Costs

DR.11 — Costs

The general rule

Costs are in the court's discretion (CPR r.44.2(1); Senior Courts Act 1981 s.51). The starting point: the unsuccessful party pays the successful party's costs ("costs follow the event", r.44.2(2)(a)) — but the court may order otherwise (r.44.2(2)(b)).

In deciding what order to make, the court considers conduct (pre- and during litigation, exaggeration, unreasonable points, failure to comply with an ADR order or unreasonable failure to engage in ADR), partial success, and admissible settlement offers that do not carry Part 36 costs consequences (r.44.2(4)–(5)). Conduct can produce an issues-based or proportionate costs order, or even deprive a winner of costs.

The two bases of assessment (r.44.3)

• Standard basis (the default): costs must be proportionate and reasonable; doubt resolved in favour of the paying party. Proportionality can trump reasonableness — reasonably incurred costs may still be cut as disproportionate.
• Indemnity basis: reasonable only (no proportionality filter); doubt resolved in favour of the receiving party. No proportionality cap — typically ordered for egregious conduct or as a Part 36 consequence.

Track and costs control

• Small claims: the normal monetary limit is GBP 10,000, subject to special rules. For personal injury, the whole claim must also be within GBP 10,000 and the pain, suffering and loss of amenity element within GBP 1,500 for non-RTA injury, or generally GBP 5,000 for road traffic accident injury; the RTA cases in r.26.10 use GBP 1,000, not GBP 5,000 (r.26.9(1)-(4)). The RTA limit is not confined to whiplash. On the small claims track the court may not order one party to pay another's costs except for the limited items in r.27.14(2): mainly the fixed costs of issuing the claim, court fees, reasonable travel and overnight expenses, capped sums for loss of earnings and experts' fees, and further costs where a party has behaved unreasonably (r.27.14(2)(g)).
• Fast and intermediate tracks: allocation is not decided by value alone. Fast track is normally for claims unsuitable for small claims, with monetary relief up to GBP 25,000, a trial no longer than one day and the r.26.9(6) oral-expert limits. Intermediate track normally covers claims unsuitable for both lower tracks with monetary relief up to GBP 100,000, subject to r.26.9(7)-(10). There is no general GBP 25,000 minimum for intermediate track. See DR.05 for the full allocation conditions. Fixed recoverable costs (FRC): where Part 45 Section VI (fast track) or Section VII (intermediate track) applies, the only costs allowed are the fixed costs in the relevant Practice Direction 45 table plus permitted disbursements (rr.45.44, 45.50(1)); the court does not assess the receiving party's actual bill. On allocation the court assigns the claim to a complexity band from 1 to 4, and the band determines the costs allowed under the table (r.26.14(1)-(3)). A higher amount may be claimed only in exceptional circumstances or where the vulnerability conditions are met (rr.45.9-45.10), and unreasonable behaviour can lead to the fixed costs being increased or reduced by 50% (r.45.13). Do not assume every such claim attracts those regimes: check the applicable Section, transitional provisions and r.45.1 exclusions, including specified residential possession, disrepair and unlawful-eviction claims and protected parties. The residential exclusion does not cover a claim arising from a boundary dispute.
• Multi-track: costs budgeting (r.3.12–3.18) via Precedent H; departure from an approved budget needs "good reason" (Harrison v University Hospitals Coventry [2017] EWCA Civ 792).

