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You should be aware of the costs involved to have your day in court. Whether or not you are successful in your claim, it is important to know what expenses you may incur before deciding to commence proceedings. Legal costs can fluctuate immensely during proceedings. If you are unsuccessful in court, you may have to pay the other side’s legal costs as well as your own. If the proceedings are less straightforward, courts may also make interim cost orders before the proceedings have finished. You should be considering the financial viability of running your case before it starts.

To assist, your legal team should constantly inform you of the costs incurred for each stage of your claim. It is also strongly recommended that you utilise any opportunities for early resolution. You may come across various terms associated with ‘costs’ during your discussions with lawyers. These terms encompass a broad range of costs that may arise. Below is a glossary of the common types of costs and what they mean.

Glossary

Term

Definition

Costs Agreement / Cost Disclosure

A costs agreement or disclosure will include an estimate of approximately how much it would cost for a lawyer to provide you with legal services. The costs agreement should also include how a lawyer calculates their costs and if any fixed costs are associated. The agreement is only an estimation of the lawyer’s costs. If the costs are quite different from the estimation, you should be provided with a revised costs agreement from the lawyer.

Assessment of Costs

A party in proceedings can have a third party determine their legal costs. Generally, this process is conducted out of court.
However, in New South Wales (NSW), there is a costs assessment process in which you can apply to the Supreme Court to have your costs assessed. You can find out more about the cost assessment process
here

Costs Follow the Event

This is the most common court order for legal costs. In proceedings, this requires the unsuccessful party to pay the other side’s costs.
In NSW, this order is considered the general rule under Rule 42 of the
Uniform Civil Procedure Rules 2005 (NSW). A successful party should reasonably expect that unless a court finds that another costs order is appropriate, the court will award costs against the unsuccessful party.

Costs in the Cause

During proceedings, parties may engage in interim/interlocutory hearings that are run before or on top of the substantive proceedings. Instead of ordering costs at the end of the interim hearing, a judge may order ‘Costs in the Cause’.


This order allows a judge to consider how they would order the costs of the interim hearing at the end of the substantive hearing. That way, they can assess the costs of the interim hearing in the context of the entire case.
Costs Reserved

The court will not make a decision on costs at this time and will determine them later.

Costs Thrown Away

If the court considers that a party has incurred costs that they were not responsible for, it may award for those costs to be ‘thrown away’.


For example, if Party B decides to amend their pleadings mid-way through the proceedings, the court may order that Party A’s costs of responding to the amendment be thrown away. 
Indemnity Costs

A court may order indemnity costs to a party if it believes the party has incurred costs unreasonably because of the conduct of another party. These are usually between 80-90% of a party’s actual legal costs. A party must submit that there has been a ‘sufficient or unusual’ feature of the proceedings or another party. Some of the features include:

  • a party pursuing a hopeless case;

  • failure to accept a reasonable offer of compromise;

  • unreasonable conduct;

  • a party has engaged in fraud; or

  • an abuse of process.
Party/Party Costs

The court will order party/party costs to a successful party in a dispute, typically to reimburse the party for the solicitors’ fees for running the dispute.


Generally, party/party costs will only reimburse a party for 60-80% of the solicitor’s fees. The court may also award party/party costs as an order for ‘costs as agreed or assessed’. In those cases, parties will need to agree on a cost figure to be ordered. If an agreement cannot be reached, the matter should go to a costs assessment.

Solicitor/Client Costs

The costs that your lawyer will charge you to assist with your matter. 

Key Takeaways

Before you take any steps towards legal proceedings, you should determine with your lawyer whether you actually have a genuine claim. You should also consider the financial consequences of running court proceedings from start to finish, as each stage of litigation has its own set of expenses. If you have any questions or need assistance navigating through the dispute process, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page. 

Frequently Asked Questions

What is a costs agreement?

A costs agreement or cost disclosure includes an estimate of how much it will cost for a lawyer to provide you with legal services. Additionally, it should include how a lawyer calculates their costs and if there are any fixed costs associated. 

What does costs follow the event mean? 

This is the most common court order for legal costs. In proceedings, this requires the unsuccessful party to pay the other side’s costs.

What does costs reserved mean?

The court will not make a decision on costs at this time and will determine them later.

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