Reflecting on the legal costs

THE word costs comes into play when a dispute is anticipated or arises and lawyers have to be consulted or engaged. It is about payment of fees.

The Dictionary of Law by L. B. Curzon says a dispute exists whenever one party to a contract requests something from the other party under the terms of their contract and that request is not complied with.

Many people only consult a lawyer when they have already decided to go to court or when a Writ of Summons is served on them and they don’t know what to do. In the meantime, things may have been done or said which could be detrimental to them.

A person should consult a lawyer at the stage a dispute is seriously anticipated, so that the person could be guided to ensure that he does not innocently say or do something which could prove to be prejudicial or damaging as the matter develops.

However, in many cases until the very end when it is inevitable, many people are reluctant to meet a lawyer.

This is very unfortunate. Not every lawyer will present a big bill. One could always ask a lawyer in advance as to what the fees would be.

Some lawyers may even not charge for an initial consultation. Others may state a fee that the person concerned may feel comfortable with.

Others may mention an exorbitant amount. However, the individual has a choice whether to consult the lawyer or not.

In the arena of civil law and matters, costs fall into different categories once litigation commences.

One clear aspect is that the client has to pay his own lawyer. This is something agreed between the lawyer and the client.

Such costs are referred to as Solicitor Client costs.

Of course, when involved in litigation, liability in terms of costs is not limited to the payment of one’s own costs. If a party is unsuccessful it would also, in addition to meeting the Order made against it, have to pay the legal costs of the successful opponent.

Sometimes a person may have a claim that may be a good claim, meaning that the chances of being successful are very good and even guaranteed!

Such people sometimes think that they would not have to pay the legal fees because the other side will have to pay their fees. This is not exactly the case.

The reason is that the costs which the Court may award to the successful party will often not equal what that party has agreed to pay its own lawyers.

The costs awarded to a successful party against an unsuccessful party are referred to as “party and party costs”.

Therefore if the party and party costs are less than the Solicitor and client costs, the successful party will have to pay the difference to its own lawyer, which in some instances could be substantial.

However, there are instances where it may be provided in a contract that the costs of the successful party shall be paid on a Solicitor and client basis. Such clauses are mainly found in contracts where one party is in a stronger position and is able to make the other party agree to such a clause.

That does not mean that whatever the successful party has agreed to pay its own Solicitors, the unsuccessful party must necessarily pay.

The unsuccessful party is entitled to expect that even though the costs have to be paid on a Solicitor and client basis, such costs are reasonable.

Unless the costs are immediately fixed by the court, then unless the parties can agree as to what is to be paid, the party can ask the costs to be taxed – meaning, assessed by the Court.

Otherwise, in the case of litigation and contentious matters, Order 59 Rule 7 (1) of the Rules of Court governing procedures in the High Court and the Subordinate Court provides that “the Plaintiff costs may be dealt with by the court at any stage of the proceedings or after the conclusion of the proceedings ...”

But what criteria is to be used in the award of costs? This is provided for in the same order by Rule 8:

“The Court in exercising its discretion as to costs shall, to such extent, if any, as may be appropriate in the circumstances, take into account any offer of contribution or offer of settlement, the conduct of all the parties, including conduct before and during the proceedings, the conduct of the parties in relation to any attempt at resolving the cause or matter by mediation or any other means of dispute resolution and in particular, the extent to which the parties have followed any relevant pre-action protocol or practice direction for the time being issued by the Registrar.”

There are cases where the Court may decide that there is to be no Order as to costs. This will mean that each party will end up paying its own costs of the proceedings.

However, the general rule is set out in Order 59 Rule 3 of the Rules of Court: “If the Court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings, the Court shall, subject to this Order, order the costs to follow the event, except when it appears to the Court that in the circumstances of the case some other Order should be made as to the whole or any part of the costs.”

This means that unless there are express and specific reasons why an Order for costs should not be made, the successful party should receive the costs.

Any comments or suggestions for points of discussion can be sent to [e-mail]. The views expressed here are entirely the writer’s own.