What is a Cost Order?
A cost order is a decision made by a court about who should pay the legal costs involved in a case. Legal costs can include solicitor’s fees, barrister’s fees, and other expenses such as court fees. Cost orders are common in both civil and family cases, and they play a crucial role in deciding who bears the financial burden of bringing or defending a legal claim.
In most cases, the general rule is that the losing party must pay some or all of the winning party’s costs. This principle is often referred to as “the losing party pays” rule. However, the court has the discretion to decide who pays and how much, taking into account the circumstances of each case. For example, if both sides have won on different issues, the court might order each party to pay their own costs, or split the costs in a specific way.
The main purpose of a cost order is to encourage parties to act reasonably during legal proceedings and to discourage unnecessary claims or defences. By making the losing party responsible for costs, the court aims to ensure that parties think carefully before starting or continuing with litigation.
Examples of how cost orders work:
- If you bring a civil claim against someone and win, the court may order the losing party to pay your legal costs. This helps you recover the money you spent on your case.
- If both sides settle before trial but cannot agree on costs, the court may decide who should pay, based on who was more successful or who acted more reasonably during negotiations.
- In some cases, the court may decide not to make a cost order at all, meaning each party pays their own costs.
The rules governing cost orders in civil cases are set out in the cost order section of the Civil Procedure Rules, with further details about fixed costs and the principle that the losing party pays found in PART 45. The official legislation for these procedures is available in the Civil Procedure Rules 1998.
It’s important to remember that a cost order does not always mean the full amount of legal costs will be paid by the losing party. The court will usually assess what is reasonable and proportionate, and may only order a partial payment.
To understand how cost orders fit within the broader picture of court costs, including court fees and funding options, explore our related guidance. This will help you prepare for the possible financial implications of going to court.
When and How Are Cost Orders Made?
When and How Are Cost Orders Made?
Cost orders are decisions made by a court about who should pay the legal costs arising from a case. Understanding when these orders are made, the factors courts consider, and the different types of cost orders is important for anyone involved in legal proceedings.
When Are Cost Orders Made?
Courts in the UK typically make cost orders at the end of a case, after a judgment or final hearing. However, in some situations, interim cost orders can be made during the course of proceedings – especially if there are applications or hearings before the final trial.
The timing and process can depend on the type of case:
- Civil cases: Cost orders are usually made after the court has decided who has won or lost the case.
- Family cases: Cost orders are less common, but may still be made, particularly if one party has behaved unreasonably.
- Tribunal cases: Costs are not generally awarded, except in cases of unreasonable behaviour or wasted costs.
What Factors Do Courts Consider?
When deciding who should pay costs, courts look at several factors. The main considerations include:
- Who won or lost: The general rule in civil cases is that the losing party pays the winner’s costs. However, this is not automatic.
- Conduct of the parties: Courts consider how each party behaved before and during the case. For example, if a party refused to negotiate or acted unreasonably, this may affect the cost order.
- Offers to settle: If a party made a reasonable offer to settle (such as a "Part 36 offer" in civil cases), and the other party refused, this could influence the court’s decision on costs.
- Proportionality and reasonableness: The court will look at whether the costs claimed are proportionate and reasonable in relation to the issues in dispute.
For civil cases, these principles are set out in detail in Civil Procedure Rules 1998, Part 44, which provide guidance on how courts should approach costs decisions.
Types of Cost Orders
There are several types of cost orders that a court can make, depending on the circumstances:
- Full costs: One party is ordered to pay all of the other party’s reasonable legal costs.
- Partial costs: The court may order that only a proportion of costs be paid, for example, 50% of the other side’s costs.
- Fixed costs: In some cases, the amount of costs is set by rules rather than calculated based on actual expenses.
- Indemnity costs: These are higher than standard costs and are awarded where the court believes one party’s conduct justifies a more generous award. For more details on when indemnity costs may be ordered and how they are calculated, see Indemnity costs.
