Costs in property and maintenance cases

What are legal costs?

Legal costs include:

• professional costs
• disbursements.

Professional costs are the fees charged by your lawyer for the work they do on your case and their expertise. They include things like:

• reading and preparing legal documents
• attending court on your behalf
• taking phone calls
• writing emails.

Disbursements are fees or expenses that your lawyer has paid on your behalf. They include:

• copying documents
• court filing fees
• postage
• travel costs
• agents fees – the costs of the work done by a lawyer for another lawyer
• experts fees, for example, the preparation of expert reports.

For more information, see Dealing with my lawyer.

Party’s to pay their own legal costs

Generally, both parties have to pay their own legal costs in family law cases. However, the court can order one party to pay some or all of the other party’s legal costs if there are circumstances that justify it making an order. 

Apply for a costs order

You can apply for a costs order:

• at any time during your case, or
• within 28 days after the court makes final orders
• within 28 days after the other party discontinues their case.

To do this, you need to complete:

• an Application in a Proceeding, and
• an Affidavit - Family law and child support.

If you have a costs agreement with your lawyer, and you are applying for a costs order on an indemnity basis, you must notify the court of the terms of your costs agreement.

If this time limit has passed, you may be able to ask the court for an extension of time to apply for a costs order in limited circumstances. 

What the court will consider

When deciding whether to make a costs order, the court will consider:

• both party’s financial circumstances
• whether a party is receiving Legal Aid NSW
• the conduct of both parties throughout the court proceedings
• whether your case was the result of a party not complying with a previous court order
• whether a party was wholly unsuccessful in the court proceedings
• any offers to settle the court proceedings, including the terms of any offers
• other relevant matters.

If you can make out any one of these grounds, that is enough for the court to be able to make a costs order. However, the court will balance all of these factors to determine whether the overall circumstances justify it making a costs order.

The court has the discretion to determine what weight it gives to each of these factors.

Financial circumstances

The court will consider you and your ex-partner’s financial circumstances to determine whether:

• both parties have the capacity to pay costs
• a costs order will cause great financial hardship
• there is a great difference between you and your ex-partners financial position
• a party’s capacity to pay costs is impact by court orders, for example, an order to pay the other party money or a maintenance order.

The court can still make an order for costs against a party, even if they don’t have the capacity to pay costs, if the circumstances justify the court making a costs order.

Grant of legal aid

The court can make an order in favour of, or against, a party who is receiving legal aid. Legal aid does not include assistance provided under the Family Violence Cross Examination Scheme.

Conduct of both parties

The court will consider the conduct of both you and your ex-partner to determine whether one of you caused the other to incur legal costs unnecessarily. This includes situations where a party:

• failed to comply with their duties of financial disclosure
• deliberately and significantly undervalued their assets, forcing the other party to obtain valuations of the property
• refused to negotiate or make an offer of settlement
• prolonged the court proceedings unnecessarily
• gave false or misleading evidence about their financial circumstances
• included lengthy, irrelevant material in their affidavit or oral evidence, such as referring to numerous old, trivial events in exhausting detail that have no significance to the case
• made late amendments to their grounds of appeal and failed to give adequate notice to the court and the other party of their intention to amend their notice of appeal.

Failure to comply with orders

If you or your ex-partner don’t comply with your legal obligations under property or maintenance orders, and further court proceedings are commenced, the party in breach may be ordered to pay the other party’s legal costs.

The court will take into account whether:

• the failure was deliberate or unintentional
• there are extenuating circumstances that meant the failure was beyond the party’s control
• there is a history of the party not complying with orders.

It is most common for the court to make an order on this basis when enforcing an order that a party has not complied with.

Party is wholly unsuccessful

The court must determine an application before it can make a costs order against a party for their application being wholly unsuccessful. For this reason, the court can’t make an order on this basis if a party discontinues their case. However, the court may be able to rely on different grounds to make a costs order in such circumstances.

The court will give great weight to a party who appeals final orders and is wholly unsuccessful.

Offers to settle

The court will look at whether you or your ex-partner made an offer in writing to settle your case, and the terms of any offers. It will consider:

• the context of when the offer was made
• the knowledge of the party that received the offer regarding the parties financial circumstances
• whether an offer was made with precision and in terms that can be understood – there is no obligation on the person receiving the offer to ask for clarity of its term
• how close the terms of the offer are to the final orders.

The closer the terms of an offer to settle are to the orders made by the court, the more weight the court will give to this factor. However, just because the terms of an offer of settlement were equal to or better than the final orders, this doesn’t mean it wasn’t reasonable to reject the offer. The court will look at the context of when the offer was made and what knowledge the parties had about each other’s financial circumstances.  

The court will give less weight to this factor when a party received an offer at a time when they didn’t understand the parties financial circumstances, or their financial circumstances are so complex that it would have been premature to accept an offer.

Other relevant matters

The court has a wide discretion to take into account any other matter that may be relevant to determining an application for a costs order. This may include such things as whether the proceedings were frivolous or vexatious.

It does not include the difference in legal fees that you and your ex-partner are charged by your lawyers.

Making a costs order

The court may make an order for costs if there are circumstances that justify it doing so. This is a discretionary power.  The court can make an order on its own initiative or following an application by a you or your ex-partner.

Usually, the court may make an order in situations where:

• a party doesn’t comply with the pre-action procedures
• a party doesn’t comply with the case management procedures
• a party doesn’t comply with the rules, regulations or a procedural order
• a party refuses to comply with a final court order
• a party discontinues their case.

The court can make a costs order:

• for a specific amount
• for an amount as assessed on a particular basis, for example, party-party or indemnity basis
• for an amount to be calculated using a method stated in the order
• at the rates set out in the rules.

A costs order may relate to part or all of the court proceedings.

Usually, the court will make an order for party-party costs.

When deciding what order to make, the court may consider:

• the importance, complexity or difficulty of the issues in your case
• the reasonableness of each party’s behaviour during the court proceedings
• the ordinary rates of legal fees
• whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate
• the time spent comply with the pre-action procedures and during the court proceedings
• whether expenses are fair, reasonable and proportionate.

The purpose of a costs order is to reimburse a party for the costs they have incurred during court proceedings. It is not to punish the party ordered to pay costs.

Party-party costs

Party-party costs are the costs that the court orders a party to pay. They are also known as ordered costs.

Normally, party-party costs only cover a portion of a party’s total legal costs.

If the court makes an order for costs, but doesn’t specify the amount to be paid or the method for determining the amount to be paid, the costs must be assessed on a party-party basis.

Indemnity costs

Indemnity costs are all the costs incurred by a party other than costs that are unreasonable in amount or that have been incurred unreasonably.

In exceptional circumstances, the court can order that a party pay the other party’s legal costs on an indemnity basis. This may include situations where a party:

• began or continued their case when they should have known they had no chance of success – the court will presume they acted with some ulterior motive or a wilful disregard of the known facts
• makes allegations of fraud knowing they are false
• engages in misconduct that costs the time of the court and other party
• makes allegations they never should have made
• prolongs the court proceedings by making baseless claims
• refuses an order to compromise.

The court has a discretion as to whether it makes a costs order on an indemnity basis. The court doesn’t have to make an order for indemnity costs even if there are grounds for it to do so.

For more information, see Legal costs in family law matters on the Federal Circuit and Family Court of Australia website.