Costs Thrown Away Meaning: What Are Costs Thrown Away?

If a court order refers to “costs thrown away”, it generally means legal costs that have been unnecessarily incurred because something happened that meant work already undertaken could no longer be used as intended.

A common example is where a hearing is adjourned at short notice because of one party’s actions. The other party may already have paid solicitors and counsel to prepare for and attend the hearing. If that preparation has effectively been wasted, the court may order the responsible party to pay costs that have been “thrown away”.

The phrase can also arise where pleadings are amended, a trial cannot proceed, an application is abandoned or some other development results in unnecessary expenditure.

For anyone searching for “costs thrown away meaning”, the key point is that the order is intended to deal with costs incurred that have effectively been wasted as a consequence of what has happened in the proceedings.

What does costs thrown away mean?

The Civil Procedure Rules recognise “costs thrown away” as one of the orders a court can make in relation to costs. In straightforward terms, it means that one party may be required to compensate another for costs that have been wasted.

Imagine a defendant prepares for a two-day hearing. Its solicitors spend time preparing the case, counsel prepares written submissions and both are ready to attend court. Shortly before the hearing, something happens for which the claimant is responsible and the hearing has to be adjourned.

Some of that preparation might be useful when the hearing is eventually rearranged. Other work may have to be repeated entirely. The court could make an order requiring the claimant to pay the defendant’s costs thrown away as a result of the adjournment. The important question then becomes which costs were genuinely wasted.

When can costs be thrown away?

Costs thrown away can arise in many situations. One of the clearest examples is an adjourned hearing or trial. If one party’s actions mean a hearing cannot proceed, the other party may already have incurred substantial legal costs preparing for it.

However, adjournments are not the only situation in which the phrase can arise. Costs may potentially be thrown away where there has been a significant amendment to a case, an application has been abandoned or withdrawn, a procedural failure results in work having to be repeated, or an earlier step in the proceedings becomes redundant.

They can also arise from interlocutory applications during ongoing proceedings. Whether an order is appropriate will depend on what has happened, why the costs have been wasted and the court’s discretion.

What costs can be included?

An order for costs thrown away does not necessarily mean every cost connected with a hearing becomes payable. The focus is on the expenditure that has actually been wasted.

For example, suppose counsel prepares for a hearing that is subsequently adjourned. Some of counsel’s preparation may remain useful for the rearranged hearing. If so, it may be difficult to say that all of the preparation costs were thrown away. Other work may need to be repeated because circumstances change before the new hearing date.

Similarly, solicitors may have carried out work that remains useful to the wider case. The assessment therefore requires consideration of what work was genuinely wasted rather than simply identifying all costs associated with the relevant period.

Depending upon the circumstances, a party’s costs thrown away might include solicitors’ preparation, counsel’s fees, attendance costs and other expenditure that no longer has value because of the relevant event.

Costs thrown away following an adjournment

Adjournments provide a useful example of how these costs orders operate. Suppose a trial is due to begin on Monday. The defendant’s solicitors have spent the previous week preparing documents, corresponding with witnesses and working with counsel. Counsel has prepared for trial and travel arrangements may have been made.

The claimant then seeks a last-minute adjournment because of an issue that could reasonably have been addressed earlier. The judge agrees to adjourn the trial but decides that the defendant should not have to bear the financial consequences of the wasted preparation.

The court might therefore order the claimant to pay the defendant’s costs thrown away by the adjournment. That does not necessarily determine who will ultimately pay the wider costs incurred in the litigation. The claimant could still go on to win the case.

The thrown-away costs order deals specifically with the financial consequences of the adjournment.

Costs thrown away vs costs in any event

There is an important difference between costs thrown away and costs in any event. If Party A receives an order for its costs “in any event”, Party B is responsible for the relevant costs regardless of who ultimately wins the proceedings.

An order for costs thrown away is narrower. It focuses on the costs wasted because of a particular event. For example, following an adjournment, the court might order:

“The claimant shall pay the defendant’s costs thrown away as a result of the adjournment.”

The defendant is not necessarily entitled to all its costs of the proceedings or even every cost relating to the original hearing. The entitlement concerns those costs that were actually thrown away.

Costs thrown away vs costs reserved

Costs reserved has a different effect again. Where costs are reserved, the court postpones the decision about responsibility for those costs until a later stage. No final decision has yet been made about which party should pay them.

With a costs thrown away order, the court has determined that one party should be responsible for the relevant wasted expenditure, subject to the wording of the particular order.

The distinction matters when reviewing the various court orders made throughout litigation. A complex case may contain a mixture of costs in the case, costs in any event, costs reserved and costs thrown away. All of these may need to be considered when the final costs position is calculated.

