Costs in family law proceedings: what you need to know
One of the most common misconceptions in family law litigation is that a “successful” party will automatically recover their legal costs from the other side. The reality is very different. Costs orders in family law are discretionary, not guaranteed, and parties must approach litigation with a clear understanding that they will usually be required to fund their own legal representation.
The starting point: each party pays their own costs
Under the Family Law Act 1975 (Cth), the general rule is that each party bears their own legal costs. This reflects the Court’s intention to promote access to justice and to avoid deterring parties from pursuing legitimate claims due to fear of adverse costs consequences.
While the Court has power to depart from this rule, there is no automatic entitlement to costs, even where a party is largely or entirely successful.
Tekla & Tekla: a cautionary reminder
In Tekla & Tekla [2025] FedCFamC1A 245, the Full Court considered an appeal from costs orders made following a property trial. Although the primary judge had ordered the respondent to pay a significant portion of the appellant’s costs, the Full Court intervened due to a lack of proper evidentiary foundation.
The Court emphasised that:
- Costs orders must be supported by evidence of the work done and the reasonableness of the costs claimed;
- A global figure or bare assertion of costs incurred is insufficient; and
- Even where a party’s conduct is criticised, the Court must still assess costs by reference to recognised costs principles.
The decision underscores that costs orders are not punitive by default and that careful analysis is required before any order is made.
The different bases of costs
When the Court does order costs, it may do so on different bases:
- Party/Party Costs
This is the default and most common basis. Party/party costs are limited by the scales set out in the Family Law Rules and are intended to compensate a party only for the necessary or proper costs of the litigation. They almost never cover the full legal fees actually paid.
- Solicitor and Client Costs
Solicitor-and-client costs allow recovery of a broader category of costs, being those reasonably incurred and reasonable in amount. This basis requires evidence of the work done and the rates charged and will typically result in a higher recovery than party/party costs – but still not necessarily full reimbursement.
- Indemnity Costs
Indemnity costs are the most extensive form of costs order and are awarded only in exceptional circumstances, usually involving serious litigation misconduct, unreasonable refusal of settlement, or abuse of process. They are rare in family law and are not awarded simply because one party is unsuccessful.
Costs are always discretionary
Even where a party seeks costs on a particular basis, the Court retains a broad discretion. Relevant considerations include:
- The financial circumstances of each party
- The conduct of the parties throughout proceedings
- Compliance with court directions and obligations
- Settlement offers and whether litigation was unnecessarily prolonged
Importantly, success in the proceedings does not of itself justify a costs order.
Conclusion
Costs orders in family law are a nuanced and discretionary aspect of litigation. Parties considering family law litigation should do so on the clear understanding that they will likely need to fund their own legal costs, regardless of outcome. While costs orders are possible in appropriate cases, they should be viewed as the exception rather than the rule. Obtaining early legal advice can assist in managing expectations, litigation strategy, and the financial realities of pursuing or defending proceedings. Contact Michael Lynch Family Lawyers today on (07) 3221 4300 or email [email protected] for experienced guidance tailored to your family law matter.
