Costs MCQs Flashcards
Which ONE of the following statements in relation to the availability of interest on damages is CORRECT?
If interest is awarded under S. 35A SCA 1981 or s. 69 CCA 1984, the rate of and period for which interest is payable are at the discretion of the court.
The court must always make an award of interest on damages in cases involving personal injury and death over £200 and has no discretion to refuse.
The Judgments Act 1838 rate of 8% is always applied to statutory awards of interest.
If proceedings for a debt are served on a defendant and the defendant then satisfies the claim, no interest will be awarded.
If interest is awarded under S. 35A SCA 1981 or s. 69 CCA 1984, the rate of and period for which interest is payable are at the discretion of the court.
The court has a discretion as to the rate and period of interest under section 35A of the Senior Courts Act 1981 or section 69 of the County Courts Act 1984. It is therefore wrong to say that the Judgments Act 1838 rate of 8% is always applied.
As to personal injury claims of over £200, the award of interest is mandatory UNLESS the court is satisfied that there are “special reasons” not to award interest: section 35A(2) of the Senior Courts Act 1981 or section 69(2) of the County Courts Act 1984.
As to debt proceedings where the defendant satisfies the claim, an award of simple interest is mandatory: “the defendant shall be liable to pay” (section 35A(3) of the Senior Courts Act 1981 or section 69(3) of the County Courts Act 1984).
Camilla sues Davinder for damages for breach of contract in the sum of £13,000. At the end of the fast track trial, the judge gives judgment in favour of Camilla.
Which of the following statements is CORRECT in relation to the likely costs position?
As the unsuccessful party, Davinder will be ordered to pay Camilla’s costs on the indemnity basis, to be assessed by summary or detailed assessment.
The general rule is that Davinder will be ordered to pay Camilla’s costs, but this is a matter of discretion for the court. The general rule is that the costs will be assessed by summary assessment.
As the unsuccessful party, Davinder will be ordered to pay Camilla’s costs on the standard basis, to be assessed by summary or detailed assessment.
The general rule is that Davinder will pay Camilla’s costs, but this is a matter of discretion for the court. The general rule is that costs will be assessed by detailed assessment.
The general rule is that Davinder will be ordered to pay Camilla’s costs, but this is a matter of discretion for the court. The general rule is that the costs will be assessed by summary assessment.
This states the general rule and when exercising its discretion as to costs – see CPR 44.2(2) As this is a fast track case the general rule is that costs will be assessed on the standard basis unless there is good reason not to do so – see PD 44 para 9.2
At a County Court trial on the multi-track, the Judge has awarded the claimant damages of £110,000 in respect of its claim for breach of contract for non - payment of goods. The defendant has been successful in their counterclaim on the basis that some of the goods were defective causing loss of profit and has been awarded damages of £40,000 on the counterclaim. Both parties have conducted the proceedings reasonably and properly and conduct is not in issue. The Judge has adjourned over lunch and will hear costs submissions that afternoon. The Judge has noted that the net effect of his judgment is that the claimant is overall the successful party in that it will receive £70,000 in damages from the defendant.
You act for the claimant, which of the following would be the BEST ADVICE to give your client on the costs orders which may be made ?
As the defendant is also a successful party the Judge must order that the Claimant as the successful party overall will recover half of their total costs of the claim and counterclaim.
As both parties were successful it is unlikely that the claimant will recover all of their costs. The Judge may instead make a proportion order so that the claimant as the successful party overall will recover a proportion of their total costs of the claim and counterclaim.
Although both parties were successful, it is likely that the claimant as the successful party overall will obtain an order that the defendant pay all of the claimant’s costs of the claim and counterclaim.
As both parties were successful the Judge will make an order that the defendant pay the claimant’s costs of the claim and the claimant pay the defendant’s costs of the counterclaim.
As both parties were successful it is unlikely that the claimant will recover all of their costs. The Judge may instead make a proportion order so that the claimant as the successful party overall will recover a proportion of their total costs of the claim and counterclaim.
This is the best advice to give the claimant in these circumstances. Please review your notes on factors relevant to the court’s discretion at rules 44.2(1) –(5) and also the commentary at 44.2.14 (paras 1 and 2) in relation to situations where there is success both ways. Although discretionary, it is generally preferable in these circumstances for the court to make a proportion order so that the overall winner recovers a proportion of the costs of the whole claim rather than an order for costs going in opposite directions.
You are acting on behalf of the defendant, Benchmark Builders Ltd, at a detailed assessment hearing of a multi-track claim. At trial, 7 months ago, the claimant was awarded damages and Benchmark ordered to pay 80% of their costs on the standard basis to be assessed if not agreed. The 20% deduction in costs reflected the fact that the Claimant was not wholly successful in their claim.
