LAWS4001 Lecture 8: Lecture 8 – Costs (week 9)
Lecture 8 – Costs
Week 9
Solicitors fees
5 or 6 minute units: timesheet (render WIP) = billings (we sett time and expertise)
Retainer: cost agreement contract
Solicitor client costs: all the costs a client owes their solicitor for legal fees &
disbursements
Party Party Costs: ordered costs s 42.1 [the default]
Global retainer or by event: bill for each milestone in the matter not by the time spend
Success fee: no win no fee, however, charge for disbursements (personal injury matter)
oUplift of up to 25% on normal rates upon winning
oCannot charge % of verdict (can in US)
Litigation funders: ‘buy’ the suit and are promised % of the verdict
No order as to costs – each party bear their own costs.
'Costs in any event' – each party bears costs of a particular step
regardless of the final outcome.
Costs in the cause – when deciding costs of an interlocutory application,
costs ordered is deferred until the ultimate result of the dispute is solved and then
the successful party is awarded costs
Costs of the day - party pays for a particular day.
Costs thrown away – wasted costs as may occur due to an amendment
removing a claim.
Security for costs
The court has the power to order a party to give security for costs: Kieren Leslie Welzel v Stephen
Paul Francis; 2.1 & 42.21 (only certain circumstances) UCPR.
“What is lacking is an assessment of the plaintiff's financials which could substantiate
the defendant's suspicion. Without it, the evidence gives rise to mere speculation as to the
plaintiff's financial position which does not suffice to meet the threshold test for an order
for security of costs.” Rural & General Insurance Broking Pty Ltd v Barrie Goldsmith
t/as Goldsmiths Lawyers [2011] NSWSC 175
Test for security of costs as follows: Fire Containment v Peter Robins.
Is there reason to believe the plaintiff will be unable to meet a costs order?
There is no need to establish that the plaintiff will actually be unable to meet the order -
only to establish that there is reason to believe to believe he wont. Not a demanding test.
Mere impecunosity in case of a natural person not enough: Lucas v Yorke.
Should the discretion be exercised?
Relevant factors include promptness in bringing the application, whether the case is a
bona fide or a sham, whether the request is oppressive, whether the plaintiff has backers
who will pay the costs order, the public interest and other factors.
Litigation costs
Cost orders can be awarded at any stage of the proceedings though they are usually
determined at the conclusion of proceedings
Court can impose indemnity costs on [said party] if there has been [fraud/misconduct]
(Fountain Selected Meats (1988))
Costs are not a penalty, they are part of restoration of the order to put the plaintiff in the
position if the wrong had not occurred
Costs help achieve the overriding purpose, if a party breaches (3) or (4) of s56, they are
ruled costs against them for the delay
Litigation is not a game, need to be cognizant to the matters issues (i.e. the pleadings)
Everyone has a duty to be model litigants (CPA), not just the crown/DPP
Judges rarely set an amount for a costs order
oWhen costs are not specified in the order, after a case has been concluded the
parties will attempt to reach a negotiated resolution of the amount owing under
any cost orders
oFailing agreement, the parties are entitled to have the costs assessed under the
Legal Profession Uniform Law Application Act (see Division 3 of Part 7).
Legal Profession Uniform Law (NSW) No 16a
s199 Costs assessment – Uniform Law Costs (Lawyer client retainer: clients are obliged to
pay when charged in accordance with the terms of the retainer)
(1) Assessments of legal costs are to be conducted by costs assessors, and are to be conducted in
accordance with this Part, the Uniform Rules and any applicable jurisdictional legislation.
(2) On a costs assessment, the costs assessor must—
(a) determine whether or not a valid costs agreement exists; and
(b) determine whether legal costs are fair and reasonable and, to the extent they are not
fair and reasonable, determine the amount of legal costs (if any) that are to be payable.
Costs ordered against legal practitioners
Can be ordered if it appears that court costs have been incurred by serious neglect,
incompetence or misconduct or without reasonable cause, where the legal practitioner:
s 99 Civil Procedure Act 2005 (NSW).
