involved in a legal dispute. We firmly believe that – however strong your case – you can only ever make an informed decision about how to proceed when all the information you need about costs is laid out in the table. Even then, the fact that courts have a wide discretion when it comes to making orders about costs means that only an estimate of your likely liability will ever be possible.
Often when our clients understand the full facts about litigation costs in England and Wales they decide to try to settle their case out of court using some kind of alternative dispute resolution (ADR) like arbitration or mediation. Of course, you might still be keen to issue court proceedings. But armed with the facts, you’ll do so with your eyes open and a realistic idea of the risk associated with any kind of commercial litigation. Here we look at liability for costs if a party loses a court case and we examine the proportion of its financial outlay a winning party can expect to recover.
For guidance on the costs of bringing legal proceedings and information on ways to fund litigation you can get in touch with Shubha Nath at Nath Solicitors on 44 (0) 203 983 8278 or get in touch through the online contact form.
Getting your case on track
When civil clams like debt recovery and commercial disputes begin, courts allocate them to a particular ‘track’ for the purposes of case management. The track your case will follow (small claims track, fast track or multi-track) will depend on the value of the claim and the complexity of the issues the case raises. The track allocated is important from a costs perspective because it will often dictate what costs, if any, a successful party can recover from the losing side. In small claims track cases (those valued at £10,000 or less) for example, costs will only be recoverable in rare circumstances.
What do court rules say about costs?
The overarching principle that the loser pays the winner’s costs remains an important guide for anyone considering embarking n litigation. However, the rules applied by judges (the Civil Procedure Rules (CPR)) are clear that the courts have a wide discretion when it comes to making orders for costs.
Deviation from the principle we’ve mentioned is not unusual. The court can take the following factors into account when deciding whether or not to award costs against an unsuccessful party:
- The conduct of all the parties, including conduct before the case began and the reasonableness of a party pursuing a particular aspect of the claim
- Has a party has succeeded in part of its case?
- Any admissible offer to settle made by a party which is drawn to the court’s attention (excluding so-called Part 36 offers which have specific cost consequences)
If I win my case, will I get all my costs back?
Clients are often surprised to learn that it’s extremely rare to recover the entirety of your legal expenditure even of you win your case outright. That’s why it is so important to carefully consider the cost implications of any court action before you embark on proceedings or defend a case that’s brought against you. In our experience recovery of 80% of a client’s costs is regarded as a good result. There are two methods of assessing the level of costs that the paying party should be ordered to meet:
- The standard basis – The courts use the ‘proportionality test’ to measure the costs claimed against the benefit to the winning side of bringing the proceedings in the first place.
- The indemnity basis – To be recoverable costs needn’t be proportionate. Instead, the court asks whether the costs were necessary and reasonable.
Usually costs will be assessed using the standard basis – the indemnity basis is employed when the paying party has behaved unreasonably. An assessment under the indemnity basis will normally result in the recovery of a higher level of costs than under the standard basis.
Remember these ways of assessing costs are carried out with reference to the factors listed in the CPR that we mentioned above (conduct etc.).
Conclusion
Of course the whole issue of the level of costs recoverable becomes academic if your opponent in the case has no assets. Before embarking in litigation you should always consider the likelihood of recovering costs from an opponent and that you may have to take enforcement action, for example through an injunction to freeze your opponent’s assets.
Contact our Litigation Lawyers
For advice on litigation costs please contact Shubha Nath at Nath Solicitors on 44 (0) 203 983 8278 or get in touch through the online contact form.
