Costs in the cause v costs follow the event – what is the difference?

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.