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Costs Orders (NT)

A “costs order” is a court order that specifies who must pay the legal costs associated with a legal proceeding. In the Northern Territory, costs orders are regulated by both legislation and court rules, including the Local Court Civil Procedure Act 1989 and the Supreme Court Rules 2008. This article explains the use of costs orders in the Northern Territory.

Costs Orders in the Northern Territory

The general rule in civil litigation is that costs follow the event. This means that the successful party in a hearing can usually expect their legal expenses to be covered by the unsuccessful party. However, this varies according to many factors and due to specific legislation and regulations. The High Court of Australia has made clear that a judge can ignore the costs follow the event rule and deprive the successful party of their costs (see, for instance, Austen v Ansett Transport Industries (Operations) Pty Ltd [1993]). An unsuccessful party can also apply for a reassessment of a costs order.

Applying

In civil litigation, one or both parties can apply for a costs order to recoup their legal expenses. Most commonly, the parties file evidence and make submissions about what costs are appropriate at the conclusion of the hearing. The stages when these orders are typically made are:

  1. at the commencement of a case;
  2. after a final determination on a pertinent issue of law;
  3. with Notices of Motion or applications for interlocutory relief;
  4. if the trial is adjourned or aborted;
  5. after the hearing, or pending appeal; and
  6. on appeal.

The judge or magistrate is not obligated to make an order at the time of the application, they can make a determination when he or she deems it appropriate.

The magistrate or judge decides whether a costs order is appropriate given all the circumstances of the case. The court makes a decision based on the facts of the case, the applicable legislation and the conduct of the parties during the proceeding. The court has unfettered discretion in relation to costs unless there is an applicable statutory provision. The parties to the proceeding have no say over who is entitled to costs. However, principles of proportionality apply.

Different types

The court can make several different types of costs orders. Ordinary costs are designed to compensate a successful party for having to defend their rights through litigation. This is the most common type, with the successful party receiving around 75% of their total incurred costs. Alternatively, the court can decide that given the circumstances, one party should pay almost all the costs incurred by the other party, or “indemnity costs”. Indemnity costs are most often awarded when a party has proceeded with litigation with no real prospect of success, or when they have otherwise abused the court process. The court may also order indemnity costs against a party who refuses to accept a reasonable offer to settle before judgment.

Supreme Court Costs Orders

A defendant needs to be careful when rejecting a settlement offer from a plaintiff in a Supreme Court of the Northern Territory case. If the defendant does not accept a reasonable settlement offer and the verdict is less favourable than the offer, the plaintiff is generally entitled to a costs order against the defendant on an indemnity basis.

If the plaintiff rejects a defendant’s compromise offer and receives a less favourable verdict, then the plaintiff is only entitled to a costs order up to the date of the offer on a standard basis. The defendant is entitled to a costs order on the standard basis from the day after they made the offer.

Whether or not the party has the resources to pay the costs is not a factor for the court to take into account in making a costs order. In Northern Territory v Sangare [2019], the High Court considered whether a costs order should have been made after the Supreme Court and Court of Appeal dismissed a defamation claim against the Northern Territory government. Although the appeal was unsuccessful, the Court of Appeal declined to order Mr Sangare to pay the respondent’s costs because his impecuniosity would likely make the order futile. The Northern Territory government successfully appealed this decision to the High Court. The High Court found that while costs orders are under judicial discretion, futility is no reason not to make them. They provide an avenue for the successful party to recover their expenses. They also provide a deterrent to the applicant themselves and other litigants without funds who might bring nuisance suits. Also, if impecuniosity is a determinative factor, the courts will be burdened with the task of establishing the relative wealth of the unsuccessful party.

Go To Court Lawyers can provide legal advice or representation on any matter. Please contact the team on 1300 636 846 for advice on costs orders in the Northern Territory.

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Author

Nicola Bowes

Dr Nicola Bowes holds a Bachelor of Arts with first-class honours from the University of Tasmania, a Bachelor of Laws with first-class honours from the Queensland University of Technology, and a PhD from The University of Queensland. After a decade of working in higher education, Nicola joined Go To Court Lawyers in 2020.
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