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How are party/party costs worked out?

02/08/2010

The Legal Profession Act 2004 and the Legal Profession Regulation 2005 governs the process in New South Wales for assessment of party/party costs.

A party which has the benefit of a order for costs made by a court of competent jurisdiction in New South Wales can apply for assessment  in accordance with the regulations.  There is no time limit for making the application.  A prescribed fee is payable but the Manager, Costs Assessment can waive or postpone the fee.  The Manager, Costs Assessment will refer the application to the most suitable Costs Assessor having regard to their availability, the nature of the matter, the jurisdiction in which the order for costs was made, the location of the parties and the avoidance of conflict of interests.  The Manager can revoke a referral and any such request must be made in writing setting out the reasons, which may include any of the above. Once an application is referred to a Costs Assessor,  the Manager has no further role .  Costs Assessments are conducted on the papers by the parties corresponding with the Costs Assessor as directed.

the Costs Assessor will communicate in writing with both parties at the same time to offer them a reasonable opportunity to make submissions. A party may be required to provide particulars or produce documents. The Costs Assessor receives documentation and submissions, assesses the costs and then issues certificates of determination of the costs along with a statement of reasons to the Manager, Costs Assessment. The parties must comply with any directions of a Costs Assessor who may either (1) decline to deal with the application or (2) deal with it on the information provided if a party fails to comply with directions.  Failure to comply with a direction without reasonable excuse is capable of being professional misconduct.

By virtue of section 364 of the Legal Profession Act 2004, the costs assessor will consider the same criteria in both solicitor/client and party/party assessments, namely :

(a)  whether or not it was reasonable to carry out the work, and

(b)  whether or not the work was carried out in a reasonable manner, and

(c)  the fairness and reasonableness of the amount of legal costs in relation to the work having regard to

  • the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter,
  • the complexity, novelty or difficulty of the matter,
  • the quality of the work done and whether the level of expertise was appropriate to the nature of the work done,
  • the place where and circumstances in which the legal services were provided,
  • the time within which the work was required to be done, and
  • the outcome of the matter

A plaintiff’s costs are fixed on an item charge basis by the schedules to the Legal Profession Regulations 2005 for debt recovery, workers compensation and probate actions.

The Costs Assessor will issue a “certificate of determination” which fixing the amount of the costs to be paid as the result of a court order.  He will also issue a certificate of determination for the costs of the assessment and which party is to pay those costs.  The costs of assessment are due to the Manager, Costs Assessment.  The Manager costs assessment will not usually release the determination to the parties unless and until the costs assessment is paid.  If not paid, the Manager, Costs Assessment may recover the costs as a debt. By virtue of regulation 126 of the Legal Profession Regulation 2005, the costs assessor will consider:

(a)  the extent to which the determination of the amount of fair and reasonable party/party costs differs from the amount of those costs claimed in the application for assessment,

(b)  whether or not, in the opinion of the costs assessor, either or both of the parties to the application made a genuine attempt to agree on the amount of the fair and reasonable costs concerned,

(c)  whether or not, in the opinion of the costs assessor, a party to the application unnecessarily delayed the determination of the application for assessment.

The certificate of determination is (once it is filed in the registry) taken to be a judgment of that court and bears interest in the same way as any other judgement.

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