An unfortunate reality of the separation process is that you incur potentially significant legal fees along the way. That is especially the case if you and your ex are unable to find a negotiated outcome, and as a result your separation requires you to go all the way through litigation.

Many people might have the view that if you “win” in litigation, your costs will be covered by the other party.

However, costs in family law proceedings don’t necessarily work that way.

In this article we’ll give you a rundown on how a Court is going to approach the question of costs in a variety of circumstances, and some of the basic principles about how legal costs work in family law proceedings.

The General Rule on Costs in Family Law Proceedings

Can you make your ex pay for your legal costs in family law proceedings?

Not usually.

The starting point for legal costs is that each party to a family law proceeding is going to bear their own costs. That means you pay your own lawyers, your ex pays their lawyers, and nobody contributes towards the other’s fees. This general rule applies to any Court proceeding under the Family Law Act.

Deviating from that general rule requires circumstances that justify doing so.

Exceptions to the Rule

So what are the kinds of circumstances where a Court could consider making a costs order against your ex?

As you’d expect, the Court can consider any matter it considers relevant. The Court has a wide discretion to look at anything it wants to in deciding whether to make a costs order against a party.

There are, however, a list of specific things that the Court will look at.

None of these factors will absolutely determine the outcome, but each will be weighed and taken into account as being either for, against, or irrelevant to the making of a costs order in a specific situation:

1. The financial circumstances of the parties (including whether one or both parties are receiving assistance from legal aid and the nature of that aid). So, for example, if a party simply cannot pay a costs order then that might weigh against making one. It is not, however, the case that simply because a costs order would be a financial burden a party can avoid having one made against them (especially if the other factors weigh heavily in favour of making one);
2. How the parties have conducted themselves. This includes looking at a party’s conduct in relation to each step of the proceedings. A party that is consistently difficult, argumentative, non-compliant, or unreasonably increases the complexity and cost of a proceeding will not be viewed positively by the court. So, for example, if a party denied a series of allegations that were clearly true and should have been admitted (and in doing so lengthened the trial by an entire day), that might be relevant. Similarly if a party failed to disclose material information or documents until they were forced to, that would be relevant too;
3. Whether the proceedings themselves only exist because a party breached previous orders of the Court. If you need to apply to the Court only because your ex has failed to comply with previous orders (for example, has failed to make a payment or transfer property in accordance with a property settlement), the Court could well adopt a position that you should not be significantly disadvantaged in the legal costs you incurred to enforce that order;
4. Whether either party has been “wholly unsuccessful” in the proceedings. “Wholly unsuccessful” is a high bar to meet, and in the context of family law proceedings is not particularly common. However, it does happen. If, for example, your ex has applied for maintenance orders and fails to satisfy a Court that they are entitled to maintenance of any kind, that would be “wholly unsuccessful”. This is different from, for example, only obtaining some of the orders that were sought, but not all of them; and
5. Whether offers of compromise have been made (more on this below).

What you’ll notice is that almost all these items are variations on a particular theme – the conduct of the parties. So the best way to think about this topic at a big picture level is that the Court is going to consider whether a party’s position, or conduct, was significantly unreasonable in the circumstances. If it was, then that could flow through to a potential costs order against them.

Understanding The Court Scale and Indemnity Costs

Many people mistakenly believe that if they get a “costs order” from a Court, then it will cover their legal fees in full.

This is not generally true.

Sometimes the Court will make an order for costs in a fixed amount. This is more common in smaller, simpler applications where a Court can be satisfied that a particular amount is appropriate to order.

Otherwise, the typical costs order a Court will give is for costs on a “standard” basis. This means that the amount of costs payable by the other party will be calculated using a table (called the “scale” of costs). The table is specifically designed to be lower than the actual costs you have probably incurred.

In rare circumstances, the Court might make an order for “indemnity” costs. This is a costs order that is calculated by reference to what you have actually spent with your lawyers, and will come much closer to fully compensating you for your legal fees. It is, however, a very uncommon order and generally only made if the Court considers a party’s conduct to be particularly unacceptable, or a party makes a strong case following an offer to settle (see below).

The Power of Offers to Settle

One of the things you will inevitably explore with your family lawyers in the separation process is whether, and when, you might make an offer to resolve the matter on certain terms.

You might, for example, make multiple offers to resolve the matter as part of a mediation.

Outside mediation, however, you could also send specific written proposal to resolve the outstanding issues.

This is not just a good idea because if could help end proceeding early, but it can also offer some strategic benefit.

Specifically for this article, a properly considered offer to settle the matter can increase your chances of getting a successful costs order.

While there are many things to think about in an offer to settle, the fundamentals are:

1. Ensure that your offer to settle contains some element of compromise – that is, while you might believe you are entitled to X, a true offer to settle might mean you are prepared to accept something less than X to resolve the matter early;
2. Discuss with your lawyers the most likely outcomes if the matter goes to trial. Ideally an offer to settle should be something less than you think the likely outcome is going to be, to the extent that’s possible to assess.
3. Consider the timing. What the parties know at the time of the offer is relevant to considering whether the other party was unreasonable in rejecting the offer.

Of course during some matters there might be a number of different offers to settle a proceeding. Some might be for “costs protection”, and others might not. Generally speaking your family lawyers will discuss with you the possibility of making an offer to settle the matter at multiple key points along the way in any separation proceedings.

Costs are an Important Part of your Separation Outcome

Of course, costs orders are not typically the most important thing that you’ll be concerned about during separation – your focus will be on finalising your former relationship and moving on with a clean start.

That said, because legal costs can be significant, it’s a good idea to consider (with your family lawyers) ways to improve your chances of securing a costs order and minimising the risks of getting one against you.

That will be relevant to what things you contest in the proceedings, what offers (if any) you might make to try and resolve the matter before a trial, and what position you take on various issues throughout the separation process.

Give us a call today if you need help on this, of any other, issue with your separation.