|
|
Key Rules: CPR Parts 43 to 48 and the PD supplementing them
|
| 11.1 |
This Chapter does not set out to do more than refer to some salient points on costs relevant to proceedings in the Chancery Division. In particular it does not deal with the processes of detailed assessment or appeals in relation to such assessments.
|
| 11.2 |
A number of provisions in respect of costs in the CPR and in the PDpdp-43, pdp-48.supplementing Parts 43 to 48 (Costs PDpdp-43) are likely to be relevant to Chancery proceedings:
|
| |
|
(1) |
Informing the client of costs orders: Solicitors have a duty to tell their clients, within 7 days, if an order for costs is made against them and they were not present at the hearing. Solicitors must also tell anyone else who has instructed them to act on the case or who is liable to pay their fees. They must inform these persons how the order came to be made (rule 44.2; Costs PD, paragraph 7.1).
| |
(2) |
Providing the court with estimates of costs: The court can order a party to file an estimate of costs and to serve it on the other parties. (Costs PD, paragraph 6.3). This is to assist the court in deciding what case management orders to make and also to inform other parties as to their potential liability for costs. In addition parties must file estimates of costs when they file their allocation questionnaire or any listing questionnaire (Costs PD, paragraph 6.4).
| |
(3) |
Summary assessment of costs: An outline of these provisions is given below. Their effect is that in the majority of contested hearings lasting no more than a day the court will decide, at the end of the hearing, not only who is to pay the costs but also how much those costs should be, and will order them to be paid, usually within 14 days. As a result the paying party will have to pay the costs at a much earlier stage than before.
| |
(4) |
Interim orders for costs: Where the court decides immediately who is to pay particular costs, but does not assess the costs summarily, for example after a trial lasting more than a day, so that the final amount of costs payable has to be fixed by a detailed assessment, the court may order the paying party to pay a sum or sums on account of the ultimate liability for costs.
| |
(5) |
Interest on costs: The court has power to award interest on costs from a date before the date of the order, so compensating the receiving party for the delay between incurring the costs and receiving a payment in respect of them from the paying party.
|
|
|
|
| 11.3 |
The court will generally make a summary assessment of costs whenever the hearing lasts for less than one day. The judge or Master who heard the application or other hearing (which will include a trial, or the hearing of a Part 8 Claim, lasting less than a day) carries out the summary assessment. The court may decide not to assess costs summarily either because it orders the costs to be "costs in the case" or because it considers the case to be otherwise inappropriate for summary assessment, typically because substantial issues arise as to the amount of the costs claimed. Costs payable to a party funded by the Legal Services Commission cannot be assessed summarily.
|
| 11.4 |
In order that the court can assess costs summarily at the end of the hearing each party who intends to claim costs must, no later than 24 hours before the time fixed for the hearing, serve on the other party, and file with the court, his or her statement of costs. Paragraph 13.5 of the Costs PDpdp-44 contains requirements about the information to be included in this statement, and the form of the statement. Failure by a party to file and serve his or her statement of costs as required by paragraph 13.5 of the Costs PDpdp-44 will be taken into account by the court in deciding what order to make about costs and could result in a reduced assessment, in no order being made as to costs, or in the party being penalised in respect of the costs of any further hearing or detailed assessment hearing which may be required as a result of the party's failure.
|
| 11.5 |
Where the receiving party (the party to whom the costs are to be paid) is funded by the Legal Services Commission the court cannot assess costs summarily. It is not, however, prevented from assessing costs summarily by the fact that the paying party (the party by whom the costs are to be paid) is so funded. A summary assessment of costs payable by a person funded by the Legal Services Commission is not by itself a determination of the amount of those costs which the funded party is to pay (as to which see section 11 of the Access to Justice Act 1999 and regulation 10 of the Community Legal Services (Costs) Regulations 2000). Ordinarily, where costs are summarily assessed and ordered to be paid by a funded person the order will provide that the determination of any amount which the person who is or was in receipt of services funded by the Legal Services Commission is to pay shall be dealt with in accordance with regulation 10 of the Regulations.
