Costs Flashcards
(14 cards)
What is the difference between costs and damages?
Damages: Compensation for harm/loss (e.g., injury or contract breach).
Costs: Expenses of the legal process (e.g., solicitor fees, court fees, expert evidence).
Costs are separate from damages and may not be fully recovered even if you win.
What is the general rule on who pays costs? (CPR 44.2)
The unsuccessful party pays the successful party’s costs.
The court has discretion to depart from this rule.
What are ‘receiving’ and ‘paying’ parties in cost assessments?
Receiving party: The one entitled to recover costs (usually the winner).
Paying party: The one ordered to pay costs (usually the loser).
Applies regardless of claimant or defendant status.
What are fixed recoverable costs and when do they apply?
Set amounts of recoverable costs under CPR for Fast and Intermediate Track claims.
Based on complexity bands and stage of resolution.
No costs budgeting required.
When can fixed costs be adjusted?
Exceptional circumstances (e.g., unusual complexity).
Unreasonable conduct:
Can lead to a 50% increase or reduction in fixed costs.
What is summary assessment of costs?
Costs are decided immediately at the end of a hearing (usually ≤1 day).
Statement of costs must be served at least 24 hours before the hearing.
No detailed breakdown—quicker but less predictable.
When is detailed assessment used?
When costs are too complex for summary assessment (esp. in Multi-Track).
Common in final hearings or if summary assessment is impractical.
What are the steps in a detailed assessment of costs? (5)
1. Notice of Commencement
- Served by the receiving party on the paying party
- Must be served within 3 months of the final order or judgment
- Includes the bill of costs and formally starts the assessment process
2. Points of Dispute
- Served by the paying party
- Must be served within 21 days of the notice of commencement
- Sets out objections to specific items in the bill
3. Reply (optional)
- Served by the receiving party
- Must be served within 21 days of receiving Points of Dispute
- Replies to the paying party’s objections
4. Request for Costs Assessment Hearing
- Made by the receiving party if costs are not agreed
- Must be filed within 3 months of the expiry of the 3-month period for serving the Notice of Commencement
- Receiving party requests the court to proceed with assessment
5. Costs Assessment Hearing / Costs Provisional Assessment
- Court assesses costs at a hearing or by provisional assessment (if total claimed is £75,000 or less)
- Provisional assessment is on paper without attendance
What is provisional assessment and when is it used?
For bills under £75,000.
Judge assesses costs on paper, without hearing.
Either party may request oral hearing within 21 days, but:
Must achieve ≥20% adjustment, or pay costs of the oral hearing.
What factors are considered in assessing costs under CPR 44.4?
- Conduct of the parties
- Value and complexity
- Importance of the case
- Skill, knowledge, and time spent
- Approved costs budget
- Circumstances of the work
- Proportionality (Standard basis only)
What is the Standard Basis of cost assessment?
Costs must be reasonable and proportionate.
Doubt is resolved in favour of the paying party.
Disproportionate costs may be reduced or disallowed, even if reasonable.
What is the Indemnity Basis of cost assessment?
Used when there has been misconduct or bad behaviour.
Proportionality not required.
Doubt is resolved in favour of the receiving party.
Higher recovery rate than standard basis.
What’s the key difference between Standard and Indemnity basis?
Standard basis
* Proportionality requireD
* Doubt is resolved in favour of paying party
* The purpose of paying costs on the standard basis is to promote fairness and reasonableness
Indemnity basis
* proportionality is NOT required
* Doubt is resolved in favour of the receiving party
* The purpose of paying costs on an indemnity basis is to punish misconduct
Case Example: May v Wavell
Claim settled for £25,000.
Claimed costs: £200,000.
Reduced to £100,000 (item-by-item), then £35,000 on proportionality review.
Raised to £75,000 on appeal.
Shows the robust proportionality test in action.
