Civil Litigation >

Syllabus Area [23] Costs

2. The court’s discretion as to costs - CPR 44.2 and its commentary

John Bates
@MrJohnBates
 Look at the Lecture/Workshop plan to see when/where we cover topics

Syllabus


04. ADR – 05. ADR – Non-
3. Pre-action 6. Commencing
1. General Matters 2. Limitation Adjudicative Adjudicative
Conduct Proceedings
Options Options


12. Default
11. Further 9. Multiple causes 8. Statements of
Judgment and 10. Amendment 7. Parties
information of action Case
Summary Judgment


16. Interim 18. Settlement
13. Case 15. Interim 17. Interim
14. Disclosure Payments and (including Offers to
Management Applications Injunctions
Security for Costs Settle)

22. Judgments,
21. Civil Trial and
24. Appeals 23. Costs Orders and 20. Expert evidence 19. Evidence of fact
Evidence
Enforcement
John Bates
@MrJohnBates
Aspects of costs
 WE ARE FOCUSING ON HOW THE COURT APPROACHES DECISION-
MAKING ABOUT COSTS BETWEEN THE PARTIES

 WE ARE NOT LOOKING AT THE COURT’S LIMITED JURISDICTION TO

DETERMINE DISPUTES BETWEEN A CLIENT AND THEIR OWN LAWYER
ABOUT THE OWN COSTS PAYABLE BY A CLIENT TO THEIR LAWYER

John Bates
@MrJohnBates
The discretion
 The court has a discretion in CPR 44.2(1) to decide:
o Whether to order one party to pay any other party’s costs; and, if so
o Whether any costs payable should be for:
 Any particular period (including any recoverable costs before litigation was started);
 Any particular percentage or proportion;
 Any particular issues;
o The method of calculating the amount of recoverable costs should be calculated (the
‘basis of assessment’ – either on the standard basis or the indemnity basis)
o The procedure for deciding recoverable costs (summary assessment or detailed
assessment) John Bates
@MrJohnBates
Terminology
 Because the court has discretion as to whether costs are payable by one party to another
and when they are to be paid, and that the decision by the court as to whether costs are to
be paid by one party to another does not depend on their status within the proceedings
(e.g. ‘claimant’, ‘defendant’, ‘third party’) it is better to describe the parties subject to
any costs order as:
o ‘the paying party’ – the party who is ordered to pay costs to the receiving party; and
o ‘the receiving party’ – the party who receives a payment of costs from the paying
party

John Bates
@MrJohnBates
Civil Litigation >
Syllabus Area [23] Costs
Determining who should be the paying and receiving parties

John Bates
@MrJohnBates
Who should pay costs?
 Although the court has discretion as to whether costs are payable by one party to another
and when they are to be paid…
 WHERE THE COURT DECIDES TO MAKE AN ORDER ABOUT COSTS, THE
GENERAL RULE IS –
'THE UNSUCCESSFUL PARTY WILL BE ORDERED TO PAY THE COSTS OF
THE SUCCESSFUL PARTY’
THIS IS THE ‘LOSER PAYS’ RULE
This is the most straightforward costs order, e.g. where one party has clearly won the case
and the court simply orders the losing party to pay the winner’s costs (and then goes onto
assess them, unless the parties have agreed between themselves what costs should be
ordered). John Bates
@MrJohnBates
Who should pay costs? THE
GENERAL RULE
 Although the court has discretion as to whether costs are payable
by one party to another and when they are to be paid…
 WHERE THE COURT DECIDES TO MAKE AN ORDER
ABOUT COSTS, THE GENERAL RULE IS –
'THE UNSUCCESSFUL PARTY WILL BE ORDERED TO PAY
THE COSTS OF THE SUCCESSFUL PARTY’
THIS IS THE ‘LOSER PAYS’ RULE [CPR 44.2(2)]
 The guidance on this fundamental questions is contained in CPR
44.2 and its accompanying Commentary in the White Book.

