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Getting Costs Orders (NSW)

A costs order is a court order that sets out who must pay the legal costs associated with proceedings, which is regulated by legislation and by court rules. The statutory provisions that are most commonly used are contained in the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005. There are also statutory provisions relating to costs orders in multiple other pieces of legislation.

Who decides costs orders?

The presiding judge or magistrate decides whether a costs order is appropriate in relation to the proceeding. When considering the suitable order, the court decides on the facts of the case and with regard to any legislative costs provisions that apply. This process can often be complicated. The court must consider the law as well as how parties have conducted themselves throughout the proceeding.

The court has unfettered discretion to consider cost orders unless a specific statutory provision applies. However, the Civil Procedure Act ensures that cost orders are made on a principled basis and adhere to proportionality principles.

Applying for a costs order

For a court to make a costs order, one or more parties need to apply. However, the judge or magistrates can make a determination at various times throughout proceedings. This does not necessarily need to occur at the time a party applies.

The court can also reserve costs orders until a later stage of the proceedings. They are more commonly considered after a party has filed evidence and made submissions to the court with respect to why it may or may not be appropriate for an order to be made at the conclusion of a hearing.

When will the order be made?

There are several stages of proceedings when costs orders are commonly made. These are:

  • At the start of litigation
  • After final determination of an issue of law before completion of the hearing
  • When Notices of Motion and applications for interlocutory relief are made
  • When the trial is adjourned or aborted
  • On appeal
  • At or after the hearing, pending appeal

Costs follow the event

If a party is successful at a hearing, the general rule is that costs follow the event. This means that the successful party can generally expect to be awarded costs against the unsuccessful party.

The common law understands costs orders as necessary to adequately compensate successful parties for their expenses during the litigation as opposed to punishing unsuccessful parties. However, the party against which a costs order is made may apply to the Supreme Court to have this re-assessed. 

Types of costs orders

The most common types are party/party costs and solicitor/client costs. 

Party/party costs

Party/party costs are made when the successful party to litigation is awarded costs on the basis that it should receive compensation for having to defend its rights through litigation. This is the most common basis for the order and it is also referred to as ‘costs on the ordinary basis’. A party that obtains party/party costs will generally get about 75% of the total expenses incurred paid by the other party.

Indemnity costs

Indemnity costs are ordered when the court considers that one party should pay almost all the expenses because of something about the way the proceedings have been conducted. This may occur if one party has proceeded where they had no real chance of success, or where they have deliberately drawn out the litigation or committed some other abuse of process. Indemnity costs may also be ordered against a party that refused to accept a reasonable offer to settle from the other party. When indemnity costs are ordered the unsuccessful party is ordered to pay all of the expenses of the successful party.

Other legislation 

In addition to the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005, there are many other state and commonwealth acts that have relevant provisions. These are:

  • Family Law Act 1975 (Cth) s 117(2)
  • Children and Young Persons (Care and Protection) Act 1998, s 88
  • Defamation Act 2005 (NSW) s 40
  • Legal Profession Uniform Law Application Act 2014
  • Civil and Administrative Tribunal Act 2013 ss 53, 60
  • Legal Profession Act 2004, ss 337, 338, 340, 348, 364, 366
  • Limitation Act 1969
  • Workplace Injury Management and Workers Compensation Act 1998, ss 250, s346
  • Legal Profession Regulation 2005, cl 112, Sch 2
  • Succession Act 2006, s 99
  • Motor Accidents Compensation Act 1999, Ch 6
  • Property (Relationships) Act 1984
  • Workers Compensation Regulation 2003, Sch 7

If you require legal advice or representation in any legal matter, please contact Armstrong Legal. 

Michelle Makela

This article was written by Michelle Makela

Michelle has over 15 years experience in the legal industry, working across commercial litigation, criminal law, family law and estate planning.  Michelle has been involved in all practice areas of the firm and in her personal practice has had experience in litigation at all levels (State and Federal Industrial Tribunals, the Supreme Court, Court of Appeal, the Federal Court, Federal...

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