In family law proceedings each party will normally be expected to bear his or her own legal costs. However, a court has a discretion to order one party to pay the costs of another party in some circumstances. It is important to consider whether such circumstances apply before applying for costs orders.
When can courts make costs orders?
Under Section 117(2) of the Family Law Act where the court is of the opinion that there are circumstances that justify it in doing so the court may make such order ‘as it considers just.’ Orders for costs can be made at any stage of the proceedings, including during interim applications where court orders are made before proceedings are finalised.
How does a court decide to make a costs order?
In considering whether to exercise the discretion to make an order for costs a court is required to have regard to certain factors under Section 117(2A) of the Act.
Firstly, it must consider the financial circumstances of each of the parties to the proceedings. However, the fact that a party may not currently have the funds from which to pay the other party’s costs may not prevent an order for costs from being made. If the order relates to a property settlement, costs orders can sometimes be paid from a party’s share of the distribution of the net proceeds of sale of a property. Another option might be to grant time in which to pay.
Secondly, the court must consider whether any party to the proceedings is receiving legal aid and if so, the terms of the grant of assistance. While this is a factor to be considered, it will not of itself prevent a court from making a costs order.
Conduct of parties
Thirdly, the conduct of the parties in relation to the proceedings must be considered. This can include any failure to comply with the requirements of the Family Law Rules. Examples of such failures are:
- Failing to produce documents in accordance with the duty to provide full and frank financial disclosure;
- Failing to provide answers to specific questions served on them by the other party.;
- Failing to admit the truth of certain facts or the authenticity of certain documents when asked to do so. This can
- By making these admissions, parties can avoid incurring unnecessary costs which will arise from being required to prove to the satisfaction of the court, the truth of these facts or the authenticity of these documents.
Failure to comply with orders
Fourthly, the court will consider whether the proceedings were necessitated by the failure of a party to comply with previous orders of the court. In the case of a contravention of parenting orders there is a specific provision for costs orders to be made under the Family Law Act.
Partly wholly unsuccessful
Fifthly, where a party has been wholly unsuccessful in the proceedings. In this respect it is always important to carefully consider what orders are being sought and the likely prospect of the court making those orders. In many cases in the Family Court, parties will be partly, but not wholly successful.
Offers to settle
Sixthly, the court will consider whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of any such offer. The failure of a party to accept an offer in circumstances where that party does not achieve a better outcome at trial is an important consideration.
An offer should be made in accordance with Section 117C of the Family Law Act and the applicable Rules of the court. It must not be disclosed to the court in which the proceedings are being heard except for the purposes of the court considering whether to make a costs order under Section 117(2).
Finally, the court can consider any other matters it thinks relevant. This shows that the court exercises a very broad discretion to make costs orders.
Any of the above factors can be used as a basis for an application for a costs orders. In the 2005 decision of PBF as Child Representative for AF (Legal Aid Commission of Tasmania) and Ors, the Full Court of the Family Court held that there is nothing to prevent any factor from being the sole foundation for an order for costs.
In exercising its discretion, a court can apply the court scale, a lesser proportion of a party’s costs or a fixed amount for costs. It is likely the costs which a court may order to be paid will only reflect a proportion of the actual legal costs which a successful party to a costs application has incurred. The costs which the court will order to be paid are described as “party and party costs.”
However, in exceptional cases, a court may exercise its discretion to order a party to pay the actual costs of the unsuccessful party. This is known as “solicitor and client costs” or “indemnity costs.” There must be some unusual features in a case to cause the court to depart from the usual practice and order indemnity costs. It is important to exercise care before seeking costs on an indemnity basis as making such an application without sufficient grounds may constitute an abuse of process.
The circumstances where an order for costs on an indemnity basis may be made are not closed. However, in 1993 Justice Sheppard of the Federal Court in Colgate Palmolive Co v Cussons described some of the circumstances where such an order might apply to be as follows:
- Where false allegations of fraud are made by a party who knows them to be false or the making of irrelevant allegations of fraud;
- Where there is evidence of particular misconduct which causes loss of time to the court and the other parties;
- Where the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;
- Where allegations were made which should never have been made or the litigation was prolonged by groundless contentions;
- Where there was an imprudent refusal of an offer to compromise;
- Where a party is in contempt of court.
Any application for costs in family law proceedings should be considered carefully and the above matters should be taken into consideration. It should be noted that the principle that each party bears their own costs is really only a starting point and that the court exercises a very broad discretion.
If you require legal advice or representation in a family law matter o rina ny othe rlegal matter please contact Go To Court Lawyers.