Costs

Question 1

in what 2 stages of the litigation process does the court make a costs order?

i.e., order a party to pay another party’s costs

Answer 1

1) at the end of an interim application = court may decide a party should pay another party’s costs for that interim application

2) at the end of trial = court decides who pays costs of litigation as a whole

Question 2

when can a party be awarded more costs by the court under a costs order than it has actually incurred?

Answer 2

NEVER - even if approved budget was higher (a party cannot profit out of litigation)

Question 3

what is inter-party costs?

Answer 3

the actual figure for costs awarded by the court that one party pays the other party

Question 4

what is non-party costs? when are they awarded? (2)

Answer 4

order that a non-party to the proceedings pays or receives costs to/from a party

criteria:

1- it is JUST

and

2- the third party SUBSTANTIALLY CONTROLS the litigation (e.g., where there is a ‘funder’ that funds a party’s litigation)

Question 5

what 3 aspects of costs does the court have discretion over?

Answer 5

1) whether to award costs and to whom

2) amount of costs

3) when costs are payable

Question 6

what is the general rule as to whether costs are payable?

what is the caveat to this?

Answer 6

general rule = unsuccessful party pays the successful party’s costs

BUT court has complete discretion and can reduce or increase costs as a sanction

Question 7

what does the court consider in exercising its discretion to deviate from the general rule that the unsuccessful party pays the successful party’s costs? (6)

Answer 7

parties’ conduct:

• willingness to engage in ADR/offers to settle
• conduct BEFORE and DURING proceedings
• was it reasonable to raise or pursue or contest a certain issue?
• did a successful claimant exaggerate its claim?
• how many issues did a party succeed on?
• any admissible offers to settle other than part 36 offers (without prejudice save as to costs offers)

Question 8

would a successful party receive 100% of the costs it incurred?

Answer 8

VERY UNLIKELY = this is always a risk in litigation so advise the client that even if they were successful they are unlikely to recover all costs incurred

Question 9

what are the 2 bases of assessment when deciding on how much costs a successful party receives?

Answer 9

1) standard basis (better for paying party)

2) indemnity basis (better for receiving party)

Question 10

what is the difference between the standard basis and indemnity basis for determining costs payable?

Answer 10

• standard basis = costs that were reasonably and proportionately incurred and that are reasonable and proportionate in amount - any doubt is resolved in favour of the paying party (e.g., 60% recovery of incurred costs)
• indemnity basis = costs that were reasonably incurred and that are reasonable in amount - any doubt is resolved in favour of receiving party (e.g., 80% recovery of incurred costs)

(DIFFERENCE IS WHETHER COSTS ARE PROPORTIONATE)

Question 11

when would the court generally award costs on an indemnity basis rather than standard basis?

Answer 11

where there is an element of the paying party’s conduct that is undesirable

e.g., did not engage in ADR/offers to settle, did not follow overriding objective, etc.

Question 12

what does the court consider when determining whether costs are ‘proportionate’ when calculating costs on the standard basis? (6)

Answer 12

Costs will be proportionate if they bear a reasonable relationship to the following specified criteria:

1. the sums in issue in the proceedings (e.g., not proportionate to award costs of 60k in a dispute worth 50k)
2. the value of any non-monetary relief in issue in the proceedings;
3. the complexity of the litigation;
4. any additional work generated by the conduct of the paying party (e.g., submitted failing interim applications, late submission of defence meant that default judgement had to be set aside, etc.)
5. any wider factors involved in the proceedings, such as reputation or public importance; and
6. any additional work undertaken or expense incurred due to the vulnerability of a party or any witness.

Question 13

after deciding what basis costs are to be assessed on (standard/indemnity), what factors does the court consider in actually calculating the costs? (9)

Answer 13

1. The conduct of parties before and during proceedings (again – having also considered this when considering whether one party should pay the other party’s costs)
2. Efforts to settle made before and during proceedings
3. The amount or value of any money or property involved
4. the importance of the matter to all the parties;
5. the particular complexity of the matter or the difficulty or novelty of the questions raised;
6. the skill, effort, specialised knowledge and responsibility involved
7. the time spent on the case
8. the place where and the circumstances in which work or any part of it was done; and
9. the receiving party’s last approved or agreed budget.

Question 14

what is the impact of a cost management order on assessing costs under the cost management regime (multi track cases)?

Answer 14

• the budget sets the proportionate costs that can be incurred in the future (but the party can still pay more for them)
• BUT: when it comes to assessing costs on the standard basis in the future, the party will not be able to recover more than what is approved by the CMO unless there is good reason to do so
• but costs incurred before the budget / CMO are assessed on the normal standard / indemnity bases

(also the party cannot recover more than it actually spent if less than the CMO approved amount)

Question 15

when must the paying party pay the receiving party’s costs?

(how many days)

Answer 15

14 days after the judgement/order stating the amount of costs

or

if the amount is decided later (aka ‘detailed assessment of costs’) = then 14 days after the amount is decided and a certificate is issued

UNLESS COURT ORDERS OTHERWISE

Question 16

What are fixed costs vs assessed costs?

