Lord Woolf maintains that the issue of costs is the most serious problem besetting our litigation system.

The Civil Procedure Rules (CPR) relax RSC order 62, rule 3(3) and its county court equivalent.

The court can exercise a wide discretion over costs to support the conduct of litigation in a proportionate manner and to discourage excess.

This new approach gives effect to the overriding objectives set out in Part 1 CPR.Part 44 - the general rules about costsAfter a trial the court has a general discretion to decide who pays, how much and when.

The general 'loser pays' rule is confirmed but the court may make a different order.

The discretion reflects the 'issue-based' approach of the CPR when ordering costs.

Re: Elgindata (No.

2) [1993] 1 All ER 232 decided that the successful party was entitled to recover the costs even of issues which had failed.

That authority is no longer law.

Part 44.3 requires the court in deciding what order to make about costs, to have regard to all of the circumstances, including:-- The conduct of the parties;-- Whether a party has succeeded on part of the case, even if it has not been wholly successful; and-- Any payment into court or offer to settle, whether or not made in accordance with part 36, for example, a pre-action offer to settle unsupported by a post-action payment into court.The conduct of the parties includes:-- Conduct before, as well as during, the proceedings, and in particular the extent to which the parties followed any relevant pre-action protocol;-- Whether it was reasonable for a party to raise or contest a particular allegation;-- The manner in which a party has pursued or defended a case or a particular issue; and-- Whether a claimant, who has succeeded, exaggerated the claim.What does the future hold?Take this example.

The statement of value in the claim form puts a figure of £150,000 on a personal injury claim.

Liability is denied but the defendant makes a part 36 payment-in of £50,000.

Special damages are agreed.

In correspondence between solicitors, the claimant flatly refuses to consider settling for less than £150,000.

The second and third days of a three-day trial are devoted to the claim for future loss of earning s.

The claimant is awarded £51,000 exclusive of interest, but the £1,000 gap between part 36 payment and award is narrowed by the higher interest that investment of the £51,000, if accepted, would have generated over the interest which will go with the award.

Although the claimant has beaten the part 36 payment, it is unlikely he will secure a full order for costs.

The defendant's submission that the costs of a three-day trial were not proportionate to an extra £1,000 in damages and that, in real terms, the defendant was close enough, will be a powerful one.

The court might well give the claimant the costs up to the part 36 payment, and the defendant costs from that date.

Alternatively, the court might disallow the claimant the costs relating to the future loss claim which occupied two-thirds of the trial.ConsequencesThe parties and the court must be prepared to give more time to consider the decision about costs than is given at present.

The ten-minute skirmish at 4.30pm on the final day of the trial will not be good enough.

There may have to be an additional hearing when the parties have digested the result and had time to prepare written submissions with suggested orders.

Costs often outweigh the damages at present.If the court does not award the successful party all costs, part 44.3 contains a menu of possible orders.

Orders should be as simple as possible to make assessment easier.

Where the court considers making an order that costs are to be awarded or not awarded for a particular step, the order should be for payment of a proportion of the total costs or, should order costs from or until a certain date.

This rule avoids the horrible complications of Medway Oil & Storage v Continental Contractors [1929] AC 88, every costs judge's (Taxing Master's) and district judge's nightmare.Where the court orders a party to pay costs and makes an order for a detailed assessment, it may order an amount to be paid on account before the costs are assessed.

This is new.

After every trial the winning party should ask for a payment on account of costs.The taxi meter - estimates of costsLord Woolf considered that the court must be prepared to take the time necessary to elevate decisions about costs above its present approach.

Otherwise, the parties will not take as seriously as they should the obligations that were placed on them.

They each have an interest in the other's costs: they may have to pay them.

If the claim is not a small claim, a costs estimate must be filed with the allocation questionnaire and another with the listing questionnaire - the case management and the costs practice directions say so.

The estimate must show costs incurred and costs to be incurred to judgment.

Estimates need not go into such detail that they disclose confidential information.

Solicitors could conveniently use form 1 of the schedule of costs forms with the costs practice direction.

Expect to be asked for an estimate of the effect of a proposed direction granting permission for additional expert evidence.

Only a costed proposal enables the court to judge the cost benefit balance required by the overriding objectives.

This may mean that if one party cannot afford a step proposed by the other, such as transfer to the multi- track, then, dealing with the case justly may mean that the court will reject the proposal.Boosting the cash flowOn 1 March 1999 judges began to assess the costs of interlocutory applications, particularly where there is a clear outcome that one party is at fault.

The power is already being put to good use because the or der usually provides for the costs to be paid immediately.

Practitioners seem to think that they should not pamper the district judge with the luxury of a written costs summary.

Form 1 (see above) is that summary which the court does need.

When the court makes a costs order against a legally represented party, not present when the order was made, it will be a requirement from 26 April 1999 for his solicitor to give the client written notice of the adverse order for costs within seven days.Cases where costs orders are deemed to be madeIf a part 36 offer or payment notice was stated to relate to part only of the claim and the claimant accepted the offer and abandoned the balance of the claim, the claimant is entitled to the costs of the proceedings to the date of service of notice of acceptance, unless the court orders otherwise.

This is new.

If the defendant applies to the court to make a different order for costs, the part 44.3 criteria apply.

Part 38 gives to the court a similar discretion to set aside the defendant's normal right to recover his costs from a claimant who has filed notice of discontinuance.

This situation might arise when the claimant has discontinued a claim for damages after obtaining an injunction, which was the real purpose of the proceedings.