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Party and Party and Attorney and Client Costs: What Does This Mean?

We find that often when in a taxation situation (whether presenting or opposing a bill), many attorneys and their PAs or clerks still struggle with the question of the proper principle upon which costs should and should not be taxed. When dealing with Party and Party costs the situation is fairly straight forward: one party (or parties) was successful and the other not. Fundamental to our concept of costs is that the loser should meet all the costs on the basis that the winner is entitled to an indemnity against costs reasonably incurred. This reasonability test is the cause of much debate even with our Taxing Masters.

What does the reasonability test mean and how should the test be applied?

Reasonable costs are such costs that take the process of litigation forward. If, therefore, one finds charges and disbursements that fail this test, then those costs theoretically should not be recoverable from the loser. In practice though this is not always that simple as there are a many factors that can challenge this test. This is, however, the best departure point when considering any bill of cost. One can therefore expect a Taxing Master to be less liberal in regards to the charges in a Party and Party bill, because it is his/her particular duty to control these kinds of costs.

The matter of Attorney and Client costs gets a bit more complicated, as there is more than one kind of these costs. The one being Attorney and Client costs that are payable by one’s own client, the other being Attorney and Client costs that are payable by the losing side. Although there are views suggesting there should not be a distinction between the two, clearly this cannot be the case due to the reasonability test, which remains a factor when opposing sides face off in a taxation situation.

To this end we refer you to Loots vs. Loots 1974 (1) SA 431 (E) at 433 (C), which, in our view, still holds the most accurate and balanced take on the various scales of Attorney and Client costs. So, when dealing with an Attorney and Client bill payable by the other side, expect a Taxing Master to be slightly more liberal than what would have been the case with a Party and Party bill. However, note that many of the principles associated with Party and Party taxations will still apply.

In our next article we look more closely at the various scales of Attorney and Client costs, and its impacts on you as a legal practitioner.

If you need guidance on preparing Party bills for submission to the Taxing Master, contact our Cape Town office on 021 948 630.