Division 12.4.2Maximum costs orders

## Part 12.1—Introduction #### 12.01 Application of Chapter 12 (1) Subject to subrule (3), this Chapter: (a) applies to costs for work done for a proceeding, or in complying with pre‑action procedures, in relation to a fresh application, paid or payable by one party to another; and (b) creates a duty for lawyers to give information about costs to their clients; and (c) provides for court management of the costs incurred by the parties in relation to a proceeding. > Note: For fresh application, see rule 1.05. (2) A party may only recover costs from another party in accordance with these Rules or an order. > Note: A self‑represented party is not entitled to recover costs for work done for a proceeding (other than work done by a lawyer) but, if so ordered, may be entitled to recover some payments. (3) This Chapter does not apply to costs in any part of a proceeding in which a Family Court is exercising its jurisdiction under section 35, 35A or 35B of the Bankruptcy Act. ## Part 12.2—Security for costs #### 12.02 Application for security for costs (1) A respondent may apply for an order that the applicant in the proceeding give security for the respondent’s costs. (2) In deciding whether to make an order, the court may consider any of the following matters: (a) the applicant’s financial means; (b) the prospects of success or merits of the application; (c) the genuineness of the application; (d) whether the applicant’s lack of financial means was caused by the respondent’s conduct; (e) whether an order for security for costs would be oppressive or would stifle the proceeding; (f) whether the proceeding involves a matter of public importance; (g) whether a party has an order, in the same or another proceeding (including a proceeding in another court), against the other party for costs that remain unpaid; (h) whether the applicant ordinarily resides outside Australia; (i) the likely costs of the proceeding; (j) whether the applicant is a corporation; (k) whether a party is receiving legal aid; (l) any other relevant matter. (3) In subrule (1): > respondent includes an applicant who has filed a reply because orders in a new cause of action were sought in the response. #### 12.03 Order for security for costs If the court orders a party to give security for costs, the court may also order that, if the security is not given in accordance with the order, the application or response of the party be stayed. #### 12.04 Finalising security (1) Security for costs may be applied in satisfaction of any costs ordered to be paid. (2) Security for costs may be discharged by order. (3) If security for costs is paid into court, the court may order that it be paid out of court. ## Part 12.3—Costs disclosure obligations Note: Nothing in this Part derogates from a legal practitioner’s costs disclosure obligations under State or Territory legislation. #### 12.05 Duty to inform about costs (1) If an offer to settle is made during a financial or property proceeding, the lawyer for each party must tell the party who the lawyer represents: (a) the party’s actual costs, both paid and owing, up to the date of the offer to settle; and (b) the estimated future costs to finalise the proceeding; to enable the party to estimate the amount the party will receive if the proceeding is settled in accordance with the offer to settle, after taking into account costs. (2) In this rule: > lawyer does not include counsel instructed by another lawyer. #### 12.06 Costs notices (1) Unless the court otherwise orders, this rule applies to all court events, except in an appeal to which Chapter 13 applies. (2) Not less than 1 day before each court event, the lawyer for a party must give the party a written notice of: (a) the party’s actual costs, both paid and owing, up to and including the event; and (b) the estimated future costs of the party up to and including each future court event; and (c) any expenses paid or payable to an expert witness or, if those expenses are not known, an estimate of the expenses. (3) Not less than 1 day before each court event: (a) a party’s lawyer must file with the court, and serve on each other party, a copy of the notice given to the party under subrule (2); and (b) an unrepresented party must file with the court, and serve on each other party, a written statement of: (i) the actual costs incurred by the party up to and including the event; and (ii) the estimated future costs of the party up to and including each future court event. (4) If a party is receiving legal aid: (a) subrule (2) and paragraph (3)(a) do not apply to the party’s lawyer; and (b) not less than 1 day before the first day of the trial, the party’s lawyer must file with the court, and serve on each party, a written statement of the actual costs incurred by the lawyer up to and including the trial. (5) Not less than 1 day before the first day of the trial, an independent children’s lawyer must file with the court, and serve on each party, a written