The cost of losing a legal battle
I recently sued someone who owes me R50,000. The Court found that the loan agreement was invalid and that the amount was not owed to me. The legal costs were subsequently awarded in the other party's favour on a party and party scale. What do I need to pay, and how is this amount calculated?
A Court is entitled to make an order as to legal costs in cases, where one party is obligated to pay some or all of the other party's legal costs. It is usually at the end of a case that the Court will order this.
First, it is important to note that legal costs are awarded in terms of tariffs. There are Magistrate's Court tariffs and High Court tariffs. These tariffs are arranged in scales that divide matters according to the amount of money in question, as well as in which Court the matter was brought forward (Magistrate's Court or High Court).
High Court tariffs will be applicable if the amount of the claim is over R400,000. There are also certain matters that are only heard by a High Court, where the High Court tariffs will be applicable. Tariffs in the Magistrate's Court differ from those in the High Court, the latter being at a higher rate. These tariffs are often amended, and attorneys need to be aware of the amendments so that the correct rates are recorded.
There are three main types of legal costs that a Court can order an unsuccessful party to pay, namely party and party costs, attorney and client costs, and attorney and own client costs.
Party and party costs
Party and party costs are legal costs that a Court orders the unsuccessful party to pay to the successful party in a case. The legal costs awarded are those costs that the successful party incurred for the duration of the case, but do not include legal costs before the matter was brought to Court.
These costs are awarded specifically in terms of the Court tariffs. The Court tariffs determine which costs can be claimed for and at which rate. Some of these costs include drafting the summons or application, and consulting with a client.
Attorney and client costs
Attorney and client costs include party and party costs as well as other legal costs. An example of one such additional cost is the accumulated cost of attendances between the party and their attorney.
These costs are not often awarded. However, such a costs order is generally awarded where a contract specifically determines that costs will be payable on an attorney and client scale should a dispute arise in terms of the contract.
These costs are subject to the same Court tariffs as applicable for party and party scale costs.
Attorney and own client costs
Attorney and own client costs are the costs that are payable by a client to an attorney in terms of the attorney's own rate. These costs are not subject to the Court tariffs, which means that they are not capped at a certain rate. The full amount owing to the attorney in terms of his/her own rate will be payable.
Paying your dues
Once costs are awarded, a bill of costs, which resembles an account, must be prepared in terms of the applicable tariffs, and provided to the taxing master of the relevant Court. The taxing master will consider the bill of costs and determine the correctness of the entries and amounts in the bill of costs.
If the unsuccessful party disputes the correctness of the bill of costs, they are entitled to oppose the bill of costs and is required to set out the reasons for the opposition. However, the taxing master will have the final say as to whether the amounts entered in the bill of costs are correct.
Once the bill of costs has successfully been taxed, the unsuccessful party is required to make payment in terms thereof.
Reference List:
- Magistrate's Court Rules
- High Court Rules
- https://www.dsclaw.co.za/articles/understanding-legal-costs-in-south-africa-a-simple-guide/