Answer 16

fixed costs = costs fixed by the rules

assessed costs = court is involved with calculation of costs where parties cannot agree (standard vs indemnity basis / summary vs detailed assessment procedure)

Question 17

what are fixed costs?

Answer 17

fixed cost regime applies where the cost is fixed by the rules

applies unless court orders otherwise

usually applies in small claims, or where dispute is uncontested between parties, or in enforcement proceedings

Question 18

what are assessed costs?

Answer 18

where fixed cost regime does not apply and parties cannot agree on costs payable, court has to be involved in calculating costs payable

2 bases of assessment:

1. standard basis
2. indemnity basis

2 procedures for assessment;

1. summary assessment
2. detailed assessment

Question 19

what is summary assessment of costs and when is it usually carried out?

Answer 19

• court determines costs immediately after the hearing
• process = parties serve statement of costs at least 24 h before the hearing + court hears submissions on costs
• used in:

1) fast track cases at the end of trial for costs of whole proceedings
2) after hearing of interim application that did not last for more than 1 day

Question 20

what is detailed assessment of costs and when is it usually carried out?

Answer 20

carried out in cases other than fast track trials or interim applications of 1 day

i.e., the court does not assess costs at the moment it decides who is liable for costs

Question 21

what is the process for a detailed assessment of costs?

Answer 21

after court decides who pays who’s costs:

1. receiving party serves notice of commencement and copy of bill of costs on the paying party
2. paying party must serve points of dispute with bill of costs = within 21 days of service
3. if parties cannot reach agreement, receiving party should file a request for detailed assessment hearing and a costs officer determines costs

Question 22

what are the types of costs order that the court can impose after an interim hearing? (8 types)

Answer 22

1. costs in any event
2. costs in the case
3. costs reserved
4. C or D’s costs in the case
5. costs thrown away
6. costs of and caused by
7. costs here and below
8. no order for costs

Question 23

what is an award of costs in any event? when may this be granted?

Answer 23

• costs in any event = the party who wins the interim application is awarded its costs for that application - regardless of who eventually wins at trial
• example = granted to a party that wins the application and the court is sympathetic with why they had to bring the application and / or is critical with the other party’s conduct

Question 24

what is an award of costs in the case? when may this be granted?

Answer 24

• the party that gets costs at trial (usually the winner) will recover its costs of the interim hearing
• granted where e.g., = judge sympathetic with both parties’ positions re the interim application

Question 25

what is an award of costs reserved?

Answer 25

the decision of who pays costs of the interim hearing is put off - if no decision is later made then it will be costs in the case

Question 26

what is an award of claimant’s costs in the case or defendant’s costs in the case?

Answer 26

if claimant’s cost in the case is awarded:
- If C wins and receives a costs order at trial = it can include the costs of the interim application
- if D is awarded costs at trial = C does not have to pay D’s costs for the interim application

(vice versa for ‘D’s costs in the case’)

Question 27

what is an award of costs thrown away?

Answer 27

• a party can be granted costs thrown away if a prior order is set aside = this entitles the party to recover costs incurred as a result of the order being set aside
• examples = costs for preparing for the hearing at which the order was wrongly made and the hearing at which the order was set aside
• rationale = the order should never have been made so the party at fault must be punished by paying costs

Question 28

what is an award of costs of and caused by?

Answer 28

a party must pay costs resulting from something that it has done

example = C must pay costs D incurred resulting from C amending PoC

Question 29

what is an award of costs here and below?

Answer 29

party will be entitled to its costs for the current proceedings as well as its costs for proceedings in any lower court

Question 30

what is an award of no order for costs? when may this be granted?

Answer 30

• each party will bear its own costs of the interim hearing
• granted where e.g., = judge is critical of both parties’ conduct so neither recover costs now or in the final hearing

Question 31

what is qualified one way cost shifting and what is its affect?

Answer 31

regime for recovery of costs between parties in PI/death cases

restricts the defendant’s abilities to enforce a cost order against a claimant = D can only enforce a costs order up to the amount of damages and interest awarded to C

(but it does not prevent a cost order from being made against C)

D can only ‘enforce’ AFTER the proceedings are concluded

Question 32

what are the exceptions to the QOCS regime - allowing D to enforce the full costs order against C? (2 cases)

Answer 32

1. without court permission = if proceedings were struck out on the grounds that:
   - C disclosed no reasonable grounds for bringing the claim
   - proceedings are an abuse of the court’s process
   - the conduct of C or someone acting on C’s behalf with C’s knowledge is likely to obstruct the just disposal of proceedings
2. with the court’s permission = if C is found fundamentally dishonest on a balance of probabilities (e.g., C duped medics or police into believing its injuries were more severe)

Question 33

In a PI case, if C loses and is awarded nothing, can D enforce a cost order against C?

Answer 33

No - the rule is that D can only enforce a cost order against C up to the amount of damages or interest that C was awarded

here C was awarded 0 so D cannot enforce the cost order

Question 34

In a PI case, if C wins and is awarded damages, but C had a cost order against it for e.g., losing an interim application or not accepting a better part 36 offer, can D enforce such cost order?

Answer 34

D can only enforce the cost order up to the amount of damages which C was awarded at trial

D cannot enforce the cost order for above that amount