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Legal costs
11/07/2006 The Star
ARTICLES OF LAW By BHAG SINGH
PAYMENT of legal fees and costs is always a subject of considerable interest
to the public. Having to deal with a lawyer is no longer a rare occurrence
and the subject of legal fees has become even more talked about.
Whilst in most cases it is a matter of agreement between the parties as to
the fees payable, there are also many situations where disputes arise or
there is an inability to agree.
A reader says he has come across words and phrases such as “party” and
“party costs”, “solicitor” and “client costs”. He also has come across words
such as “tax” or “taxation” and wants to know what tax has to do with a
lawyer’s fees.
The public views all payments to lawyers as being legal fees. However not
all of that may go to the lawyer. The amount paid will include out of pocket
expenses by the lawyer already incurred or to be paid by him later. In the
course of dealing with the subject words such as “party and party costs”,
solicitor and client costs,” “full costs” and “costs out of common fund,
etc” are frequently used. And these do have specially-defined meanings.
When claiming legal costs though the legal process, the manner in which this
is provided for has to be understood. There are specific provisions in the
Rules of the High Court and Rules of the Subordinate Court which set out the
basis for claiming and the permitted amounts in the respective courts. Of
course there are similar rules in the Federal Court and Court of Appeal.
It would be relevant to point out as an example that “costs” as defined in
the Rules of the High Court refer to and includes fees, charges,
disbursement expenses and remuneration. For those unfamiliar with the
system, the Rules of the High Court provide detailed guidance on how
documents are to be prepared and filed in court for commencing legal
proceedings, including the subject of costs.
For the party awarded costs, the procedure to recover these from the party
against whom the costs have been awarded, is set out in the Rules. The words
“taxation” or having costs “taxed” are used in the Rules as well as cases
when the Rules were interpreted.
However this has nothing to do with “tax” or “taxes” as these words are
commonly used and understood where the Government collects revenue through
the Inland Revenue Board. The word “taxing” means the various parties
claiming legal costs and the Court deciding the amount to be paid.
The general principle is that the party that is unsuccessful in an action
whether as a plaintiff or defendant will be asked to pay the costs. These
costs are referred to as “party and party costs”.
In the case of the High Court there is a Schedule which sets out in detail
the various kinds of work that is done or would need to be done.
Against each type of work certain amounts are provided for as the minimum
and maximum amount that could be payable. Taking into account various
aspects of the case, it is left to the officer who is assigned the task of
assessing what to allow the amount permitted.
There are certain items where no amount is stated in the rules. Here the
officer carrying out the assessment is permitted discretion to allow a
suitable sum. The officer in the High Court who attends to this assessment
referred to as “taxation” will be the Senior Assistant Registrar or the
Deputy Registrar. He/she is also referred to as the “Taxing Officer”.
On other occasions there may be a dispute between a client and his solicitor
as to the payment. Here, the way out is to have the sum claimed by the
solicitor taxed. This is done by the solicitor preparing a Bill of Costs and
submitting it to the court to be assessed for the right sum payable.
When this happens it is referred to as the “solicitor client costs” meaning
the costs payable by the client to the solicitors. When this happens all
costs will be allowed without being subject to the limits imposed in the
case of party and party cost to the extent that this is so.
For the purpose of arriving at the amount to be allowed, the court will take
into account what has been agreed to between the solicitor and the client
unless it is regarded in the circumstances as being unreasonable or
unreasonably incurred. There are also cases where an unsuccessful party may
be ordered to pay costs on a solicitor and client basis. This requires a
specific order to be made.
But once such an order is made the unsuccessful party will be entitled to
costs not only on the basis of the stipulated amount but what such party has
paid his/her own solicitors even though it may have been excessive.
However, this is subject to the qualification that the amount is reasonable
and the expenses not unreasonably incurred. Such an order will only be made
where there are circumstances which justify a more onerous obligation being
placed on an unsuccessful litigant.
Quite apart from circumstances and conduct of the party against whom the
order is made, it may be that such a party has contractually pre-agreed to
shoulder this increased burden.
Most agreements contractually provide for the customer to pay the legal
costs on a solicitor client basis in the event of default. And invariably
all customers agree. |
