Cost in the cause or cost on the cause, are ways of saying the losing party must pay legal costs to the winning party. What can happen sometimes is cost orders are made in interim, or preliminary hearing, or interlocutory hearing, where the court will make an immediate order for costs. So whatever the court decides regarding costs, at one of these points in the proceedings, the losing party will have to pay at the end. Read this Legal Kitz blog to find out everything you need to know about costs, including the two bases on which parties must pay.
What do I need to know about cost in the cause?
At the end of court proceedings the judge will usually have to make a further decision about who pays the costs for the legal proceedings. Costs in the cause are orders that are limited to civil matters, therefore they are not considered in criminal matters. In administrative law matters it is generally accepted that parties will pay their costs before the commencement of their proceedings.
It is important for clients to understand before commencing a legal matter the likelihood they’ll have to pay costs at the discretion of the court if they lose their matter. Even in some circumstances where clients are successful with their legal proceedings they may still need to pay costs, as costs are at the complete discretion of the court. In other words, costs are determined on what the court considers to be appropriate.
Common costs in the case include:
- Expert witness fees;
- Court filing fees;
- Barristers’ fees; and
- Consumables.
Note: Exceptional family law matters may have alternative order for costs.
What are the two bases of cost in the cause?
Standard basis
Commonly successful parties will recover anywhere from half to 75% of the their legal costs. Even so, a successful client under the standard costs basis will have normally end the trial on average one quarter out of pocket. It is important to understand that the Uniform Civil Procedure Rules govern standard costs basis in Queensland.
Indemnity basis
The court will order that the unsuccessful party must pay the successful party’s legal costs on an indemnity basis. This means they must pay the costs incurred by the party defending or reacting to the claim made against them. This only occurs in the following circumstances, specifically if a party:
- is if found to have misled or has conducted themselves in manner that have caused the court to waste time;
- intentionally brings an action against other that has no prospects of success;
- no respect for the facts of the matter or the law involved; or
- refusal of reasonable alternative offer or compromise.
If an indemnity basis order occurs, the court will appoint a cost assessor to determine the successful party’s reasonable legal expenses. However, there is an important way a party can limit their exposure to the indemnity, by agreeing to an amount of cost before an indemnity claim is made.
The costs assessor will analyse the following:
- any agreement regarding costs between the parties;
- the fees of the court; and
- the party’s fees that due to their legal representative for their work in the matter.
What is a Calderbank offer?
In the middle of proceedings, some parties may decided to negotiate and settle the matter out of the court. There are many alternative ways to settle a matter out of court, one of the most common is a Calderbank offer. The offer must be a genuine offer and be clearly labelled as a Calderbank offer.
For example, Tom is likely to receive $1,000 if they pursue legal action against Tim. However, if before the end of the litigation Tim offers to pay Tom $1000, but Tom refuses the offer, than the court will see this as unreasonably refusing a genuine offer and at the end of trial will likely make orders for costs more favourably for Tim, and rather than Tom.
What are the different types of cost orders?
Costs of the day
This is an order to pay costs immediately or shortly after losing a matter. This can occur during a preliminary hearing and is usually the cost for a specific day or aspect of the proceeding.
Costs reserved
This means the court has decided to delay their order for costs. Usually this occurs where a party has wasted the time of the court, and it is unclear what nature of costs would be appropriate. A party can be subject to cost reserved when they fail to follow the direction of the court.
No order as to costs
Simply put, this is an order for both parties to pay their own legal fees. Such an order occurs when the matter is either settles, or has been abandoned.
Costs thrown away
This is an order for costs to be paid when one party has wasted the time of the other. Such an order can occur when a party fails to appear in court, wasting the time of the other party. Additionally, the court may make orders for thrown away costs if a party makes an error, changes their pleadings, or does not follow a court order.
Facing litigation
Facing litigation can be stressful enough, and trying to understand the nuances and important aspect of costs in legal matters can add to the stress and become very overwhelming. Furthermore, if costs are not properly considered by a party facing litigation, they can unintentionally cause further stress and financial loss, worsening the situation. Before you commence any litigation or make any decision that could affect your liability for costs, you should consult your lawyer. To not do so is to risk significant consequences, and even if you win your matter, you may walk away financially worse off than at the start of the matter.
Legal advice
If you require assistance in taking a matter to court, you should seek legal advice. Legal Kitz can assist with ensuring that your matter in court is as time and cost efficient as possible. Click here to book a FREE consultation with one of our highly experienced solicitors today, or contact us at [email protected] or by calling 1300 988 954.