Legal Definitions - taxation of costs

Taxation of Costs

Taxation of costs refers to the formal legal process where a court reviews and determines the specific amount of litigation-related expenses that a party who wins a lawsuit is legally entitled to recover from the losing party. It is the court's official calculation of which allowable costs, beyond the main judgment or award, the losing side must reimburse to the winning side.

Here are a few examples to illustrate this concept:

• Example 1: Business Contract Dispute

  Imagine a small graphic design firm sues a client for breach of contract after the client refused to pay for completed work. The court rules in favor of the graphic design firm, awarding them the unpaid amount. During the post-judgment phase, the firm submits a list of expenses incurred during the lawsuit, such as court filing fees, fees for serving legal documents on the client, and the cost of obtaining certified documents. The court will then undertake the taxation of costs, reviewing each item on the firm's list to decide which of these specific expenses the losing client must legally reimburse to the graphic design firm.

• Example 2: Environmental Lawsuit

  Consider a community group that successfully sues a corporation for violating environmental regulations, leading to a court order requiring the corporation to clean up pollution. While the primary outcome is the cleanup order, the community group also incurred significant expenses during the litigation, such as fees for expert witnesses who testified about the environmental damage, costs for scientific testing, and deposition transcript fees. The court will engage in the taxation of costs to formally assess and fix the exact amount of these permissible expenses that the corporation must pay back to the community group, separate from the environmental remediation itself.

• Example 3: Intellectual Property Infringement

  Suppose a software developer successfully sues a competitor for copyright infringement of their unique code. The court awards the developer damages for the infringement. In addition to these damages, the developer incurred various costs during the legal battle, including fees for forensic IT experts who analyzed the competitor's code, court reporter fees for depositions, and fees for obtaining certified copies of intellectual property registrations. Through the process of taxation of costs, the court will meticulously examine these expenses and determine precisely which ones the infringing competitor is obligated to reimburse the winning software developer.