Dispute Resolution - Costs

Question 1

Indemnity Principle

Answer 1

Party cannot recover more costs from an opponent than they are liable to pay their legal representative

Question 1

General rule

Answer 1

Loser pays winner’s costs - solicitor’s fees and disbursements (e.g. court fees and counsel’s fees)

At the discretion of the court, reasons for departing from general rule:

• Failure to comply with pre-action protocol
• Rejection of a Party 36 offer
• Exaggeration of a claim
• Failure to succeed on whole of claim

Question 2

Standard Basis

Answer 2

Default basis

Court will allow recovery of proportionate costs only

Benefit of doubt given to paying party as to whether a cost is proportionate

Question 3

Indemnity Basis

Answer 3

Generally awarded on this basis to sanction for misconduct

Court does not consider proportionality and excercises any doubt in favour of receiving party

Question 4

Assessment Hearings

Answer 4

Court will consider receiving party’s bill

Two types of hearings:

1. Summary Assessment

In lower value cases and interim applications a statement of costs must be filed by each party 24 hours before hearing/2 days before trial

Judge will make a summary assessment of costs payable at the conclusion of hearing.

Usually payable in 14 days of hearing

2. Detailed Assessment

Larger value claims and claims of greater complexity

If parties unable to agree to a figure, receiving party required to prepare detailed bill of costs to be served on opponent within 3 months after judgment/order

Opponent files their points of dispute within 21 days - if fail to do so the receiving party can apply for a default costs certificate

Question 5

Security

Answer 5

Defendant may apply for security of costs order if they are concerned that if claimant loses they will not be able to pay defendant’s costs - claimant CANNOT apply

May require claimant to pay money into court or secure a bond

Question 6

Exceptions to ‘Loser Pays’ Rule

Answer 6

On small claims track the court will generally not award costs

On fast track cases the costs a party can claim in relation to the trial itself are fixed - costs for preparation for trial are excluded

Question 7

Wasted Costs Order

Answer 7

Legal representative acted improperly, unreasonably or negligently which caused unnecessary costs AND it is just to make the order

Sanction against the solicitor

Question 8

One-Way Cost Shifting Rule

Answer 8

A claimant will not be required to pay the defendant’s costs in a personal injury claim unless certain conditions are met:

1. Fundamentally dishonest
2. Claim made for financial benefit of another
3. Struck out for disclosing no cause of action or abuse

Question 9

Costs Management Order

Answer 9

Once a CMO made the costs budget should not be departed from (20% leeway)

If a party believes they will exceed the CMO they must apply to the court for a new one