Costs

Question 1

What is the general rule about who pays?

Answer 1

Unsuccessful party pays successful party’s costs

Question 2

Are legal costs recoverable in the small claims track?

Answer 2

No (costs payable only relate to disbursements)

Question 3

How are costs dealt with usually on the fast track?

Answer 3

Usually summarily assessed

Question 4

What is the effect of a costs management order if a party is awarded their costs on the standard basis at trial?

Answer 4

They will recover the amount of the last approved or agreed budgeted costs

(Court can depart from budgeted costs only if good reason to do so)

Question 5

What is the effect of a costs management order if a party is awarded their costs on the indemnity basis at trial?

Answer 5

Incurred costs are assessed by court in usual way

Question 6

What are fixed costs?

Answer 6

In certain situations (eg. default judgement, summary judgement), CPR fixes amount party may recover

On fast track: fixed costs imposed on the advocate who prepares & appears at trial

Question 7

What is a summary assessment, and when should the cost make a summary assessment of costs?

Answer 7

Summary = court determines amount payable immediately at end of hearing

Unless good reason not to, court should make summary assessment of costs at:
1. Conclusion of a fast track trial and
2. Any other hearing that has not lasted more than 1 day

(Parties must file & serve statement of costs to assist court)

Question 8

What are the time limits for filing & serving a statement of costs?

Answer 8

Fast track trial: at least 2 days before

Interim hearing: at least 24 hours before

(Filed to assist court in summary assessment)

Question 9

What is the procedure for detailed assessment of costs?

Answer 9

Receiving party serves Notice of Commencement of detailed assessment proceedings on paying party within 3 months of date of judgement
↓
Paying party has 21 days to serve points of dispute
↓
Receiving party has 21 days to reply
↓
Receiving party files request for assessment hearing within 3 months of expiry period
↓
If costs claimed less than £75k: court undertakes provisional assessment (without parties)
↓
If either party unhappy with provisional assessment, can request oral hearing within 21 days

Question 10

If at oral hearing for detailed assessment, a party fails to achieve an adjustment by at least 20% in their favour, what happens?

Answer 10

Will be ordered to pay the costs of the hearing

Question 11

What is the time limit for the receiving party to serve Notice of Commencement of detailed assessment proceedings?

Answer 11

Must be served within 3 months of date of judgement/order

If wish to challenge bill, paying party has 21 days to serve points of dispute (& receiving party then has 21 days to reply)

Question 12

What 8 factors should the court take into account when assessing the amount of costs the receiving party is entitled to? (r44.4)

Answer 12

(a) Conduct of parties & efforts made to try resolve dispute

(b) Value of any money or property involved

(c) Importance of matter to parties

(d) Complexity of matter

(e) Skill, effort, specialised knowledge, responsibility etc. involved

(f) Time spent on case

(g) Place & circumstance in which work done

(h) Receiving party’s last approved or agreed budget

Question 13

When assessing costs on the standard basis, how is any doubt resolved?

Answer 13

In favour of the paying party

Question 14

How are costs assessed on the standard basis?

Answer 14

Costs must be proportionate to the matters in issue?

1. Is item reasonably incurred?
2. Is item reasonable in amount?
3. Is total figure for each phase proportionate so that it bears a reasonable relationship to:
   a. The sums in issue
   b. The value of any non-monetary relief in issue
   c. The complexity of the litigation
   d. Any additional work generated by paying party’s conduct
   e. Wider factors (eg. reputation, public importance)

Question 15

When assessing costs on the indemnity basis, how is any doubt resolved?

Answer 15

In favour of the receiving party

Question 16

How are costs assessed on the indemnity basis?

Answer 16

1. Is the item reasonably incurred?
2. Is the item reasonable in amount?

ie. no requirement for proportionality unlike on standard basis

Question 17

Can the court order a non-party to pay costs?

Answer 17

Yes - discretionary power to do so where it is satisfied that:

a. The non-party was the real party interested in the litigation;

or

b. The non-party was responsible for bringing the proceedings

(nb. before any order can be made, the non-party must be added as a party to the proceedings)

Question 18

What are the grounds for granting an order for security for costs?

Answer 18

1. One or more of the conditions in Part 25 is satisfied - claimant:
   → is resident outside Hague Convention
   → is impecunious company
   → has taken steps to make enforcement difficult

and

2. It is satisfied that it is just to make an order - will consider:

• Strength of claim & defence
• Causes of claimant’s impecuniosity
• Property within jurisdiction
• Timing
• Claimant’s ability to provide security

Question 19

What are the Part 25 conditions that must be established as part of security of costs?

