Can I recover legal costs if I win in Court?

If you win in Court, then the general rule is you will have your costs paid by the unsuccessful party. Furthermore, the unsuccessful party will bear their own costs. While that may sound great, it does not mean you will get all your legal costs paid by the unsuccessful party.

There are two types of cost orders that can be granted:

• Standard Costs

• Indemnity Costs

What are Standard Costs?

Usually, costs are ordered on a standard basis.[1] This means you may expect to receive around 60% of the legal costs that you incurred..

The rationale for ordering costs on a standard basis is that a case is more likely to settle if both parties know they will be left out of pocket should the matter proceed, even if they go on to win their case or successfully defend the case against them. In this way, parties are encouraged to settle their dispute prior to trial.[2]

However, to maximise your recovery of costs, you should seek an order that the other side pay your costs on an indemnity basis.

What are Indemnity Costs?

Indemnity costs should cover you for virtually all of the costs that you have incurred since issuing the court proceeding.[3]

A court will only make an order for indemnity costs in certain circumstances. For example, this can include when a litigant commences proceedings with a wilful disregard for known facts or clearly established law.

What are Calderbank Offers and Offers of Compromise?

The most certain way to obtain an order for indemnity costs is to make an Offer of Compromise,[4] or a Calderbank letter.[5] If your dispute is a simple question of how much money is owing, then an offer of compromise should be the simpler option compared to a Calderbank letter.

If you make an offer of compromise and it is rejected by the other side, you may be entitled to a more favourable costs order if the court’s determination is more favourable than the offer you made.[6]

The rationale behind these courts rules is to reward litigants who make reasonable offers to settle, and to punish litigants that cause unnecessary costs to be incurred by rejecting reasonable settlement offers.

Therefore, the morale of the story is that it pays to make an early offer; even if you think the other side will not accept it.

How Can DSA Law Help?

If you are seeking advice regarding your legal dispute and believe you could benefit expert legal assistance, please Contact Us or one of our Commercial Lawyers at DSA Law on (03) 8595 9580.

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[1] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.30.

[2] Ugly Tribe v Sikola (2001) VSC 189 [10]. 

[3] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.30.1.

[4] Ibid r 26.02.

[5] Calderbank v Calderbank (1975) 3 Al ER 333

[6] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 26.08.