Costs Orders in Civil Proceedings (WA)

At various points during the course of civil proceedings, a costs order can be made in a party’s favour or against them. For this reason, a party’s legal costs, the other party’s legal costs and potential costs orders should be an ongoing consideration. This article outlines how costs are awarded in civil proceedings in Western Australia.

What are costs orders?

A costs order is made to ensure that the party that bears responsibility for the proceedings pays the costs associated with the proceedings. There are several different types of costs orders that can be made in different situations.

Solicitor-client costs

Solicitor-client costs orders refer exclusively to the costs a solicitor charges to the client. This includes the solicitor’s professional fees for the work they have completed, and disbursements such as court filing fees and barristers’ fees.

Party-party costs

Party-party costs orders are the costs that a court may order an unsuccessful party to pay to a successful party. This is the most common costs order. Party-party costs orders normally only partially cover the successful party’s actual costs. The successful party cannot claim more than what they have paid to their lawyer, and in some cases, the legislation fixes the amount of costs payable.

Indemnity costs

Indemnity costs are all costs incurred by a party including solicitor-client costs, disbursements, expenses and remuneration. The costs must not be unreasonably incurred or be an unreasonable amount.

Generally, indemnity costs are awarded where there is misconduct on the part of the unsuccessful party such as continuing a cause of action or maintaining a defence without any prospect of success, or unreasonably rejecting an offer of settlement.

Scale of Costs

In Western Australia, the Legal Costs Committee was established as an independent statutory authority with the power to make legal costs determinations to regulate the costs that may be charged by law practices under section 275 of the Legal Profession Act 2008.

The legal costs determinations are also known as the ‘scale of costs’ and there is a scale for each court including but not limited to:

• Magistrates Court (Civil);
• Supreme & District Courts (Contentious Business);
• District Court (Appeals);
• Probate Costs;
• State Administrative Tribunal.

The Legal Costs Committee is required to review the scale of costs at least once every two years. If there is an order for party-party costs, the scale of costs determines how much the unsuccessful party is required to pay the successful party.

When can indemnity costs be ordered?

The matter of Yara Australia Pty Ltd v Oswal [2012] WASCA 264 at paragraph 33 summarised the circumstances in which indemnity costs orders may be made:

• There must be some special or unusual feature warranting the award of an indemnity costs order: Colgate-Palmolive Co v Cussons Pty Ltd [1993];
• The types of cases in which an indemnity costs order may be made are not closed: Colgate-Palmolive Co v Cussons Pty Ltd [1993];
• Indemnity costs are appropriate where the action “has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success”; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd [1988];
• An order for indemnity costs may be an appropriate sanction because it can be seen as a “mark of disapproval on the part of the court about the improper or unreasonable conduct of litigation”: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003];
• It is sufficient to enliven the discretion to award indemnity costs that, for whatever reasons, a party persists in what should on a proper consideration seem to be a hopeless case: Quancorp Pty Ltd v MacDonald [1999].

Costs orders made throughout proceedings

Civil proceedings typically involve hearings and conferences at the court and the court may make orders relating to costs along the way. Costs may be dealt with by the court at any stage of the proceedings or after the conclusion of the proceedings.

The types of orders a court can make as to costs include:

• No order as to costs – neither party is awarded to pay the other’s costs.
• Costs reserved – where the decision as to who pays the costs of the hearing will be determined at a later stage.
• Costs in the cause – the party that is unsuccessful at the end of the proceedings, will pay the costs of the hearing to the successful party at the end of the proceedings.
• Costs thrown away – where one party’s time has been wasted because the other party fails to attend or prepare for a hearing.

Applying for costs orders

If you are the successful party, you should consider making an application for costs if an order has not already been granted in your favour. It is possible to agree to a fixed amount for the unsuccessful party to pay the successful party. If an agreement is reached, the parties can file consent orders with the court. If costs cannot be agreed upon, then costs will have to be taxed.

Taxation of Costs

In most cases, the court will order costs to be paid ‘taxed if not agreed’ or ‘assessed if not agreed’. This order gives the party the option of coming to an agreement on how much the unsuccessful party will pay the successful party, and if they cannot reach an agreement, the successful party’s costs will be taxed.

‘Taxation of costs’ is a process performed by the court to determine how much the unsuccessful party is to pay the successful party if a costs order is awarded in the successful party’s favour.

Your solicitor should advise you on costs at the outset of your matter, and throughout your matter. As your matter progresses, the advice you receive on costs could change – this could be due to facts, evidence or defences coming to light that strengthen or weaken your position.

You can also take ‘costs protective’ steps such as setting out all the facts of your case and your legal position at the beginning of the matter and making settlement offers.

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