By Gianna Huesch
The affordability of legal fees is a common concern for those going through family law litigation. The worst situation is where someone feels they can’t afford to leave a relationship and feels forced to stay due to an inability to pay the legal costs of proceedings.
While clients often seek to borrow funding for their legal representation from family or friends, or through bank loans, credit cards or redraw facilities, for example, one possible solution may be to seek funding from the other party to cover litigation expenses.
Under section 117 of the Family Law Act 1975, separating couples are expected to pay their own costs, however under section 117(2) of the Act, the court does have the authority to make orders for costs if “the court is of opinion that there are circumstances that justify it in doing so”. The making of orders for litigation expenses in such circumstances are informally known as a ‘Hogan’ or ‘Barro’ order, and while relatively uncommon, are a legitimate option to consider for those unable to meet the cost of funding their family law litigation.
These orders are most typically seen in situations where a party to a relationship may have controlled the finances or been the sole breadwinner while the other party raised the children, leading, not only to a disparity in the financial circumstances of the parties, but may also result in a situation where one party does not have access to sufficient funds to pay for their legal fees.
When one party to a relationship is in a financially dominant position, there is the potential to seek funding from that party, at the discretion of the judge, with the aim of putting both parties on an equivalent financial footing for proceedings.
Essentially a partial property settlement received in advance, monies are paid into the financially weaker party’s solicitor’s trust account to cover the legal fees and expenses that will be incurred (note that orders can be made for costs already incurred as well as for future costs). When it comes to the final property settlement, the funds advanced are included in the net asset list and are deducted from the entitlement of the party who received the funds.
The courts regard making a Hogan/Barro order as a last resort and will expect efforts to have been made to obtain consent to access funding prior to making such application. For example, parties usually first try to obtain consent from the other side for a joint drawdown of funding from the matrimonial asset pool, which is equally favourable to each side.
However in cases where consent is not given, it’s possible to apply to the courts to order the financially dominant party to provide the other party with a lump sum of funds to prosecute their case. If the wealthier party’s funding would be asset-based, the court is able to order the sale of assets to pay the amount.
The granting of a Hogan/Barro order is dependent on the individual facts and circumstances of a case, including the available asset pool and whether parties meets certain prerequisites and threshold tests.
Section 117(2A) of the Act lists the factors to be considered by the court in determining if a party should be ordered to pay the costs of the other. For example, it must be proven that the wealthier party is in fact in a financially dominant position, that they have the capacity to pay their own legal costs, and that the financially weaker party can’t meet their legal costs. Evidence also needs to be provided as to actual legal costs incurred to date and the amount being applied for must be less than the amount the applicant is likely to receive in the final property settlement. The court will also take into consideration a number of other factors, such as the parties’ conduct during proceedings. Your solicitor will be able to advise you on the precise form of evidence and processes involved in making such an application.
Because the making of the Hogan/Barro application itself will incur legal costs, it’s important to be expertly advised by a family law solicitor on the commercial reality of whether you are likely to be granted a Hogan order. The court also has discretion to order that the wealthier party pays the other party’s costs of making the Hogan/Barro order application itself, if a party was forced to make the application because consent was not provided but would have been reasonably expected to have been provided.
Would you like to discuss negotiating legal funding with your ex-partner, or alternatively making a Hogan order application? Please contact 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.