Revision Guide - Ch.16: Costs

Question 1

Generally, who pays the costs and disbursements?

Answer 1

As a general rule, the loser in litigation pays the winner’s costs and disbursements.

Question 2

What are costs?

Answer 2

Solicitor’s fees

Question 3

What are disbursements?

Answer 3

Expenses incurred by the solicitor on behalf of their client

Question 4

How are costs decided?

Answer 4

At the discretion of the court

Question 5

What is the indemnity principle?

Answer 5

Under the indemnity principle, a party cannot recover more from an opponent than they are liable to pay their own legal representative.

They can’t recover their solicitor’s ‘usual fee’ if the solicitor gave them a discounted fee.

Question 6

What is the standard basis for costs assessment?

Answer 6

The court allows only proportionate costs + exercises any doubt in favour of the paying party

Question 7

What is the indemnity basis for costs assessment?

Answer 7

The court does not consider proportionality, so it is difficult for the paying party to object to costs unless it is able to say that it was unreasonable for the solicitor to do the work at all.

Question 8

When is the indemnity basis used?

Answer 8

Usually only as a type of sanction to encourage conduct

Question 9

In a multi-track case, when do the parties file a costs budget?

Answer 9

If the claimant seeks less than £50,000 - with the Directions Questionnaire.

If the claimant seeks £50,000 or more - at least 21 days before the Case Management Conference.

Question 10

When may a judge make a costs management order?

Answer 10

CMO

At the Case Management Conference

Question 11

What is the effect of a costs management order?

Answer 11

Costs cannot unreasonably exceed the CMO.

If it looks like they will, a new CMO should be sought.

Question 12

What is the effect if a party fails to file a costs budget?

Answer 12

The party will not be able to recover costs if they prevail

Question 13

What will the judge usually do when the case concludes?

Answer 13

The judge will usually make an order for inter-partes costs

Question 14

What is an order for inter-partes costs?

Answer 14

An order for the loser to pay the winner’s costs

Question 15

What will be done in lower value vases + interim applications?

Answer 15

A statement of costs must be filed by the parties 24 hours before a hearing or 2 days before a trial, and the judge will make a summary assessment of the costs payable at conclusion of the hearing.

Question 16

What will be done in larger value claims?

Answer 16

The court is likely to order a ‘detailed assessment’

Question 17

What happens if a ‘detailed assessment’ of costs is ordered?

Answer 17

The winning party prepares a detailed bill of costs within 3 months of the judgment or order.

If the bill is over 20% more than the figures in the costs budget, the claimant must file a statement with reasons.

The paying party has 21 days to file points of dispute.

Alternatively, the judge may enter a provisional assessment based on the bill - indicating an amount the court is willing to approve.

Question 18

What can be done if the receiving party is not happy with the amount in the provisional assessment?

Answer 18

It can challenge it within 21 days + ask for the matter to be listed for a detailed assessment hearing.

Question 19

When will an application for security of costs order be made?

Answer 19

If the defendant is concerned that the claimant will not be able to pay the defendant’s costs if the defendant wins the case.

Question 20

What happens if an application for security of costs order is successful?

Answer 20

The claimant may be required to pay money into court or provide a bond.

Question 21

When is a security of costs order available?

Answer 21

Only if:
1. The claimant is resident outside the jurisdiction,

2. The claimant is a company or other body and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so,
3. The claimant has changed address since the claim was started with a view to evading the consequences of litigation,
4. The claimant failed to provide an address or gave an incorrect address on the claim form,
5. The claimant is acting as a nominal claimant - someone suing for the benefit of another person, or
6. The claimant has moved assets outside England and Wales to make it difficult to enforce an order for costs against them.

Question 22

When may the court issue a wasted costs order?

Answer 22

A court may issue a wasted costs order requiring a solicitor or party to pay the costs of the other party if the solicitor acted improperly, unreasonably, or negligently.