Costs orders - who pays the costs of legal proceedings?

Date: Aug 25, 2014
Document Type: Article

The Court has power under Section 98 of the Civil Procedure Act 2005 to determine by whom, to whom and to what extent the costs of the proceedings are to be paid.

Ordinarily, costs follow the event which means the unsuccessful party pays the costs of the successful party.

Uniform Civil Procedure Rules (UCPR) 42.1 provides that as a general rule, costs follow the event.

Subject to this Part, if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs.

The consequence of this rule is that successful litigants receive their costs in the absence of special circumstances justifying some other order.

Success is defined by reference to the event.

The “event” extends to any disputed question of fact or law and the notation is not limited to issues in the technical pleading sense.  

Once the successful party has been identified by reference to an event, the “competing position” is that it is ordinarily appropriate to award the costs of proceedings to the successful party without attempting to differentiate between the particular issues on which it was successful and those on which it was not.

The usual rule may be departed from if a particular issue or group of issues in which the successful party failed was clearly dominant or separable. 

The usual rule may also be departed from where the matters upon which a party was unsuccessful took up a significant part of the trial, either by way of evidence or argument.

A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may also be ordered to pay the other parties costs of them.

The demands of the community for greater economy and efficiency in the conduct of litigation may be reflected in a qualification of the presumption that the successful party is entitled to all its costs.

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