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Costs – back to basics – what do I need to know

One aspect of litigation that deserves a little more attention than it gets is costs.

One of the common misconceptions around costs is that if you win you get your costs, being all of your legal costs.

The reality is somewhat different.

The first important point to note is that the Court has ultimate discretion in relation to whether to award costs.

The second point is that there is a rule at least in relation to Queensland state court matters that costs in a proceeding follow the event, unless the Court orders otherwise.  This effectively means, if you are successful, the Court may award costs in your favour.  However, this is subject to a myriad of exceptions created by case law over time.

It is helpful to note that the Rules also permit settlement offers to be made throughout a proceeding which can improve a party’s position in the long run at least in relation to costs.

In the Magistrates Court jurisdiction for claims up to $50,000, the Rules set out prescribed amounts for what is known as standard costs.  The benefit of this is it creates some certainty about how much costs you may recover if you are successful.  These prescribed costs are sometimes significantly lower than the actual costs you will incur in a proceeding.  The issue this creates is if you are successful and costs are awarded on the standard basis in your favour, you may only recover a portion of your actual costs.

For successful claims above $50,000 in the Magistrates Court and claims in the District and Supreme Court of Queensland, costs on the standards basis may result in you recovering approximately 50% to 65% of your actual costs.

If you are unsuccessful with your claim or your defence of a claim, costs may be awarded against you.  So, in addition to you bearing your own legal costs, you may have to pay the other sides legal costs.

Courts have the power to award what are called indemnity costs in very exceptional circumstances, which means you may be able to recover the vast majority of your costs, providing you fall within an exceptional circumstance.  This usually only applies in cases where a claim has been dismissed and is an entirely frivolous or baseless claim or a party has unreasonably defended a claim without any proper basis.

An important take away here is if you are contemplating bringing a claim that you be prepared to ask your lawyers for some detailed advice about costs and that you properly consider their advice before going ahead as it can make the difference between a commercial outcome or otherwise.

If you have any questions about costs or litigation generally, please reach out to one of our litigation lawyers at McLaughlins Lawyers on 07 5591 5099; your gold coast premier law firm.

 

Author: Matt Kollrepp

Director: Ian Kennedy

Date: 27 October 2020