Recovery of Costs

What it is

Recovery of costs means reclaiming the costs of pursuing a debt — such as court filing fees and certain legal or recovery expenses — from the debtor, on top of the principal amount owed. Whether and how much can be recovered depends on the contract terms and the rules of the relevant court.

It recognises that chasing an unpaid debt has a real cost that, in many cases, the debtor can be required to bear.

Why it matters

Recovering costs reduces the net loss caused by late payment and discourages debtors from forcing unnecessary legal action. Clear contract wording about interest and recoverable costs strengthens a claim and can be added to a statement of claim or judgment.

Merion structures recovery to pursue costs where the contract and court rules allow, for clients who use refer a debt.

Good to know

This is general information and not legal advice. Courts often allow only 'reasonable' or scale costs rather than every expense, so full reimbursement is not guaranteed. Terms in your invoices or trading agreement that clearly provide for interest and recovery costs make a stronger case. Costs are only worth pursuing where the debtor can actually pay.