Costs

Question 1

Which provisions of the CPR deal with costs?

Answer 1

CPR Part 44 - General Rules about Costs
CPR Part 45 - Fixed costs.

Question 2

What is the general rule?

Answer 2

Costs follow the events - the unsuccessful party will be ordered to pay the costs of the successful party.

Question 3

What discretion does the court have as to costs?

Answer 3

The court has discretion as to whether costs are payable by one party to another, the amount of those costs, when they are to be paid.

Question 4

What is assessment?

Answer 4

The process of deciding the precise amount which a party must pay to the other.

Question 5

r44.4

Answer 5

Costs cannot be unreasonably incurred or be unreasonable in amount.
Costs unreasonably incurred cannot be recovered.
Costs which are not reasonable in amount may be reduced.

Question 6

What are the two basis upon costs can be assessed?

Answer 6

1. Standard Basis.
2. Indemnity Basis.

Question 7

What is the usual basis for assessment of costs?

Answer 7

Standard basis will automatically apply where a right to costs arises under a CPR.

Question 8

How are costs assessed on the standard basis?

Answer 8

Only costs that are proportionate allowed.
Costs which are disproportionate may be disallowed, even if they were reasonably and necessarily incurred.
If there is doubt the doubt will be resolved in favour of the paying party.

Question 9

How are costs assessed on the indemnity basis?

Answer 9

If there is doubt as to whether a cost has been unreasonably incurred or is unreasonable in amount, the doubt is resolved in favour of the receiving party.

Question 10

When will the court disallow costs or order a party to pay the costs incurred by the opponent for reason of the parties fault?

Answer 10

Where a party or their legal representative has acted unreasonably or improperly or failed to comply with a rule practice direction or court order.

Question 11

What type of factors will the court consider when deciding if costs are reasonable, or reasonably incurred?

Answer 11

1. The conduct of the parties, at all stages of proceedings, including any attempts to settle.
2. The value of money or property involved.
3. The importance of the matters to the parties.
4. The complexity of the matter, or the difficulty or novelty of the issues.
5. The time spent on the case.

Question 12

What is a summary assessment of costs?

Answer 12

Where costs are assessed by the judge who has heard the case or application.

Question 13

When will a summary assessment of costs be used?

Answer 13

Where costs are not fixed, nor required to be assessed by detailed assessment under the rules.
Cannot be used where a party is publicly funded or any party is child or protected party.

Question 14

When is a summary assessment of costs made?

Answer 14

At the conclusion of:
- A trial in the fast track (costs of the whole claim);
- Any other hearing which has lasted not more than one day (costs of the application/matter).

Question 15

What is a detailed assessment of costs?

Answer 15

Procedure by which the amount of costs is decided upon a detailed bill of costs.

Question 16

What form is used for detailed assessment of costs?

Answer 16

An electronic bill of costs.
Mandatory for multi-track claims.

Question 17

What part of the CPR deals with detailed assessment proceedings?

Answer 17

Part 47

Question 18

What time limit is there for commencing detailed assessment proceedings?

Answer 18

3 months of the judgment, order, award, or other determination giving a right to costs.

Question 19

What are the steps in detailed assessment proceedings before applying to the court?

Answer 19

1. Receiving party must draw up a bill of costs, and serve this with a notice of commencement (Form N252), and evidence of third party costs on the paying party.
2. Paying party must within 21 days set out any points of dispute.
3. If no points of dispute are served, the receiving party can apply to the court for a default costs certificate (N254).
4. If there is a dispute, and a settlement cannot be reached, the receiving part can apply for a detailed assessment at court (N258).

Question 20

What is the court procedure for detailed assessment of costs, where the costs are £75,000 or less?

Answer 20

Court will undertake a provisional assessment within 6 weeks.
After receiving provisional assessment, parties have 21 days to apply for hearing.
If no hearing is required, the provisional assessment is binding.

Question 21

What is the court procedure for detailed assessment of costs, where costs are greater than £75,000?

Answer 21

Court will fix a hearing, giving the parties at least 14 days notice.
Parties required to attend to give oral submission.
After the hearing, the court issues a final costs certificate (N256).

Question 22

What is qualified one-way costs shifting?

Answer 22

In personal injury claims, a claimant does not have to pay the defendant’s costs if the claim fails, but a defendant must pay the claimants costs if the claim succeeds.

Question 23

When will qualified one-way costs shifting be disapplied?

Answer 23

Where the claimant has been found to be fundamentally dishonest.

Question 24

When does the active costs management regime apply?

Answer 24

Multi-track cases.
Does not apply:
- Claims made on behalf of children.
- Claims where claimant has a limited or severely impaired life expectancy.
- Claims valued at £10 million or more

Question 25

What steps are required by the parties in the active costs management regime?

Answer 25

1. A costs budget (Precedent H), must be exchanged and filed at least 21 days before the case management conference.
2. An agreed budget discussions report (Precedent R) must be file seven days before the first hearing.

Question 26

What measures will the court use in the active costs management regime?

Answer 26

1. Court will not depart from the costs budget when assessing costs, unless it has good reasons to do so.
2. Court can make a costs management order at any time.
3. Cost management conference.

Question 27

What is a cost management order?

Answer 27

Records the extent to which the cost budgets are agreed between the parties.
Or, where a cost is not agreed, records the court’s approval of a budget.

Question 28

When is a costs management order used?

Answer 28

Usually made after the costs budgets are filed and exchange, unless the court is satisfied the overriding objective can be fulfilled without an order.

Question 29

What is a costs capping order?

Answer 29

An order limiting the amount of future costs and disbursements, which the party may recover.
Only caps costs for work carried out after the date of the order.

Question 30

When can a costs capping order be made?

Answer 30

Court has discretion to make an order if:
(a) it is in the interests of justice to do so.
(b) there is a substantial risk that without an order that costs will be disproportionate to the overall costs of the litigation; and
(c) the risk cannot be adequately controlled by other methods.

Question 31

What part of the CPR deals with the Cost Capping Order?

Answer 31

Part 23

Question 32

What is an order for security for costs?

Answer 32

An order that requires a party to either pay money into the court, to provide a bond or to provide an insurance policy as security for an opponent’s costs for the whole or part of the proceedings.

Question 33

What part of the CPR deals with an order for security for costs?

Answer 33

Part 25

Question 34

What grounds can be relied upon to make an order for security for costs?

Answer 34

1. The claimant is resident outside of the jurisdiction and is not a resident covered by specific regulations and conventions.
2. The claimant is a company or body and there is reason to believe they will be unable to pay the defendant’s costs if ordered to do so.
3. The claimant has changed address since issuing the claimant with the intention of evading the consequences of the litigation.
4. The claimant has failed to give or given an incorrect address in the claim form.
5. The claimant is acting as nominal claimant, and there is reason to believe they will not pay the costs if ordered to do so.
6. The claimant has dealt with its assets so as to make enforcement of an order for costs difficult to enforce against it.