Houston and Houston & Anor

The Family Court of Australia considered competing applications for costs between Ms Houston (the wife), Mr Houston (the husband), and Ms Mills (the Second Respondent, the wife's mother). The dispute arose from the husband and wife constructing a cottage and other improvements on the Second Respondent's property, financed by a mortgage secured against that property. The husband had joined the Second Respondent to the proceedings, seeking a declaration of an equitable interest in the property for himself and the wife, which was ultimately found to be less than the secured liability.

The court was required to determine whether to award costs against any party, and on what basis, given that the financial issues between the husband and wife had been resolved by consent orders. Specifically, the court had to consider the wife's application for costs against the husband, the Second Respondent's application for costs against the husband, and the husband's application for costs against both the wife and the Second Respondent. The court's determination was guided by section 117 of the *Family Law Act 1975* (Cth) and relevant Rules of Court, which outline the general principle that parties bear their own costs but grant the court discretion to make orders for costs in justifiable circumstances.

The court applied the principles governing costs orders under the *Family Law Act 1975* (Cth), including the factors listed in section 117(2A), such as the financial circumstances of the parties, their conduct in the proceedings, and the reasonableness of their behaviour. The court noted that while the ordinary rule is for costs to be awarded on a party/party basis, it has the discretion to order indemnity costs in circumstances warranting a departure from the usual course, such as where proceedings were commenced or continued for an ulterior motive or involved undue prolongation on groundless contentions. The court considered the husband's conduct in joining the Second Respondent and maintaining the claim against her until the final hearing, despite evidence suggesting the claim was futile.

The court ordered that the husband pay the wife's costs on a party/party basis from 5 February 2014. The husband was also ordered to pay the Second Respondent's costs on a party/party basis from 8 November 2013, the date from which the court considered the husband became aware his claim against her was futile. The husband's own application for costs against both the wife and the Second Respondent was dismissed, and he was ordered to bear his own costs. The court also certified for counsel pursuant to Rule 19.50 of the *Family Law Rules 2004* (Cth).