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), partial success, and admissible Part 36 offers (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 (≤£10,000): no costs-shifting except fixed/limited costs (r.27.14). Note the PI sub-limits — non-RTA personal injury small-claims PSLA limit is £1,500 (RTA whiplash £5,000).
• Fast track (claims up to £25,000) and intermediate track (£25,000–£100,000, introduced Oct 2023): fixed recoverable costs (FRC) apply by complexity band (Bands 1–4).
• 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: a claimant who beats its own offer at trial gets indemnity costs, enhanced interest (up to 10% above base), and an additional amount on damages — 10% of the first £500,000 and 5% of any excess, capped overall at £75,000 (r.36.17(4)(d)) — all running from expiry of the relevant period. A claimant who fails to beat a defendant's Part 36 offer normally pays the defendant's costs from expiry. Strict, self-contained code.
• QOCS (r.44.13–44.17): in personal injury, a losing claimant is generally protected from paying the defendant's costs (subject to fundamental dishonesty etc.).

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 damages uplift 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).
• Note Part 26 was renumbered, in force 6 April 2024.

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