22 Costs, Funding and Civil Legal Aid

Costs orders: general principles

- Two main principles:

(a) Costs payable to one party to another are in discretion of court; and
(b) General rule is unsuccessful party will be ordered to pay costs of successful party.
Incumbent on judge to justify departure
- Must take into consideration all the circumstances, in particular
(a) Conduct of parties, which includes
(i) Conduct before as well as after proceedings, and extend to which pre-action
protocol
(ii) Extent to which reasonable for parties to raise, pursue or contest each of the
allegations
(iii) Manner in which parties pursued or defended the claim
(iv) Whether successful party exaggerated the value of the claim
(b) Whether a party was the only successful party
(c) Any admissible offer to settle
- Where only partially successful, award a percentage (is abandon arguments, deprive of 15
per cent costs)

Nominal damages

- C usually ordered to pay defendant costs

Failure to consider or participate in ADR

- Taking unreasonable stance in ADR same as not taking part at all (no award as to costs/10-
15% where failed to consider negotiation)

Claims wrongly commenced in high court instead of cc: no reduction in excess of 25%

Costs follow the event

Situations in which costs do not follow the event

- Following situations:
(a) Costs of any application to extend time are borne by the party making the application
(b) Party failing to make admissions of fact or in relation to documents after service of a
notice to admit facts or documents, or after service of a list of documents, is usually
responsible for paying costs of proving those matters;
(c) Slander of women act 1891 costs must exceed damages unless reasonable grounds for
bringing claim
 (d) If successive claims brought against persons jointly or otherwise liable for the same
damage, costs ordered in favour of the claimant in the first claim unless reasonable
grounds for bringing the later claims

Multiple parties

- Multiple defendants
(i) Costs ordered against each d and c can recover costs against any one or d;s
(ii) D1 can claim contributions under civil liability (contribution) act
(iii) If d successful, and are separately rep’s, c only liable to pay costs if reasonable to
have separate reps
- Bullock and sanderson orders
(i) Where c REASONABLY claims against two d’s each in the alternative and succeeds
against one only, court has discretion to order bullock and sanderson
(ii) Look at facts c knew or ought reasonably t have known to consider whether joinder
was reasonable: if it was costs do not follow the event
(iii) Bullock order: C loses to D1, pays his costs, wins against D2, gets costs and costs paid
to D1
(iv) Sanderson order:D2 to pay D1’s costs direct, c has no liability
(v) Sanderson order where c legally aided or insolvent, no liability
- Multiple claimants
(i) Split judgments not necessary as all rep’d with the same (must be)

Multiple issues

- Counterclaims:
(i) Where one wins claim and another wins counterclaim, costs in respect of both
actions, may be set off against each other
- Additional claims under part 20
(i) Where c wins against d and d wins indemnity from third party, third party liable for
all the costs of d
(ii) Where c loses against d and therefore loses against 3 rd party, c has to pay all costs
for all of d’s proceedings if reasonable for d to sue 3 rd party
- Litigants under disability
(i) Litigation friend liable
- Trustees and personal reps
- Costs after an appeal

Range of costs orders

- Seven types:
(i) Only a proportion
(ii) Specified amount
(iii) Costs until a certain day
(iv) Costs incurred before proceedings begun
(v) Only relating to certain steps
 (vi) Certain distinct part of proceedings
(vii) Interest on costs
- Where losing party guilty of misconduct:
(i) Indemnity costs
(ii) Ordering payment of interim costs forthwith
(iii) Interest on costs to certain date either judgment act (8%) or some other %

Interim costs orders

- Where no order as to costs, none are payable, exceptions:

