Overview of costs

Question 1

What is the court’s jurisdiction in relation to a costs order?

Answer 1

The court has full power to determine who and to what extent costs of proceedings are to be paid.

This includes costs prior to proceedings such as when complying with the pre-action protocol and spent negotiating.

The court will consider making a costs order at the end of any interim hearing as well as at the ed of trial.

Question 2

What are the different types of litigation costs?

Answer 2

Solicitor-client costs;
Inter-party costs; and
Non-party costs

Question 3

What are solicitor-client costs?

Answer 3

The costs payable by the client to the solicitor under the contract. The client is primarily responsible for their solicitors costs.

If a party is successful in litigation, it is likely they will want to seek an order that the other party should pay their costs.

Question 4

What is the indemnity principle?

Answer 4

It provides that a party will not be able to recover a sum in excess of their liability to their own solicitor.

Question 5

What are inter-party costs?

Answer 5

This is the term used for the actual figure for costs awarded by the court which one party has to pay the other party.

Question 6

What are non-party costs?

Answer 6

Court has the jurisdiction to award costs against a non-party (i.e. to require a person who is not a party to the proceedings to pay something towards the costs).

This is most likely where there is a `funder’ funding the litigation.

Question 7

What will the court consider when deciding whether to award costs against a non-party?

Answer 7

*Is it just to make the order?

*Where the non-party funds but also substantially controls or at any rate is to benefit from proceedings, justice will ordinarily require that if the proceedings fail the non-party will pay the successful party’s costs.

Question 8

What is the general rule in relation to whether costs are payable?

Answer 8

Costs follow the event. This means the unsuccessful party pays the winner.

Question 9

When will the court depart from the general rule of when costs are payable?

Answer 9

Matters it will take into account is the parties conduct and whether a party succeeded on only some issues/ part of the claim. An example is where the successful party unreasonably refuses to engage in ADR. Burden is on unsuccessful party to show there should be a departure from the general rule.

Question 10

When determining the amount of costs payable what is the basis for assessment?

Answer 10

There is a standard basis and an indemnity basis.

Question 11

What is the standard basis for assessment?

Answer 11

The court will allow costs which:

*have been proportionately and reasonably incurred; and

*are proportionate and reasonable in amount

Any doubt is resolved in favour of the paying party.

It is not uncommon for only 60% of costs to be recovered from the paying party.

Question 12

What is the indemnity basis for assessment?

Answer 12

The court will allow costs which:

*Have been reasonable incurred; and

*Are reasonable in amount

Any doubt will be resolved in favour of the receiving party.

It is not uncommon that the receiving party will receive 70-80% of its legal costs from the paying party.

Question 13

What does `proportionate mean’?

Answer 13

Costs will be proportionate if they bear a reasonable relationship to the following specified criteria:

a) The sums in issue in the proceedings;

b) The value of any non-monetary relief in issue in the proceedings;

c) The complexity of the litigation;

d) Any additional work generated by the conduct of the party paying; and

e) Any wider factors involved in the proceedings, such as reputation or public importance

Question 14

What factors are to be taken into account in deciding the actual amount of costs?

Answer 14

After deciding the basis for assessment, the court will take into account the circumstances of the case including:

• Conduct of the parties
• Complexity of the matter
• The place where and circumstances in which the work was done
• The receiving party’s last approved or agreed budget.

Question 15

What is the time for complying with an order for costs?

Answer 15

Unless the court orders otherwise, a party must comply with an order for the payment of costs within 14 days of:

• The date of the judgment or order if it states the amount of costs;
• If the amount of those costs (or part of them) is decided later, the date of the certificate which states the amount;

Question 16

What is qualified one way costs shifting? (QOCS)

Answer 16

Regime for the recovery of costs between parties in proceedings involving claims for damages in respect of death and PI. It restricts the defendant’s ability to enforce a costs order against the claimant.