Introduction| Party/party costs | Cost scales for general claims | Minor civil actions | Lawyers' charges | Alternative dispute resolution| Offers to settle | Any further questions?
All too often people embark on a civil claim in the Magistrates Court without a proper appreciation of the risks and likely costs, especially if they lose the case. The purpose of this information is to assist people who are considering taking a matter to court to calculate the likely costs beforehand so that they can make an informed decision about whether or not to go ahead with a lawsuit.
The pamphlet also explains the rights of parties in relation to recovering legal costs and outlines the non-trial options available for settling civil claims in the Magistrates Court.
A party represented by a lawyer who wins a case in the Magistrates Court is entitled to recover some of their legal costs. This cost entitlement is called ‘party/party costs’.
Detailed cost schedules available from court registries can be used to estimate the likely party/party costs of a claim before the claim is started.
Cost scales for general claims
Claims for amounts greater than $6,000 are called general claims. There are two cost scales for general claims: one for routine actions and the other for complex actions.
On the routine scale in a trial that lasts only one day, a plaintiff (i.e. the party starting the claim) who wins is entitled to recover legal costs equal to about 25% of the judgment. For example, if a magistrate awards a plaintiff $10,000, the defendant will be required to pay the plaintiff that amount as well as about $2,500 towards the plaintiff’s legal costs.
A defendant (i.e. the party against whom the claim is made) who wins, can recover legal costs equivalent to about 25% of the plaintiff’s unsuccessful claim. For example, a losing plaintiff who claimed $10,000 from a defendant would be required to pay the defendant the amount specified in the judgment plus another $2,500 to help cover the defendant’s legal costs.
In complex actions, the proportions rise to about 30%.
The proportions provided above are only intended as a guide. If a claim involves many adjournments of directions and conciliation hearings the party/party costs are likely to be greater than these percentages. Also, claims frequently involve the additional cost of expert reports (e.g. medical reports or engineers’ building reports) and/or fees for expert witnesses; these charges can add considerably to the cost of a claim.
Where a trial lasts more than one day, the daily cost of legal representation can be calculated from item 24 in the cost schedules that are available at registries.
If a party wishes to claim on the complex scale, they must notify the other party in writing.
The advantage to the successful party of claiming costs on the complex scale is that they can recover a greater proportion of their costs. If the other party contests the notice to claim costs on the complex scale, it is left to the magistrate at trial to decide which scale will apply.
One way of minimising legal costs is to have a claim heard as a ‘small claim’ or ‘minor civil action’. Minor civil actions are claims for amounts of $6,000 or less. Under the provisions of the Magistrates Court Act, lawyers are not usually permitted to represent a party at the trial of a minor civil action so no party/party costs are payable. Witness fees are allowed, but in minor civil actions these are usually only $30 to $40 (see Scale 3 in the cost schedules available from registries).
It is important to note that claims of more than $6,000 can also be heard as minor civil actions, providing the other party agrees.
Before instructing a lawyer to represent you, it must be realised that even if you win the claim, the legal costs you are entitled to recover may be much less than the amount your lawyer actually charges. If you lose and costs are awarded against you, not only will you have to pay your own solicitor-client costs but the other person’s party-party costs as well.
It is essential that you discuss your lawyer’s charges before you get him/her to commence or defend a claim for you. To avoid problems later, get written confirmation of the fees and charges.
It is important to remember that there is no economic point in hiring a lawyer to win a claim if you have to pay all your judgment as well as the party/party costs to your lawyer.
Nor is there any sense hiring a lawyer to defend a claim if you will end up owing more to your lawyer than the claim against you. There is also little point spending a lot of money on a claim against a defendant who has no money or assets to pay your judgment. Not only will you not be able to recover your judgment, but you will still have to pay your lawyer.
Alternative dispute resolution
The Civil Division of the Magistrates Court has an option of mediation as an alternative means of dispute resolution for minor civil actions and general claims. Mediation is provided by professionally trained court staff with accredited qualifications in mediation. It provides parties with an opportunity to negotiate a mutually agreeable resolution to a dispute rather than having to resort to court adjudication.
If the parties in a dispute decide to try and resolve the matter by mediation, a mediation conference will be held soon after the defendant has filed their defence. At the conference the mediator attempts to identify the parties’ interests (rather than their legal rights) and bring them to a consent settlement that will accommodate those interests.
In addition to the speedier resolution of claims, mediation has the potential to provide considerable cost savings for litigants because the matter is resolved before most of the costs are incurred.
The rules of the Magistrates Court, Civil Division, have been designed to encourage parties to make and accept reasonable offers to settle out of court. For general claims, the chief forum for negotiating out of court settlements is the conciliation conference, which is the last opportunity parties have to settle a matter before trial.
A party who fails to make or accept a reasonable out of court settlement can incur considerable legal cost penalties.
The following example illustrates the cost penalties that can be incurred by an unsuccessful defendant: A plaintiff notifies a defendant that they are willing to accept an out of court settlement of $10,000. The defendant, however, does not agree to that sum and the matter goes to trial. The plaintiff subsequently wins the case and is awarded $11,000. The defendant is required to pay not only the judgment but all the plaintiff’s legal costs from 14 days after the acceptance offer was made. That is, the defendant is penalised for failing to agree to the plaintiff’s reasonable offer to settle out of court.
Similarly, plaintiffs who refuse to accept a defendant’s reasonable offer to settle out of court are subject to cost penalties. Defendants who offer more than or equal to the judgment against them are entitled to party/party costs from 14 days after the offer was made (Rule 59).
It is important for parties to make realistic offers at the final conciliation conference as further cost penalties can apply (Rules 52 and 53).
For more information about these cost penalties, the relevant rules are included in the cost schedule.
Telephone:
Adelaide Magistrates Court (Civil)
61 8 8204 2444
E-mail:
AMCregistry@courts.sa.gov.au
Mail:
The
Senior Registrar
Adelaide Magistrates Court (Civil)
Level 1
260-280 Victoria Square
Adelaide South Australia 5000
The Senior Registrar
Adelaide Magistrates Court (Civil)
PO Box 6115
Halifax Street
Adelaide South Australia 5000
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