statement of the actual costs incurred by the independent children’s lawyer up to and including the trial. (6) In a financial or property proceeding, unless the court otherwise orders: (a) a notice under subrule (2) or a statement under paragraph (3)(b) must specify the source of the funds for the costs paid or to be paid; and (b) a party who makes a payment to a lawyer for costs or future costs must disclose to the lawyer the source of funds from which the payment is made. > Note: The court may relieve a party from being required to disclose the source of the funds if, for example, the source is a third party (see rule 1.31). (7) If a person fails to comply with subrule (3), (4) or (5), the person must file the relevant costs estimate or particulars of costs with the court and serve it on each other party within 3 days of the court event or within such other time period as the court directs. (8) The court may record, by way of notation, on the face of a case management order the terms of any costs notice and any comments it has about costs incurred in the proceeding, including in relation to their consistency with previous costs notices, and their proportionality. (9) In this rule: > lawyer does not include counsel instructed by another lawyer. #### 12.07 Costs notices and case management When making any case management decision in relation to a claim relating to the property of the parties, the court may have regard to: (a) any costs notices filed and served by the parties; and (b) the additional costs involved in each proposed procedural step. ## Part 12.4—Management of legal costs ### Division 12.4.1—Costs principles #### 12.08 Legal costs to be fair, reasonable and proportionate (1) The legal costs incurred in a proceeding must be: (a) fairly, reasonably and proportionately incurred; and (b) fair, reasonable and proportionate in amount; in the circumstances of the proceeding. (2) In considering whether a party’s legal costs have been fairly, reasonably and proportionately incurred, regard must be had to all relevant matters including, but not limited to, whether a lawyer representing the party, a lawyer representing any other party, or any self‑represented litigant has: (a) complied with all relevant rules and orders of the court, including requirements that documents be filed or provided to other parties by a given date; and (b) acted reasonably in raising, pursuing or contesting a particular allegation or issue; and (c) made reasonable efforts, subject to the client’s instructions, to resolve the dispute through negotiation, mediation or arbitration; and (d) made reasonable efforts to narrow the issues in dispute; and (e) filed no more interlocutory applications than are reasonably necessary in the circumstances of the proceeding; and (f) filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding. (3) In considering whether a party’s legal costs are fair, reasonable and proportionate in amount, regard must be had to all relevant matters including, but not limited to, whether the costs reasonably reflect: (a) the level of skill, experience, specialisation and seniority of the lawyers concerned; and (b) the level of complexity, novelty or difficulty of the issues involved, and the extent to which the proceeding involved a matter of public interest; and (c) the labour and responsibility involved; and (d) the circumstances in which lawyers acted, including any or all of the following: (i) the urgency of the work; (ii) the time spent on the work; (iii) the time when work was required to be carried out; (iv) the place where work was required to be carried out; (v) the number and importance of any documents involved; and (e) the quality of the work done; and (f) the retainer and the instructions (express or implied) given in the matter. (4) In considering whether a party’s legal costs have been fairly, reasonably and proportionately incurred under subrule (2), or are fair, reasonable and proportionate in amount under subrule (3), regard must also be had to any applicable State or Territory law in relation to the regulation of legal practitioners in that State or Territory. (5) In relation to an application for costs by one party against another, a cancellation fee levied by a barrister or solicitor advocate is taken not to be reasonable. ### Division 12.4.2—Maximum costs orders #### 12.09 Application of Division 12.4.2 This Division applies to proceedings under the Family Law Act other than the following: (a) proceedings under Part VI of that Act; (b) proceedings under Division 6, 9 or 13 of Part VII of that Act; (c) proceedings to enforce a decree or injunction made under Division 6, 9 or 13 of Part VII of that Act; (d) an arbitration conducted pursuant to Division 4 of Part II of that Act. #### 12.10 Maximum costs orders—general (1) A party may apply to the court for an order specifying the maximum costs as between party and party that may be recovered for the proceeding. (2) A maximum costs order may be made: (a) at any