Costs

Question 1

what is the general position?

Answer 1

o General position > loser pays winner’s costs but court can depart from this (i.e. if Part 36 offer is made. See: split cost orders)

Question 1

what does costs include?

Answer 1

• solicitors’ fees, counsels’ fees and disbursements (inc. expert fees, court fees and pre-action costs)

Question 2

what are the procedures for assessing costs?

Answer 2

summary assessment and detailed assessment

Question 3

what are costs on the small claims track?

Answer 3

The only fees / expenses that can be recovered are:
o Solicitors’ costs incurred by commencement of the claim which are fixed
o Advice about an injunction or specific performance, capped at £260
o Court fees
o Travel costs & loss of earnings to attend the hearing, capped at £95 p/d
o Experts’ fees, capped at £750 per expert
o Costs can be summarily assessed if a party has behaved unreasonably
o NB: barrister’s costs are not recoverable

Question 4

what are costs on the fast and intermediate track?

Answer 4

fixed costs

Question 5

what are fixed costs based on?

Answer 5

• Fixed costs are based on the complexity bands and stage of proceedings

Question 6

can fixed costs be amended?

Answer 6

• Fixed costs can be increased/decreased by 50% for unreasonable conduct

Question 7

give an overview of fixed costs

Answer 7

• Fixed costs are based on the complexity bands and stage of proceedings
• Trial advocacy fees are fixed
• Generally, disbursements are recoverable in full so long as they are required and reasonable

Question 8

are disbursements recoverable where fixed costs apply?

Answer 8

• Trial advocacy fees are fixed
• Generally, disbursements are recoverable in full so long as they are required and reasonable

Question 9

can parties apply for summary assessment where fixed costs apply?

Answer 9

• Parties can apply for a summary assessment of costs (i.e. costs exceeding fixed costs), but this will only be granted in exceptional circumstances

Question 10

what assessment usually takes place on the multi-track?

Answer 10

detailed assessment

Question 11

what effect does a CMO have on costs?

Answer 11

this depends on the basis costs were awarded:

o Costs awarded on standard basis > the court cannot depart from the last approved / agreed budget unless there is good reason to do so (i.e. costs of a certain phase were not awarded at all or much less than budgeted)

o Costs awarded on an indemnity basis > assessed in the usual way unless agreed between parties

If a CMO has not been made, there is more flexibility in dealing with costs.

Question 12

what happens if there is a difference between the costs claimed and costs in the budget? what is the %?

Answer 12

o If there is a 20% or more difference between the costs claimed by the receiving party and those set out in their budget, the receiving party must provide reasons for the difference. The court will then make a decision.

Question 13

what are the basis for assessment?

Answer 13

standard and indemnity

Question 14

when does the basis for assessment not apply?

Answer 14

where fixed costs apply

Question 15

re: multi-track

on what basis are damages and costs awarded?

Answer 15

standard or indemnity

Question 16

what is an example of an unreasonably incurred cost?

Answer 16

o Example of unreasonably incurred > expert instructed without permission

Question 17

what are the part 44 factors?

Answer 17

The court must have regard to the Part 44 factors when deciding costs:
o The conduct of parties and efforts made to try and resolve the dispute
o The value of the claim
o Importance of the matter to parties
o Complexity of the matter
o Skill, effort, knowledge and responsibility of those involved
o Time spent on the case
o Place and circumstance in which the work was done
o Receiving party’s last approved / agreed budget

the court will consider the Part 44 factors when deciding if costs are reasonable in amount/proportionate

Question 18

when costs are awarded on a standard basis, what is recoverable? what is the effect of this?

Answer 18

• Costs which are reasonable incurred and reasonable in amount that are proportionate to the matters in issue are recoverable.

o Effect > disproportionate costs can be disallowed or reduced even if they are reasonably incurred and reasonable in amount

Question 19

re: standard basis

when will costs be proportionate?

Answer 19

• Costs will be proportionate if they bear a reasonable relationship to the sums in issue; the value of non-monetary relief, complexity of litigation; additional work created by the conduct of the paying party and any wider factors.

Question 20

re: standard basis

what happens if there is doubt as to reasonableness or proportionality?

Answer 20

• Any doubt as to proportionality or reasonableness of a cost is resolved in favour of the paying party

Question 21

re: standard basis

what is the approach when assessing on the standard basis?

