Costs in Civil Litigation

The commencement of litigation is generally viewed as the ‘last resort’ in a dispute and connotations which are implicitly conveyed often flow to the other party which are analogous to a UFC match when the contenders enter the octagon and the announcer says: it’s…time…

While it can be viewed as the only remaining option, in most civil matters where parties are represented, the matter will not go forward to a full trial in the courts. Most parties will reach a settlement which can be achieved by numerous means and is often in the best interests of everyone involved, and may also save costs.

It is no secret that litigation in general is a timely and expensive exercise, and for most people, costs are one of the central considerations. If a civil dispute escalates to litigation, the associated legal costs also increase which often leads to our clients asking whether any of the costs associated with the proceeding are recoverable.

The reality of litigious matters is that the vast majority of successful parties will not recover all their legal costs, and may recover only some of their legal costs incurred during the various stages of litigation. Notably, there are ways of maximising your chances of recovering all your costs.

If you would like to discuss your litigious matter with our office, we offer a twenty (20) minute obligation-free consultation to discuss your matter on a confidential basis.

This article will provide a general overview of when a civil matter goes to trial and costs orders are awarded in the Magistrates, District and Supreme Court of Queensland. Cost orders of other courts and jurisdictions may vary.

This article is not legal advice, and should not be construed as legal advice by the reader. If you require legal advice in relation to your litigious matter, please seek independent legal advice that is specific to your circumstance.

 

Costs Orders Generally

The rationale behind awarding costs to the successful party is not to penalise the unsuccessful party, rather it is to enable the successful party to recoup, at least, some of their legal costs.

The Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’) govern civil litigation, including cost orders.

Rule 680 provides that a party may only recover costs if it is ordered by the court or expressly stated under the UCPR. Costs awards are always up to the discretion of the Court and cannot be guaranteed.

In most cases, costs will be awarded under the UCPR unless unusual or particular circumstances require the court to make an order.

Rule 682 (1) states that the court may award costs at any stage of the proceeding (i.e. the cost of applications made throughout the proceeding) or after the proceeding ends, and rule 682 (2) allows the assessment of costs to occur when the proceedings end.

The general rule of costs under rule 681 ultimately empowers the court with discretion in relation to the costs of a proceeding, including an application in a proceeding that ‘follow the event’ unless the court orders otherwise,

In other words, the successful party will generally be awarded some of their legal costs unless the court orders otherwise and subject to exceptions of this general rule.

 

The Exceptions to the General Rule of Costs Orders

There are various grounds and sets of circumstances where the Court will exercise their discretion to order a cost order which is inconsistent with the general rule. The following is not an exhaustive list and is indicative only:

• Self-represented litigants are usually not entitled to costs, however there is authority to suggest that a lawyer who is a self-represented litigant may be awarded costs.

 

• Costs may be awarded to an unsuccessful party where the other parties conduct does not seek to reasonably limit or mitigate the other party’s costs.

 

• Rule 697 applies where a matter commenced in the Supreme Court and the matter could have brought before the Magistrates Court or District Court. In this respect, the costs for the plaintiff may be assessed as if the proceeding started in the Magistrates Court or District Court unless the court orders otherwise.

 

• If the litigation was brought because of the public interest and satisfies the element of public interest.

 

• In certain circumstances, costs against non-parties to a proceeding may be awarded if the courts consider the non-party to be intrinsically connected to the proceeding.

 

Costs Orders Involving Multiple Parties or Issues

Another express exception of the general rule of costs is under rule 684 where there are multiple parties or issues involved in a proceeding. The court may make an order for costs in relation to a particular question or a particular part of a proceeding.

If a person is successful against one party and not the other, the person will generally be given costs from the former and not the latter.

The court may issue a ‘Bullock Order’ which orders the plaintiff to pay the successful defendant’s costs and the unsuccessful defendant must pay the plaintiff’s costs

The court may also issue a ‘Sanderson Order’ which orders the unsuccessful defendant to pay the successful defendant directly.

 

Assessment of Cost Orders

Costs awarded under the UCPR are assessed by the registrar or a costs assessor based on the respective court’s ‘scale of costs’.

Rule 686 allows costs, without an order, to be assessed if:

1. The court orders a party to pay another party’s costs; or
2. Under these rules, a party must pay another party’s costs; or
3. Under a filed written agreement, a party agrees to pay to another party costs under these rules.

 

Court Ordered and UCPR Cost Orders

Under Rule 687 of the UCPR, the court may order a party to pay to another party:

1. A specified part or percentage of assessed costs;
2. Assessed costs to or from a specified stage of the proceeding;
3. An amount for costs fixed by the courts; or
4. An amount for costs to be decided in the way the court directs.

 

Costs under the UCPR will either be awarded on a Standard Cost or an Indemnity Cost basis.

 

Standard Cost Basis

This form of cost order is the usual cost awarded in litigation and is often referred to as ‘party and party costs’ or ‘scale costs’.

Rule 702 (2) of the UCPR stipulates that when assessing costs, a cost assessor must allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.

Determining whether costs are necessary or proper requires the party to establish that it was reasonable to have incurred those costs.

A litigant that receives costs on the standard basis will generally recover approximately 50% of their actual legal costs spent. Although the range could be estimated between 30% to 70%, depending on the court scale applicable.

 

Indemnity Cost Basis

Indemnity costs are not often awarded and will apply only in special circumstances.

Rule 703 of the UCPR states that when assessing costs on the indemnity basis, a cost assessor must allow all costs reasonably incurred and of a reasonable amount, having regard to:

1. The scale of fees prescribed for the court; and
2. Any costs agreement between the party to whom the costs are payable and the party’s solicitor; and
3. Charges ordinarily payable by a client to a solicitor for the work.

 

A litigant may be awarded indemnity costs if they make a formal offer for settlement under the UCPR which is rejected by the other party, and the Court orders a cost order that exceeds the formal offer.

A litigant will generally recover more than they would on a standard basis, which could be up to 80% of costs.

 

Conclusion

Whether you are the litigant who brought the proceeding or the litigant that is defending the proceeding, the common issue between the parties (apart from the dispute itself) is costs, and how and when costs can be limited or mitigated by the parties involved.

That is not to say that litigants need to be principally concerned with costs of the other party or parties, however litigants should take reasonable steps with minimising and reducing costs where possible.

While costs are one of the central considerations for most litigants, before, during and after a proceeding, engaging a lawyer to assist in litigation or in your dispute may be in your best interests.

It is an important part of litigation strategy to minimise your own legal costs and to put yourself in the best possible position to have a portion or all of your legal costs paid by the other party.

At Potts Lawyers, we have a team of expert litigation lawyers who are waiting to assit you.

If you would like to discuss your litigious matter with our office, we offer a twenty (20) minute obligation-free consultation to discuss your matter on a confidential basis.