Costs in the Case: What Does Costs in the Case Mean?

If a court order says “costs in the case”, it means that the costs of a particular hearing or application will usually follow the overall costs outcome of the proceedings. In simple terms, the party in whose favour the final costs order is made will normally also be entitled to the costs covered by the earlier “costs in the case” order.

This wording commonly appears following an interim hearing or application. Unlike costs in any event, it does not immediately decide that one particular party must pay those costs regardless of the eventual outcome.

Understanding the different types of cost orders is important because a few words in an order can make a significant difference to who is ultimately liable to pay legal costs.

What does costs in the case mean?

The meaning of “costs in the case” is set out in the Civil Procedure Rules. Where the court makes an order for “costs in the case”, the party who ultimately receives an order for the costs of the proceedings will also be entitled to the costs covered by that earlier order.

For example, imagine a claimant and defendant are involved in litigation and there is an interim application.

At the end of the application, the judge orders“costs in the case.”

No party has necessarily been ordered to make an immediate payment as a result of that wording. If the claimant later wins the proceedings and is awarded costs, the claimant will normally be entitled to include the relevant costs of the earlier application within its overall recovery.

If the defendant ultimately receives the costs of the proceedings, the position is reversed. The defendant’s costs of the relevant application would ordinarily form part of the costs it is entitled to recover.

Why does a court make a costs in the case order?

Civil proceedings can involve numerous applications and hearings before the final outcome is known. A judge may not consider it appropriate to decide immediately that one party is entitled to recover the costs of a particular application from the other.

Instead, the court can allow those costs to follow the eventual outcome of the litigation. A costs in the case order can therefore avoid making a final decision about responsibility for those particular costs while the wider dispute remains unresolved.

It links the costs of that part of the proceedings to the eventual costs outcome.

Costs in the case: an example

Consider a commercial dispute in which the claimant seeks £500,000 from the defendant. During the proceedings, an application takes place concerning disclosure. Both sides incur £10,000 dealing with the application.

The court makes an order for costs in the case.

Several months later, the claimant succeeds at trial and the defendant is ordered to pay the costs of the proceedings.

Subject to the precise wording of the orders and any other relevant costs decisions, the claimant can usually seek to recover their costs of the earlier disclosure application as part of the costs payable by the defendant.

Had the defendant instead obtained the final costs order, it would ordinarily be the defendant that benefited from the earlier costs in the case order. This is why it is not enough to look at an interim order in isolation. Its financial effect may depend upon what happens later.

Costs in the case vs costs in any event

Costs in any event is different. Where Party A is awarded costs in any event, Party B is responsible for Party A’s costs of the relevant hearing or application regardless of the final result of the proceedings.

For example:

“The claimant shall pay the defendant’s costs of the application in any event.”

The defendant has obtained a specific entitlement to those costs. Even if the claimant ultimately wins the wider litigation, the claimant may still be required to pay the costs covered by that order.

With costs in the case, the identity of the party entitled to those costs depends upon the final costs outcome.

What does “costs in the application” mean?

Another phrase that may appear in a court order is “costs in the application”. This operates in a similar way to costs in the case, but the relevant outcome is linked to the application rather than the proceedings as a whole.

Where there are several stages to an application, the court may decide that the costs of an earlier stage should follow the ultimate costs decision on that application.

These different types of orders allow the court to deal with costs flexibly as litigation develops.

What does costs reserved mean?

Costs reserved has another meaning. Where costs are reserved, the court has postponed the decision about who should be responsible for the costs incurred. A later judge can decide what order should be made.

This differs from costs in the case because a costs in the case order already provides a mechanism for determining who will ultimately receive those costs: they follow the party who receives the costs of the proceedings.

With costs reserved, the decision itself remains to be made. The distinction between costs reserved, costs in the case and costs in any event should therefore be considered whenever reviewing an interim order.

Does costs in the case mean I have to pay immediately?

Usually, the words “costs in the case” alone do not mean that one party has been ordered to make an immediate payment to the other. The eventual liability depends upon the final costs outcome.

This is different from a specific order requiring one party to pay another party’s costs of an application, particularly where the court has also summarily assessed those costs at a fixed amount.

For example, an order might state that the claimant must pay £7,500 towards the defendant’s costs of an application within a specified period. This creates a much more immediate liability.

Anyone unsure about an order should therefore read the complete wording rather than focusing on one phrase.

How much can ultimately be recovered?

A costs in the case order establishes how the relevant costs should follow the final costs outcome. It does not necessarily mean that every pound spent will ultimately be recoverable. The amount of a party’s costs that can be recovered may still need to be agreed or assessed.

If the final order provides for detailed assessment, the receiving party may prepare a Bill of Costs setting out the amounts claimed. The paying party can then challenge appropriate items through Points of Dispute.

Issues can include the amount of time spent, hourly rates, counsel’s fees, expert costs, duplication, proportionality and whether particular work was reasonably incurred. The basis of assessment will also matter.

What if I win only part of my case?

Costs can become more complicated where neither side achieves complete success. The general rule in civil proceedings is that the unsuccessful party normally pays the successful party’s costs, but the court has a broad discretion over costs orders.

The court can consider factors including conduct, partial success and settlement offers. It can also make issue-based or percentage costs orders.

As a result, determining which party in whose favour the costs of the proceedings have ultimately been awarded may require consideration of the final order as a whole. This can then affect earlier costs in the case orders.

Why should solicitors keep track of interim costs orders?

A lengthy case can produce several different costs orders before trial. There may be costs in the case following one interim hearing, costs in any event following another application and costs reserved following a third. These orders can become significant when the final Bill of Costs is prepared.

Accurate records are therefore important. The receiving party needs to establish which costs it is entitled to claim, while the paying party should check that the Bill does not seek costs that fall outside the orders actually made.

The wording of every relevant judgment and order should form part of that review.

How ARC Costs can help

ARC Costs acts for both paying and receiving parties where the court has made an order for legal costs.

We can review the different types of cost orders made throughout proceedings and determine how they affect the costs ultimately recoverable.

For receiving parties, this can include preparing Bills of Costs, identifying recoverable costs from interim applications, preparing Replies and negotiating the amount payable.

For paying parties, we can review the Bill against the underlying costs orders, prepare Points of Dispute and identify costs that may not fall within the receiving party’s entitlement.

The answer to “what does costs in the case mean?” is therefore relatively straightforward: the costs covered by the order will generally follow the party that ultimately receives the costs of the proceedings.

However, establishing exactly which costs incurred can be recovered, how much should be allowed and how multiple interim orders interact can require a much closer examination of the case.

If the court makes an order for costs in the case, keeping an accurate record of that order can be important when the final costs position is determined.

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