court event; and (b) on the court’s own initiative or on the application of a party. (3) A maximum costs order may be made in respect of: (a) the proceeding as a whole; or (b) any issues that are ordered to be tried separately. (4) The court may make a maximum costs order in relation to any or all of the parties, if: (a) it is in the interests of justice to do so; and (b) there is a substantial risk that, without such an order, costs will be disproportionately incurred; and (c) the court is not satisfied that the risk referred to in paragraph (b) can be adequately controlled by either or both of the following: (i) case management directions or orders made under this Part; (ii) a detailed assessment of costs. (5) In considering whether to exercise its discretion to make a maximum costs order under this rule, the court must consider all the circumstances of the proceeding, including: (a) whether there is a substantial imbalance between the financial positions of the parties; and (b) whether the costs of determining the appropriate maximum amount are likely to be proportionate to the overall costs of the proceeding; and (c) the stage which the proceeding has reached; and (d) the costs that have been incurred to date and the likely future costs of the proceeding. (6) The amount specified in a maximum costs order must not include an amount that a party is ordered to pay because the party: (a) has failed to comply with, or has sought an extension of time for complying with, an order or any of these Rules; or (b) has sought leave to amend a document; or (c) has otherwise caused another party to incur costs that were not necessary for the economic and efficient progress of the proceeding or hearing of the proceeding. (7) The court may vary an amount specified in a maximum costs order if, in the court’s opinion, there are special reasons and it is in the interests of justice to do so. > Note: A maximum costs order does not affect the power of the court to make an adjustment to the parties’ property taking into account their actual legal costs. #### 12.11 Application for a maximum costs order (1) A party may apply for a maximum costs order by filing an Application in a Proceeding supported by an affidavit. (2) The affidavit must: (a) set out: (i) whether the maximum costs order sought is in respect of the proceeding as a whole or a particular issue that has been ordered to be tried separately; and (ii) why a maximum costs order should be made; and (b) be accompanied by a costs budget setting out: (i) the costs incurred by the party to date in the proceeding (including legal costs and any disbursements); and (ii) an estimate of the costs that the party is likely to incur at each stage in the future conduct of the proceeding. (3) The court may give directions for the determination of the application. The directions may: (a) direct any party to the proceedings to file: (i) a schedule of costs in the approved form; or (ii) written submissions on all or any part of the issues arising from the application; and (b) fix a date and time for the hearing of the application; and (c) indicate whether the judge hearing the application will sit with an assessor or a Judicial Registrar at the hearing of the application; and (d) include such further directions as the court considers appropriate. #### 12.12 Application to vary a maximum costs order An application to vary a maximum costs order must be made by an Application in a Proceeding supported by an affidavit setting out the reasons why the variation sought should be made. ## Part 12.5—Orders for costs #### 12.13 Order for costs (1) The court may make an order for costs on its own initiative. (2) A party may apply for an order that another person pay costs. (3) An application for costs may be made: (a) at any stage during a proceeding; or (b) by filing an Application in a Proceeding within 28 days after the final order is made. > Note: See subsection 114UB(4) of the Family Law Act. (4) A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement or costs agreements in relation to those costs and, if so, the terms of the costs agreement or costs agreements. (5) In making an order for costs in a proceeding, the court may set a time for payment of the costs, which may be before the proceeding is concluded. > Note 1: Subsection 114UB(1) of the Family Law Act provides that, as a general rule, each party to family law proceedings shall bear the party’s own costs. Subsection 114UB(2) of that Act provides that the court may, subject to subsection 114UB(3) and sections 114UC and 114UD of that Act and the applicable Rules of Court, make such order as to costs as the court considers just, if the court is of the opinion that there are circumstances that justify it in doing so. > Note 2: A party may apply for an order for costs within 28 days after the filing of a notice of discontinuance by the other party (see rule 10.03). > Note 3: A party may apply for an extension of time to make an application (see rule 15.06). > Note 