Applications for Litigation Expenses aka “Hogan Orders”

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“A highly relevant matter which distinguishes litigation under the Family Law Act 1975 from ordinary civil litigation…is the fact that very often the wealth of the parties is controlled by one rather than both of them” – per Nicholson CJ, Lindenmayer and O’Ryan JJ in Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856.

Due to injustice that can arise when one party to a marriage controls the wealth of the marriage, Courts exercising jurisdiction pursuant to the Family Law Act 1975 (“FLA”) have developed guidelines to create a means by which a party not in control of funds, can apply to have the other party meet their litigation expenses. These types of orders have been referred to by several names but are commonly known to Family Lawyers as “Hogan Orders”[i].

Although it is more technically correct to refer to these types of orders simply as “orders for litigation expenses”, for the sake of brevity and consistency hereafter they will be referred to as “Hogan Orders”.

Jurisdiction

Hogan Orders are not specifically provided for in the FLA however, it has been established that there are a number of sources of jurisdiction for the Court to make such orders. These are:

  •  Interim or “partial” property settlement[ii] (section 79 FLA);
  • Interim costs order[iii] (section 117 FLA);
  • Interim spousal maintenance order[iv] (section 72 and 74 FLA);
  • Injunction[v] (section 114 FLA).

The Full Court in Strahan & Strahan (Interim Property Orders) [2009] FamCA 116, recently confirmed that the while the Court can make a Hogan Order utilising any of the above sources of power, it is necessary to identify the source of the power, because it is the source of the power that determines the necessary preconditions and relevant considerations for making the Hogan Order.[vi] Thus for example, seeking a Hogan Order as an interim property order will have different requirements, and implications, than seeking litigation expenses as interim costs, spousal maintenance or as an injunction.

Matters of common relevance

While the requirements will differ depending on the source of power, there are some matters relevant to all such Applications. Three such matters were identified in Zschokke and Zschokke (1996) FLC 92-693 and confirmed in Strahan. These are:

  • A position of relative financial strength on the part of the Respondent;
  • A capacity on the part of the Respondent to meet his or her own litigation costs;
  • An inability on the part of the Applicant to meet his or her litigation costs.

In Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578, in addition to the three matters described above, the following were also identified as being relevant regardless of the basis upon which the order is sought:

  • The Applicant has an arguable case for substantive relief which deserves to be heard;[vii]
  • Evidence of the Applicant’s likely costs of the litigation;[viii]
  • It is not an essential precondition that the Applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis;[ix]
  • The order may make a provision for litigation expenses at a rate that appears reasonable in all the circumstances;
  • An order can be made in respect of costs already incurred as well as for future costs;
  • Whether the order is to be in respect of costs already incurred, or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order and its quantum;
  • Any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended. This may be done by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs;[x]

The above matters need to be specifically addressed in the Applicant’s Affidavit material and/or the Affidavit of the Applicant’s legal representative. Any relevant documents should be exhibited i.e. documents such as:

  • Letters evidencing litigation funding has been applied for and rejected;
  • Letters evidencing that Legal Aid has been applied for and rejected or alternatively, evidence such as material from the Grants Handbook showing that the Applicant would not qualify for Legal Aid;
  • Identify the assets and income of the Respondent from the disclosure documents which establish the capacity of the Respondent to meet his or her own litigation costs. If necessary, documents from the Respondent’s solicitor can be requested or subpoenaed to show what the Respondent has paid his or her solicitor and the Respondent’s liability to meet litigation costs;
  • Identify from the disclosure documents or by other means a source from which the litigation expenses can be paid.

Matters specifically relevant to different sources of jurisdiction

As stated above, with each potential source of jurisdiction there are also differing considerations that are required to be addressed.

Section 79 FLA – Interim Property Settlement

The Court is generally reluctant to make an interim property order, preferring to exercise the jurisdiction once at a final hearing. The source of the power is contained within section 79 while section 80(1)(h) is the “enabling provision” by which the order is made.

Applying for an interim property order is a two step process requiring:

  1. An adjectival or procedural step to determine whether it is appropriate that the interim order be made;
  2. A substantive step i.e. regard must be had to the matters contained with section 79 before the power conferred by section 79 can be exercised.

It was indicated prior to Strahan that the first step required the applicant to show that there were “compelling circumstances” why the interim order should be made[xi]. However, the Full Court in Strahan, had regard to comments made by Federal Magistrate Reithmuller in Wenz v Archer (2008) 40 Fam LR 212, and determined that the Applicant need not establish compelling circumstances but rather “whether in all the circumstances it is appropriate” to make the interim order. It is submitted that where the three relevant matters from Zschokke are established, the “test” for step 1will be satisfied.

Having established step 1, the considerations for the Court are the same as those involved in making a “final property adjustment order”, that is, the Court must consider the matters in sections 79(4) relating to contributions, the relevant matters in 75(2) by virtue of 79(4)(e), relating to any further adjustment for “future” factors and the requirement in 79(2) that any order be “just and equitable”.

Therefore in seeking litigation expenses as an interim property settlement, the Applicants Affidavit should contain evidence with respect to the 4 step process[xii] used to determine the range of entitlement pursuant to section 79, that is:

  • The nature and extent of the matrimonial property pool;
  • That the Applicant has an entitlement to property on the basis of contributions;
  • Any adjustments for relevant section 75(2) factors;
  • That it is just and equitable to make the order.

