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Courts and Tribunals Tasmania

Lawyers’ Costs

Unlike fees charged by other professions, fees to lawyers are regulated by Acts of Parliament or Statutory Rules. Courts have exercised control over solicitors and their costs for many centuries.

What Are Costs?

Legal costs are the remuneration of a solicitor for legal work. There are two primary categories of costs:

"Solicitor - Client Costs"

These are the costs charged by a client for professional work. They usually relate to a retainer (also known as a "Costs Agreement") between the solicitor and client. See the Legal Profession Act 1993, s.143A(1).

Section 135 of the Legal Profession Act provides that an itemised bill of costs claimed or recovered by a legal practitioner is subject to taxation by a taxing officer.  In the Magistrates Court of Tasmania, different terminology is sometimes used ie. "assessment" of costs is used instead of "taxation" of costs.

On a taxation/assessment between solicitor and client all the costs are allowed if they are reasonably incurred, unless they are incurred without the approval of the client. Unusual or unnecessary costs or expenses incurred when the client has not been expressly warned that such costs might not be allowed on taxation will not be allowed.

The itemised bill of costs sought to be taxed may not relate to a litigious action and may relate to a conveyancing or commercial matter.

"Party - Party Costs"

In most litigation the unsuccessful party is required to pay the successful party's costs. These are called "party and party" costs, and are covered by a scale of costs prescribed in legislation:

· Magistrates Court (Civil Division) Rules 1998 - Part 9 and Schedule 1.

· Supreme Court Rules 2000- Part 34, Schedule 1

These Rules are available on the Tasmanian legislation website at: http://www.thelaw.tas.gov.au/

In some cases, the Magistrates Court may order that a different scale of costs (or a percentage of another scale) will apply eg. that the successful party recover their costs at the rate of a nominated percentage of the Supreme Court scale.

If the losing party considers the successful party’s lawyer’s bill of costs to be excessive, they may ask for it to be assessed (or "taxed") by a taxing officer within the appropriate jurisdiction, eg the Magistrates Court, or the Supreme Court, and the costs scales above will apply. However, the losing party must notify the Court within 21 days about which items in the bill are opposed, and the basis upon which they are opposed (see Magistrates Court (Civil Division) Rules 1998 r.147).

Global Costs vs. Activity costs

The cost scale in the Magistrates Court (Civil Division) Rules 1998 is structured to cover aggregated stages of the litigation process ie. they are "globalised" to cover certain areas of activity (eg. all litigation work undertaken until initiating a Claim is payable by the losing party at 4% of the Judgment amount in a routine matter).

By comparison, the cost scale in the Supreme Court Rules 2000 is structured on an individual activity basis eg. writing a letter, attending a client for initial instructions, drafting a Writ, filing the Writ in the Court registry etc.

Cost Penalty Rules

The Magistrates Court (Civil Division) has a number of cost penalty rules that are designed to penalise a losing party who has been unreasonable in the settlement negotiations that form part of the conciliation process in civil disputes: see Magistrates Court (Civil Division) Rules 1998 r.141, 142, & 143.

Form Of Bill Of Costs

The bill of costs is to be prepared on the approved Form with columns showing the date, the number of the item, the particulars of the services, the disbursements and the professional charges. The bill should describe the professional work done in sufficient detail that its character and purpose are clear. Disbursements are those charges paid out eg. the cost of a medical report.

A party who objects to the amount of a bill of costs must file a written Notice of Objection at the Court (within 21 days after receiving a bill of costs from the successful party) listing the items in the bill to which an objection is taken, and the reason for that objection.

Items Within The Bill

The following is a list of items highlighting some matters in the scale where difficulties have arisen on taxation or assessment :

  • Instructions

This item includes obtaining sufficient information to commence the action. It is also to compensate a solicitor for planning, thought, consideration, anxiety and risk, skill and responsibility

  • Drawing Documents

A "folio" is 100 words or numbers. It should also be noted that drawing is not the physical act of putting pen to paper. It is the application of the solicitor's mind to the preparation of the particular document necessary for the problem at hand.

  • Attendances

Under the Supreme Court scale, attendances are divided between solicitor's attendance and clerk's attendance and a distinction is made between proper and formal attendances. The rate (as at mid-2005) for a proper attendance of a solicitor varies between $67 and $200 per hour, depending on the nature and complexity of the action and the seniority of the practitioner involved.

  • Correspondence

A distinction is drawn between different categories of correspondence. For example, a "formal" letter usually contains simple information and is usually very short eg. acknowledging receipt of another document.  An "ordinary" letter contains more detail and information, and is therefore usually longer.  A "special" letter contains complex advice in which the solicitor has applied exceptional skill and legal knowledge.

  • Instructions for Brief

This item is discretionary and compensates for other work, not previously charged for, undertaken in getting the matter ready for trial. It might include all items of work performed by way of research, briefing witnesses, inspection of documents and other attendances.

  • Barrister’s (or "Counsel's") Fees

There is no scale rate for counsel (even where the solicitor is acting as counsel). The fees allowed for work as Counsel are determined by the taxing officer's assessment of the complexity of the issues in the case, the seniority and professional experience of the barrister, and the value of the counsel work performed.

Taxation

The "taxation" or "assessment" procedure at which the successful party's costs are checked by a Court Officer involves:

  • the parties attending a costs hearing at the Court before a taxing officer, or assessment officer;
  • objections to specific items being determined; and
  • an order being made on the total costs and out-of-pocket expenses that are to be paid by the unsuccessful party to the successful party.

 

Costs Of Taxation

In taxations arising from litigation before the Court the party chargeable must pay the costs thereof. These costs include the costs of drawing the bill, the application for an appointment, any necessary additional copies of the bill, the attendance on taxation and any taxation fees payable.

If the bill is reduced by one-sixth on taxation, the successful party’s lawyer may not be able to recover his/her costs for attending the taxation (including preparation of the bill) unless the taxing officer determines otherwise. Also, the taxing officer may in his discretion allow the unsuccessful party to recover costs for preparation and attending the taxation.

Review Of Taxation

Any party who is dissatisfied with a taxation may apply to the taxing officer to review those items objected to prior to a final certificate being issued (the certificate is not issued until the expiration of 48 hours after the taxation). The party objecting must lodge a list of the items objected to and the grounds and reasons for the objection. At the review the taxing officer may hear further evidence and issue his reasons in written form. If the party objecting is dissatisfied with the review he may apply to a Magistrate within ten days for an order to review the taxation.

Taxing Officer's Discretion

The guiding principle in all taxations is that the taxing officer shall allow all such costs, charges and expenses as shall appear to him or her to have been necessary or proper for the attainment of justice and for maintaining or defending the rights of any party.