The type of order made depends on the conduct of the parties, the complexity of the case, and the relevant rules for that area of law.
Cost Orders in Different Types of Cases
- Civil cases: The starting point is that the loser pays the winner’s costs, subject to the court’s discretion. The rules and principles are detailed in Civil Procedure Rules 1998, Part 44.
- Family cases: Cost orders are less common, as the court usually expects each party to pay their own costs. However, if a party acts unreasonably or fails to comply with the court’s directions, a cost order may be made. For more information, refer to the Family Procedure Rules 2010.
- Tribunals: Costs are rarely awarded, except in cases of unreasonable conduct or wasted costs (for example, if a party has caused unnecessary expense).
Practical Advice
If you are involved in a legal case, it is important to:
- Understand the potential for a cost order: Be aware that you could be ordered to pay the other side’s costs if you lose, or if your conduct is criticised by the court.
- Act reasonably throughout the case: Cooperate with the other party where possible and consider making or accepting reasonable offers to settle.
- Keep records of your legal costs: This will help if you need to claim costs or challenge the other party’s claim.
For more on managing legal costs, you may wish to explore related topics such as court fees, funding your case, and recovering costs.
Cost Orders in Different Types of Cases
Cost orders can work differently depending on the type of legal case. Understanding these differences is important if you are involved in civil litigation, family law matters, or tribunal appeals.
Cost Orders in Civil Cases
In most civil court cases, the general rule is that the losing party is ordered to pay the legal costs of the winning party. However, the court has wide discretion and may consider factors such as the conduct of both sides, any offers to settle, and whether costs were reasonably incurred.
The main rules governing cost orders in civil cases are set out in Civil Procedure Rules 1998, Part 44. These rules explain when costs can be awarded, how they are assessed, and the process for challenging a costs order. For example, the court may make a "summary assessment" of costs at the end of a hearing, or order a more detailed assessment if the costs are complex.
It is important to note that even if you win your case, you may not recover all of your legal costs. The court will only order payment of costs that are reasonable and proportionate.
Cost Orders in Family Law Cases
Cost orders in family law cases, such as divorce or child arrangements, are treated differently from civil cases. The general approach is that each party pays their own legal costs, unless there is a good reason to order otherwise. This is to avoid discouraging people from seeking fair outcomes, especially where children or vulnerable parties are involved.
However, in some circumstances – such as where one party has behaved unreasonably or has failed to comply with court orders – a costs order may be made. For example, if you are dealing with divorce financial orders, the court will look at whether either party has acted unreasonably during negotiations or proceedings. The court may also consider the specific factors set out in the Family Law Act 1996, Section 25, such as the conduct of the parties and the needs of any children.
If you are involved in a family law case, it is crucial to seek advice on the likelihood of a costs order and how to manage your legal expenses.
Cost Orders in Tribunal Appeals
Tribunal appeals, such as those heard by the First-tier Tribunal, generally operate on a "no costs" basis. This means that each party usually pays their own costs, regardless of the outcome. However, there are exceptions. The tribunal can order one party to pay the other’s costs if they have acted unreasonably in bringing, defending, or conducting the proceedings.
For more information on the procedures and when costs orders may be made, see our guide to First-tier Tribunal appeals. You can also read more about the approach to costs in tribunals in this article: First-tier Tribunal.
Understanding how cost orders work in your specific type of case can help you plan and manage your legal costs more effectively. For further information on related topics, you may wish to explore guidance on funding your case, court fees, and recovering costs.
Who Pays Legal Costs Under a Cost Order?
When a court makes a cost order, it decides who is responsible for paying the legal costs incurred during the case. In most UK legal cases, the general rule is that the losing party pays the winning party’s legal costs. This principle is often referred to as “costs follow the event.” However, there are exceptions and variations depending on the circumstances of the case and the judge’s discretion.
The Usual Rule: Loser Pays
Typically, if you win your case, the court may order the other side to pay your legal costs. This is designed to compensate the successful party for the expense of bringing or defending the claim. The rules governing how these decisions are made can be found in Civil Procedure Rules 1998, Part 44 and further explained in the official guidance on costs order.
