Cost Orders in Family Law

In the realm of family law, the allocation of costs is a crucial aspect that can significantly impact the parties involved in legal proceedings. Section 117 of the Family Law Act 1975 governs the principles surrounding costs in family law matters in Australia. This provision outlines the general rule that each party bears their own costs but allows for exceptions based on specific circumstances. In this blog post, we will delve into the intricacies of Section 117, exploring the factors that influence the court’s decision to make cost orders and the considerations taken into account.

The General Rule: Each Party Bears Their Own Costs

Section 117(1) establishes the default position that, in family law proceedings, each party is responsible for bearing their own costs. This means that, absent exceptional circumstances, the financial burden of legal proceedings falls upon the individual parties involved.

Exceptions and Judicial Discretion

However, Section 117(2) introduces a significant caveat to this general rule. It empowers the court, under certain circumstances, to make orders regarding costs. The court’s discretion to do so is influenced by various factors outlined in the subsections as well as the applicable Rules of Court.

Key Considerations in Making Cost Orders

When determining whether to make cost orders, the court must consider several factors. These considerations provide a comprehensive view of the circumstances surrounding the case:

1. Financial Circumstances: The court takes into account the financial circumstances of each party, recognizing that disparities may warrant adjustments in cost allocations and the ability of any party to actually pay the costs.
2. Legal Aid Assistance: If a party is receiving legal aid, the terms of the grant are considered. Whilst a party in receipt of Legal Aid funding is not immune to a costs order, it does form part of the matrix of factors considered by the Court.
3. Conduct of the Parties: The court assesses the conduct of the parties throughout the proceedings. This includes their behavior regarding pleadings, discovery, admissions of facts, and compliance with court orders.
4. Failure to Comply with Court Orders: If the legal proceedings were necessitated by one party’s failure to comply with previous court orders, the court may take this into account in cost determinations.
5. Unsuccessful Party: The court considers whether either party has been wholly unsuccessful in the proceedings. A party who has been wholly unsucessful is more likely to be ordered to pay the other parties’ legal costs. This factor is often difficult to argue in very large or complex matters where both parties have small “wins” and “loses” throughout the proceedings.
6. Settlement Offers: Offers made by either party to settle the proceedings, and the terms of such offers, are considered. If a party can show they made an earlier offer in the same or similar terms to those that the Court ultimately makes (or terms which are even better for the other party), that party can argue that all costs after that offer was made should be paid by the party who did not accept the offer as that is the sole reason for those costs accruing.
7. Other Relevant Matters: The court retains the discretion to consider any other matters deemed relevant to the case.

Section 117 of the Family Law Act provides a framework for the allocation of costs in family law proceedings, balancing the general principle that parties bear their own costs with the court’s discretion to make orders in specific circumstances. As parties navigate the complexities of family law, understanding the factors that influence cost orders becomes essential for informed decision-making and effective legal representation.