What You Need to Know About Applications for Interim Orders to Fund Legal Expenses in Family Law proceedings - ’Hogan Orders’

While Australia’s family law system is designed to ensure a just and equitable resolution of disputes between couples who are separating or divorcing, the costs of pursuing legal action to achieve that result can impact the parties disproportionately.

The situation is changing but in many relationships one party still remains largely in control of the financial assets. Typically this is the case where one party is the main breadwinner and the other is the homemaker in the relationship. When the relationship breaks down and the parties seek a property settlement to finalise the split and move on, the financially disadvantaged party comes up against the harsh reality of legal costs.

Hogan Order

Our legal system deals with this disparity through what are colloquially known as ‘Hogan Orders’, derived from the family law case of Hogan & Hogan (1988) FLC 91-976 where the power of the Federal Circuit and Family Court of Australia (then the Family Court of Australia) to make orders for one party to pay the legal costs of the other was expressed. The Court has the discretion to make such orders in various situations, including interim or ‘partial’ property settlements, interim costs orders, interim spousal maintenance orders, and injunctions.

This article looks at when Hogan Orders are appropriate and how they work in levelling the financial resources between two parties to a property settlement.

What is required for a Hogan Order?

 
Before it’s necessary to make an application for a Hogan Order, it’s important to emphasise that one party to a family property settlement proceeding can request their former partner cover their legal expenses to avoid the time and expense of a court application. Where negotiation fails, however, the essentials of this type of application are as follows.

The conditions which much exist for the Court to consider exercising its discretion and making a Hogan Order - requiring one party to contribute to the other party's legal costs – were set out in the case of Zschokke and Zschokke (1996) FLC 92-693 (‘Zschokke’). Factors to be considered in an application for such an order include:

• the applicant’s inability to meet his or her litigation costs in the family law proceedings;
• the respondent’s position of financial strength, relative to the applicant;
• the respondent’s capacity to meet his or her own litigation costs.

Further factors informing the question of whether or not a Hogan Order should be made were identified in the case of Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578, including that:

• the applicant has an arguable case for substantive relief which deserves to be heard;
• evidence of the applicant’s likely costs of the litigation;
• a precondition of whether an order will be made is not that the applicant’s legal representatives will cease to act unless the costs are paid or secured on an ongoing basis;
• 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 may require that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order.

Evidence from the applicant in the form of an affidavit is required to support the application for a Hogan Order. There are different interim orders in property settlement proceedings in which such an order may be appropriate, discussed below.

Interim or ‘partial’ property settlements

Parties to family law property settlement proceedings often seek interim or ‘partial’ settlements while the final resolution is pending. The court may order one party to make payments or transfer assets to the other party to meet immediate financial needs. However, the question of who bears the cost of legal proceedings during this interim stage can be complex.

The case of Strahan & Strahan [2009] FamCA 116 (‘Strahan’) provides guidance on the question, where the Court considered whether the husband should pay the wife's legal costs associated with an interim property order. Here, the Court indicated that once the three key requirements from Zschokke are satisfied, the applicant must furnish evidence of the nature and extent of the matrimonial property pool; their entitlement to property on the basis of contributions; adjustments for the numerous relevant section 75(2) factors (age and health of the parties, children from the relationship, other dependants, contributions of one party to the other, etc); and that it is just and equitable to make the order. To satisfy the last requirement, the applicant will need to show an interim settlement will not be greater than their likely entitlement in a final settlement.

In Strahan, ultimately, the court ordered the husband to pay the wife's legal costs of $5 million, highlighting the discretionary nature of Hogan Orders and the need to consider the circumstances of each case.

Interim costs orders

These orders may require one party to contribute to the other party's legal costs, reducing the inequality in access to legal representation. In Zschokke, the court stressed that litigation costs should not be a barrier to accessing justice. In determining whether a Hogan Order is appropriate, the Court will consider factors such as

• the financial circumstances of each of the parties;
• whether the parties are in receipt of Legal Aid;
• the conduct of the parties in regards to litigation costs;
• whether the proceedings eventuated because one party failed to comply with previous orders of the Court;
• such other matters as the Court considers relevant.

Interim spousal maintenance orders

These orders can be essential for ensuring that a financially disadvantaged spouse can meet their immediate needs. The Family Law Act includes a threshold test for the payment of spousal maintenance in section 72(1), namely 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 because of the care of children under 18; incapacity for gainful employment; any adequate reason, and; with regard to section 75(2) factors.

Similar to other interim orders, the question of who bears the cost of legal proceedings in obtaining these orders can arise. Hogan Orders play a vital role in addressing this issue. The court may order one party to pay the legal costs of the other when seeking interim spousal maintenance. This ensures that both parties can effectively pursue their claims without being deterred by the financial burden of legal proceedings. The discretionary nature of these orders allows the court to consider the specific circumstances of each case, including the financial needs and resources of the parties.

Injunctions

Injunctions are court orders that prohibit a party from taking certain actions or require them to do specific things. In family law, injunctions may be sought to prevent the disposal of assets or protect the rights of children – but parties may still incur significant legal costs.

The Court can make orders for one party to pay the legal costs of the other when seeking injunctive relief. Again, the court's discretion is critical in assessing the fairness and reasonableness of such orders in each case.

Discuss your case with expert family lawyers

Our family law system aims to provide a fair and just resolution of disputes between couples going through separation or divorce. Hogan Orders can play a crucial role in addressing the issue of litigation costs in the various family law proceedings outlined above but it’s important to remember such orders are at the Court’s discretion, requiring compelling evidence on behalf of the party seeking the order in support of their application.

The advice of trusted family lawyers with widespread experience in family law matters is essential if you are seeking a Hogan Order so as to properly put your case in property settlement proceedings. Contact our team at Frigo James Legal today for more information or to ask questions about anything discussed in this article.