimed for attending or appearing at the hearing;
(f)counsel’s fees; and
(g)any VAT to be claimed on these amounts.

Question 65

The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event—

Answer 65

(a)for a fast track trial, not less than 2 days before the trial; and
(b)for all other hearings, not less than 24 hours before the time fixed for the hearing.