Litigation is a strange industry.

Sometimes it can feel a bit like being in a new chapter of Alice in Wonderland where things are never as they seem.

Take costs, for example.

You would assume (not unreasonably) that the losing party will have to pay the winning party’s costs.

Whilst in many cases that is true, it isn’t always true and the reality is far from straight forward.

For example, in small claims, you are highly unlikely to recover costs, but there are exceptions to that, particularly if the court decides that one party has lied and/or unreasonably failed to engage in negotiations.  Even if costs are not awarded, you can still recover attendance costs of £95.00 per witness, court costs and some fixed fees.  So those people who tell you that you can’t recover any costs are wrong.  In addition, if you bring a counterclaim, you might be able to take it outside of small claims, so that costs will apply.

Even if you are not in small claims, there are any one of a number of things that could derail a costs claim by the successful party.  There are all manner of things that the other side could have done during the course of the litigation (such as making part 36 or Calderbank offers) that the winning party has failed to deal with that could change the costs position.  For example, if you are claiming £100,000, and I offer to pay £80,000 on day one, and then at trial you are successful, but are only awarded £75,000, the chances are that you will have to pay all of my costs from the day you rejected my offer.  Which sounds straight forward enough, but even that isn’t a certainty because there are still things that you can argue against this, such as if the piece of information that defeated £25,000 of your claim didn’t come to light until witness evidence, which is almost at the end.

You see what I mean.  It’s never straight forward.

It gets worse.

Simply because you are awarded your costs, doesn’t mean you’re going to get what you spent.  I usually advise clients that if they recover 70% of their actual expenditure they are doing well, but, again, this is not an exact science, and disputes over costs has become an area of litigation on its own, particularly in bigger cases.  The simple principal is that you are entitled to throw any resources you like at your case, but that does not mean that the other side have to pay for your extravagance.  If you choose to instruct a top KC or senior expert on a claim that is only worth £20,000 at best, it is highly unlikely that a court is going to agree that the other side have to pay the full amount of your fees.  In a recent case on that exact point, it is likely that the winner of the claim is actually going to end up being the loser, as the costs that they are going to have to pay themselves will by far exceed the amount that they recovered.  This means that the whole dispute was completely pointless, other than the fact that it provides a good example of how you can get it both right and wrong at the same time.

Sometimes these things are tactical.  The case in question settled long before the trial, and it may be that the other side were discouraged from fighting on, knowing which expert and barrister they were going to be up against.  So, despite the financial risks, and financial outcome, the successful party may still put this down as a win.  My view, however, would be that if this was your only way of having a good chance of winning, you probably shouldn’t have bought the case in the first place.

Kleyman & Co Solicitors.  The full service law firm.  Helping you avoid disappearing down rabbit holes.