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Nyst Legal director and litigation lawyer Brendan Nyst discusses the cost of litigation in a winning case.

 

 

Q. If I go to court and I win, do I get back all my legal expenses?

A. 

That’s a simple question — and, of course, a very relevant one to anyone who is forced to take a matter to court. Unfortunately, the answer is rather complex and uncertain.

The starting point — the ‘rule of thumb’ if you like — is, yes, if you succeed in a court action, you are entitled to be reimbursed for the costs you have incurred in bringing and maintaining the proceedings. That includes recovery of all of your legal costs and outlays, including solicitors’ and barristers’ fees, court filing fees, witness expenses, and the like.

In normal, straightforward circumstances, costs should ‘follow the cause’, meaning that the person who succeeds in the court case should be compensated for the cost they have incurred in bringing that court case.

However, that is just a rule of thumb and, like most things in life, it is subject to a myriad of qualifications and vicissitudes. That’s because the award of costs to either party by a court is a discretionary exercise, which is ultimately informed by a host of ill-defined factors and considerations.

It’s up to the judge to determine whether, and if so how and in what measure, costs should be apportioned between the parties. Of course, that discretion has to be exercised judicially, and there must be good and identifiable reasons why the rule of thumb should not be followed in any particular case.

But, for example, sometimes court cases involve the litigation of multiple causes of action, so that even where a party is ultimately successful in the overall proceedings, to get there they have pursued various avenues and arguments, some of which were successful and others that were not. That can lead to a sometimes complex and complicated calculation of how the overall costs should be paid.

Further, and for very practical reasons, it is important to keep in mind that when lawyers talk about legal costs, and judges make orders for the reimbursement of such costs, they are usually factoring in a distinction between what are known as party and party costs, on the one part, and what are called solicitor and own client costs on the other. Solicitor and own client costs are all of the costs payable by a client to their solicitor for the work done by the solicitor to advance the case on their behalf.

To most of us, that would no doubt seem to be the only truly relevant figure, since that’s what the client actually has to pay the lawyer to get the job done. However, when awarding costs in a court case in favour of one party or another, judges will most often order reimbursement of party and party costs only.

Precisely what work done and charged for by a lawyer in advancing their client’s case qualifies as party and party work, as opposed to solicitor and own client work, which can be a matter of close and considered calculation, assessment, and even opinion by an experienced legal costs assessor and will vary significantly depending on the jurisdiction in which the party litigates.

The long and the short of it is that even if you are entirely successful in a court case and the judge orders the other party to pay you your full party and party costs of the proceedings, that doesn’t mean you’re going to get back all the money you’ve shelled out to your lawyers. In fact, the amount of money a person is likely to receive pursuant to a court order for party and party costs is invariably only a fraction of what they have actually had to pay — often no more than about 50 per cent of the amount they are actually out-of-pocket.

So, from the outset, care should be taken by any litigant to take whatever steps they can to protect their position regarding costs. For example, a sensible settlement offer made early in the proceedings can, if not accepted by the other party, result in an award for ‘indemnity costs’.

That term essentially means what it says — that is, the other party must fully indemnify you for everything you have paid out to your lawyers to bring the case to court. Various tactics can be employed to engineer an award of indemnity costs, and an experienced and capable litigation lawyer will always have one eye on such tactics. So should anyone planning on litigating.

 

Brendan Nyst, Dispute Resolution & Litigation, Wills & Estates, Defamation, Nyst Legal

www.nystlegal.com.au

 

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