Costs

Question 1

What costs are involved in litigation as a whole?

Answer 1

• Counsel’s fees
• Court fees
• Expert’s fees
• Other costs
• Solicitor’s fees

Question 2

Does court have power to determine by whom and to what extent costs prior to proceedings are paid?

Answer 2

Yes - court has full power to determine by whom and to what extent costs of proceedings are to be paid inc prior to proceedings (e.g. complying with pre-action protocol and negotiating in connection with pending litigation)

Question 3

What two points will a court consider making a costs order?

Answer 3

End of interim hearing and end of trial

Question 4

What happens if judge does not make an order on costs? I.e. no order as to costs

Answer 4

Each party pays own costs

Question 5

What is the difference between solicitor-client costs, inter-party costs and non-party costs?

Answer 5

1. Solicitor-client costs - costs payable by client to solicitor under contract of retainer
2. Inter-party costs - actual figure for costs awarded by court which one party has to pay other (will never be 100%)
3. Non-party costs - costs against a non-party (person not a party to proceedings must pay something towards costs)

Question 6

What happens where there is a shortfall between sum on solicitor’s bill and sum recovered as inter-party costs?

Successful party likely to seek order from court that other party pay its incurred legal costs

Answer 6

The client makes up the rest

Question 7

What does the indemnity principle mean for a successful party?

Answer 7

A party cannot recover a sum in excess of liability to own solicitor (cannot make profit)

Question 8

Against what non-party will court award costs against (require them to pay) and when will they do this?

Answer 8

• Most likely against ‘funder’ funding litigation
• Must be just to make the order and more likely to pay successful party’s costs where non-party both funds and substantially controls/is to benefit from proceedings

Question 9

What is the general rule on inter-party costs?

Answer 9

Costs follow the event aka loser pays costs of winner

Question 10

As the court have complete discretion, what matters will they consider and what different costs orders might be made?

Answer 10

Will consider:

• Parties’ conduct (before or during proceedings, whether it was reasonable to pursue certain issue, manner in which it pursued, defended case etc.)
• Whether a party has succeeded on only some issues/part of claim

Can make order like…

• Successful party pays unsuccessful party’s costs
• Each bear own costs
• One party pays other party’s costs for specified period of litigation

E.g. unreasonable refusal by one party to engage in ADR

Question 11

Will a finding of an unreasonable refusal to engage in ADR automatically result in a costs penalty?

Answer 11

No - but will be an aspect of the parties’ conduct which is considered

Question 12

What is a basis of assessment? What are the 2 types?

Answer 12

Basis of assessment = general principles to apply in calculating exact amount of costs

1. Standard basis = costs are proportionate and reasonable both in how they are incurred and amount (approx 60% of costs recovered from paying party)
2. Indemnity basis = costs are reasonable in how they are incurred and amount (approx 80% of costs recovered from paying party)

Question 13

Who will doubt be resolved in favour of for both standard and indemnity basis?

Answer 13

• Standard = doubt resolved in favour of paying party
• Indemnity = doubt resolved in favour of receiving party

Question 14

When would an indemnity basis of assessment be used?

Answer 14

Where some element of party’s conduct deserves some mark of disapproval

I.e. is designed to penalise

Question 15

When will costs which have been unreasonably incurred or are unreasonable in amount be recovered?

Answer 15

Will not be!

Question 16

What is meant by ‘proportionate’ in the standard basis?

I.e. where awarded on standard basis costs needs to be proportionate

Answer 16

Costs will be proportionate if they bear a reasonable relationship to:

1. Sums in issue in proceedings
2. Value of any non-monetary relief in issue in proceedings
3. Complexity of litigation
4. Any additional work generated by conduct of paying party; and
5. Any wider factors involved in proceedings (e.g. reputation, public importance)

Question 17

If a large sum is claimed - even if above value of dispute - will this automatically make costs disproportionate?

Answer 17

Not necessarily - discretionary nature of proportionality test makes it hard to predict

Question 18

Once standard or indemnity basis is decided, what factors will be taken into account to decide the amount of costs?

Answer 18

• Conduct of parties
• Complexity of matter
• Place where and circumstances in which work was done; and
• Receiving party’s last approved/agreed budget (as part of cost management process)

Question 19

By when must party comply with order for payment of costs?

Answer 19

Within 14 days of

1. Date of judgement or order if it states to amount of costs
2. Date of certificate which states amount if the amount of costs is decided later

Question 20

What is qualified one way costs shifting?

Answer 20

The regime for recovery of costs between parties in proceedings involving claims for damages in respect of death and personal injury

Restricts ability of D to enforce costs order against C

Question 21

What is the difference between fixed costs and assessed costs? (When will each be used?)

