It is worth being precise about what the Rules say, because the vocabulary used in practice does not always match them.
Four bases, not five
The bases of taxation in the National Court Rules 1983 are —
Party and party — Rule 24, the default. Common fund — Rule 32. Trustee — Rule 33. Solicitor and client — Rule 35.
The term indemnity appears in the Rules in a different context altogether: Order 5 Rule 48, contribution or indemnity, which concerns a defendant’s cross-claim against another party.
Where a party asks for “indemnity costs” in the National Court, what is sought in substance is an order that costs be taxed on a basis more generous than party and party — in practice, the solicitor and client basis under Rule 35, or the common fund basis under Rule 32, which Rule 32(2) describes as a more generous basis than the party and party basis.
Frame the application in the language of the Rules, and identify the rule relied on.
The two bases compared
| Party and party — r 24(2) | Solicitor and client — r 35 | |
|---|---|---|
| Test | All costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party | All costs shall be allowed except as specified |
| Excluded | Anything beyond what was necessary or proper | Costs of an unreasonable amount or unreasonably incurred — unless approved by the client |
| Unusual costs | Not allowed | Not allowed unless reasonably incurred or the client was expressly warned — r 35(5) |
| Effect | The usual shortfall between recovery and the actual bill | Substantially closes that gap |
The ADR Rules 2022
Where the Court is satisfied that a party has not participated in good faith in the mediation or has impeded the mediation or has otherwise failed to meet that party’s obligations under a mediation order or agreement, the Court may order — among other things — costs on an indemnity or lawyer and client basis.
It is one of six heads of relief in Rule 11(2), alongside dismissal of the proceeding and striking out a defence and entering judgment. And by Rule 11(3), the Court shall not make such an order unless the Court has heard the parties as to why any of those heads of relief should not be granted.
So the clearest statutory route to a punitive costs order in a civil proceeding is bad faith in a court-ordered mediation. See failing to participate in mediation.
The provisions that bite
Where any person fails to comply with any provision of these Rules or any judgement or order of the Court, the Court may order him to pay the costs of any other person occasioned by the failure.
Note the width: it applies to any person, not only a party — and the costs are those occasioned by the failure.
Where a party serves a notice disputing a fact under Order 9 Rule 29(2), or disputing the authenticity of a document under Order 9 Rule 31(2), and the fact or authenticity is afterwards proved in the proceedings, that party shall, unless the Court otherwise orders, pay the costs of proof.
These are the Rules’ own answer to unreasonable conduct: a party who puts the other to proof of something that turns out to be true pays for it, win or lose.
Rule 18(3) — where money is paid into Court and the plaintiff recovers less than the amount so paid in, the plaintiff shall, unless for special cause the Court or a Judge shall otherwise order, have costs to the date of payment in but be ordered to pay all the costs of the defendant so paying into Court from and after the date of such payment into Court.
Rule 19 — where a party makes an offer of contribution under Order 8 Rule 49, the Court may, in exercising its discretion as to costs, take the offer into account.
How to ask
- Identify the rule. Ask for taxation on the solicitor and client basis under Order 22 Rule 35, or on the common fund basis under Rule 32 — not simply for “indemnity costs”.
- Point to the conduct. Rule 11 requires costs to follow the event except where it appears to the court that some other order should be made. The exception has to be justified.
- Use the specific rules where they apply — Rules 15, 16, 18(3), 19 and 20 each deal with identified conduct and do not depend on a general discretion.
- Ask at the right time. Rule 5(1) allows costs to be dealt with at any stage of the proceedings or after the conclusion, and Rule 5(2) allows an order that costs be paid immediately.
- Get the order recorded. Rule 8: a party shall not be entitled to recover any costs … except under an order of the Court. The basis of taxation must appear in the order, or the default in Rule 24(1) applies.
Where the conduct complained of is a lawyer’s rather than a party’s, the appropriate application may be for costs against the lawyer personally — see costs against a lawyer.
Sources
- National Court Rules 1983 — O 5 r 48; O 8 rr 49, Div 6; O 9 rr 29, 31; O 22 rr 5, 8, 11, 15, 16, 18–20, 24, 32, 33, 35
- Alternative Dispute Resolution Rules 2022 — O 2 r 11
The statement that Order 22 contains no basis of taxation described as “indemnity” is made on a reading of the whole of that Order as published on PacLII; the term appears in the Rules only in Order 5 Rule 48 (contribution or indemnity).
Before relying on anything here, read the current text of the National Court Rules 1983 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.