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When you own a business, you can encounter problems, such as a commercial dispute with another business or a customer. Although you should try to resolve this using an alternative dispute resolution (ADR) method, court proceedings can sometimes be the only effective way of reaching a solution. Since litigation can be time-consuming and expensive, you will want to prepare a statement of costs detailing your total costs. These costs include any potential recoverable costs, such as counsel’s fees. 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.
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.
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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.
This fact sheet outlines how your business can manage a dispute.
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’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
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.
You must serve your statement at least 24 hours prior to your hearing date.
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