The general rule for costs in Family Law matters is that each party bears their own costs (Family Law Act 1975 (the Act) (sec 117(1)). However, there are exceptions to this rule, and the court can make orders requiring one party to pay the other’s costs.
What does the Court consider?
If the court believes there are circumstances that warrant it, it can make an order for costs (Family Law Act 1975 sec 114UB). Sec 114UB(3) of the Act sets out the factors the court should consider. The presence of one of these factors is sufficient for the court to make a costs order.
There is no distinction between costs orders for property matters and parenting matters.
If an Independent Children’s Lawyer is appointed, unless a party is legally aided or would suffer financial hardship if they had to pay, the court can order that each party bears the cost in proportions it considers fair.
What are offers to settle?
A court may make a costs order against a party who has declined an offer to settle, if after the final hearing it can be shown that party would have been better off accepting the offer.
Conduct of parties
The court will consider the failure by a party to comply with the Federal Circuit and Family Court (Family Law) Rules 2021.
What are party and party costs?
Costs orders are usually made on a “party and party” basis, where an unsuccessful party is ordered to pay the costs of the successful party. However, a successful party will not be able to recover all of its legal costs. It will be able to recover only the costs for certain items of work on a scale set out in the Federal Circuit and Family Court (Family Law) Rules 2021. Party and party costs are usually less than your actual legal fees.
An order for costs is not a penalty or a payment of damages: it is made to compensate a party against expenses incurred in proceedings.
What are indemnity costs?
An indemnity costs order means that one party must pay all costs reasonably incurred by the other party. The court will award indemnity costs only in exceptional circumstances.
A recent Family Law case (Jaros & Calden) listed situations when it may be appropriate for a court to make an order for indemnity costs. That is, when:
- a party makes allegations of fraud knowing them to be false;
- a party makes irrelevant allegations of fraud;
- misconduct causing loss of time to the court and to other parties;
- proceedings being instituted and maintained for an ulterior motive;
- proceedings being commenced disregarding known facts, or clearly established law; and
- making allegations which ought never have been made or a case based on groundless contentions.
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