Litigation can be expensive and both parties will incur costs as a result. The general rule in civil proceedings is for the losing party to pay the costs of the losing party, however, this does principle does not apply in the small claims track where, with a few exceptions, each party is expected to cover their own costs.
If you are defending a claim where the total amount is over £10,000, you should be aware of the possibility of having to pay the claimant’s costs if you go all the way to trial and lose.


What are costs?

CPR 44 deals with costs. CPR 44.1 defines what costs include:

‘costs’ includes fees, charges, disbursements, expenses, remuneration, reimbursement allowed to a litigant in person under rule 46.5 and any fee or reward charged by a lay representative for acting on behalf of a party in proceedings allocated to the small claims track;

When awarding costs, the court will consider the conduct of both sides as well as any efforts to settle and willingness to participate in alternative dispute resolution (ADR) such as mediation. The conduct of the parties includes things like:

  • Whether the pre-action conduct rules were followed.These include sending a properly worded letter before action or letter of claim and dealing with your response in the proper manner. The pre-action conduct also applies the defendant, hence the importance of responding to letters of claim.
  • Whether the claimant exaggerated their claim.
  • Whether it was reasonable to raise, pursue or defend a particular issue.
  • The manner in which the party dealt with a particular issue or allegation.
  • Whether the part was co-operative.
Costs assessment is a complex issue. If you find yourself subject to a costs order from the court, you may be able to challenge it but you’ll need legal advice.
Costs orders are court orders similar to judgments (CCJs) and can be enforced in much the same way. See enforcement.
Unlike judgments (CCJs), costs orders are not recorded on the public registry or on your credit files as they do not arise from credit you did not pay back.

Wasted costs

Wasted costs orders can be made against legal representatives (solicitors) who act improperly, unreasonably or negligently and in so doing, cause the other party to incur unnecessary costs. Examples of conduct that can give cause to a wasted costs order are:

  • Failure to comply with court orders
  • Not attending a hearing or appointment
  • Pressing on with a hopeless claim
  • Inefficient presentation of the case at trial
  • Not pleading the case properly
  • Anything that constitutes an abuse of process

Wasted costs orders are made on application and the lawyer or firm against whom the application is made should be given notice of the application and be told what they are supposed to have done wrong. Most applications will be dealt with at a hearing.

Costs in the small claims track

If you win a small claim, you can only claim certain costs against your opponent, referred to as fixed costs. They include:

  • court fees;
  • travel expenses for attending court;
  • loss of earnings for attending court (currently capped at £95);
  • loss of earnings and travel expenses for any witnesses you had to call on your behalf, if applicable;
  • experts reports you had to pay for, if applicable (currently capped at £750 per expert).
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