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Win Or Lose, Who Pays the Legal Costs?
The 2 Main Types of Costs in Civil Proceedings
There are 2 kinds of costs involved in any civil proceedings taken out in the Singapore courts. These are:
Solicitor-and-Client costs – which refer to the amount each party owes to their respective lawyers for all the work done for the civil suit; and
Party-and-Party costs – which refer to the amount which the court orders one party to the litigation to pay to the other party.
The Key Principles Governing Party-and-Party Costs in Singapore
Party-and-Party costs cover not just legal fees charged by the lawyer for services rendered but also expenses like disbursements such as filing fees, court fees, transport charges, photocopying charges, etc.
In Singapore, this kind of costs generally “follow the event”, which means that the losing party generally has to pay the successful party the legal costs incurred by the successful party (there are relatively rare exceptions, which are discussed below). This gives the rightful party in any proceedings some assurance that some of their legal fees will be covered at the end of the litigation process, and thereby empowers the rightful party (whether it’s the plaintiff or the defendant) to pursue or defend their claim.
The 3 principles which balance the interests of winning parties, losing parties and potential litigants in future respectively are:
- With respect to winning parties in civil litigation: the costs of litigation should be shifted to the losing party to bolster access to justice – rightful claimants and defendants are more likely to pursue or defend their rights in court if they know that their legal costs will eventually be paid by the losing party.
- With respect to losing parties in civil litigation: the law works to compensate the successful party only for costs reasonably incurred, not all costs incurred, because including unreasonable costs would be unjust and unfair.
- With respect to future potential litigants: the losing party may have to pay 2 sets of costs – the costs due to his own lawyer for services rendered, and the costs he has to pay to the winning party. This would deter risk-averse potential litigants and potential litigants who do not have enough money from beginning civil proceedings without a sound case to present to the courts. The 2 other principles described above for winning and losing parties also apply to potential litigants.
Types of Party-and-Party Cost Orders Made in Singapore
Although costs generally follow the event (i.e., losing party pays for the winning party’s;legal costs), it is important to keep in mind that the courts are afforded the discretion to make appropriate costs orders as they see fit.
At times, costs may not follow the event, or the court decides that the party-and-party costs ordered should be minimized, or even that the winning party should pay the losing party’s legal costs. This could happen in several circumstances, 2 examples of which are:
Even though he wins the case, the winning plaintiff had grossly overstated his claim, or has made improper, unreasonable and totally unfounded allegations; and
Even though he wins the case, the winning defendant’s conduct in the proceedings had caused unnecessary and protracted litigation and expense to be incurred.
The types of court orders typically made include:
Fixed costs – Where one party pays a defined sum (determined by the court according to legislative schedules and according to criteria specific to each civil suit after hearing lawyers arguments on costs) to the other party.
Costs in the cause – Where whichever litigant is successful at the end of the trial receives costs, which is another way of saying “costs follow the event”.
Plaintiff’s costs or defendant’s costs – To be awarded to the named party only if he succeeds in the proceedings, but the named party does not have to pay the costs of the other party if the other party succeeds in the proceedings. For example, if the court orders defendant’s costs, the plaintiff must pay party-and-party costs to the defendant of the defendant wins the civil suit. If the defendant loses the civil suit, the defendant does not need to pay party-and-party costs to the plaintiff.
Costs in any event – Where one party is awarded the costs for interlocutory matters, regardless of whether or not he is eventually successful in the civil suit as a whole.
Costs thrown away – Where costs are awarded to a non-blameworthy party to compensate him for effort put in and expenses incurred which turn out to be “wasted” because of the blameworthy party’s conduct. Such waste may manifest itself in not following proper court proceedings or in undertaking unnecessary applications or pleadings before the court.
No order made as to costs – Where the court decides that party-and-party costs are not payable and each party should pay for its own respective legal costs.
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How Is The Amount of Party-and-Party Costs Determined?
What usually happens at the end of the civil litigation process is that the judge first decides on who wins the case, then determines party-and-party costs. It may either:
Fix the party-and-party costs; or
Order the party-and-party costs in an action to be taxed
Fixed Costs
The court will order fixed costs when it is appropriate to do so. For example, when fixed costs would allow all parties to avoid the protracted delay, possible aggravation and increased expenses which come with taxation proceedings, or where the civil suit in question is a simple and common one for which a range of costs have been pre-determined by the courts in appendix 2 to Order 59 of the Rules of court, the court may order fixed costs instead of ordering costs to be taxed. Do take note that even after costs have been foxed, the party ordered to pay party-and-party costs may still resort to taxation if it thinks the award of fixed costs was too high.
Taxed Costs
Here, ‘tax’ means the judicial process (taxation) the court undertakes to determine the reasonableness of legal fees. Such taxation is normally conducted by a taxing registrar in a separate taxation hearing.
The Standard Basis For Determining Party-and-Party Costs
All party-and-party costs are normally taxed on a Standard Basis, which means that the court will allow a reasonable amount for all costs reasonably incurred, and any doubts as to whether costs were reasonably incurred or reasonable in quantum shall be resolved in favour of the paying party. This usually means that the party claiming costs has to show that any particular item was reasonably incurred or reasonable in quantum and therefore allowed.
Can You Expect To Be Paid All Of Your Legal Costs If You Win The Civil Suit?
The short answer is generally ‘No’.
Although costs normally follow the event, the successful party does not usually fully recover all of his legal costs from the unsuccessful party. Party-to-party costs fixed or taxed by the Court typically fall between 40-70% of the actual costs of the winning party’s lawyer’s legal fees.
At the end of the day, the law expects all litigants to bear some of the costs of litigation as part and parcel of life. It also cannot allow costs that are unreasonably incurred.
Do take note that the legal fees due to your own lawyers are payable regardless of whether you are awarded party-to-party costs or whether you are able to successfully recover them from the losing party. In other words, even if you win the case, you will still have to pay your own lawyers the full amount they charge (unless you wish to dispute your own lawyers’ unreasonable fees).
How We Can Help You
Dealing with Cost issues in legal proceedings is tricky, failing to follow proper procedure or taking out applications that have little merit may cause you to incur costs above your own lawyer’s fees.
Lions Chambers LLC is an established law firm in Singapore. Our team of lawyers specialise in various areas of law and will be able to assist you. Our consultations are free. Please call +65 8777 3677 or click here to WhatsApp us today.