If you’ve received a court order stating that costs are “reserved,” you may well be asking: what does “costs reserved” mean for your case? It’s one of the most common types of costs orders made during civil litigation, yet it’s frequently misunderstood.

In short, an order for costs reserved means the court has postponed deciding who pays the costs of a particular application. The issue doesn’t disappear; it simply remains outstanding, usually until the conclusion of the proceedings, when the court’s costs order will typically include the costs of the earlier application alongside the wider legal costs of the case.

What Does “Costs Reserved” Actually Mean?

When a judge reserves costs following an interim hearing, they are choosing not to make an immediate order as to costs. The question of which party bears the costs is simply left open, to be dealt with once the wider litigation has run its course, at which point the costs judge decides how those costs incurred fit into the final costs order.

How Reserved Costs Are Dealt With at the Conclusion of Proceedings

As a general rule, reserved costs follow the ultimate outcome of the case. Once the litigation concludes, the party in whose favour judgment is given will typically also be entitled to the costs of interim applications where costs were reserved along the way.

This reflects the wider principle under CPR 44.2, where the unsuccessful party is ordinarily ordered to pay the costs of the successful party. The starting point is that costs follow the event, and reserved costs are treated as part of the proceedings, not as standalone disputes.

Costs Reserved vs Other Types of Costs Orders

Costs reserved are only one of several types of costs orders a court might make, and each carries different consequences for recovery.

Costs in the Case

The costs of that application automatically favour the costs order made at the conclusion of the litigation, with no separate decision required later. This is one of the more common costs in the case outcomes at interim stages, and tends to suit applications that are unlikely to be decisive to the wider dispute.

Costs in Any Event

Here, one party is awarded costs in any event, regardless of who ultimately succeeds in the wider case; the liability is fixed at that point rather than left to depend on the final outcome.

No Order as to Costs

Sometimes the court decides that no order as to costs is appropriate, meaning each party bears their own costs of that application whatever happens later in the case.

Costs Reserved

By contrast, costs reserved keeps the court’s discretion open. The judge can make whatever order as to costs they consider appropriate once the full picture, and conclusion of the proceedings, is known, and it’s just one of several types of costs orders the court has available to it throughout a case.

Why Do Courts Reserve Costs?

Judges often reserve costs at an interim hearing because it isn’t yet clear which party will ultimately succeed, and an application that looks significant early on may turn out to be minor once the substantive dispute is resolved.

Reserving costs lets the court consider the litigation as a whole rather than making piecemeal decisions after every hearing. Its discretion remains broad, though: a different costs order might still be made where an application should never have been pursued, or there has been unreasonable conduct.

Frequently Asked Questions

Does costs reserved mean I have to pay straight away? No. The court hasn’t yet decided who is to pay the costs of that application; the decision is deferred, usually until the final costs order.

Who ends up paying the reserved costs? Usually, whichever party is ultimately successful will be entitled to the costs of applications where costs were reserved, unless there’s good reason for the court to order otherwise. In practice, this means the successful party is entitled to those early costs as part of the final assessment.

What This Means for Receiving and Paying Parties

For the receiving party, this offers reassurance: costs incurred during interim applications shouldn’t be overlooked because a decision was postponed. Provided the overall case is won, those costs should ordinarily be included in the final costs order.

For the paying party, liability for earlier applications can continue throughout a case and form part of the final costs order. As reserved costs can span a long period between an interim hearing and the eventual assessment, clear time recording throughout makes recovery easier to justify.

How Greener Costs Can Help

Our team of costs lawyers and costs draftsmen regularly advise solicitors and their clients on costs orders, Bills of Costs and detailed assessment proceedings, including reserved costs and the various types of costs orders arising during civil litigation.

If you’d like advice on reserved costs or any other aspect of costs recovery, get in touch with the Greener Costs team today for a free, no-obligation discussion.