SUMMARY: COSTS
The Court’s discretion as to costs
Must cite these MAIN points in an exam answer: NO MATTER WHICH PROBLEMATIC WINNER ETC.
(Use discretion as to whether to mention details RE reasonable costs etc.)
(1) The Court has discretion as to whether or not costs will be awarded and the extent of those costs:
ð S 24(1) Supreme Court Act
(2) The Court’s discretion will be exercised this way in the standard case:
◦ The loser will pay the costs of the winner on a standard cost basis: O63 R30; McFadzean v Construction Forestry Mining and Energy Union
o ‘On a taxation (assessment) on the standard basis, all costs reasonably incurred and of reasonable amount shall be allowed’ – O63 R30
o In assessing costs payable, Court will consider:
§ Whether it was reasonable to carry out the work in question;
§ Whether the work was carried out in a reasonable manner;
§ What is a fair and reasonable amount for the work actually carried out (3) If discretion does not follow this principle, reasons ought to be provided: Pepys v London Transport Executive – see costs on indemnity basis below
(4) However, it is not always straightforward to determine who wins the case and who loses (see Problematic winners below)
Note: When a party is unrepresented, that party is not entitled to costs ð Since costs refers to the legal fees that have been incurred Taxation of costs
ð Costs are first quantified through a taxation (assessment) of costs
ð First, the winning party will send the losing party a costs outline; then, the losing party will choose whether to agree to those costs (whether they think they are fair)
ð If an agreement cannot be reached, costs will be assessed by the Court o Note: Costs awarded on a standard cost basis will not offer complete
indemnification (will not represent 100% of the costs incurred by the lawyer for the successful party)
§ Usually represent between 70-75% of the total costs incurred ð Costs are compensatory – NOT punitive.
o i.e. costs are not awarded with the intention of sanctioning the unsuccessful party
Can costs be awarded against a non-party?
The Court’s discretion is wide enough to make an order for costs against a non-party: Knight v FP Special Assets (1992).
◦ However, Courts are reluctant to do so; such orders are cautiously made and only in exceptional circumstances
Before a Court will make an order against a non-party, the court will consider:
Relevant factors:
The non-party’s association with the proceedings; and
The role, in any, the non-party played in the costs that were incurred;
The connection between a party to the proceeding and the non party Non-party could include:
o Insurance company;
o Liquidator;
o Receiver;
o Corporate officer or director.
Costs awards against legal practitioners Can legal practitioners be ordered to pay costs?
Under O63 R23, where a lawyer has caused costs to be incurred improperly or without reasonable cause, or to be wasted by failure to act with reasonable competence and expedition, Court may make various orders against them (see below).
O63 R23
(1) Where a solicitor for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition, the Court may make an order that –
(a) all or any of the costs between the solicitor and client be disallowed or that the solicitor repay to the client the whole or part of any money paid on account of costs;
(b) the solicitor pay to the solicitor’s client all or any of the costs which the client has been ordered to pay to any party;
(c) the solicitor pay all or any of the costs payable by any party other than the client.
Costs on an indemnity basis
ð Used where a party is being sanctioned for their conduct and thereby pays costs as a punishment
o Note: Costs on the standard basis are compensatory – NOT punitive.
O63 R30(1)
(1) On a taxation (assessment) on the indemnity basis, all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred.
(2) If there is any doubt as to whether the costs were unreasonably incurred or were unreasonable in amount, that doubt shall be resolved in favour of the party to whom the costs are payable.
Key points
+ Here, all costs are allowed unless they are unreasonable.
+ Amounts to nearly 100% of costs (rather than 70-75%)
When are indemnity costs awarded?
◦ Must be some special or unusual feature of the case to justify departing from the standard basis, where the losing party’s conduct has been improper: Fountain Selected Meats (Sales) v International Produce Merchants
◦ The party who has been ordered to pay cost under this basis, is guilty of some unmeritorious or improper conduct in the running of the case
◦ The question is whether the particular facts and circumstances warrant making an order for the payment of costs other than on a standard costs basis.
Examples which will justify the court in making a cost order on the indemnity basis:
(1) If the party knowingly makes false/irrelevant allegations of fraud: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd
(2) Where a party’s misconduct causes wasteful delay in the court process and to other persons: Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd
(3) Where proceedings were commenced or continued for an ulterior motive: Fountain Selected Meats (Sales) v International Produce Merchants
(4) Where a proceeding is commenced or continued in wilful disregard of known facts and clearly established law: Fountain Selected Meats (Sales) v International Produce
Merchants
(5) Imprudent refusal of offer of compromise: Messiter v Hutchinson (6) Abuse of process
(7) Where a party is guilty of contempt of court: EMI Records Ltd v Ian Cameron Wallace Ltd (8) Unsuccessful party prolonged the trial by deliberate false defences and allegation (9) Action commences or continued when P should have known there was no real prospect
of success: Fountain Selected Meats (Sales) v International Produce Merchants (10) D should have known it had no prospect of success, especially if warned by P or the
Court
(11) Failure to disclose relevant document without reasonable excuse, and the party wants to use it at trial: National Australia Bank Ltd v Petit-Breuil (No 2)
(12) P commences a case even where D has already admitted liability and will pay.
The Court must consider all the circumstances of the particular case and then decide whether it is justified in ordering costs on the indemnity basis.
Solicitor-own client costs
What costs does a client have to pay his/her own solicitor?
O63 R59 Basis of taxation of costs payable by client
Costs payable to solicitor by the solicitor’s own client are those costs assessed on a standard costs basis.
◦ i.e. Client must pay their solicitor costs reasonably incurred and of reasonable amount.
Note: O63 R60 Taxation between solicitor and client
(1) Costs not reasonably incurred or not of reasonable amount may nevertheless be allowed to a solicitor against a client if –
(a) the costs were incurred with the authority of or the amount was authorised by the client; and
(b) before the costs were incurred, the solicitor expressly warned the client that the costs might not be allowed on a taxation of costs as between party and party.
◦ i.e. solicitor can recover costs even though they were not reasonably incurred or of reasonable amount if they were incurred with the client’s authority and the lawyer expressly warned the client that the costs might not be recoverable from the other side.
◦ Authority may be express or implied: para (2) Problematic winners include:
ð P wins but the amount is less than what was offered in a formal offer or a Calderbank offer – p. 55
ð P commences an action in the wrong court (but still wins) – p. 57 ð P wins on some issues but loses on others – p. 57
ð P successful against one D but unsuccessful against another – p. 59
