4.1 Award of Costs (1)

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Under section 51 of the Supreme Court Act 1981 and CPR 44.3(1), the awarding of costs is entirely at the Court's discretion.

'Costs' is the term used to describe the legal fees in a case, which are generally determined by the number of units of time that a solicitor or other legal advisor has spent dealing with the matter.

Before deciding on a costs award, the Court will take into account all the circumstances of the case. This includes looking at the conduct of the parties throughout the litigation - a particularly relevant factor is whether they have complied with any pre-action protocol. The court will also consider whether the parties acted reasonably in relation to various issues for example, in relation to the conduct of the case, including whether the claim was exaggerated, how any defence was pursued and whether any offers to settle had been made.

The client should therefore be advised that their conduct throughout each of the stages of the claim will be key to the awarding of costs.

The usual rule is that the loser pays the winner's costs, but far from being the definitive answer in relation to the issue of costs, the Courts merely use this rule as a starting point. Full costs may well be awarded but equally, it is not unusual for the Courts to make a partial costs recovery order or indeed to prevent any recovery of costs. Again, a key factor is the conduct of the parties themselves, both before and during the action. This includes, their willingness to investigate the possibility of settling the matter via alternative methods of dispute resolution.

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