John Bates
@MrJohnBates
Who should pay costs?
EXCEPTIONS TO THE GENERAL
RULE
 There are exceptions to THE GENERAL RULE THAT 'THE
UNSUCCESSFUL PARTY WILL BE ORDERED TO PAY
THE COSTS OF THE SUCCESSFUL PARTY’ [THE ‘LOSER
PAYS’ RULE]

 'The court may make a different order’ [CPR 44.2]

 The general rule does not apply to certain Court of Appeal

proceedings (see [CPR 44.2(3))]

John Bates
@MrJohnBates
Civil Litigation >
Syllabus Area [23] Costs
Possible orders relating to the scope of the costs order against a paying party

John Bates
@MrJohnBates
What should the paying party pay
costs for? THE STARTING POINT
 Whenever the court makes an order for costs between the parties,
i.e. that one party (‘the paying party’) must pay costs to another
party (‘the receiving party’)

 THE STARTING POINT IS THAT THE ORDER WILL BE

FOR THE COSTS THAT THE RECEIVING PARTY HAS
INCURRED IN RELATION TO THE PROCEEDINGS
BETWEEN THE PARTIES, FROM THE DATE OF ISSUE
UNTIL JUDGMENT.

 BUT…there are other options in CPR 44.2(6) John Bates

@MrJohnBates
What should the paying party pay
costs for? OTHER ORDERS
 There are other options in CPR 44.2(6) including the court being
able to order that the paying party must pay:
o a proportion of another party’s costs;
o a stated amount in respect of another party’s costs;
o costs from or until a certain date only;
o costs incurred before the proceedings have begun (‘recoverable
pre-action costs’)

John Bates
@MrJohnBates
What should the paying party pay
costs for? OTHER ORDERS
 There are other options in CPR 44.2(6) including the court being
able to order that the paying party must pay:
o costs relating to a particular step in the proceedings;
o costs relating only to a distinct part of the proceedings (BUT
before doing so, the court should first consider whether it is
practicable to make an order instead for a proportion of
another party’s costs or costs from or until a certain date only
[CPR 44.2(7)]); and
o interest on costs from or until a certain date, including a
date before judgment.
John Bates
@MrJohnBates
The discretion
 REMEMBER the court has a discretion in CPR 44.2(1) about costs
 There is a wide range of orders that the court could make about costs.
 There is a useful Table in 44 PD, paragraph 4.2…

John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
Costs; or The party in whose favour the order is made is entitled to that party's
costs in respect of the part of the proceedings to which the order relates,
Costs in any event whatever other costs orders are made in the proceedings.

Costs in the case; or The party in whose favour the court makes an order for costs at the end
of the proceedings is entitled to that party's costs of the part of the
Costs in the application proceedings to which the order relates.

John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
Costs reserved The decision about costs is deferred to a later occasion, but if no later
order is made the costs will be costs in the case.

John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
Claimant's/Defendant's costs If the party in whose favour the costs order is made is awarded costs at
in case / application the end the proceedings, that party is entitled to that party's costs of the
part of the proceedings to which the order relates.
If any other party is awarded costs at the end of the proceedings, the
party in whose favour the final costs order is made is not liable to pay
the costs of any other party in respect of the part of the proceedings to
which the order relates.

John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
Costs thrown away Where, for example, a judgment or order is set aside, the party in whose
favour the costs order is made is entitled to the costs which have been
incurred as a consequence. This includes the costs of –
 preparing for and attending any hearing at which the judgment or
order which has been set aside was made;
 preparing for and attending any hearing to set aside the judgment or
order in question;
 preparing for and attending any hearing at which the court orders
the proceedings or the part in question to be adjourned;
 any steps taken to enforce a judgment or order which has
subsequently been set aside.
John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
Costs of and caused by Where, for example, the court makes this order on an application to
amend a statement of case, the party in whose favour the costs order is
made is entitled to the costs of preparing for and attending the
application and the costs of any consequential amendment to his own
statement of case.

John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
Costs here and below The party in whose favour the costs order is made is entitled not only to
that party's costs in respect of the proceedings in which the court makes
the order but also to that party's costs of the proceedings in any lower
court. In the case of an appeal from a Divisional Court the party is not
entitled to any costs incurred in any court below the Divisional Court.

John Bates
@MrJohnBates
Possible costs orders
 There is a wide range of orders that the court could make about costs CPR 44.2(1) and a
useful Table in 44 PD, paragraph 4.2
Term Effect
No order as to costs; or Each party is to bear that party's own costs of the part of the
proceedings to which the order relates whatever costs order the court
Each party to pay own costs makes at the end of the proceedings.

[Silence…] If the court does not make any order about costs, no costs are
recoverable by any party in relation to the matter before the court (e.g.
the hearing of the application at which the rest of the order is made)

John Bates
@MrJohnBates
Civil Litigation >
Syllabus Area [23] Costs
What factors should the court consider before making a costs order?

John Bates
@MrJohnBates
What should the court consider before making
a costs order?
 THERE IS A LIST OF CIRCUMSTANCES IN CPR 44.2(4)
AND CPR 44.2(5) THAT THE COURT WILL HAVE
REGARD TO WHEN DECIDING WHAT ORDERS TO
MAKE ABOUT COSTS.