When Each Party Pays Their Own Costs
There are situations where the court may decide that each party should pay their own legal costs, regardless of who wins. This might happen if the judge believes that both parties were partly at fault, if the case involved complex issues where neither side clearly prevailed, or if the conduct of the parties during the case justifies such an order. For example, if both parties have won on different issues, or if the winning party behaved unreasonably, the court might not award full costs.
Special Considerations for Individuals and Businesses
Cost orders can have very different impacts depending on whether you are an individual or a business. For individuals, being ordered to pay the other side’s legal costs can be financially devastating, especially if the sums involved are large. For businesses, while cost orders can still be significant, they may be better equipped to absorb or plan for these expenses as part of their risk management.
The High Court has provided guidance on when third parties (such as funders or insurers) might be ordered to pay costs, particularly if they have stood to benefit from the litigation. This is especially relevant in commercial disputes or where litigation funding arrangements are in place.
What If You Cannot Pay a Cost Order?
If you are ordered to pay legal costs but cannot afford to do so, the other party may take steps to enforce the order. This could include applying for a charging order against your property, or even bankruptcy proceedings in severe cases. However, there are options available if you are struggling with debt. For example, administration orders can help individuals manage their debts, including court-ordered costs, by making affordable monthly payments through the court.
Practical Advice
- Always consider the risk of a cost order before starting or defending a legal case.
- Seek legal advice about your potential liability for costs, especially if your financial position is uncertain.
- The rules and principles around costs are detailed and can be complex. For a deeper understanding, refer to Civil Procedure Rules 1998, Part 44 and the official guidance on costs order.
Understanding who pays legal costs under a cost order is crucial, as it can have serious financial consequences for both individuals and businesses involved in litigation.
Understanding the Financial Impact of Cost Orders
When you are involved in a legal case, understanding the financial impact of cost orders is essential. Cost orders can significantly affect the total amount you may have to pay, especially when combined with other legal expenses like court fees and solicitor costs. Here’s what you need to know about how cost orders work and what they could mean for your finances.
How Cost Orders and Court Fees Are Connected
A cost order is a decision by the court about who should pay the legal costs of a case. These costs often include not only the fees charged by lawyers but also court fees and other expenses, such as expert witness fees or travel costs. Court fees are the charges you pay to the court for issuing and progressing your case. They can form a significant part of the overall costs, and if a cost order is made against you, you could be responsible for paying both your own and the other side’s court fees.
For a detailed breakdown of the different types of court fees that may be included in a cost order, you can refer to Court Fees | Practical Law, which outlines the current fees payable in the County Court, High Court, and Supreme Court.
The Financial Risks of Losing a Case
One of the biggest financial risks in litigation is losing and being ordered to pay the other party’s costs. Under the Civil Procedure Rules (CPR) Part 44, the general rule is that the losing party will pay the winning party’s costs, although the court has discretion to decide otherwise. This means you could end up paying not only your own legal costs and court fees, but also those of your opponent. In some circumstances, cost orders can even be made against parties who are not directly involved in the case. For more information on how these principles apply, see Cost Orders against a non party – Lexology.
Why Understanding Court Fees Matters
Being aware of court fees and how they contribute to the overall cost of your case is crucial. Court fees must be paid at various stages, such as when you issue a claim or apply for a hearing. If you are unsuccessful and the court makes a cost order against you, you may have to reimburse the other side’s court fees as well. This can add up quickly, so it’s important to factor these expenses into your decision-making before starting or defending a claim.
How Settlements Affect Cost Orders
Not all cases go to a full trial. If you settle your case before the final hearing, the question of who pays the costs – including court fees and legal expenses – will usually be part of the settlement agreement. The parties can agree on how to divide the costs, or in some cases, the court may decide. To understand how settlement costs interact with cost orders and who may be responsible for paying them, read our guide on who pays what if you settle.
