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The Family Law Act provides that the general principle is that each party to the proceedings pay their own legal costs and other disbursements.
Exceptions to the General Rules
The Family Law Act and the Family Law Rules and general principles provide that there may be exceptions to the general rule and the Court can order that the costs of one party to the proceedings be paid by another party (or in extreme circumstances by another non-party) to the proceedings.
The Court before making a cost order against one party must consider the circumstances and determine whether the party will be awarded costs based on the objective facts. The Family Court will consider:
(a) Whether there is a disparity in financial resources of the parties.
(b) If a party is receiving legal aid.
(c) Whether a party has conducted themselves properly during proceedings, e.g. they have not complied with court procedures or wasted the court’s time by failing to provide proper information.
(d) A party failing to comply with court orders.
(e) If one party’s case has been without merit from the beginning of proceedings.
(f) Whether a settlement offer was made.
(g) Whether the proceedings were frivolous or vexatious.
(h) Any other objective facts.
A costs order can be made in relation to the whole of the proceedings or any part of the proceedings.
The question of whether a party will be awarded costs depends on to a very great degree how the proceedings are conducted. In this regard it is critical to:
(a) Properly consider your obligations and comply with your obligations as required by the Family Law Act. There are many obligations however one of the first initial critical obligations is to provide full disclosure of your financial position. Similarly, your ex is required to provide full disclosure. The failure to provide full disclosure would be a possible basis for an application for costs.
(b) Secondly, all attempts should be made to comply with all Court orders or directions of the Court.
(c) Thirdly, all attempts should be made to properly consider the appropriate resolution and it is of great assistance to provide an offer of compromise in an attempt to resolve the matter. There are numerous benefits not only the savings that you would have if you can settle your case at an early stage, but also if you make an offer which is more than reasonable and it is not accepted this may result in the party that does not accept the offer in having to pay the costs of the party who have made the reasonable offer. This is critical and to a great degree will have a significant bearing on how the parties consider their obligations negotiate it and deal with the disputes they find themselves in.
We are very conscious and proactive in trying to ascertain the likely outcome of the proceedings at an early stage and highly recommend an appropriate offer be put. However, each case is different and the timing of the offers may be different in particular having regard to the position adopted by each of the parties in the proceedings.
We also recommend in the appropriate case early negotiation, early resolution and in the appropriate cases at the appropriate time mediation in an attempt to resolve cases without the burden of the large costs (both financial and emotionally and relationshipwise) of having an ongoing dispute. We can assist in these negotiations and discuss all options available to you as and when required.
A further exception to the rule is that where the Court orders that there be an independent children’s lawyer, the Court may make an order that may and usually makes an order that the parties to the proceedings pay the costs of the children’s independent lawyer.
What costs am I entitled to? What is the basis of the costs that can be ordered?
The Court if it is to make an order that one party pay the costs of the other party is not limited to the basis of the order. However, the basis must be exercised with the objective discretion.
Ordinarily, a judge will award costs on a party and party basis. This means in theory means that the party against whom the order is made will only pay the minimum costs that were expended to do justice between the parties.
There are many costs involved in litigation which do not fall within the party and party costs.
However, in exceptional circumstances, a Court may order costs on an indemnity basis. Watson & Watson were the solicitors in case Cohan v Cohan in which the Family Court determined that it had power to award costs on an indemnity basis. The circumstances on under which the costs order on an indemnity basis is ordered is not limited. However, such an order will only be given where the Court holds that one party has acted improperly, for example, pursuing a case that had no chance of success or making false allegations. Costs on an indemnity basis may also be ordered where one party imprudently rejects a settlement offer from the other. However, the Court is under no obligation to award costs on an indemnity basis in such cases.
When should the Application for Costs be made?
The Application for costs can be made by any party at any time during the proceedings or within 28 days after the conclusion of the proceedings.
The Court can make an order for costs of a set amount or order that the costs be assessed. The usual position is that the Court hearing the matter will not be involved in the assessment, however, there are to some limited extent exceptions to this rule. We will advise you in relation to these matters as the circumstances arise.
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