In family law cases, there is a blanket rule that each party shall bear their own costs of any proceedings in the Family Court. Essentially, the Family Court operates on the basis that each party pays their own costs, with neither party receiving the benefit of the other’s contribution to their legal fees.
There are some circumstances when the Court will consider a costs application.
When will the Court make an order for costs?
Section 117 of the Family Law Act 1975 (Cth) governs an application for costs, whether it is in the context of a hearing or an appeal, and irrespective of whether same concerns property issues or parenting issues.In some circumstances, the Court may determine that an order for one party to pay the other parties costs (or a portion of same), is justified.
Factors which the court will consider when presented with a costs application include:
- the financial circumstances of each of the parties to the proceedings;
- whether any party to the proceedings received the assistance of legal aid and what the terms of that grant were;
- the conduct of each of the parties throughout the proceedings;
- whether the proceedings resulted from the failure of a party to comply with previous orders of the Court;
- whether one of the parties was wholly unsuccessful in the proceedings;
- whether either party made an offer in writing to the other party in the proceedings to settle and what the terms of that offer were; and
- any other matters which the Court considers relevant.
What type of cost orders are made?
If the Court determines that there are circumstances which warrant an award for costs, the Court must then determine what type of order to make in relation to those costs.
In family law, there are three common types of costs orders made by the Family Court. These are:
- Indemnity costs
- Party/party costs; or
- Costs of a fixed sum
When the court makes an order that costs be paid on an “indemnity basis”, it means that the party in which the order is made against, is to pay the entirety of the other parties’ reasonable legal fees. Orders for costs on an indemnity basis are rare. For example, in 2015, in the matter of Medlon & Medlon (No. 6) (Indemnity costs)  FamCAFC 157, Strickland J determined that as the wife was wholly unsuccessful in an application regarding a conflict of interest, it was appropriate that an order be made for costs to be paid on an indemnity basis.
Party/party costs are where a party is ordered to pay another party’s costs as determined having regard to an itemised scale, and on the basis of what work is determined as fair and reasonable. Schedule 3 to the Family Law Rules contains the scale rate for party/party costs awards. The scale identifies the set amount which can be assigned to a particular cost. The scale cost is often less than the cost actually charged to a client.
The court can also make a fixed sum costs order. A fixed sum costs order is exactly what the name details. The court will determine what fixed sum the other party will pay by way of costs. This type of order is often a preference for legal representatives when making a costs application, as it saves the client time and further costs, of identifying specific costs in accordance with Schedule 3 as referred to above.
When can you apply for a costs order?
In circumstances where you consider an order has been made by the Family Court for which costs are appropriate, you can apply for same within 28 days from the date that the Order was made.
If you believe your application for costs has merit, there is no guarantee that costs will be awarded, and carries with it the same risk as does any litigation.
An unsuccessful application for costs does carry a risk, namely that costs will be ordered against you in circumstances where you were, in fact, seeking to receive same. In the words of Martin CJ in Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq)  WASC 254 (S):
“…(a cost application) might assume a life and dimension of [its] own, disproportionate to [its] significance. Such an approach should be discouraged, because it is in the interests of the parties and of the public for disputes with respect to costs to be resolved as quickly and as efficiently and as inexpensively as possible.”
Don’t hesitate to contact the team at Kerr Fels for advice about your situation.
The information provided in this article is of a general nature and should not be relied upon for your family law matter.
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