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“I want them to pay my costs” How costs really work in Family Law

Published on October 18, 2019 by Kristie JamesKristie James

Recently, I have had an overwhelming number of clients’ say:  ‘I want the other party to pay my costs’.

Perhaps this is because the costs of litigation are rising. Perhaps it is because Lawyers like to include a throw-away line like ‘we will use this letter to seek costs against your client’ (which, most of the time, is an unnecessary and misleading statement).

Either way now seems like as good of a time as any to cut through the myths and explain how costs work in Family Law.

So, who pays the cost?

The general rule is that parties involved in family law proceedings each pay their own legal costs.

Will the Court ever award costs?

Like everything, the general rule has exceptions and it is within the Court’s discretion to make an order for costs if it is satisfied that there are circumstances which would justify it doing so.

Some examples of when the Court may order one party to pay the costs of the other are:

  1. Where one party breaches a Court order and the other party has to file an Application to the Court because of that breach;
  2. Where one party fails to comply with standard Court procedures. For example, their duty to provide disclosure of their financial circumstances and the other party has to file an Application to the Court because of it;
  3. If the litigation is found to be frivolous or vexatious in nature;
  4. If a party has been wholly unsuccessful in their Application before the Court;
  5. Where a written offer was made to settle by one party which was rejected by the other party and following determination by the Court, the person who made the offer is awarded an amount equal to or greater than, that offer.

So, the other party has done the wrong thing, now I get costs right?

The short answer is no.  If any one of these examples occurs it does not necessarily mean the Court will order costs. The Court will also consider such things as:

  1. The financial circumstances of the parties;
  2. The conduct of the parties;
  3. Any other matter the Court considers relevant.

How much do I get?

Okay, so the Court is satisfied there are circumstances justifying an Order for costs. The next thing you will want to know is, how much do I get?

The Court may Order:

  1. A specific amount;
  2. Party-party costs, which is based on a Schedule applicable to the Court in which your matter has been litigated, i.e. Family Court or Federal Circuit Court.

It is important to understand that party-party costs are generally not reflective of the amount you have been charged by your Lawyer. In fact, the amount the Court will order will be significantly less than your actual legal fees unless you are awarded indemnity costs;

  1. Indemnity costs, which are all of the costs that are reasonably and properly incurred during the conduct of your proceedings.

Is that the end of the matter?

Not always. Sometimes, the person who has been ordered to pay costs simply does not pay. This means that the person who is to receive the money is unfortunately put to the effort and expense of having to recover those costs whether through their Lawyer or by way of further Application to the Court.

Things you can do to reduce your exposure to a Costs Order

  1. Be mindful of the way you conduct your litigation;
  2. Adhere to Orders of the Court and also, the obligations you have under the Rules of that Court.
  3. Give each offer made by the other party thoughtful consideration.

Weigh up the offer against your worst case outcome in Court. Then factor in your legal fees and the possibility of having to pay the other party’s legal fees. It might shed a new light on the offer being made.

Expect to pay your legal costs. The decision of the Court to award legal costs is a purely discretionary one and we say, don’t bank on it.

For tips on how to save money during a family law matter, see my previous article Five ways to save money when resolving your family law dispute.

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