Court Clarifies How to Calculate Fair Solicitor and Client Rates in Family Law Costs Orders
In Tekla & Tekla [2025] FedCFamC1A 245, Justice Riethmuller of the Federal Circuit and Family Court (Division 1) delivered a landmark decision on the operation of the Division 2 costs scale and the proper application of “solicitor and client” costs in family law proceedings. The Court allowed the appeal, finding the primary judge had no evidentiary basis for a $78,955 lump-sum costs order and instead fixed the amount at $64,685.98. The judgment provides critical clarification on how courts should determine reasonable rates and time for legal work under the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth) and how the discretion under s 114UB of the Family Law Act 1975 (Cth) should be exercised judicially, proportionately, and transparently.
Facts and Issues:
- Following a four-day property trial, the respondent (husband) successfully sought a costs order against the appellant (wife) after she refused a reasonable settlement offer and conducted the litigation in an unnecessarily expensive and obstructive manner.
- The primary judge ordered the wife to pay $78,955 in costs, representing half the respondent’s claimed total, despite minimal evidence of the actual work done or the reasonableness of the charges.
- The appellant, self-represented, appealed, arguing the costs order was unfair and unsupported by evidence.
- The key issue on appeal was whether the trial judge erred by fixing a lump-sum costs order without any evidentiary foundation and without reference to the relevant Division 2 costs scale.
Issues for Determination:
- Was the primary judge entitled to fix a lump-sum costs order without evidence of the work done or hourly rates?
- How should the Court determine “solicitor and client” costs under Division 2 of the Rules?
- What constitutes a reasonable rate and reasonable amount for solicitor and client costs under r 12.47 and Schedule 1 of the Division 2 Rules?
- Should costs orders in family law matters reflect market rates or remain anchored to the Division 2 scale?
Rule (Law):
- s 114UB Family Law Act 1975 (Cth) – Each party bears their own costs unless the Court finds circumstances justifying otherwise, having regard to conduct, financial position, offers to settle, and other relevant factors.
- r 12.17–12.47 Family Law Rules 2021 (Cth) – Define and regulate bases for costs:
- Party and party: “necessary or proper” costs.
- Solicitor and client: “reasonable” costs as proved by the claimant.
- Indemnity: “all costs reasonably incurred” unless shown otherwise.
- Schedule 1 (Division 2 Rules) – Sets the hourly rate ($301.22) and itemised lump sums for hearings and preparation.
- Precedents:
- House v The King (1936) 55 CLR 499 – Costs discretion must be exercised judicially.
- Sfakianakis & Sfakianakis (2019) 59 Fam LR 419 – Indemnity costs are not a “blank cheque.”
- Bouras v Grandelis (2005) 65 NSWLR 214 – “Solicitor and client” costs must be “reasonable” and the onus lies on the claimant.
- Hazan v The Manager, Costs Assessment [2023] NSWSC 1587 – Even diligent legal work may be “overworked” and unreasonable.
Application (Analysis):
1. Evidentiary Failure at First Instance
The Court held that the respondent’s solicitor had failed to provide any itemised bill, costs agreement, or evidence of the time spent. Justice Riethmuller emphasised that a short-form bill of costs is standard in other jurisdictions and that failing to supply one left the primary judge without an evidentiary basis.
“The process of dividing the total amount sought in half… was not sufficient to convert the bare claim into an evidentiary basis for the finding”.
The absence of proof meant the costs order was arbitrary and had to be set aside.
2. Determining Reasonable Solicitor and Client Rates
Justice Riethmuller provided a comprehensive comparison of national costs scales. He found that while Division 2’s scale ($301.22/hr) was intended for typical family law cases, market evidence supported a reasonable rate of $450/hr for solicitor and client costs — a 50% uplift reflecting realistic private billing rates across jurisdictions.
The Court noted:
- Federal Court scale: up to $780/hr.
- Victorian Supreme Court scale: $450–$900/hr.
- WA Family Court: $352–$572/hr.
- Legal Aid: ~$195/hr (not a realistic market comparator).
This analysis established a benchmark rate for assessing “reasonable” solicitor and client costs where evidence is lacking.
3. Operation of the Division 2 Scale of Costs
The Division 2 scale was designed for efficiency and predictability, providing standard itemised fees for preparation, daily hearings, and advocacy loadings.
Justice Riethmuller demonstrated how these could be used to calculate costs transparently:
Two-thirds of that sum was then uplifted by 50% (reflecting solicitor and client rates) and preparation time was increased by 20% to account for additional complexity.
4. Judicial Reasoning and Proportionality
Justice Riethmuller underscored that costs orders in family law must remain proportionate to the financial stakes and parties’ capacities, citing Family Law Act s 95(2)(e) and Central Practice Direction, Schedule A.
He warned against inflated or speculative costs claims:
“Family law litigants are not sophisticated consumers… there must be real regard to the repeated statements requiring costs to be fair, reasonable, and proportionate”.
5. Outcome and Re-Exercise of Discretion
The Court re-exercised the discretion and fixed:
- $64,685.98 for the substantive proceedings; and
- $1,674.69 for the costs of the costs application (half of the Division 2 party/party rate).
Judgment:
Appeal allowed.
The primary judge’s order was varied to reflect the recalculated lump-sum costs consistent with the Division 2 scale and reasonable solicitor/client rates.
Reasoning:
- The primary judge had no evidentiary foundation for fixing costs.
- Division 2 scales are not “arbitrary” but a structured, equitable benchmark.
- Solicitor and client rates must be proven reasonable by the party claiming them.
- The Court must protect against disproportionate legal expenditure and uphold fairness in costs assessments.
Precedents Relied On:
- House v The King (1936) 55 CLR 499
- Sfakianakis & Sfakianakis (2019) 59 Fam LR 419
- Bouras v Grandelis (2005) 65 NSWLR 214
- Hazan v The Manager, Costs Assessment [2023] NSWSC 1587
- Fountain Selected Meats v International Produce Merchants (1988) 81 ALR 397
Take-Home Lesson:
The Division 2 costs scale provides an essential baseline for family law costs, but solicitor and client costs must reflect reasonable market rates supported by evidence. Courts will not accept arbitrary or inflated lump sums. Practitioners must ensure costs are proportionate, transparent, and substantiated — or risk judicial recalibration.
