In the now largely litigated landscape of institutional liability claims, and with the rise of interlocutory applications and judgments, institutions should be aware of the types of costs orders that can be made by the Court over the course of litigation. Lawyers may also seek instructions as to whether to "seek costs" when responding to an application. 

In Australia's civil litigation system, the "unsuccessful" party must often pay the legal costs incurred by the other party(ies). Legal costs orders include the costs of preparation (such as drafting affidavits and submissions) and Counsel's fees. 

You may have often heard your lawyers throwing these words around when discussing interlocutory applications, trials and arguing about the costs of a proceeding. Here is a short cheat sheet. 

Costs orders we ordinarily see made over the course of the litigation include:

• Costs in the proceeding/Costs in the cause - the successful party in the proceeding will be awarded their costs.

• Costs Reserved - the Court will hear the parties on the costs related to a particular event (such as an interlocutory application) at a later stage/the conclusion of the proceeding. Costs are often reserved when, at the time the application is heard, the Court does not have enough information before it to decide how costs should be determined. 

• Costs to follow the event - the successful party at the application/hearing will be awarded their standard costs in relation to the application. 

• Costs thrown away - ordinarily made against one party where that party is responsible for an adjournment or vacation of a hearing date at short notice or on the day of the hearing, resulting in the other party having "thrown away" costs in preparing for a hearing that was ultimately adjourned or vacated.

• No orders as to costs - each party bears their own costs.

  • There are also different scales on which legal costs may be awarded or paid, commonly referred to as standard or party/party costs versus indemnity costs. 

• Standard Costs (or Party - Party costs) - includes all costs reasonably incurred and of a reasonable amount, including claims for disbursements (such as barrister and expert fees, court fees, subpoena payments, printing, transcripts etc). The amounts that can be charged for legal fees are higher at the Supreme Court than the County Court, which applies a 20% discount. 

  • Note: In Victoria, the Supreme Court has introduced a new scale by which costs are to be calculated, based on years of experience and hourly rates. This new scale commences at the beginning of 2025. 

• Indemnity Costs - can be awarded on a discretionary basis by the Court, in circumstances where a party has not acted reasonably. Circumstances in which indemnity costs may be awarded include where a party does not have a proper basis for certain allegations being made, or for pursuing a particular interlocutory application, where there is evidence of particular misconduct that results in the court and the other parties wasting time and money, where a party acts with an ulterior motive, or where there has been an unreasonable refusal to engage in narrowing the issues in dispute or resolving the proceedings and causing delay (including for example unreasonably rejecting an offer from another party made via a Calderbank Offer).