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14 March 2016

Who Pays The Costs?

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There is no dispute that Court proceedings can be a very expensive exercise.  Not only does it cost you time (there are a usually several preliminary Court dates before your actual hearing), but it can also cost you a lot of money.  So who pays for your legal fees?

The general rule under the Family Law Act 1975 is that parties bear their own legal costs.  However, the Court has the discretion to make Orders as to costs.

What does this mean? 

If the Court is of the opinion that, in the particular circumstances of your case, an Order requiring the other party to pay your costs or pay security for costs is just, it can make such an Order.

Section 117(2A) of the Act sets out the matters to be taken into account in determining whether the circumstances justify a Costs Order.  These include:-

  • the financial circumstances of each of the parties to the proceedings;
  • whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
  • the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
  • whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;
  • whether any party to the proceedings has been wholly unsuccessful in the proceedings;
  • whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
  • such other matters as the Court considers relevant.

If the Court makes an Order for Costs, the ordinary rule is that payment be on a party and party basis.  This means that costs are assessed in accordance with the scale set out in the applicable rules (either Federal Circuit Court Rules 2001 if your case is being heard by the Federal Circuit Court or the Family Law Rules 2002 if you are in the Family Court).

Alternatively, if the Court considers it appropriate to do so, it can order costs on an indemnity basis.  This mean that the Court may order that the proper costs, charges and expenses reasonably incurred by one party to litigation to successfully prosecute or defend his or her proceedings be reimbursed by the unsuccessful party.

What does this mean for you?

  • You should consider your prospects of success in every application you make or defend to the Court.   As the saying goes, “costs follow the event” – a hopeless or unsuccessful application, or a delay due to your actions or inaction may result in a Costs Order being made against you.
  • You should consider offers of settlement carefully.  If you reject an offer of settlement and obtain a less favourable result at trial, you may be ordered to pay costs to the other party.

How do I make an application for costs?

  • If appropriate, an application can be made during the course of litigation.  This can be at interim Court appearances.
  • After final judgment and Orders are made.  A Costs Application must be filed within 28 days after the final Order is made.

If you would like further information about Applications for Costs, please contact one of our solicitors.

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