By Carly Boekee, Associate
Two different approaches to dealing with legal fees
In Trevi the Full Court of the Family Court was required to consider how to deal with the wife’s legal fees of $437,268 which she had funded from assets in existence at separation. In comparison, the husband was a lawyer and had only incurred costs of $142,587, his firm having represented him during the proceedings, which he had paid from his income.
The trial judge had a discretion to either:
(a) notionally ‘add back’ the amount spent by the wife to the pool of assets available
for adjustment between the parties; or
(b) leave the amount out of the pool of assets and instead take the sum into account
when considering each party’s percentage entitlement to the assets.
The trial judge had determined not to add the sum expended by the wife on legal fees back to the pool of assets available for adjustment between the parties.
The Full Court cited prior case law which established that typically if the funds used to pay legal fees were in existence at separation and both parties have an interest in them, then the funds should be added back as a notional asset of the party who expended them.
The appeal was allowed because the trial judge had confused the two approaches, determining to take the legal fees into account pursuant to section 75(2)(o), however then referring to the authorities which relate to the discretion of adding back legal fees to the pool of assets.
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