With regard to what is just and equitable, it is important to show that, prima facie, the Applicant is not receiving an interim settlement in excess of his or her likely entitlement at the final hearing.

Any exercise of power pursuant to s.79 is on a “final basis” although the Court does not have to exercise the power at only one time. The power can be exercised by a succession of orders until the power is exhausted i.e. there is no matrimonial property not dealt with.[xiii] Thus provided there is property remaining, the Court has jurisdiction to make further orders regarding all the property of the parties or either of them, and can reallocate property previously allocated by the interim order. Further, any property/funds allocated for the payment of legal fees and spent, will likely be “added back” as notional property which is consistent with the Courts approach to the treatment of legal fees paid from matrimonial property[xiv] and the general rule in section 117(1) that each party bears their own costs.

Section 117(2) – Interim Costs

The general rule in matrimonial proceedings is that each party bears their own costs[xv]. However, the court may make an order for costs on a final or interim basis pursuant to section 117(2) if:

  •  The circumstances justify the order being made;
  • The order is just; and,
  • Subject to the maters in sections 117(2A), (4) and (5).

In Zschokke the Court held that if the source of jurisdiction for the Hogan Order is section 117(2), then the matters in section 117(2A) must be addressed in so far as they are relevant[xvi]. It is submitted the following could or will be relevant in an Application for a Hogan order:

  • The financial circumstances of each of the parties to the proceedings;
  • Whether any party to the proceedings is in receipt of Legal Aid;
  • The conduct of the parties i.e. refusal to make funds available;
  • Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
  • Such other matters as the court considers relevant.

If an interim costs order is made, the funds provided to the Applicant are not automatically added back as notional property. However, it is common for the Court to make an order that the trial Judge retains a discretion as to how the funds are treated at trial.

Section 74 – Interim Spousal Maintenance

With regard to spousal maintenance, section 74 empowers the Court to, “make such Orders as it considers proper” for spousal maintenance. What is proper is that “which is not insufficient or excessive in the circumstances”.[xvii] The type of spousal maintenance order here is an interim, as opposed to final, spousal maintenance order but this is of little consequence as the requirements for interim and final spousal maintenance orders are the same. Like an interim property order, section 80(1)(h) is the section by which the order is made. This is because both spousal maintenance and interim property orders are contained within Part VIII FLA and section 80(1) applies to, “the court in exercising its powers under this Part”.

Before the Court can order spousal maintenance, a “threshold test” for determining eligibility must be met.  The threshold test is contained within section 72(1) and provides that a party to a marriage is liable to maintain the other party, if that party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

  • By reason of care of children under 18;
  • By reason of incapacity for gainful employment;
  • Any adequate reason;
  • Having regard to any relevant matter referred to in s.75(2).

Thus the Applicant’s Affidavit material should specifically address the threshold issues and relevant section 75(2) matters.

It is submitted that an advantage to the Hogan Order being paid as spousal maintenance is that it would be unusual for the Court to add back spousal maintenance.

Section 114 – Injunction

Section 114 is the least utilised section for Hogan Orders and, to the best of the authors knowledge, most of the authorities have simply commented that the question is open that section 114 is available, without taking the issue any further.[xviii]

The relevant provisions are:

  • Section 114(1)(e) The Court may make such order or grant such injunction as it considers proper, including “an injunction in relation to the property of a party to the marriage“; or
  •  Section 114(3) “a court exercising jurisdiction under [the FLA] in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise…in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.

Injunctions may be granted if there is a serious question to be tried, and the balance of justice and convenience favours an injunction (Stowe and Stowe (1980) 6 Fam LR 75). Affidavit material should address the above considerations.

Conclusion

Applications for Hogan Orders ought to be fairly uncommon as they are Applications of last resort. As stated above, it will be necessary to establish in Affidavits that all avenues of obtaining funds have been exhausted. This obviously includes asking the other party for funds as interim spousal maintenance or as an interim property settlement by consent.

In summary, if the Application for expenses is necessary, it is important to consider the source of jurisdiction to be relied upon, identify it in your Application, ensure that any matters particular to that type of order are addressed and ensure the general considerations relevant to all such Applications are addressed as well.


[i] Hogan and Hogan (1986) FLC 91-704

[ii] Zschokke and Zschokke (1996) FLC 92-693

[iii] Breen v Breen (1990) 65 ALJR 195

[iv] ibid

[v] Poletti and Poletti (Unreported, Family Court of Australia, Nygh J, 2 March 1990)

[vi] Strahan & Strahan (Interim Property Orders) [2009] FamCA 116 at 84

[vii] Chester v Chester (1995) FLC 92-612

[viii] ibid

[ix] Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes and Coomes [1995] FamCA 103; (1995) FLC 92-558 per Cohen J

[x] Breen v Breen (1990) 65 ALJR 195

[xi] Harris and Harris (1993) FLC 92-378

[xii] Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395

[xiii] Gabel v Yardley (2008) 40 Fam LR 66 at 57

[xiv] Chorn v Hopkins (2004) FLC 93-204

[xv] S.117(1) Family Law Act 1975

[xvi] Because s.117(2) requires the judicial officer to consider the matters in s.117(2A) before making a costs order

[xvii] Robinson and Willis (1982) FLC 91-215

[xviii] Poletti and Poletti (Unreported, Family Court of Australia, Nygh J, 2 March 1990); Zschokke and Zschokke (1996) FLC 92-693; Strahan & Strahan (Interim Property Orders) [2009] FamCA 116 at 84

 Article – Hogan Orders

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