Costs

Question 1

What is included in ‘costs’?

Answer 1

Solicitor fees and disbursements such as court fees, expert fees and pre-action costs.

Question 2

What is the general rule regarding costs?

Answer 2

The losing party pays the successful party’s costs.

Question 3

When must the costs budget be filed?

Answer 3

21 days before the CMC

Question 4

What is the procedure for costs on each track?

Answer 4

Small claims track: Not awarded;
Fast track: fixed costs;
Intermediate track: fixed costs;
Multi-track: Detailed assessment

Question 5

How are fixed costs determined on the fast and intermediate tracks?

Answer 5

The court determines which band of complexity the parties are in, the costs awarded are determined from there.

Question 6

What is a summary assessment?

Answer 6

Court assesses the costs to be paid immediately after trial; parties to serve a statement of costs 2 days before fast track trial and 24 hours before an interim hearing.

Question 7

What is the detailed assessment of costs?

Answer 7

Court goes through the costs line by line and assesses whether they were proportionate and reasonable to be incurred.

Question 8

What is the standard basis for awarding costs?

Answer 8

Costs must be proportionate to the matters in issue.

Proportionality is determined on whether they bear a reasonable relationship to the matters in issue.

Even if reasonably incurred and in amount, if it isn’t proportionate it isn’t considered.

Question 9

What 5 factors are considered in assessing proportionality on the standard basis?

Answer 9

(1) the sums in issue;
(2) value of non-monetary relief in issue;
(3) complexity of the litigation;
(4) any additional work generated by the paying party’s conduct;
(5) wider factors such as reputation or public importance.

Question 10

Who receives the benefit of the doubt when assessing if costs were proportionate on the standard basis?

Answer 10

The paying party.

Question 11

What is the test for assessing costs on the indemnity basis?

Answer 11

Must be:

• Reasonably incurred; and
• Reasonable in amount

Question 12

Who receives the benefit of the doubt when assessing whether a cost was reasonable on the indemnity basis?

Answer 12

The receiving party.

Question 13

When would a non-party be ordered to pay costs?

Answer 13

If a third party funder was the real party interested in bringing the litigation, they will be made subject to an order.

Question 14

What is a security for costs order?

Answer 14

Where the court is satisfied it is just to make an order and a condition in part 25 applies, the claimant will be ordered to pay money into court as a security for costs.

Question 15

What are the 3 conditions in part 25 that could apply for a security for costs order?

Answer 15

(1) Claimant resides out of E/W or EU;

(2) Claimant is an impecunious company; or

(3) Claimant has taken steps to make enforcement difficult e.g. relocating.

Question 16

What 5 considerations are taken into account when assessing justness for security for costs?

Answer 16

(a) strength of claim and defence;

(b) claimant’s ability to provide security;

(c) cause of C’s impecuniosity;

(d) whether there is property within the jurisdiction;

(e) whether the application was prompt

Question 17

What is a part 36 offer?

Answer 17

An offer to settle a claim but with potential penalties attached for the receiver.

Question 18

What must a part 36 offer consist of?

Answer 18

(1) be in writing;

(2) make clear it is made pursuant to part 36;

(3) specify a period of not less than 21 days where, if the offer is accepted, D pays C’s costs; and

(4) state whether it relates to all or part of a claim, and whether it considers any counterclaim

Question 19

What happens when a Part 36 offer is accepted in the relevant period?

Answer 19

Sum must be paid within 14 days. Failure to pay would result in the receiving party entering judgement.

Question 20

What happens if C accepts D’s offer after the relevant period has expired?

Answer 20

D pays C’s costs up until the date which the relevant period expired; and

C pays D’s costs thereafter until the date of acceptance.

Question 21

What happens if D doesn’t accept a part 36 offer which is equal to or less than the amount awarded at trial?

Answer 21

Damages are awarded plus an additional 10% (up to £500,000) or 5% (between £500,000-1,000,000);

from the expiry of the RP, higher interest on damages/costs and costs are awarded on the indemnity basis.

Question 22

What happens if C wins at trial but doesn’t beat D’s part 36 offer?

Answer 22

C is awarded damages and interest;

C is awarded costs until the expiry of the RP;

C pays D’s costs from the expiry of the RP.

Question 23

When is it unjust to impose part 36 consequences?

Answer 23

If the offeror had not provided significant disclosure to enable the offeree to make an informed decision, or if a part 36 offer was made only days before the trial.