Unit 17 Costs

Question 1

What 3 main things does the court’s discretion as to costs include?

Answer 1

The court has discretion as to –

a. whether costs are payable by one party to another;
b. the amount of those costs; and
c. when they are to be paid.

Question 2

What is the general rule on costs?

Answer 2

the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party

Question 3

What 2 types of cases does the general rule on costs (cost follows event) not apply?

Answer 3

The general rule does not apply to the following proceedings –

a. proceedings in the Court of Appeal on an application or appeal made in connection with proceedings in the Family Division; or
b. proceedings in the Court of Appeal from a judgment, direction, decision or order given or made in probate proceedings or family proceedings.

Question 4

In deciding what order (if any) to make about costs what circumstances will the court have regard to?

Answer 4

In deciding what order (if any) to make about costs, the court will have regard to all the circumstances, including –

a. the conduct of all the parties;
b. whether a party has succeeded on part of its case, even if that party has not been wholly successful; and
c. any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

Question 5

In considering the “conduct” of the parties in determining costs, what does this include?

Answer 5

The conduct of the parties includes –

a. conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol;
b. whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
c. the manner in which a party has pursued or defended its case or a particular allegation or issue; and
d. whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.

Question 6

What orders can the court make that a party must pay?

Answer 6

The orders which the court may make under this rule include an order that a party must pay –
a. a proportion of another party’s costs;
b. a stated amount in respect of another party’s costs;
c. costs from or until a certain date only;
d. costs incurred before proceedings have begun;
e. costs relating to particular steps taken in the proceedings;
f. costs relating only to a distinct part of the proceedings; and
g. interest on costs from or until a certain date, including a date before judgment.
Before the court considers making an order under paragraph (f), it will consider whether it is practicable to make an order under paragraph (a) or (c) instead.
Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.

Question 7

What are the two options for basis of assessment of costs?

Answer 7

Where the court is to assess the amount of costs (whether by summary or detailed assessment) it will assess those costs –
a. on the standard basis; or
b. on the indemnity basis,
but the court will not in either case allow costs which have been unreasonably incurred or are unreasonable in amount.

Question 8

What does it mean for costs to be assessed on the standard basis?

Answer 8

Where the amount of costs is to be assessed on the standard basis, the court will –

a. only allow costs which are proportionate to the matters in issue. Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred; and
b. resolve any doubt which it may have as to whether costs were reasonably and proportionately incurred or were reasonable and proportionate in amount in favour of the paying party.

Question 9

What does it mean for costs to be assessed on the indemnity basis?

Answer 9

Where the amount of costs is to be assessed on the indemnity basis, the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party.

Question 10

What happens if the court doesn’t specify the standard or indemnity basis in its order as to costs?

Answer 10

Where –
a. the court makes an order about costs without indicating the basis on which the costs are to be assessed; or
b. the court makes an order for costs to be assessed on a basis other than the standard basis or the indemnity basis,
the costs will be assessed on the standard basis.

Question 11

What costs are “reasonable costs”?

Answer 11

Costs incurred are proportionate if they bear a reasonable relationship to:

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 paying party; and
e. any wider factors involved in the proceedings, such as reputation or public importance.

Question 12

What will courts take into account if assessing costs on the standard basis?

Answer 12

• proportionately and reasonably incurred; or
• proportionate and reasonable in amount.
If costs are awarded on the standard basis, the court assessing costs will disallow any costs –
a. which it finds to have been unreasonably incurred;
b. which it considers to be unreasonable in amount;
c. which it considers to have been disproportionately incurred or to be disproportionate in amount; or
d. about which it has doubts as to whether they were reasonably or proportionately incurred, or whether they are reasonable and proportionate in amount.

Question 13

What will courts take into account if assessing costs on the indemnity basis?

Answer 13

If costs are awarded on the indemnity basis, the court assessing costs will disallow any costs –

a. which it finds to have been unreasonably incurred; or
b. which it considers to be unreasonable in amount.

Question 14

What will the court have regard to in assessing costs?

Answer 14

The court will also have regard to –
a. the conduct of all the parties, including in particular –
I. conduct before, as well as during, the proceedings; and
II. the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
b. the amount or value of any money or property involved;
c. the importance of the matter to all the parties;
d. the particular complexity of the matter or the difficulty or novelty of the questions raised;
e. the skill, effort, specialised knowledge and responsibility involved;
f. the time spent on the case;
g. the place where and the circumstances in which work or any part of it was done; and
h. the receiving party’s last approved or agreed budget.

Question 15

What can the court do if there is misconduct by a party in failing to comply with a costs assessment or costs order?

Answer 15

a. disallow all or part of the costs which are being assessed; or
b. order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.
Where –
a. the court makes such an order against a legally represented party; and
b. the party is not present when the order is made,
the party’s legal representative must notify that party in writing of the order no later than 7 days after the legal representative receives notice of the order.

Question 16

To what proceedings does qualified one-way costs shifting apply?

Answer 16

This Section applies to proceedings which include a claim for damages –
a. for personal injuries;
b. under the Fatal Accidents Act 19767; or
c. which arises out of death or personal injury and survives for the benefit of an estate by virtue of section 1(1) of the Law Reform (Miscellaneous Provisions) Act 19348,
but does not apply to applications pursuant to section 33 of the Senior Courts Act 1981 or section 52 of the County Courts Act 1984 (applications for pre-action disclosure).

Question 17

What is the effect of qualified one way costs shifting?

Answer 17

orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.
Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.

Question 18

What are the exceptions to qualified one way costs shifting where permission is NOT required?

