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Inter-Party Costs: A long and winding road to recovery (21 July 2015)

Date: 21/07/2015
Duncan Lewis, Public Law Solicitors, Inter-Party Costs: A long and winding road to recovery

Many would believe that the conclusion of a case occurs when its’ purpose has been resolved successfully or unsuccessfully. However, the issue of costs can sometimes be as complex as the matter itself.

Part 44.2 of the Civil Procedure Rules identifies the Court's discretion as to costs. Nevertheless, Legal representatives must familiarise themselves with the application in practise to ensure there is no loss of costs where it can be prevented.

Legal representatives must ensure that litigation is the last resort for parties in dispute. It is easy to assume that the simplest solution is to present the dispute to an objective member of the judiciary rather than negotiate a settlement with the party who initially proposed the arguments in dispute. However, case law demonstrates that Courts tend to frown upon parties failing to settle before trial resulting in a waste of judicial time.

If settlement is not to be achieved at first instance then we must turn to the Civil Procedure Rules (CPR). Part 44 provides a general guideline on the costs procedure.

For the purpose of this article, we shall focus on part 44.2 of the CPR, the Court's discretion as to costs. Legal representatives must be wary of the criteria applied by the Courts when considering whether to grant an order of costs, to ensure that there is no loss in remuneration where possible.

Part 44.2 sets out the general criteria that Courts should apply, however legal representatives must turn to established case law to identify how the Court may choose to interpret this rule.

Boxall v Waltham Forest LBC (2001), previously established the law for the recovery of costs where judicial review proceedings had settled without a hearing. Scott Baker J held that the “overriding objective is to do justice between the parties without incurring unnecessary court time and consequently additional cost”.

He outlined the importance of considering who the successful party may have been had the substantive issues been fought to a conclusion when considering the order as to costs

However, since the introduction of the Pre Action Protocol for Judicial Review in December 2001, the conduct of parties prior to settlement has played a greater role in swaying the court’s decision as to how to decide the order as to costs. It is therefore, essential that parties ensure they adhere to the protocol to avoid judges imposing costs penalties for significant breaches of it.

The Pre-Action Protocol requires parties to attempt to settle a dispute prior to proceedings by sending a letter of claim to the Defendant outlining the issues and proposing a solution. The defendant should normally respond within 14 days before action to court should be considered.

This reaffirms the importance of attempting to settle prior to litigation and the Pre Action Protocol allows the Court to see evidence of this.

M v Croydon [2012] EWCA Civ 595 provides a more up to date and clear set of guidelines that the Courts have applied when deciding whether to grant an order as to costs. Master of the Rolls, Lord Neuberger provided the main judgment. Guidelines were set depending on the different circumstances of the case: (i) where the claimant has been wholly successful (ii) where the claimant has only succeeded in part following a contested hearing or settlement and (iii) where there was compromise which does not actually reflect the claimant’s claim. The judgment then goes into further detail as to how Courts should determine the order based on these circumstances, taking into account the specific facts of the case.

Emphasis is again made on whether the parties could have settled and the successful party in the matter.

Therefore, after considering the Court’s stance in the matter, the question is, how could it be improved? This article has focused on the Court’s discretion where costs were settled prior to a final hearing. The pre-action protocol is an effective method as it allows for a good use of judicial time when only necessary. However, for the judge to determine the successful party may not always be so straightforward. The Courts may have to evaluate the merits of the case, which could require further expenditure of time and resources.

Furthermore, it is submitted that the specific criterion the Courts are applying, is a simplistic and inflexible test when applying the discretion awarded to them through Part 44.2 of the CPR. This can lead to an unfair result where consideration of the complex issues surrounding the matter may not be taken into account. It is submitted that a more reasonable approach would be to have regard to all circumstances allowing for some scope in the argument as to costs.

About the Author: Sangeetha Vairavamoorthy

Sangeetha Vairavamoorthy joined Duncan Lewis in January 2015 as a Public Law caseworker. She recently graduated from King’s College London with a 2:1 in Law (LLB) and plans to begin the Legal Practitioners Course (LPC) in September 2015.


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