#8502 - Costs - Litigation - Civil Procedure

When determining what costs order court should make:

1. Costs are in the discretion of the Court: s 98 CPA

   1. Costs follow the event (the loser pays) is the standard position: UCPR r 42.1

2. Rationale for costs: Costs are not punitive.

   1. Eg in Dr Bronte Douglas v Lawton : order made was not punitive in terms but typical order, even though judge referred to ‘punishment’ costs order not overturned.

3. Cost should be proportionate to importance and complexity of subject-matter of dispute: In any proceedings, the practice and procedure of thecourtshould be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute: s 60 CPA

   1. Note: unclear what it means in situations when you have very complex matters. Does this mean you can spend lots more?

   2. Eg in Zanella v Madden co-owner of property wanted to realize it, other coowner couldn’t be found, disappeared, co-owner conducted internet searched, but hadn’t advertised overseas. On balance of probabilities D was dead, alcoholic, would be 63, and no-one heard of him for over 20 years, in past times my have advertised but considering estate only $37k bearing in mind s 56 CPA cost is proportionality too great: Zanella v Madden

   3. eg in Vella v ANZ Banking – late request for documents to be produced, $100k of legal fees per day, bearing in mind ss 56-60 of CPA court will not interrupt trial to deal with late subpoenas or notices to produce – very difficult to convince court that a late notice to produce should be given an order - Young CJ couldn’t see how the material could be relevant – no order on notice ot produce – after evidence given by witnesses then matter of assurances by other party and notice to produce could be reheard

4. Parties have obligation to assist court to further overriding purpose to facilitate just quick and cheap resolution of proceedings and therefore to comply with Court’s directions and orders: s 56(3)

   1. Eg in Priest v NSW – D was meant to give reports on a particular operation – however just provided 37 boxes of information – each of folder had something that responded but also a lot of extraneous material – breached obligation under s 56 – costs were awarded on an indemnity basis.

Awarding costs after conclusion of proceedings to parties:

5. Costs are in discretion of the court (s 98 CPA) but under r 42 UCPR unless it appears to court that some other order should be made costs will follow the event

   1. Unsuccessful party may be ordered to pay entirety of costs of successful party even though successful party did not succeed on all issues. Unless particular issue/group of issues clearly dominant usually appropriate to award costs to successful party without attempting to differentiate between particular issues on which it was successful and those which it failed: Baulderstone

6. Assessment Is on ordinary basis unless court otherwise orders: UCPR r 42.2

7. GO TO NOTES ON OFFER OF COMPROMISE / CALDERBANK

Indemnity costs:

8. Indemnity costs – awarded where relevant delinquency on part of unsuccessful party: Baulderstone. (eg evidence of misconduct that causes loss of time to court; fact that proceedings commenced in willful disregard of known facts; allegations groundless)

   1. What is insufficient for indemnity basis: Just because litigation complex, or because party fights proceedings fiercely, or because case no merit at end of hearing because its been lost.

9. Evaluation of indemnity basis: Occasionally P costs are awarded on an indemnity basis to compensate party for misconduct of another: Colgate-Palmolive v Cussons. Costs awarded on an indemnity basis allow for all costs incurred except those that appear to have been unreasonably incurred or those that appear to be an unreasonable amount: UCPR r 42.5; EMI Records v Ian Cameron Wallace

   1. Discourages spending big on fancy lawyers.

10. Note terminology is used in relation to solicitor-client and between adversaries [3.210].

Other Costs orders:

11. No order as to costs – each party bears their own costs

12. Costs in any event – party bears costs of particular step (motion or interlocutory dispute) regardless of final outcome

    1. This is when the judge thinks that a particular step shouldn’t have been taken

13. Costs in the cause – party who is ultimately successful pays costs of particular step

Costs against third parties

14. Third parties: Within discretion of court to award costs against third parties: s 98 CPA. (a) court will be reluctant to make costs orders to third parties but (b) will consider their role in the litigation. If they are litigation funders who hide behind the plaintiff costs could be awarded against them.

