by Fahri Azzat
Published January 2, 2017
Article first published in Loyar Burok on 02.01.2017.
Question: In Malaysia, if I sue someone, can I get back my legal costs?
You need to first understand terminology and distinguish between professional legal fees (‘Legal Fees’) and court awarded costs (‘Court Costs’):
Legal Fees are what you pay your lawyer to carry out the work for you.
Court Costs are what the court usually awards you when you succeed with your claim or defence. Court Costs are supposed to reimburse you for expenses incurred in having to claim or defend your case in court. The idea is that since you were successful in your claim or defence and incurred expense in doing so, the losing party should pay those expenses. It is not for every expense incurred related to the claim or defence.
This is inevitable because Court Costs only cover expenses incurred related for court related matters only. You may have spent a great deal in investigating and preparing for the court proceedings, but not all the expenses incurred for preliminary work done can be claimed.
Generally, you do not get to recover the legal fees you paid when you successfully sue someone in Court. Instead, what you receive is Court Costs. So Court Costs almost always never equals the Legal Fees you paid your lawyer.
There are 2 instances when the Court will allow your Legal Fees to be paid as Court Costs.
Instance 1: When the Court itself orders for Court Costs to be paid on an indemnity basis.
Court Costs on an indemnity basis means all costs and expenses incurred you incurred is claimable against the losing party except if those amounts are unreasonable or unreasonably incurred. The Court makes such an order only in exceptional circumstances.
There is no definition of what amounts to exceptional circumstances. The Courts prefer deciding it on a case by case basis. The rule of thumb appears to be where a litigant behaves unreasonably to a high degree in his conduct of the case.
Instance 2: This is only possible in a contractual situation.
If there is a clause in the contract, which is the subject or basis of dispute, that provides for the right to claim costs in an indemnity basis then the Court may allow for it.
It allows it in that circumstance because that was a term that was negotiated and agreed upon by the parties. Having said that, the Court may still not allow it because ultimately Court Costs are determined by the Court.
Legal Fees are straightforward.
You negotiate and agree it with your lawyer.
Or you simply agree with the fee proposal by your lawyer.
Then so long as you pay your lawyer’s Legal Fees as and when you are supposed to, he will carry on working for your case.
Court Costs depends on where your case is filed.
If it is in the Subordinate Courts (i.e. Magistrates and Sessions Courts) then the Court Costs are fixed according to the cost schedule found in Order 59 Rule 23 of the Rules of Court 2012. Here is an excerpt of that cost schedule:
So if you successfully sue someone after a trial and obtain a judgment sum against them of RM 2,300, then you are entitled to suing costs of RM 75 and advocacy costs of RM 250.
Suing costs is the expense given to you for hiring a lawyer to carry out your instructions, issue the Writ of Summons and Statement of Claim, and for attending to all matters directed by the Court in preparation of the case until Judgment is obtained.
Advocacy costs is the expense given to you if your lawyer conducted a trial. You are not entitled to it if judgment was obtained without a trial.
If it is in the High Court and above, then Court Costs are assessed and determined by the Judge.
In deciding the Court Costs, the Court shall have regard in particular to the following factors:
The complexity, difficulty and novelty of the issues in the case;
The skill, specialized knowledge and responsibility required to conduct the case;
The amount of time and labour spent on the case by the lawyer;
The amount and importance documents prepared or considered;
The place and circumstances of the transaction;
The importance of the case to the client;
The amount or value at stake in the case; and
Whether the lawyer was efficient and economical in his conduct of the case.
Can I claim for the other costs and expenses incurred like my filing fees, affirmation fees, advertisement costs, photocopying costs, etc.?
Yes, these are allowed for. It is important that you keep all your expense receipts. You will have to show this at the end of the case when totaling up the Costs.
Legal Fees need to be paid when your lawyers asks for further payment.
Court Costs are generally paid by the losing party at the conclusion of the case. The Court can order the Court Costs to be paid before that. But it only orders that in exceptional cases.