Legal costs

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 are located in the Uniform Civil Rules 2020 used to estimate the likely party/party costs of a claim before the claim is started.

Claims for amounts greater than $12,000 are called general claims. Generally, costs are awarded to the successful party on a party/party basis. This means that an unsuccessful party is required to pay the successful party the costs outlined in Cost Scale, and any disbursements that are fair and reasonable.

For example, if after a trial, a applicant (i.e. the party starting the claim) is successful, they would be entitled to recover legal costs equal to about 25% of the judgment. That means if a Magistrate awards a applicant $10,000, the respondent will be required to pay the applicant that amount as well as about $2,500 towards the applicant’s legal costs.

If a respondent (i.e. the party against whom the claim is made) is successful, they would be entitled to legal costs of the applicant’s unsuccessful claim. For example, a losing applicant who claimed $10,000 from a respondent would be required to pay the respondent the amount specified in the judgment plus costs to help cover the respondent’s legal costs.

The proportions provided above are only intended as a guide. If a claim involves many adjournments of directions and conciliation hearings then 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, and these charges can add considerably to the cost of a claim.

The daily cost of legal representation can be calculated from the Uniform Civil Rules 2020 Cost Scale.

To minimise legal costs, a claim can be heard as a ‘minor civil action’. Minor civil actions are claims for amounts of $12,000 or less. Under the Magistrates Court Act 1991, lawyers are not usually permitted to represent a party at the trial of a minor civil action so no party/party costs are payable.

A minor civil action is a monetary claim for $12,000 or less, a neighbourhood dispute or a minor statutory proceeding. However, a party may elect to have a neighbourhood dispute or a minor statutory proceeding involving a monetary claim for more than $12,000 to be excluded from the rules relating to minor civil actions.

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 legal costs to your solicitor but the other person’s party-party costs as well.

Consideration should also be given before initiating a claim against a person 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.

If you are a respondent, it is worthwhile thinking about whether there is any sense in hiring a lawyer to defend a claim if you will end up owing more to your lawyer than the claim against you.

Whether you are the applicant or respondent, 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 on, get written confirmation of the fees and charges.

The court can refer the matter to mediation usually at the Directions Hearing stage. 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.

Further, if parties attempt to settle a claim by mediation, they may be entitled to a discount on the setting down fee which must be paid before a matter is listed for trial.

See mediation for more information.

The Uniform Civil Rules 2020 have been designed to encourage parties to make and accept reasonable offers to settle out of court, before a matter proceeds to 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 respondent: A applicant notifies a respondent that they are willing to accept an out of court settlement of $10,000. The respondent, however, does not agree to that sum and the matter goes to trial. The applicant subsequently wins the case and is awarded $11,000. The respondent is required to pay not only the judgment and their own legal costs to their solicitor, but also all the applicant’s legal costs from 14 days after the applicant’s offer was made. That is, the respondent is penalised for failing to agree to the applicant’s reasonable offer to settle out of court.

Similarly, applicant’s who refuse to accept a respondents reasonable offer to settle out of court may be subject to cost penalties. Respondent’s who offer more than or equal to the judgment against them are entitled to their own legal costs owing to their solicitor, from 14 days after the offer was made to the applicant, while the applicant would not be entitled to recover their own costs to their solicitor.

For more information about these cost penalties, the relevant rules are located in the Uniform Civil Rules 2020.