In this blog post I explain the related but
different concepts of costs follow the event and costs in the cause. I
personally find costs to be an uninteresting topic of law, but if you work in
litigation, knowledge of basic costs principles and orders is essential. The
simplest way to remember the difference is to understand that costs follow the
event is a principle and costs in the cause is an order. While I have used
examples from South Australia, the jurisdiction I work in, the content is
applicable to other Australian jurisdictions.
The principle – costs
follow the event
The principle that costs follow the event is a common
law principle that the unsuccessful party pays the legal costs of the
successful party in litigation. In simple terms, the loser pays their own costs
and the costs of the winner. Where
there are multiple events in an action, the costs will be allocated separately for
each event, though there will often be a dispute as to whether events are
separate or part of the main action. A court may decide to depart from the
principle in certain situations after considering the nature of the action, the
complexity of the factual and legal issues, the profile of the parties and
publicity associated with the matter and the amount recovered.
The common law rule that costs follow the event
had been included in statute or rules in most jurisdictions. For example, in
South Australia r 263(1) of the Supreme
Court Civil Rules 2006 provides that “as a general rule, costs follow the
event”. This general rule is subject to more specific rules such as that “the
costs of an amendment are to be awarded against the party making the amendment”
(r 263(1)(a)). However, costs are awarded at the court’s discretion (see s 40
of South Australia’s Supreme Court Act 1935)
and the general rule and more specific rules are subject to orders to the
contrary.
The order – costs in
the cause
Costs in the cause is an order that costs
from an interlocutory hearing (for example) will form part of the general costs
and be awarded to the successful party in the action. Costs in the cause orders
have existed for over a century in Australia, with the NSW case of Dubbo Refrigerating & Co v Rutherford (1898)
14 WN (NSW) 180 often cited as authority for the interaction between costs in
the cause orders and general costs principles.
In Dubbo
Refrigerating the plaintiff was suing the defendant for unpaid work boiling
down 17,023 of the defendant’s sheep for tallow (sheep fat, commonly used in
the 1800s to produce shortening for processed foods and deep frying). Two
commissions had occurred in which costs in the cause had been ordered. The
plaintiffs were awarded general costs after the hearing. As the case is not
readily electronically available I have extracted the key paragraph:
“The costs in both commissions were
ordered to be costs in the cause, but it is now said that although the evidence
was accepted by the jury as in favour of the defendant, the plaintiffs are
entitled to the costs because they are entitled to the general costs of the action.
“Costs in the cause” merely means costs
not now disposed of; after the trial they have to be disposed of with the costs
of the trial, which are themselves costs in the cause, according to certain settled
principles of law which the Prothonotary has followed. Issues are divisible,
and if some issues are found for the defendant, although the plaintiff may be
the successful party in the action, still the defendant gets the costs of those
issues upon which he has succeeded, although they may at first have been costs
in the cause. Here the Prothonotary is entitled to assess the costs of these
commissions in favour of the party who was successful upon the issues to which
the evidence in question was directed, and he has done so. If a plaintiff takes
out a commission, and examines a witness whose evidence turns out at the trial
to be absolutely immaterial, is the defendant to pay the costs merely because
the plaintiff is entitled to the general costs of the action? So here, why
should the defendant have to bear the cost of witnesses whom he called to
establish his case, and who were in fact instrumental in establishing it? The evidence
of these witnesses was within the same category exactly as if the witnesses had
been present at the trial, and I am of the opinion that the Prothonotary has
acted upon the proper principle in allowing them to the defendant.”
There are several advantages of obtaining an
order for costs in the cause versus relying on the principle of costs follow
the event, including that the order is not subject to the exceptions that apply
to the principle, and the order will ordinarily be respected by the trial judge
or an appellate court. It would be very unusual for a court to amend or substitute
a costs order made earlier in proceedings. In the case of Koosen v Rose (1897) 45 WR 337 (often incorrectly cited as Coosen v Rose (1897) 45 WR 337) an order
for costs in the cause was made in chambers for the costs of the chambers application.
At trial the judge interfered with this order, making the plaintiff pay his own
costs for the application in chambers. On appeal, the Court of Appeal decided
that the trial judge had no jurisdiction to interfere with the costs order of
the proceedings in chambers.
Note the difference between the orders costs in
the cause and “plaintiff’s costs in the cause” (more commonly made) or
“defendant’s costs in the cause” (rarely made). A “plaintiff’s costs in the
cause” order means that if the plaintiff is ultimately awarded costs of the
action, the costs the subject of the interlocutory application become part of
that. If the plaintiff is not ultimately awarded costs of the action, there is no
order as to the costs the subject of the interlocutory application. Often a
costs order is requested through an interlocutory application, though orders as
to costs prior to the event are often made by consent or otherwise in
directions hearings.