Practical Advice
- Budget carefully: Always consider the possibility that you may have to pay both your own and the other side’s costs.
- Get advice early: A legal adviser can help you understand your potential exposure to cost orders and court fees.
- Review the rules: Familiarise yourself with the Civil Procedure Rules (CPR) Part 44, which set out how costs are awarded in civil cases.
- Consider settlement: Reaching a settlement can sometimes help manage or reduce the risk of a large cost order.
Understanding the full financial impact of cost orders, including how they relate to court fees and settlement costs, will help you make informed decisions throughout your legal case.
How to Manage and Fund Legal Costs
Managing and funding legal costs is a crucial part of any court case. Understanding your options and planning ahead can help you avoid unexpected expenses, especially if a cost order is made against you. Here’s what you need to know:
Funding Your Case
There are several ways to fund a legal case in the UK:
- Private funding: This means paying your legal fees yourself, either from savings or other personal resources. It gives you full control over your legal representation, but can be expensive.
- Legal expenses insurance: Some home or motor insurance policies include cover for legal costs. Check your existing policies to see if you’re already protected.
- Legal aid: If you cannot afford legal representation, you might qualify for legal aid. The rules for eligibility are set out in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Legal aid is available for certain types of cases and is subject to both a means test (your income and savings) and a merits test (the strength of your case). For the latest developments and challenges in legal aid funding, see Civil Legal Aid.
- Alternative funding methods: These include conditional fee agreements (commonly known as “no win, no fee” arrangements), crowd-funding, or support from charities and advice centres. Each option has its own risks and requirements, so it’s important to get independent advice.
For a detailed overview of these options, visit our page on funding your case.
Fee Waivers and Help With Fees
Court fees can be a significant part of your overall legal costs. The amounts you might need to pay are set out in the Court Fees (Miscellaneous Provisions) Order 2009. If you are on a low income or receiving certain benefits, you may be eligible for a fee waiver or reduction under the government’s Help With Fees (HWF) scheme. This can cover the cost of issuing a claim, applying to the court, or other related fees.
Find out more about eligibility and how to apply for help with fees (HWF).
Planning Ahead for Cost Orders
A cost order means you may have to pay the legal costs of the other party if you lose your case, or sometimes even if you win but the court decides you should pay some costs. To avoid surprises:
- Discuss possible outcomes with your solicitor early on, including the risk of cost orders.
- Budget for all potential costs, including your own legal fees, court fees, and the possibility of paying the other side’s costs.
- Consider insurance or legal aid as a safety net if you are worried about affordability.
- Keep records of all expenses related to your case, as you may be able to recover some costs if you win.
Seeking Financial Assistance
If you are struggling to meet legal costs, don’t hesitate to seek financial help. This could include:
- Applying for legal aid if your case and financial circumstances qualify.
- Exploring community legal advice centres, which may offer free or reduced-cost support.
- Looking into payment plans or staged payments with your solicitor.
- Checking for local charities or organisations that support people with legal problems.
By understanding your options and taking practical steps, you can manage your legal costs more effectively and reduce the risk of unexpected financial strain during your case.
Recovering Costs After a Court Case
When you win a court case in the UK, you may be entitled to recover some or all of your legal costs from the losing party. This is known as a "costs order." The court will usually decide who should pay these costs and how much should be paid, taking into account the conduct of both parties and the outcome of the case.
How to Claim Back Your Legal Costs
If the court orders the losing party to pay your legal costs, you become the "receiving party." The process for recovering costs typically involves preparing a detailed bill of costs, which sets out the legal fees and expenses you are claiming. The losing party, known as the "paying party," can review and challenge the bill if they believe any charges are unreasonable.
The court may assess the bill of costs in one of two ways:
- Summary Assessment: Usually done immediately at the end of a short hearing or trial, where the judge decides the amount to be paid.
- Detailed Assessment: Used for more complex cases, where a separate hearing is held to carefully review the costs claimed.
