This is a term often used in judgments as in "the defendant will pay costs."
Costs were not payable under the common law and required a statute to give the judges the authority to impose them; to add them to their judgments.
Costs are not a judgment that the loser pays the winner's legal fees. Legal fees are a private contractual matter between a lawyer and his/her client. Costs are, in part, in recognition of that reality but not otherwise associated. A person who does not have a lawyer is just as entitled to costs in the event that she or he is successful.
As Bouvier wrote in his American Law Dictionary under the caption of costs:
"They are distinguished from (attorney) fees in being an allowance to a party for expenses incurred in conducting his suit; whereas (attorney) fees are a compensation to an (attorney) for services rendered in the progress of the cause.
"A party can in no case recover costs from his adversary unless he can show some statute which gives him the right."
Because costs are not available unless there is a statute allowing it, a cost-awarding power is intentionally omitted from the jurisdiction of the presiding judge or officer of informal or simplified proceedings such as arbitrations, small claims and some family courts.
In Johnstone v. The Law Society of PEI, Justice McQuaid of the Court of Appeal adopted these words to describe costs:
"... the sum of money which the court orders one party to pay another party in an action as compensation for the expense of litigation incurred. The definition continues to the effect that costs are awarded as compensation, (i.e. reimbursement); there is, unlike damages, no restitutio in integrum, that is to say, no concept in costs, as there exists in damages, that the injured person should be placed, insofar as money can do so, in the same position as he occupied before the injury was suffered".
A court can also condemn a losing party to "special costs" but this is considered punitive as it would include the other side's lawyer bill.
In most states, the court has the final say on costs and may decide not to make an order on costs.
In Halsbury's Laws of England (2004):
"The court has discretion as to whether costs are payable by one party to another, the amount of those costs and when they are to be paid.... A party has no right to costs unless and until the court awards them to him and the court has an absolute and unfettered discretion to award or not to award them. This discretion must be exercised judicially; it must not be exercised arbitrarily but in accordance with reason and justice.
"If a court does decide to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party...."
Thus, the rule has been coined to costs follows the event which means that the court will usually order that the loser of the litigation pay the winner's costs.
A typical bill of costs may have two components:
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The allowance against legal fees incurred usually based on a scale of complexity. For example, the unsuccessful party of a trial that lasted one day might list costs of $1,000 broken down into hourly units for preparation and trial; and
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Expenses incurred by the successful party to defend or run his/her litigation including photocopy costs, legal research, postage and courier and court filing expenses.
REFERENCES:
- Bouvier, John, Law Dictionary (Boston: The Boston Book Company, 1987), page 447-448.
- Callaghan v. Town of Montague 195 Nfld. & P.E.I.R. 190 (2000), published at canlii.org/en/pe/pesctd/doc/2000/2000pesctd69/2000pesctd69.html
- Bacon, N., "Costs", published in Halsbury's Laws of England (London: Butterworths, 2004), page. 14.
- Johnstone v. The Law Society of Prince Edward Island 2 PEIR B-28 (1988)