Costs in Family Law Matters

Most people understand that legal services are expensive. Lawyers are highly trained professionals who spend many years (and many dollars themselves) towards obtaining degrees, being out of the full-time workforce studying and incurring HECS debt. 

Some lawyers have fixed fee agreements or a hybrid of fixed costs and time costing for different tasks however by far the most common method of costing is time costing. Research suggests legal services consumers prefer fixed fees however these can be risky for the lawyer if a client’s matter takes a turn for the unexpected.

Another difficulty with fixed fees and legal costs is that client’s can end up with large legal bills through no fault of their own. Sometimes costs are incurred when a lawyer is forced to react to what the other party is doing such as Court applications. If a party is belligerent, uncooperative or refuses to settle costs can also increase dramatically as litigation drags on.

Can I get an Order that the other party pays my family law costs?

This is a commonly asked question. The other common question is “can my ex force me to pay costs?”

It is not uncommon for some lawyers to make a threat about costs. On occasion, a lawyer will threaten in correspondence that if something isn’t done, and an application to the court is necessary, that they will seek “costs of and incidental to” their client’s application. In another scenario, a lawyer will put in their client’s application or response that the husband or wife pay the costs of the matter.

Not surprisingly these types of threats can be upsetting for people to read, and more often than not, they are empty threats. However, that is not to say costs aren’t sometimes awarded in family law matters.

The law regarding costs in family law matters

Section 117(1) Family Law Act 1975 (“the Act”) provides that subject to a number of other sections, each party in a family law matter “bears his or her own costs”.

This means that the starting position for the Court is that each party should pay for their own lawyer. Of course, you don’t need to have a lawyer. Everyone has the right to represent themselves, however family law is technical and nuanced, and it is advisable not to represent yourself if you can avoid it.

It is not unusual when a separation occurs that one of the parties has greater access to resources than the other party. This creates an obvious disadvantage for the person who can’t afford the expensive lawyer.

The “case law” for family law property matters has established that in order to maintain the integrity of section 117(1), that where one party has access to resources forming the matrimonial property pool (i.e., the net assets and superannuation subject of the family law litigation) and spends some of that money on their own lawyer, it should be “added back” to the matrimonial property pool. Added back means that the value accounted for as property already received by the party who had the benefit of it i.e., money spent on lawyers is an advance on the property settlement.

Like many situations within the law however, the general rule that each party bears their own costs won’t apply to every situation.

When can I get costs in a family law matter?

There are several situations most likely to result in costs being awarded by the Court to a party. Costs are always awarded at the discretion of the Judge.

The first situation where you may be able to get costs paid is in a property settlement matter when you make an offer to settle, the offer is not accepted, and subsequently a Court awards a Judgment for more than the amount of the offer.

This situation is provided for in section 117C Family Law Act 1975. Basically, this section places into the Family law Act what is known as a “Calderbank offer” under the common law.

Offers of settlement are protected by “without prejudice privilege” which means they can’t be put into evidence before the Judge. The reason for this is to encourage litigants to settle without the “prejudice” of the Judge seeing what they would have agreed to. However, after the trial is finished offers can be raised as evidence to support why a party should be awarded costs. The rationale being if the offer you made is exceeded by the Judgement, the other litigant had they accepted it would have prevented the costs from the day of the offer being incurred. As stated above, the Court can choose now to award costs and other factors (set out below) also apply.

The next situation when costs could be awarded is when a party has behaved in a way that has created costs unnecessarily. These types of costs order have a punitive component in that as well as reimbursing the wronged party they punish people for conduct such as missing time frames or failing to follow an Order etc.

Another situation where costs can be awarded is where there is a disparity in the financial ability of the parties to fund the litigation and the interests of justice would require this being balanced. Sometimes these types of orders are called “Hogan” or “Barrow” Orders. On this website there is an article I have written which details the circumstances where these types of costs orders can be made (see link: https://hooperandmillfamilylawyers.com.au/applications-for-litigation-expenses-aka-hogan-orders/).

These orders do defeat the general proposition that “each party bears their own costs” so are only made when the circumstances make them necessary.

What does the Court take into account in making a costs order?

The circumstances for the court to consider are listed in section 117(2A) Family Law Act 1975. These are:

1. The financial circumstances of the parties.
2. Whether any party is in receipt of legal aid and, if so, the terms of the grant of legal aid.
3. The conduct of the parties.
4. Whether the proceedings are necessary due to a failure to comply with an order.
5. Whether any party has been wholly unsuccessful.
6. Whether either party to the proceedings has made an offer in writing to settle and the terms of any such offer; and
7. Any matters the court considers relevant.

The last opens up what may be relevant to almost anything relevant to costs being generated.

What does costs mean?

Getting costs doesn’t necessarily mean you get back all of the costs incurred in funding your matter. If you are asking for costs you will need to establish for the Court how much you have paid and the basis upon which the costs have ben charged.

There are also different types of costs lawyers refer to. Some examples are:

• Party and party costs – these are the base costs of running the action. Usually, they are about say 40% to 60% of the actual costs. These costs are the most common types of costs awarded. These costs are awarded where the Court doesn’t consider all the interactions with the solicitor and client should be paid for by the other party.
• Solicitor and own client/indemnity costs – This is where all of the costs are paid by the other party and are typically awarded where there is a punitive element to the costs order.
• Reserved costs – This is where costs are not awarded but delayed until a further time when an issue is to be determined. This type of order indicates that costs may be awarded in the future.

Family law advice

It is important to remember that you should not rely on “generic” advice in any legal matter. In every situation I strongly recommend that you obtain advice from a legal practitioner in the area of law before taking action.  If you have any queries in relation to separation, divorce, de facto relationships, property settlement or child support payments, my firm Hooper Mill Family Lawyers can assist you with practical advice.

We are family lawyers servicing all areas in Brisbane and on the Gold Coast.