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Costly Withdrawal: Court Orders Husband to Pay Wife's Legal Expenses Despite Pro Bono Representation”

Introduction

In a pivotal decision addressing the interplay between pro bono representation and cost recovery in family law proceedings, the Federal Circuit and Family Court of Australia has provided detailed guidance on the application of the indemnity principle under section 117 of the Family Law Act 1975 (Cth). The case of Gallegos & Berntsson explores whether a party represented pro bono can recover legal costs, and under what circumstances such an award might be “just”. Justice Behrens’ judgment is both an exposition on the discretionary power of cost orders and a navigation through uncharted territory regarding pro bono legal representation in this jurisdiction.

Facts and Issues

Factual Background

  • The applicant, Ms Gallegos, and the respondent, Mr Berntsson, are parents of a nine-year-old child, X.
  • The parties had lived in Country C before relocating to Australia in 2022, shortly after which they separated.
  • Mr Berntsson returned to Country C and later filed foreign custody proceedings.
  • In Australian proceedings commenced in June 2024, Ms Gallegos sought parenting and property orders.
  • Mr Berntsson filed a stay application, requesting the Australian proceedings be paused pending his Country C proceedings.
  • He later withdrew the stay application, just days before it was scheduled to be heard.

Costs Application

  • Ms Gallegos applied for costs arising from responding to the now-abandoned stay application.
  • She was represented by Lander & Rogers on a non-contingent pro bono basis, with only $3,433 paid personally toward disbursements.
  • The core issue became whether a party represented pro bono could receive a cost order under s 117 of the Family Law Act.

Legal Issues and Application of Law

Key Legal Questions

  1. Can a party represented pro bono recover costs under s 117?
  2. What is the relevance of the indemnity principle in such circumstances?
  3. Was a costs order just and appropriate given the conduct of the parties?

Statutory Framework

Under section 117(1) of the Family Law Act, each party typically bears their own costs. However, s 117(2) allows a court to order costs where it is just to do so, considering factors under s 117(2A) such as:

  • Financial circumstances,
  • Conduct of parties,
  • Offers of settlement,
  • Whether a party was wholly unsuccessful,
  • Any other relevant matters.

Justice Behrens confirmed that the indemnity principle – that costs may only be awarded for liabilities actually incurred – applies to s 117(2) decisions.

Judgment and Reasoning

Why the Judge Ruled for Ms Gallegos

  1. Application of Indemnity Principle
  • Justice Behrens held that, despite the pro bono arrangement, Ms Gallegos could only recover the $3,433 she actually paid, not the full legal value of the pro bono services.
  • Precedent from Cachia v Hanes (1994) 179 CLR 403 and analysis from Trevorrow v South Australia (No 7) [2008] SASC 5 reinforced that a party cannot be indemnified for costs not owed.
  1. Wasted Resources and Procedural Conduct
  • The stay application was “wholly unsuccessful” and withdrawn late, wasting court time and causing unnecessary legal expenditure by the wife.
  • Evidence indicated Mr Berntsson was alerted early to the potential for cost consequences if he pursued the application (see letter dated 9 September 2024 in Annexure JO1).
  1. Financial Circumstances
  • Though both parties claimed financial strain, evidence from Ms Gallegos suggested minimal access to funds and lack of child support.
  • Mr Berntsson had access to substantial sums (e.g., ~$600k and ~$830k received into his accounts in October 2024), but gave vague and untested explanations for their use.
  1. No Appearance or Submissions by the Husband
  • Despite being notified, Mr Berntsson failed to appear or provide written submissions at the costs hearing.

Conclusion

The Court ordered fixed costs of $3,433 to be paid by Mr Berntsson within 7 days. This sum reflected the actual disbursements incurred, aligning with the indemnity principle.

Key Paragraph Citations and Authorities

  • Application of Indemnity Principle: [27]–[33]
  • Court's Analysis on Costs and Conduct: [41]–[44]
  • Relevant Statutes: Family Law Act 1975 (Cth) s 117; Federal Circuit and Family Court Rules r 12.17
  • Cases Cited:
  • Cachia v Hanes (1994) 179 CLR 403
  • Trevorrow v State of South Australia (No 7) [2008] SASC 5
  • Lenova & Lenova (Costs) [2011] FamCAFC 141
  • Charisteas & Charisteas (No 2) [2023] FedCFamC1A 10

Take-Home Lesson

Pro bono does not mean parties are insulated from costs orders. Even when legal services are donated, if the recipient incurs any actual costs, they may still recover those through a court order. The case underscores the Court's willingness to hold parties accountable for procedural missteps and waste of resources, even where financial hardship is alleged.

Legal practitioners should ensure clients are aware of the cost consequences of abortive or tactical applications, particularly where offers to settle or withdraw have been ignored. Furthermore, the case invites legislative or rule-based clarity on cost recovery for pro bono services, a developing area in Australian family law.

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