Legal Costs - Yours and His/Hers?
Payment of legal costs is an important issue to all Family Court litigants.
Section 117(1) of the Family Law Act sets out the general principle that in proceedings under the Family Law Act each party shall bear their own costs.
In most Family Court cases for a variety of reasons each party does bear his or her own costs.
The costs that a client pays to his or her own solicitors are generally known as, "lawyer/client costs" or "solicitor/client costs".
In certain circumstances the general rule that each party bears his or her own costs in the Family Court may be departed from. In these circumstances you may be able to obtain a Court order against the other party requiring him or her to pay a proportion of your costs. The proportion of the costs payable depends upon a variety of factors and is at the discretion of the presiding judicial officer. The presiding judicial officer must however exercise his or her discretion taking into account a variety of factors. Section 117(2)(A) of the Family Law Act sets out these factors which include:
(a) the financial circumstances of each party to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of Legal Aid and if so, the terms of the grant of that assistance to that party;
(c) the conduct of each party to the proceedings in the proceedings, including their conduct in relation to the pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with any previous orders of the Court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the Court considers relevant.
The Court is generally more reluctant to make costs orders requiring one party to pay a proportion of the other party's legal costs in cases involving children. Whilst the Court expects parties to behave in a reasonable manner and make every effort to settle disputes without going to Court, people should not be discouraged from issuing proceedings in relation to children because of a fear of having to pay not just their own legal costs but also a proportion of the other party's legal costs. In some children's cases though where a party has been unreasonable or unsuccessful in the proceedings, an order for costs may be made against that party.
The Application of the factors set out in 117(2)(A) can be complicated.
For instance if one party brings an Application which is successful, that party may have an expectation they will obtain an order for costs against the unsuccessful party given the contents of section 117(2)(A)(e) referred to above. If however the unsuccessful party is in poor financial circumstances with several young children to support, the Court may not make any order for costs.
There will be some circumstances where the arguments for a costs order being made will be very strong and clear cut. At other times it will be difficult to predict what orders, if any will be made in regard to one party having to pay a proportion of the other party's legal costs given the different factors in section 117(2A).
If one party is required to pay another party's legal costs, the proportion of the legal costs payable is also at the discretion of the Court. In some instances only a small payment may be ordered against an unsuccessful party whereas at the other extreme a party who has been unsuccessful and has behaved in a particularly unreasonable and inappropriate manner in the eyes of the Court may be required to pay what are known as indemnity costs. Indemnity costs are as the name suggest – a costs order requiring an unsuccessful party to pay all of the actual lawyer/costs of the successful party. Indemnity costs orders are very difficult to obtain.
Not just your own legal costs but the possibility you may have to pay a proportion of the other party's legal costs or conversely that you may be able to obtain an order for costs against the other party, are important factors which need to be born in mind at all times during Family Court litigation.
As well as being conscious of your own costs you need to speak to your lawyer as to whether or not you are at risk of any costs orders being made against you and conversely what you can do to increase your chances of obtaining a costs order against the other party.
Whilst costs factors can add to the pressures of litigation, they can also prove a very useful tool in focusing the attention of litigants which can sometimes lead to a quicker settlement than would otherwise be the case.
We are happy to discuss with you in more detail.
November 2003
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