Costs Flashcards
What is the indemntity principle?
The defendant will never pay more than the claimant would have to pay.
For example, say C has been awared £100,000 settlement. C was funded by a DBA set at 20% and the solicitors costs incurred were £40,000. The defendant will only have to pay £20,000 costs because that is the maximum the claimant would have to pay.
This is because the C is limited to £20,000 (20% of £1000 under the DBA) - The maximum D must pay for costs is this figure.
C has accepted £400,000 settlement
The claim is funded by a DBA set at 20%
Cs solicitor has incurred £40,000 costs
What is the maximum amount of costs the Defendant must pay?
£80,000
This is because the DBA means C only pays 20% of the damages recieved
20% of £400,000 = £80,000
The idemnity principle means D only pays a much as C would.
C accepted £50,000 settlement
The claim was funded by a CFA set at 20%
Costs incurred amount to £30,000
What is the amount of the success fee Cs solicitor can claim?
The success fee is £6,000
20% of £30,000 = £6,000
C would pay £36,000 to their solicitor (£30,000 costs + £6,000 Success Fee)
What is the maximum percentage of damages that can be charged under a DBA (not clinical negligence or PI)
50%
What is the maximum percentage of damages that can be charged under a DBA for a clincial negligence and personal injury claim?
25 %
C has a DBA with her solicitor which provides for the solicitor to be paid 50% of the damages in the event the claim succeeds.
The claimant is awarded £120,000 at trial
The solicitor’s fees recoverable from the other side, calculated on the basis of a reasonable hourly rate, are £20,000.
What sum may the solicitor charge?
£60,000
The solicitor is entitled to 50% of the damages. 50% of £120,000 is £60,000.
Unlike a conditional fee agreement, with a DBA, if the case is successful, the solicitor will be paid a proportion of the damages awarded to the client by way of a remedy, rather than getting their charges plus a success fee, so £80,000 is wrong
With a DBA does the solicitor get their charges on top of the success fee?
No
Unlike a conditional fee agreement, if the case is successful, the solicitor will be paid a proportion of the damages awarded rather than getting their charges plus a success fee
A claim for damages for breach of contract is settled on terms that the defendant must pay the claimant damages of £50,000 together with the claimant’s legal costs
The claimant has a written conditional fee agreement (CFA) with her solicitor which provided for a success fee of 80% of the fees charged by the firm.
The solicitor has calculated their professional fees at £20,000
What sum may the solicitor charge the client for their professional fees, net of VAT?
£36,000
The success fee is 80%.
80% of £20,000 is £16,000.
This can be charged on top of the ‘normal’ fee of £20,000. So the total charge is £36,000.
A claimant has made an interim application to amend their particulars of claim in an ongoing civil claim because new evidence came to light that significantly impacts the claim
Which interim costs order is the judge most likely to make in this scenario?
Defendant’s costs in any event
This is because the party applying for an amendment will usually be responsible for the costs of and arising from the amendment.
There is nothing to indicate that the judge thought the defendant was unreasonable in opposing the application
A defendant has made an interim application for security for costs in an ongoing commercial dispute.
The claimant opposes the application.
The judge grants the application for security for costs.
Which interim costs order is the judge most likely to make in this scenario?
For Security of Costs, the usual order is Costs in any event.
This is because the judge granted the defendant’s application for security for costs, which typically means the defendant is entitled to recover the costs of making the application irrespective of the outcome of the main case
A defendant has made an interim application for specific disclosure of a category the claimant allegedly failed to disclose as part of standard disclosure.
The claimant opposes the application, stating that the search is unlikely to locate documents of significance.
The judge decides to grant the application for specific disclosure.
Which interim costs order is the judge most likely to make in this scenario?
Costs reserved
This is because the judge, having granted the interim application for specific disclosure, may decide to postpone the decision on costs until a later stage, particularly if the likely significance of the documents located may be clearer as the case progresses.
How to calculate the success fee (e.g. the percentage) when creating a CFA?
The success fee percentage is calculated by dividing the chances of losing (e.g. 40%) by the chances of winning (e.g. 60%) which is then applied to the base costs (e.g. 665 % of X)
