Costs
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COSTS
A. Jurisdiction and General Rule
Jurisdiction:

the jurisdiction of the court to award costs is statutory: s221 Supreme Court Act 1995

a party can not recover any costs of a proceeding other than under the UCPR or order of the court:
r691

costs may be awarded at any stage of the proceedings or after the proceedings end: r680

costs may be recovered for proceedings, which have abated: s116I Supreme Court Act 1991
General Rule:

the winner is awarded their costs plus the judgment for or against the claim
Rationale:

the rationale is to indemnify the successful party for the costs incurred by them in contesting the
claim. It is not to penalise the loser or reward the winner

in practice the award of costs does not fully indemnify the winner. A recognised rule of thumb is
that the winner will recover only 2/3 of their actual costs.

the reason for this is that there are two scales of costs:
 Standard basis rr690, 703

this is the usual scale awarded in litigation which the registrar must assess costs on
unless otherwise provided: r703

determined by reference to the scale of costs prescribed in the rules (r 690), and is
also limited to only those costs which are necessarily or properly incurred (r 703).
 Indemnity basis rr690, 704

in special cases costs are awarded at a slightly more generous scale than the
standard basis (trustee has a prima facie entitlement: r705, otherwise courts
discretion: r704(1))

not determined by reference to what is actually paid to a solicitor, but by reference
to what is reasonable: r704

Special cases include:
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where the dispute concerns a fund, and costs are to be paid from the fund
rather than by a specific party. For example, trustee/beneficiary disputes.
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where there is a penalty for a party acting improperly – see ‘offer to settle’
penalties.
B. Court discretion in cost awards

Ultimately, the awards of costs are made at the courts discretion
(i) General rule: Costs follow the event
General rule:

costs follow the event, unless the court considers another order is more appropriate: r689

similarly, the rule applies with respect to costs of a question or part of a proceeding

alternatively the court may declare what percentage of costs are attributable to a particular
question or issue: r682
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May receive affidavit evidence:

in exercising the discretion, courts may receive affidavit evidence which may influence the exercise
of its discretion as to the appropriate costs order.
No right of appeal:

no appeal lies from an order as to costs only, which by law are left to the discretion of the judge

the only exception is by leave of the judge making the order: s253 Supreme Court Act 1995
Self-Litigators: can they claim their costs?

no, the UCPR's relate only to work done or expenses incurred
 Cachia v Hanes (1994) a self-represented litigant sought compensation for the loss of time spent preparing and conducting their case.
Held: the cost rules only provide for reimbursement of work done or expenses incurred by a practitioner or their employee. A partial
indemnity was the appropriate compromise between no costs and full indemnity for all.
Successful party denied costs:

there are a number of situations where a successful party may be denied costs in the exercise of
the court’s discretion:
 where the plaintiff failed to make demand before bringing proceedings;
 where the plaintiff has brought several proceedings where one action would suffice;
 where the plaintiff has been guilty of conduct contrary to public policy;
 where the successful party adopts an obstructive or unco-operative attitude in a mediation
conference
Capolingua v Phylum Pty Ltd, Caloundra City Council v Minister for Natural Resources & Ors No
Defendant provokes litigation:

if a defendant provokes litigation, then even though he/she may ultimately succeed in the action
he/she may be deprived of an order for costs: Ritter v Godfrey
Third parties:

as litigation is frequently funded by third parties (eg. insurers, unions, receivers, contingency fee
arrangements, and governments) costs can be awarded against third parties: Knight v F P Special
Assets Limited; Johnson v Santa Teresa Housing Association
Legal Practitioners:

courts can award costs against a party’s legal adviser: inherent jurisdiction pursuant r708, De
Sousa v Minister for Immigration, Local Government and Ethnic Affairs

generally done where the adviser is responsible for delay, misconduct, or negligence
 De Sousa: bad legal advice concerning immigration law was perceived by the court as a serious dereliction of duty. Costs were awarded
against the practitioner concerned.
(ii) Exceptions: Costs don't follow the event
Public interest litigation:

eg South Melbourne City Council v Hallam (No 2) where there was a challenge to the constitutional
validity of local government legislation which was ultimately rejected on the facts.
Impecunious parties:

cost awards can bankrupt unsuccessful parties
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
powerful incentives arise to settle, particularly if the other side is more affluent

contingency fees and representative proceedings can help to break down these barriers
Other exceptions:
 Verna Trading Pty Ltd v New India Assurance Co Ltd the trial judge determined that an insured’s loss was not covered by a contract of
insurance but nevertheless ordered costs against the insurer who refused to explain why they had refused to indemnity for the loss which
was the primary cause of the litigation.
Problematic winners:
These are situations where the winner and the appropriate costs order are difficult to determine.
Party wins in the wrong court:

it is possible to bring a small claim in a higher court or a higher claim in a lower court.

