7): Procedures and Processes Relevant to Costs in Dispute Resolution

Question 1

What is the general rule regarding costs?

Answer 1

Losing party usually pays the winner’s costs.

Court has discretion to decide otherwise.

Question 2

What Do “Costs” Include?

Answer 2

Solicitor’s fees.

Disbursements: court fees, counsel, experts, etc.

Question 3

What are the court’s powers on costs?

Answer 3

Make a summary assessment (fast track).

Order a detailed assessment (multi-track).

Considers conduct before and during litigation.

May penalise unreasonable behaviour.

Question 4

What is a Summary Assessment (Fast Track)?

Answer 4

Court assesses costs immediately after hearing.

Brief review by judge (not itemised).

Payable within 14 days.

Question 5

What is a Detailed Assessment (Multi-Track)?

Answer 5

1. Used when parties disagree on costs.
2. Steps:
   -Serve notice, bill, and disbursements (within 3 months).
   -Opponent replies in 21 days.
3. If no reply: default costs certificate.
4. If disputed: assessment hearing.
5. Under £75k: provisional assessment.
   -Over £75k: full hearing with costs judge.

Question 6

When do Fixed Costs apply?

Answer 6

Apply to:
-Small claims, fast track, intermediate track (from Oct 2023).

Prescribed in CPR PD 45.

Limited exceptions (e.g. clinical negligence).

Question 7

What is the difference between the standard vs indemnity basis of awarding costs?

Answer 7

1. Standard Basis:
   - Costs must be proportionate and reasonable.
   - Doubts resolved in paying party’s favour.
2. Indemnity Basis:
   - Costs must be reasonable only.
   - No proportionality test.
   - Doubts resolved in receiving party’s favour.

Question 8

What are Interim and Final Costs Orders?

Answer 8

1. Interim:
   - For interim hearings (e.g. summary judgment).
   - Usually summary assessment.
2. Final:
   -At trial’s end.
   -Considers: Conduct, value, complexity, effort, budget, importance.

Question 9

What are non-party costs?

Answer 9

Court may order costs against a non-party if:

They controlled the litigation,
AND
Stood to benefit from its outcome.

Question 10

What is a part 36 Offer?

Answer 10

1. Written offer to settle under CPR Part 36.
2. Must:
   - State it’s a Part 36 offer.
   - Define scope (full/part/counterclaim).
   - Include a relevant period (min. 21 days).
3. Not available in small claims.

Question 11

How is a Part 36 offer accepted?

Answer 11

Serve notice of acceptance.

Pay within 14 days or judgment may be entered.

Question 12

What are the possible Outcomes for Part 36 offers?

Answer 12

1. D makes offer, C accepts:
   - Within period: D pays C’s costs up to acceptance.
   - Outside period: D pays C’s early costs; C pays D’s late costs.
2. C makes offer, D accepts:
   - D pays C’s costs up to date of acceptance (in both scenarios).

Question 13

What happens with Rejected Part 36 Offers?

Answer 13

1. C makes offer + D rejects + C wins: If award equals/beats offer:
   - D pays indemnity costs from expiry of offer period.
   - Interest up to 10% above base.
   - 10% uplift on damages (first £500k), 5% thereafter (max £75k).
2. C wins but fails to beat offer:
   - No penalty on D.
3. D makes offer, C fails to beat:
   - C pays D’s post-offer costs + interest.
4. D makes offer, C loses:
   - C pays D’s costs + interest.

Question 14

What is an order for Security for Costs?

Answer 14

1. D can apply if C:
   - Is non-UK resident (non-Hague state).
   - Is a company unlikely to pay.
   - Has moved/hidden assets.
2. Form N244 + witness statement needed.
3. Must justify amount requested.

Question 15

What is the Security for Costs Procedure?

Answer 15

1. Court may order payment into court or other security.
2. Not available:
   - Pre-action.
   - For small claims.
   - Solely for interim applications.
3. Delay can reduce chance of success or affect cost recovery.