Costs

Question 1

Give 4 examples of things that may acquire legal costs

Answer 1

Solicitor fees
Engaging a barrister
Obtaining a report from an expert
isuing the claim form

Question 2

What are the two broad categories of legal costs?

Answer 2

Basic charges

Disbursements

Question 3

What are basic charges?

Answer 3

The cost of the work undertaken by the solictor

Question 4

What are disbursements?

Answer 4

money that the solicitor spends on the client’s behalf e.g.

• court fees
• counsel’s fees
• expert’s fees

Question 5

Give three ways costs of litigation can be controlled

Answer 5

settling disputes early

ensuring that litigation is conducted efficiently

empowering the court to control sums of costs awrded

Question 6

Can parties agree anything to do with costs, if so, what can they agree between themselves?

Answer 6

Yes, they can agree between themselves:

• who should pay the costs
• how much those costs should be

Question 7

What is the general rule regarding the orders the court may make about costs?

Answer 7

the unsuccessful party will be ordered to pay the costs of the successful party

Question 8

What will the court have regard to when deciding what orders to make about costs?

Answer 8

• the conduct of the parties
• whether a party has succeeded on part of its case, even if that party has not been wholly successful
• any admissible offers to settle that are drawn to the court’s attention

Question 9

What does parties’ “conduct” include?

Answer 9

• pre-action conduct
• the reasonableness of raising certain issues
• the manner in which a particular party has pursued/defended a particular allegation or issue
• whether a successful party has exaggerated a claim

Question 10

Which key cases discuss the courts powers in relation to pre-action conduct?

Answer 10

Halsey v Milton Keynes General NHS Trust

PGF II SA v OMFS Co1 Ltd

Question 11

How would you describe the court’s powers in relation to costs?

Answer 11

The court has wide discretion which enables the court to be flexible about the costs orders that it can make

Question 12

What happens with regards to costs when the claimant and defendant are BOTH successful in their claim/counterclaim. E.g. the claimant is awarded their claim for £20,000, but the defendant is also awarded their counterclaim for £12,000?

Answer 12

In cases where the issues in the claim and counterclaim are very similar, the fairest costs order is usually to award the overall winner a proportion of their costs, rather than ordering each party to pay the costs of the other.

In cases where the issues in the claim and counterclaim are quite different, the court might follow the Medway Oil rule. In such cases, the judge may order that each party is entitled to be paid the costs of their claim/counterclaim by the other party, However the defendant (who brought the counterclaim) is only entitled to recover those costs that are specifically referable to the counterclaim.

Question 13

Give an example of when a Sanderson & Bullock Order might be made.

Answer 13

I am a passenger in Billy’s car and I have fallen asleep. Billy’s car collides with Josh’s car. As I was asleep, I did not see how the accident occurred. I have injuries and losses which I wish to claim.

Billy says the accident is Josh’s fault, so I commence a claim against Josh. In Josh’s defence, he denies liability and blames Billy. In order to protect my position, I apply to amend the claim to add Billy as a second defendant to my claim.

At trial, liability is found against Josh. So I have been successful in my claim against Josh, but unsuccessful in my claim against Billy (as he was found not liable).

The judge may make such an order as it would be unfair for me to pay Billy’s costs as I was acting reasonably in bringing the claim against both of them.

Question 14

What are the two orders a court can make with a Sanderson & Bullock order?

Answer 14

a) the court might order me to pay Billy’s costs, but also order that I can recover them from Josh (a Bullock order)
b) the court may order that Billy’s costs should be paid to him by Josh directly (a Sanderson order) - orders of this nature tend to be used where the Claimant is legally aided or where the Claimant simply would not have the funds to pay the costs to the unsuccessful Defendant.

Question 15

What does QOCS stand for?

Answer 15

Qualified One Way Costs Shifting

Question 16

In which types of claims can QOCS be applied?

Answer 16

a) personal injury claims
b) claims for damages under the Fatal Accidents Act 1976
c) claims for damages arising out of death or personal injury which survive for the benefit of an estate pursuant to s1(1) Law Reform (Miscellaneous Provisions) Act 1934

Question 17

What is the effect of a QOCS?

Answer 17

defendants will generally be ordered to pay the costs of successful claimants but, subject to certain exceptions, will not recover their own costs if they successfully defend the claim.

Question 18

When will the claimant lose the protection of QOCS?

Answer 18

• the claim is found on the balance of probabilities to be “fundamentally dishonest”
• the claim is struck out as disclosing no reasonable grounds for bringing the proceedings, or as an abuse of process, or for conduct likely to obstruct the just disposal of the proceedings
• the claimant has failed to beat a defendant’s part 36 offer to settle.

Question 19

What is meant by a summary assessment of costs?

Answer 19

Where the judge who heard a trial or application assesses the costs at the end of the trial/application.

The judge will look at the recieving party’s costs schedule and will then invite the paying party to make representations as to any deductions that should be made.

The judge may then turn to the recieving party to ask them for any response to the paying party’s representations.

The judge will then give a brief decision on the amount of costs that they are awarding (setting out where they are making deductions to the receiving party’s bill and why).

Question 20

What is a detailed assessment of costs?

Answer 20

A much more thorough assessment of the winner’s costs. Once the “winner” has been determined, the assessment of the amount of costs will be adjourned for detailed assessment.

A detailed assessment is a separate hearing in front of a judge who will examine the recieving party’s “bill of costs”

Question 21

What are the two basis of assessing costs?

Answer 21

The standard basis - this is the default basis of assessment

the indemnity basis

Question 22

Regardless of the basis of assessment, what sort of costs will the court NOT allow?

Answer 22

costs which have been unreasonably incurred

costs which are unreasonable in amount

Question 23

What will the court consider when assessing costs on the standard basis?

Answer 23

The court must be satisfied that the costs claimed are proportionate to the matters in issue.

If the costs incurred are disproportionate to the matters in issue, those costs may be disallowed or reduced.

Where the court has any doubt as to whether costs were reasonably and proportionately incurred and/or whether they were reasonable and proportionate in amount, those doubts shall be resolved in favour of the paying party.

Question 24

What will the court consider when assessing costs on the indemnity basis?

Answer 24

the concept of proportionality does not feature. Instead, the court is merely concerned with considering whetehr the costs are reasonably incurred and reasonable in amount.

Where the court has any doubt as to whether costs were reasonably and proportionately incurred and/or whether they were reasonable and proportionate in amount, those doubts shall be resolved in favour of the recieving party.

Question 25

When might the indemnity basis be used?

Answer 25

Where the conduct of the paying party (during the proceedings) has been unsatisfactory (or which may have driven up the costs) e.g. refusing an offer to settle that they on’t beat at trial; pleading fraud which they then failed to prove; commencing proceedings which are struck out or dismissed on the basis that they lack merit.