Further if proceedings have been brought without reasonable prospects of
success (Treadwell v Hickey): a court can order the legal practice to repay costs ordered
to pay another party or to indemnify any other party: eg s 348 Legal Profession Act 2004
(NSW).
s56(4) CPA: imposes a statutory duty upon every legal practitioner not to conduct
themselves so as to cause his/her client to breach the client’s duty to assist the court
Priest v NSW [2007]: Justice Johnstone: the effect of section 56 is that every litigant is
now a “model litigant”
s 60 – CPA
Priest: There is a duty on the courts to ensure that practice and procedure are implemented in such
a way that the real matters in issue are resolved in such a way that the cost to the parties is
proportionate to the importance and complexity of the subject matter in dispute
Bullock order: an order that an unsuccessful defendant indemnify the plaintiff against costs
payable to successful defendants: Bullock v London General Omnibus Co [1907] (plaintiff
involved).
Sanderson order: an order that an unsuccessful defendant pay the costs of other co-
defendants: Sanderson v Blyth Theatre Co [1903] (no plaintiff involved)
Such orders may be appropriate:
Where claims against the respective defendants are interdependent or
alternative: Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Ltd (1984); or
In view of the conduct of the relevant unsuccessful defendant.
Sanderson orders are sometimes preferred to avoid circuity in the recovery of costs. The
choice between the two orders has practical significance only if one of the parties is likely
to be insolvent.
THE DEFAULT POSITIONS:
UCPR
s 42.1 General Rule: ‘That Costs Follow The Event’
Subject to this Part, if the court makes any order as to costs, the court is to order that the costs
follow the event unless it appears to the court that some other order should be made as to the
whole or any part of the costs.
(1)“PARTY PARTY COSTS:” ORDERED COSTS
The party who looses has to pay the legal costs of the winning party which are usually
paid on the ordinary basis
Either (A) or (B)
The power of a court to make an award of costs is provided for in s 98 CPA.
[s172 – Legal costs must be fair and reasonable Legal Profession Uniform Law (NSW)]
Costs necessarily to enforce or defend rights: they cannot be excessive
(A) COSTS ON THE “ORDINARY BASIS” [s 3(1) CPA]:
"ordinary basis" , in relation to the assessment of legal costs that a court has ordered to
be paid, means the basis of assessing costs in accordance with Division 3 of Part 7 of
the Legal Profession Uniform Law Application Act 2014 .
what is fair and reasonable (s 76 Legal Profession Uniform Law Application Act 2014 )
s 42.2 General rules as to the assessment of costs
Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under
an order of the court or these rules are to be assessed on the ordinary basis.
60% (2/3)
s 362 LPA:
oWhether it was reasonable to carry out the work;
oWhether the work was carried out in a reasonable manner;
oWhat is a fair and reasonable amount of costs for the work?
Costs assessor may have regard to the factors: s 172 of the Legal Profession Uniform Law to
determine what is “fair and reasonable”:
(1) A law practice must, in charging legal costs, charge costs that are no more than fair and
reasonable in all the circumstances and that in particular are—
(a) proportionately and reasonably incurred; and
(b) proportionate and reasonable in amount.
(2) In considering whether legal costs satisfy subsection (1), regard must be had to whether the
legal costs reasonably reflect—
(a) the level of skill, experience, specialisation and seniority of the lawyers concerned;
and
(b) the level of complexity, novelty or difficulty of the issues involved, and the extent to
which the matter involved a matter of public interest; and
(c) the labour and responsibility involved; and
(d) the circumstances in acting on the matter, including (for example) any or all of the
following—
(i) the urgency of the matter;
(ii) the time spent on the matter;
(iii) the time when business was transacted in the matter;
(iv) the place where business was transacted in the matter;
(v) the number and importance of any documents involved; and
(e) the quality of the work done; and
(f) the retainer and the instructions (express or implied) given in the matter.
