Cost ceilings and stage of matter limits
In addition to any other conditions which Victoria Legal Aid (VLA) may put on a grant of legal assistance, VLA may limit the type and amount of costs which are paid under the grant of legal assistance.
The Commonwealth has imposed ceilings on the amount of costs payable in some Commonwealth cases. An example is the cost ceiling of $16,767 (including GST) for people in most family law cases.
VLA has fixed fees payable for various grants of legal assistance, but VLA may limit the amount it is prepared to pay, either for the entire matter or for particular stages of a matter. This is so VLA can assist as many people as possible from its limited resources.
If the assisted person reaches the cost ceiling for the matter or the fee limit fixed for a funding stage, then VLA may restrict the assistance paid. However, if relevant, VLA may make a grant of legal assistance for the next funding stage.
VLA may pay costs ordered against an assisted person
Matters proceeding at first instance
In all matters, except appeals, if a court or a tribunal orders costs against an assisted person, then VLA may pay those costs to the person in whose favour the court or tribunal made the order if:
- either the assisted person or the person in whose favour the court or tribunal made the order applies to VLA in writing
- the amount they claim is reasonable
- the person applying to VLA would suffer ‘substantial hardship’ if VLA does not pay the costs.
In deciding if the person applying will suffer substantial hardship, VLA will have regard to their financial circumstances and consider what detriment they will suffer if the costs order is not paid.
If VLA is satisfied that the person would suffer substantial hardship, then VLA will pay an amount of costs (up to the total amount ordered) that it considers just and equitable.
In an appeal, if a court orders costs against an assisted person, then VLA may pay those costs to the person in whose favour the court made the order if:
- either the assisted person or the person in whose favour the court made the order applies to VLA in writing
- VLA considers the amount claimed to be just and equitable.
VLA may require a statutory declaration of hardship
In all cases, except appeals, VLA may require the person requesting payment of costs to make a statutory declaration of substantial hardship. The person must explain the nature and extent of the hardship they will suffer if VLA does not pay the costs.
The following organisations and people would probably have difficulty in showing substantial hardship:
- a public company
- a private company
- an incorporated association
- an ‘individual of means’.
Deciding what costs are ‘just and equitable’
VLA decides what costs (if any) would be just and equitable for VLA to pay by considering:
- the conduct in the legal proceedings of both the assisted person and the person awarded costs
- whether either person caused the proceedings to take longer than necessary
- whether the assisted person fully disclosed everything favourable to their case.
VLA may require reimbursement of costs
If VLA pays the costs, then VLA may:
- require the assisted person to reimburse VLA for some or all of the amount of costs
- secure the reimbursement in any way VLA considers appropriate
- charge interest at 9.24 per cent (as at November 1995) on the amount which VLA requires the assisted person to reimburse.
Reconsideration and review of VLA’s decision
If any person is affected by VLA’s decision about paying costs awarded against an assisted person, then that person may ask VLA to internally reconsider its decision.
Will VLA agree in advance to pay an assisted person’s costs in an unsuccessful case?
VLA may agree, before a legal proceeding begins, to pay costs ordered against the assisted person (that is, agree to ‘indemnify’ the assisted person) if their case is unsuccessful. However, VLA will agree to do this only if the legal proceedings are a test case.
In addition, VLA’s costs indemnity will apply only if:
- any costs ordered against the assisted person are directly related to the proceedings covered by the grant of legal assistance
- the assisted person has complied with all the terms and conditions of their grant of legal assistance.
Reviewed 21 February 2022