CPR 44 explained: the court’s discretion, bases of assessment and the factors that decide costs

Almost every costs argument in the civil courts of England and Wales starts in Part 44. Whether the question is who pays after a trial, whether an interim hearing should carry its own order, or how a bill should be cut down on assessment, the court will look first to the general rules in this Part. Later Parts deal with special regimes — fixed costs in Part 45, special cases in Part 46 and assessment procedure in Part 47 — but they build on Part 44 rather than replace it.

Part 44 also contains rules that are easy to overlook until they bite: the time for payment, the effect of an order that says nothing about costs, the court’s power to penalise misconduct, and the qualified one-way costs shifting rules that protect most personal injury claimants. Understanding the structure helps practitioners and clients predict outcomes before money is spent arguing about them.

Rule 44.2(1) gives the court discretion as to whether costs are payable by one party to another, the amount of those costs and when they are to be paid. Rule 44.2(2) then states the general rule: if the court decides to make an order, the unsuccessful party will be ordered to pay the costs of the successful party. The court may make a different order, and frequently does where success is mixed.

In deciding what order to make, the court must have regard to all the circumstances, including the conduct of all the parties, whether a party has succeeded on part of its case even if not wholly successful, and any admissible offer to settle that is not a Part 36 offer. Conduct is defined widely. It includes behaviour before as well as during the proceedings, compliance with pre-action protocols, whether it was reasonable to raise or pursue a particular issue, the manner in which a case was pursued or defended, and whether a winning claimant exaggerated its claim. Since the decision in Churchill and the 2024 rule changes, a failure to engage in alternative dispute resolution is expressly part of the conduct the court considers.

Rule 44.2(6) lists the orders available. Instead of an all-or-nothing outcome, the court may order a party to pay a proportion of another party’s costs, a stated amount, costs from or until a certain date, costs incurred before proceedings began, costs relating to particular steps, costs relating only to a distinct part of the proceedings, or interest on costs from or until a certain date, including a date before judgment.

The rules encourage percentage orders where practicable rather than issue-based orders, because issue-based orders are difficult to apply on assessment. Where the court orders a party to pay costs subject to detailed assessment, rule 44.2(8) says it will order a reasonable sum on account unless there is good reason not to. That payment on account can be a significant cash-flow point for the receiving party, and its amount is often argued with reference to the approved budget or the bill.

Costs are never recovered automatically in full. Rule 44.3 provides that the court will not allow costs which have been unreasonably incurred or are unreasonable in amount, and it assesses on either the standard basis or the indemnity basis. On the standard basis the court allows only costs that are proportionate to the matters in issue, and resolves any doubt about whether costs were reasonably and proportionately incurred in favour of the paying party. Costs which are disproportionate may be disallowed or reduced even if they were reasonably or necessarily incurred.

On the indemnity basis, proportionality falls away and any doubt about reasonableness is resolved in favour of the receiving party. That shift in the burden is why an indemnity order is valuable. Where an order does not state the basis, costs are assessed on the standard basis. Rule 44.3(5) explains proportionality: costs bear a reasonable relationship to the sums in issue, the value of non-monetary relief, the complexity of the litigation, additional work caused by the paying party’s conduct, and wider factors such as reputation or public importance.

When the court assesses costs on either basis, rule 44.4 requires it to have regard to all the circumstances, including the conduct of the parties before and during the proceedings, efforts made to resolve the dispute, the amount or value of money or property involved, the importance of the matter to the parties, the particular complexity, difficulty or novelty of the questions raised, the skill, effort, specialised knowledge and responsibility involved, the time spent on the case, the place and circumstances in which the work was done, and the receiving party’s last approved or agreed budget.

These are often called the seven pillars, and they are the vocabulary of every assessment. A claim for a senior fee earner’s hourly rate is justified by complexity and responsibility; a challenge to hours spent drafting witness statements is argued by reference to time reasonably spent; and a large departure from an approved budget must be justified by good reason. Points of dispute and replies that tie each argument to these factors tend to persuade a costs judge far more than generic objections.

Rule 44.6 allows the court to assess costs summarily or order detailed assessment, and rule 44.7 requires payment within 14 days of a judgment or order stating an amount, or of a certificate of assessment, unless the court specifies otherwise. Rule 44.9 creates deemed costs orders, for example where a claim is discontinued or a Part 36 offer is accepted, and rule 44.10 explains what happens where an order makes no mention of costs — in general, no party is entitled to costs for that application or hearing.

Rule 44.11 allows the court to disallow costs or order a party or its legal representative to pay costs where there has been unreasonable or improper conduct, and Section II of Part 44, from rule 44.13 onwards, sets out qualified one-way costs shifting for personal injury claims. Each of these rules has generated its own case law, and we cover several of them in separate guides on this blog.