By Ravi Nanga
IN the past we looked at what was required to commence an action and what was to be expected once an action was filed in court, up to obtaining judgment.
From the time a pre-action protocol letter is written, the Civil Proceedings Rules are invoked. These rules contain a comprehensive code that prescribes what is required to be done in order to commence an action, the managing of the matter through the courts up to trial and judgment, and how a person can enforce a judgment.
Once an action is filed in court, these rules provides a step by step guide as to what is required to be done by the parties to the action and what are the powers of the court.
These rules came into force in September 2005 and replaced the previous Rules of the Supreme Court 1975.
The Civil Proceedings Rules are laid out in a more user friendly format than the rules that it replaced and was drafted in that way so as to allow lay persons to better understand the court process.
In addition to being more user friendly, another benefit was to change the manner in which legal costs were awarded, and under the Civil Proceedings Rules, in the case of most routine matters, the parties will know up front what will be their exposure to legal costs, that is, how much costs will be payable to the other party at the end of the matter.
It must be emphasised that the method of calculating costs under the rules is separate and apart from the question of your own legal costs that you have to pay your own attorney, and that will be a private arrangement between you and your attorney.
The costs provided for by the rules are those costs that the court will award to either party depending on the outcome of the matter.
Further, it is possible that the costs that can be awarded by the court will not be the same as the costs that you may have to pay your own attorney so that there is the possibility that you will not be able recover all the costs that you have expended.
In most cases where the claim is quantified, that is, a specific sum of money is being claimed, the normal way of calculating costs will be on the prescribed scale.
What this means is that if a party claims a sum of money, is successful in the matter and obtains judgment, the defendant, in addition to having to pay the claim, will also normally be ordered to pay that party’s costs on a prescribed basis. In the rules, there is a schedule of costs by which the amount of costs can be calculated based on a scale.
That is, the amount of costs that will be awarded will be a percentage of the sum that is claimed and there is a formula that is used to calculate the costs. In cases where there is no fixed sum being claimed, a party can apply to the court in order to fix a value to the claim for the purposes of calculating costs.
Since the parties will know at the start of the matter what will be the likely prescribed costs, if they are of the view that the complexity of the matter warrants a greater sum in costs, at the first hearing of the matter they can apply to fix a costs budget. That is, they can estimate the amount of work that will be involved in doing the matter, and apply to the court for a higher sum than what will be recovered on the prescribed scale.
Once the court is satisfied that the costs budget is warranted, the costs budget will be fixed. That is a sum that represents the maximum amount a party may be ordered to pay as legal costs to the other party.
It should be noted that although a party may apply for a certain budget, the court has the power to increase or decrease that sum in fixing the budget. The reason why a party must make such an application at the first hearing of the matter is in keeping with the costs regime, so that the parties will know up front, what is their exposure to costs will be. Even where a costs budget is fixed, it should be noted that the court has the power to order a lesser sum at the end of the matter.
Further, given the fact that the party applying for the costs budget may end up being liable for those costs, before applying to fix a costs budget, that party must consent to the application being made.
Where there is a costs budget, if the person who applied for the costs budget is unsuccessful in the matter, that person can be liable to pay the budget that was fixed, to the other party.
It should also be noted that there are certain types of matters where the quantum of costs is determined at the end of the matter.
In such cases it will be for the court to assess an appropriate sum in respect of costs, depending on the complexity of the matter and the amount of work that was reasonably done through-out the matter.
Although usually the successful party is awarded their costs, it is ultimately up to the court to decide who should pay costs, and the powers of the court are so wide that the court can order a successful party to pay the unsuccessful party’s costs. When it comes to the question of legal costs, it will be for the court to ultimately decide which party is liable to pay costs to the other party. In appropriate circumstances, a court can decide that each party should bear their own costs, so that the court will make no order as to costs. When that occurs, the successful party will not be able to recover any legal costs from the other party
The benefit of the system of quantifying and awarding costs under the Civil Proceedings Rules is so that the parties can know up front what their potential liability is so that they will be in a good position to decide whether it is worthwhile to proceed with their court action.