The impasse of reserved costs – the winning party does not take it all

March 1st, 2018

By Beverly Shiells

There seems to be a misconception among colleagues that the winning party is ultimately entitled to all costs incurred in an action or application and that such costs also include any reserved costs orders made. The Taxing Master has, however, no authority to tax a reserved costs order and any reserved costs order must be unreserved prior to taxation. Failure and/or neglect to address any reserved costs orders prior to the finalisation of a matter can ultimately cost your client a vast amount in legal fees. The client will be burdened with reserved costs, which despite the costly financial implication also results in a diluted victory and an unsatisfied client. Similarly an agreement by the opponent to pay the costs of the action also does not automatically include reserved costs unless expressly stated.

Reserved costs explained

The position in both the High Court and magistrate’s court is that if you bring an interlocutory application or if a matter is postponed and costs are awarded as costs in the cause, the costs will follow the result of the action namely, the winning party takes it all. If, however, the court reserves the issue of costs to be argued and adjudicated on at a later stage, it cannot be taxed until the court has made a ruling on who is ultimately liable for the reserved costs. The costs can also be unreserved if there is an agreement between the parties that specifically addresses the liability for the reserved costs. Reserved costs, as such, do not follow the result and the winner of the action and/or application is not automatically entitled to the reserved costs without either an order or agreement to that effect. Reserved costs is a specific costs order that delays the adjudication of the liability of costs to a later stage.

The issue of reserved costs was addressed in the matter of Commissioner for Inland Revenue v Niemand 1965 (4) SA 780 (C) where Watermeyer J held that the order as to costs was not a final order and not appealable. Judge Albert Kruger and Wilma Mostert in Taxation of Costs in the Higher and Lower Courts: A Practical guide (Durban: LexisNexis 2010) at 10 states that:

‘It is therefore the duty of the attorney or counsel to bring the reserved costs under the court’s attention to make a final decision either on trial or settlement of the matter. If the attorney or advocate neglects to ask the court for an order or to obtain an agreement on the reserved costs, those costs cannot be recovered from the other party on taxation and their own client would be legally responsible to settle reserved costs in respect whereof no further costs order was made.’

Wunsh J in Martin NO v Road Accident Fund 2000 (2) SA 1023 (W) referred to the matter of How v Earl Winterton (No 4) (1904) 91 LT 763 where it was held that a Taxing Master has no authority to deal with reserved costs and that the issue of reserved costs must be referred back to court to determine the liability of same. Only once the court has dealt with the reserved costs will the Taxing Master have the necessary authority to tax same in accordance with the costs order. At 765 Kekewich J held that:

‘I think that when costs are reserved it is necessarily implied, and the practice of the court sanctions the implication, that there is reserved the question of the incidence of those costs, quite apart from the question whether they are to be paid by the plaintiff or the defendant. It may turn out that they are to be paid by neither, and that the costs of both ought to come out of the estate, or be paid by a third party. In the meantime the court has pronounced no opinion whatsoever, not only on the question whether the plaintiff should pay the defendant or the defendant should pay the plaintiff but as to how the costs should be borne at all. It might in the end say that neither party should have any costs, or it might deal with them in one of the other ways I have suggested; but it is quite impossible, I think, for the Taxing Master, dealing with the costs of a defendant to an action, to look at costs which have been reserved.’

Wunsh J held in Martin that:

‘Costs are usually reserved if there is a real possibility that information may be put before the Court which eventually disposes of the action or the application which may be relevant to the exercise of a discretion in regard to them (cf Hillkloof Builders (Pty) Ltd v Jacomelli 1972 (4) SA 228 (D) at 233H), although, where the issues affecting interlocutory costs are clear, the Court then dealing with the matter should not choose an easy way out to shift the task to another Court (Fleet Motors (Pty) Ltd v Epsom Motors (Pty) Ltd 1960 (3) SA 401 (D) at 404H-405B; Trust Bank of Africa Ltd v Muller NO and Another 1979 (2) SA 368 (D) at 318C-D). Costs are reserved because there is no ready view about the liability for them and they will not necessarily follow the result of the case. They are separate from the costs of the action or application.’

