Are my Legal Costs Recoverable? If so, how much is recoverable?
This question that should be answered at each stage in a recovery or litigation process.
The answer to this question will depend on the following criteria:
- Whether you obtain an order that the other party pay your costs; and
- The nature of the Costs order; and
- Whether the party has money or assets to meet the costs order
In order for you to recovery your legal costs, you must obtain an order for the payment of the costs by another party.
Costs Follow the Event
During the course of litigation the Courts have a broad discretion to order that an unsuccessful party pay the successful party costs. The Court will exercise its discretion to award costs to a successful party on a case by case basis, and has the power to award costs incurred appropriately by a party in the particular circumstances of the case.
The successful party is generally entitled to receive his or her costs on a party/party basis, which is determined by the nature of the litigation, the conduct of the parties and the outcome of a particular event in the litigation.
The Nature of the Costs Order
The Court has the power to award different types of costs orders including:
A party/party costs order allows a successful party the entitlement to claim costs from the other party which have been reasonably incurred and assessed pursuant to legislation and/or rules which apply to the Court which the party seeks relief. Generally these types of costs orders are awarded during interlocutory proceedings (such as Notice of Motions) and are award to compensate the successful party for the costs thrown away and the costs of the day or proceedings. It should be noted that these costs will not completely cover the legal costs that you may have incurred and can range between 55% and 70% of the actual costs incurred. This is the usual basis upon which an order for costs will be made.
This type of costs order allows a successful party the entitlement to claim the costs which the solicitor would be able to recover from his or her client, being normally under the retainer (contract) for legal services rendered. Generally the Court will award these types of costs at the finalisation of the proceedings as the costs of the successful party would normally need to be assessed/taxed by the Court or a Court appointed assessor.
The Court will award this type of costs order to a successful party in proceedings where a party has been subjected to unreasonable costs and expenses in the proceedings as a result of the conduct of the other party. The Court will exercise its discretion by considering certain special or unusual features in the particular case and the conduct of the parties, for example the way the party has conducted their case and whether they have been reasonable and co-operative in their attempts at achieving settlement of the matter. Generally the Court would award these types of cost orders at the finalisation of the matter and will exercise its discretion only in particular cases.
A demonstration of the reasoning for awarding indemnity costs has been explained by Tamberlin J in Jones v Porsche Centre Melbourne Pty Ltd  FCA 1423
“The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation."
The Costs Order must be satisfied
It should go without saying but this is often overlooked. An unsatified judgment is just that - a piece of paper. It is however a compulsory and necessary step for proceding to the next step of enforcement. If the debtor has insufficient assets to meet the judgment he will not be able to meet the costs order either.