Close Nav


Derek Legal Blog

Author: Derek Legal


Derek Legal Blog

Applicable Principles for the Awarding of Costs





MLC 10467 of 2018










Applicable principles

4. The applicable principles are settled.  In general, parties to a proceeding under the Family Law Act 1975 (Cth) (Act), should bear their own costs: Act, s 117(1).  However, power is conferred on the court to make such order as to costs as it considers just where it is of the opinion that circumstances justify it in doing so: s 117(2).  The power is subject to a number of provisions, including s 117(2A) and the Rules of Court.
5. In s 117(2A) of the Act, a number of factors are listed which the court must consider in deciding what order for costs (if any) should be made.  I address those factors below.  Further, the Federal Circuit Court Rules 2001 (Cth) confer power when making an order for costs, to either: set the amount of costs; set the method by which such costs are to be calculated or to refer the matter for taxation in the manner there provided.  In addition, the court may set the time for payment of costs: r 22.01(2).
6. The power to make an order for costs is constrained by the requirement that the court has formed the opinion that circumstances exist to justify making an order for costs.  Where that opinion has been formed, s 117(2A) provides that the court shall have regard to the matters enumerated in that provision in considering what order (if any) should be made in relation to costs. 
7. Properly construed, there is nothing in s 117 which prescribes that more than one factor must be present before an order for costs may be made, or that a comparative evaluation of the weight of each such factor must be undertaken in the exercise of the discretion to award costs.[1] 
8. In Fitzgerald (as child representative for AF (Legal Aid Commission of Tasmania) v Fish,[2] the Full Court stated:

Nowhere in subsection (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in sub-s (2A).As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

9. While the weight to be given to any of the particular factors prescribed by s 117(2A) calls for the exercise of discretion, those factors, so far as they are relevant to that exercise, must be taken into account.[3]  Further, the authorities recognise that there may be one factor which so dominates the particular facts and circumstances of the case under consideration that it alone may sufficiently provide the sole basis for the conclusion that the discretion ought to be exercised in favour of, or against, an order for costs.  I address those matters in turn.

Parties’ financial circumstances – par 117(2A)(a)

10. The requirement to consider the parties’ financial circumstances draws attention to the need to address whether there is a disparity in the parties’ financial position.  However, the court is authorised to adopt a broad brushed approach.  The underlying objective is to enable the court to have some appreciation of the relative financial positions of the parties.[4]

Legal aid – par 117(2A)(b)

11. This factor has significance as requiring that the court cannot disregard legal aid as consideration where it applies.  Further, it draws attention to the need to reflect upon the general principle that a party cannot recover costs which he or she is subject to a liability to pay such costs.[5]

Parties’ conduct – par 117(2A)(c)

12. The court is required to consider the parties’ conduct:

. . . including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters.

13. Where the particular conduct of a party has caused an additional burden resulting in costs to be incurred by their opponent, this will commonly constitute a consideration which may engage the power to award costs. 
14. This consideration is not confined to non-cooperation or obstructiveness but may involve unjustifiable conduct of any kind which has caused costs to be incurred that ought not to have been incurred.[6]  Notably, In the Marriage of Greedy,[7] the Full Court recognised that the refusal to negotiate or to put forward an alternative appropriate order may be a factor which warrants the favourable exercise of discretion.  An infinite array of circumstances may constitute conduct that warrants attention under par 117(2D)(c).

Compliance with orders – par 117(2A)(d)

15. The court is required to consider “whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court.”  While it may be relevant, it is not necessary to establish that the party’s failure to comply with previous court orders entailed any culpable conduct (whether by act or omission).

Whether wholly unsuccessful – par 117(2A)(e)

16. The prescribed conduct to which par 117(2A)(e) draws attention is whether any party to the proceedings has been wholly unsuccessful in the proceedings.  In this connection, the authorities recognise that although a party’s submissions may have been wholly unsuccessful, they may not have been without merit.[8]  The Full Court endorsed the statement in Hawkins & Roe,[9] that “even a meritorious case can be ‘unsuccessful’ when the other case is found to have greater merit.”

