What does an indemnity costs order actually get you?

On 3 October 2014, Besanko J decided in Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 1066 that an order of a fellow judge that one party pay the other’s costs on an indemnity basis, which did not specify that the costs were to be assessed by reference to the successful party’s costs agreement with its solicitors, entitled it to costs assessed on that basis.

The Federal Court is therefore a better place to get an indemnity costs order than the Supreme Court because the law in the Supreme Court, as determined by the Costs Judge,  is that the beneficiary of an indemnity costs order gets costs assessed according to the same scale as ordinary costs are assessed by reference to, but with an easier road to showing that the costs incurred ought to be paid by the other party at all: ACN 074 971 109 as trustee for the Argo Unit Trust v National Mutual Life Association of Australia Limited [2013] VSC 137.

In the Supreme Court, of course, a special costs order allowing costs to be taxed by reference to the costs agreement may still be sought, and obtained, e.g. Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399.  But that is the exception rather than the default, and one which many trial counsel may not be aware of.

So badly do many trial counsel deal with the question of costs that it really would not be a bad idea if litigants got advice more often than they do from costs lawyers before costs fell to be argued in any case in which there are substantial costs and fault in the costs sense on both sides, or a number of interlocutory costs issues remaining for determination.

Mind you, according to Besanko J, it has long been thus.  His Honour pointed to Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 121 (per Von Doussa J) and older cases from other jurisdictions.

This case demonstrates that ultimately what determines questions of costs is always the statutory instrument which provides for them.  Increasingly, one jurisdiction’s jurisprudence will not prove persuasive in relation to different statutory regimes.

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