Application for costs: A wife made a futile attempt to have her ex pay her legal fees recently in the family courts. The matter highlights the need to be careful with proceeding with an action for costs that can’t succeed. Why was the wife’s application pointless? Let’s take a look…
The case, given the pseudonym Bickman & Julien, was in fact an arbitrated matter. That is, the former couple had used Alternative Dispute Resolution process of arbitration to determine their property matter. They had then registered the decision of their arbitrator with the courts, making it enforceable. The current court dispute related only to the issue of who should pay the costs.
In the case, the former couple had sought an arbitral award over their marital asset pool of $970,000:
The arbitrator found that the total value of net assets and superannuation was $953,832.92.
The arbitrator weighed the parties’ respective contributions and found that the assessment should be 60% to the husband and 40% to the wife. Based on s 75(2) factors, the arbitrator added 5% to the assessment in favour of the wife thereby producing a division of net assets as to 55% in favour of the husband and as to 45% in favour of the wife.
The wife made an application for an order under section 117(2) of the Family Law Act that the husband pay her “costs on a party/party basis as agreed or assessed”. The husband in turn asked for it to be dismissed, wanting each of them to bear their own costs in accordance with s 117(1) of the Act.
The wife argued she shouldn’t have to pay her legal fees because the arbitrator had handed down an award she had asked for (namely a transfer of property title) as well as making an order for an additional lump sum payment. This, she argued, meant her ex was “wholly unsuccessful” in the arbitration.
She argued that “in the upshot of the arbitrator’s final orders, the applicant was ordered to transfer to the respondent his right, title and interest in the Suburb B property and, additionally, that the applicant was ordered to pay the respondent $130,166. She submitted that while the arbitrator made orders in terms sought by both in relation to the Suburb B property, the additional requirement for the applicant to pay the respondent $130,166 meant that the applicant was wholly unsuccessful in this litigation”.
Her lawyers advanced the argument that the wife relied on case law that established that the phrase “wholly unsuccessful” here meant “without merit”.
However, hearing the costs issue the court found the husband had in fact been partially successful: because each party had proposed the transfer of title during the arbitration and because the husband had “succeeded in obtaining an order under s79 for the division of assets in his favour as to 55%.”
The court said given the husband had sought the property transfer orders, and the arbitrator’s award had made that transfer, the husband was not “wholly unsuccessful in the proceeding”. His case could not be seen as having been “without merit”, even if it failed in certain regards (such as his application to the arbitrator not to make any further property orders).
The court ruled each party should pay its own costs.
Who normally pays the costs of arbitration?
The costs of arbitration (obtaining legal advice, hiring an arbitrator, sometimes hiring a venue, court costs of registration etc) are borne by the parties equally. This mirrors the situation with litigated matters.
When do courts award costs?
As a rule, parties involved in family law proceedings each pay their own legal costs. Courts however have discretion to make orders for costs if they are satisfied that the circumstances justify it. For example if:
- A party breaches a court order and the other party has to file an application in court due to the breach;
- If a party fails to comply with standard court procedures (eg their duty of full and frank disclosure) which necessitates the other party filing an application to court due to it;
- If the litigation is determined to be frivolous or vexatious;
- If a party has been wholly unsuccessful in their application before the court; or
- If a written offer to settle was made by one party but rejected by the other, and after a court’s determination, the person making the offer is awarded an amount equal to or greater than the offer was.
As you can see from the above-mentioned case, it’s going to be hard to argue your ex was “wholly unsuccessful” and their case lacking merit, if they were seen to be able to achieve any elements of what they sought–even if the final percentage outcome means they “lost”.
You can read this case in full here.
Do you need assistance with a property settlement? Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.
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