Litigation can be an expensive process and any costs orders can impact the total financial outlay of the litigative process. If a costs order is in your favour, this can reduce your expenses. If it isn’t – this can potentially increase them substantially. So what’s the difference between party costs and indemnity costs? And what about client and solicitor costs?
Client and Solicitor Costs
A client and practitioner may enter into a written agreement as to the costs to be charged for work done. An agreement may be varied or cancelled if a Court determines that the amount of agreed costs is unreasonable. (SOURCE: Wa.Gov.Au 2024)
Client and solicitor costs are different to party costs and indemnity costs. They’re essentially the legal fees charged by your solicitor to engage them for their legal services. When a successful order for party costs is made to a litigant, this usually covers a significant amount of the client and solicitor costs charged but not all.
Party Costs
Party costs are those costs which a court may order one party to litigation to pay another party, usually against the unsuccessful litigant. The court may fix the amount of costs it orders one party to pay to the other or the amount of costs may be assessed by a taxing officer by reference to the relevant scale of costs. (SOURCE: Wa.Gov.Au 2024)
Indemnity Costs
An order for indemnity costs involves an extra payment on top of the reasonable costs of running a case. They are higher than standard costs and granted in exceptional circumstances usually after a losing party has refused settlement or abused the litigative process in some capacity.
High-Profile Cases and Indemnity Costs
In 2014, 60 Minutes aired an episode titled “Forced Marriage: An Extraordinary Story of Kidnap, Survival, Escape and Hiding.”
It shared the story of Rania Farrah and how she had been kidnapped to Syria by her family (her parents Mouhammad and Pamela Tabbaa), held against her will there and forced to marry a cousin 15 years her senior. When she was 18 years old she was able to escape back to Australia with the help of the Australian Department of Foreign Affairs and Trade.
After the episode aired, her parents filed a defamation lawsuit against the Nine Network and 60 Minutes program for alleging they allowed the kidnapping and subsequent marriage to occur. However, in December 2017 a Supreme Court jury found that the claims were substantially true and they lost the defamation case.
The judge suggested the court should infer that the Tabbaa’s “colluded” with their son Omar “for the purpose of attempting to extract a damages award from what they perceive to be a wealthy media defendant”.
Mrs Tabbaa was ordered to pay Nine Network’s costs on an indemnity basis because the judge held she gave evidence that she knew to be false.
Mouhammad and Pamela Tabbaa were unemployed at the time but faced a million dollar legal bill for the unsuccessful defamation action.
Read more here.
Victoria Cross recipient Mr Roberts-Smith sued three newspapers – the Sydney Morning Herald, The Age and the Canberra Times — and two journalists over stories reporting allegations he committed war crimes while deployed in Afghanistan.
In June of 2023, following a lengthy trial, Justice Anthony Besanko dismissed the case and found allegations including murder had been proven on the balance of probabilities – which is the civil standard. Roberts-Smith was ordered to pay costs on an indemnity basis.
Read more here.
In May 2024, the Federal Court ordered Bruce Lehrmann to pay most of Ten’s legal costs from his failed defamation suit against the TV network and Project host Lisa Wilkinson because he brought the case on a “knowingly false premise.”
Justice Michael Lee said Lehrmann should pay almost all of Ten’s and Wilkinson’s costs on an indemnity basis, except when it came to the failed qualified privilege defence argument, where the network would receive regular costs.
At the time, Justice Lee was quoted as saying; “there are no real winners in this litigation.”
Read more here.
