The Winner in Court Still Has to Pay Legal Costs
You may have heard that if you win your Court case, that the other party will pay your legal costs. This is not true. In commercial litigation, you must pay all your legal costs yourself.
If you win your business or general commercial dispute, you may be entitled to an order that the other party compensate you for your legal costs. But you rarely recover the amount you actually paid. The Courts deliberately ensure there is a shortfall in costs recovery, so litigants are encouraged to settle their legal dispute by negotiation.
In the Victorian Civil and Administrative Tribunal (VCAT) and similar consumer tribunals, it is standard practice for no costs orders to be made at all. If you issue a proceeding in VCAT, be prepared to pay all your legal costs yourself, or factor them into any legal settlement discussions.
The Magistrates’ Court, County Court and Supreme Court all routinely order that the defeated party pay the winner an amount for legal costs. However, that amount is usually only around half of the actual legal costs paid. In some cases, the costs order is only a small fraction of the legal costs incurred.
Most importantly, the ability to recover costs is always dependant on the defeated party’s ability to pay. If the other party goes into liquidation you may not be able to recover anything at all.
So, while you may have a strong legal claim, an early settlement may result in a better commercial outcome than litigation. You should seek early legal advice on how to resolve your commercial dispute without litigation if possible. Or if commercial litigation is required, use it strategically to settle the dispute quickly.
We have an experienced business and commercial disputes team at Taurus Legal Management that can assist you with any questions you may have. You can contact us on (03) 9481 2000 or at firstname.lastname@example.org.