"Loser should pay all costs"
Of course, it's not always easy to decide who is the loser, even after the verdict is announced. I suppose what you really mean is that the party who was being unreasonable and is thus mainly responsible for the case coming to court should pay the costs.
An example to think about: I damage your car accidently. I offer you £100 to pay for the repair. You say: "No way. I want £500." I say: "Bollocks. £100 is already generous." You sue me. The court says I should pay you £70 in damages. Now, who should pay the legal costs? Common sense says you should: although you won your case, you are to blame for us going to court and incurring those costs.
As far as I know, English courts do award costs in a way that roughly agrees with common sense. They expect parties to consult their solicitors and settle out of court unless the case involves an undecided point of law or for some other reason merits the attention of a judge. If you abuse the legal system by bringing an unnecessary case, the judge is not amused.