Resource ● Last updated 24 April 2025 ● 13 min read
Understanding costs in the County and Supreme Courts of Victoria
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Is this page for me?
This page has information if:
- You want to understand the financial risks of going to court.
- You have a civil matter (ie. not criminal), and
- You’re representing yourself (ie. a self-represented litigant),
Why do I need to understand costs?
Going to court is a big decision. Court cases can take months or years to resolve and can be time consuming and expensive.
If you’re representing yourself in court, it’s important you understand how costs orders work and the financial risks of going to court.
If you lose your case in court, you may have to pay some or all of the other party’s legal fees and other costs. This is called a costs order.
Some things to keep in mind:
- The court won’t always take into account that you’re self-represented when making a costs order.
- If you’re representing yourself and you win, you can’t claim the time you spent working on your case as a cost.
- If you lose your case, you may end up paying a substantial amount of money to cover the other party’s legal costs (if they had a lawyer).
- You may not understand the strengths of your case from a legal perspective.
- You may not be able to reasonably estimate how much it will cost to go to court.
- You may not be able to assess the risk of the court making a costs order against you.
- Being unfamiliar with court processes may mean some aspects of your case take longer, adding to potential costs.
Costs orders can be devastating. Get advice before you go to court.
One of the biggest risks of going to court is that you’ll lose and have to pay costs.
The risk of a costs order against you is serious and has significant financial consequences.
You should always get legal advice about the strength of your case before you go to court.
What is a costs order?
A costs order is an order made by the court that you should pay some or all of the other party’s costs. Costs refer to the legal costs spent by a party in relation to a court case.
Generally, the losing party has to pay costs. If your case is unsuccessful, a costs order will probably be made against you. The costs order will be in favour of the successful party that won their case.
Example – claiming costs
Costs are the legal costs included in a costs order. Costs include solicitors’ professional fees and other legally relevant expenses by a party in relation to the court case.
Other costs may include:
- Barristers’ fees
- Expert witness fees
- Filing fees and photocopying fees (ie. disbursements)
Legal costs in a case can be significant. Costs orders can range from $10,000 to over $100,000 depending on the case.
These costs are in addition to the main outcome of the case. If you lose your case, you may have to pay the successful party damages or compensation, as well as their legal costs.
If the court doesn’t specify the amount in a costs order, the amount will be assessed by:
- The Costs Court, or
- Someone appointed by the court.
There are rules about what a party can claim as a cost.
- If your case is unsuccessful, the successful party is not entitled to claim costs more than those actually incurred. The successful party can recover costs that were reasonably incurred, and that are reasonable in amount.
- If your case is successful, you can claim disbursements (ie. expenses incurred because of the proceeding, such as court filing fees). You can’t claim the time you spent working on your case as a cost. This is different to a party that has legal representation. A party represented by a lawyer will usually claim their solicitors’ and barristers’ fees as part of their legal costs, as well as other expenses.
When are costs orders made?
Costs orders can be awarded at any stage of the proceeding, but they’re usually made at the end. The court will make a separate costs order after the main outcome of the case is decided.
Costs orders may cover:
- The whole proceeding
- Part of a proceeding (ie. when a particular legal question is determined in a proceeding, or to cover a particular stage of the proceeding)
Example – interlocutory hearing costs order
A costs order can be made before the end of a trial if there was a mini case heard in the middle (ie. an interlocutory hearing).
An interlocutory hearing may be needed to work out a specific legal issue before the case can continue.
A costs order can be made for an interlocutory hearing, separate from the costs order made at the end of the proceeding (ie. when the entire outcome of the case is decided).
Often the court will make a costs order:
- As a fixed sum, or
- As agreed by the parties or assessed.
If the court makes an order for ‘costs as agreed or assessed’, you and the other party agree on the amount the unsuccessful party needs to pay the successful party.
If you can’t agree on costs with the other party, an external expert will review the successful party’s costs and determine the amount that the unsuccessful party needs to pay.
What types of costs orders are there?
The court has discretion to decide what costs are ordered. This gives the court flexibility to decide an appropriate costs order for your case.
The following are types of costs order the court can make, describing the amount and/or reasons for making that type of costs order.
More than one may apply in your case.
Costs on a standard basis mean the unsuccessful party must pay the reasonable costs of the other party. These include things like paying barrister and court fees.
Typically, the unsuccessful party needs to pay about 60-70% of the successful party’s legal costs. Depending on the circumstances, it can be more or less than this.
The successful party (ie. the party being paid costs), must prove their costs are reasonable if there is a dispute about them.
Costs on an indemnity basis mean the unsuccessful party must pay all costs for the other party, unless they are an unreasonable amount or were unreasonably incurred.
Indemnity costs will usually be 85-100% of the successful party’s legal costs.
Indemnity costs are awarded when the successful party’s legal fees increased because of the unsuccessful party’s conduct in the proceeding. For example, indemnity costs may be ordered in cases of fraud, abuse of process, or unnecessarily prolonged proceedings.
