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CHAPTER 21 – COSTS, FEES AND EXPENSES

21.1 TYPES OF COSTS IN GENERAL

21.1.1 Actual expenses

In most cases, costs are the “out-of-pocket” expenses that a party has actually spent, or will have to spend in the very near future, in order to bring proceedings in court against someone, or to defend a prosecution or action that has been brought against the party. Costs may include such expenditure as filing and service fees and enforcement costs paid to the court, witness expenses, fees for medical reports, lawyer fees, and (in appropriate cases) the party’s travelling expenses.

21.1.2 Costs and compensation

An order that one party should pay a sum towards the costs of the other party is a method of partially compensating the latter for having to fight the case. However, “compensation”, as that term is usually used, can cover a range of different sorts of loss and damage, while costs are limited to the actual expenses referred to above. In all cases, Magistrates should be careful not to use a costs order as a means of adding to compensation otherwise ordered, or as a way of further penalising the party against whom the costs order is made.

21.1.3 The test

If a claim for costs is contested, the person claiming may have to produce receipts or support the claim with evidence on oath. In deciding what claims to allow, the Magistrate should consider whether each item of costs was reasonable necessary in order to properly conduct or defend the proceedings. The maximum may be fixed by fee schedules prescribed by law.

21.1.4 Lawyers’ fees

Where a lawyer is acting for a party, the lawyer gives a bill or account to the party, and the lawyer’s fees become part of the party’s costs. In fact, the lawyer may also have paid the “out-of-pocket” expenses, so that the lawyer’s bill will include both:

(a)        the lawyer’s fee or charge for the legal work and representation in court; and

(b)        the expenses paid by the lawyer.

They are all costs of the party.

21.1.5 Party-to-party costs

A party in whose favour a costs order is made will not normally recover all of his or her own party costs, but only a contribution towards them, which is called “party-to-party” costs. The Magistrate usually fixes these, having regard to maximum fee schedules provided in court rules or regulations.

21.1.6 Costs in criminal cases

After a person has been found guilty and the sentence has been determined, the court may order the defendant to pay costs, but such costs are not intended to be paid to the state towards the salaries of police officers or for court services. These salaries and services are paid from the state treasury, into which fines are paid: see, for example, District Courts Act, s 177. Costs awarded against the defendant in criminal matters usually relate to items such as witness expenses and the out-of-pocket expenses of a private informant.

21.2 ORDERS FOR COSTS

21.2.1 General principle

The award of costs is the exercise of a judicial discretion, and any decision must always be made after taking each case on its merits, hearing each party and taking proper account of the law. There is no absolute rule that a party who loses a case must pay the costs of the successful party. Rather, it is a general principle in Papua New Guinea, as in the United Kingdom and Australia, that “costs should follow the verdict”, thus penalising the unsuccessful party and reimbursing the successful one. However, this principle is always subject to the discretion of the court in the light of the circumstances of the particular case. For example, a party might win a claim for damages, but the delay and other tactics of that party might have caused such expense to the other party that the victor’s costs should be reduced, or even denied. It is useful to regard the award of costs to the successful party as a strong presumption that can be rebutted in appropriate circumstances. In Papua New Guinea, a court’s powers in relation to cost orders depend on the authority and discretions conferred by statute: see PNG Pipes Pty Ltd v Mujo Sefa (1997) SC524.

21.2.2 Awarding costs

As this is a judicial act, it is never automatic.

In a criminal case, the court’s duty is first to consider what is the appropriate sentence. If that is a fine, the offender’s means to pay, so far as the court knows them, must be taken into account. The same applies to compensation orders: see 21.1.2. Costs should never be awarded as a disguised penalty. The costs awarded should bear some relationship to the level of any fine.

