Litigation costs

'Justice is open to everyone in the same way as the Ritz Hotel.' Judge Sturgess

Some problems with costs

Understanding the rules on costs is as important as understanding the merits of the claim itself. Over recent years there have been several important developments. It is only possible to give an outline of these here, but here are some general principles.

Who pays costs to whom

It is now too simplistic to say that the “loser” will be ordered to pay the costs of the winner. Increasingly, the courts are being persuaded to make orders based on which party has won which of the “issues”. Therefore, a claimant who successfully obtains a judgment against a defendant requiring the defendant to may it money may nevertheless find that he is ordered to pay some of the defendant’s costs if he has lost the arguments on some of the other issues dealt with by the judge.


At an early stage of any litigation proceedings, all parties are required to prepare a budget for the costs

a)    that they have already incurred; and
b)    that they anticipate they will incur in dealing with the various stages of the litigation.

Although the Budget can be reviewed if the litigation changes, the parties will be expected to keep their costs within the figures approved.

Some judges are being very tough on budgets. If a budget is cut, that party has to make a choice between preparing the case so as to maximise the prospects of success or keep within the budgeted figure so as to increase the chances that costs will be recoverable.

Even if a “winner” obtains an order for its costs to be paid, it will not be paid a figure in excess of the budgeted figure. Furthermore, if the budgeted figure is now “disproportionate” to the value of the claim, the sum which can be recovered may be reduced even further.

Refusing to mediate

If a party has failed or refused to mediate, it may not be allowed to recover its costs.

All these factors make it very difficult to predict what the costs implications of any court action may be.

Information on the funding of Dispute Resolution, Litigation and Tribunal Claims

Additional Information