Costs against lawyers

15. Note law: jurisdiction to order legal practitioner to pay costs must be exercised with care nad discretion and only in clear cases: Re Black Stump

16. In general: costs can be awarded against lawyer under s 98 CPA

17. Where lawyer been very bad: S 99 – only applies in fairly serious circumstances where costs have been occurred: ( s 99(a): serious neglect, serious incompetence or serious misconduct of a legal practitioner or s 99(b) improperly or without reasonable cause )

    1. Inherent jurisdiction cases - Even if Lawyer has acted imoprerly don’t necessarily impose costs – but should give sustainable reasons for exercising discretion: Whyked . note qualifiers: (1) jurisdiction is to be exercised sparingly, must be laywer’s conduct is some serious dereliction of duty or gross ngeglience (2) inherent power of court to pay costs in appropriate case ordinarily exercised on basis of serious dereliction. Neither necessary nor desirable to define level of incompetence in which costs jurisdiction will arise: Whyked . Unclear whether inherent jurisdiction cases still appl to s 99 costs.

18. Where lawyer has continued baseless proceedings: under s 345(1) LPA law practice cannot provide legal services on claim/defence of claim for dmaages unless reasonably belief on basis of provable facts and reasonably arguable view of law that claim/defence has reasonable prospects of success. If it appears that this has been breached then court may of own motion or on application of party make an order against legal practice or legal practitioner responsible for providing the services: (a) an order that the party must pay whole or part of the costs that party has been ordered to pay another party (s 348(1)(a) LPA) and (b) order that practice/associate indemnity any party other than party to whom the services were provided against the whole or any part of the costs payable by the party indemnified (lawyer indemnifies client): s 348(1)(b) LPA.

    1. Continuing obligation: at time of commencement of proceedings reasonable prospects of success, but if at date of trial commenced no reaosnable prospects of success because of lack of evidence then lawyer has to pay costs for plaintiff owed as a result of this: Firth v Latham

    2. Impecunious parties: in Whyked v Yahoo!7 if case is killed because D sought security for costs, and plaintiff didn’t have the money, and then D sought costs of proceedings be paid by P’s solicitors - court held that the case was difficult but not hopeless, real problem was plaintiff lacked resources to bring it, shouldn’t exercise s 99 CPA to deter legal practitioners from advancing difficult cases

Joining parties

19. When P sued D1 and D2, but D1 successful and D2 unsuccessful. Normally P will have to pay D1’s costs, but D2 will have to pay P’s costs.

20. But sometimes D2 will have to pay P for the costs P spent suing D1 through a Bullock or Sanderson order.

21. Options are: (a) no bullock or sanderson or (b) a bullock or sanderson and if you decide (b), then you decide whether it’s a bullock or sanderson.

    1. Bullock – where P pays cost of successful defendant (D1) directly to D1 and adds those costs as a disbursement to the P’s costs which are to be paid by the unsuccessful defendant (D2) D2 has to pay P’s costs including what they paid against D1. Ie. (1) PD1, and then D2 P + D1.

    2. Sanderson: Unsuccessful D (D2) ordered to pay successful D’s (D1) costs as well as the P’s costs. D2 D1, and then D2 P.

    3. If D2 is poor – then D1 will want bullock order so P has to pay D1 directly and P must attempt to recover those costs from D2, but P will want a Sanderson order)

22. Court will order Sanderson or Bullock order if: (a) reasonable or just that unsuccessful defendant D2 should pay costs of proceedings; and (b) reasonable for P1 to have joined D1.

    1. In Naidu – it was reasonable for Naidu to have joined ISS but no conduct by NN to have caused Naidu to need to join ISS. So no Sanderson order.

    2. Examples of when it is in conduct of unsuccessful D :

       1. Judge should make Bullock order if the unsuccessful defendant has done or said something to led the plaintiff to sue the other defendant who was ultimately not liable – so the D should be required to pay for the plaintiff’s error

       2. Eg where the...