4: For costs orders related to appeals, see Part 13.10. #### 12.14 Costs order for proceedings in other courts (1) This rule applies to a proceeding in the Federal Circuit and Family Court that: (a) has been transferred from another court; or (b) is on appeal from a decision of another court. (2) The court may make an order for costs in relation to the proceeding before the other court. (3) The order may specify: (a) the amount to be allowed for the whole or part of the costs; or (b) that the whole or part of the costs is to be calculated in accordance with these Rules or the rules of the other court. #### 12.15 Costs order against lawyer (1) The court may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs to be incurred by a party or another person, or to be thrown away, because of: (a) a failure to comply with these Rules or an order; or (b) a failure to comply with a pre‑action procedure; or (c) improper or unreasonable conduct; or (d) undue delay or default. (2) A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed: (a) to attend, or send another person to attend, the hearing; or (b) to file, lodge or deliver a document as required; or (c) to prepare any proper evidence or information; or (d) to do any other act necessary for the hearing to proceed. (3) An order under subrule (1) may be made on the initiative of the court, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away. (4) An order under subrule (1) may include an order that the lawyer: (a) not charge the lawyer’s client for work specified in the order; or (b) repay money that the client has already paid towards those costs; or (c) repay to the client any costs that the client has been ordered to pay to another party or another person; or (d) pay the costs of a party; or (e) repay another person’s costs found to be incurred or wasted. #### 12.16 Notice of costs order (1) Before making an order for costs against a lawyer or other person who is not a party to a proceeding, the court must give the lawyer or other person a reasonable opportunity to be heard. (2) If a party who is represented by a lawyer is not present when an order is made that costs are to be paid by the party or the party’s lawyer, the party’s lawyer must give the party written notice of the order and an explanation of the reason for the order. ## Part 12.6—Calculation of costs #### 12.17 Method of calculation of costs (1) The court may order that a party is entitled to costs: (a) of a specific amount; or (b) as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or (c) to be calculated in accordance with the method stated in the order; or (d) for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3. > Note: See subsection 114UB(5) of the Family Law Act. (2) If costs are payable under the Family Law Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party and party basis. > Note: See subsection 114UB(6) of the Family Law Act. (3) In making an order under subrule (1), the court may consider the following: (a) the importance, complexity or difficulty of the issues; (b) the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2); (c) the rates ordinarily payable to lawyers in comparable proceedings; (d) whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate; (e) the time properly spent on the proceeding, or in complying with pre‑action procedures; (f) whether expenses (paid or payable) are fair, reasonable and proportionate. #### 12.18 Maximum amount of party and party costs recoverable (1) This rule sets out the maximum amount of party and party costs a person may recover: (a) if the court orders that costs are to be paid and does not fix the amount by means of a maximum costs order made under rule 12.10 or otherwise; and (b) if a person is entitled to costs under these Rules. (2) The maximum amount of costs that a person may recover under this rule is as follows: (a) for fees—an amount calculated in accordance with Schedules 2 and 3; (b) for an expense referred to in Schedule 2 (other than item 101 of Part 1)—the amount specified in that Schedule for that expense; (c) for any other expenses—a reasonable amount. #### 12.19 Interest on outstanding costs Interest is payable on outstanding costs at the rate referred to in rule 10.17. ## Part 12.7—Specific costs matters #### 12.20 Costs in court of summary jurisdiction A party cannot recover from another party costs, for work done by a lawyer in a court of summary jurisdiction, that are more than 80% of the amount referred to in Schedule 3 that may be charged for the work. #### 12.21 Charge for each page (1) A lawyer may charge the amount specified in Schedule 3 for a document only if it complies with the requirements for documents in rule 2.14. (2) For the purposes of Schedule 3, the calculation of the number of words in a document excludes words that are part of: (a) an approved form; or (b) a document in a form approved by the Chief Executive Officer. #### 12.22 Proportion of costs If the scale in Schedule 3 provides for an amount to be