Legal Costs

This information is for lawyers.

Legal costs are the remuneration of a lawyer for legal work. Fees to lawyers are regulated by Acts of Parliament or Statutory Rules.

Solicitor–client costs

  • These are the costs charged by a client for professional work.
  • They usually relate to a retainer (also known as a ‘Costs Agreement’) between the solicitor and client. Refer to the Legal Profession Act 2007, s.306.
  • Section 135 of the Legal Profession Act provides that an itemised bill of costs claimed or recovered by a solicitor is subject to taxation by a taxing officer. In the Magistrates Court, different terms are used (for example, ‘assessment’ of costs is used instead of ‘taxation’ of costs).
  • On an assessment between solicitor and client, all the costs are allowed if they are reasonably incurred, unless they are incurred without the approval of the client. Unusual or unnecessary costs or expenses incurred when the client has not been expressly warned that such costs might not be allowed on assessment will not be allowed.
  • The itemised bill of costs sought to be taxed may not relate to a litigious action, and may relate to a conveyancing or commercial matter.

Party–party costs

  • In most litigation, the unsuccessful party is required to pay the successful party's costs. These are called ‘party and party’ costs.
  • They are covered by a scale of costs prescribed the Magistrates Court (Civil Division) Rules 1998 - Part 9 and Schedule 1 and the Supreme Court Rules 2000- Part 34, Schedule 1.
  • In some cases, the Magistrates Court may order that a different scale of costs (or a percentage of another scale) will apply; for example, that the successful party recover their costs at the rate of a nominated percentage of the Supreme Court scale.
  • If the unsuccessful party considers the successful party’s lawyer’s bill of costs to be excessive, they may ask for it to be assessed (or taxed) by a taxing officer within the Magistrates Court, and the costs scales above will apply.
  • However, the losing party must notify the Court within 21 days about which items in the bill they oppose, and the basis upon which they’re opposed (refer to Magistrates Court (Civil Division) Rules 1998 r.147).

Global costs vs activity costs

  • The cost scale in the Magistrates Court (Civil Division) Rules 1998 is structured to cover aggregated stages of the litigation process; that is, they are ‘globalised’ to cover certain areas of activity (for example, all litigation work undertaken until initiating a Claim is payable by the losing party at 4% of the Judgment amount in a routine matter).
  • By comparison, the cost scale in the Supreme Court Rules 2000 is structured on an individual activity basis; for example, writing a letter, attending a client for initial instructions, drafting a Writ, filing the Writ in the Court registry.

Cost penalty rules

  • The Magistrates Court’s Civil Division has a number of cost penalty rules that are designed to penalise a losing party who has been unreasonable in the settlement negotiations that form part of the conciliation process in civil disputes. Refer to Magistrates Court (Civil Division) Rules 1998 r.141, 142, & 143.

Form of bill of costs

  • The bill of costs is to be prepared on the approved form.
  • The bill should describe the professional work done in sufficient detail that its character and purpose are clear.
  • Disbursements are those charges paid out for example, the cost of a medical report.
  • If the unsuccessful party objects to the amount of a bill of costs, they can file a written Notice of Objection at the Court: within 21 days of receiving the bill, listing the items in the bill they object to, and why they object to it.

Items within the bill

These are some matters where difficulties have arisen on assessment:

Instructions

  • This item includes obtaining sufficient information to begin the action.
  • It is also to compensate a solicitor for planning, thought, consideration, anxiety and risk, skill and responsibility

Drawing documents

  • Drawing is not the physical act of putting pen to paper. It is the application of the solicitor’s mind to preparing the particular document needed for the problem at hand.
  • A ‘folio’ is 100 words or numbers.

Attendances

  • Under the Supreme Court scale, attendances are divided between solicitor’s attendance and clerk’s attendance; and a distinction is made between proper and formal attendances.
  • The rate (as at mid 2005) for a proper attendance of a solicitor varies between $67 and $200 an hour, depending on the nature and complexity of the action and the seniority of the practitioner involved.

Correspondence

A distinction is drawn between different categories of correspondence. For example:

  • a ‘formal’ letter usually contains simple information and is usually very short; for example, acknowledging receipt of another document
  • an ‘ordinary’ letter contains more detail and information, and is therefore usually longer
  • a ‘special’ letter contains complex advice, in which the solicitor has applied exceptional skill and legal knowledge.

Instructions for brief

  • This item is discretionary and compensates for other work not previously charged for, undertaken in getting the matter ready for trial.
  • It might include all items of work performed by way of research, briefing witnesses, inspection of documents and other attendances.

Barrister’s or Counsel's fees

  • There is no scale rate for counsel, even where the solicitor is acting as counsel.
  • The fees allowed for work as Counsel are determined by the taxing officer’s assessment of the complexity of the issues in the case, the seniority and professional experience of the barrister, and the value of the counsel work performed.

Assessment

The assessment procedure at which the successful party’s costs are checked by a Court Officer involves:

  • the parties attending a costs hearing at the Court before a taxing officer or assessment officer
  • objections to specific items being determined, and
  • an order being made on the total costs and out-of-pocket expenses that are to be paid by the unsuccessful party to the successful party.

Costs of taxation

  • In taxations arising from litigation before the Court, the party chargeable must pay the costs thereof.
  • These costs include the costs of drawing the bill, the application for an appointment, any necessary additional copies of the bill, the attendance on taxation, and any taxation fees payable.
  • If the bill is reduced by one-sixth on taxation, the successful party’s lawyer may not be able to recover their costs for attending the taxation (including preparation of the bill) unless the taxing officer determines otherwise.
  • Also, the taxing officer may in their discretion allow the unsuccessful party to recover costs for preparing and attending the taxation.

Review of taxation

  • Any party who is dissatisfied with a taxation may apply to the taxing officer to review those items objected to before a final certificate being issued (the certificate is not issued until the expiration of 48 hours after the taxation).
  • The party objecting must lodge a list of the items objected to and the grounds and reasons for the objection.
  • At the review, the taxing officer may hear further evidence and issue their reasons in written form.
  • If the party objecting is dissatisfied with this review, they may apply to a Magistrate within ten days for an order to review the taxation.

Taxing officer’s discretion

  • The guiding principle in all taxations is that the taxing officer shall allow all such costs, charges and expenses as shall appear to them to have been necessary or proper for the attainment of justice and for maintaining or defending the rights of any party.