Costs, Funding, and Professional Conduct in Litigation
What the exam tests
Costs, Funding and Professional Conduct in Litigation tests costs orders, funding arrangements and the ethical duties of the litigator.
Core rules
- Costs normally follow the event, assessed on a party-and-party basis or indemnity basis for misconduct. A Calderbank offer, marked without prejudice save as to costs, can improve the costs position.
- Bullock and Sanderson orders address costs where a claimant succeeds against one of several defendants; the court decides which defendant bears which costs.
- Security for costs may be ordered against an impecunious claimant or a foreign resident, subject to proportionality.
- Funding: maintenance and champerty remain relevant. Third-party funding is permitted in limited contexts such as international arbitration and related proceedings, not generally in domestic litigation. Contingency fees are restricted by professional rules.
- Professional conduct: avoid conflicts, keep client confidences, do not mislead the court, honour undertakings, and do not communicate with a represented party without consent.
Worked example
A claimant rejects a reasonable Calderbank offer of $100,000 and wins $105,000 at trial. The defendant may argue that the claimant should pay costs from the date of the offer because the offer was more favourable than the judgment after costs are considered. The court weighs the offer, the reasons for rejection and the conduct of the parties.
Traps
Ignoring a Calderbank offer; claiming privilege without basis; acting under a conflict; breaching an undertaking; charging an unlawful contingency fee; misleading the court about evidence.