From time to time in litigation, the Plaintiff will succeed to some extent on its claim and the defendant will succeed to some extent on its counterclaim. When that happens, who bears the costs?

The answer depends on a number of issues including the conduct of the parties, the extent of success enjoyed by the respective parties, and in particular whether offers were made. As a result, it is critical in litigation to make sensible offers so as to give yourself the best protection as to costs.

As an example, the recent outcome of a building dispute litigated in the District Court was that the plaintiff builder (who had sued for over $600,000) succeeded on its claim to the extent of under $60,000 plus interest, and the defendant (who had counterclaimed for about $550,000) succeeded to the extent of about $65,000.

The matter involved both senior and junior counsel for both sides, with the hearing occupying in excess of 15 days. As a result, the costs of each party are likely to be very significant.

In this matter a decision as to costs is yet to be made, however the Court has indicated that an order that each party bear their own costs may be appropriate, and has invited submissions as to costs. If one of the parties had made a strong offer that they have bettered in the decision – eg if the plaintiff had offered to pay the defendant $20,000 and its costs, or the defendant had made an offer to pay the plaintiff a small amount or to walk away and bear its costs – then depending on the terms of the offer and who made it (there are different rules for plaintiffs’ offers and defendants’ offers, also some offers are made outside of the rules), they could be awarded costs and the amount of those costs might exceed $200,000.

Regardless, ultimately the costs decision will be enormously significant for the parties, who are likely to have invested substantial sums into the litigation.

The decision can be found here

For advice in relation to building disputes, please contact Justin Mathews who is an accredited specialist in commercial litigation and a registered adjudicator for building disputes,