Your client and Instructing Solicitors were unhappy about the claimant’s conduct in the proceedings and particularly that of the claimant’s solicitor, Charlie Grey, who they feel was unprofessional, aggressive and delayed proceedings considerably. They say this course of behaviour has worsened during the assessment proceedings with Mr Grey refusing to engage in discussions or attempts to agree costs within the costs management budget and causing an adjournment of a previous costs assessment hearing a day before it was listed, causing further costs to be incurred.
Your client feels very strongly that the claimant and Mr Grey’s conduct in the assessment proceedings, and generally, should be highlighted as unreasonable or improper at the detailed assessment hearing.
Which of the following would be the BEST ADVICE for your client in light of the court’s powers?-
Submissions should be made that the costs judge may, in light of the conduct, disallow all or part of the costs which are being assessed or order the claimant or Mr Grey to pay costs which their behaviour has caused the defendant to incur.
Submissions should be made that the costs judge, in light of the conduct, may disallow all or part of the costs which are being assessed provided notice is given to Mr Grey within 7 days.
Submissions should be made that the costs judge, in light of the conduct, may disallow all or part of the claimant’s costs relating to the assessment proceedings, or order Mr Grey to pay the defendant’s costs of the assessment proceedings.
No submissions can be made. The costs judge has no power to disallow any costs on the basis of misconduct as the trial judge has already taken the claimant’s conduct into account in deciding what costs order to make.
Submissions should be made that the costs judge may, in light of the conduct, disallow all or part of the costs which are being assessed or order the claimant or Mr Grey to pay costs which their behaviour has caused the defendant to incur.
This is the best advice as it encompasses all of the available options available to the court relating to costs being assessed and this submission would maximise the client’s chances of reducing their costs liability and/or recovering some costs, which seems relevant on the facts of this case – see CPR 44.11 .
Your client the claimant in a multi-track claim, has won at trial and the defendant has been ordered to pay costs on the standard basis. These could not be agreed so you have attended the detailed assessment hearing. Costs budgets were filed at the case management conference and a costs management order was made approving the budgets. Unfortunately, the claimant’s costs have exceeded those in the approved budget in a number of areas.
Which of these statements as to the assessment of costs in these circumstances is CORRECT?
The court should depart from approved or agreed budgets and allow additional costs if they have been reasonably incurred and are proportionate.
If there is any doubt as whether costs are reasonably and proportionately incurred and reasonable and proportionate in amount this will be resolved in favour of the claimant.
Unless satisfied there is good reason to do so, the court will not depart from the approved costs budget.
The costs budgets are estimates and can be departed from; they are only a factor the court may consider when assessing costs.
Unless satisfied there is good reason to do so, the court will not depart from the approved costs budget.
See CPR 3.18 on this point. Note that all costs assessed on the standard basis are subject to CPR 44.3(2) and even if within budget would be disallowed if they did not satisfy those requirements. Consider how the position would have been different if costs were assessed on the indemnity basis i.e. r.3.18 would not apply although the court would still have regard to the costs budget as a factor to consider on assessment – see CPR 44.4(3)(h).
You have acted for the defendant in a multi-track personal injury claim arising from a road traffic accident. The defence was partially successful as the court found that the claimant was contributory negligent and damages of £60,000 were reduced by 25% to £45,000. When considering costs the court found that the claimant had acted unreasonably in failing to concede contributory negligence early in the proceedings where the evidence was overwhelming that the claimant was not wearing a seatbelt.
The Judge ordered that the defendant pay 75% of the claimant’s costs of the claim to be assessed on the standard basis and also ordered that the defendant’s costs of proving contributory negligence should be paid by the claimant and assessed on the indemnity basis. Costs budgets show that the defendant’s estimated costs of proving contributory negligence are £5,000.
Which of the following statements is the BEST ADVICE to give the defendant as to the enforceability of the costs order in their favour:-
The claimant is protected against having to pay any of the defendant’s costs as this is a personal injury claim and the costs order in favour of the defendant is unenforceable
The order is enforceable to its full extent without the court’s permission and the defendant is guaranteed to recover £5,000.
As there has been no finding of fundamental dishonesty, the costs order in favour of the defendant is unenforceable.
The order is enforceable to its full extent without the court’s permission but may only be enforced once costs are assessed or agreed.
The order is enforceable to its full extent without the court’s permission but may only be enforced once costs are assessed or agreed.
This would be the best advice to give the Defendant in these circumstances. Pursuant to CPR 44.12 and 44.14, this costs order would be enforceable to the full extent without the court’s permission . Costs are enforceable up to the aggregate amount of damages and interest awarded to the claimant, here this is £45,000 which will cover all of the defendant’s assessed costs. Proceedings have concluded but the costs can only be enforced once costs have been assessed or agreed. Note that CPR 3.18 does not apply to costs assessed on the indemnity basis and therefore more than the amount claimed in the budgets could be allowed if they satisfy the requirements of reasonableness in CPR 44.3(1) and 44.4.
