The general principle in family law matters is that each party is required to pay their own legal costs regardless of whether they “win” or “lose”. Courts do, however, have the power to make an order for one party to pay the other party’s legal costs if they deem it appropriate.
This article deals with costs orders in family law matters.
Common situations which can lead to an order being made for costs in a family law matter include:
- When a party breaches a court order and the other party files a contravention application.
- Where a party to the proceedings has not complied with directions under orders such as the provision of documents to the other party or a valuer.
- Where one party makes a written offer for settlement during the course of negotiations and the other party refuses to accept that offer, and the party who made the offer receives a settlement that is equal to or greater than the original offer after a trial.
The Family Law Act 1975 sets out the matters that the court must take into account when considering whether to make an order for costs.
Those matters include:
- the financial circumstances of each party;
- whether any party receives Legal Aid;
- the conduct of the parties in proceedings;
- whether a party has failed to comply with previous orders of the court;
- whether a party has been wholly unsuccessful in the proceedings; and
- whether either party has made an offer in writing to the other party.
If the court decides to make an order for costs against a party, costs will be awarded either in accordance with the “scale” or on an indemnity basis. Costs on the “scale” are calculated in accordance with a schedule of costs set out in the court rules. The schedule of costs will often only represent a portion of the actual costs incurred by the party and therefore their entire costs will not be covered. If an order for costs is made on an “indemnity basis”, the party against whom the order is made will be required to pay all costs of the other party, provided they are reasonable. Orders for indemnity costs are generally rare.
Section 117(1) of the Act states each party must bear their own costs in the proceedings. However, section 117 (2) gives the court power to make an order for costs against one party.
Federal Circuit and Family Court of Australia Rules
Chapter 12 of the Federal Circuit and Family Court (Family Law) Rules 2012 deals with cost orders. Rule 12.13 provides that the court may make an order for costs at its own initiative or an application by a party at any stage during a proceeding or within 28 days of the date the final order is made.
Rule 12.17 provides that the court may make an order that a party is entitled to costs:
- of a specific amount;
- to be calculated according to a method stated in the order;
- for part of a proceeding or part of an amount assessed according to Schedule 3.
If the court does not specify a method for calculating cots in a costs order, the costs are to be calculated on a party/party basis.
In making a costs order, the court must consider:
- the importance, complexity or difficulty of the issues;
- the reasonableness of each party’s behaviour during the proceedings;
- the rates ordinarily payable to lawyers in comparable proceedings;
- whether a lawyer’s conduct has been improper, unfair, unreasonable, or disproportionate;
- the time properly spent on the proceeding, or in complying with pre-action procedures;
- whether expenses are fair, reasonable and proportionate.
For advice or representation in any legal matter, please contact Armstrong Legal.