Costs and Funding

Question 1

How does the court generally deal with costs in fast track cases?

Answer 1

A judge makes a decision on the day of the trial

Question 2

If a costs budget is approved by the court, then the party is guaranteed to recover those costs. True or false?

Answer 2

False, the costs budget is merely an estimate, and a judge can depart from this.

Question 3

What is the difference between the standard basis and the indemnity basis?

Answer 3

On the standard basis the court must consider the proportionality of the costs claimed, whereas in indemnity basis, proportionality is not considered. Costs are usually higher on indemnity basis.

Question 4

What is qualified on-way costs shifting?

Answer 4

Applies to personal injury claims only - is the claimant is successful and court makes a costs order, the defendant will have to pay the claimant’s costs. If defendant is successful, they will not be able to recover their costs.

Question 5

What is a part 36 order?

Answer 5

A type of offer designed to incentivize a party into making or accepting an offer to settle.

Question 6

How do the courts deal with costs on the small claims track?

Answer 6

Limited to fixed commencement costs and third-party costs

Question 7

How do the courts deal with costs on the fast track?

Answer 7

Legal costs and disbursements are recoverable, but are generally summarily assessed

Question 8

How do the courts deal with costs on the multi-track?

Answer 8

Legal costs and disbursements are recoverable, but are generally detailed assessed.

Question 9

What do summarily assessed costs mean?

Answer 9

The court takes an instant view on the value of the costs that are to be paid by one party to another.

Question 10

What do detailed assessed costs mean?

Answer 10

Occurs when a summary assessment is not possible - a court will go through a detailed bill of costs

Question 11

What is a costs budget?

Answer 11

A document that provides an estimate of the reasonable and proportionate costs which a party is expecting to incur

Question 12

Is a costs budget the same as a final costs order?

Answer 12

No, it is not.

Question 13

What are inter-partes costs orders?

Answer 13

Costs are awarded by the court in favour of one other party.

Question 14

What are non-party costs orders?

Answer 14

A costs order against or in favour of somebody who is not part of the proceedings. This is extremely rare.

Question 15

What is security for costs orders?

Answer 15

These are made by defendants to ensure the claimant can meet any possible future costs orders made against the claimant. The claimant would have to pay a specified sum to court.

Question 16

What are the criteria for a valid part 36 offer?

Answer 16

• In writing
• Must be made clear that it is pursuant to part 36
• Must state whether it relates to the whole or part of the claim
• Must state whether it includes any counterclaim
• It must state a relevant period

Question 17

What is the relevant period of a part 36 offer?

Answer 17

It is the period from the date on which a part 36 offer is served and within which a party can accept the offer. It must be 21 days or more.

Question 18

A claimant is bringing a small claim against a defendant for breach of contract, with the damages claimed being valued at £3,400. The
claimant is successful in the action and seeks to recover their legal costs from the defendant.

Which of the following best describes the claimant’s legal position?

A. The claimant will only be entitled to fixed commencement costs and third-party fees, such as court fees.

B. The claimant will only be entitled to fixed commencement costs.

C. The claimant will be entitled to their legal costs, which will be summarily assessed.

D. The claimant will be entitled to their legal costs, which will be subjected to detailed assessment.

E. The claimant will not be entitled to any of their costs as they are not recoverable in the small claims track.

Answer 18

A. The claimant will only be entitled to fixed commencement costs and third-party fees, such as court fees.

Question 19

A claimant is ordered to file and serve a costs budget no later than 4.00 p.m. on 3 June. They fail to do so, and instead send the
defendant a copy of a costs budget three days before the trial is due to begin. The claimant is successful at trial and the defendant is
ordered to pay the full value of the damages claimed.

Which of the following best describes the position on costs?

A. The claimant will be able to recover a small portion of their legal costs, reduced to reflect their failure to file and serve a costs
budget.

B. The claimant will be able to recover all of their legal costs. Being successful in the action overall will override their failure to file and
serve a costs budget.

C. The claimant will be limited to recovering court fees only.

D. The claimant will be limited to recovering fixed commencement costs and court fees only.

E. The claimant will not be able to recover anything at all due to their failure to comply with the relevant court direction.

Answer 19

C. The claimant will be limited to recovering court fees only.

Question 20

A claimant commences proceedings against a defendant building company following allegedly negligent work being carried out on the
claimant’s property. The defendant company is run by a sole director and shareholder, who is also the sole employee. The claimant is
successful in the action and is awarded the full damages claimed, and the defendant company is ordered to pay the claimant’s costs on
the standard basis. The claimant is concerned that the company may not be able to afford to pay the costs.

Which of the following best describes how the claimant should proceed?

A. The claimant should raise their concerns with the judge at trial and request that the costs order be made against the sole director,
shareholder and employee of the defendant company.

B. The claimant should make an application for a security for costs order against the sole director, shareholder and employee, as the
claimant has suspicions that they are going to attempt to avoid payment.

C. The claimant has been awarded a costs order against the defendant company and should therefore expect to receive payment
imminently.

D. The claimant should make an application for a security for costs order against the defendant company as the claimant has
suspicions that they are going to attempt to avoid payment.

E. The claimant should make an application for a non-party costs order against the sole director, shareholder and employee of the
defendant company, as it is clear that he is both controlling the litigation and has a personal interest in the outcome.

Answer 20

E. The claimant should make an application for a non-party costs order against the sole director, shareholder and employee of the
defendant company, as it is clear that he is both controlling the litigation and has a personal interest in the outcome.

Question 21

A claimant commences proceedings against a defendant for damages relating to personal injury caused by the defendant’s alleged
negligent driving. At trial, the defendant successfully defends the claim on the basis that their driving did not fall below the standard
reasonably expected, and therefore did not cause the claimant’s injuries.

Which of the following best reflects the claimant’s liability for the defendant’s costs?

A. The general principle is that the loser pays the winner’s costs, and therefore the claimant is likely to be ordered to pay the
defendant’s costs on the standard basis.

B. The general principle is that the loser pays the winner’s costs, and therefore the claimant is likely to be ordered to pay the
defendant’s costs on the indemnity basis.

C. The claimant is unlikely to be ordered to pay the defendant’s costs.

D. The claimant is likely to be ordered to pay the defendant’s costs as their cause of action was defeated by the defendant at trial.

E. The claimant is likely to be ordered to pay the defendant’s costs as they have brought the claim dishonestly.

Answer 21

C. The claimant is unlikely to be ordered to pay the defendant’s costs.

Question 22

A claimant makes a Part 36 offer to a defendant in the sum of £73,000. The relevant period expires on 1 April. The defendant does not
respond to the offer and the claimant is successful in the action at trial on 16 November, but only recovers £64,000.

Which of the following best represents the likely position regarding the applicability of the Part 36 offer?

A. The Part 36 offer will not apply. The defendant did not respond to the offer, so it is not relevant.

B. The Part 36 offer will not apply. The claimant’s failure to beat the offer at trial is not relevant.

C. The Part 36 offer will apply. The claimant is likely to be ordered to pay the defendant’s costs on the standard basis from the date of
expiry of the relevant period to the date of judgment.

D. The Part 36 offer will apply. The defendant is likely to be ordered to pay the claimant’s costs on the standard basis from the date of
expiry of the relevant period to the date of judgment as they failed to respond to the offer.

E. The Part 36 offer will apply. The claimant is likely to be ordered to pay the defendant’s costs on the indemnity basis from the date of
expiry of the relevant period to the date of judgment.

Answer 22

B. The Part 36 offer will not apply. The claimant’s failure to beat the offer at trial is not relevant.