1.8 Legal Costs | Compensation and Support Reference Library, Compensation Offsetting Guidelines, 1 Introduction

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1.8 Legal Costs

As mentioned above, the Repatriation Commission has had policy in place since 2005 on the exclusion of certain legal costs that a person may incur when pursuing damages or compensation.

Two terms are used when describing costs incurred by an individual who pursues a compensation or damages claim.  The first being "party-party" costs and the second "solicitor-client" costs.

"Party-party" costs include all amounts specifically included in any Court judgement, settlement or other compensation payment as "costs".

"Solicitor-client" costs are separate from "party-party" costs and include all other costs that are not specifically included in a settlement or judgement.  These costs are a private arrangement between the solicitor and the client and must not be excluded from the compensation payment.

The Repatriation Commission policy decision refers only to “party-party” costs.  The Commission decision is that "party-party" costs are not to be regarded as being in the scope of the definition of compensation.  Therefore specified "party-party" legal costs only can be excluded from a lump sum compensation payment received by an income support pensioner, disability compensation pensioner or war widow/er, when applying either the compensation offsetting or compensation recovery rules.

Where costs are not specifically noted (often where there has been a settlement), advice should be sought as to the amount included to cover costs.  In seeking this advice a clear distinction must be made between “party-party” and “solicitor-client” costs.

For compensation offsetting purposes the party-party legal costs are subtracted from the lump sum compensation payment.  The fortnightly equivalent of the balance is then calculated, based on the instructions and tables provided by the Australian Government Actuary.