Case Number

HCJ 891/05

Date Decided

6-30-2005

Decision Type

Original

Document Type

Full Opinion

Abstract

[This abstract is not part of the Court's opinion and is provided for the reader's convenience. It has been translated from a Hebrew version prepared by Nevo Press Ltd. and is used with its kind permission.]

The case concerns the question of once it was decided to order a party to pay costs, including attorney’s fees (hereinafter: costs), what is the standard for assessing the amount to be paid: whether “real” costs (that is costs expended by a party in actuality or that the party has committed to expend) or a different standard, such as reasonable expenses or minimal expenses.

The Supreme Court held that the Civil Procedure Regulations afford the courts discretion as to whether to order costs, as well as to the matter of their amount. However, there is nothing in the language of the regulations to determine the ordinary standards according to which costs must be ordered and to determine with cost is necessary for conducting litigation.

As a general rule, the law applicable in Israel – and in other countries is that the party who lost the judicial proceeding would be order to pay the costs of the party who prevailed. Ordering costs is a unique requirement, somewhat of a hybrid by nature – it is not a clearly tort based requirement and it is not punitive. Rather, it is a statutory requirement that grants the courts discretion. In any event, therefore, the mere requirement to pay costs does not indicate the amount that must be ordered.

The general determination as to the responsibility to pay costs is based on balancing several purposes and fundamental principles: ensuring the right to access courts; protecting the individual’s right to property; equality between parties; and managing the resources of the judicial system.

As a matter of principle, and as a point of departure, the winning party must be granted the payment of real costs, that is the actual expenditures that party made or had committed to make. However, a judge must exercise objective discretion and examine the amount of costs argued and consider whether these costs are reasonable, proportional, and necessary for the conducting of litigation considering the entirety of the matter’s circumstances.

Recognizing ordering “real” costs as the default means that anyone arguing for costs carries the burden of demonstrating their actual amount, for instance by submitting an attorney’s fees agreement, detailing the work that was done on the case, explaining the foundation for the billing of fees and providing evidence of actual payments or invoices for fees. Once the actual costs have been detailed and proven, the burden shifts to the opposing party – who lost the ligitation – to show why the requested amount should not be ordered, considering the costs’ reasonability, necessity and proportionality.

Generally, there is no place to distinguish between the state and any other litigant for the purposes of ordering the state to pay costs. It is true that ordering the State to pay costs is tantamount to ordering the public as a whole to pay them, but where the order to pay is justified and its amount is reasonable, the amount should not be reduced merely because it is the State who bears responsibility to pay them. Otherwise, the prevailing party bears the brunt of financing the litigation for the public as a whole. Though there is difficulty in proving actual expenditures made by the State, should it win the litigation and wish to assess its costs, there is no just cause for it not to be granted its reasonable costs considering the entirety of the circumstances in the matter.

Under the circumstances, weight should be given to the fact that the procedure ended without a discussion on the merits, a short while after it was submitted; that the Petitioner did not submit the attorney’s fees agreement – which is important for assessing the reasonable attorney’s fees under the circumstances – and that the case itself is not particularly complex, factually or legally, and revolves around the reasonability of the public authority’s action in light of previous proceedings.

Keywords

Civil Procedure -- Trial Costs, International Law -- Relevance of foreign law in judicial decisions

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