Outline of the Rules Concerning Costs Orders in Litigation before the English Courts
1. As a general rule, if a litigant is successful in making applications to the Court during the litigation or is successful in the litigation overall, the Court is likely to make an order for payment of its costs by the other side. If a litigant is unsuccessful in any applications made to the Court or in the litigation as a whole, then an order to pay the costs of the other side may be made against the litigant.
2. In any assessment of costs an unsuccessful litigant may not be ordered to pay the full amount of the successful party's actual costs. The actual costs recoverable from a losing party may be limited as follows.
- a. The assessment of costs may be either on the standard or indemnity basis. Costs are usually assessed on the standard basis. On either basis the Court will only allow a party to recover costs reasonably incurred and reasonable in amount. On the standard basis the Court will additionally only allow a party to recover those costs which are proportionately incurred and proportionate in amount. Accordingly, a party might expect to recover a greater proportion of its costs on an indemnity basis. Costs incurred by a party are proportionate if they bear a reasonable relationship to (a) the sums in issue in the proceedings; (b) the value of any non-monetary relief in issue in the proceedings; (c) the complexity of the litigation; (d) any additional work generated by the conduct of the paying party; and (e) any wider factors involved in the proceedings, such as reputation or public importance.
- b. Litigants may be required to file and exchange costs budgets at an early stage in the litigation. When assessing the costs a litigant can recover from the losing party, the Court may have regard to the receiving party’s last approved or agreed budget for each phase of the proceedings.
- c. The Court may award costs to reflect which party succeeded on each individual issue in the case. So for example, a litigant might be successful overall, but lose on an issue which had been very expensive. Occasionally, the overall winner has had to make a net payment to the loser.
3. An award of costs made against another party does not mean that the other party will necessarily have the resources to pay.
4. A litigant ordered to pay costs is normally liable for interest on those costs from the date when the order is made, even though the amount of the costs payable may not at that stage have been either agreed or determined in any assessment of costs.
5. Some orders for costs (relating to individual applications) will be made as the litigation proceeds. Such costs orders may be subject to payment deadlines which fall before the end of the litigation, and may be measured in days rather than weeks. As a result, a litigant may have to pay costs to the other party (or receive costs from the other party) periodically as the action progresses.
6. In shorter hearings and applications, costs will often be summarily assessed at the conclusion of the hearing or application by the Court. A longer hearing may require a detailed costs assessment.
7. It is also possible for costs orders to be made against Bristows if the Court believes that the Court's time (or the time of another party) has been wasted or that a course of action was (in the Court's view) unacceptable. If as a result of following a clients' instructions, an order for costs is made against Bristows, then under our Terms of Business the client will be required to reimburse Bristows for payment of that costs order.
8. The Patents County Court has a different regime for the recovery of costs based on scale fees with a maximum for each phase of the litigation. If you require further details please contact us.
9. Similar rules on costs may be operated by other tribunals and bodies which hear disputes, although smaller amounts may be awarded or recoverable costs may be capped at a predetermined amount.
10. If you have any questions regarding this outline or the circumstances in which you might receive, or be liable, under a costs award, please contact the Partner or Fee-Earner with whom you regularly deal.