Can a costs order be made in a family law arbitration?
Recently, an arbitrator handed down a costs award in favour of our client following a protracted arbitration hearing.
Late last year, the arbitrator had accepted almost entirely our client’s version of events and determined that a 25 year de facto relationship existed between our client – the applicant and the respondent. You can read about that decision here.
The entire hearing had been conducted by video link through Zoom from our Liverpool family law offices.
Will costs to be shared equally?
Usually, the costs of an arbitration are shared equally between the parties.
Regulation 67H(1) of the Family Law Regulations 1984 deals with the costs of an arbitration. It states:
“The costs of an arbitration are to be shared equally between the parties to the arbitration unless the parties agree, in writing, otherwise.”
Family law act: section 117
Regulation 67H, however, must be read in conjunction with the broad powers given to the court (and an arbitrator) as to costs in section 117 of the Family Law Act 1975 . You can read more about section 117 here.
Terms of referral to arbitration
It is crucial when referring a matter to arbitration in a family law case to preserve your client’s right to pursue costs at the conclusion of an arbitration.
In this case, our Liverpool family solicitor obtained the following order as to costs at the time that the matter was referred to arbitration:
Nothing in this direction shall prevent either one or the other parties seeking costs against the other including their share of the arbitration at the conclusion of that determination.
Following the arbitrator’s ruling, we made an application for the respondent to pay our client’s costs including his share of the arbitrator’s fees.
In his costs award, the arbitrator ordered the respondent to pay the entire costs of the arbitration as well as our client’s legal costs.
Financial circumstances of the parties
Addressing the financial circumstances of the parties (section 117(2A)(a) of the Family Law Act), the arbitrator found:
I agree with the Applicant’s submission that against the background of a relationship which lasted some 25 years as found by me taking into account a variety of historical matters which are also relevant to the determination of the parties’ entitlements, both parties can expect to receive a significant amount.
In particular I therefore find that the financial circumstances of the Respondent are such that she has the means to satisfy a costs award.
Conduct of the parties
Dealing with the conduct of the parties (section 117(2A)(c) of the Family Law Act), the arbitrator referred to the many adverse findings he had made against the respondent and stated:
In my view, the Respondent set out in a conduct from the very start of the proceedings to deny the existence of any circumstances which would warrant any order which would see the Applicant receiving any benefit from the proceeds of the Former Matrimonial Home.
Whether any party has been wholly unsuccessful?
The arbitrator found that the respondent had been wholly unsuccessful. Section 117(2A)(e) of the Family Law Act was therefore applicable.
The Arbitrator also observed:
Whilst in Anison (2019) 59 Fam LR 581 the Full Court linked the term “wholly
unsuccessful” to the proceedings as a whole, in my view, given the specific
issue to be determined in the arbitration and the terms set out in the various
orders, this factor is applicable to that particular aspect in relation to which
costs are to be determined.
An order was made for the respondent to pay our client’s costs of the arbitration and 100% of the arbitrator’s fees.
Findings against respondent
In his award, the arbitrator also made reference to his adverse findings against the respondent, which included:
- She actively misleading the court from the very commencement of the proceedings; and
- She subsequently filing extensive evidence by herself and her witnesses which was to the largest part not accepted.