16. Costs

Question 1

For what five reasons might the court depart from the general rule that the loser pays costs?

Answer 1

1. Failure to comply with pre-action protocol
2. Failure to negotiate, or engage in ADR
3. Rejection of a Part 36 offer (discussed in chapter 17)
4. Exaggeration, or
5. Failure to succeed on the whole of the claim

Question 2

What does the indemnity principle provide?

Answer 2

Only costs reasonably incurred and reasonable in amount are recoverable.
* if it unreasonable in amount, will reduce value.
* if it is unreasonable incurred, disallowed completely.

Any doubt is resolved in favour of receiving party.

Question 3

When is the court likely to make an adverse costs order?

Answer 3

where parties have unreasonably refused to partake in ADR.
* effect of requiring party to the proceedings too pay some or all of the other party’s costs, even if they succeed.

Question 4

What are the two bases of costs assessment?

Answer 4

1. Standard basis
2. Indemnity basis

Question 5

What occurs under the standard basis of costs assessment?

Answer 5

Proportionate and reasonably incurred costs and doubt is exercised in favour of the paying party.

Question 6

What triggers costs assessment on an indemnity basis and what occurs under this?

Answer 6

Paying party incurring unnecessary costs by their conduct.

The court does not consider proportionality and the paying party cannot object as to costs unless they are claiming the solicitor shouldn’t have done the work at all.

Question 7

What four factors will the court take into account when assessing costs?

Answer 7

1. Value of the claim
2. Complexity and importance of the claim
3. Skill and effort involved
4. Time spent

Question 8

What are the two ways a party can file their costs budget, depending on the value of the case?

Answer 8

1. £50,000 and below: filed with Directions Questionnaire
2. Over £50,000: filed 21 days before Case Management Conference

Question 9

What is the effect of the court making a Costs Management Order, and what is the % leeway afforded?

Answer 9

It means that the cost budget should not be departed from, save for a 20% leeway

Question 10

What is the possible consequence of not filing a budget?

Answer 10

Costs may not be recoverable, beyond court fees

Question 11

What are inter-partes costs?

Answer 11

A term given to describe the other party’s costs when you are obligated to pay them, to be distinguished from a party’s own costs

Question 12

How soon before (1) an interim hearing, and (2) fast-track trial must a statement of costs be filed?

Answer 12

1. 24 hours
2. Two days before

Question 13

In lower value cases and interim applications, how soon after the hearing must costs be paid?

Answer 13

14 days

Question 14

What three types of costs are fixed on the small claims track, departing from the general rule that orders for payment of legal costs are generally not made on the small claims track?

Answer 14

1. Low value road traffic accidents
2. Small claims cases or money claims
3. Employer’s liability cases

Question 15

What is the starting point for a detailed assessment of costs, and within what time limit must the receiving party file this document?

Answer 15

The receiving party prepares a bill of costs and serves within three months of judgment or order

Question 16

After being served with a bill of costs, what does a paying party file and within what time limit after being served must they do so?

Answer 16

The paying party files their points of dispute within 21 days.

Question 17

What does it mean for a District Judge to provisionally assess the bill?

Answer 17

District Judge will consider the reasonableness of the bill

Question 18

What is the upper limit for costs, above which a provisional assessment will not occur?

Answer 18

£75,000

Question 19

What is the receiving party’s option if they are not happy with the amount in the provisional assessment, and within what time limit must they apply for this option?

Answer 19

They can challenge the provisional assessment and apply for a detailed assessment hearing within 21 days

Question 20

What must the claimant file if the bill is more the 20% over the budget?

Answer 20

A statement of reasons

Question 21

Within what time limit of the final costs certificate should costs be paid?

Answer 21

14 days

Question 22

Who is the only party that can apply for a security of costs order, and what is the logic being precluding the other party?

Answer 22

Defendant, as they cannot stop the claimant bringing proceedings, but the claimant is free to continually assess whether the defendant is worth suing

Question 23

What are the five criteria, one of which is enough, which the defendant must satisfy to make an application for a security of costs order?

Answer 23

Claimant:

1. Resides outside jurisdiction
2. Has changed address since claim started with a view to evading consequences of litigation, or provided no/incorrect address on the claim form
3. Is suing for the benefit of a third-party
4. Is corporate entity and there is reason to believe they won’t be able to pay costs
5. Has taken steps regarding their assets that would make it difficult to enforce a costs order, e.g. moving them outside the jurisdiction

Question 24

In what situation is a non-party costs order available?

Answer 24

Where the non-party funds the proceedings and controls or stands to benefit from them

Question 25

How must a solicitor conduct themselves in order to have a wasted costs order made against them?

