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Of the different types of order the court can make in relation to interim matters is one for “costs reserved”. PD 44 para.4.2 explains the effects of such an order:
“The decision about costs is deferred to a later occasion, but if no later order is made the costs will be costs in the case.”
I have always understood this to mean that where such an order is made but this is overlooked when the matter settles, whether at trial or by agreement, then tough luck for the party who is ultimately unsuccessful. The costs of that interim matter are treated as costs of the claim overall. Cook on Costs states:
“It is worth pointing out that an order for ‘costs reserved’ becomes an order for ‘costs in the case’, if there is no later determination of where responsibility for those costs lies.”
It is not uncommon for this issue to be overlooked, particularly where counsel is not properly briefed as to the existence of such orders before a final hearing.
However, a recent decision from the Court of Appeal suggests that this analysis is not necessarily correct.
In Taylor v Burton & Anor  EWCA Civ 21 an interim order was made permitting the claimant to amend their particulars of claim, permitting the service of an amended defence and permitting the defendant to serve a further statements of fact dealing with any new factual issues arising in the amended case. The judge ordered that the “costs of and occasioned by the amendment are reserved to the trial judge”.
At trial the defendant was ordered to pay the claimants’ costs of the action on the standard basis. This had the effect of also picking up the costs of the amendment reserved to the trial judge. The Court of Appeal proceeded on the basis that the trial judge was unaware of this as he had not been referred to the fact that those costs had been reserved to him and did not refer in his costs judgment to the fact that they had.
The Court of Appeal’s conclusion was:
“In my view, the judge was innocently in error in not dealing separately with this head of costs. I say ‘innocently’ because he was not told that this head of costs had been reserved to him. He ought to have been told and he ought then to have considered separately how to deal with them. He might have decided simply to include them as the costs to which the Burtons were entitled as part of their costs of the claim. He might have thought it appropriate to make a different order. We do not know. As, however, he did not address his mind to how to deal with them, we consider that he fell into error and that, in consequence, we can and should exercise our own discretion as to what order to make in respect of the reserved costs.”
The defendant was a litigant in person representing himself at the trial but this does not appear as part of the reasoning for the decision and there is nothing in the judgment to suggest the position would have been different if the defendant had been represented.
This judgment appears to place the onus on the trial judge to check whether there are any interim costs orders reserved to him and gives virtually an automatic right of appeal if the judge does not do this. It must be said that whatever the fairness of the decision, resolving such issues by way of appeal appears a very cumbersome and expensive route. Why not just allow the matter to be remitted to the trial judge for consideration? It also begs the question as to when the wording of PD 44 para.4.2: “if no later order is made the costs will be costs in the case” actually applies. This decision suggests there must be a formal judicial decision on the point before there is any finality.