Costs

In commercial litigation where each party has claims and asserts that a balance is owing in its own favour, the party which ends up receiving payment should generally be characterised as the overall winner of the action. The court should take as its starting point the general rule that the successful party is entitled to an order for costs, and then consider what departures are required from that starting point.

The judge should make an issue−based costs order if that is what the circumstances of the case require. However, the judge should hesitate before doing so, because of the practical difficulties and because of the steer given by r 44.3(7).

In many cases the judge should reflect the relative success of the parties on different issues by making a proportionate costs order. The judge should have regard not only to any Pt 36 offers made but also to each party’s approach to negotiations (insofar as admissible) and general conduct of the litigation.

If one party makes a Pt 36 offer or an admissible offer within r 44.3(4)(c) which is nearly but not quite sufficient, but the other party rejects that offer outright without any attempt to negotiate, it might be appropriate to penalise the latter in costs. In assessing a proportionate costs order the judge should consider what costs are referable to each issue and what costs are common to several issues. It will often be reasonable for the overall winner to recover not only the costs specific to the issues which he has won but also the common costs.