What Costs Are Covered In A Final Costs Order?

The court can order that one party pay all of the other side's legal costs, the costs of certain issues, their costs from a specific date or between specific dates or even a percentage of their costs.

Who Pays Whose Costs?

The first thing the judge has to decide is who should pay whose costs. This might sound simple but is not. The judge may decide one party is entitled to costs up to a certain date and the other party is entitled to their costs after that date. However, there may also be more than 2 sets of parties and more than 1 case being dealt with at the same time. All of a sudden the options start to multiply.

The costs will normally "follow the event", but if the "winning" party has put forward an inflated claim the judge could decide they should not recover the costs of those issues or the other side should recover their costs on the issues that were lost (an "issues" order) or even reduce the costs by a percentage (a "percentage" order) to reflect this. The same solution may arise where the judge feels that one or other party has acted improperly and thereby increased the overall costs.

What If No Costs Order Is Given?

As an alternative, the judge could make no Order as to costs, usually reflecting disapproval at how the clients or their lawyers have run the case. Being silent on costs amounts to the same thing. This means all parties pay their own costs, but not each others. If you receive a bill from your solicitors in these circumstances, you have to assess whether it was you or them at fault. You should contact us for advice as soon as possible if this happens.

On What Costs Basis Should The Costs Be Paid?

Having reached this point, the judge then has to decide the basis on which the costs should be paid. The options are standard or indemnity costs. If the Order is silent, then standard costs will normally apply. Indemnity Costs are "solicitor/own client" costs (what you have to pay your own lawyer) and these are governed by contract law and are payable unless "unreasonably incurred", known as the indemnity basis. The second side is "between the parties" costs (formerly inter-partes - what the other side have to pay) and these are usually costs that have been "reasonably incurred" and are known as standard costs. The different emphasis is important. If costs do not appear reasonable, but are also not considered unreasonable, the other side do not usually have to pay them, while the client will still be liable for them.

When Are Costs Assessed?

The court will normally summarily assess costs at the end of any hearing or trial lasting less than 1 day. All other costs are usually referred for detailed assessment.

If the costs are not assessed immediately, then the judge can make an Interim Costs Order of a suitable sum to be paid towards the total costs liability. This stops interest running on some of the costs and means the party who is to recover their costs does not have to keep waiting forever before they see any money.

What Happens When A Costs Order Is Made?

Before a case goes to court, each solicitor should prepare a costs schedule or bill showing either the costs of the individual hearing, or if it is a final hearing/trial, the costs for the entire case. Once a judge has decided who has won the case, they will assess each side’s costs and make a costs order showing how much should be paid by each party. Each party will then usually have 14 days from the date of the order to pay the costs.

To learn more about how costs are assessed, please see our section on challenging legal charges.