Interlocutory costs award. Tread Carefully !

When pursuing an Interlocutory Costs Order the happy glow when it is successfully secured can fade quickly if the precise terms of the costs award have not been clearly set out. What you actually receive might not turn out to be what you though you had requested.

Remember some key matters.

Forthwith

If the Court does not make a summary assessment of your costs entitlement at the hearing, which should be the norm in routine interlocutory applications, ensure the order for costs provides for assessment forthwith in the absence of agreement. Otherwise if you cannot agree the costs with the paying party you will be unable to assess/enforce the cost entitlement until the conclusion of the entire action. 

Previous Reserved Costs

If the costs of an earlier issue/hearing are "Reserved" be sure to address your mind to them at the next available opportunity. The CPR treats costs reserved as "costs in the case", ie irrespective of why they were incurred they will follow the final main event outcome. The party ultimately successful will get them even if they were incurred due to their action/inaction. That position has been muddied somewhat by the decision in Taylor v Burton & Anor [2014] EWCA Civ 21. Paras 25 - 33 where the COA agree that the party unsuccessful at the case conclusion (who had not caused the reserved cost to be incurred), should not meet them despite having failed to make representations against liability for them at the trial. This appeal was allowed on the basis that the trial judge had not applied his mind to the issue of the reserved costs and ought to have and as a consequence he had erred and the COA was entitled to substitute its order.  

Clarity/Precision

If there is a specific element of costs you are seeking ie a particular fee or piece of expenditure, ask for it. Do not assume the order will necessarily pick it up. Clarity at first instance is always preferable to months of wrangling over confused intentions.

What Basis?

Get the Basis right. There are two. Standard and Indemnity. Standard is the general basis and the fall back Basis if the order is not specific. The Indemnity Basis is not to be confused with the Indemnity Principle which is something completely different. There are significant differences between the two bases. Indemnity is a more favourable entitlement. Proportionality doesn't apply to costs on that basis. That is an increasingly critical matter the new CPR Proportionality provisions enabling the court to disregard the previous necessity test.

Where there are potential conduct arguments the prospect of a more favourable Indemnity Basis Costs Order should never be overlooked. Significant unreasonable behaviour/conduct and CPR Part 36 are the main considerations meriting Indemnity Basis costs awards.

Check our guidance updates regularly. An article on cases/circumstances where Indemnity Basis awards have been granted/refused is in the pipeline.  

Burden of Proof

On the Standard Basis the burden of proof is on the receiving party to prove the costs being claimed are reasonable. On the Indemnity Basis it is reversed and it is on the Paying Party to prove they are unreasonable. 

Where the assessing officer is in doubt about whether expenditure is reasonable, on the Indemnity Basis it will be resolved in favour of the receiving party. On the Standard Basis in favour of the Paying Party. 

   

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