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My Legal Costs

Will I be able to recover my legal costs?

In general the Court will order the losing party to pay the legal costs and expenses of the winning party.

Fixed Costs
In certain circumstances the Court will only allow the award of fixed legal costs particularly where the other side fails to defend a claim. Sometimes fixed costs are recoverable without an order being made (e.g. when a bailiff is requested to enforce a possession order).

Public Funding
Previously known as “Legal Aid”, eligibility depends upon the party’s financial situation and the merits of his case. Applications are made to the Legal Services Commission. If successful, the LSC will pay the assisted person’s legal costs on behalf of the assisted party (known as a Community Legal Service Public Funding Certificate). The Certificate is effectively a loan. If your opponent receives public funding it will not permit you to claim any legal costs against that party except in the most exceptional of circumstances.

It is important to realise that the Court assesses legal costs based on a relatively low fixed hourly rate and that you are therefore unlikely to be awarded more than 70-80% of your legal costs in any event.

Other Parties’ Legal Costs

What costs could I be ordered to pay, if the Court makes an order for costs against me? The following guidelines summarises the current legal position. Your liability could change as the case progresses. Who should pay legal costs and how much they should pay is decided by the Court. The general rule is that the unsuccessful party will be ordered to pay the successful party’s legal costs. However, this general rule is subject to a number of conditions including the circumstances of the claim, and in particular:

    • The extent to which the parties have followed any pre-action protocol (i.e. statements of understanding between legal practitioners and others about pre-action practice which are approved by the Practice Direction)
    • The extent to which it was reasonable for the parties to raise, purse or contest each of the allegation or issues
    • The manner in which the parties pursued or defended the action or particular allegations or issues
    • Whether the successful party exaggerated the value of their claim
    • Whether the party was only partly successful
    • Any payment into court or offer to settle

The purpose of these considerations is to ensure that both sides comply with the overriding objective to progress the case quickly and efficiently and to penalise parties which fail to comply and to achieve a just outcome. Some orders for costs will be made as the case progresses (known as interim costs orders) and / or at the conclusion of the case (known as final costs orders). There are a variety of different interim costs orders, which include:

    • An order for costs – entitles the successful party to recover the costs incurred in that part of the proceedings from the other party. It is made where party is clearly the winner of that particular issue
    • Costs in the case – these costs are payable by the party which is unsuccessful at the end of the proceedings, when a final costs order is made. It is made when there is no clear winner over a particular issue
    • Costs reserved – means that the Court will defer the issue of costs until a later date. If no later order is made costs will be costs in the case. It is made when a case is adjourned to a specific date in the future or when there is some issue as to whether the successful party should have their costs paid and there is insufficient time to resolve the issue
    • Costs of and caused by – when, for example, costs are incurred as a direct result of the other part’s action or inaction
    • Costs here and below – applies if there is an appeal to a higher court
    • No order as to costs or each party to pay their own costs – each side pays their own costs regardless of whether or not a final order for costs is made in their favour

Once the Court has decided who should pay, the Court will decide how much they should pay. Costs which are unreasonably incurred are not recoverable from the other side at all. Costs are normally assessed on a standard basis. The court will only allow costs which are proportionate (i.e. having regard to the value of the claim; the importance of the case; the complexity of the issues; and the financial position of each party) to the matter in issue and will resolve any doubts as to whether costs are reasonably incurred or reasonable in amount in favour of the party paying those costs. If the court thinks that it is appropriate to penalise a party it can award costs on an indemnity basis. The court will not consider whether costs are proportionate and will resolve any doubts as to whether costs are reasonably incurred or reasonable in amount in favour of the party whose costs are being paid). When assessing costs the Court must have regard to:

    • The conduct of all the parties both before and during the proceedings, and any efforts made in trying to resolve the dispute;
    • The value of the claim;
    • The importance of the case to all the parties;
    • The complexity of the issues;
    • The skill, effort, specialised knowledge and responsibility involved;
    • The time spent on the case;
    • The place where and the circumstances in which work or any part of it was done; and
    • Any other factor which the Court thinks is appropriate.

It is very important that any pre-action protocol is followed, letters before action are sent and there is full co-operation between the parties. Otherwise parties could end up with a hefty costs bill even if they go on to win the case. Costs can be assessed in 2 ways: 1. Summary assessment – (i.e. where the court decides how much should paid when it makes the order for costs e.g. at the first possession hearing or at an application hearing). Courts are encouraged to make such orders, in preference to detailed assessments. The court will not make such an order where the paying party is publicly funded. The monies are payable by the unsuccessful party to the successful party within 14 days and interest is payable upon late payments, with interest accruing from the date of the order. 2. Detailed assessment – there is a further hearing. Detailed assessment proceedings must start with 3 months of:

    • The date upon which the order was made;
    • Receiving Notice of Discontinuance;
    • Accepting an offer to settle; or
    • Accepting a payment into court.

If proceedings are not brought within these time frames the paying party can apply to the Court for an order compelling the receiving party to start the proceedings or risk losing part of the recoverable costs.

Counter-claims & Set Offs

Where a party is successful on one claim and unsuccessful on the other the Court can order the 2 awards of costs to be set off against each other and the party entitled to the higher award will receive the balance.

Small Claims Track (claim of no more than £10,000 or no more than £1,000 for repairs)

Recoverable costs are usually limited to little or nothing or a fixed contribution toward court fees. However, if a party has behaved unreasonably (e.g. making unnecessary applications or refusing to cooperate) the Court can make an award of costs.

Conclusion

Before embarking upon litigation, consider whether the other party might have a Defence (to all or part of your claim) or a Counter-claim. Your potential liability for costs is twofold. Firstly your own legal costs and secondly the other party’s, if they are successful against you, whether in whole or in part. If there are aspects of the case upon which you can co-operate with the other side you should do so to prevent the Court applying costs sanctions against you.

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