Costs in civil litigation

COSTS Charges for use of the courts, including associated officers, bailiffs; Evidential costs: witnesses, experts; Lawyers’ fees, where lawyers are involved, including the cost of obtaining documentary evidence in common law jurisdictions.

American Rule vs. English Rule

Section 91 ZPO Principle of the obligation to bear costs; scope of this obligation (Germany) (1) The party that has not prevailed in the dispute is to bear the costs of the legal dispute, in particular any costs incurred by the opponent, to the extent these costs were required in order to bring an appropriate action or to appropriately defend against an action brought by others. The compensation of costs also comprises compensation of the opponent for any necessary travel or for time the opponent has lost by having been required to make an appearance at hearings; the rules governing the compensation of witnesses shall apply mutatis mutandis. (2) In all proceedings, the statutory fees and expenditures of the attorney of the prevailing party are to be compensated. However, the travel expenses of an attorney who has not established himself in the judicial district of the court hearing the case, and who does not reside at the location of the court hearing the case, shall be compensated only insofar as it was necessary to involve him in order to bring an appropriate action, or to appropriately defend against an action brought by others. The costs of retaining several attorneys shall be compensated only insofar as they do not exceed the costs of a single attorney, or insofar as personal reasons required an attorney to be replaced by another. Where an attorney represents himself, he shall be reimbursed for those fees and expenditures that he could demand as fees and expenditures had he been granted power of attorney to represent another party. (3) The costs of the legal dispute in the sense as defined by subsections (1) and (2) also include the fees arising as a result of conciliation proceedings before a dispute-resolution entity established or recognised by a Land department of justice (Landesjustizverwaltung); this shall not apply if a period longer than one year has lapsed between the date on which the conciliation proceedings ended and the date on which proceedings were brought in the courts. (4) The costs of the legal dispute in the sense of subsection (1) also include costs that the prevailing party has paid to the party that has not prevailed in the course of the legal dispute.

Cost allocation (Italy) Art. 91, par. 1, c.p.c.: the judge orders the losing party to pay the costs (expenses and attorney’s fee) in favor of the other party) Art. 91, par. 4, c.p.c.: the justice of the peace in some cases can order the unsucessful party to pay legal costs, but the amount of costs cannot be higher than the amount in dispute (see Constitutional Court no. 157/2014) Art. 92 c.p.c.: (a) the judge can reduce the costs excessive or unnecessary; (b) the judge can «compensate» the costs if any party is competely victorious or if the issue is new or if there is a change in the case law.

Rates provided by the law Hourly fees Contingent or conditional fees

Article 25 Legal fee agreements (Code of Conduct for Italian Lawyers) 1. The legal fee agreement, without prejudice to Article 29 sub-section 4, is free. The agreement may be based on: - time rates - flat rates - agreements on one or more businesses - fulfilment and time of the activity execution - single stages or performances or the entire activity - percent basis on the value of the business how much the receiver of the performance can benefit and not only on a strict asset basis. 2. Agreements through which a lawyer receives as legal fee a part or a whole of an allotment of the property subject of his legal performance or of the point of contention are forbidden. 3. The breach of prohibition under the previous sub-section entails the enforcement of suspension of the professional practice from two to six months as disciplinary sanction.

Legal costs in Italy Attoney’s fees D.M. n. 127/04 (in force till 2012) D.M. 140/12 and D.M. n. 55/14 Other costs: d.P.R. 115/2002

UK Senior Courts Act 1981, s. 51 English rules of civil procedure - Part 44 – General rules about costs https://www.justice.gov.uk/courts/procedure-rules/civil Practice direction 44 – General rules about costs https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part-44-general-rules-about-costs/part-44-general-rules-about-costs2

Senior Courts Act 1951, section 51 Discretion Senior Courts Act 1951, section 51 (1) Subject to the provisions of this or any other enactment and to rules of court, the costs of and incidental to all proceedings in—(a)the civil division of the Court of Appeal;(b)the High Court; and (c)any county court, shall be in the discretion of the court. (2)Without prejudice to any general power to make rules of court, such rules may make provision for regulating matters relating to the costs of those proceedings including, in particular, prescribing scales of costs to be paid to legal or other representatives or for securing that the amount awarded to a party in respect of the costs to be paid by him to such representatives is not limited to what would have been payable by him to them if he had not been awarded costs. (3)The court shall have full power to determine by whom and to what extent the costs are to be paid. The exercise of the discretion in ordering costs is governed by CPR and by common law principles

Costs The unsuccessful party pays the costs of the successful party (Rule 44.2) Standard basis vs. indemnity basis (Rule 44.3)

CPR 1.1 The overriding objective (1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost. (2) Dealing with a case justly and at proportionate cost includes, so far as is practicable – (a) ensuring that the parties are on an equal footing; (b) saving expense; (c) dealing with the case in ways which are proportionate – (i) to the amount of money involved; (ii) to the importance of the case; (iii) to the complexity of the issues; and (iv) to the financial position of each party; (d) ensuring that it is dealt with expeditiously and fairly; (e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and (f) enforcing compliance with rules, practice directions and orders

Standard basis Costs reasonably incurred (Rule 44.3, section 1) Cost proportionate to the mattes in issue (Rule 44.3, section 5) In case of doubt whether costs were reasonably and proportionately incurred are resolved in favour of the paying party The principle stated in Home Office v. Lownds [2002] EWCA Civ 365 has been pushed aside with the Jackson Refrom

Cost considered reasonable Proportionality test BNM v MGN Ltd [2016] EWHC B13 (Costs) 3 June 2016 Total claimant’s cost £ 241,817 Cost considered reasonable Costs reduced after the proportionality test Base profit costs £46,321 Base Counsel’s fees £14,687.50 Court fees £1,310 Base costs of drawing the bill £4,530 Atkins Thomson’s success fee £16,780.83 Counsel’s success fee £4,846.88 ATE premium £61,480 VAT £17,433.24 Total base costs £62,318.50 Total costs £167,389.45 Base profit costs £24,000 Base Counsel’s fees £7,300 Court fees £1,310 Base costs of drawing the bill £2,250 Atkins Thomson’s success fee £7,920 Counsel’s success fee £2,409 ATE premium £30,000 VAT £8,775.80 Total costs £83,964.80

Indemnity basis The doubt whether costs were reasonably incurred is resolved in favour of the paying party

For an assessment on the indemnity basis: Richmond Pharmacology limited v. Chester Overseas Limited, Levine and Levine [2014] EWHC 3418 (Ch) For an assessment on the indemnity basis: There must be some circumstances which take the case out of the norm Indemnity costs are appropriate only where the conduct of the paying party is unreasonable to a high degree The discretion is wide and must be exercised taking into account all the circumstances The pursuit of a weak claim will not usually justify an order for indemnity costs, provided that the claim was at least arguable The making of a grossly exaggerated claim may be a ground for indemnity costs

Costs assessment (Rule 44.6) Summary assessment (PD 9) vs Detailed assessment (Rule 47)

Multiparty litigation Sanderson order (Sanderson v Blyth Theatre Co.) vs. Bullock order (Bullock v London General Omnibus Co.) Defendants who have been sued by other defendants can recover costs from the defendant who have sued them