Costs Assessment

Question 1

What is the general rule regarding costs in litigation?

Answer 1

The general rule is that the unsuccessful party pays the successful party’s costs. However, the judge has discretion to make different costs orders if deemed appropriate.

Question 2

What are some examples of what “costs” can include in litigation?

Answer 2

Costs include solicitor’s charges, disbursements such as court fees, expert’s fees, and even pre-action costs.

Question 3

What is a costs management order?

Answer 3

A costs management order is issued by the court to control costs, and will normally mean the receiving party will recover the amount of their last approved or agreed budgeted costs. The court may depart from the budgeted costs only if there is a good reason to do so.

Question 4

What are the differences between the different tracks regarding costs?

Answer 4

○Small claims track: Legal costs are not recoverable, only disbursements.
○Fast and intermediate tracks: Fixed costs apply.
○Multi-track: A detailed assessment of costs is carried out.

Question 5

What are fixed costs and what are their advantages and disadvantages?

Answer 5

Fixed costs are predetermined amounts that a party may recover from their opponent.
○ Advantage: Litigants know in advance how much they will have to pay if they lose.
○ Disadvantage: The successful party is unlikely to recover all of their costs

Question 6

What is summary assessment of costs?

Answer 6

Summary assessment involves the court determining the amount of costs payable immediately, usually at the end of a hearing. This is usually done at interim hearings.

Question 7

What is detailed assessment of costs and when is it usually used?

Answer 7

Detailed assessment is used when the court cannot make a summary assessment. It involves a more comprehensive review of the costs, usually in multi-track cases.

Question 8

What are the steps involved in a detailed assessment of costs?

Answer 8

○Receiving party serves a notice of commencement and bill of costs.
○Paying party has 21 days to serve points of dispute.
○Receiving party has 21 days to file a reply.
○Receiving party must request an assessment hearing within 3 months

Question 9

What is the standard basis of costs assessment?

Answer 9

Costs awarded on the standard basis must be proportionate to the matters in issue, and any doubts are resolved in favour of the paying party

Question 10

What is the indemnity basis of costs assessment?

Answer 10

Costs on the indemnity basis are awarded as a penalty for a party’s conduct. Any doubts are resolved in favor of the receiving party, and there is no test of proportionality.

Question 11

In what circumstances can a non-party be liable for costs?

Answer 11

A non-party may be liable for costs if they were the real party interested in the litigation or responsible for bringing the proceedings. This is still an exceptional order.

Question 12

What is security for costs and why might a defendant seek it?

Answer 12

Security for costs is an order that requires the claimant to provide funds to the court to cover the defendant’s costs. A defendant might seek it if they are concerned that the claimant won’t be able to pay the costs if they lose.

Question 13

What conditions must be met for the court to make an order for security for costs?

Answer 13

The court must be satisfied it is just to make the order and one or more of the conditions in Part 25 applies. The conditions include if the claimant resides outside of a 2005 Hague Convention State or is an impecunious company

Question 14

What are the requirements for a valid Part 36 offer?

Answer 14

A Part 36 offer must be in writing, state it is made pursuant to Part 36, specify a relevant period of not less than 21 days for acceptance, and state whether it relates to the whole or part of the claim.

Question 15

What are the consequences of accepting a Part 36 offer within the relevant period?

Answer 15

If accepted within the relevant period, the sum must be paid within 14 days, and the receiving party is entitled to their costs up to the date of acceptance.

Question 16

What are the consequences of accepting a Part 36 offer late?

Answer 16

If a defendant’s offer is accepted late, the defendant pays the claimant’s costs up to the expiry of the relevant period, and the claimant pays the defendant’s costs thereafter until acceptance. If a claimant’s offer is accepted late, the defendant pays the claimant’s costs up to the date of acceptance.

Question 17

What happens if a claimant beats their own Part 36 offer at trial?

Answer 17

The claimant will be awarded damages plus an additional amount, enhanced interest on damages, and costs on an indemnity basis (multi-track) or a 35% uplift on fixed costs (fast/intermediate track) from day 22 onwards.

Question 18

What happens if a claimant wins at trial but fails to beat their own Part 36 offer?

Answer 18

No additional penalty is imposed on either party

Question 19

What happens if a claimant wins at trial but fails to beat a defendant’s Part 36 offer??

Answer 19

The defendant pays the claimant’s costs up to the date the relevant period expired (Day 21), then the claimant pays the defendant’s costs from Day 22 until judgment. This is sometimes called a ‘split costs’ order.

Question 20

What happens if a claimant loses at trial after rejecting a defendant’s Part 36 offer?

Answer 20

The claimant pays the defendant’s costs, as well as interest on those costs from Day 22 until judgment.