Summary
- A statement of costs is a document served on the court that breaks down your legal costs in commercial litigation, enabling the court to carry out a summary assessment at the end of proceedings, and must be served at least 24 hours before the hearing.
- Failing to serve the statement on time, without a reasonable excuse, can result in the court refusing to award you costs even if you win, and may expose you to liability for costs arising from any resulting delays or adjournments.
- Advocacy by ambush, where a party produces their costs statement only at the point the judge considers costs rather than in advance, is treated as procedurally unfair and can result in costs being denied to the offending party.
- This article is a plain-English guide to statements of costs in commercial litigation for business owners in the United Kingdom, written by LegalVision’s business lawyers.
- LegalVision specialises in advising clients on commercial disputes, litigation procedure and costs recovery in the UK.
Tips for Businesses
Use Form N260 as your template even though it is not strictly required, as it ensures you include all relevant information. Set a reminder to serve your statement at least 24 hours before the hearing date and keep proof of service. If you are unsure what costs are recoverable, get advice from a disputes solicitor before completing the statement, not after the hearing.
A statement of costs is a document that parties to commercial litigation must serve on the court to set out a breakdown of their legal costs, enabling the court to carry out a summary assessment under the Civil Procedure Rules (CPR). In England and Wales, the relevant practice direction is CPR PD 44, which governs summary assessment procedure and the use of Form N260. The court uses the statement to decide what costs order to make at the end of proceedings, including whether to award recoverable costs against the losing party. This article will explain statements of costs and how you can complete and submit one.
What is a Statement of Costs?
A statement of costs is a document that all parties to commercial litigation must serve on the court to break down the costs of their legal proceedings. This statement is important because it enables the court to make a summary assessment of costs at the end of your matter.
Therefore, if you intend to claim your legal expenses from going to court, serving the statement of costs is essential. Importantly, you must do so at least 24 hours before the court hearing is due to take place.
When Does Summary Assessment Apply?
Summary assessment is not used in every case. Courts carry out a summary assessment at the end of hearings that last less than one day. This includes most interim applications and short trials.
For longer or more complex proceedings, the court will usually order a detailed assessment instead. Detailed assessment is a separate process where a costs judge examines the costs in full after the main proceedings have concluded. In detailed assessment, parties do not use a statement of costs. Instead, the receiving party must serve a bill of costs, which is a more detailed document that CPR Part 47 governs under a different procedure.
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What Should a Statement of Costs Include?
When you complete a statement of costs, it is helpful to use Form N260. Whilst this is not a legal requirement, if you do not use it, your statement of costs should closely follow it. Your legal representative will sign your statement of costs for you and if you do not have one, you will have to sign it. Nonetheless, whenever your business is involved in court litigation, you are strongly advised to get legal advice from a dispute solicitor.
A statement of costs should include the following:
- how many hours you are claiming;
- what the hourly rate is;
- the grade of the fee earner;
- costs for the solicitor to attend the court hearing;
- costs for counsel to participate in the court hearing;
- additional disbursements you wish to claim;
- the cost of the additional disbursements;
- any amount of Value Added Tax (VAT) you intend to claim.
This fact sheet outlines how your business can manage a dispute.
Are There Consequences of Not Completing a Statement of Costs?
It is a legal requirement where you choose to provide the court with a statement of costs, that you do so at least 24 hours before your court hearing. Importantly, unless you have a reasonable excuse for not doing so, the court will consider this specifically when deciding any order for the costs of the:
- court claim;
- hearing;
- application;
- any further hearing
- any detailed assessment hearing
These considerations highlight the potential delays or other negative ramifications that come from you not submitting you statement on time. If you fail to comply with the given timeframe, the other party may argue you should be liable for the costs of those consequences. This could mean paying the costs of pauses in proceedings (court adjournment) or a detailed assessment by the court.
What is Advocacy by Ambush?
Advocacy by ambush is where a party produces the statement of costs when the judge decides on costs rather than serving it 24 hours before the hearing. This is unfair on the other party as they have not seen the costs statement in advance to consider it and prepare any relevant argument. However, the party carrying out advocacy by ambush would have seen the other party’s cost statement.
Carrying out advocacy by ambush can result in not being allowed your costs even if you were the successful party in the court litigation.
Key Takeaways
If your business is part of a commercial dispute, you could end up in court proceedings. Litigation should, however, be a last resort in a business disagreement. If you are part of a court case and want to claim costs, you must complete a statement of costs and produce it at least 24 hours before your hearing. A statement of costs is required so that the court can perform a summary assessment of costs to make a costs order at the end of legal proceedings. The consequences of not completing a statement of costs correctly and on time without a reasonable excuse can harm your ability to reclaim your legal costs.
If you need help understanding statements of costs in the UK, LegalVision provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced disputes lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.
Frequently Asked Questions
What should I include in my statement of costs?
If you fill out your statement of costs with Form N260, it will contain all of the relevant information you should complete. However, if you are not using this form, then you should outline how many hours you are claiming and the rate, the costs for your legal representatives (solicitors, counsel, etc) to participate in the hearing, additional disbursements you wish to claim, the cost of the additional disbursements and any amount of Value Added Tax (VAT) you intend to claim.
When do I need to serve my statement of costs?
You must serve your statement at least 24 hours prior to your hearing date.
What is advocacy by ambush?
Advocacy by ambush occurs when a party produces their statement of costs at the point the judge decides on costs, rather than serving it 24 hours before the hearing. This can result in the court refusing to award you costs, even if you were the successful party.
What happens if I do not submit my statement of costs on time?
Without a reasonable excuse, the court will take your late submission into account when deciding costs. You may be held liable for costs arising from any delays, including court adjournments or a detailed assessment hearing, even if you ultimately succeed in the underlying dispute.
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