in the former you will be awarded the lower court scale and may have to compensate the
defendant for the additional costs incurred: r698, O’Doherty v McMahon

in the latter case your remedy including costs if successful is limited to the upper limit of that
courts jurisdiction.
Party ultimately wins, but loses on several issues:

if one of the issues was subject to a notice to admit, normally the party must pay the costs of
proof of that fact in question.

there may also be apportionment of costs issue by issue as raised above: Byrns v Davie
Complex cases:

Where there are multiple defendants, they are each entitled to individual representation. Where the
plaintiff succeeds against some but not others, each of the defendants may be the subject of a
separate costs order.
Several defendants, alternatively liable:

Where several defendants are alternatively liable, the courts have devised two forms of order to
effect justice between the parties:
 "Bullock order" - Bullock v London General Omnibus Co

the plaintiff may be ordered to pay the costs of the successful defendant, but may
then add them to the disbursements recoverable from the unsuccessful defendant.
 "Sanderson Order" - Sanderson v Blyth Theatre Co

court may order the unsuccessful defendant to directly pay the costs of the
successful defendant
 Gould v Vaggelas: respondents sold a business to the appellants. A company created to run the business went into liquidation. The
respondents sued the appellants as guarantors of the company. The appellants counterclaimed for fraudulent misrepresentation and
joined the accountants as respondents. They won against the respondents but lost against the accountants. A bullock order was made.
The full court reversed this. On appeal to the High Court Gibbs J said in relation to the bullock order that ‘the costs have been reasonably
and properly incurred by the plaintiff as between him and the unsuccessful defendant’. This restored the original trial judges decision.
 Barradine Pty Ltd v Westworld Holdings Pty Ltd and Rylands & Hilmer (A firm): B’s solicitors and the second defendant negotiated
settlement of a dispute regarding removal of a caveat and surrender of a lease. This involved payment of $50 000 to the plaintiff on
signing of the agreement and a further $50 000 on surrender of possession. The defendant failed to make the second payment. The
plaintiff then added a second defendant who was the first defendant’s solicitors. The plaintiff succeeded against the first defendant. The
plaintiff was ordered to pay the second defendant’s costs and recover them from the first defendant (a Bullock order). It argued that a
direct order that the first defendant pay the second defendant was more appropriate (Sanderson order). Andrews CJ refused to make a
Sanderson order since the first defendant was in liquidation. He said: ‘In this case I can see no reason why the defendants Rylands and
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Hilmer should be made to depend upon the result of the winding up of Westworld before recovering its costs or any of them. It is the
plaintiff, in my view, who should pay those costs.'
Several defendants ordered to pay costs:

an order for the payment of costs by two or more persons creates a joint and several liability
which may be ascertained by taxation and enforced against one of those persons alone: Thiess
Watkins v Witan Nominees
Several issues:

Split orders may also be made. These will occur where there is a counter-claim, or several issues

taxed costs of the counter-claim are usually much less than the taxed costs of the claim
 Smith v Madden: Dixon J reviewed the authorities on the question of the taxation of costs in circumstances where the plaintiff had been
successful on his claim and had obtained judgment on the claim, with costs, and the opposing party has been successful on his counterclaim and obtained judgment on the counter-claim, with costs. He said ‘… the taxation of the costs of an action and of the counter-claim
is governed by the principle that the party receiving the costs of the action should recover the general costs and whatever was reasonably
incurred in bringing and maintaining or defending the action, as the case may be, considered as if there had been no counter-claim and
that the party receiving the costs of the counter-claim should recover the further or increased costs reasonably incurred in bringing and
maintaining or defending the counter-claim. … it may be necessary to divide an item of costs into two parts. This will occur when there is a
single charge for work but a severable part of that work relates to the claim and the other severable part of the work relates to the counterclaim. It will then be necessary to divide the single charge in accordance with the two classes of work it covers.’
C. Interlocutory orders and costs

‘All costs’: standard basis costs.

‘Costs of the proceeding’: costs of all issues in the proceeding: r679

‘Costs in any event’ or ‘Costs’: whether you win or lose the proceeding at trial, the party with the
benefit of this order gets their costs of that interlocutory application. You can not tax and execute
on those costs immediately, but have to wait until the ultimate taxation of the costs of the action.

