Costs in Civil Cases: Who Should Pay?

General principles

The two main principles when it comes to deciding which party should pay the costs of an application or of the whole proceedings are:

  • The costs payable by one party to another are in the discretion of the court; and
  • The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.

A successful party in normal circumstances is entitled to have an order for costs against the loser, with limited exceptions. Exceptions include cases where a successful claimant recovers no more than nominal damages, or where the successful party acted improperly or unreasonably or where the issue on which a party succeeded is raised for the first time by amendment at a very late stage. In exercising its discretion on costs the court is required to have regard to all the circumstances, and in particular to the following matters:

  • The extent to which the parties followed any applicable pre-action protocol;
  • The extent to which it was reasonable for the parties to raise, pursue or contest each of the allegations 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 the claim;
  • Whether a party was only partly successful; and
  • Any admissible offer to settle.

Interim costs orders

If an order makes no reference to costs, none are payable in respect of the proceedings to which the order relates. Usually however, the court will make some form of order saying who will pay the costs of any interim applications. The choice of order depends on the court’s view of who won the interim application. Case management hearings usually result in orders for costs in the case, as there is no ‘winner.’ An adversarial application won by the claimant will usually result in an order for ‘claimant’s costs.’ Applications made without notice, and interim injunctions granted on the basis of the balance of convenience, usually result in ‘costs reserved.

Final costs orders

There are seven possible variations from the main rule that the unsuccessful party should pay the whole of the successful party’s costs. These variations are:

  1. That  a party mast pay only a proportion of another party’s costs;

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For more information on:

  • Order for costs in cases involving multiple parties
  • Bullock order
  • Sanderson order
  • Quantification of costs
  • Agreement between the parties
  • Fixed costs
  • Summary assessment
  • Detailed assessment