21.3 COSTS UNDER THE DISTRICT COURTS ACT

The District Court’s power to award costs is implied and assumed in several sections, principally s 260 of Pt XII of the District Courts Act, but it should be noted that the costs power and the amount of any award are subject to that section. Other sections of the District Courts Act provide for costs in different circumstances. The District Courts Regulations (see regs 47-49) contain prescribed maximum fees in the following schedules:

·           Schedule 3: Court Fees in the District Court;

·           Schedule 4: Lawyers’ and Agents’ Costs;

·           Schedule 5: Witnesses’ Expenses;

·           Schedule 6: Miscellaneous Fees (Court fees for providing copies of orders, etc).

21.4 COSTS IN CRIMINAL MATTERS

21.4.1 On conviction

Where the court enters a conviction, it may award such costs as it thinks just and reasonable to be paid by the defendant to the informant: District Courts Act, s 260(1)(a).

The principles governing the Magistrate’s discretion, referred to in 21.1 and 21.2 above, apply. For example, natural justice requires that all parties present are entitled to be heard on the question of costs. Also, no order for costs can be made against a person unless there is proof of service of proceedings and the person has duly become a party to the dispute: Leo Getsi v PNG Harbours Board [1993] PNGLR 408.

The Magistrate must specify and fix the sums allowed for costs in the wording of the conviction: District Courts Act, s 260(1)(c) and (g). This is mandatory. The maximum amounts set in the schedules apply: see 21.3.

21.4.2 Time for payment or instalments

As in the case of a fine, the court may allow time for payment of costs. It may also direct payment by instalments, or direct that security may be given for the payment: District Courts Act, s 165.

21.4.3 Recovery of costs in criminal matters

When considering the recovery of payment of costs, it is necessary to read Pt XIII of the District Courts Act (on costs) together with Pt IX (on enforcement). Enforcement is by way of imprisonment, and the court must fix a term of imprisonment in default of payment, according to scale: ss 167, 168, 201 and 260(1)(h). Warrants of commitment (ss 170 and 171) and execution (s 173) may be issued. Moneys recovered and received by the court clerk are required to be paid by the clerk:

·           first, towards costs ordered in favour of a party (which may include the informant);

·           secondly, in accordance with any terms imposed on the conviction; and

·           thirdly, according to the law (if any) under which the information was laid; or

·           in default, to the Secretary for Finance: s 177.

21.4.4 Costs of successful defendant

Where the court dismisses an information, it may order the informant to pay the defendant such costs as it thinks just and reasonable, subject to the court’s obligation to consider a list of seven factors relating to the prosecution’s conduct of the investigation and prosecution of the alleged offence: District Courts Act, ss 260(1)(b) and 260A(1). These factors direct the Magistrate’s attention to such matters as whether the prosecution acted in good faith in bringing and continuing the charge, and whether it conducted the investigation in a reasonable manner. The defendant’s conduct may also be taken into account. Failure to consider the full list of factors may nullify any order as to costs.

The court must also take note of the fact that the withdrawal, dismissal or acquittal of a charge does not automatically entitle the defendant to costs, and there is no presumption either way: District Courts Act, s 260A(2) and (3). It seems clear that when a defendant seeks costs against the informant in reliance on s 260(1)(b), the Magistrate should first consider the wording of s 260A and apply that section to the facts. The court record of the decision should show that the Magistrate had turned his or her mind to the relevant parts of s 260A before making a costs order under s 260(1): Leo Getsi v PNG Harbours Board [1993] PNGLR 408.

The Act does not apply to a dismissal of a charge of an indictable offence: s 261. As far as court, witness and lawyer fees are concerned, the schedules apply.

21.4.5 Costs on sureties to keep the peace

Another example of statutory authority to award costs arises in relation to the Magistrate’s jurisdiction to require a person to enter into recognisance and give surety to keep the peace. Section 218 of the District Courts Act provides that costs may be awarded in the same manner and to the same extent, and may be recoverable by the same process, as on a conviction.