(i) Trustees and personal representatives, who are entitled to their costs from relevant
fund
(ii) Landlords and mortgagees
(iii) Orders which are silent on costs made on applications without notice, which mean
‘applicant’s costs in the case’
- Method of assessment of interim costs
(i) Where no more than a day, where costs order awards costs to one of the parties,
usually make an immediate assessment, otherwise an order is treated a requiring a
detailed assessment
- Costs of amendment
- Must tell absent client within 7 days
- No order as to costs usually means each party to pay own, but exceptions for:
(a) Trustees and personal reps who are entitled to costs from fund;
(b) Landlords and mortgagees; and
(c) Where applications made without notice is to be costs in the case
- Where no longer than a day and ordered award to one of the parties, usually make a
summary assessment of costs
- Types of interim costs orders:
(a) Costs/costs in any event: for part of proceedings
(b) Costs in the case/costs in the application: same as above
(c) Costs reserved: for a later date, where nothing said then no order as to costs
(d) Costs thrown away: entitled to costs incurred a s consequence of an incorrect judgment:
(a) preparing and attending any hearing; preparing and attending any hearing to set
aside; any adjourned proceedings; any steps taken to enforce the judgment now set
aside
(e) Costs of and caused by: resulting form an amended case
(f) Costs here and below: appeal
(g) No order

Sols must inform absent client within 7 days

Indemnity principle
 - Party cannot be liable to pay more to other side in costs tan winner is liable to pay own
lawyers

Basis of quantification

- Two basis:
(i) Standard basis
(ii) Indemnity basis
- Standard/least generous basis:
(a) Only allow costs which have been reasonably incurred and reasonable in amount
(b) Only costs which are proportionate
(c) Disallow or reduce costs if disproportionate
(d) Resolve any doubt which it may have about whetehr costs were reasonably incurred in
favour of the paying party

Proportionality

- Following helps:
(a) Sols under a duty to give clients best information on costs at outset and as case
progresses
(b) Encouraging use of CFAs and DBAs
(c) Costs recoverable in small track cases limited to court fees paid by successful party, sols
costs of issuing claim form and expert witnesses
- Costs will be proportionate if bear reasonable relationship to:
(a) Sums in issue in proceedings;
(b) Value of any non-monetary relief
(c) Complexity of litigation
(d) Additional work generated by conduct of paying party; and
(e) Wider factors: public importance etc.

Summary assessment

- Determine immediately after end of hearing

- Hearings less than a day and for assessing costs in fast-track
- Unnecessary where agreed
- Not in legal aided
- Statements of costs: each must file and serve costs in form: filed and served not less than
two days before fast-track and must set out:
(i) Number of hours claimed
(ii) Hourly rate
(iii) Grade of fee earner
(iv) Amount and nature of disbursements
(v) Legal reps costs for attendance
(vi) Counsel’s fees
(vii) VAT on costs
- Any failure to serve taken into account when deciding
 - Conducting summary assessment
- Summary assessed costs generally payable within 14 days of order

Detailed assessment

- Leave to costs judge (DJ’s in County Courts)

- Court discretion whether to order it
- Protected persons and legally aided
- Procedure on detailed assessment
(i) Must be commenced within three months of judgment, order or other
determination
(ii) Serve on paying party notice of commencement form together with a bill of costs
(iii) Paying party may dispute by serving points of dispute on the winning party (within
21 days of date of commencement)
(iv) If above is not done within 21 days, winning party may apply for default costs
certificate
(v) Receiving/ winning party has right to reply to disputed items within 21 days
- Before detailed assessment, winning party may be awarded a reasonable sum on account of
costs unless there is good reason not to do so

Fast-track fixed costs

- Two systems:
(a) Whole of the costs incurred and only applies to PI claims that leave RTA and EL/PL
protocols
(b) All other fast track claims, but only imposes fixed costs on the trial, not all of
proceedings