John Bates
@MrJohnBates
‘The factors in CPR 44.2(4) for the court to
consider before making a costs order
 These circumstances include:
o the conduct of all the parties;
o whether a party has succeeded on part of its case, even if
that party has not been wholly successful;
o any admissible offers to settle that are drawn to the court‘s
attention (OTHER THAN Part 36 offers – because Part 36 is
a self-contained code which contains its own rules about costs
where a Part 36 consequences arise).

John Bates
@MrJohnBates
‘The factors in CPR 44.2(4) for the court to
consider before making a costs order
 These circumstances include:
o the conduct of all the parties;
o whether a party has succeeded on part of its case, even if
that party has not been wholly successful;
o any admissible offers to settle that are drawn to the court‘s
attention (OTHER THAN Part 36 offers – because Part 36 is
a self-contained code which contains its own rules about costs
where a Part 36 consequences arise).

John Bates
@MrJohnBates
‘Conduct’ as a factor in CPR 44.2(4) for the court
to consider before making a costs order
 Relevant 'conduct' includes:
o Pre-action conduct (e.g. a failure to engage with the pre-action
protocols or the Practice Direction – Pre-Action Conduct and
Protocols);
o The reasonableness of raising certain issues;
o The manner in which a particular party has
pursued/defended a particular allegation or issue;
o Whether a successful party has exaggerated its claim.

John Bates
@MrJohnBates
‘Conduct’ as a factor in CPR 44.2(4) for the court
to consider before making a costs order
 For relevant ‘Pre-action conduct‘ consider the Commentary in
the White Book about the cases of Halsey v Milton Keynes
General NHS Trust and PGF II SA v OMFS Co 1 Ltd – these
cases give very important guidance on this issue.

John Bates
@MrJohnBates
‘Admissible offers to settle’ as a factor in CPR
44.2(4)
 REMEMBER an offer to settle may be made:
o As a Part 36 offer to settle (whether pre-action or after
litigation has started); or
o As an offer to settle which does not meet the formal
requirements of Part 36 offers to settle, such as Calderbank
offers
 THE COSTS CONSEQUENCES OF PART 36 OFFERS TO
SETTLE ARE REGULATED BY PART 36 – IT IS A SELF-
CONTAINED CODE AND SO THE FACTORS IN CPR 44.2
DO NOT APPLY TO COSTS ORDERS MADE AFTER A
PARTY HAS BETTERED/NOT BETTERED A PART 36
John Bates
OFFER AT TRIAL @MrJohnBates
‘Admissible offers to settle’ as a factor in CPR
44.2(4)
 BUT CPR 44.2 allows the court to take into account OTHER
ADMISSIBLE OFFERS TO SETTLE, i.e. an offer to settle
which:
o falls outside the scope of a formal Part 36 offer to settle; and
is either
 An ‘open offer’, i.e. the offeror intends that it be shown to
anyone; or (as is more normal)
 Made 'without prejudice save as to costs' – which means
that the offer cannot be shown to the court for any purpose
other than the court’s determination of costs.
John Bates
@MrJohnBates
‘Admissible offers to settle’ as a factor in CPR
44.2(4)
 Where the court takes into account other admissible offers to settle
(e.g. a Calderbank offer (without prejudice save as to costs):
o Where the offeree fails to beat the offer, the usual order for
costs is that the offeree pays the offeror’s costs from the
date when the offer 'ought reasonably to have been accepted
by the offeree.'

John Bates
@MrJohnBates
Civil Litigation >
Syllabus Area [23] Costs
2. The court’s discretion as to costs - CPR 44.2 and its commentary

John Bates
@MrJohnBates
 Look at the Lecture/Workshop plan to see when/where we cover topics

Syllabus


04. ADR – 05. ADR – Non-
3. Pre-action 6. Commencing
1. General Matters 2. Limitation Adjudicative Adjudicative
Conduct Proceedings
Options Options


12. Default
11. Further 9. Multiple causes 8. Statements of
Judgment and 10. Amendment 7. Parties
information of action Case
Summary Judgment


16. Interim 18. Settlement
13. Case 15. Interim 17. Interim
14. Disclosure Payments and (including Offers to
Management Applications Injunctions
Security for Costs Settle)

22. Judgments,
21. Civil Trial and
24. Appeals 23. Costs Orders and 20. Expert evidence 19. Evidence of fact
Evidence
Enforcement
John Bates
@MrJohnBates