Damian Evans Matthew Davies Charlotte Finley January 3 2023 Snapshot: introduction to litigation costs in Jersey Ogier | Litigation - Jersey Damian Evans, Matthew Davies, Charlotte Finley Litigation Standard versus indemnity basisFactor A versus Factor B upliftIssues-based costs ordersIndemnity principleCosts are rightly at the forefront of a client's mind throughout the lifetime of a dispute. This article sets out the key principles of costs in Jersey and an overview of what to expect.Standard versus indemnity basisAt the conclusion of a hearing (whether interlocutory or the final hearing in the case), the court exercises discretion as to who is liable for costs. The general rule (which is, of course, subject to exceptions) is that the losing party pays the costs of the winning party. When awarding costs, the court will either do so on the "standard basis" or the "indemnity basis" as follows:On the standard basis, a party can expect to recover 60-70% of their costs.On the indemnity basis, a party can expect to recover 75-90% of their costs.The default position by the court is to order costs to be paid on the standard basis, and the court will only move from this if one or more aspects of the proceedings take the case out of the ordinary. Examples of when costs might be ordered on the indemnity basis would include where one party's litigation conduct has been particularly poor or obstructive, or where they have committed fraud (for further information please see "Snapshot: obtaining indemnity costs against litigants in Jersey").Factor A versus Factor B upliftWhen a party is awarded costs on the standard basis, the next stage is for costs to be "taxed". That involves working out how much the winning party is entitled to recover by applying the relevant Factor A rate together with any permissible Factor B uplift. Factor A rates are set by Jersey practice directions and provide for the recoverable hourly rates for lawyers. The recoverable rates are based on years qualified or rank (eg, a lawyer over five years qualified has a set hourly rate of £240). The Factor B uplift is effectively a percentage increase to the Factor A rate determined by reference to the complexity of the case.On top of costs being recoverable on the standard basis, a Factor A and Factor B uplift will also be applied. Generally, a Factor B uplift of 35-50% is considered "usual". Therefore, using a Factor B uplift of 35%, the total amount claimable for a lawyer over five years qualified with a set hourly rate of £240 will be a maximum of £324 per hour.But when a party is awarded their costs on the indemnity basis, it is not necessary to apply Factor A and B rates. The winning party is entitled to recover their costs at the rates charged by their legal advisers.Issues-based costs ordersIt is worth noting that the court also has the authority to allow (or disallow) a party its costs in relation to a specific issue raised in proceedings. If, for example, a party's conduct in relation to an issue before the Court is unreasonable or has resulted in a failed interlocutory application. Therefore, where a party has been successful overall, they may still be disallowed their costs in relation to particular issues, or even have to pay the other party's costs in relation to the same.Indemnity principleFinally, the last key principle of relevance is the "indemnity principle". This states that a party cannot recover more for a lawyer's time than that lawyer has charged to the party. As such, the indemnity principle prevents a party from recovering more for their lawyer's time than they have been charged.For further information on this topic please contact Damian Evans, Matthew Davies or Charlotte Finley at Ogier by telephone (+44 1534 514 000) or email ([email protected], [email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.