Most litigants in the Family Court system have “costs” somewhere at the back of their mind – or more likely, the forefront. Any family law litigation has an associated expense and it is only natural to want to mitigate the financial damage.
The knee-jerk reaction to a successful application in the Family Court is usually a claim for family law litigation costs.
However, before setting off down that path, it is important to understand what grounds an application for costs and exactly how much you can expect to recover if successful.
Keep in mind that an unjustified application for costs can be considered an abuse of process, and it itself, may warrant the awarding of costs against the applicant!
Before pursuing any application for costs, it is important to seek tailored legal advice.
What is the Family Court’s position on costs?
As a general rule, each party bears their own costs in Family Court proceedings regardless of whether they “win” or “lose”.
This principle is embedded in family law legislation, both at section 117 of the Family Law Act 1975 (Cth) and section 237 of the Family Court Act 1997 (WA).
As a starting point, parties should expect to shoulder the full expense of their own litigation costs and should not assume to be able to recover them from the other party. However, the Family Court may make an order for costs in circumstances that justify doing so.
Do I have grounds for a costs application?
The Family Court has a very broad discretion when determining costs applications and may consider any matters it deems relevant.
However, there are certain factors set out in family law legislation that is must consider. These factors are as follows:
1. Financial circumstances of the parties
The mere fact that a party may not be in a financial position to pay the other party’s costs does not necessarily preclude the Family Court from making an order for costs.
An understanding of the parties’ financial circumstances assists the Family Court to make an order that is appropriate in the circumstances – for example, an allowance of time to pay costs or an order for costs to be deducted from the amount a party would otherwise receive on financial settlement.
2. Legal Aid
The Family Court must consider whether any party to the proceedings is receiving Legal Aid assistance and if so, the terms of the grant of aid. Again, the mere existence of a Legal Aid grant does not in itself preclude the Family Court from making an order for costs.
3. Conduct of the parties in relation to the proceedings
This factor is commonly relied upon in costs applications. The legislation provides a non-exhaustive list of family law processes that the conduct might relate to, such as discovery and production of documents.
In practical terms, an example of relevant conduct might be the failure of a party to comply with their duty to provide full and frank disclosure. A failure of this nature has the tendency to increase the other party’s legal costs as they then have to pursue the discoverable documents.
4. Failure to comply with previous Court orders
The Family Court must consider whether the proceedings were necessitated by the failure of a party to comply with previous orders of a Court. A further specific provision exists for costs to be awarded where there is a contravention of parenting orders in relation to children.
5. Where a party is wholly unsuccessful
Case law suggests that the words “wholly unsuccessful” must be taken literally, as there are often cases where one party is substantially unsuccessful in their application but not completely so.
6. Offers for settlement
The Family Court must consider whether a party has made an offer in writing to settle the proceedings, and the terms of that offer. The failure of a party to accept an offer for settlement, where that party does not achieve a better result than was offered, is an important consideration and often gives rise to a successful costs application.
7. Any other matters as the Family Court considers relevant
If my application for costs is successful, how much of my legal fees can I recover?
Costs are most commonly awarded on a party and party basis, reflecting costs which are assessed to be fair and reasonable. In exercising its discretion, the Family Court can apply its own scale of costs, award a fixed amount of costs or a proportion of the actual legal costs incurred.
Party and party costs usually represent only part of the actual legal costs incurred by the successful party in a costs application. The sum awarded can be significantly less than what was actually paid in legal fees and disbursements.
Costs may be awarded on an indemnity basis in exceptional circumstances, reflecting the actual professional costs and disbursements incurred by the successful party in a costs application.
Such exceptional circumstances were contemplated in the Federal Court case of Colgate Palmolive Co. v Cussons Pty Ltd [1993]. In summary, circumstances justifying indemnity costs include where:
- a party has persisted in what should have been seen as a hopeless case;
- unsuccessful proceedings were brought to achieve an ulterior or extraneous purpose;
- a party has made allegations of fraud knowing them to be false or made irrelevant allegations of fraud;
- there has been particular misconduct causing loss of time to the Family Court and to other parties;
- the proceedings commenced were in wilful disregard of known facts or clearly established law;
- a party has made allegations which ought never to have been made;
- there has been undue prolongation of a case by groundless contentions;
- there has been an imprudent refusal of an offer to compromise; and
- a party is in contempt of court.