charged that is based on time or number of words, the amount to be charged is an amount that is proportionate to the time or number of words actually taken or written. #### 12.23 Costs for reading If it is reasonable for a lawyer to read more than 50 pages for a proceeding, the amount to be charged under item 104 in Schedule 3 is at the discretion of a Judicial Registrar. #### 12.24 Postage within Australia The charge referred to in Schedule 3 for producing a document (including a letter) includes an allowance for: (a) preparing one file copy of the document; and (b) postage of the document in Australia. #### 12.25 Waiting and travelling time (1) Subrule (2) applies if: (a) a lawyer has travelled less than 100 kilometres from the lawyer’s place of business to attend court; and (b) it is not appropriate or proper for an agent to attend court instead of the lawyer. (2) The lawyer may charge an amount for time reasonably spent attending a court event if the lawyer was: (a) at court waiting for the court event to start or resume after the time allocated; or (b) travelling to or from court. (3) A lawyer who attends court for the hearing of 2 or more proceedings may charge, for each proceeding, an amount that is reasonable, having regard to the time spent at each hearing: (a) travelling to or from court; or (b) waiting for each hearing to start or resume. (4) The total amount that may be charged under this rule for all proceedings must not be more than the amount that may be charged under Part 1 of Schedule 3 for one proceeding. #### 12.26 Agent’s fees The costs claimed by a lawyer (the principal lawyer) for work done by another lawyer as agent of the principal lawyer must not be more than the amount the principal lawyer would have been entitled to charge under Schedule 3 if the principal lawyer had personally done the work. #### 12.27 Costs of proceedings not started together (1) This rule applies if: (a) a lawyer starts a proceeding for a client that could reasonably have been started at the same time, and in the same court, as another proceeding between the same parties; and (b) the proceeding was not started at that time in that court. (2) The lawyer may charge for work done for all the proceedings only the amount the lawyer could have charged if the lawyer had started all the proceedings at the same time in the same court. #### 12.28 Certificate as to counsel The judicial officer hearing a proceeding may certify that it was reasonable to engage a lawyer (including King’s Counsel and Senior Counsel) as counsel to attend for a party. #### 12.29 Lawyer as counsel—party and party costs (1) This rule applies to party and party costs for fees paid or to be paid to a lawyer engaged as counsel. (2) The fees are a necessary expense for a proceeding if: (a) either: (i) the proceeding was heard by a Full Court; or (ii) in any other proceeding—it was reasonable to engage counsel to attend at the proceeding; and (b) for a hearing or trial, counsel: (i) was present for a considerable part of the hearing or trial; and (ii) gave substantial assistance during the period to which the fees relate in the conduct of the proceeding; and (c) the fees are not more than the amount otherwise payable under these Rules for counsel engaged to attend at a proceeding. #### 12.30 Lawyer as counsel—assessment of fees (1) This rule applies to party and party costs for fees paid or to be paid to a lawyer engaged as counsel. (2) A Judicial Registrar may allow the costs of engaging more than one counsel, including counsel who is not King’s Counsel or Senior Counsel. (3) If: (a) counsel is engaged to attend at a trial; and (b) the trial takes more than 1 day; a Judicial Registrar may allow a fee in accordance with Part 2 of Schedule 3 for each further day or part of a day. (4) A Judicial Registrar must not allow: (a) a fee paid to counsel as a retainer; or (b) a reading fee, unless: (i) the proceeding is unusually complex; or (ii) the amount of material involved is particularly large; or (c) for a proceeding before a court of summary jurisdiction—an amount for counsel’s fees, other than in accordance with item 203 or 204 of Schedule 3; or (d) if a daily fee for counsel’s attendance is payable in accordance with Part 2 of Schedule 3—an additional amount for work done for the proceeding by counsel on any day for which the daily fee applies. #### 12.31 Expenses for attendance by witness An amount paid, or to be paid, for attendance by a witness at a hearing is a disbursement properly incurred for a proceeding if: (a) the attendance is reasonably required; and (b) the amount is reasonable, or is authorised or approved by the court. #### 12.32 Expenses for preparation of report by expert An amount paid, or to be paid, to an expert for preparation of a report for a party or an independent children’s lawyer is a disbursement properly incurred for a proceeding if: (a) the report is reasonably required; and (b) the amount is reasonable, or is authorised or approved by the court.