Answer 21

1. Judge reviews each claimed cost and disallows any unreasonably incurred or unreasonable in amount.
2. Proportionality of the overall figure is assessed against the Part 44 factors
   o Proportionate - no further assessment
   o Not proportionate - the judge will scrutinise each category (i.e. disclosure, evidence) and make any further reductions they see fit

Question 22

re: standard basis

what is the effect if the judge makes reductions?

Answer 22

• If reductions are made, the receiving party is still liable to pay the full amount owed to a third party. It just means the receiving party receives less from o/s

Question 23

if costs are awarded on an indemnity basis, what costs can be recovered?

Why is this the case?

Answer 23

Costs which are reasonably incurred and reasonable in amount can be recovered (i.e. no reference to proportionality)

Costs are awarded on this basis as a penalty, if a party has behaved improperly in pre-action or during proceedings

Question 24

re: indemnity basis

what happens if there is any doubt as to reasonableness?

Answer 24

• Any doubt in terms of reasonableness is resolved in favour of the receiving party

Question 25

what happens if the order does not specify the basis?

Answer 25

• If the order does not specify the basis, the standard basis is assumed

(not inc. where fixed costs apply)

Question 26

when do summary / detailed assessment apply?

Answer 26

Where costs are not agreed / fixed costs do not apply

NB: parties should try to agree costs to avoid litigation risk

Question 27

what is summary assessment?

Answer 27

• the court determines costs payable immediately at the end of the hearing.

Question 28

when should the court carry out a summary assessment?

Answer 28

unless fixed costs apply, the court should make a summary assessment at any hearing that has not lasted more than a day, unless there is good reason not to do so

Question 29

when should summarily assessed costs be paid?

Answer 29

within 14 days

Question 30

re: summary assessment

what should the court do before a hearing?

Answer 30

• Parties should f&s a statement of costs at least 24 hours before the hearing

Question 31

when will there be a detailed assessment?

Answer 31

• Used where there is insufficient time for a summary assessment or MT cases

Question 32

what is the starting point for detailed assessment?

Answer 32

• Within 3 months of judgment/order, the receiving party must serve on the paying party: Notice of Commencement of detailed assessment proceedings (DAP); bill of costs and evidence (i.e. receipts).

Question 33

re: detailed assessment

what happens if the bill is disputed?

Answer 33

• If the bill is disputed, parties should try to reach an agreement. If they cannot:
  1. Paying party serves points of dispute within 21 days
  2. Receiving party has 21 days to file a reply.
  3. Receiving party files a request for an assessment hearing within three months of the expiry of the period for commencing DAP
  4. Costs are less than £75k > court undertakes a provisional assessment in the absence of parties, unless the court orders a detailed assessment hearing
  o If a party is unhappy with the provisional assessment, they can request an oral hearing within 21 days. If they fail to achieve an adjustment in their favour by at least 20%, they must pay costs of the hearing
  5. Costs are over £75k > detailed assessment hearing. Court decided costs.

Question 34

re: detailed assessment

what happens if the disputed costs are under £75k?

Answer 34

1. court undertakes a provisional assessment in the absence of parties, unless the court orders a detailed assessment hearing
2. If a party is unhappy with the provisional assessment, they can request an oral hearing within 21 days. If they fail to achieve an adjustment in their favour by at least 20%, they must pay costs of the hearing

Question 35

re: detailed assessment

what happens if the disputed costs are over £75k?

Answer 35

detailed assessment hearing. Court decided costs.

Question 36

what does qualified one way costs shifting apply to?

Answer 36

• Only applicable to claims for damages relating to PI and death

Question 37

who can rely on qualified one way costs shifting?

Answer 37

• Only Cs can rely on this (inc. Cs to CCs and part 20 claims)

Question 38

what is the effect of qualified one way costs shifting?

Answer 38

• The doesn’t prevent the court from ordering costs, but it limits D’s ability to recover them.

Question 39

re: qualified one way costs shifting

when can a costs order be enforced by D without the court’s permission?

Answer 39

A cost order can be enforced by D without the court’s permission where:

The aggregate amount of the cost order(s) does not exceed the aggregate amount of money C has received (inc. settlement money, damages, cost and interest); or

C’s claim was struck out for one of the following reasons:
 C disclosed no reasonable grounds to bring the claim;
 The proceedings were an abuse of the court’s process; or
 The conduct of the C / person acting on their behalf

Permission is needed in all other cases

Question 40

re: qualified one way costs shifting

if needed, when will the court grant permission for D to enforce a costs order?

Answer 40

Permission will only be given if, on the balance of probabilities, the claim is fundamentally dishonest