Costs orders are orders made following a judgment about who should pay the legal costs of the proceedings. The general rule is that the successful party will be awarded part of their legal costs, which the unsuccessful party will need to pay. Even if you are successful, you will not be able to recover 100% of your costs. In some instances, the court will cap the amount of costs that are recoverable to a certain point. 

How Do Costs Orders Work? 

The court can decide the unsuccessful party must pay them. The court can award costs on different bases, including:

Ordinary Basis 

This is also known as “party/party costs” and is the usual process for awarding costs. Here, if your case is successful, you should expect to recover around 60-70% of your legal costs.

Indemnity Basis

Awarded costs on an indemnity basis is less common. A party seeking indemnity costs must show the court that there are sufficient or unusual circumstances for the court to grant them. A common reason is that the other party did not accept a reasonable offer earlier in the proceedings.

For example, if you had made the defendant a reasonable offer to settle earlier, and they did not accept it, they could be penalised through indemnity costs for not taking the offer and avoiding a trial.

If an agreement can be reached between the parties on the amount of costs payable, consent orders can be filed with the court so that the judge does not have to make the determination.

What is a Costs Assessment?

If you cannot negotiate an agreement as to the amount of costs, you may need to make an application for assessment of costs. An assessment of costs involves: 

  1. providing the application to the other party and allowing them 21 days to provide objections, or otherwise resolve the matter;
  2. filing the application with the supreme court, who will appoint an independent costs assessor to determine the application;
  3. both parties then providing the cost assessor with any additional information; and 
  4. the costs assessor then making a determination as to the costs that must be paid.

Once you have made this determination, the party liable for the costs must pay them.

What Will My LegalVision Team Be Doing?  

Your LegalVision Team will be reviewing any settlement offers made by either party throughout the proceedings. Here, we will assess whether it will be possible to make a claim for indemnity costs. Your team will also be working hard to calculate your costs throughout the proceedings.

The best outcome is to reach an agreement with the other side on the amount of costs that are payable. Your LegalVision Team will likely be corresponding with your opponent to negotiate an outcome. 

If a costs order is made in your favour, but you cannot agree with your opponent on the amount, your LegalVision Team will be preparing an application for an assessment of costs. If a costs order is made against you, your LegalVision Team will be considering any application for assessment of costs received and preparing objections.

What Do I Need To Do?

If you are at this stage of the proceedings, there are a few things that your LegalVision team may need you to do. This includes:

  1. considering offers on costs; and
  2. providing instructions to your LegalVision team.

This article is part of a larger publication on the NSW Local Court Process. To read a glossary of terms featured in the publication, click here.

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