Question 1
A claimant is considering issuing proceedings in the County Court against the defendant
for loss of profits estimated at £25,000. Before taking the matter further, the claimant wants
advice from their solicitor about the costs implications and how these will be dealt with by
the court. The solicitor writes to the claimant explaining these.
Which of the following statements contained in the letter of advice is correct?
A If the case proceeds on the fast track most of the costs are fixed by the CPR.
B If the case proceeds on the multi- track costs are usually subject to summary
assessment.
C Each party will generally bear their own costs in making or responding to interim
applications on the way to trial.
D In most instances, costs will be ordered on the standard basis so that they must be
reasonable to the matters in issue.
E If costs are ordered on an indemnity basis any doubt is resolved in favour of the
receiving party.
Answer
Option E is correct.
Option A is wrong as although, for example, the costs of the advocate preparing and
attending the trial are subject to the fixed costs regime of the CPR, most costs are not.
Option B is wrong because the costs of multi- track litigation are generally subject to
detailed assessment. However, the costs associated with interim applications are often
addressed on a summary basis by reference to the usual principle that the unsuccessful
party is responsible for the successful party’s costs – option C accordingly is wrong.
Option D is wrong. Costs on the standard basis are recoverable if they are proportionate to
the matters in issue – not ‘reasonable
Question 2
A company’s business is dependent upon a few major contracts, including one with the
local Council. As a result of a disagreement, the Council breaks off the relationship.
The company sues, alleging that the Council was not entitled to terminate the contract.
The Council applies for a security for costs order on the basis that the company will
be unable to pay its costs if the Council wins at trial after the company admits it is in
financial difficulties.
Which of the following statements best describes what might happen during the security
for costs application?
A The court cannot take into account the strength of the claim or the defence. Such
matters must be left for determination at trial.
B The Council should provide evidence in support of its application, such as the
company’s accounts and poor credit ratings.
C The court cannot take into account any argument that it would not be just to make
an order because the company’s financial difficulties are as a result of the Council’s
wrongful termination.
D If the court is satisfied that one of the required conditions applies and that it is just to
do so, it must make an order for security for costs.
E Even if the application is successful, the Council will have to bear its own costs in
making that application. The purpose of the application is to provide security for future
costs, not to quantify past costs.
Answer
Option B is correct. The application is likely to be made on the grounds that the claimant
is an impecunious company. In such cases, the defendant should produce evidence of the
company’s poor financial standing (such as the company’s accounts and poor credit ratings).
Option A is wrong. The strength of the claim and the defence are matters that the court may
take into account (although it is true that the court will want to avoid a situation in which the
merits have to be considered in any detail).
Option C is wrong. An application for security for costs may fail where the claimant is able
to persuade the court that its shortage of money has been caused by or contributed to by
the defendant’s behaviour (for example, in terminating a contract and not paying the agreed
contract price when there was no legal basis for doing so).
Option D is wrong because the court’s power to make an order for security for costs is
discretionary rather than mandatory. Option E is also wrong. The usual costs position on any
interim application is still relevant when making or opposing an application for security for
costs, namely the loser pays the winner’s costs.
Question 27
A company (‘the Retailer’) entered into a contract with another company (‘the Supplier’) to purchase 30,000 flat-pack boxes at a price of £60,000. The Retailer paid a deposit of £20,000.
When delivered, the boxes were defective and the Supplier was unable to supply replacement boxes. The Retailer rejected the boxes and did not pay the balance of the purchase price. To avoid incurring further losses, the Retailer obtained replacement boxes from another supplier for £70,000.
The Retailer has followed all appropriate pre-action procedures, and the Retailer’s solicitor is now ready to draft and issue a claim form.
Ignoring interest, what sum can the Retailer properly claim against the Supplier?
A. £70,000
B. £10,000
C. £30,000
D. £20,000
E. £60,000
C - £30,000
A man engaged an estate agent to sell his property. The terms of their agreement were contained in a written document. The agreement provided for payment of commission to the estate agent on completion of a sale, provided that the estate agent introduced the purchaser.
The sale of the property completed and a dispute arose as to whether the estate agent had introduced the purchaser. The estate agent brought proceedings against the man for payment of the commission alleged due under the written agreement. The proceedings were successful at trial, resulting in an award of damages to the estate agent of £12,000.
What, if any, order for costs might be expected in the circumstances of this case?
A. No order for costs because the claim arose from a consumer contract within the meaning of the Consumer Rights Act 2015.
B. An order in favour of the estate agent confined to reimbursement of court fees paid because the claim is a small claim.
C. No order for costs because the claim is a small claim..
D. An order in favour of the estate agent for fixed costs only.
E. An order in favour of the estate agent for costs on the standard basis, summarily assessed at the conclusion of trial.
E - An order in favour of the estate agent for costs on the standard basis, summarily assessed at the conclusion of trial.
