Costs orders in Australia: does the loser pay, and how much?

In most Australian civil courts, costs follow the event: the court usually orders the losing party to pay the winner's legal costs. But the order is normally on the ordinary basis (also called party-party), which covers only costs that were reasonably necessary to run the case, assessed by the court's rules or a costs assessor. Your agreement with your own lawyer is on the solicitor-client basis, so winners nearly always pay a gap themselves. Losers pay their own lawyer in full plus the winner's assessed costs. The exceptions matter: family law starts from each party paying their own costs, most tribunals award costs only in special circumstances, small claims allow little or nothing, and offers to settle can switch costs onto the party who rejected them.

This guide belongs to the overview of lawyer fees in Australia. Figures are illustrative.

The main types of costs order

Order	What it means	When it is made
Costs on the ordinary basis	Loser pays the winner's reasonably necessary costs, as assessed	The usual order after a final hearing
Indemnity costs	Loser pays all the winner's costs except those unreasonably incurred or unreasonable in amount	After an unaccepted offer of compromise in some cases, misconduct in the proceedings, or where a contract provides for it
Costs in the cause	Whoever wins the case gets the costs of this step	Interlocutory steps, such as a directions hearing
Each party bears own costs	No order between the parties	Family law starting point, many tribunals, some public interest or test cases
Costs thrown away	Costs wasted because of one party's change or delay	Adjournments, late amendments
Lump-sum or fixed costs	The court fixes a figure instead of a full assessment	Increasingly common in some courts to avoid long assessments

Courts always keep a discretion about costs. Partial success, conduct during the case and refusals to mediate can all change the outcome.

Why winners still pay a gap

An ordinary-basis assessment asks whether each cost was necessary or proper for the case and reasonable in amount. Common items cut back include:

Hourly rates above the scale or what an assessor considers reasonable
Time spent by more than one lawyer on the same task
Partner-level work an assessor thinks a junior could have done
Client conferences that were not needed for the litigation
Costs of issues you lost, even if you won overall

Worked example (illustrative): your costs to the end of trial are $60,000. An ordinary-basis assessment might allow, say, 60% to 70%, so $36,000 to $42,000. Your gap is $18,000 to $24,000. Enter your own numbers in the costs recovery gap calculator.

There is no fixed percentage in any statute. Ask your lawyer for their estimate of recoverable costs in your court; under costs disclosure rules they should give you one.

Losing: what you might pay

If you lose, you typically pay:

Your own lawyer's full fees and disbursements, and
The other side's costs on the ordinary basis.

Illustrative example: your own costs are $45,000 and the other side's costs are $55,000. If their recovery on the ordinary basis is about 65%, you pay $55,000 x 0.65 = $35,750 to them, plus your own $45,000: $80,750. If an indemnity order is made, the amount to them could be close to the full $55,000. See adverse costs and security for costs.

Offers that shift costs

Most Australian courts have rules on offers of compromise. If you make a formal offer and the other side rejects it, then does worse at trial, the court will usually order them to pay your costs on the indemnity basis from the day after the offer. Informal Calderbank offers (letters marked "without prejudice save as to costs") can have a similar effect if rejecting them was unreasonable. Because offers can change who pays by tens of thousands of dollars, they are one of the most important strategic tools in a case. See offers of compromise and Calderbank offers.

Courts and tribunals with different costs rules

Forum	General costs approach
Federal Circuit and Family Court of Australia and Family Court of WA (family law)	Each party pays their own costs unless the court finds circumstances justifying an order under the Family Law Act 1975
NCAT (NSW)	Each party pays own costs; costs orders only in special circumstances
VCAT (Victoria)	Each party bears own costs unless the tribunal orders otherwise
Small claims divisions of local and magistrates courts	Very limited costs, often only filing and service fees
Criminal courts	Costs orders are uncommon and limited by statute
Workers compensation and motor accident schemes	Scheme-specific rules

If you are thinking of using a tribunal to avoid lawyers' costs, read small claims and tribunals versus a lawyer.

Getting the costs order paid

A costs order is a debt. If the other side does not pay after the costs are assessed or agreed, you may need to enforce it, which costs more money and depends on them having assets. A judgment against an insolvent person or company may be worth little. Before starting a case, consider whether the other side could pay.

Frequently asked questions

Can I claim for my own time if I represent myself?

Generally no. Self-represented individuals in Australia usually cannot recover costs for their own time, though out-of-pocket disbursements may be recoverable. Self-represented lawyers are treated differently in some cases.

What if I win only part of my claim?

The court may reduce your costs, make no order, or split costs by issue. Partial success is one of the most common reasons winners recover less than expected.

Who decides the amount of costs?

Either the parties agree, the court fixes a lump sum, or the costs go to formal assessment. See costs assessment explained.

Sources

Supreme Court of NSW — costs assessment and costs rules in NSW
Supreme Court of Victoria — the Costs Court and costs in Victoria
Federal Court of Australia — costs practice in federal courts
NSW Civil and Administrative Tribunal — legal costs at NCAT
Victorian Civil and Administrative Tribunal — costs at VCAT