The unsuccessful party (ie. the party that needs to pay costs), must prove that costs are unreasonable if there is a dispute about them.
The court will often wait to make a decision about costs at the end of the proceeding. In this case a costs order will be reserved until a later stage in the proceeding.
If there are preliminary hearings, the decision about costs may be reserved until the end of the whole case.
It’s common for the court to make an order reserving costs. Often, the unsuccessful party who loses the case will have to pay these reserved costs.
An order for costs to be taxed in default of agreement means that a specialised court (ie. the Costs Court) will decide your costs order.
This order is usually made if you can’t agree with the other party about what the reasonable costs are.
If no order as to costs is made, you and the other party pay your own legal fees.
The court will usually make this order if you make a settlement agreement with the other party and agree to pay your own costs.
The court will sometimes order costs for one party during a preliminary hearing (ie. an application or hearing). These are commonly the costs of a particular day or event in the proceeding.
Costs of the application or hearing usually need to be paid immediately (or within a short period after the day or event).
Costs thrown away are costs that must be paid for the other party’s wasted time.
You may be wasting the other party’s time if:
- You make late changes to a pleading (ie. amending pleadings).
- You miss attending a hearing (ie. a failure to comply with the timetable).
- You aren’t prepared for a hearing (ie. a failure to comply with the timetable).
- You make some other error.
How does a settlement offer affect costs?
A settlement offer is an offer to try and resolve the dispute (ie. settle). A settlement offer is made from one party to another party, before the court has made their final decision.
- If you’re offered a settlement, consider it carefully. Efficient dispute resolution is an important part of achieving justice. A settlement offer may resolve the dispute earlier, saving your time, money, and stress.
- If you decide to reject a settlement offer, you should be aware of how this may affect costs.
It’s important to take into account your whole case and circumstances when considering a settlement offer, the way the court will. Settlement offers can impact how costs orders are made.
Have you received a settlement offer?
If you get a settlement offer, you should immediately get legal advice.
A lawyer can explain:
- What type of offer you’ve received
- What are the financial risks of rejecting the offer
- Help you set realistic expectations about continuing your case in court
What type of settlement offers are there?
There are 2 types of settlement offers.
- Calderbank offer
- Offer of compromise
A settlement offer will generally fit into one of these 2 types. The type of settlement offer directly affects the type of costs order a court can make if you reject the offer.
A Calderbank offer is a written offer to the other party that usually has the words ‘without prejudice except as to costs‘.
The Calderbank offer is an important factor when the court decides a costs order.
- Without prejudice means that the offer can’t be communicated to the court.
- Except as to costs is the exception – the offer can be communicated to the court when it is time to decide who pays the legal costs.
If your case is unsuccessful and you rejected a reasonable Calderbank offer, the other party can use the offer to persuade the court that you must pay their legal costs.
- A reasonable Calderbank offer is compared to the amount in damages or compensation you’re ordered to pay in the end (ie. the final outcome).
- If you rejected a Calderbank offer that is the same amount (or more) than the final outcome, the court can order you to pay a higher percentage of costs.
- Higher costs mean the court can order you pay indemnity costs (ie. 85-100% of the other party’s legal costs).
An offer of compromise is also a ‘without prejudice’ settlement offer. An offer of compromise can’t be shared with the court, except at the end of the proceeding when the court makes a costs order.
An offer of compromise has formal criteria about how it must be written and the information included. If a settlement offer meets these requirements, rules define how costs are calculated.
Costs are calculated based on the type of claim (especially personal injury claims), when the offer was made, and which party made the offer.
With an offer of compromise there is an assumption that costs will be awarded in favour of the party who made the offer, unless the court orders otherwise. It is for the party who rejected the offer to argue that the offer was not reasonable.
What if a costs order is made against me?
You shouldn’t ignore a costs order.
If you ignore a costs order, you risk the successful party (ie. the judgment creditor) applying to court to get your assets so they can be sold, or applying to wind up your business (if you have one), to pay the costs order.
A costs order will usually include a due date when costs must be paid.
If you believe that a costs order made against you is unfair, you can appeal to the Supreme Court (or Court of Appeal if your case was heard in the Supreme Court).
You must lodge an appeal within 28 days of the judgment, or the costs order being made.
You should get legal advice before starting an appeal, so you’re informed about your chances of success and added financial risk.
If you think that the legal fees claimed by the other party are unreasonable, you can apply for an assessment of a bill of costs (ie. taxation)
You must apply to the Costs Court.
You should get legal advice before applying because it can be expensive.
If you can’t pay a costs order made against you, you can try to arrange a payment plan with the other party.
If you can’t agree on a payment plan with the other party, you can apply to court for an instalment order. An instalment order spreads out paying the costs order across smaller amounts.
Find more information about instalment orders on our ‘How to apply for an instalment order in the County Court of Victoria‘ page.
This resource was last updated on 24 April 2025. This is legal information only and does not constitute legal advice. You should always contact a lawyer for advice specific to your situation. Please view our disclaimer for more information.
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