Policies
17. Costs and Fees
17.11. Costs Legal Aid NSW must pay on behalf of the client under s47 of the Act
Legal Aid NSW must pay costs awarded against a legally assisted person. up to the monetary limit established by the Legal Aid NSW Board, unless the matter comes within the exceptions set out below at 17.11.6.
Discretion to pay costs in certain types of matters
In certain matters Legal Aid NSW has discretion as to whether it will pay costs ordered against the legally assisted person.
See Delegation Instrument for who has authority to exercise the discretion to pay costs under s47(4) and (4A) of the Act.
17.11.1 Statutory protection for legally assisted person from paying certain costs
Under s47(1)(b) of the Act, a legally assisted person is given statutory protection against paying costs awarded against them except in:
- specified types of state matters.
The statutory protection in s47(1)(b) of the Act does not apply in federal court matters. However, see Act chapter for Legal Aid NSW policy on paying costs in Federal Court and tribunal matters.
17.11.2 Notification of statutory protection to other parties in proceedings
Because of the statutory protection and the Legal Aid NSW monetary limit, s34(6) of the Act requires that a legally assisted person's legal practitioner advises any other parties to the proceedings of the effect of s47 of the Act.
Section 34(6) Notice must be sent to all other parties involved in the proceedings which advises them of the effect of s47 of the Act.
See Costs Guideline 10.2 for direction on notifying other parties to proceedings of the effect of the statutory protection against an adverse cost order (s47 indemnity).
17.11.3 Contribution by legally assisted person towards s47 costs
Under s36(1)(b) of the Act a legally assisted person may be required to pay a contribution towards the costs which Legal Aid NSW pays under s47 of the Act. This is a condition of the grant of legal aid and the amount must be set out in the grant letter to the legally assisted person.
See Contributions chapter for details on the contribtion policy and payment procedures.
17.11.4 Legal Aid NSW liability is limited to a maximum amount under s47
Under s47(2) of the Act, the liability of Legal Aid NSW in the event an adverse cost order is made against a legally assisted person, is limited to a maximum amount. The current maximum amount is $15,000.
The ceiling of $5,000 referred to in s47(2) of the Act may be raised by Legal Aid NSW Board without amending the Act.
17.11.5 Uniform application of the limit
Legal Aid NSW does not raise the ceiling for particular matters. It will only raise the ceiling as a matter of policy to apply to all matters which come within the scope of s47.
Limits
Legal Aid NSW has increased the general limit on a number of occasions.
The following table sets out the different limits and the dates the limit was commenced.
17.11.6 How Legal Aid NSW distributes costs under s47 to parties
The maximum amount under s47 of the Act applies to ‘one proceeding'.
What does ‘in any one proceeding' mean for the purpose of s47?
The examples below set out Legal Aid NSW policy concerning specific types of proceedings and whether they are considered ‘one proceeding' or not for the purpose of s47 of the Act.
Examples
More than one party to a proceedings
Under s47(2)(a) of the Act if there is more than one successful other party to the proceedings the monetary limit will be shared between the parties except in the following circumstance:
- a separate monetary limit will apply to each party in any one proceedings if Legal Aid NSW is satisfied that the party has a separate interest in the proceedings.
Interlocutory applications
Under this policy, Legal Aid NSW regards interlocutory applications as part of the substantive proceedings and not a separate proceeding for the purpose of the s47 indemnity
Cross claims
In a case where a legal aid grant covers a cross claim and the defence of a proceedings and the proceedings are heard together, Legal Aid NSW considers this as ‘one proceeding' when applying s47(2) of the Act.
Appeals
Under this policy appeal proceedings are normally considered as separate proceedings from proceedings at first instance and s47(2) would be applied separately to these proceedings.
17.11.7 When Legal Aid NSW may decline to pay costs awarded against a legally assisted person
Under s47(4) or (4A) of the Act Legal Aid NSW may decline to pay costs awarded against the legally assisted person in the following types of matters:
- an appeal, or application for a new trial, made on the ground that money awarded to the legally assisted person is inadequate s47(4)(a)
- an action in which the legally assisted person is successful against one or more, but not all, of the other parties to the action: s47(4)(b) of the Act
- an action in which the legally assisted person is successful after having been unsuccessful in interlocutory proceedings related to the action: s47(4)(b1) of the Act
- when an order for costs is made against a legally assisted person in an interlocutory matter, where possible payment of those costs are to await the outcome of the proceedings. If the legally assisted person succeeds in the proceedings, Legal Aid NSW may decline to pay the interlocutory costs under s47(4)(b1) of the Act. Note that this subsection does not apply to order for costs made before 1 February 1997
- an action heard and determined under s42 of the Civil Procedure Act 2005 (NSW): s47(4)(c)
- an action brought under the Family Law Act 1975 (Cth), and
- matters under Child Support (Assessment) Act 1989 (Cth).
