When don't costs follow the event?
Ever pondered why your successful client didn't recoup their costs? Numerous statutory and common law exceptions exist, rendering the general rule costs follow the event subject to some intricacies…
Statute
🔍 Under r63.70 of the Supreme Court (General Civil Procedure) Rules 2015, the successful party may barred from recovering the costs of unnecessary or poorly executed legal work. The costs court can even order your client to pay your (unsuccessful) opponents costs arising from unnecessary work!
Additionally, checking the empowering legislation of a court for discrete exceptions is crucial. For instance, VCAT lacks jurisdiction for third-party costs orders; s109(2). This is critical in joinder applications and other interlocutory hearings involving third parties! 🙀
Common Law
⚠️Under the common law, the exceptions are even wider. Some key examples are:
1️⃣ If the successful party only receives nominal damages; Key Infrastructure Australia Pty Ltd v Bensons Property Group Pty Ltd (No 2) (2019) VSC 763, per Robson J at [29].
2️⃣ If the relief obtained is no better than that offered at settlement; The Dempsey Group Pty Ltd v Spotlight Pty Ltd (No 3) [2019] FCA 519; per Davies J at [4].
3️⃣ If success hinges on a technicality rather than the merits; Shao v Crown Global Capital Pty Limited (No 2) [2023] NSWSC 1114, per Ball J at [15]-[16].
4️⃣ When the defendant induced the plaintiff to bring proceedings, misleading them about a good cause of action; Jones v Apps (No 2) [2009] VSC 366, per Hanson J at [17]. Interestingly, this rule extends to circumstances where the defendant has ‘taunted’ or corresponded with the plaintiff in an ‘insulting’ manner; Ritter v Godfrey [1920] 2 KB 47.
5️⃣ If the successful party deliberately incurs unnecessary expenses or burdens their opponent with unjustified costs; Keddie v Foxall [1955] VR 320, at 323-324. Some recognised examples are:
Last minute pleading amendments; Thompson v Racing Victoria (No 2) [2020] VSC 684, per Cavanough J at [19]-[20]
Trial by ambush tactics; Harrem Pty Ltd v Tebb [2008] NSWSC 510, per Palmer J at [19]
Failure to bring an obvious mistake to the opponent’s attention; Green v Schneller [2003] NSWSC 202, per Simpson J at [32]
6️⃣ If the successful party unreasonably refused ADR; Halsey v Milton Keynes NHS Trust [2004] All ER 920.
7️⃣ If misconduct occurs during litigation or its preceding circumstances; Ritter v Godfrey [1920] 2 KB 47.
8️⃣ If the successful party neglects model litigant obligations; Khier v Department of Justice and Regulation [2019] VSC 76, per Richards J at [33]-[35].
In conclusion, while the general principle dictates that costs follow the event, a myriad of exceptions lurk within both statutes and common law. Familiarising yourself with these intricacies is essential to navigate the complexities of litigation successfully. 🕵️♂️📚