The Family Law Act provides for each party to bear their own legal costs. In some cases however, a party may seek that the other meet their legal fees.
Section 117(2) of the Act provides that the Court may make an order that one party meet the other party’s costs of Court proceeding, “if there are circumstances that justify it doing so”.
Costs applications are commonly made where one party has made an offer to resolve the proceedings, the offer is rejected by the other party, and then the first mentioned party goes on to receive a similar or more advantageous outcome than the offer that was refused.
If I am successful in the proceedings, do I automatically get a costs order?
Costs will not automatically be awarded at the conclusion of a hearing. This is consistent with the general principle in family law proceedings that each party will be responsible for meeting their own costs.
If you wish to seek that the other party meet your costs, it will be necessary to file an Application, with a supporting Affidavit. The Court will conduct a separate hearing of your costs application, either by considering the documents in Chambers (where the parties do not need to appear) or at a hearing. Unfortunately, this means that you are likely to incur further legal costs whilst seeking that the other party meet your costs of the proceedings.
What will be considered when determining a costs application?
The Court will have regard to the following matters, as identified in section 117(2A) of the Family Law Act:
The financial circumstances of each of the parties to the proceedings;
Whether any party to the proceedings is in receipt of assistance from Legal Aid, and the terms of that assistance;
The conduct of the parties to the proceedings;
Whether the proceedings were necessary as a result of one party’s failure to comply with Orders of the Court;
Whether any party to the proceedings has been wholly unsuccessful in the proceedings;
Whether any party to the proceedings has made an offer of settlement in writing to the other party, and the terms of any such offer;
Any other relevant matter.
Will I be reimbursed all of my costs?
If a costs order is made, it will not necessarily provide for you to be reimbursed for the amount you spent on the litigation. The Court can consider awarding costs from the date that the offer was made (and for rejected) until the conclusion of the proceedings for example.
The Court has the power to order that a party meet the other party’s costs of the proceedings on an indemnity basis, or in accordance with a scale of costs set in the Federal Circuit and Family Court (Family Law) Rules 2021. The scale of costs set in the Family Law Rules is significantly lower than the costs that a party would likely have incurred with their solicitor.
Indemnity costs effectively provide for a party to be reimbursed the costs incurred by them with their solicitor (for the relevant period, from when the offer was made until the conclusion of the hearing). It is rare that the Court orders one party to pay costs on an indemnity basis. In order to do so, the Court must be satisfied that a party “imprudently refused of an offer to compromise”, as found in the case of Colgate-Palmolive v Cussons [1993] FCA 536. Indemnity costs can also be ordered against a party who has failed to comply with Court Orders or who has improperly conducted themselves throughout proceedings.
The Court may also order that costs be paid as assessed or agreed, whereby if the parties cannot agree on the amount of costs to be paid, an independent assessor can be appointed to determine the amount of costs payable, based on what costs were reasonably incurred during the proceedings. The costs assessor is entitled to be paid for their work in assessing the costs also.
What does this mean for me?
The above matters emphasise the importance of making reasonable offers to resolve your family law matter, and also the necessity to consider any offer of settlement very carefully.
If you wish to obtain advice in relation to your family law matter, contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.
Author: Margot McCabe