May 2018 Family Law Case Watch

Who bears the costs in Family Law proceedings?

Understandably, many Family Law litigants consider it to be unjust when they are either forced to initiate or respond to Family Law proceedings at significant cost. As a result, Family Law solicitors are frequently asked whether a Costs Application can be brought against an opposing party.

Pursuant to Section 117 of the Family Law Act 1975 (“the Act”), each party to proceedings under the Act shall bear his or her own costs. Unfair as it may seem, successful Costs Applications in Family Law matters are the exception not the rule. Accordingly, litigants should be warned not to conduct their matters with the hope of relying on a Costs Application.

The recent Family Court case of Jenkins & Jenkins however, is an example of a successful Costs Application brought by a Wife against her Husband. This case provides invaluable insight into how the Court exercises its discretion when applying the exceptions to the general principle that parties shall bear their own costs in Family Law proceedings.

The breadth of the Court’s discretion includes making Costs Orders that it “considers just” and “relevant,” in addition to considering:

1.      The financial circumstances of each of the parties;

2.      The conduct of the parties in relation to the proceedings;

3.      Whether any party to the proceedings has been wholly unsuccessful in the proceedings; and

4.      Whether either party to the proceedings has made an offer in writing to the other party to settle the proceedings and the terms of any such offer.

The facts in this matter relevant to the Costs Application concerned the Wife who was seeking that her Husband pay her costs of and incidental to, an Application in a Case seeking interim spousal maintenance and other financial orders relating to a Family Trust. The Husband in his Response document, sought to have the Wife’s Application for spousal maintenance dismissed and he did not propose paying her any other amount by way of spousal maintenance. He also sought to have that part of the Wife’s Application dealing with the Family Trust dismissed and he did not propose any alternate orders in relation to Trust administration matters.

The matter was allocated a date for Hearing and both parties attended Court. Prior to entering the Court room, the parties participated in negotiations and an agreement was ultimately reached. The parties accordingly requested that the Judge formally make the Orders contained in the agreement they reached outside the Court room.

The agreement reached provided that the Husband pay the Wife spousal maintenance in the amount of $457 per week. In respect of the Family Trust, orders were made including: that outstanding tax returns be lodged, that the 2015 trust income be distributed equally between the parties, and that the 2016 and 2017 trust income be distributed totally to the husband (with some limitation as to the Husband’s ability to draw on that income for the 2017 financial year and any future years pending the finalisation of the parties’ property settlement). The orders also required the Trust income to be paid into the bank account of the Family Trust as opposed to the Husband’s personal bank account. There was an additional order included that had not appeared in the Wife’s original Application, namely, that the Husband pay the amount of $2,169.50 for the repair of the boundary fence at the former matrimonial home.

The Wife’s original Application had envisaged that the Husband pay her spousal maintenance in the amount of $689.14 per week and she ultimately received $457 per week. In addition, the Wife conceded in the agreement that the Husband receive the income from the Family Trust for the 2016 financial years onwards (in accordance with the above-mentioned conditions.

The solicitor for the Husband, when making submissions in respect of the Wife’s Costs Application, made the assertion that the Husband, while not wholly successful, was also not wholly unsuccessful and therefore each party should bear their own costs in respect of the compromised agreement that was reached at Court.

The Judge however, in considering the conduct of the matter leading up to the hearing and in particular, in reviewing the letters of offer and counter-offers exchanged between the parties, considered that the proceedings could have been resolved prior to the hearing had it not been for the unreasonable conditions proposed by the Husband. The Judge’s reasons included the fact that an agreement was reached on the day of the Hearing without any mention of such conditions previously and consistently required by the Husband.

The Judge was satisfied that although the Husband knew of the Wife’s need and his own capacity to contribute to her financial support, the Wife had to bring an Application in order to obtain the outcome that she ultimately obtained. The Judge opined that the Wife had been put to considerable expense by paying her solicitor to prepare and file the Application and in retaining Counsel to appear at the hearing. The Wife incurred further costs in paying for her solicitor to prepare and file the Costs Application and in retaining and instructing Counsel to appear at that Hearing.

The Judge was also satisfied with the evidence that the Husband was earning around $184,000 before tax per year and had approximately $51,000 in bank accounts. The Wife, in stark contrast, was earning $7,800 per year and had approximately $1,700 in her bank accounts.

The Judge was therefore satisfied that the circumstances justified an order for costs being made and ordered that the Husband pay to the Wife the sum of $6,000 towards her costs of and incidental to her Application in Case filed in July 2017.

We hope that our May 2018 Case Watch has provided you with clarity in respect of who bears the costs in Family Law proceedings and the matters that the Court may consider when applying their discretion to award a Costs Order.

If you have recently separated or have a Family Law enquiry, please contact us on (02) 9437 0010 or to discuss in complete confidence. We are conveniently situated in St Leonards on Sydney’s Lower North Shore and have a team of experienced and caring professional Family Lawyers available to help you.

These posts are only intended as an overview or comment on current issues that may interest you and are not legal advice. If there are any matters that you would like us to advise you on, then please contact us.

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