Key offers and orders

• Part 36 at judgment: under r.36.17, if a claimant obtains a judgment at least as advantageous as its own offer, the court must normally award the benefits in r.36.17(4), unless unjust and subject to that rule's exclusions. The ordinary regime gives indemnity costs from expiry of the relevant period, interest on those costs up to 10% above base, and interest on all or part of the monetary award (excluding interest) up to 10% above base for some or all of the period from expiry. An additional amount is calculated at 10% of the first GBP 500,000 and 5% above that, capped at GBP 75,000. It is a lump sum, not an amount running from expiry; if there is no monetary award it is calculated on the costs award (r.36.17(4)(d)).
• Failure to beat the defendant's offer: subject to r.36.17's qualifications, the court must normally order the defendant's costs from expiry of the relevant period, plus interest on those costs, unless unjust. Under r.36.17(5), injustice is assessed in all the circumstances, including the offer's terms and timing, available information, information-sharing conduct and whether it was a genuine attempt to settle.
• Fixed costs and Part 36: for claims within Part 45 Sections VI-VIII, r.36.24 modifies those consequences (r.36.22). In particular, when the claimant qualifies under r.36.17(1)(b), the indemnity-costs limb is replaced by the fixed-costs rules and additional costs equal to 35% of the difference between the applicable fixed costs at expiry and at judgment (r.36.24(3)-(5)). Do not add ordinary indemnity assessment to that regime. Rule 36.24 replaces only the indemnity-costs limb; r.36.17 otherwise applies (r.36.24(1)), so the interest on the award and the additional amount under r.36.17(4)(a) and (d) are not removed. Where the claimant fails to beat the defendant's offer, the claimant keeps the fixed costs for the stage reached when the relevant period expired, and the defendant receives the fixed costs applicable at the date of judgment less the claimant's fixed costs (r.36.24(2), (9)).
• QOCS - qualified one-way costs shifting (rr.44.13-44.17): applies to proceedings including damages claims for personal injury, under the Fatal Accidents Act 1976, or surviving for an estate under the Law Reform (Miscellaneous Provisions) Act 1934 following death or injury. It applies whether the claimant wins or loses. It limits enforcement, not the court's power to make a costs order against the claimant. Pre-action disclosure applications and the pre-commencement funding cases in r.44.17 are excluded.
• The enforcement cap (r.44.14): subject to the exceptions below, costs orders against the claimant may be enforced without permission only up to the aggregate money value of orders for, or agreements to pay or settle a claim for, damages, costs and interest in the claimant's favour. Deemed costs orders under r.44.9 count too. Enforcement waits until the proceedings have concluded and costs have been assessed or agreed; r.44.12 governs set-off where enforcement against a favourable costs order is permitted. The inclusion of costs and settlement agreements applies to proceedings issued on or after 6 April 2023 (SI 2023/105, rr.1(3), 24); earlier proceedings require the earlier version of the rule.
• Exceptions: r.44.15 permits full enforcement without permission where proceedings are struck out for no reasonable grounds, abuse of process, or conduct likely to obstruct their just disposal by the claimant (or someone acting on the claimant's behalf with the claimant's knowledge). Rule 44.16(1) permits full enforcement with permission where the claim is found, on the balance of probabilities, fundamentally dishonest. Under r.44.16(2), permission and the extent the court considers just are required for the specified third-party financial-benefit or mixed-claim cases; the third-party head excludes a dependant and claims for gratuitous care, employer-paid earnings or medical expenses.
• Part 36 and QOCS: failing to beat a defendant's offer does not itself remove QOCS. The resulting adverse costs order remains subject to the cap unless an exception applies. A claimant with no favourable damages, costs or interest order or settlement has a zero cap, but the exceptions must still be checked.

Common traps

• Part 36 is not a Calderbank/"without prejudice save as to costs" offer — its automatic consequences only flow if its formal requirements are met.
• "Costs follow the event" is the default, not a rule — conduct displaces it.
• Standard vs indemnity: only standard has the proportionality test; remember who benefits from doubt on each.
• The Part 36 additional amount is capped at £75,000 — "10% uplift" alone is a distractor; it tapers (10% then 5%) and is capped.
• Don't confuse basis of assessment (standard/indemnity) with method (summary vs detailed assessment).
• Part 26 was replaced from 1 October 2023, subject to transitional provisions (SI 2023/572, rr.1-2, 8); the limited amendments in SI 2024/106 did not introduce or renumber the whole Part.

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