Answer 21

• Fixed costs = amount fixed by the rules (uncontested disputes, enforcement proceedings, small claims)
• Assessed costs = court need to be involved in decision of amount payable and a summary or detailed assessment required (where parties are unable to agree amount)

Question 22

Where will the basis of assessment (standard/indemnity) fit into fixed and assessed costs?

Answer 22

Bases of assessment govern the criteria to be adopted and factors to be considered when calculating costs

Fixed/assessed costs involves figuring out how much

Question 23

What is the difference between summary and detailed assessment and when will each be used?

Assessments required when costs are assessed and not fixed

Answer 23

• Summary assessment = court determines amount payable by way of costs immediately at end of hearing (trial lasted not more than a day)
• Detailed assessment = quantification left by judge to a cost officer (complex procedure where trial lasted longer than a day)

Summary used unless good reason not to

Question 24

What must parties’ do for a summary assessment and what will the court do in response?

Answer 24

• Parties must prepare statement of costs and serve them on each other not less than 24 hours before time fixed for hearing
• Court rewviews these, hears parties’ short submissions re them, and makes a decision

Question 25

What will the court do at the beginning of the procedure for a detailed assessment?

Answer 25

On deciding that one party should pay other’s costs, the court orders they will be subject to detailed assessment - makes no attempt to set figure on them

Question 26

For a detailed assessment, what does the receiving party do to commence assessment proceedings?

Answer 26

Serves a notice of commencement and copy of bill of costs on paying party

Question 27

What must paying party do regarding the bill of costs?

Answer 27

Serve points of dispute re any item on it within 21 days of notice of commencement

Question 28

What happens if parties cannot reach an agreement on points of dispute re bill of costs?

Answer 28

Receiving party should file a request for a detailed assessment hearing at which costs officer determines sum to be paid

Question 29

Can budgets have an impact on assessment of costs even if costs management order was not made?

Answer 29

Yes

Question 30

What is the difference between the bases of assessment (standard and indemnity) and fixed and assessed costs?

Answer 30

• Bases of assessment = assess how costs should be calculated (criteria/factors)
• Fixed and assessed = how much one party should pay other party’s costs

Question 31

What are interim costs orders?

Answer 31

Costs orders a court might make at an interim stage

Question 32

What are the 3 most common interim costs orders?

Answer 32

1. Costs in any event (and summary assessment of costs)
2. Costs in the case
3. Costs reserved

Question 33

What is the effect of a costs in any event order?

Answer 33

Party that the order is made in favour of is awarded costs of interim hearing from other party regardless of who wins at trial

Question 34

What is the effect of a costs in the case order?

Answer 34

The party who eventually gets its costs at trial (usually winner) will recover its costs of interim hearing from other party

Usually party who wins at trial recovers costs of this application

Question 35

What is the effect of a costs reserved order? What if no decision is made?

Answer 35

Decision on who pays costs of interim hearing is put off to a later occasion - if no decision is made = costs in the case

Question 36

What happens if there is no order for costs?

Answer 36

Each party bears own costs for that hearing

Question 37

If the costs order is “claimant’s costs in the case”, what is the effect?

Answer 37

• C successful and receives order it should be entitled to costs at end of trial = can include costs of interim application
• D is awarded costs at trial = C does not have to pay D’s costs of interim application

Same works in reverse if “D’s costs in the case”

I.e. the party will only 1) receive costs or 2) not receive but not have to pay (like a heads I win, tails you lose situation)

Question 38

If a judgement or order is set aside, and a costs thrown away order is made, what does this mean?

Answer 38

The party in whose favour this costs order is made is entitled to costs incurred as a result of the judgement/order being set aside (potentially inc hearing at which original order made and hearing at which set aside)

Rationale = judgement/order should never have been made, party at fault is punished by having to pay costs of it being made

Question 39

What is an order of costs of and caused by?

Answer 39

Party must pay costs resulting from something that party has done

E.g. costs incurred by D resulting from C amending POC

Question 40

What is a costs here and below order?

Answer 40

The party in whose favour the costs order is made is entitled not only to that party’s costs re proceedings in which court makes order but also to that party’s costs of proceedings in any lower court

Question 41

What does the QOCS (qualified one way costs shifting) regime do?

Answer 41

For PI/death proceedings - restricts ability of D to enforce a costs order against C

Because this would be mean

Question 42

For the fixed recoverable costs regime - which applies to fast and intermediate tracks - what will parties be required to state on their directions questionnaires?

Answer 42

An agreed complexity band (no dispute) or the complexity band they consider appropriate (in dispute)

Complexity band = determine the amount of costs that can be claimed from other party in event that a costs order is made