Answer 19

One or more of:

Claimant-

→ is resident outside Hague Convention

→ is impecunious company must show will be unable to pay

→ has taken steps to make enforcement difficult court will consider effect not motivation

Question 20

What are some of the factors the court will consider when determining whether it is just to make an order for security for costs? (5)

Answer 20

Strength of claim & defence
Less likely D to win, less justified in seeking

Causes of claimant’s impecuniosity
ie. caused by D?

Property within jurisdiction

Timing
should apply as soon as practicable

Claimant’s ability to provide security
where C has reasonable prospect of success, courts reluctant to order security which they cannot comply with as will stifle claim (burden on claimant to show no prospect of raising funds)

Question 21

Are trial costs in a fast track claim, where costs awarded on standard basis, fixed?

Answer 21

Yes - sum awarded depends upon the level of the damages award.

For an award of more than £15,000 the trial costs are fixed at £1,650.

Question 22

What are the 4 formalities requirements for a Part 36 offer?

Answer 22

1. In writing
2. Clear it is made pursuant to Part 36
3. Specify a period of not less than 21 days during which, if offer is accepted, D will pay C’s costs (‘the relevant period’)
4. State whether it relates to whole or part of claim & whether it takes into account any counterclaim

Question 23

What is the ‘relevant period’ of a Part 36 offer?

Answer 23

A period of not less than 21 days during which, if the offer is accepted, the defendant will pay the claimant’s costs

Question 24

What are the consequences of acceptance of the defendant’s Part 36 offer within the relevant period?

Answer 24

Defendant pays C’s costs up to date of acceptance on the standard basis

• Proceedings are stayed
• Defendant pays money to C within 14 days

Question 25

What are the consequences of late acceptance of the defendant’s part 36 offer?

Answer 25

1. Defendant pays claimant’s costs up to date of expiry of relevant period on the standard basis
2. Claimant pays defendant’s costs up to date of acceptance on the standard basis

Question 26

If a party accepts a Part 36 offer, what is the time limit for paying?

Answer 26

Within 14 days

Question 27

What are the consequences of the defendant accepting the claimant’s Part 36 offer within the relevant period?

Answer 27

Defendant pays C’s costs up to date of acceptance on the standard basis

Question 28

What are the consequences of late acceptance by the defendant of the claimant’s Part 36 offer?

Answer 28

Defendant pays C’s costs up to date of acceptance on the standard basis

Question 29

What are the consequences of non-acceptance of claimant’s Part 36 offer if C wins at trial & equals or beats their own offer?

Answer 29

C is awarded

Damages plus

• For damages up to £500k: an additional 10% and
• For damages of £500k-£1m: an additional 5%
• Up to max £75,000

+

Up to Day 21

• Interest on damages from date of loss as claimed in particulars
• Costs on standard basis from date C incurred them

+

From Day 22

• Interest on damages at max 10% above base rate
• Costs on indemnity basis
• Interest on costs at max 10% above base rate

Question 30

What are the consequences of non-acceptance of claimant’s Part 36 offer where claimant wins at trial but does not beat their own offer?

Answer 30

Part 36 has no effect

Question 31

What are the consequences of non-acceptance of claimant’s Part 36 offer where claimant loses at trial?

Answer 31

Part 36 has no effect

(C ordered to pay D’s costs on standard basis in usual way)

Question 32

What are the consequences of non-acceptance of defendant’s Part 36 offer, where the claimant wins at trial & beats the defendant’s Part 36?

Answer 32

Part 36 has no effect

(D pays amount of judgement + interest as claimed in particulars & C’s costs on standard basis)

Question 33

What are the consequences of non-acceptance of defendant’s Part 36 offer, where the claimant loses?

Answer 33

Claimant pays D’s costs & interest on those from day 22 until judgement

(Usually 1-2% above base rate)

Question 34

What are the consequences of non-acceptance of defendant’s Part 36 offer where the claimant wins at trial but does not beat defendant’s Part 36?

Answer 34

Split Costs order:

Claimant is awarded damages & interest from date of loss as claimed in particulars of claim

+

Up to Day 21: Defendant pays C’s costs on standard basis from date C incurred them

+

From Day 22: Claimant pays D’s costs on standard basis & interest on those costs (usually 1-2% above base rate)

Question 35

How long is a Part 36 offer open for?

Answer 35

until the offeror either withdraws it by serving written notice of withdrawal, or its terms are changed by serving a written notice of change

Question 36

Can a Part 36 offer be made before commencement of proceedings?

Answer 36

Yes