‘Costs in the cause’: the party who wins gets the costs of this interlocutory application. If the costs
in the cause are awarded to a specific party (eg plaintiff’s costs in the cause) instead of at large,
then only if that party wins can they get the costs. The other party will not get those costs if they
win, but will not have to pay them either. A trial judge has no power to deprive the party who has
obtained an order for costs of an interlocutory application, except where they are reserved.

‘Costs of the action v Costs of the trial’: the first includes trial and interlocutory costs, the latter
only includes trial costs.

‘Costs thrown away’: this arises where an interlocutory order renders previous steps useless. For
example, where a defendant gets a default judgment set aside, they must compensate the plaintiff
for the costs of obtaining that default judgment.

‘No order as to costs’: the court will state this specifically. Neither party recovers costs from the
other, they each pay their own costs.

‘Order silent as to costs’: the winner on this application will get their costs if they also win at trial.

‘Reserved costs’: costs reserved follow the event (r699). The trial judge will make the appropriate
order dealing with these costs.
D. Assessment of quantum of costs

A successful party is required, in the absence of a costs agreement, to prepare a costs statement
formerly known as a ‘bill of costs’, in accordance with the relevant scale of costs and fees.

This is then taxed by a Registrar, usually in the presence of both parties.

The amount of costs to which a successful party is entitled is controlled by the court through the
taxation process.
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It is generally the case that a party is awarded its costs of the action "to be taxed". In such a case,
and in the absence of an agreement with the other side as to the appropriate amount of costs, the
successful party is required to prepare a costs statement which is then served on the other party,
who may then list objections and reasons for those objections.

The taxing officer will then appoint a time for taxation which will occur in the presence of both
parties.

The taxing officer decides whether each item as it appears on the costs statement was necessarily
incurred by the party and in so deciding exercises a discretion which must be done judicially. This
process is called "taxing costs".

Taxation involves examination of each item in a costs statement by way of allowance or
disallowance. The taxing registrar exercises a discretion. There is some unique language involved
with the process:
 ‘Drawing’ a document is applying ones mind to composing the document ($5.10 per folio).
 ‘Engrossing’ a document is writing down on paper the material drawn in your mind ($1.50 per
page).
 ‘Perusal’ of a document is applying one’s mind and skill to the meaning of a document ($1.50
per folio).
 ‘Folio’ consists of 72 words.
 ‘Attendance’ is when you attend to a matter, for example a telephone call.

Solicitor’s bills are regulated by the Legal Practitioner’s Act 1995 (Qld) ss 5-12

A party liable to pay costs may serve on the party entitled to those costs a written offer to settle
the costs, non-acceptance of which has further cost implications (rr721, 722)
Nb. Inferior Courts:

Rule 681 requires a Magistrate to set the amount of costs in a proceeding, except where the
nature and complexity of the proceeding suggests assessment by a Registrar.

Rule 686 deals with proceedings removed from the ‘first court’ to another court. Usually the costs
up to the time of removal are assessed on the ‘first court’ scale, the remainder being assessed on
the second court’s scale.
E. Security for costs applications

A security for costs application is brought on behalf of a defendant to ensure that the plaintiff has
sufficient assets to cover the defendant’s costs.

The application is only available in the following circumstances r670:
 Impecunious corporations (s 1335 Corporations Law);
 Nominal plaintiffs;
 Address of plaintiff is not stated or is misstated in the originating process, with an intention to
deceive;
 Plaintiff has changed address to avoid consequences of the proceeding;
 Plaintiff ordinarily resident outside Queensland;
 Plaintiff is about to depart Australia to ordinarily reside outside the jurisdiction
 Act authorises making of the offer; or
 For special circumstances – the justice of the case requires the making of the order.

Once any of the above criteria are satisfied the court has a discretion to order security for costs – a
discretion which is based on the following factors amongst others r671:
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 the means of those standing behind the litigation;
 the prospects of success or merits of the proceeding;
 the genuineness of the proceeding;
 the impecuniosity of a corporation;
 whether the plaintiff’s impecuniosity is attributable to the defendants conduct;
 whether the plaintiff is effectively in the position of a defendant – coins story;
 whether an order for security for costs would be oppressive;
 whether an order for security for costs would stifle the proceeding;
 whether there is a matter of public importance;
 whether there has been an admission or payment into court;
 whether delay by the plaintiff has prejudiced the defendant;
 whether an order for costs against the plaintiff would be enforceable within the jurisdiction; or
the costs of the proceeding.
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