Once upon a time, courts expected the parties to make all their submissions about costs and orders at the trial or hearing. Costs would be dealt with on the spot in an oral decision or in the reserved judgment. There was no expectation of a second hearing.
The trend in the last 20 or so years has been for parties to ask for time to consider the court’s reasons and take instructions before making any submissions about costs. The expectation now is that there will be further written submissions and that about a month later there may be a second hearing on costs alone.
“So, the parties are incurring more costs fighting about costs,” despairs one innovative judge who is about to commence an experiment in his court to change this process.
Justice Thomas Bradley, appointed to the Supreme Court of Queensland in 2018 will soon trial a novel approach in his court. He will decide costs within the one hearing.
“The simplest way to start is in a supervised list with the usual trial preparation directions. In this form it would be a suggestion to the parties and the supervising judge. The suggested direction could be that a party must give written notice to the court and to each other party if the party intends to contend for an order other than the usual order that costs follow the event. The notice must be given before the trial or hearing commences. If no party gives notice, then no party may make submissions for a different costs order without leave of the court, and the court may proceed on the basis that all the parties are agreed that costs should follow the event.”
“That would probably avoid later submissions about costs in most cases. I think that would be a considerable saving to the parties and to the court.”
In addition, “the psychology might work well too. Heading into a trial, parties should have informed views of their prospects. They have the whole of the dispute in mind. After a judgment, there can be a tendency for successful parties to maximise the win by chasing indemnity costs, and for unsuccessful parties to try to extract tiny victories on costs to compensate for their substantive losses.”
Likely response
However, there may be some clients who will always say “no, we want to have a separate argument about costs”, but they will have at least turned their mind to it an early point in time, says the judge.
“I would think for the vast majority of cases they won’t say that they want a special costs order and that will be much more efficient in the general system. Judgments will include costs. There’ll be no later submissions, no later consideration, no separate judgments on costs.”
So, instead of expecting 50 pages of submissions about costs and orders from counsel who will sometimes allocate individual costs to each analysed issue, “We’re just expecting something that’s very simple and direct,” explains the judge.
One of the benefits may also be to create an opportunity for a dialogue between the lawyers and the client about costs before the trial or hearing. “That helps the client’s thinking about the matter. The clients should have a more nuanced and fuller view of what’s going on. It probably assists the process of resolving disputes as well.”
Why two hearings?
Justice Bradley explains how the doubling up of hearings has developed.
“We’ve just fallen into a habit of not thinking about costs orders until after the principal decision is made. Then when the parties know the outcome, they get into this pattern. If you’ve won, you want your costs, all of them.
“And if you’ve lost, you want to try and reduce some of the costs that you have to pay.
“So, you have this second argument about it. Sometimes if you win well, then you say ‘I’d like my costs on a higher standard. I’d like it to be on an indemnity basis or some more stringent basis’. But nobody turns their mind to those arguments typically until after the main result has come.”
The judge doesn’t think this delay is part of a strategy by the parties.
“My sense of it is that because we’ve now had a long period of time in which people are used to the idea that counsel doesn’t turn up to collect the judgment, a solicitor or a law clerk turns up and collects it. Counsel assume they will have time to think about and write submissions on costs.
“Because we’re in that habit, that’s what everybody’s expecting. The habit is more costly for clients. It takes up additional court resources. For the most part it makes little difference to the result.”
Attempts to address the issue
Given that this is a problem that is common to all jurisdictions that award costs, the judge cites efforts to encourage agreement on costs orders. These include giving an embargoed copy of the judgment to the parties before the judgment is formally handed down, so they can prepare their costs arguments to coincide with the final judgment for consideration by the judge.
However, “the cure for it has not really worked,” says the judge, as counsel have continued to ask for more time to make their submissions to be heard at a second hearing.
Weighing up the benefits
On balance, the benefits that this new experiment could bring are compelling.
“The question is whether the search for a perfect costs order for each matter is increasing the cost burden on parties in matters generally, and whether that’s a good thing, an efficient thing or an inefficient thing and a bad thing. It’s whether the search for the perfect is driving out what would be a good result,” Justice Bradley reasons.
“So my thought is, if arguing about what should be the perfect costs order means that for any given matter parties incur increased costs, is that increased cost worth it? Is it an efficient use of the parties’ resources and is it an efficient use of the courts’ resources and so the public resources?
“In the vast majority of cases, the answer is the additional time and resources spent on perfecting a costs order are not worth it. Most applications for indemnity costs fail. So do most applications for ‘issues-based’ costs orders.”
In querying the benefit of holding a separate hearing for costs, his view is clear.
“What’s the net benefit to the parties, to the public cost of the courts? Does that benefit make the additional cost justifiable? The practical answer seems to be that the present tendency results in unnecessary expenses and delay.”
“I don’t want to say this is the answer, but I think it might be useful to say we should have a discussion about it.”
It’s literally about time.
