Considering Litigation? Consider Your Costs!

Considering Litigation?  Consider Your Costs!

As Ben Roberts-Smith’s failed defamation Claim now turns to the matter of costs, reportedly an astonishing $35 million!

Let’s take a timely look at how Costs are dealt with in the Queensland court system in the context of this high-profile federal court case.

Mr. Roberts-Smith commenced his defamation proceedings in August 2018. In March of 2020 the Defendants made a settlement offer which was rejected by Mr. Roberts Smith, the ramifications of this offer and rejection are significant.

Generally, costs follow the event, meaning that the successfully party at a trial should have the benefit of a costs order. There are two types of Costs Orders in Queensland which are provided for under the Uniform Civil Procedure Rules 1999 (UCPR), these being –

• Standard Costs under rule 702; and
• Indemnity Costs under rule 703.

For Standard Costs the UCPR sets out a schedule of fees. For instance, in the Supreme and District Court it sets a fee of $2,037 for “instructions to sue – claim and statement of claim and service”. Unfortunately for a successful party the legal fees associated with undertaking the task are usually significantly more than the schedule allows so the successful party still ends up out of pocket despite receiving a cost order.

Indemnity Costs are far more lucrative for the successful party and allow for an order that the unsuccessful party is to pay all the costs reasonably incurred by the successful party. The court will only award indemnity costs where –

• there is evidence of misconduct that causes loss of time to the Court and the other parties;
• the proceedings are commenced or defended with no prospects of success;
• the proceedings are commenced with willful disregard of known facts or established law; or
• there is an unreasonable refusal of an offer of compromise.

In the case of Mr. Roberts-Smith it is reported that he has accepted that indemnity costs will be payable for the period after the March 2020 settlement offer was made, this is because an offer was made, which he refused to accept, and ultimately the court ruled against him.

Therefore, he was unreasonable in refusing an offer of compromise. The Defendants in the case are also arguing that indemnity costs should be paid all the way back to the start of the case in August 2018 on the basis that Mr. Roberts-Smith had no prospect of success. It will now be up to the court to decide whether that was the case or not.

In litigation tactical offers are sometimes made so that the party making the offer gives themselves a good chance of receiving indemnity costs after a trial. These offers are made on a without prejudice basis, meaning they can’t be disclosed to the court as part of the trial proceedings, but can be after the trial when costs are being decided.

These offers often reference the case of Calderbank v Calderbank [1976] Fam 93, [1975] 3 All ER 333 (EWCA) which was an English court of appeal decision which established the concept that a party to litigation who does not accept an offer, which ultimately turns out to be better than what the court awards them, should be punished on the matter of costs.

It appears that the Defendants in the Roberts-Smith case gave themselves good costs cover by making the settlement offer in March 2020.

The law of Costs has many complexities and it’s important that litigants have a good understanding of how they work as often the Costs can outweigh the amount being pursued in the litigation.

Then of course, even if you get the costs order you may have trouble enforcing it, not too many people would have a spare $35 million sitting around!

September 8th, 2023, Anthony Miller.

If you are considering litigation, please reach out to the friendly team at Miller Sockhill Lawyers to discuss your options with one of our experienced Lawyers.