Overview — Costs disputes

Assessment in relation to the costs incurred and charged in a family law matter may be undertaken either:

• • as a result of a challenge against an account rendered by the solicitor to the client (solicitor/client costs); or
• • as a result of a costs order being awarded against a party in the proceedings if the parties are unable to reach an agreement in relation to the quantum of the costs order (party/party costs).

There are two separate costs orders that may be made in the Federal Circuit Court and the Family Court (of Australia or Western Australia) in relation to party/party costs. They are:

• • costs on an indemnity basis. This means that the costs to be assessed may be charged in accordance with the costs agreement entered into between the client and solicitor; and
• • costs as agreed or assessed. This means that the costs are to be assessed in accordance with Pt 19.1 of the Family Law Rules 2004 (Cth) or Pt 21 of the Federal Circuit Court Rules 2001 (Cth) and the Schedules included in those Rules.

If an order for costs on an “agreed or assessed” basis is awarded, the parties are, after preparing a bill of costs, able to agree on the quantum to be paid. If no agreement is reached, the bill of costs will be required to be assessed.

In New South Wales, costs disputes are dealt with by way of an administrative process using the services of a costs assessor or review panel rather than in the court. In Victoria, disputes are dealt with in the Costs Court, as part of the Supreme Court.

In other States, matters such as lawyer/client, third party payer/law firm disputes are dealt with in accordance with the Supreme Court of each State or Territory.

Assessment of bill of costs

Where the client disputes the practitioner’s bill, the practitioner is required to provide an itemised account of all amounts claimed, the date of the occurrence and details of the work carried out and in accordance with the costs agreement and disclosure document originally provided to the client. Conditional costs agreements are not permitted in respect of family law matters. Interest does not accrue until at least 30 days after providing the bill and must reflect the provisions in the original costs agreement.

Where either the client remains unsatisfied or the law practice has been unable to recover, they can apply to the State Supreme Court for a costs assessor to be appointed. The costs assessor has wide powers to request documents and can refer the conduct of a law practice to the Office of the Legal Services Commissioner if they believe there has been professional misconduct.

See also Preparing a bill of costs in assessable form.

Court-ordered costs

Where a court orders either costs on a party/party basis or on an indemnity basis against a party, the applicant is entitled to a payment of costs that were “reasonably incurred” in the course of the litigation. If the parties cannot come to an agreed settlement, the paying party will be required to file an itemised account as well as the costs agreement between the client and the law practice as a reference point. Once the documents are filed by the applicant, the respondent will file a Notice Disputing Itemised Costs Account.

In the Family Court, the registrar will make the assessment of costs according to the Family Law Rules 2004 (Cth) applying Sch 3 while in the Federal Circuit Court, either the court itself or a registrar will make a costs assessment applying the Federal Circuit Court Rules 2001 (Cth). Once a costs assessment has been made, an order will be issued in the court, or a certificate of determination will be issued by a costs assessor. It is possible to apply for a review of a costs assessment by way of rehearing in both the Family and Federal Circuit Courts and in the Supreme Court of any State or Territory.

See also Having a bill of costs assessed.