The Price of Being Right: Understanding the Costs of Litigation

Before you commence legal proceedings, there’s a question that matters just as much as whether you have a strong case: can you afford to be right?

Legal costs in litigation are frequently misunderstood — and that misunderstanding can be expensive. Written settlement offers, including Calderbank offers and formal offers of compromise, can have significant costs consequences if rejected unreasonably. In practice, this means that even a successful party may walk away from proceedings having recovered far less than their actual legal spend — and in some circumstances, a party who wins on the merits can still face an adverse costs order if they rejected a reasonable settlement offer along the way.

The rules also differ meaningfully between courts and tribunals. Costs orders that are readily available in the Supreme Court or District Court are not guaranteed in a tribunal like NCAT — and understanding those differences before commencing proceedings is essential to making a genuinely informed decision about whether to litigate at all.

In this episode of the Strata Law Podcast, Sachs Gerace Lawyers’ Partner Anne Fernando breaks down what legal costs actually include, who pays them, and why the decision to commence proceedings is as much a financial decision as it is a legal one — with practical guidance on when litigation is commercially worthwhile and when settlement is the better path.