When it comes to legal costs, particularly within the realm of litigation, there is a general misconception surrounding this topic and the practicalities of how it actually works and is applied in practice. Considering the expensive nature of litigation in general and the fact that whether you are the enforcer or on the receiving end of a legal suit, legal costs would be an inevitable factor to consider and thus having a basic understanding of the various concepts may prove beneficial should you ever find yourself being a party to litigation in the future.
Costs awarded to the successful party:
Within our legal system, the general principle is that the court hearing the matter will award the costs of the suit to the successful party. Contrary to popular belief, this does not mean that the unsuccessful party will simply pay all your legal fees — it is not so straightforward unfortunately. There are particular tariffs and scales which the court use to determine the value and/or cost of specific legal services performed throughout the legal suit and which costs can be recovered from the unsuccessful party. This however, does not directly correlate with the fees you pay your attorney for performing those particular legal services and as a result, you are not able to recover all of the fees you paid your attorney and end up having to carry the difference. In simple terms, your attorney will charge you an agreed upon hourly rate for any work performed on the matter, which would be stipulated in the fee agreement concluded between yourself and your attorney at the outset of the matter, but that hourly rate generally far outweighs the values provided for in the tariff scales which can be recovered from the unsuccessful party — resulting in a situation where you are unable to recuperate all of the funds you have paid towards legal fees.
Different cost scales:
There are also different tariff scales to be used depending on the value of the claim as well as the particular court you find yourself litigating in. The Rules of Court set the tariffs applied to Magistrate’s Courts and make provision for four (4) scales (A through to D) based on the value of the successful claim. Scale D allows the highest proportion of legal fees and/or costs to be recovered. The High Court and Magistrate’s Court also utilise different tariff scales with the High Court scales allowing for a much greater proportion of legal costs to be recovered as opposed to the Magistrate’s Court scales. The High Court scales also make provision for advocate fees whereas the Magistrate’s Court scales do not, unless specifically ordered by a Magistrate.
Different cost orders:
Party and party costs: this is the scale of costs most often awarded by a court and comprise of costs incurred in the course of prosecuting or defending a claim in court. These costs are also specific to the actual court case and do not include any costs related to attendances between you and your attorney. Party and party costs are also the least punitive cost scale available.
Attorney and client costs: these costs are essentially party and party costs but include some charges for attendances between you and your attorney. This is a more punitive scale and is not regularly granted by courts save for particular circumstances such as: if there is a clause in a contract which makes specific reference to attorney and client costs (although this is not always observed due to the courts discretion in this regard), or if the court is unhappy with the conduct of one of the litigants and believes that a punitive cost order is warranted and/or appropriate.
Attorney and own client costs: this is the most punitive scale available and entails the actual fees payable by you to your attorney, as per the hourly rate specified in the fee agreement and agreed to between you and your attorney. These costs are very seldomly granted by courts and arise only in the most exceptional circumstances.
Enforcement of cost order:
If you have been successful with your case and the court has awarded you the legal costs (cost order), a bill of costs will have to be drawn up and taxed by the Taxing Master (court official) before it can be enforced and/or executed. This process is known as taxation and involves the Taxing Master determining which costs you will be allowed to recover from the unsuccessful party. Once the bill of costs has been taxed, and in order to recover the legal costs due to you from the other party, you are entitled to enforce and/or execute same as if it were a Court order.
Conclusion:
Please note that this article is not legal advice and is not intended to be a full or comprehensive guide to legal costs, but rather a very broad summary in order to provide you with some insight and a basic understanding of the topic. Should you find yourself contemplating litigation, or should it potentially be on the horizon, we strongly recommend contacting our team and consulting an attorney to obtain the best possible advice.
Article by Liam Labuschagne