Answer 25

Improperly, unreasonably, or negligently

Question 26

In addition to improper, unreasonable, or negligent conduct, what are the two criteria for a court to make a wasted costs order against a solicitor?

Answer 26

1. Conduct caused unnecessary cost, and
2. It is just to make the order

Question 27

Within what time limit of a wasted costs order being made must a solicitor inform their client?

Answer 27

7 days

Question 28

What is the purpose of a costs management order?

Answer 28

Court sets a baseline metric for reasonable/proportionate costs for each stage of proceedings.

• In standard basis assessment, court will not depart from these set figures unless there is good reason to do so.
• Note - parties’ agreed costs cannot be changed by court.

Question 29

Can parties revise their initial costs budgets?

Answer 29

Only available if ‘significant developments’ have taken place NOT to correct mistakes/inadequacies.

Question 30

How are costs assessed on an standard basis?

Answer 30

Costs payable where:
- Proportionately and reasonably incurred and in amount
- Any doubt is resolved in favour of the paying party.

Question 31

How are costs assessed on an indemnity basis?

Answer 31

• Costs payable if reasonably incurred and in amount
• Any doubt is resolved in favour of the receiving party.

Question 32

What additional factors will the court consider when assessing costs?

Answer 32

• Parties’ conduct, including willingness to engage in ADR.
• Amount/value at stake
• Cases’ importance for parties + its complexity.
• Skill, effort, specialised knowledge, and responsibility requiored.
• Time spent on case
• Place/circumstances in which work was conducted (ie. type of law firm)
• Receiving party’s last approved or agreed upon costs budget.
• Difference between listed amount in budget and claimed amount now.

Question 33

How are costs generally assessed in the fast-track?

Answer 33

summarily
file and serve statement of costs on other party no less than 24 hours before hearing.

Question 34

How are costs generally assessed in the multi-track?

Answer 34

Detailed assessment

Question 35

What is the procedure for a detailed costs assessment?

Answer 35

1) Party in whose favour the order was made serves notice of commencement and copy of its bill of costs to paying paty within 3 months of date of judgment/order.

2) Paying party must raise disputed points within 21 days of receipt of notice.

3) If no agreement is reached, the receiving party must reply within 21 days from paying party’s response AND request assessment hearing within 3 months from judgement/order date.

4) Conduct of assessment hearing where bill exceeds £75,000 live (cf. less than that, no in-person hearing is held).

Question 36

What pre-action costs recoverable where the matter becomes litigated?

Answer 36

Any costs incurred prior to the start of proceedings, provided those costs are of and incidental to the proceedings and are reasonable and proportionate.
- does not include consideration of options for funding the claim

Question 37

Does a litigant in person have to file a costs budget in a multi-track claim?

Answer 37

No, only parties in claims that are not litigants in person will need to file and exchange budgets.

Question 38

What is one key point to remember about when costs orders are made?

Answer 38

consequential upon an event, so require judge to come to some determination (ie. order strike out) for a cost order to follow.

Question 39

Where a court makes a costs order against a party who is not present, within what time must their solicitor notify them?

Answer 39

no later than 7 days after solicitor receives notice of order

Question 40

What is the effect of an order of costs in any event at the end of an interim hearing?

Answer 40

Party in whose favour the order is made, will recover their legal costs of the interim hearing irrespective of whether they lose at the final hearing.

Question 41

What is the effect of an order of costs in the case at the end of an interim hearing?

Answer 41

Loser at the at the final hearing pays

Question 42

What is the effect of an order of costs reserved at the end of an interim hearing?

Answer 42

Decision on who should pay the costs is deferred to a later date and if not dealt with then “costs in the case” applies.

Question 43

What is meant by ‘costs thrown away’ an interim hearing?

Answer 43

another version of costs in the application, but reflects the fact that one side has caused unnecessary costs to be incurred and should therefore pay them.

Question 44

What is meant by costs in the application following an interim hearing?

Answer 44

Whichever side obtains a costs order in the application will also recover the costs of the interim hearing from the other side (this usually applies where the initial hearing is adjourned to a later date).

Question 45

What is the effect of a ‘wasted costs’ order?

Answer 45

cost order made against directly against a solicitor or barrister for their negligence, failing to comply with their duties to the court, protocol, putting forward unmeritious arguments, etc.

Question 46

What is effect of a ‘No Order as to costs’?

Answer 46

If the judge makes this order or is silent on costs then neither party is entitled to recover their costs from the other.

Question 47

What are the consequences of the receiving party failing to file their bill of costs within the three month period?

Answer 47

Court has discretion to **disallow ** all or part of the statutory interest otherwise payable.

Question 48

What is a default costs certificate, after what period is a party eligible to apply?

Answer 48

in multi-track, if losing party fails to object to provisional assessment within 21 days, then can apply for provisional assement to be the final one.