Inter-partes costs orders (interim and final)

Inter-Partes Costs Orders (Interim and Final)

Inter-partes costs orders are judicial orders requiring one party in a litigation to pay the costs of the other party. These orders can be either interim or final, depending on when they are made and the stage of the proceedings. The purpose of inter-partes costs orders is to compensate a party for the legal expenses they have incurred due to the litigation, and to encourage fair conduct and efficiency in the legal process. The awarding of costs is guided by principles of fairness, reasonableness, and proportionality.

Interim Costs Orders

Interim costs orders are made during the course of legal proceedings, before the final resolution of the case. These orders can cover various stages of the litigation process and serve several purposes:

• ★ Security for Costs: In cases where there is concern about a party's ability to pay costs if they lose, the court may order that party to provide security for the other party's costs. This is common in situations involving parties from outside the jurisdiction or where there are doubts about the financial stability of a party.
• ★ Costs of Interim Applications: During litigation, parties may make various applications (e.g., for interim injunctions or disclosure). The court can order the losing party in these applications to pay the costs incurred by the winning party, helping to compensate them for the expenses of that specific procedural step.
• ★ Costs Reserved: In some instances, the court may reserve the decision on costs until the conclusion of the case. This means that the question of who should pay the costs will be determined as part of the final judgment.
• ★ Payment on Account of Costs: The court may order an interim payment on account of costs, particularly if a party has had significant success at an interim stage. This payment helps cover costs already incurred and reduces the financial burden while waiting for the final costs decision.

Final Costs Orders

Final costs orders are made at the conclusion of the case, after the final judgment has been delivered. These orders determine the total costs liability of the parties based on the outcome of the case:

• ★ Costs Follow the Event: The general rule is that the losing party pays the winning party's costs. This principle incentivizes parties to consider the merits of their case carefully and discourages frivolous or unmeritorious claims.
• ★ Costs on the Standard Basis: Costs ordered on the standard basis must be reasonable and proportionate to the matters in dispute. The court will resolve any doubts in favor of the paying party, ensuring that only necessary and justified costs are awarded.
• ★ Costs on the Indemnity Basis: Costs ordered on the indemnity basis are not subject to the same strict rules of reasonableness and proportionality. This higher level of costs can be awarded in cases where a party has acted unreasonably or improperly. The receiving party is given the benefit of the doubt regarding the reasonableness of costs.
• ★ Percentage Costs Orders: The court may order a party to pay a percentage of the other party's costs, reflecting the degree of success achieved. For example, if a party only partially succeeds in their claims, the court may apportion the costs accordingly.
• ★ Each Party to Bear Their Own Costs: In some cases, the court may order that each party bear their own costs, especially if both parties have had mixed success or if there is no clear winner.

Assessment and Enforcement of Costs Orders

Once a costs order is made, the costs may need to be assessed (taxed) to determine the exact amount payable. This process ensures that only reasonable and proportionate costs are awarded. The two main types of assessment are:

• ★ Summary Assessment: A quick assessment of costs usually conducted at the end of a hearing or trial, where the judge determines the costs payable based on a brief review of the costs incurred.
• ★ Detailed Assessment: A more thorough and formal examination of the costs claimed, typically conducted by a costs judge. This process is used when significant costs are involved and requires detailed evidence of the expenses incurred.

Conclusion

Inter-partes costs orders, both interim and final, play a crucial role in civil litigation, providing a mechanism for compensating parties for the costs incurred and encouraging responsible conduct. By awarding costs appropriately, courts ensure that justice is accessible and that parties are not unduly burdened by the financial implications of litigation. Understanding the nature and effect of these orders is essential for parties involved in legal disputes, as it helps manage expectations and plan for the financial aspects of pursuing or defending a case.