When businesses consider court proceedings, one assumption often sits quietly in the background – if we win, the other side pays.
In Northern Ireland, the reality is more subtle. While the general rule is that costs follow the event, meaning the losing party may be ordered to pay the winner’s costs, recovery is rarely complete. The financial impact of litigation can be significant even in a successful outcome.
Neil Allsopp, Partner at Allsopp Campbell Rainey, explains: “Clients are often surprised to learn that winning a case does not mean recovering every pound spent. Cost recovery is subject to assessment and discretion, and the process itself can add further expense.”
What Does ‘Costs Follow the Event’ Really Mean?
Under the Rules of the Court of Judicature (Northern Ireland) 1980, the court has wide discretion when awarding costs. Although the successful party will usually receive a costs order in their favour, that does not automatically equate to full reimbursement.
Costs are commonly subject to taxation or assessment, and the figure allowed may be lower than the actual legal fees incurred. In addition, certain expenses, such as management time, internal disruption, and commercial opportunity costs, are typically not recoverable.
Why Winning Can Still Be Expensive
Even where judgment is obtained in your favour, several factors can reduce the practical value of a win:
• Partial success – if a party succeeds on some issues but not others, costs may be adjusted.
• Conduct – unreasonable behaviour during proceedings can alter costs recovery.
• Settlement offers – failure to engage properly with settlement discussions or formal offers can carry costs and consequences.
• Enforcement risk – if the losing party cannot pay, a costs order may be difficult to realise in practice.
The financial equation is therefore rarely as simple as win equals full recovery.
The Role of ADR and Settlement
Northern Ireland courts expect parties to examine Alternative Dispute Resolution where appropriate. An unreasonable refusal to mediate may influence a court’s view on costs, even if a party ultimately succeeds.
This strengthens a key strategic point: litigation is not only about legal strength but also about proportionality and conduct. The court will look at the overall approach taken by both sides.
Budgeting and Commercial Reality
Litigation should always be approached as a commercial decision, not simply a legal one. Before proceedings are issued, businesses should consider:
• The likely recoverable proportion of costs
• The strength of the opponent’s financial position
• The impact of time and management distraction
• The possibility of settlement at different stages
As Carla Fraser, Partner at Allsopp Campbell Rainey, notes: “The right question is not just ‘Can we win?’ but ‘What does winning actually look like in commercial terms?’ Early assessment of risk and cost exposure allows clients to reach informed, strategic decisions.”
A Fair Perspective
Court proceedings remain an essential tool for enforcing rights or defending positions. However, understanding how costs operate in Northern Ireland helps to manage expectations and avoid unwelcome surprises at the end of a case.
Allsopp Campbell Rainey advises businesses across Northern Ireland on dispute strategy, cost-risk assessment, and litigation planning. Contact Neil Allsopp, Carla Fraser or the Allsopp Campbell Rainey team.