In AA Mutual Insurance Association Ltd v Gcanga 1980 (1) (SA) 858 (A) it was held that a reserved costs order does not become attached to the main judgment and that it ‘remained separate from and independent of that judgment and did not necessarily follow the result of the action between the parties.’

Practical illustration and application for variation of order in terms of r 42(1)(b)

The claimant’s matter is postponed sine die and the wasted costs (which would include a portion of both the attorney and counsel’s preparation, costs of witnesses for attending court, reservation and preparation fees for experts and counsel’s day fee) are reserved to be argued at the next round. Both counsel and the attorney neglect to raise the issue of reserved costs and the action is ultimately finalised with a costs order in the claimant’s favour. The costs of the postponement can easily be in the region of R 100 000 depending on the seniority of the counsel and number of experts involved. The reserved costs will now have to be paid by the client, despite their victory in the matter. The attorney can approach their opponent to agree to pay the reserved costs, which they will unlikely agree to after the fact. Alternatively, one can bring an application to court to address the issue of reserved costs. There are, however, inherent risks associated with bringing an application. In the unreported judgment of Cipla Medpro (Pty) Ltd v H Lundbeck A/S and Another In re: H Lundbeck A/S and Another v Cipla Medpro (Pty) Ltd (CCP) (unreported case no 89/4476, 24-5-2010) (Southwood J) in the Court for the Commissioner of Patents the applicant brought two applications in terms of r 42(1)(b) of the Uniform Rules of Court in which it sought to vary the court orders in two urgent applications dismissing the applications with costs, including the costs consequent on the employment of two counsel. In each application the applicant sought an order that the costs order, include the qualifying fees of the expert witness. It is trite law that an order for costs must include the costs for your experts’ qualifying fees to be able to recover same on taxation. Rule 42(1)(b) provides that the court may, on the application of any party affected vary an order or judgment in which there is a patent error or omission. Southwood J held that:

‘In the present case the parties argued the question of costs and the courts made costs orders. There is no suggestion that these costs orders did not correctly express the intention of the court or that the court did not consider what was argued or omitted to order what was requested. It is clear from the facts that the court did not consider the qualifying fees of expert witnesses because it was not requested to include such fees in the order. As far as Rule 42(1)(b) is concerned the applicant has not established a patent error or omission attributable to the court. … The application must therefore be refused on these grounds alone.’

In Goldsworthy (born Marshall) v Goldsworthy [2009] JOL 23468 (ECG) the divorce decree did not include the reserved costs of a previous postponement. The applicant brought an application wherein she sought an order that costs be determined in her favour. The respondent opposed same on the basis that there was no patent error or omission attributable to the court and the court is functus officio. It was held that:

‘[I]t was common cause that the aspect of reserved costs constituted a bona fide omission on the part of all concerned. The reserved costs were overlooked by the legal representatives of the parties, and consequently were not brought to the attention of the trial judge.

Rule 42 (1)(b) of the Uniform Rules of Court provides that a court may mero motu or upon the application of any party affected, rescind or vary any order or judgment in which there is ambiguity, error or omission. The present court therefore had the power to deal with the reserved costs and to make a determination in respect thereof. That would not constitute altering the original order.’


The course of action to be followed when faced with a situation where reserved costs were not addressed is the following:

  • Negotiate an agreement with your opponent, which expressly states that they will be liable for the reserved costs.
  • Redirect the matter to court by bringing an application in terms of r 42(1)(b) of the Uniform Rules.

It is as such imperative that reserved costs are dealt with promptly and prior to the finalisation of the matter to avoid unnecessary delays in recovering client’s costs or ending up with a situation where the client is ultimately responsible to settle the reserved costs. The client is furthermore saddled with the unnecessary costs of bringing an application in terms of r 42(1)(b) and the legal practitioner is left embarrassed by their failure and/or neglect to address the reserved costs at the appropriate forum.

Beverly Shiells LLB (cum laude) (UP) is an attorney at Tiaan Smuts Attorneys in Pretoria.

This article was first published in De Rebus in 2018 (March) DR 31.