Written offer to settle – par 117(2A)(f)

17. The court must also consider whether either party to the proceeding made a written offer to settle, the terms of the offer and their precision.
18. This requirement reflects policies of the Act including to encourage conciliation, the very real public interest to incentivise settlement, lighten the court’s workload and the drain on scarce judicial resources.[10]  In Browne v Green, the Full Court underlined the importance of proper consideration being given to the making of an offer, its terms, the time at which it had been made and that it be contrasted with the result which was achieved instead by judgment:

The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it proper consideration, is something to which very significant weight indeed ought normally be given.[11]

19. It follows that parties may proceed at their peril in rejecting a reasonable offer of settlement.  At the same time, the court should be slow to approach the evaluation of the question of costs from a backwards looking perspective by simply asking whether the result achieved had been worse than that which had been offered at an earlier time.  The reasonableness of the offer and the context in which it was made remain important ‘forward looking’ considerations.[12]
20. Equally, the context in which an offer was made includes that there are “cases where the contents of the offer are themselves [the] subject of disputed value and [they are the] legitimate subject matter for determination”.[13]  That is to say, the surrounding context may support a conclusion that a backwards looking evaluation of an offer may pay insufficient attention to the circumstances which obtained at the time that the offer was made and that the issue in dispute was one which a litigant was reasonably entitled to press for determination at trial. 

Any other matter– par 117(2A)(g)

21. While there is evident overlap between this provision and the various factors prescribed by pars 117(2A)(a)-(f), it is settled that the terms of par 117(2A)(g) could hardly be expressed in wider terms.[14]
22. In contrast with the special provision made by s 117(1) of the Act, in other civil litigation, a party who has succeeded is generally entitled to a favourable exercise of discretion to an award of costs: cf Latoudis v Casey.[15]  The decision affirms the settled principle that an award of costs is compensatory and not punitive and is intended to indemnify the successful party against the expense to which they have been put by reason of the proceeding.[16]  As Mason CJ observed, it is fundamental to the exercise of the discretionary power respecting costs that the issue be considered from the perspective of the successful party.
23. Equally, it is clear that an order for costs is not intended to operate by way of a complete indemnity.  To the contrary, an order for costs is confined to legal costs and expenses which are properly incurred by a successful party.[17]  The entitlement to costs, so understood, is then confined to costs of the kind for which the relevant rules of court provide.  The entitlement is not at large.  This general principle is explained in part by the circumstance that in most jurisdictions, the court is given a statutory discretion which is not constrained by the prescription of relevant considerations or criteria as is found in s 117 of the Act.[18]  The position is quite different under s 117 which recognises that proceedings under the Act are not the same as civil litigation in many respects.  As concerns parenting applications under the Act, the proceeding is not strictly inter partes because it entails the consideration of a child or children who are not parties to the litigation and whose best interests are under consideration.  As concerns property, the parties are treated as owing fundamental mutual obligations respecting their financial affairs in a way where each is to be expected not to erode those interests.


[1]                 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123, [41]; Eldred & Eldred (No.2) [2015] FamCA 188, [22]. 

[2]                                              (2005) 33 Fam LR 123, [41].

[3]                                              I & I (1995) FLC 92-625;

[4]                                              Browne v Green (2002) FLC 93-115.

[5]                                              In the Marriage of Conroy (1976) 2 Fam LR 11, 223.

[6]                                              In the Marriage of Fisher (1990) 13 Fam LR 806.

[7]                                              (1982) 8 Fam LR 669.

[8]                                              Wrensted v Eades [2016] FamCAFC 46, [85]-[87].

[9]                                              [2012] FamCAFC 77.

[10]                Cf In the Marriage of Greedy; Robinson & Higginbotham (1991) 14 Fam LR 559, 561; see also s 117C.

[11]                                             Browne v Green (2002) FLC 93-115, [57].

[12]                                             JEL v DDF (Repayment on Appeal, and Costs) (2001) 28 Fam LR 119.

[13]                                             Pennisi & Pennisi (1997) FLC 92-774.

[14]                                             Parke & the Estate of the Late A Parke [2016] FamCAFC 248, [36].

[15]                                             (1990) 170 CLR 534.

[16]                                             Latoudis 170 CLR 534, 542-543.

[17]                                             Cachia v Hanes (1994) 179 CLR 403, 410.

[18]                                             Latoudis v Casey (1990) 170 CLR 534, 541.

Posted in: Derek Legal Blog at 01 April 20

Copyright All Rights Reserved © 2013.