During consultations, clients regularly raise the point that they feel the opposing side should pay their legal costs as this is only fair and/or the other party has no valid claim. The issue of legal costs is by no means a matter of logic as many laymen believe it to be.
There is nothing obvious about costs and a court is to apply its mind to the question of costs as much as it is to apply its mind to the merits of the matter. In some types of disputes, the courts generally grant the successful party a cost order against the unsuccessful party. In other types of disputes, the success of a matter has no bearing on the costs incurred and instead the court has to apply certain legal principles to decide the issue of costs.
Generally-speaking, in criminal matters an accused pays his or her own legal costs throughout the entire criminal trial even if the state does not succeed in prosecuting the accused person. In civil matters, the issue of costs is a complex legal issue that requires written (heads of argument) and verbal arguments by both legal teams involved in a dispute. Just as the legal teams are to argue the merits of the matter, in the same manner they need to specifically address and argue the issue of costs.
The following are some examples of cost orders:
- Costs awarded to the party that succeeds in the matter: the successful party obtains a cost order against the unsuccessful party;
- Costs de bonis propriis means the opposing party’s costs are to be paid by an attorney based on the fact that the attorney substantially deviated from what is expected from him/her as attorney;
- No cost order: each party to pay their own legal costs.
Should you succeed in a civil claim and should the court award a cost order against the other party, there is another distinction to grasp: costs on an attorney-and-client scale versus costs on a party-and-party scale. Clients assume that if they succeed in the matter with a cost order against the other party they can claim back 100% of the fees spent during the matter. This is only the case if the cost order is granted on an attorney-and-client basis (which is rare). In most cases, even if you win the matter you only receive costs on a party-and-party scale.
Party-and-party costs are considered necessary costs and are determined by the Court Rules in terms of its necessity and in terms of the tariffs associated with the necessary steps, e.g. a first consultation is considered necessary and the prescribed rate of the consultation is and (for argument’s sake) set at R1 000.00 for an attorney. Attorney-and-client costs are agreed to between the attorney and their client, e.g. a client agrees to pay their attorney R1 200.00 per hour plus VAT for all time spent on the matter.
Should the client therefore succeed in the civil matter, with a cost order on a party-and-party scale, he or she cannot claim the entire R1 200.00 plus VAT for the first consultation from the other party but can only claim R1 000.00 as prescribed. The R368.00 difference came from the client’s pocket even if they won with a cost order against the other party.
Labour disputes are a different kettle of fish. Cost orders in labour matters are granted on the basis of fairness and law. The Labour Court should specifically apply its mind in respect of the law and fairness to determine a cost order. The successful party in a labour dispute is not to assume a cost order in their favour as is mostly the case in (non-labour) civil matters. In the matter of MEC KZN v Dorkin (2007) the principles of law and fairness pertaining to cost orders in labour disputes were set out. The Constitutional Court case of Zungu v Premier KZN (2018) reiterated the principles set out in the Dorkin matter.
A unique type of dispute is a Rule 43 application. During divorce proceedings, a party may approach the court (more than once) for interim maintenance or interim rights & responsibilities over minor children whilst the divorce itself is ongoing. The party bringing the application may also decide to claim a contribution towards their legal costs from the other party. This is exceptional as other types of disputes or court applications do not make provision for an interim claim to legal costs from the other party as a Rule 43 application does.
The party claiming a contribution to their legal costs should justify the costs they envisage and also claim that they cannot afford such costs, e.g. a trial will run for at least three days, a forensic auditor will be required to assess the finances and the advocate and attorney fees for the trial and preparation for trial are valued at a certain amount. The claimant cannot afford the costs as he or she only earns a small salary.
The rationale behind a claim for contribution to legal costs is that the party claiming must be in a position to adequately present their case before a court and costs may not become a hurdle to such adequate presentation. The court will only order a contribution towards costs insofar as what is considered needed to be spent, not what the claimant desires to spend on legal costs. The scale on which litigation is required is considered to determine a reasonable contribution to costs. The emphasis is on the fact that only a contribution is expected to costs, not for one party to pay the other party’s costs in its entirety.
From the above, one can see that legal costs are not a simple or merely a logical issue but require some preparation by both legal teams. As a client, it is wise and responsible to ensure that you and your attorney agree to an acceptable hourly tariff, to prepare monthly invoices and to discuss advocate tariffs in order to ensure you are not caught off-guard by the costs of litigation whilst the matter is ongoing.