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 are satisfied that it is appropriate to do so.
Common situations which can lead to an order being made for costs in Family Law matters 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 for the filing of material and/or fulfilling obligations pursuant to orders such as 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 which is equal to or greater than the original offer after a trial.
The Family Law Act sets out that matters that the court must take into account when considering whether to make orders for costs. Those matters include:
- The financial circumstances of both parties;
- Whether any party to the proceedings is in receipt of Legal Aid;
- The conduct of the parties in relation to the proceedings;
- Whether the proceedings were necessitated by failure of a party 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 Family Law Act 1975 provides that 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 to the proceedings, should the circumstances justify the Court in making that Order.
When considering whether it is appropriate to make an Order for costs against one party, the Court must take into account the factors set out in Section 117 (2A) of the Family Law Act 1975, as follows:
- The financial circumstances of each of the parties to the proceedings;
- Whether a party to the proceedings is in receipt of a grant of legal aid and the terms of that grant;
- The conduct of the parties during the proceedings;
- Whether the proceedings were required as a result of a party failing to comply with Court Orders;
- Whether a party to the proceedings has been wholly unsuccessful in the proceedings;
- Whether a party to the proceedings has made an offer of settlement to the other party and the terms of that offer;
- Any other matters that the Court deems relevant.
Federal Circuit Court of Australia
Rule 21.02 of the Federal Circuit Court Rules 2001 provides the Court with the power to make an Order for costs to be paid by one party as follows:
- At any stage during the proceedings;
- Within 28 days of a Final Order being made;
- Within any further time allowed by the Court.
In making any Order for costs the Court may:
- Set an amount of costs;
- Set the method by which costs are to be calculated;
- Refer to the costs for taxation under the Federal Court Rules (Part 40) or the Family Law Rules (Chapter 19); and
- Set a time for the payment of costs.
Schedule 1 of the Federal Circuit Court Rules 2001 sets out the party-party costs payable in family law matters in the Federal Circuit Court, however Rule 12.02 gives the Court power to use their discretion to make an Order outside of that set out in the sale.
Pursuant to Rule 21.04 the Court can also make an Order for costs to be reserved until further hearing
Family Court of Australia
Chapter 19 of the Family Law Rules 2004 governs costs payable in family law matters in the Family Court of Australia. Rule 19.08 of the Family Law Rules 2004 enables a party to make an Application to the Court for another party to pay their legal costs (party/party costs), similarly to that of the Federal Circuit Court, as follows:
- At any stage during the proceedings;
- By filing an Application in a case within 28 days of a Final Order being made.
The Court can make an Order for costs as follows:
- On its own initiating (Rule 1.10);
- Within 28 days of the other party filing a notice of discontinuance (Rule 10.11);
- Following the party applying for an extension to file an Application (Rule 1.14); and
- For costs Orders relating to appeals (Part 22.10)
The costs payable in the Family Court are calculated in accordance with the Scale of Costs set out in schedule 3 of the Family Law Rules 2004, however again the Court has the discretion to make an Order for costs outside of that specified in the scale.
Rule 19.18 of the Family Law Rules 2004, sets out that when making an Order for costs the court is required to consider the following matters:
- the importance, complexity or difficulty of the issues in the case;
- the reasonableness of each parties behaviour in the case;
- the rates ordinarily payable to lawyers in comparable cases;
- whether a lawyer’s conduct has been improper or unreasonable;
- the time properly spent on the case, or in complying with pre-action procedures; and
- expenses properly paid or payable.
Should the Court consider appropriate, an Order for costs can be made against one party.
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