Case Update: Jersey Royal Court Clarifies The Scope Of Costs 'of And Incidental To' Proceedings

• Published date: 26 May 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Collas Crill
• Author: Mr Simon Hurry

A very brief costs overview

A successful party to litigation will likely wish to try and recover its legal costs.

The general rule is that legal costs follow the event, with the 'loser' being ordered to pay the 'winner's' legal costs. However, in more complex litigation, parties can (and often do) win and lose on different issues. Deciding an overall winner can be difficult. The Royal Court has previously noted that it is a mistake to strain to try to label one party as the 'winner' and one as the 'loser' when the complexity or other circumstances of the litigation do not readily lend themselves to analysis in these terms. Consequently, the Royal Court has adopted a more flexible issue-based assessment as to who should be ordered to pay legal costs.

Unless a party's costs have been awarded by way of summary assessment (a process reserved for interlocutory (non-final) hearings lasting no longer than one day), a costs order will be made on the standard or indemnity basis.

A payment on account of a party's costs can be made (typically requiring the payment of a percentage of a party's costs within a few weeks) but, crucially, neither a standard nor indemnity costs order specifies an amount to be paid. That is up to the Judicial Greffier, the clerk to the Royal Court, who will tax the receiving party's costs, having regard for the basis of the costs order made and the submissions of the relevant parties.

The Judicial Greffier's approach to taxation on the standard and indemnity basis, respectively, is set out in the Royal Court Rules 2004 (as amended), as follows.

Standard basis

On a taxation of costs on the standard basis there shall be allowed a reasonable amount in respect of all costs reasonably incurred and any doubts which the Judicial Greffier may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party.

Indemnity (higher) basis

On a taxation of costs on the indemnity basis, all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred and any doubts which the Judicial Greffier may have as to whether the costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the receiving party.

An indemnity costs order is an exceptional order. If the Royal Court is being asked to make one, the key question is whether there is something in the conduct of the action of the other party or the circumstances of...