Legal Aid NSW should give the legally assisted person the opportunity to respond to a Notice which informs the legally assisted person that Legal Aid NSW intends to decline to pay costs under s47 of the Act.
If Legal Aid NSW decides to decline to pay costs under s47 of the Act then Legal Aid NSW must:
- record the reasons for the decision (s47(7))
- within 14 days notify the legally assisted person in writing of the decision (47(5)), and
- inform the legally assited person that they have a right to appeal to the Legal Aid Review Committee against the decision (47(6)).
17.11.8 When Legal Aid NSW is not liable to pay certain costs
Under s47(3) or (3A) of the Act Legal Aid NSW is not liable to pay certain costs in other matters, all of which are listed below:
- costs incurred by or on behalf of a person for a period when that person was not a legally assisted person. This includes party/party costs which relate to work undertaken prior to the grant of legal aid.
- costs incurred in proceedings for a criminal offence in which the legally assisted person was the accused person
- costs incurred when a lump sum grant has been authorised under s30(2) and (4) of the Act and Legal Aid NSW determined when granting legal aid that s47 indemnity was not to apply to the grant of aid
- costs ordered against a formerly legally assisted person when legal aid has been terminated and the order for cost is made after the termination of legal aid
- costs incurred under a contractual obligation - (example - recovering costs under a covenant to a mortgage), or a statutory obligation.
17.11.9 Liability of legally assisted person under s47 when aid is terminated
If legal aid is terminated and an adverse costs order made after termination, the formerly legally assisted person is liable for the whole of the opponent's costs of the proceedings and this includes party/party costs incurred even when the grant of legal aid was current.
Legal Aid NSW officers must be aware of the effect that terminating legal aid may have in rendering formerly legally assisted persons liable for the whole of their opponent's costs of the proceedings. This includes party/party costs incurred for the period even when legal aid was current.
In appropriate cases, opportunities are to be given to a legally assisted person to conclude proceedings without incurring adverse costs orders. This is particularly relevant in in-house matters where Legal Aid NSW is also the legally assisted person's legal practitioner.
17.11.10 Who can authorise a s47 payment
Legal Aid NSW officers authorised under the Delegation Instrument can authorise payments under s47 of the Act.
Costs for interlocutory proceedings
Where possible costs for interlocutory proceedings will be deferred pending the outcome of the proceedings.
Who is authorised to exercise discretion under s47(4) and (4A) of the Act?
Legal Aid NSW officers authorised under the Delegation Instrument can exercise the discretion to decline to pay costs which come within s47(4) and (4A) of the Act.
Written Notice must be given to legally assisted person
Under s47(5) and (6) of the Act, Legal Aid NSW must give written notice of the decision within 14 days of the decision. The notice is to include advice that the legally assisted person has a right of appeal to a Legal Aid Review Committee.
Recording reason
Under s47(7) of the Act, Legal Aid NSW officer or committee that has made the decision to decline to pay the costs must record the reasons for the decision.
Right of appeal to LARC
The legally assisted person has a right to appeal against a decision by Legal Aid NSW not to pay costs under s47(4) and(4A) of the Act.
17.11.11 Is there protection under s47 of the Act for legally assisted persons in Federal court and tribunal matters?
The application of s47 of the Act to proceedings in the Federal Court was considered by the Full Court of the Federal Court in Woodlands and Ors v. Permanent Trustee Company Ltd and Ors (1996) 139 ALR127.
The Court held that:
“Section 47(1)(b) does not apply to the Federal Court in that it is inconsistent with s43(1) of the Federal Court of Australia Act (Cth) which sets out the Court's power to award costs”.
Whether or not s47 will apply in other federal courts and tribunals depends on whether legislation establishing those courts and tribunal includes a power to award costs that is inconsistent with s47 of the Act.
Legal Aid NSW should advise the legally assisted person in the grant letter that there is no statutory protection in federal court matters.
See Cost Guideline 10.2 for procedure on notifying legally assisted person about federal court and tribunal matter.
17.11.12 Legal Aid NSW may decide to pay certain costs in federal court matters
Legal Aid NSW policy is that it may pay an amount towards costs awarded against a legally assisted person up to the monetary limit set under s47(2) of the Act.
The legally assisted person will be liable to pay any balance owing.
17.11.13 The Court may make an order for security of costs against legally assisted person
Section 47(1)(b) of the Act does not prevent the court making an order against a legally assisted person for security to pay costs. However, it can provide a reason why an order for security for costs should not be made.
The New South Wales Court of Appeal in Rajski & Anor v Computer Manufacturer & Design Pty Ltd [1983] 2 NSWLR 122 decided that s47(1)(b) of the Act:
"cannot operate to destroy the jurisdiction or power of the Supreme Court to order security for costs . It certainly will in the ordinary run of cases make an order for security for costs a wrong exercise of the power to do so."
This decision was followed in Petranker v Brown [1983] 2 NSWLR 131.
Date Last Published: 21/12/2016