Are costs thrown away decided immediately?

Sometimes they are decided immediately. The court may carry out a summary assessment and decide the amount payable at the hearing.

Summary assessments are commonly used where the court can determine the relevant costs without requiring the parties to go through the full detailed assessment procedure.

The parties may have filed schedules setting out the costs they seek for the relevant hearing or application. The judge can then decide what should be allowed.

In other cases, the court may determine entitlement to costs but leave the amount to be agreed or assessed later. This can lead to detailed assessments where agreement cannot be reached.

The wording of the order is therefore crucial. Being awarded costs thrown away does not necessarily tell you the amount that will ultimately be recovered.

Are costs thrown away assessed on the standard or indemnity basis?

An order for costs thrown away and the basis upon which those costs are assessed are separate questions. A court can make an order identifying the costs to which a party is entitled and also determine whether assessment should take place on the standard or indemnity basis.

Where the order does not specify the basis, the Civil Procedure Rules generally provide for costs to be assessed on the standard basis. On the standard basis, costs must be reasonably incurred, reasonable in amount and proportionate to the matters in issue.

Indemnity costs operate differently. Proportionality does not apply in the same way and doubts as to whether costs were reasonably incurred or reasonable in amount are resolved in favour of the receiving party.

The fact that costs have been “thrown away” does not itself mean that they will automatically be assessed on the indemnity basis. The exact wording of the order should always be checked.

Do costs thrown away have to wait until the end of the case?

Not necessarily. A court can make costs decisions during proceedings as well as at the conclusion of the proceeding. This is particularly relevant to interim hearings and procedural applications.

If an adjournment has caused one party to incur wasted costs, the court does not necessarily need to wait until the final trial to decide responsibility for them.

The timing of payment will depend upon the order and whether the amount has already been assessed.

This is another reason why parties should not assume that all legal costs will simply be dealt with at the end of the litigation.

How are costs thrown away calculated?

This can be one of the more difficult aspects of the order. It may be relatively easy to establish that a party incurred £15,000 preparing for a hearing. It does not automatically follow that £15,000 was thrown away. The key issue is what work was wasted.

If a solicitor spent five hours preparing a witness for the original hearing but that preparation remains useful when the hearing is rearranged two weeks later, there may be an argument about whether the whole of that time was thrown away.

If the rearranged hearing occurs six months later and significant work needs to be repeated, the position may be different.

The same issue can arise with counsel’s preparation, bundles, witness evidence and written submissions. For receiving parties, it is therefore important to be able to identify the wasted work clearly. For paying parties, the question is whether the costs claimed genuinely fall within the scope of the order.

What if I disagree with the amount claimed?

An order requiring you to pay costs thrown away does not necessarily require you to accept the figure requested by the other party. Where the amount has not been summarily assessed, it may be possible to negotiate the claim. If the costs are subject to detailed assessment, the paying party can challenge appropriate items through the costs assessment process.

One important issue will be whether the work claimed was actually thrown away. Another may be whether the amounts claimed are reasonable and, where the standard basis applies, proportionate.

The scope of the underlying order is particularly important. A receiving party should not use an order for costs thrown away as a basis for claiming wider costs that remain useful to the proceedings or fall outside the event covered by the order.

Why are different types of costs orders important?

There are numerous types of costs and costs orders used during civil litigation. The difference between costs thrown away, costs in the case, costs in any event and costs reserved can materially affect the amount ultimately payable.

For example, a party may have been ordered to pay costs thrown away following an adjournment but later be successful at trial and receive its wider costs of the proceedings.

Alternatively, a party may win an interim application and still receive an order for costs in the case rather than an immediate order against its opponent.

Understanding the wording of individual orders is therefore essential when preparing or challenging a final Bill of Costs.

How ARC Costs can help with costs thrown away

ARC Costs acts for both paying and receiving parties in legal costs disputes. Where a party has been awarded costs thrown away, we can review the underlying order and identify which work properly falls within the entitlement.

We can also assist with preparing schedules and Bills of Costs, negotiations, Points of Dispute, Replies and detailed assessment proceedings.

For paying parties, we can examine whether the costs incurred and claimed were genuinely wasted or whether some of the work remained useful to the proceedings.

For receiving parties, careful preparation can help demonstrate why particular expenditure was thrown away and should be recovered.

An order for costs thrown away may look straightforward, but disputes can arise over exactly what the order covers and how much should be paid.

The simplest answer to “what does costs thrown away mean?” is that they are costs wasted because of a particular event in the litigation. Establishing which costs were actually wasted, however, can require a much closer examination of the work undertaken and the precise wording of the court’s order.

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