1. What is taxation of legal costs?

1. What is taxation of legal costs?

Taxation is the process whereby the court assesses the reasonable amount of costs payable under the costs order. The Paying Party who is not satisfied with a bill of costs and wants to apply for taxation must make the application within 12 months following the receipt of such a bill (section 67 of the Legal Practitioners Ordinance). A bill of costs is one prepared by the Receiving Party to list in detail all items of the costs claimed.

For bills in the amount of $200,000 or below, the assessment will be done by a Chief Judicial Clerk of the Registry. For those above $200,000, the assessment will be done by a taxing master. Neither the taxing master nor the Chief Judicial Clerk of the Registry can vary the costs order (i.e. they cannot change the previous decision of a court concerning which party would have to bear the legal costs). They can only decide the amount of costs to be paid. Hence, if a party is not satisfied with the costs order, he should consider lodging an appeal instead of raising objections to the amount of costs before the taxing master.

On taxation of the costs of a litigant in person (without legal representation), if that litigant has suffered monetary loss for attending to the legal action, he may be allowed to claim costs to compensate for his loss. The maximum costs will be either the actual loss or two thirds of the amount if the work was carried out and charged by his lawyer (if any). Where in the opinion of the taxing master the litigant has not suffered any monetary loss in doing any work for the legal proceedings, he will only be allowed to claim costs for the time reasonably spent on the work. The maximum cost for time spent is $200 per hour.

Taxation of costs is a technical process and you are recommended to consult a lawyer before making the relevant application. For further details of the taxation procedure, please read Order 62 of the Rules of the High Court or Order 62 of the Rules of the District Court as appropriate.

You can also refer to the webpage of the Resource Centre for Unrepresented Litigants to get a summary of the taxation procedure.