Costs

Question 1

Who has the Ultimate Authority to Issue a Costs Order?

Answer 1

The Court, which can determine whether Costs are payable, by whom, to whom, and for how much.

Question 2

What are the Three Types of Litigation Costs?

Answer 2

• Non-Party Costs: Costs awarded against a person not privy to the Proceedings.
• Inter-Party Costs: Costs awarded between the Parties.
• Solicitor-Client Costs: Costs payable by a Client to their Solicitor, as governed by their Contract of Retainer.

Question 3

When will the Court Order Non-Party Costs?

Answer 3

It deems it just and equitable, particularly where the person is involved or significantly interested in the litigation.

A typical example is third-party financiers of litigations. That said, this is a rare occurence.

Question 4

What is the General Rule on when a Costs Order may be given?

Answer 4

Costs follow the event, but this is subject to the Court’s discretion.

For example, Costs may be awarded against a Party that unreasonable refused negotiate pre-dispute, even though, technically, nothing happened.

Question 5

What is the Indemnity Principle?

Answer 5

A Party cannot recover more from their Counterparty than they are liable to pay their Solicitor.

Question 6

How is the Amount of Costs Payable evaluated?

Answer 6

The Standard Basis:

• Costs must be reasonable and proportionate in amount and incurrence.
• Any doubts are resolved in favour of the Payer.

The Indemnity Basis:

• Costs must be reasonable in amount and incurrence.
• Any doubts are resolved in favour of the Payee.

The latter is usually awarded punitively, i.e. when a Party’s conduct deserves a degree of disapproval.

Question 7

How are Costs Assessed under either the Standard or Indemnity Basis?

Answer 7

By way of a Summary Assessment or a Detailed Assessment.

Question 8

What is the Procedure for conducting a Summary Assessment of Costs?

Answer 8

• Each Party prepares and files Statement of Costs at least 24 hours before the Costs Hearing.
• The Court hears brief submissions from the Parties before ruling.

Question 9

When is the Summary Assessment of Costs used?

Answer 9

• At the end of a Fast Track Claim.
• At the end of an Interim Application or any other matters that resolves within one day.

Question 10

What is the Procedure for conducting a Detailed Assessment of Costs?

Answer 10

Step 1 — Court Order:

• The Court rules on Costs and orders a Detailed Assessment.

Step 2 — Negotiation:

• The Payee Serves a Notice of Commencement and a Bill of Costs on the Payer.
• The Payer has 21 days from the Notice of Commencement to Serve any points of dispute on the Payee.

Step 3 — Detailed Assessment Hearing:

• If the Parties cannot resolve issues amongst themselves, the Payer may file a request for a Hearing, where a Costs Officer will decide the matter.

Question 11

When is the Detailed Assessment of Costs used?

Answer 11

When Costs are not Fixed or are disputed or complex.

Question 12

Which considerations are relevant to the Proportionality of Costs?

Answer 12

• The Claim Value.
• The complexity of the litigation.
• The value of non-monetary relief.
• Further work undertaken due to the Counterparty’s conduct.
• Any other relevant factor, e.g. reputation or public importance.

Question 13

What must the Court consider when deciding the Amount of Costs?

Answer 13

All relevant circumstances, and in particular:

• The Costs Budget.
• The case’s complexity.
• The Parties’ extent of success on their issues.
• The Parties’ conduct, particularly on ADR and Settlement.

Even where a Budget is not formally set during Case Management, a Party’s ability to pay can influence the final sum payable.

Question 14

What is the Deadline for Complying with a Costs Order?

Answer 14

14 days from:

• The date of the Order if Costs are specified; or
• The date of the Costs Certificate specifying the sum.

Question 15

What is Qualified One-Way Costs Shifting (“QOCS”)?

Answer 15

A limitation on the Defendant’s ability to recover costs from a Claimant that has acted honestly.

This only applies to Personal Injury Claims.

Question 16

What are Fixed Costs?

Answer 16

Predetermined Costs (by the CPR) that are recoverable without further assessment.

Question 17

In which Claims do Fixed Costs apply?

Answer 17

Small Claims:

• By default.

Fast and Intermediate Track Claims:

• Depends on the Case’s Complexity Band and the stage at it which concludes.
• The higher the Band and the later it concludes, the more the Victor can recover.

Exact numbers are found in Table 12 (Fast Track) and Table 14 (Intermdiate Track) of PD45.

Question 18

What are the Seven Types of Interim Costs Orders?

Answer 18

• Costs in Any Event (and Summary Assessment): The Payee is entitled to recover Costs, regardless of the Trial’s outcome.
• Costs in the Case: The Payee is whoever wins the Trial.
• Costs Reserved: A Costs Order will be made at a later stage in the Trial, and if no specific Order is made, Costs in the Case applies by default.
• Party’s Costs in the Case: The Payee is entitled to recover Costs if it wins, and if it does not, it need not pay for the Victor’s Interim Application costs.
• Costs Thrown Away: A given Costs Order is set aside and the sums paid pursuant thereto, and associated therewith, must be returned.
• Costs Of and Caused By: A Party incurs further costs due its Counterparty’s actions, who is made to account therefor.
• Costs Here and Below: The Victor can recover Costs incurred in the present litigation and those preceeding it (down to the Divisional Court).