|
| 11.6 |
The amount of costs to be paid by one person to another can be determined on the standard basis or the indemnity basis. The basis to be used is determined when the court decides that a person should pay the costs of another. The usual basis is the standard basis and this is the basis that will apply if the order does not specify the basis of assessment. Costs that are unreasonably incurred or are unreasonable in amount are not allowed on either basis.
|
| 11.7 |
On the standard basis the court only allows costs which are proportionate to the matters in issue. If it has any doubt as to whether the costs were reasonably incurred or reasonable and proportionate in amount, it resolves the doubt in favour of the paying party. The concept of proportionality will always require the court to consider whether the costs which have been incurred were warranted having regard to the issues involved. A successful party who incurs costs which are disproportionate to the issues involved and upon which he or she has succeeded will only recover an amount of costs which the court considers to have been proportionate to those issues.
|
| 11.8 |
On the indemnity basis the court resolves any doubt it may have as to whether the costs were reasonably incurred or were reasonable in amount in favour of the receiving party.
|
| 11.9 |
The court must take into account all the circumstances, including the parties' conduct and the other matters mentioned in rule 44.5. Indemnity costs are not confined to cases of improper or reprehensible conduct. They will not, however, usually be awarded unless there has been conduct by the paying party which the court regards as unreasonable or unless the case falls within rule 48.4 (see paragraph 11.13 below).
|
| 11.10 |
A party must normally pay costs which are awarded against him or her and summarily assessed within 14 days of the assessment. But the court can extend that time (rules 44.8, 3.1(a)). The court may therefore direct payment by instalments, or defer the liability to pay costs until the end of the proceedings so that the costs can then be set against any costs or judgment to which the paying party then becomes entitled.
|
| 11.11 |
If the parties have agreed the amount of costs, they do not need to file a statement of the costs, and summary assessment is unnecessary. If the parties to an application are able to agree an order by consent without the parties attending they should also agree a figure for costs to be inserted in the order or agree that there should be no order as to costs. If the costs position cannot be agreed then the parties will have to attend on the appointment but unless good reason can be shown for the failure of the parties to deal with costs as set out above no costs will be allowed for that attendance. The court finds it most unsatisfactory if parties agree the terms of a consent order but not the provision for costs. Depending on the facts and circumstances, the court may not be able to decide on the question of costs without hearing the application fully, but it is not likely to be consistent with the overriding objective to allow the necessary amount of court time to the dispute on costs in such a case. The court may then have to decide the costs issue on a broad brush approach, making an order against one party or the other only if it is clear, without spending too much time on it, that such an order would be appropriate, and otherwise making no order as to the costs.
|
|
|
| 11.12 |
The court should be informed, on any application for the payment of costs, if any party has entered into a conditional fee agreement. The court can then consider whether, in the light of that agreement, to stay the payment of any costs which have been summarily assessed until the end of the action, or to decline to order the payment of costs on account under rule 44.3(8).
|
|
|
| 11.13 |
Parts 45 to 48, and the Costs PDpdp-43, contain provisions regarding:
|
| |
|
(1) |
special cases in which costs are payable;
| |
(2) |
wasted costs;
| |
(3) | fixed costs (these are payable for instance if judgment for a sum of money is given in default); and
| | (4) |
detailed assessment.
|
|
| |
In the context of Chancery litigation attention is drawn to rule 48.2 (Costs orders in favour of or against non-parties); rule 48.3 (Amount of costs where costs are payable pursuant to a contract) (see further Costs PDpdp-43 paragraph 50 and see also Chapter 21 -- Mortgage Claims); and rule 48.4 and Costs PDpdp-43 paragraph 50A (Limitations on court's power to award costs in favour of trustee or personal representative). Reference may also be made to Chapter 26 as regards costs orders in trust litigation.
|