When litigators talk about ‘costs’ they mean court awarded costs, not lawyer’s legal fees. I previously discussed the difference in The Distinction between Legal Fees and Court Costs. In sum, legal fees are what you pay your lawyer to conduct your case, court costs are what you pay your opponent when you lose your application, claim or appeal.

The general rule of thumb for court costs is loser pays.

For example, X sues Y for not paying for goods sold and delivered (for whatver reason). X loses. The court is likely to award Y costs. It is to compensate (not reimburse) Y for his legal expenses and the inconvenience of defending himself. However, the court can deny or reduce the costs Y would have received if he behaved badly. The award of costs is at the court’s discretion. Parties are expected to conduct their case in a cooperative, economical, and candid manner. Similarly, if X wins against Y.

Previously (circa pre-2008), it was not the court’s practice to fix a sum for cost. For example, after deciding an application, the court would pronounce ‘the application is allowed with costs‘. What the court means is the application is allowed and the respondent pays the applicant costs. Conversely, if the court pronounces ‘the application is dismissed with costs‘, it is means the application is not allowed and the applicant has to pay the respondent costs.

The judge determines who gets cost, not how much. To determine that, we have (and still do) a procedure known as ‘taxation of costs’. It is a legal term of art to mean assessing the costs awarded by the court. Who assess the cost? Usually, the senior assistant registrar. Or less commonly, the deputy registrar. Judges do not. They only listened to appeals from the registrar’s assessment of costs.

Taxation of costs was one of the things I dreaded most about practice as a pupil and young lawyer. I mention ‘pupil’ and ‘young lawyer’ because we were tasked with taxation. A senior lawyer rarely prepared or conducted it. To be fair, it was not a worthwhile use of their time. This was bottom-feeding work for pupils and fresh lawyers. I dreaded it because it was gruelling, pedantic, and often times, ultimately, an act of futility.

When I started out, that was the worse thing you could give me. Throw me in the filing room to look for a lost file for weeks. Thrust upon me a trial to do tomorrow I knew nothing about. Send me for a case where hearings were fixed on Sundays. I’d even do my legal baptism several times over. Just don’t give me a taxation. Please. I got them all the same. Because as a pupil or fresh lawyer then, you didn’t get to choose what you did.

So what was gruelling and pedantic about taxing costs? To tax costs, under the Rules of High Court 1980 (“RHC80”), we filed a notice of taxation and a bill of costs. The notice was not a problem. That was the easy part. It was the bill of costs that was painfully tedious and dreaded. Why?

Firstly, costs often were taxed at the end of the case, which usually was several years after it was initiated. Cases moved slowly back then. That meant there were several years worth of correspondence, documents, conversations, travelling, applications, affidavits, etc. to trawl through and make sense of.

Secondly, we had to detail and verify each and every one of those things – every letter issued and perused, phonecalls made, meeting held, travel, each bit of work done. Basically, we had to account, itemize and assign a value (with reference to the rate provided for in the RHC80) any and every work done for the case where it related to the court or the other side’s lawyers.

It did not include work done vis-a-vis the client. You could only include what is known as ‘party-party’ costs, i.e., work related to dealings with the other side or the court. For example, you could include the cost for issuing a letter to the other sides’s solicitors. But you could not include a letter issued to your client in the bill of cost. That is a ‘solicitor-client’ cost, i.e., work done for the client only, which did not involve the other side or court. Another example of that would be legal advise to the client.

Thirdly, because of that, we had to be careful to only include ‘party-party’ costs and not ‘solicitor-client’ costs. That meant we had to exercise care by considering each document to ensure we did not include ‘solicitor-client’ matters. It is alright if you have thirty or forty exchanged correspondence. But when we had to go through hundreds of correspondence over several years, it was painfully tedious.

When I was tasked with my fair share of them in my early practice, depending on how old a file was, I would take several hours. There have been times I spent days in a room just preparing a bill of costs. How long it took depended on how long and litigious the proceedings were.

Firstly, computer use at the time was at its infancy (circa 1999). Documents were not digitized. Everything was paper, staples, comb binding, and tape binding. The bill of cost was manually prepared.

Secondly, oftentimes times, the file I had to prepare a bill of cost for would be in a complete mess when it landed on me. My initial efforts were spent organising the file: rearranging the correspondence in chronology, then reading through them to confirm the court attendances, applications and affidavits filed and served, verifying that against the court attendance record on the file cover (where we recorded our court attendances and what happened then), then reorganising and verifying all the cause papers filed and received, removing duplicates and old drafts, and ensuring the relevant documents were accounted for.

Only after I got the file in order, I began preparing the bill of cost. Early on, I noticed that the bills of cost I had to oppose laid out the bill of cost in a table that followed the chronology of events. I found that messy and frustrating.

After handling a few, I revised my bill of cost to segment the costs by categories instead of by chronology and sectioning them off with headers. So there was a category for correspondence exchanged, court attendances, phonecalls exchanged, applications and affidavits exchanged, etc. It looked neater and more organised.

Not that it mattered or anybody cared. I don’t recall anybody ever remarkin how thoughtuflly it was prepared. In fact, oft times it was not even looked at.

