Costs orders are issued by courts as a decision about which of the parties to a proceeding should meet the legal costs involved. Such orders are governed by a variety of statutes and a court’s procedural rules. They are usually made on the application of one or both parties, but can also be determined by the presiding judge or magistrate at other stages of the proceedings, prior to any application being made.
For most matters heard in the Supreme, District and Local courts of NSW, the awarding of costs is governed by the NSW Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005. By contrast, in family law matters, costs orders follow the provisions of the Family Law Act 1975.
We’ll look at how family law costs orders differ from other types of costs orders in this article but if you are uncertain about whether you will be liable to pay the other’s party’s legal costs, or whether you can apply to have your costs met, you should contact experienced family law practitioners Felicio Law Firm today.
Costs orders in family law matters
Under section 117 of the Family Law Act the starting point for costs in family law matters is that each party to the proceeding will be responsible for their own legal costs.
As always in law, there are exceptions to this general rule. Subsections within section 117 set out the factors the court may take into account in order to make an order as to costs which apportions them on a different basis to that of each party being responsible for their own legal costs.
Matters the court regards in determining whether it should make an order for costs in a family law matter include:
- The financial circumstances of each of the parties to the proceedings.
- Whether any party to the proceedings is receiving legal aid and, if so, how much that entails.
- The conduct of the parties in relation to the proceedings, including 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.
- Such other matters as the court considers relevant.
Only one of the matters above need be present for the court to decide to make a costs order. It’s important to note that the court’s discretion applies both to parenting and property cases in family law matters. Also important is the principle that costs orders are not meant to be punitive or act as a penalty against one party. Instead, they are conceived as compensation for one party for the costs they have incurred in going to court.
Case example: In the Federal Circuit Court – the other court in Australia that hears family law matters – the case of Secco & Reid (No. 2)  FCCA 2594 saw the father ordered to pay the mother the sum of $32,498.75 after the judge considered the parties’ differing financial circumstances; the fact the father was wholly unsuccessful in the proceedings; and the fact that the father failed to properly consider or respond to an offer made by the mother.
Costs orders are usually awarded on a party/party basis, in which one party is ordered to pay a proportion of the other party’s legal costs. This will usually not cover all of the successful party’s legal costs but may cover 75 per cent, as a guide.
In some cases both in family law matters and in other courts, costs may be awarded on an ‘indemnity’ basis in which one party is ordered to pay the actual legal costs of the unsuccessful party. An indemnity costs order may be made where one party makes false claims against the other party, such as fraud; where one party’s conduct has wasted the time of the court or the other party; where the litigation has been commenced for vexatious or ulterior purposes; where offers of compromises have been refused, and other similar reasons.
Costs orders in other courts
In non-family law courts, the court has an unfettered discretion to make cost orders unless a specific legislative restriction applies. As in family law matters, costs orders are not designed to be punitive and must be proportionate.
In making a costs order, the court has regard to the facts of the case, whether any specific legislative provisions apply, and the conduct of the parties to the proceedings (as it also does in family law matters).
In courts such as the District or Local Court, in general ‘costs follow the event’, meaning the successful party is awarded costs against the unsuccessful party. The party against whom costs are awarded can, however, apply to the Supreme Court to have the costs order re-assessed.
As in the Family or Federal Circuit Court, costs can be awarded on a party-party or indemnity (also known as solicitor-client) costs basis. It should be noted that there are restrictions on the amount of legal costs that can be awarded depending on the court division hearing your matter. Expert legal advice should be sought before you commence your action.
Speak with Felicio
The awarding of costs in legal actions can be a complicated area of the law, reliant on court discretions, statutory limits, the nature of the matter and the conduct of the parties.
While a family law case starts on the basis that each party will be responsible for their own legal costs, it’s not always the case, just as it’s not always the case that a winning party in the District or Local will automatically be awarded costs against the losing party.
If you need to know more about costs orders, it’s best to discuss the subject with experienced legal practitioners such as Felicio Law Firm as part of a wider discussion on the merits of your case, whether you’re involved in a family or civil matter. Call us today on (02) 4365 4249.