My Ex says I will pay their legal fees if I don't agree to settle: True or False?

Monday, 13 November, 2017

You’re part way through negotiating your property settlement and arrangements for children and just been presented with a bill for legal fees that has made you feel physically ill. After months of correspondence back and forward between your lawyer and the other side, you’re actually no closer to a resolution than when you started.

As you assess the damage, it occurs to you that a large portion of the costs you’ve incurred relate to your ex-partner being sluggish in responding to requests for information, and perhaps even intentionally obstructing you from reaching an agreement.

They have

refused to provide information when requested
requested you to provide petty or irrelevant disclosure
supplied incomplete or inaccurate disclosure
been unprepared for appointments to negotiate, or
just not turned up to mediation appointment and court hearings.

The telephone calls, meetings, reminder letters to both you and your ex and the other sundry work your lawyer does on your behalf has added up surprisingly quickly.

I am often told by people in this situation that their lawyer is going to send a threatening letter to their ex, telling them that if they don’t provide the information, they will also be pursuing them for all of the resultant unnecessary costs.

Sounds fair enough, doesn’t it?

The 'costs threat' costs you

Before you pay your lawyer to write a letter threatening your ex with costs recovery, consider that a successful application to award costs in family matters is only granted in a very small percentage of cases.

A study conducted by The Law and Justice Foundation of NSW reported applications for costs were made in 18% of cases included in the study, with costs awarded in only about 2% of Family Court cases.

In addition to that, you need to fully understand the concept of no-fault divorce which operates in Australia. Regardless of the obstructive and unpleasant behaviour of your ex-spouse, there is no blame associated with the breakdown of your relationship, nor in most cases, with their conduct during the settlement period. So, they will not be punished for obstructive, tardy or unpleasant conduct and you will not be compensated with a costs order for being proactive, on time and pleasant. Don't let that stop you from being proactive, on time and pleasant anyway!

It's highly unlikely that you will be awarded costs, and remember, there will be additional costs involved for you to lodge an application to have costs awarded.

Unless you are nearing the end of a trial and it is clear that your matter meets the "exceptional circumstances", consider carefully as to whether it is really worth waste your money or antagonising your ex-partner by instructing your lawyer to send an unnecessary, and most likely futile, threatening letter.

Legal costs in family law matters

It is accepted in family law cases that usually the parties involved in legal proceedings are responsible for paying their own legal costs.

The Court may order one party to pay the legal costs of another. These are known as party-party costs and they are made only in exceptional circumstances.

As you’ve already read there can be exceptions, hence your lawyer being able to make the threat against the other side, but successful applications are extremely rare.

Examples of exceptional circumstances

Offers of Settlement

Where one party has declined a reasonable offer for settlement made by the other party and subsequently made an application to pursue the matter to trial, and the sum awarded by the Court is less than that originally offered, the 'losing' party may have to pay the other party’s legal costs.

Losing an Application

If you make an application to the Court and the application is not granted, then the Court may order the losing party to pay the other party’s costs. This is especially so if when the application commenced, it was deemed by the Court to have no chance of success.

How does the Court make a party-party costs order?

The rules about party-party costs are set out in Part 21 of the Federal Circuit Court Rules 2001 (the Rules). The Family Law Rules 2004 (applied in the Family Court) do not apply to family law matters in the Federal Circuit Court unless ordered by a Judge.

Unless the court otherwise orders, the amounts payable for a party-party costs order are set out in Schedule 1 of the Rules.

The Court may depart from this scale. Sometimes, the Court may order that a specific amount of costs be paid, or may apply:

• the costs rules of the Family Court, or

• another method for determining the costs.

Costs in contravention proceedings

Division 13A of the Family Law Act 1975 sets out how costs are awarded in contravention proceedings that affect children.

If the Court decides that a 'more serious' breach of an order has occurred, it must order costs against the person breaching the order, unless it would not be in the child's best interests.

If the Court dismisses a contravention application or finds that no action is required, and such a finding has been made previously, it must consider ordering costs against the person who filed the contravention application.

Source: www.federalcircuitcourt.gov.au website

What are indemnity costs?

Where the conduct of a party warrants it, the Court can award all costs that a party reasonably and properly incurred. These costs are known as indemnity costs.

Applying for costs?

A costs application is only considered at the end of a case.

In some situations, you can make an oral application for costs on the day of your court hearing or, file an application seeking a costs order with the Court.