Now let me tell you why it was often not looked at and why I felt my efforts preparing for taxation of costs were ultimately a waste of time and effort. For that you have to appreciate that the biggest item in the Bill of Cost was the ‘getting up’.

That is the old phrase for doing the work. To ‘get up’ means to do all the things necessary to prepare your case for hearing or trial – research, thinking, advocacy, etc. It is not a commonly used phrase now. Old timers like me will know what you mean when you said, ‘I did the getting up for this file.’

Now all the other items in the bill of cost were minute compared to the item for getting up. For example, even at a hundred over correspondence that may only amount to maybe a thousand or slight more ringgit at most. We got anything between four to ten ringgit for a correspondence depending on its nature. Even if you add the travelling, expenses incurred, filing fees, etc. it will all come up to at most a few hundred or thousand ringgit.

This was compounded by the practice of putting a high amount for the getting up, for example, a hundred or two hundred thousand ringgit. It was a practice to put a high figure because we all knew that the registrar would slash the hell out of it. The idea was to put such a high number that even after the Registrar reduced it, the amount was still reasonable or acceptable.

Because of that the focus for negotiation was only on the getting up fee item. The lawyers were less concerned about the other items. Let me relate an anecdote to illustrate what I mean.

This would be a typical scene: My boss and I are sitting outside the Registrar’s room with the opposing lawyer before the taxation hearing. We are applying for the taxation of costs because we want to collect on the costs. That meant, I had to prepare the notice and bill of costs.

‘Eh, Tan, can we settle this, ah?’ my boss asked.

‘Eh, of course, Encik Izzat. I am always for settlement,’ Tan replied.

‘So, what’s your proposal?’

‘Like this lah, we just talk about the getting up only. That’s the biggest one. The rest we no need to count. They are small sums only. See, the correspondence is a few hundred, the expenses a few thousand.

‘Okay. So, what’s your offer?’

‘You are asking fity for getting up. Can we do twenty-five?’

‘Give me a bit more, lah. Thirty?’

‘Can. Thank you! Ha, see like this, we can avoid the hearing and have breakfast in peace!’ said Mr Tan as he smiled along with Encik Izzat as they shook hands.

When we were called in, we recorded the agreement. The registrar didn’t have to look at the bill of costs since parties were agreed. That’s how it often went. My experience felt like the ratio of actually having to argue a bill of costs was maybe one out of ten, the rest being settled amicably.

Of course, they did not see young me looking on utterly dejected that my efforts to prepare that bill of cost and the bundle of authorities was a complete waste of time and effort and served merely as an occasion for them to agree on cost. I felt the entire exercise was often futile. I wondered why they couldn’t just call each other up and agree on the costs instead of going through that charade. The cost of the taxation was often overlooked in those negotiations.

But now I do. Once the costs are assessed, the respondent must pay them. The longer it takes to assess the costs, the later the respondent has to pay it.

Knowing how it would play out most of the time invoked dread whenever I had to prepare bills of costs. But back then, whether I disliked it or not was of no consequence. It was a job. The boss instructed me, and that was that.

These days, there is no need for taxation of costs. The practice is the courts determine it immediately after a hearing or trial. The process is powerfully simple. A judge asks one party how much it offers and the other how much it wants. It then takes the median amount, or as close to it as possible and awards that. It is a blindingly quick for the litigants. It is easy for the judge. It can be over in less than a minute.

I love the speed of it but I don’t know how proper that practice is. After all, Order 59 rule 7(2) of the Rules of Court 2012 provides that ‘At the conclusion of the proceedings, the Court will hear submissions from the parties as to the quantum of costs and shall order such costs as it deems fit. ‘Submissions’ means arguments. Those arguments are supposed to be tendered together with the main argument or separately. But it must be accompanied by a bill of costs.

So, the assessment of costs is expected to take place by way of submissions together with a bill of costs. The court is expected to hear arguments about the costs. It is expected to make a qualitative and quantitative evaluation of the bill of costs. So what is argued when arguing about costs?

In assessing costs, the court factors the court should consider is contained in Order 59 rule 16, Rules of Court 2012. It specifies seven items the court is supposed to take into account: (i) the complexity, difficulty or novelty of the legal issues (ii) the skill, specialised knowledge and responsibility required of and the time and labour expended by the lawyer (iii) the amount and importance of documents, however brief, prepared or perused (iv) the place and circumstances the business involved is transacted (v) the importance of the case to the client (vi) the amount or value of the case and (vii) whether the lawyer conducted his case economically and efficiently.

All of these factors are hard to capture in the mere suggestion of a sum. I contend they cannot. The proposal of a sum is not argument, it is a suggestion without substance. When the current court practice of assessing costs is measured against the requirments of Order 59, Rules of Court 2012, it falls short of what is stipulated.

In my experience, the issue of costs is rarely taken or treated seriously in Malaysia, by lawyers and judges. It’s that part of the case that is overlooked or not given sufficient consideration. Costs is like an afterthought of the case. An instance of suffering to be reduced. It is the toothpick after the meal – it’s there, we feel it, we glance at it fleetingly before disposing it.

If there is one thing I am certain of for both the lawyers and judges, it is difficult to remove the taxation on enthusiasm in conducting a taxation of costs.