The Critical Importance of Bringing Your Case in the Correct Court-the Differential Costs Order

differential costs order

Choosing which Court to pursue your legal proceedings in is an important decision with a potentially costly outcome if you pursue your cause of action in the wrong Court. Two recent cases illustrate this:

  1. Moin -v- Sicika and
  2. O’Malley -v- McEvoy

Two personal injuries cases were brought in the High Court but the awards were within the Circuit Court scale. The plaintiff was awarded costs on the Circuit Court scale but the Judge refused the defendant’s request for a differential costs order.

The defendant appealed this decision to the Court of Appeal and succeeded in getting a differential costs order.

This order allows the Judge who makes the award of damages to the plaintiff on the lower court scale to order that the plaintiff pay the difference between the costs actually incurred by the defendant and those that would have been incurred if the case was brought in the correct court.

The Judge can measure these costs or order that they be taxed and the differential costs provision also provides for a set-off against the plaintiff’s costs.

The Courts Act 1981, as amended by the Courts Act, 1991, sets out the differential costs order power as follows:

“Limitation on amount of plaintiff’s costs in certain proceedings.

17.—(1) Where an order is made by a court in favour of the plaintiff or applicant in any proceedings (other than an action specified in subsections (2) and (3) of this section) and the court is not the lowest court having jurisdiction to make an order granting the relief the subject of the order, the plaintiff shall not be entitled to recover more costs than he would have been entitled to recover if the proceedings had been commenced and determined in the said lowest court.

(2) In any action commenced and determined in the High Court, being an action where the amount of damages recovered by the plaintiff exceeds £25,000 but does not exceed £30,000, the plaintiff shall not be entitled to recover more costs than he would have been entitled to recover if the proceedings had been commenced and determined in the Circuit Court, unless the judge hearing the action grants a special certificate, for reasons stated in the order, that, in the opinion of such judge, it was reasonable in the interests of justice generally, owing to the exceptional nature of the proceedings or any question of law contained therein, that the proceedings should have been commenced and determined in the High Court.

(3) In any action commenced and determined in the High Court, being an action where the amount of the damages recovered by the plaintiff exceeds £5,000 but does not exceed £15,000, the plaintiff shall not be entitled to recover more costs than whichever of the following amounts is the lesser, that is to say, the amount of such damages or the amount of costs which he would have been entitled to recover if the action had been commenced and determined in the Circuit Court.

(4) It shall not be lawful for rules of court to contain or impose any restriction on the amount of costs recoverable by any party from any other party in any action or other proceeding, but nothing in this subsection shall prevent the insertion in rules of court of a restriction on the amount of the costs recoverable which is identical with a restriction imposed by this section nor the fixing by rules of court of the amount recoverable by any person as and for the costs and expenses incurred by him in the doing of any specified thing in any particular form of action or other proceeding.

(5) (a) Where an order is made by a court in favour of the plaintiff or applicant in any proceedings (not being an appeal) and the court is not the lowest court having jurisdiction to make an order granting the relief the subject of the order, the judge concerned may, if in all the circumstances he thinks it appropriate to do so, make an order for the payment to the defendant or respondent in the proceedings by the plaintiff or applicant of an amount not exceeding whichever of the following the judge considers appropriate:

(i) the amount, measured by the judge, of the additional costs as between party and party incurred in the proceedings by the defendant or respondent by reason of the fact that the proceedings were not commenced and determined in the said lowest court, or

(ii) an amount equal to the difference between—

(I) the amount of the costs as between party and party incurred in the proceedings by the defendant or respondent as taxed by a Taxing Master of the High Court or, if the proceedings were heard and determined in the Circuit Court, the appropriate county registrar, and

(II) the amount of the costs as between party and party incurred in the proceedings by the defendant or respondent as taxed by a Taxing Master of the High Court or, if the proceedings were heard and determined in the Circuit Court, the appropriate county registrar on a scale that he considers would have been appropriate if the proceedings had been heard and determined in the said lowest court.

(b) A person who has been awarded costs under paragraph (a) of this subsection may, without prejudice to his right to recover the costs from the person against whom they were awarded, set off the whole or part thereof against any costs in the proceedings concerned awarded to the latter person against the first-mentioned person.

(6) In this section ‘relief’ includes damages.”.

The Court of Appeal held that it was incumbent upon a Judge where an award is made on the lower court scale to make a differential costs order unless there is a good reason for not doing so.

The Court of Appeal also noted it is necessary for the Plaintiff to pursue his case in the lowest court that can award what is reasonable in the circumstances of the case and if he does not do so then there is a serious costs risk.

In these cases the defendant had written to the Plaintiffs telling them that they believed the correct Court for the case was the Circuit Court and they would seek a differential costs order under under s. 17(5) of the Act of 1981 if the Plaintiff succeeded with his claim.

Read the full decision of the Court of Appeal here.

The takeaway is you need to exercise caution in which case you choose to pursue your case.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.