Will The Losing Party Pay My Legal Fees?
Generally, when a party wins a civil suit, the other party may be ordered to pay a sum to cover legal fees incurred by the successful party.
This is known as party-and-party costs. When the court makes an order for party-and-party costs, one party is required to pay a certain amount to the other party.
However, although the winning party is able to get party-and-party costs, this amount usually does not cover the full legal costs the successful party has to incur.
The primary rationale of the unsuccessful litigant paying party-and-party costs is to increase access to justice.
This is to allow the rightful party some assurance that some of their legal fees will be covered at the end and empowers them to pursue or defend their claim.
Entitlement To Party-And-Party Costs
Party to party costs may be payable;
- Under legislation – such as when a party succeed in their application;
- Under contract – this occurs when a contract between the parties provide that in the event of a dispute, legal costs are to be paid by one party to another; or
- Under judgment or court order – under the rules of court, except where expressly provided for by legislation or contract, an order for costs is necessary before a party to proceedings in court may recover costs from any other party.
How Does The Court Decide On Party-And-Party Costs?
In general, costs are entirely at the discretion of the court. Generally, the court will award costs to follow the event, except when it appears to the court that some other order should be made.
The court is entitled to take account of the parties’ conduct before and during trial for the purpose of exercising its discretion on the award of costs.
However, this discretion is not unfettered. In order to depart from the general rule, the court must justify its findings.
The general rules should not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of proceedings.
The successful party may be deprived of the whole or part of his costs if the successful party raises issues or makes allegations improperly or unreasonably.
The court may not only deprive him of his costs but order him to pay the whole or part of the unsuccessful party’s costs.
For example, a party who is successful but has unreasonable and indiscriminately filed numerous documents may be deprived of the full costs of the hearings.
Quantum Of Party-And-Party Costs
Unless otherwise specified, an order for costs is an order for taxed costs i.e. costs generally to be taxed.
This means that costs are awarded to a party but the quantum of the costs is not fixed and is to be determined by the Court at a Taxation hearing having consideration to a Bill of Costs filed and the objections raised.
The default position is that costs are to be taxed on a standard basis, unless it appears to the court that a taxation on an indemnity basis is appropriate.
This means that a reasonable amount in respect of costs reasonably incurred shall be allowed and any doubts which the Registrar may have as to whether costs were reasonably incurred or were reasonable amount shall be resolved in favour of the paying party.
Indemnity costs are exceptional. This usually justified where there is some sort of misconduct i.e. dishonesty, impropriety or abuse of process, which would warrant a departure from the usual basis of costs.
Costs taxed on an indemnity basis means that all costs shall be allowed except where they are of an unreasonable amount or have been unreasonably incurred and any doubts as to such shall be resolved in favour of the receiving party.
A party entitled to require any costs to be taxed must begin proceedings for the taxation of those costs by lodging the bill of costs at the Registry within 12 months from the date on which the entire cause or matter is finally disposed of, including any appeals therefrom, unless otherwise ordered by the court.
The Registrar shall then give to the party beginning the proceedings not less than 14 days’ notice of the date and time appointed for taxation. Such party must within 2 days upon receiving the Registrar’s notice, send a copy of his bill of costs to every other party entitled to be heard in the proceedings.
Registrar has discretion as to amount of costs to be allowed. In exercising his discretion, regard should be had to the principle of proportionality and all the relevant circumstances, particularly:
(a) complexity of item or the cause or matter in which it arises and the difficulty or novelty of the questions involved;
(b) skill, specialized knowledge and responsibility required of, and the time and labour expended by the solicitor;
(c) number and importance of the documents (however brief) prepared or perused;
(d) place and circumstances in which the business involved is transacted;
(e) urgency and importance of the cause or matter to the client; and
(f) where money or property is involved, its amount or value.
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