Tuesday, 6 August 2013

Farewell party-party

Since 1 April 2013, the Supreme Court of Victoria has had a new costs regime.  It applies to all proceedings, even if they were commenced before that date.

It’s likely to result in more generous costs orders.  Parties currently in litigation should consider this as part of their dispute resolution strategy.

Here are the major changes to the Rules that you need to know:
  • No more ‘party-party’ costs.  Previously, there were three ways the Court could calculate the legal costs payable by a party under a costs order:
    • party-party - the default method, based on what was considered to be the ‘necessary or proper’ work for a particular case;
    • solicitor-client - costs ‘reasonably incurred and of reasonable amount’; and
    • indemnity - all costs incurred, unless unreasonable.
The new default method for calculating costs is the more generous solicitor-client basis.  This has been renamed the ‘standard basis'.  Indemnity costs may still be ordered.

This means that under a standard costs order, successful litigants will recover more of their legal spend than they would have under the old regime. 
  • Interlocutory costs are not now recoverable until the end of the proceeding (unless leave is sought).
  • A successful party with a costs order in their favour will generally be entitled to:
    • reserved costs (previously, the Court would make orders on a case by case basis);
    • the cost of an interlocutory application (previously, parties typically bore their own interlocutory costs); and
    • costs from amending a pleading (previously, the amender typically bore the cost).
The Scale of Costs is now more generous, more simplified and more in line with modern litigation practices (bad news for all the litigators out there conducting proceedings by telex). 

Five changes you might be interested in:
  • The Scale is now exclusive of GST.
  • Use of the six-minute unit. Solicitors’ time for attendances will now be claimable in six-minute units, which is the time recording system used by most private law firms (not VGSO – we only record the time we actually spend.  Crazy, we know…).  A six-minute unit is calculated at $36 plus GST per unit.  This amounts to a higher hourly rate than previously (where the amount recoverable depended on the nature of the attendance). 
  • Maximum fees payable for counsel.  Unless otherwise ordered, recovery of counsel’s fees is capped at a maximum of $5000 plus GST per day for junior counsel and $7500 plus GST per day for silks.  
  • The cost of photocopying (previously claimable at $2.30 per page) is now entirely discretionary.  The Supreme Court has indicated that copying is likely to be allowed at 22 cents per printed side of page where copied in-house.
  • The scale provides for the sending of messages that are 20 words or less by email or SMS or other electronic means.
What do you think about these changes? Do you think it will affect parties’ litigation strategy?

For more information on the changes to the Supreme Court costs regime or for advice on your dispute resolution strategy, please contact:

Andrew Suddick
General Counsel (Litigation)
t  8684 0458 m 0408 037 927
andrew.suddick@vgso.vic.gov.au

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