LAW IN NEW ZEALAND
The second most important practical factor to consider when thinking about suing somebody is the issue of how much it will cost. The first consideration is, naturally, the prospects of successfully winning or defending the case (depending on whether you are a plaintiff claimant or a defendant). If there is reasonable doubt about whether or not you have a case or argument to pursue or defend then the best option is to try and settle the dispute without resort to litigation. Taking people or parties to court can be very expensive. If you ultimately lose then you must not only pay your own legal fees but also the legal fees incurred by the successful party who either sued you or successfully defended the legal proceedings you issued.
In the usual course of events a successful litigant is entitled to be paid legal costs by the other unsuccessful party or parties to the litigation. This is a reflection of the general principle that “costs follow the event”. If a plaintiff, as claimant, wins then that plaintiff can usually claim costs from the defendant (or defendants if there was more than one). If the defendant or defendants successfully defeat the plaintiff’s claim then costs may be awarded against the plaintiff.
“Costs” within the context of litigation also include court filing fees that are paid to the court if a fees waiver was not granted by the court (filing fees are waived if the party as either plaintiff or defendant has convinced the court that the relevant filing fees are unaffordable) and what are known as “disbursements” (any costs, such as engaging the services of a process server to serve the proceedings on the defendant or defendants, the costs of a private investigator, the costs involved in hiring “experts” to provide specialist information that might assist in proving fault and losses for example and the actual costs involved with hearing the case in the court).
Full solicitor-client or “indemnity” costs are rarely awarded by the courts even if “win” your case (successfully sue or defend). In New Zealand costs are usually awarded according to a prescribed and inflexible set scale. This scale is often far less than the real legal costs involved in the litigation (although it is better than it used to be). Otherwise, if persuaded, courts may order the payment of a relatively higher “reasonable contribution” towards the actual costs incurred in suing or defending legal proceedings. This is better than scale costs but, again, is usually less than actual costs. As a general rule a “reasonable contribution” towards the payment of costs is usually about two-thirds of the actual legal fees. Consequently even if you “win” you still, effectively, suffer some financial loss because any award of costs will not cover all the legal fees paid to your lawyer. You will still be liable to pay the difference between what you pay your lawyer to represent you and what, lesser, costs are awarded to you by a court (either on a scale or reasonable contribution basis).
The realistic cost of litigation is often underestimated by lawyers. Costs blow-outs, based on the intensive time and effort required to prepare and conduct a case, can come as belated and nasty surprises to some clients even if they achieved a successful result. The overall costs of litigation are a critically important factor that should be carefully addressed sooner rather than later accordingly.
---Jerry McGuire