Indemnity Cost Orders in Family Law Matters- What does it mean, and how do you get one?
Family law is a unique area of law, because of the amount of people that have access to the family law system in Australia at any given time. Disputes usually arise from families being unable to resolve their circumstances privately, and it is the intention of the Family Law Act 1975 (Cth) for all people - subject to jurisdiction and limitation periods - to have access to the Court for that assistance.
Another unique aspect of family law is the general rule that each party is responsible for their own legal costs (see S 117 of the Family Law Act 1975). In matters where litigation can stretch for months and years, this is a very significant factor. Each time a party applies for the other party to pay some or all of their legal costs, they are required to establish to the Court that the circumstances of their case warrants a departure from that general rule. When considering this, the Court will take into account:
- the parties’ financial circumstances, and any legal aid grants;
- the position of the parties, and their conduct before the Court;
- if the proceedings were due to a breach of existing Court Orders; and,
- attempts made to settle the matter, and anything else the Judge considers relevant.
Even when a costs order is made, the Judge dealing with the matter has to decide whether to make a cost order on a limited basis (scaled, or party/party costs), or indemnity costs (meaning that every dollar paid by the successful party will be reimbursed by the other side).
In the matter of Jaros & Calden, a case heard in the Federal Circuit Court in Adelaide in August 2019, the issue of indemnity costs were explored by Judge Heffernan:
“Such an order involves a very significant departure from the ordinary course and should only be made in exceptional circumstances. […] Some categories of matter in which it has been held appropriate to make an order for indemnity costs have been: where a party makes allegations of fraud knowing them to be false; or a party makes irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that proceedings had been instituted and maintained for an ulterior motive; where proceedings have been commenced in disregard of known facts, or clearly established law; and, the making of allegations which ought never to have been made or a case based on groundless contentions. (at paragraphs 7-8)
I am satisfied by virtue of […]the conduct of the father in the proceedings, his making of allegations which were not reasonably capable of belief, his deliberate non-compliance with orders of the Court; and what he must have well known to be the hardship caused to the wife in having to make the Application by reason of her difficult financial circumstances, that an order for costs on an indemnity basis is justified in this case with respect to the Application in a Case. Parties must be dissuaded from making baseless allegations, disobeying Court orders for tactical reasons, using children as weapons in a litigious war of attrition and wasting Court time. When all of those features are present, as they are here, they are matters which can tip the balance in favour of an exercise of the Court’s discretion to make an exceptional order for indemnity costs. They have done so on this occasion.” (at paragraph 27).”
The matter of Jaros & Calden highlights that whilst indemnity cost Orders are uncommon and should not be expected by parties in family law litigation, a party who has been forced to incur legal costs in an unreasonable situation, may be able to seek costs from the other side.
An Application for Costs is a complex argument in family law that arises at various points throughout the course of a matter. If you have questions about the implications of costs orders in the family law system, please don’t hesitate to contact a member of Coleman Greig’s Family Law team, who would be more than happy to assist you today.