In general terms, there are three categories of costs in litigation:

Solicitor/client fees – negotiated by way of a private agreement between lawyer and client. These legal costs must be fair and reasonable and the lawyer must avoid actions which result in increased legal costs. The lawyer is required to disclose their anticipated fees for any key stage of litigation and the costs agreement must be agreed to by the client.

Party-party costs – these arise following a court order that the unsuccessful party is required to pay the costs of the other party. However in family law matters, the general rule is that each party is responsible for its own costs and such orders are only made in limited circumstances.

Indemnity costs – such an order arises where the court orders that a party pay the reasonable solicitor/client fees of the other party and arises as a result of the unreasonable conduct of the party.

Solicitor/client costs

Fees payable by a client to their lawyer arises by way of a costs agreement in which the lawyer discloses the anticipated cost of litigation including any necessary disbursements. In NSW and Victoria, since 1 July 2015 the Legal Profession Uniform Law (LPUL) applies to regulating the manner of costs disclosure, billing, costs assessment and costs dispute resolution. Solicitor/client costs are now governed by the applicable laws regulating the legal profession in the relevant state or territory. See Solicitor/client costs and costs agreements.

Practice Tip: As from 1 July 2015, legal practitioners in both New South Wales and Victoria are governed by the Legal Profession Uniform Laws as a result of an Intergovernmental Agreement formalizing their participation in a joint regulatory scheme. .As at 2019, the Western Australia Attorney General has announced an intention for WA to adopt the Legal Profession Uniform Law. At the time of writing, the Bill has not yet been introduced into parliament. Other States and territories have declined to participate at this stage

Party/party costs

The Family Law Act 1975 provides that — as a general rule — each party is to bear their own costs. This general principle is expressed to be subject to the following exceptions:

• • costs orders as court thinks just — the court has a general power to make such orders as to costs as it sees fit;
• • costs in proceedings relating to overseas enforcement and international conventions;
• • costs where false allegation or statement made — where a party knowingly makes a false allegation or statement, the court must order that party to pay some or all of the other party or parties’ costs;
• • frivolous or vexatious proceedings; and
• • contravention without reasonable excuse (more serious contravention) — where a party has failed to comply with orders and other obligations affecting children, the court, inter alia, must make an order as to costs against the contravening party.

Costs in the Family Court as between parties are regulated by Ch 19 of the Family Law Rules 2004 (Cth). See Parties normally bear their own costs.

A party to family law proceedings in either the Family Court (of Australia or Western Australia) or the Federal Circuit Court may make an application for costs in either:

• • interim proceedings; or
• • upon final determination of the matter by the court.

See When Party/party costs orders might be made.

An application for costs can be made even if the matter is settled amicably between the parties or “by consent”. However, it is usual, and very desirable, that any consent arrangement include provision as to costs, usually being “that there be no order for costs” or “that each party shall pay his or her own costs of these proceedings.”

Independent children’s lawyer’s costs

In children’s proceedings, an Independent Children’s Lawyer (ICL) will often have been appointed. A condition of the appointment of the ICL includes provision that the ICL must seek costs against the parties (subject to a means test), whether the matter is finalised by consent or otherwise. In those circumstances the ICL may still make an application for costs against the parties. Such an order is usually not made, but practitioners need to be aware of the possibility of such an order.

See Independent children’s lawyer.

Proceedings in the Federal Circuit Court

Party/party costs in the Federal Circuit Court are regulated by Pt 21 of the Federal Circuit Court Rules 2001 (Cth). As for proceedings in the Family Court, the Family Law Rules 2004 (Cth) address party/party costs, while costs as between solicitor/client are regulated by the applicable laws regulating the legal profession in the relevant state or territory.

For party/party costs in proceedings before the Federal Circuit Court, see When Party/party costs orders might be made.