Order for indemnity costs and family law proceedings

In this blog, we consider an order for indemnity costs and the circumstances when a Court may exercise its discretion to make such an order. You may refer to our other recent blog for information concerning costs generally.

If you are wishing to make or defend an application for a costs order, you are welcome to contact our Brisbane divorce lawyers or our divorce lawyers Brisbane Northside for advice.  We practise in all areas of family law. We provide free family law advice during your initial call with us and can generally offer fixed fees for any work that you would like us to undertake for you. Our goal is always to assist you to resolve your family law issues without the need to go to Court. However, if you are involved in a court action, we have the experience to represent you.

You are also welcome to read on….

In Talwar & Sharma (No.2) [2018] FCCA 3413, the Federal Circuit Court of Australia made an order for indemnity costs against the wife requiring that she pay the husband’s costs in the amount of $22,850.

The Court had made an order previously that the wife pay the husband and amount of $15,000 in respect of security for costs which the wife had failed to pay.

Some time soon after that order was made, the wife a notice of discontinuance in respect of the application that she had made for final property orders.

The husband then made an application seeking an order for indemnity costs requiring that the wife pay him the amount of $22,885. This was the amount of the husband’s costs at the time that he filed that application.

The Court expressed the view that the husband’s costs had been entirely wasted. In coming to that view and making an order for indemnity costs, the Court also noted that the husband had made an offer that he pay the wife the amount of $15,000 in full and final settlement of the property proceedings which the wife had commenced. However, the wife rejected that offer even though the Court said that she would have been substantially better off had she accepted it.

Whilst the general principle regards costs is set out in section 117(2) Family Law Act 1975 (Cth) requiring that each party to proceedings under that Act bears their own costs, the Court has a broad discretion to award costs.

Before making an order for costs (whether being an order for indemnity costs or some other costs order), the Court must first find that there are justifying circumstances for it to do so. However, the Court is not required to specify the circumstances which justify the making of such an order.

In Latoudis v Casey ( [1990] HCA 59; (1990) 170 CLR 534) the High Court stated as follows:

“… in exercising its discretion to award or refuse costs, a court
should look at the matter primarily from the perspective of the defendant. To
do so conforms to fundamental principle. If one thing is clear in the realm of
costs, it is that, in criminal as well as civil proceedings, costs are not
awarded by way of punishment of an unsuccessful party. They are compensatory in
the sense that they are awarded to indemnify the successful party against the
expense to which he or she has been put by reason of the legal proceedings.”

The Court has the power to make a costs order on an indemnity basis.

Where costs are ordered (as is more usual) on what is known as a party and party basis, the amount that is actually received by the successful party will usually be an amount that is less than what would be received were an order for indemnity costs made.

Before a Court makes an order for costs on an indemnity basis, there must be some special or unusual feature of the case to warrant the Court departing from making an order on a party and party basis.  However, even where such a feature exists, the Court continues to have discretion regards any order for costs.

Contact our Brisbane divorce lawyers or our divorce lawyers Brisbane Northside for advice concerning any family law issues, including regards your position concerning family law property settlement or regards an order for indemnity costs.