Cost orders and the process for assessing costs are governed by Civil Procedure Rules 1998, Part 44, which set out the general rules about costs in civil court cases. For a practical overview of how these rules are applied, you can also refer to the Costs Order guidance provided by Justice UK.
Challenges in Recovering Costs
Even if the court orders the losing party to pay your costs, recovering the full amount is not always straightforward. The court has discretion to decide what proportion of your costs are "reasonable and proportionate" – you may not get back everything you have spent.
Sometimes, the losing party may delay payment, dispute the amount, or simply refuse to pay. In such cases, you may need to take enforcement action, such as applying for a charging order against their property or instructing bailiffs to recover the debt. These steps can add extra time, expense, and complexity to the process.
For more insight into how the High Court approaches costs orders and the factors considered, you can review recent guidance and case law.
What If the Losing Party Does Not Pay?
If the losing party fails to pay the costs ordered by the court, you have several enforcement options:
- Warrant of Control: Allows court bailiffs to seize goods to cover the debt.
- Attachment of Earnings Order: Deductions are made directly from their wages.
- Charging Order: A charge is placed on their property, which may be enforced if the property is sold.
It is important to act promptly and seek legal advice if you encounter difficulties in recovering your costs, as enforcement can be a complex process.
Differences When Recovering Costs from Public Bodies
Recovering costs can be different if your case involves a claim against a public body, such as a government department or local authority. Public bodies may have additional protections or procedures in place, and costs orders against them are sometimes subject to special rules or limitations. The court may also consider the wider public interest and the conduct of the public body during the litigation.
Understanding how cost orders work in these situations is important, as it may affect both your ability to recover costs and the strategy you use in your case.
For more detailed information about the legal framework for cost orders, refer to Civil Procedure Rules 1998, Part 44 and the Costs Order guidance. If you want to explore the step-by-step process of recovering costs or understand how things differ when making a claim against a public body, follow the links for further practical advice.
Additional Considerations and Related Topics
When dealing with cost orders, it’s important to remember that they don’t exist in isolation. Cost orders can interact with other financial orders made by the court, such as those relating to damages, compensation, or debt repayments. If you’re involved in a legal case, understanding how these different orders work together can help you plan for the total financial impact.
Cost Orders and Other Financial Orders
A cost order typically requires one party to pay the legal costs of the other. However, the court may also issue additional financial orders – such as instructing a party to pay a debt or damages. In some cases, these orders can overlap or affect each other. For example, if you owe money as a result of a court judgment and also face a cost order, you may have to manage multiple payments at once. Courts take your ability to pay into account, but failing to meet these obligations can have serious consequences.
The Role of Administration Orders
If you’re struggling to pay what you owe – including legal costs – a court may grant an administration order. This is a debt solution designed to help individuals who have multiple debts but can afford to pay something each month. An administration order allows you to make a single monthly payment to the court, which is then distributed to your creditors, including any legal costs you owe. You can learn more about how administration orders work in practice, or read the Administration Orders definition for further detail.
Avoiding Surprises: Understanding All Court Costs and Fees
Legal costs aren’t limited to what’s covered by a cost order. You might also be responsible for court fees, charges for expert witnesses, and other expenses related to your case. These can quickly add up, so it’s vital to understand the full range of possible costs before your case proceeds. For a comprehensive overview of what you might be expected to pay, see our guide to court costs and check the detailed breakdown at Court Costs and Fees.
Related Topics for Further Reading
To help you navigate the financial aspects of legal proceedings, consider exploring these related topics:
- Administration orders: How they can help manage debts, including legal costs.
- Court costs: What you need to know about fees, funding options, and ways to recover costs.
- Court Costs and Fees: A thorough overview of legal action costs, including possible reductions and funding help.
- Administration Orders: A legal glossary for a deeper understanding of administration orders.
By gaining a clear picture of all potential costs and financial orders, you can better prepare for what lies ahead and make informed decisions about your legal options. If you have questions about your specific situation, it’s always wise to seek professional advice.