Answer 18

Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –
a. the claimant has disclosed no reasonable grounds for bringing the proceedings;
b. the proceedings are an abuse of the court’s process; or
c. the conduct of –
I. the claimant; or
II. a person acting on the claimant’s behalf and with the claimant’s knowledge of such conduct,
is likely to obstruct the just disposal of the proceedings.

Question 19

What are the exceptions to qualified one way costs shifting where permission IS required?

Answer 19

1. Orders for costs made against the claimant may be enforced to the full extent of such orders with the permission of the court where the claim is found on the balance of probabilities to be fundamentally dishonest.
2. Orders for costs made against the claimant may be enforced up to the full extent of such orders with the permission of the court, and to the extent that it considers just, where –
   a) the proceedings include a claim which is made for the financial benefit of a person other than the claimant or a dependant; or
   b) a claim is made for the benefit of the claimant other than a claim to which this Section applies.
3. Where paragraph (2)(a) applies, the court may, subject to rule 46.2, make an order for costs against a person, other than the claimant, for whose financial benefit the whole or part of the claim was made.

Question 20

What if the costs claimed by a party are more than 20% higher than what they budgeted?

Answer 20

If there is a difference of 20% or more between the costs claimed by a receiving party on detailed assessment and the costs shown in a budget filed by that party, the receiving party must provide a statement of the reasons for the difference with the bill of costs.
Where it appears to the court that the paying party reasonably relied on the budget, the court may restrict the recoverable costs to such sum as is reasonable for the paying party to pay in the light of that reliance, notwithstanding that such sum is less than the amount of costs reasonably and proportionately incurred by the receiving party.
Where it appears to the court that the receiving party has not provided a satisfactory explanation for that difference, the court may regard the difference between the costs claimed and the costs shown in the budget as evidence that the costs claimed are unreasonable or disproportionate.

Question 21

Define the cost order: Costs/Costs in any event

Answer 21

The party in whose favour the order is made is entitled to that party’s costs in respect of the part of the proceedings to which the order relates, whatever other costs orders are made in the proceedings.

Question 22

Define the cost order: Costs in the case/Costs in the application

Answer 22

The party in whose favour the court makes an order for costs at the end of the proceedings is entitled to that party’s costs of the part of the proceedings to which the order relates.

Question 23

Define the cost order: Costs reserved

Answer 23

The decision about costs is deferred to a later occasion, but if no later order is made the costs will be costs in the case.

Question 24

Define the cost order: [Claimant’s/ Defendant’s]

costs in [case/ application]

Answer 24

If the party in whose favour the costs order is made is awarded costs at the end the proceedings, that party is entitled to that party’s costs of the part of the proceedings to which the order relates. If any other party is awarded costs at the end of the proceedings, the party in whose favour the final costs order is made is not liable to pay the costs of any other party in respect of the part of the proceedings to which the order relates.

Question 25

Define the cost order: Costs thrown away

Answer 25

Where, for example, a judgment or order is set aside, the party in whose favour the costs order is made is entitled to the costs which have been incurred as a consequence. This includes the costs of –
• preparing for and attending any hearing at which the judgment or order which has been set aside was made;
• preparing for and attending any hearing to set aside the judgment or order in question;
• preparing for and attending any hearing at which the court orders the proceedings or the part in question to be adjourned;
• any steps taken to enforce a judgment or order which has subsequently been set aside.

Question 26

Define the cost order: Costs of and caused by

Answer 26

Where, for example, the court makes this order on an application to amend a statement of case, the party in whose favour the costs order is made is entitled to the costs of preparing for and attending the application and the costs of any consequential amendment to his own statement of case.

Question 27

Define the cost order: Costs here and below

Answer 27

The party in whose favour the costs order is made is entitled not only to that party’s costs in respect of the proceedings in which the court makes the order but also to that party’s costs of the proceedings in any lower court. In the case of an appeal from a Divisional Court the party is not entitled to any costs incurred in any court below the Divisional Court.

Question 28

Define the cost order: No order as to costs – Each party to pay own costs

Answer 28

Each party is to bear that party’s own costs of the part of the proceedings to which the order relates whatever costs order the court makes at the end of the proceedings.

Question 29

WHEN should the court consider and make a summary assessment as to costs?

Answer 29

Whenever a court makes an order about costs which does not provide only for fixed costs to be paid the court should consider whether to make a summary assessment of costs.

Question 30

WHEN should the court make a summary assessment as to costs?

Answer 30

The general rule is that the court should make a summary assessment of the costs –
a. at the conclusion of the trial of a case which has been dealt with on the fast track, in which case the order will deal with the costs of the whole claim; and
b. at the conclusion of any other hearing, which has lasted not more than one day, in which case the order will deal with the costs of the application or matter to which the hearing related. If this hearing disposes of the claim, the order may deal with the costs of the whole claim,
unless there is good reason not to do so, for example where the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily.

Question 31

What is the general rule for summary assessment?

Answer 31

• Costs SHOULD be summarily assessed at the conclusion of either the fast track trial or any other hearing which has not lasted more than one day.
• Each party intending to claim costs must prepare a statement of costs
• Statements of costs must be filed and served:
o Fast track trial: not less than 2 days before the trial
o Any other hearing: No later than 24 hours before the time fixed for the hearing

Question 32

What is a Sanderson order?

Answer 32

The unsuccessful defendant to pay the successful defendant’s costs directly to him/her. (Commonly used where claimant is legally aided)

Question 33

What is a Bullock order?

Answer 33

The claimant to pay the successful defendant’s costs to him/her and recover them from the unsuccessful defendant as part of the claimant’s costs of the action.