21.5 COSTS IN CIVIL MATTERS

Where the court makes an order in favour of the civil complainant, it may award such costs as it thinks just and reasonable against the defendant in sums specified and fixed by the court, and the reverse applies where the order is in favour of the defendant: District Courts Act, s 260(1)(a), (b), (c) and (g). The schedules apply, and, in the case of the attendance at court of the complainant and defendant, a daily allowance to cover loss of wages and accommodation expenses, to a maximum of K85, is provided for in Sch 5.

Such costs and allowances are recoverable, without the direction of the court, by execution against goods and chattels under Pt IX, Div 2 of the Act.

21.6 ADJOURNMENTS

Where a case is adjourned, the court may order that the costs of and occasioned by the adjournment be paid by one party to another party: District Courts Act, s 260(1)(e). The schedules apply: see also the discussion of adjournments in Chapter 4. The power to order a party to pay costs that arise out of delay or other conduct interfering with the smooth running of the case is an important sanction. On the other hand, where adjournments and changes of venue are necessary in criminal matters, in circumstances for which an unrepresented defendant is not responsible, the Magistrate may need to take care that the defendant is aware of the right to claim reasonable costs.

In civil matters, the situation is sometimes different. By and large, it is up to the parties to protect their own interests by asking for, and objecting to, awards of costs. However, here again, the Magistrate may have to be vigilant to ensure that an unrepresented party knows the rules relating to costs, especially where the other party has a legal representative.

In the particular situation where proceedings have been brought in the wrong court, and the defendant satisfies the court that the matter could be more conveniently and properly heard in another court, the Act makes explicit provision. If it can be shown that the defendant has been brought to the wrong court vexatiously and oppressively, the court must immediately deal with the matter. Further, the court may order the person issuing the proceedings to pay the defendant, by way of compensation or amends, such reasonable sum as the court directs, together with the costs of the order: District Courts Act, ss 150 and 151.

21.7 WITNESSES

Witnesses who attend to give evidence or produce documents, whether they have been examined or not, shall, unless otherwise ordered by the court, be paid expenses covering travel and such matters as loss of wages and accommodation expenses to the maximum stated and in accordance with the details provided in Sch 5: District Courts Act, ss 260(1)(f) and 264.

21.8 LAWYERS’ AND AGENTS’ COSTS

The court may order a party to pay lawyer’s costs to another party. This is within the discretion given by s 260 of the District Courts Act. However, the Act makes no distinction between the amounts of a party’s own costs and party-to-party costs: see 21.1.4 and 21.1.5 above. No lawyer or agent is entitled to receive, in total, by way of fees for work done, any amount more than the fees prescribed in Sch 4: s 263. The schedule specifies the maximum costs and charges allowable in relation to items of work carried out by lawyers, according to a scale under which the fee increases in accordance with the amount recovered by the complainant and, in the case of the defendant, the amount claimed.

Schedule 4 also permits claims for such items as “money properly paid out of pocket”, the “actual cost of conveyance”, and a daily allowance when the lawyer attends court at a place other than that at which he or she carries on business. Where the lawyer attends court on more than one matter at the same sittings of the court, the schedule requires the costs and allowances to be rateably divided. This does not mean that a lawyer will recover all of his or her schedule costs from cases attended at the same sittings. In fixing costs to be paid for legal attendance in one case, the court is not obliged to take into account the possibility that the lawyer may not recover costs in the other cases heard at the same sitting: see, for example, Leo Getsi v PNG Harbours Board [1993] PNGLR 408. Clearly, claims for costs require careful scrutiny in light of the Magistrate’s duties and discretions.

21.9 COSTS ON APPEAL

Appeal from the District Court to the National Court under s 219 of the District Courts Act requires both a notice of appeal and a recognisance or other security for costs: s 220. The Magistrate is called upon to determine judicially the amount that the prospective appellant must cover in order to ensure that the appellant will:

·           prosecute the appeal;

·           abide by such order as the National Court may make on the appeal; and

·           pay any costs awarded by that court: s 222.

The appellant has a choice – either to enter into a recognisance or to deposit the sum with the clerk of the District Court: see Chapter 26.