Knowledge

Costs recovery in Guernsey litigation largely follows the same principles as in English civil litigation: the successful party's costs are typically paid by the losing party. In Guernsey, there is no limit to costs recovery based on the value of the claim (as there is in England & Wales), but there are blanket recoverable rates based on fee-earner status, which usually means the successful party only ends up recovering around 60-70% of their actual legal spend.

The recoverable rates are prescribed by Guernsey's Costs and Fees Rules, and the current recoverable rates for litigation in the Royal Court are £351 for advocates and £235.17 for associates. These rates have increased over the years, as they are subject to inflation.

Foreign lawyers' fees (i.e. fees incurred by non-Guernsey advocates, lawyers and counsel not employed by a Guernsey firm) are generally only recoverable in exceptional circumstances, such as where there's a need for specialist legal advice not available in Guernsey.

The same principles applicable to costs awards in English & Welsh litigation also apply in Guernsey - costs are awarded either on the recoverable or indemnity basis. An award on the recoverable basis requires an analysis as to whether costs have been reasonably incurred and are proportionate in amount. This is the usual costs award for a successful litigant. Indemnity costs, on the other hand, operate as a type of sanction for inappropriate behaviour in litigation. There is no cap on indemnity costs, and so the full legal spend can be recovered. The question of costs remains within the judge's discretion, so a partial or full award is always possible.

Once a costs award is granted, the receiving party serves the paying party with a bill of costs. This is a schedule reflecting all legal work undertaken that is recoverable pursuant to the costs order. If the paying party disputes any of the entries, they can apply to the Royal Court for taxation of costs within one month of being served with the bill of costs. Taxation proceedings take place before a separate costs judge, called a Taxation Master, and each party has the opportunity to enter submissions. During taxation proceedings the burden is on the receiving party to justify their costs and on the paying party to argue how and why the costs are disproportionate and/or unreasonable.

It should be noted that pursuant to the Guernsey Bar Rules, contingency/success fee arrangements and damages-based arrangements are prohibited. Third-party funding, also known as litigation funding, is permitted. Litigants should therefore be aware of the costs risks involved in litigating in this jurisdiction.