Costs Flashcards
What are the crucial factors in a client’s decision to issue proceedings?
The amount the case is likely to cost and the probability of recovering costs from the opponent.
What terms are used to refer to the successful and unsuccessful parties in litigation?
The successful party is referred to as ‘the receiving party’ and the unsuccessful one as ‘the paying party’.
What does the term ‘costs’ include in litigation?
Costs include solicitor’s charges, disbursements such as court fees, expert’s fees, and even pre-action costs.
What is the general rule regarding costs in litigation?
The general rule is that the unsuccessful party pays the successful party’s costs.
What must parties file before the case management conference in multi-track cases?
Parties must file a costs budget setting out the costs incurred to date and those anticipated for the future.
What is the effect of a costs management order?
A party awarded its costs on the standard basis at trial will normally recover the amount of its last approved or agreed budgeted costs.
How are costs dealt with in the small claims track?
Legal costs are not recoverable; costs payable will only relate to disbursements.
What is the process for summary assessment of costs?
The court determines the amount payable immediately at the end of the hearing, usually at the conclusion of a fast track trial.
What is required for a detailed assessment of costs?
The receiving party must serve a Notice of Commencement of detailed assessment proceedings within three months of the judgment or order.
What does ‘inter-partes’ mean?
‘Inter-partes’ means ‘between the parties’ and refers to costs considerations during interim hearings.
What are the two issues regarding costs after a trial or settlement?
Who pays and how much.
What factors does CPR, r 44.4 outline for assessing costs?
Factors include the conduct of the parties, the value of money or property involved, the importance of the matter, and the complexity of the matter.
What is the standard basis for assessing costs?
Costs awarded on the standard basis must be proportionate to the matters in issue.
What happens if costs are deemed disproportionate on the standard basis?
Costs that are disproportionate may be disallowed or reduced even if they were reasonably incurred.
What is the indemnity basis for assessing costs?
Costs on the indemnity basis are awarded as a penalty and must be reasonably incurred and reasonable in amount.
What is a key difference between the standard and indemnity bases for costs?
On the standard basis, costs must be proportionate to the matters in issue; there is no test of proportionality on the indemnity basis.
What is the assessment of costs on an indemnity basis?
Costs are recoverable if the item is reasonably incurred and reasonable in amount.
How are doubts resolved in cost assessments?
Any doubt is resolved in favour of the receiving party on the indemnity basis.
What happens if the item is disallowed?
The item is not recoverable.
What are the key differences between standard and indemnity bases?
The court allows only proportionate costs on the standard basis, while there is no test of proportionality on the indemnity basis.
What is a non-party costs order?
The court can order a non-party to meet the costs if they are the real party interested in the litigation.
What must happen before a non-party costs order is made?
The third party must be added as a party to the proceedings.
What is qualified one-way costs shifting (QOCS)?
Claimants making unsuccessful personal injury claims are not required to pay the defendant’s costs unless the claim is found to be fundamentally dishonest.
What is the effect of QOCS on claimants?
Claimants will not pay the defendant’s costs if they lose, but the defendant pays the claimant’s costs if the claim succeeds.
What is security for costs?
The court can order security for costs if it is just to do so and certain conditions apply.
What condition allows a defendant to apply for security for costs?
If the claimant is based outside the EU.
What is the procedure for applying for security for costs?
The defendant must write to the claimant first and then submit a notice of application to the court.
What happens if a settlement is reached before litigation?
The prospective claimant will not recover legal costs unless agreed.
What are Part 36 offers?
Offers to settle that, if rejected, can lead to penalties if the rejecting party does not achieve a better outcome at trial.
What are the requirements for a valid Part 36 offer?
It must be in writing, specify it is made under Part 36, state a relevant period of not less than 21 days, and clarify its relation to the claim.
What happens if a Part 36 offer is accepted within the relevant period?
The sum must be paid to the claimant within 14 days, and the claimant is entitled to their costs up to acceptance.
What are the consequences of non-acceptance of a Part 36 offer?
Proceedings continue, and there may be significant cost consequences based on trial outcomes.
What factors are considered for justness under Part 36?
The judge considers the terms of the offer, timing, available information, and conduct of the parties.
What are the three possible outcomes if a claimant makes a Part 36 offer?
The claimant could: (a) win at trial and be awarded a sum that equals or beats their own offer; (b) win the case but obtain a judgment that is less than their own offer; or (c) lose at trial.
What happens if the claimant wins at trial and equals or beats their own Part 36 offer?
The claimant will be awarded damages and may receive additional penalties against the defendant, which are potentially severe.
What is the additional amount the defendant must pay if damages are up to £500,000?
The defendant must pay an additional amount of 10% of the sum awarded.
What is the additional amount the defendant must pay if damages are between £500,000 and £1 million?
The defendant must pay 10% of the first £500,000 and thereafter 5% up to a maximum of £75,000.
What happens from Day 22 after the claimant beats their own Part 36 offer?
The percentage rate of interest on the damages awarded increases to a rate not exceeding 10% above the base rate.
What costs does the defendant pay if the claimant wins at trial but does not beat their own offer?
The defendant pays the claimant’s costs on the standard basis from when those costs were incurred until the relevant period expired.
What happens if the claimant loses at trial after making a Part 36 offer?
The claimant will not be awarded damages and will be ordered to pay the defendant’s costs on a standard basis.
What are the consequences if the claimant wins at trial and beats the defendant’s Part 36 offer?
The claimant is awarded the amount of the judgment plus interest and their costs on the standard basis.
What is a ‘split costs’ order?
It is when the claimant pays the defendant’s costs on the standard basis from the expiry of the relevant period until judgment.
What happens if the claimant wins but fails to beat the defendant’s Part 36 offer?
The claimant pays the defendant’s costs on the standard basis from Day 22 to judgment, plus interest on those costs.
What interest rate is typically applied to costs after Day 22?
Interest on costs is usually at 1% or 2% above the base rate.
