Ashby’s Grimoire

The Legal Costs Page

Years ago when the world was young and I was green I had the pleasure of hearing a - rather agitated - fellow member of the legal profession declare to the Supreme Court Taxing Master that legal costing was “a species of witchcraft”. I liked that, but I think that my learned friend rather understated the case. Legal costing is not mere witchcraft, it is a Black Art. To many lawyers it is what the law in general is to the lay public; obscure, confusing, slightly menacing but always present somewhere in the background. There are others who dismiss the whole subject as boring (practitioners of other arcane disciplines like wills drafting) or sordid (workers in community legal services) or trivial (partners in mega-firms).

If you really have no interest in costs, stop reading now and return to my home page, but not before you’ve made a note of where to contact Ashby Smyth & Co. (see bottom of page) as a resource for the day when reality lands on your desk in the form of a Summons for Taxation.

On the other hand, if you can't resist reading on, we're all lawyers here so please first read our DISCLAIMER

Costing FAQs

Questions from readers are welcomed, just bear in mind that this site (which will be under constant construction) is intended to provide information of a general nature, not legal advice to be acted on in specific situations.

What is actually the difference between solicitor/client and party/party costs?

Everyone, even non-litigation lawyers, seems to be aware that party/party costs are those costs payable by the unsuccessful party to the successful party pursuant to a Court order or in some cases pursuant to the rules of Court. Unfortunately quite a number of practitioners have the mistaken impression that solicitor/client costs are somehow “extra”, in addition to the party /party costs. Assess the solicitor/client costs at $15,000 and the party/party costs at $10,000 and these hopeful people imagine they are entitled to total fees of $25,000!

In fact party/party costs are an indemnity - to the client, not the solicitor. They are that portion of the total costs (including disbursements) payable to the solicitor which can be recovered from the unsuccessful party. Think - Australian readers - of your Medicare rebate; the schedule rebate is to the medico’s actual fee what party/party costs is to solicitor/client costs.

Working out just exactly what the portion might be is what keeps the likes of Ashby, Smyth & Co. in business, not to mention the Supreme Court Taxing Master and an assortment of Registrars in other courts. It all comes down to the distinction between “reasonable” and “necessary”. I do not think I can do better than Malins V.C. in Smith v Buller (1875) 19 Eq., p. 475 who said that “costs chargeable under a taxation between party and party are all that are necessary to enable the adverse party to conduct the litigation and no more. Any charges merely for conducting the litigation more conveniently may be called luxuries, and must be paid by the party incurring them.”

Can I charge postage as a disbursement?

Not ordinary postage, nor ordinary phone calls. The cost of postage, the same as the cost of the envelope, is factored into the scale charge for a letter.

In fact, the practice - still far from extinct - of charging a little something for "postage, petties and sundries" has been expressly forbidden for years by the Law Institute of Victoria and there are many auditors who consequently take a dim view of any instances that they come across.

However, this prohibition only applies to ordinary postage or telephone charges. If you have to send an article by registered post or airmail, or if you make an STD or ISD call then the charges may be passed on.

Costs Agreements - News From The West

The Full Court of Western Australia has ruled that past consideration is not a bar to the validity of a cost agreement: D Angelo & Partners v Cooper (lib no 960334 ). Whether an agreement does have that effect depends on the wording of the agreement. The Court may infer from the circumstances that the parties intended to have a retrospective effect. In the Cooper case the agreement had been signed after trial. Little future work remained to be done. The Court (per Anderson J) made clear that it was not being asked to rule on whether an agreement in these circumstances was reasonable . Kennedy J was not prepared to rule on the issue as the evidence before him was not considered adequate. Rowland J followed Anderson J in principle but had doubts about the evidence in this case. More details appear in the Costs newsletter for June 1996 (Law Society of WA Perth). David Garnsworthy 15 July 1996

Are The Walls Coming Down?

The recovery of interstate legal costs has for many years been a problem. The decision of the Northern Territory Court of Appeal in Howard v Herbert can open the way to greater recovery. Gallop J held that lack of Territory qualifications was not a bar to recovery of costs relating to Adelaide practitioners. Thomas and Kearney JJ agreed. The reasons of Gallop J point out that the Adelaide costs had been paid before taxation and were therfore recoverable in any event. His Honour's reasons go much further but need to be read carefully. Note His Honour has held that Kearney Js decision in TNT Bulkships, except in regard to pre payment, was wrongly decided. Thomas J agreed with those reasons. Practitioners should also consider Minister for Works v Australian Dredging [1986] WAR 235 which appears to be to the contrary. Detailed analysis appears in Costs Newsletter no 50 available through the Law Society of WA or e-mail dgarns@lawsocietywa.asn.au.
David Garnsworthy 8 August 1996

Anyone who is at all interested in legal costs should subscribe to the Costs Newsletter, a unique publication that outstrips by a country mile the commercial looseleaf services. David scours the literature for developments in the law of costs, and provides very useful commentary. Absolutely essential for professional costs consultants!

The Bottom Line

Counsel's fees can be a problem in the County Court, particularly in personal injury matters. There are set scale fees and it can happen that fees marked, in good faith, at top scale will be well in excess of what can be recovered on a party/party basis if the Plaintiff recovers less than was expected. Furthermore, in workers compensation matters Counsel's fees are subject to the 10% reduction pursuant to the Ministerial Guidelines.

Plaintiffs in personal injury and workcare matters are frequently impecunious and may well have a "no win, no pay" agreement with their solicitors, which can lead to some awkward dickering with Counsel over the unrecoverable balance of fees.

The Gippsland firm of Simon Parsons & Co. take a direct and apparently unique approach. They endorse their backsheets in these sorts of matters as follows:

As agreed you get paid what we recover from the other side when we get paid.

We are assured that they have no difficulty in finding suitable barristers willing to accept briefs on this basis.

Oddbins

In the High Court and Federal Court (including the Bankruptcy Division) a folio still consists of 72 words, an ancient measure that no doubt is ejusdem generis with rods and perches and gills. In the Family Court and all other Victorian Courts a folio is 100 words. This might sound trivial, but it makes quite a difference in calculating the costs of something like a 50 page commercial lease.

ASHBY, SMYTH & CO.

Legal Costs Consultants

Christine M. Ashby B.Juris, LL.B
Helen E. Smyth LL.B

P.O. Box 175 South Melbourne 3205
DX 20505 Park Street/Emerald Hill
Tel: 9699-3347 (Christine)
9877-4273 (Helen)
Fax: 9696-2493

email address
cmashby@ozemail.com.au

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Last Updated: Thursday, 12 September 1996