Costs orders explained: no order as to costs, costs thrown away and more

CPR 44.2(2)(a) sets the general rule that the unsuccessful party will be ordered to pay the costs of the successful party. This is often described as costs following the event. The court can make a different order, and in deciding what to do it must consider all the circumstances, including conduct, whether a party succeeded on part of its case, and any admissible offers to settle.

Conduct includes behaviour before and during the proceedings, whether it was reasonable to raise or pursue an issue, the way the case was conducted and whether a winning party exaggerated its claim. Refusing to engage in alternative dispute resolution can also be relevant, as our article on refusing mediation explains.

An order for “no order as to costs” means each party bears its own costs of the matter covered by the order. Neither side can recover from the other. It is common where both sides had partial success, where an application was necessary but neither party was really at fault, or where a settlement includes an agreement that costs lie where they fall.

CPR 44.10 matters here. Where an order is silent about costs, the general position is that no party is entitled to costs in relation to that order, subject to exceptions. It is therefore important to ask for costs when an order is made rather than assuming they will follow later.

Practice Direction 44 explains the common interim orders. “Costs in the case” or “costs in the application” means the party who later gets its costs of the proceedings also gets the costs of that part. “Costs reserved” means the decision is postponed; if no later order is made, the costs become costs in the case. Our article on costs in the case and costs reserved covers these in more detail.

“Costs thrown away” means costs incurred as a result of a step that has become wasted, such as setting aside a default judgment or amending a statement of case. “Costs of and caused by” an amendment covers the cost of making it and of consequential amendments. “Claimant’s costs in the case” means the claimant recovers them if successful, but does not pay the defendant’s costs of that part if the claimant loses.

Where success is mixed, CPR 44.2(6) lets the court order a party to pay a proportion of the other side’s costs, a stated amount, costs from or until a date, or costs relating to a distinct part of the proceedings. The court is encouraged to make a percentage order where practicable instead of an issue-based order, because issue-based orders are hard to apply on assessment.

A percentage order is applied to the costs as assessed, not the costs claimed. A 70% order on a bill that is reduced on assessment produces 70% of the reduced figure. Advising on the realistic recovery therefore needs both the percentage and a view on how the bill is likely to be assessed.

Draft orders deserve careful attention. Specify the basis of assessment, whether the costs are to be summarily or detail assessed, any payment on account and any interest on costs. An order that says nothing on these points can leave the receiving party with a long wait and a lower recovery.

Our free checklists and detailed assessment guidance explain what happens after an order is made, and our Costs Lawyers can advise on the terms before a hearing.