Hogan Orders

One of the main challenges for former partners during a property settlement is the cost of legal proceedings. Litigation in the Federal Circuit and Family Court of Australia can be expensive, and financial disparities between former partners often make it difficult for one party to afford proper legal representation. A common scenario involves one party, often the primary income earner, having greater financial resources, while the other party, who may have been a homemaker or part-time employee struggles to fund their legal costs. Such imbalances can create significant barriers to the parties negotiating a fair property settlement. To address this financial disparity, a party in financial need can apply for a Hogan Order (also known as an interim property order), which compels the financially stronger party to cover the legal costs of the other party while the case is ongoing. This ensures that both parties have a fair opportunity to present their case and obtain proper legal representation, and one party is not forced to self-represent or accept an unfavourable settlement due to financial pressure.

Legislative context

Section 117 of the Family Law Act 1975 provides that parties in a family law proceeding should pay their own legal expenses, but the court has the power to order one party to pay the other party’s costs under certain circumstances. In Halsted v Baughan [2021]for example, the wife was the higher income earner and was ordered to contribute to the husband’s legal costs.

How does a Hogan Order work?

The term ‘Hogan Order’ originated from a 1986 Family Court case. In that case, the judge made the order to rectify any potential power imbalance between the parties after a divorce. A Hogan Order allows the court to order the financially dominant party to pay funds into the trust account of the other party’s solicitor. However, it is important to note that this payment is considered an advance on the final property settlement, meaning the amount will later be deducted from the applicant’s share of the settlement.

In the Marriage of Elizabeth Fabioleta Zschokke Appellant/Wife and Reto Zschokke Respondent/Husband [1996], the Full Family Court identified three key criteria that prompted the granting of a Hogan Order:

• one party must be in a position of relative financial strength
• that party must have the capacity to fund their own legal expenses
• the applicant must be unable to fund their own legal costs.

The courts have since clarified the requirements to include:

• one party must be financially more advantaged than the other
• the respondent must be in a position to pay their own legal fees
• the applicant must have a reasonable chance of success in their case against the respondent
• the costs must be for an amount less than the likely property settlement
• the applicant must provide evidence about the incurred legal costs and that the legal representative is not willing to defer payment until after settlement.

Ensuring fair use of funds

The courts take steps to prevent misuse of funds obtained through a Hogan Order. Justice Brereton emphasised that any such order should protect both parties from potential injustice by ensuring that:

• the funds are administered by the applicant’s solicitors
• the funds are only used for specified legal expenses
• detailed records of legal costs are maintained and available for review.

If most of the financially dominant party’s wealth is tied up in assets rather than cash, the court may order the sale of assets to fund the other party’s legal costs.

Judicial caution in granting Hogan Orders

Hogan Orders are not granted automatically. In fact, courts are cautious in making such orders and will only approve an application if there are compelling circumstances. In Zschokke, the court stated that such orders should be limited to cases where there is a strong justification for intervention.

Key considerations before applying for a Hogan Order

Applying for a Hogan Order can be costly and complex. The court may not always approve the request, particularly if the applicant’s financial need is not clearly demonstrated or if the anticipated legal expenses appear excessive. In some cases, seeking mutual agreement with the other party to release funds from the asset pool for legal fees may be a more practical solution.

For the responding party, opposing a Hogan Order can also carry financial risks. If the applicant’s request is granted, the respondent may be ordered to cover the costs of the application itself, adding further financial strain.

Legal advice is crucial

Deciding whether to apply for (or indeed contest) a Hogan Order requires careful consideration. Expert legal guidance is essential to assess the likelihood of success, prepare compelling evidence, and navigate the complexities of family law proceedings. At Go To Court Lawyers, our experienced family law solicitors can provide strategic advice on whether a Hogan Order is the right option for you, or help defend against an application if you are the responding party. Contact us today on 1300 636 846 to discuss your case and protect your financial interests.