Who Pays the Costs of an Interim Application?

An interim application can be necessary to resolve an issue before a civil claim reaches trial. However, applications can also result in significant additional legal costs, particularly where solicitors must prepare evidence, instruct counsel and attend a contested hearing.

A common question is; who pays the costs of an interim application?

In civil proceedings in England and Wales, the general rule is that the unsuccessful party pays the successful party’s costs. However, the court has discretion to make a different order, and the outcome of an interim application does not always determine who must pay the costs.

At ARC Costs, our Costs Lawyers and Costs Draftsmen assist solicitors and parties with the preparation, recovery and assessment of legal costs, including costs arising from interim applications.

What is an Interim Application?

An interim application is a request for the court to make an order before the final resolution of proceedings. Applications may be necessary to address procedural issues, obtain evidence, protect assets or deal with urgent circumstances.

Common examples include applications for:

• An interim injunction to prevent a party from taking certain actions.
• Specific disclosure of documents.
• An extension of time to comply with court directions.
• Relief from sanctions following a procedural failure.
• Permission to amend a statement of case.
• Summary judgment or strike-out of a claim.

An application for an interim order will often involve preparing an application notice, supporting witness statements and a draft order.

The parties may also need to prepare written submissions, review evidence and attend a hearing. These steps can generate substantial legal fees, particularly in complex commercial litigation.

Who Usually Pays the Costs of an Interim Application?

Under CPR 44.2, the court has discretion to determine whether one party should pay another party’s costs, the amount payable and when payment should be made. The general rule is that the unsuccessful party pays the successful party’s costs.

For example, if a claimant makes an application for specific disclosure and the defendant unsuccessfully opposes it, the court may order the defendant to pay the costs of the application.

However, the court will consider all the circumstances. These may include the parties’ conduct, whether the application was necessary, whether either party acted unreasonably and whether the applicant achieved the relief sought.

A party can succeed on an application but still receive a different costs order if the court considers that appropriate. The rules governing costs decisions are set out in CPR Part 44.

What Are the Different Types of Interim Costs Orders?

The wording of an order for costs is particularly important because it determines when and how costs may be recovered.

Costs of the Application

Where the court orders one party to pay the other party’s costs of the application, the successful party is generally entitled to recover the allowable costs relating to that application. The amount may be agreed, summarily assessed or subject to detailed assessment. The entitlement is not dependent on the receiving party ultimately winning the wider proceedings.

Costs in the Case

An order for costs in the case means that the costs of the relevant application follow the final costs outcome. For example, if the claimant ultimately obtains an order for their costs of the proceedings, they may also recover the costs of an earlier application covered by a costs-in-the-case order.

The costs are therefore not normally payable immediately following the interim hearing.

Costs Reserved

Where costs are reserved, the court postpones deciding who should pay them. The issue may be determined at a later hearing or when the proceedings conclude. If no subsequent order is made, reserved costs are treated as costs in the case.

No Order as to Costs

Where the court makes no order as to costs, each party generally bears its own costs of the application, regardless of the eventual outcome of the proceedings.

Costs Thrown Away

Costs thrown away may be awarded where a party’s actions have caused another party to incur unnecessary expenditure. For example, an adjournment or the setting aside of an earlier order may result in costs being wasted. The court may order the responsible party to pay those costs.

For further information, see ARC Costs’ guidance on legal costs and detailed assessment.

Who Pays the Costs of an Interim Injunction?

The costs of an interim injunction can be more complicated than those of a routine procedural application. An interim injunction may be sought to prevent a party from disposing of assets, disclosing confidential information or taking other action before trial.

Applications can be urgent and may involve extensive evidence and significant legal expenditure.

However, obtaining an interim injunction does not automatically mean the applicant will recover their costs immediately.

Where an injunction is granted based on the balance of convenience rather than a final determination of the parties’ rights, the court may reserve costs until the underlying dispute is resolved. This is because the court has not necessarily determined which party is ultimately right.

The outcome will depend on the circumstances, including the parties’ conduct and the nature of the application.

Solicitors should therefore consider the potential costs consequences before making an application for an interim injunction, particularly where the underlying claim remains contested.

How Are Interim Application Costs Assessed?

The court may determine the amount payable through summary assessment or detailed assessment.

Summary Assessment

Summary assessment is commonly used following interim hearings lasting no more than one day. The court considers the costs claimed and determines a reasonable amount, usually at the conclusion of the hearing.

Parties intending to claim costs should prepare a statement of costs, normally using Form N260.

For application hearings, the statement should generally be filed and served at least 24 hours before the hearing.

The statement may include solicitors’ time, counsel’s fees, court fees and other recoverable expenses.

The court considers whether the costs claimed are reasonable and, where applicable, proportionate.

Detailed Assessment

Where costs cannot appropriately be assessed at the hearing, the court may order detailed assessment.

The receiving party will usually prepare a Bill of Costs setting out the work undertaken and the amounts claimed.

The paying party may then challenge particular items through Points of Dispute.

ARC Costs provides specialist Bills of Costs drafting and Points of Dispute services to assist with this process.

What Legal Costs Can Be Recovered?

The recoverable costs of an interim application depend on the relevant costs order and the applicable rules. They may include the reasonable costs of preparing the application notice, drafting witness statements, reviewing evidence, corresponding with the opposing party and attending the hearing.

Counsel’s fees and court fees may also be recoverable. However, the receiving party cannot necessarily recover every amount charged by its solicitors.

The court may reduce costs where the time claimed is excessive, the hourly rates are unreasonable or work has been duplicated.

For example, an application involving a relatively straightforward procedural issue may not justify extensive attendance by several senior fee earners.

Where costs are assessed on the standard basis, proportionality is also relevant.

The applicable fixed recoverable costs regime, if any, must also be considered.

When Must Interim Application Costs Be Paid?

Where the court summarily assesses costs and orders payment, the paying party will generally have 14 days to pay unless the court specifies another period.

Where costs are ordered subject to detailed assessment, payment is generally due within 14 days of the relevant costs certificate, unless otherwise ordered.

The court may also order a payment on account of costs before the final amount has been assessed.

Where costs are reserved or ordered to be costs in the case, payment will usually depend on a later determination.

It is important to check the exact wording of the court order rather than assuming that payment is immediately required.

Can You Challenge the Costs of an Interim Application?

Yes. A paying party may be able to challenge the amount claimed, depending on whether costs have already been assessed.

Where detailed assessment is required, challenges can be raised through Points of Dispute.

Common objections concern excessive hourly rates, unreasonable time spent preparing evidence, unnecessary counsel’s fees and duplicated work.

However, where the court has already summarily assessed and fixed the costs, the available options are different. A party cannot simply reopen the assessment by serving Points of Dispute.

Any challenge to the order itself may require an appropriate application or appeal, subject to the relevant rules and deadlines.

Obtaining specialist advice early can help establish which options remain available.

How ARC Costs Can Help With Interim Application Costs

ARC Costs provides specialist legal costs services to solicitors, law firms and parties involved in civil litigation throughout England and Wales.

We assist receiving parties with preparing Bills of Costs and pursuing costs recovery, while helping paying parties review and challenge potentially excessive costs claims.

Our team also provides Costs Lawyer advocacy and assistance with detailed assessment proceedings.

Whether you need to recover the costs of an interim application or challenge an amount claimed by another party, our specialists can help you understand the relevant costs rules and available options.

Contact ARC Costs to discuss your legal costs requirements.

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