Publicly funded litigants

- Successful: should be worked on same basis, as if not publicly funded

- Costs against funded party: protected

Pro bono

- Pay to charity prescribed

Costs against non-parties

Wasted costs orders

- Legal rep personally liable

- Nature
 (i) Compensatory in nature, made if three conditions satisfied:
(a) Satisfy court that lawyer acted improperly, unreasonably or negligently
(b) Conduct complained of caused app to incur unnecessary costs
(c) In all circumstances it must be just to order
- Procedure
(i) Generally made after trial
(ii) Prt 23 or by court initiative
(iii) Legal rep given three days written notice: what claim and how much
(iv) Court give reasonable opportunity to be heard
- Generally considered in two stages:
(i) First stage applicant has to adduce evidence would be likely, if unanswered, to lead
to a wasted costs order and court must be satisfied wasted costs order is justified
having regard to likely costs involved
(ii) Give legal rep opportunity of putting forward his or her case and only make order if:
(a) Legal rep acted improperly, unreasonably or negligently
(b) Conduct caused another party to incur unnecessary costs; and
(c) It is just in all the circumstances to order rep to compensate that party for the
whole or part of those costs.
- If court does make order, must specify amount to be paid or disallowed.

Qualified One-Way Costs Shifting

- R 44.13L
(a) PI
(b) Fatal Accidents Act
(c) Death or pi under s 1(1) Law Reform Act 1934
- By claimant
- If CFA before 1 PAril 2013 – not apply

Effect of QOCS

- Cannot order more costs against c than was awarded in damages

Claimant loses:

- Amount of damages is nil, therefore no order as to costs

Claimant partially successful

- Respective degree of success

- If full or partial award, 44.14 has no application
- However where costs order made, cannot exceed the aggregate amount in money terms of
the damages and interest awarded
Judgement not as advantageous as prt 36 offer

- Split costs order

- Will award costs to claimant up to the relevant date and d costs thereafter

Loss of QOCS Protection

- Does not apply where proceedings struck out on grounds that:

(a) C disclosed no reasonable grounds for bringing proceedings
(b) Abuse of process
(c) Conduct of
(i) The claimant
(ii) Person acting on c’s behalf with c’s knowledge

Small track:

CPR 27.14

(2) The court may not order a party to pay a sum to another party in respect of that other party’s costs, fees
and expenses, including those relating to an appeal, except –

(a) the fixed costs attributable to issuing the claim which –

(i) are payable under Part 45; or

(ii) would be payable under Part 45 if that Part applied to the claim;

(b) in proceedings which included a claim for an injunction or an order for specific performance a sum not
exceeding the amount specified in Practice Direction 27 for legal advice and assistance relating to that
claim;

(c) any court fees paid by that other party;

(d) expenses which a party or witness has reasonably incurred in travelling to and from a hearing or in
staying away from home for the purposes of attending a hearing;

(e) a sum not exceeding the amount specified in Practice Direction 27 for any loss of earnings or loss of
leave by a party or witness due to attending a hearing or to staying away from home for the purposes of
attending a hearing;

(f) a sum not exceeding the amount specified in Practice Direction 27 for an expert’s fees;
(g) such further costs as the court may assess by the summary procedure and order to be paid by a party
who has behaved unreasonably; and

(h) the Stage 1 and, where relevant, the Stage 2 fixed costs in rule 45.18 where –

(i) the claim was within the scope of the Pre-Action Protocol for Low Value Personal Injury Claims in Road
Traffic Accidents (‘the RTA Protocol’) or the Pre-action Protocol for Low Value Personal Injury (Employers’
Liability and Public Liability) Claims (‘the EL/PL Protocol’);

(ii) the claimant reasonably believed that the claim was valued at more than the small claims track limit in
accordance with paragraph 4.1(4) of the relevant Protocol; and

(iii) the defendant admitted liability under the process set out in the relevant Protocol; but

(iv) the defendant did not pay those Stage 1 and, where relevant, Stage 2 fixed costs; and

(i) in an appeal, the cost of any approved transcript reasonably incurred.

(3) A party’s rejection of an offer in settlement will not of itself constitute unreasonable behaviour under
paragraph (2)(g) but the court may take it into consideration when it is applying the unreasonableness test.

(4) The limits on costs imposed by this rule also apply to any fee or reward for acting on behalf of a party to
the proceedings charged by a person exercising a right of audience by virtue of an order under section 11
of the Courts and Legal Services Act 19901 (a lay representative).