Galloway & Steele

Case [2021] FedCFamC1F 203

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Galloway & Steele [2021] FedCFamC1F 203

File number(s): SYC 6615 of 2007
Judgment of: HARPER J
Date of judgment: 17 November 2021
Catchwords: FAMILY LAW – COSTS – Between parties – Where final judgment had been delivered in 2015 – Where father had been granted sole parental responsibility – Where mother filed initiating application in 2020 seeking to relitigate parenting proceedings in 2220 – mother’s application dismissed after threshold application of the principles in Rice & Asplund (1979) FLC 90-725 – Where father now seeks costs of the proceedings – Where mother engaged Queen’s Counsel for the substantive dispute – Mother now self-represented – Father’s financial position stronger than that of the mother – Where the mother was wholly unsuccessful – Where the mother commenced proceedings based on an unreasonable interpretation of the final orders – Where the mother refused to engage in discussions to avoid litigation – Indemnity costs not justified – Order for costs fixed in the amount of $25,000.
Legislation:

Family Law Act 1975 (Cth) s 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Cases cited:

Colgate-Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225; (1993) 118 ALR 248; (1993) 28 IPR 561

D & D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64

Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish and Anor (2005) 191 FLR 294; (2005) 33 Fam LR 123; [2005] FamCA 158

Galloway & Steele [2011] FamCA 550

Galloway & Steele [2015] FamCA 1215

Galloway & Steele [2021] FamCA 508

Harris & Dewell (No 2) [2018] FamCAFC 180

Kohan and Kohan (1992) 112 FLR 151; (1992) 16 Fam LR 245; (1993) FLC 92-340

Limousin v Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178

Medlon & Medlon (No 6) (Indemnity Costs) (2015) 54 Fam LR 1; (2015) FLC 93-664; [2015] FamCAFC 157

Moorcroft & Moorcroft (2020) 60 Fam LR 361; [2020] FamCAFC 83

Munday v Bowman (1997) FLC 92–784; (1997) 22 Fam LR 321

Prantage & Prantage(Costs) [2014] FamCA 850

Rice & Asplund [1978] FamCA 84; (1979) FLC 90-725; (1978) 6 Fam LR 570

Worth and Worth (No 2) [2019] FamCAFC 126

Division: Division 1 First Instance
Number of paragraphs: 53
Date of last submission/s: 2 November 2021
Date of hearing: On the papers
Place: Sydney
Solicitor for the Applicant: Holmes Donnelly & Co
Solicitor for the Respondent: Ms Steele in person

ORDERS

SYC 6615 of 2007

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR GALLOWAY

Applicant
AND:

MS STEELE

Respondent

ORDER MADE BY:

HARPER J

DATE OF ORDER:

17 NOVEMBER 2021

THE COURT ORDERS THAT:

1.Within 60 days, the Respondent Mother pay the Applicant Father’s costs of and incidental to her Initiating Application filed 26 October 2020, her Application in a Case filed on 10 December 2020, and the father’s application for costs the subject of this judgment, fixed…

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AGLC
Galloway & Steele [2021] FedCFamC1F 203
Case
[2021] FedCFamC1F 203
Decision Date

CaseChat Overview and Summary

The case of Galloway & Steele involved a protracted dispute between the father and mother over parenting arrangements for their child. The father sought a costs order against the mother, citing her unsuccessful application and refusal to resolve the matter. The mother, who had engaged legal representation, argued that she had limited financial resources. The Full Court considered whether the circumstances justified an order for indemnity costs, which are rarely awarded and represent a significant departure from the usual rule of party/party costs. The Court examined the financial circumstances of both parties, the mother’s unsuccessful application, and her refusal to accept a proposed resolution. The Court found that the mother's conduct justified a costs order in favour of the father.

The key legal issues before the Court were whether the father had established circumstances justifying a costs order in his favour, and if so, whether those costs should be awarded on an indemnity basis. The Court considered several factors, including the mother's financial resources, her unsuccessful application, and her refusal to accept a proposed resolution. The Court had to weigh these factors against the general principle that costs should typically be borne by the party who incurred them, except in extraordinary circumstances.

In its reasoning, the Court noted that an order for indemnity costs is rare and only justified in cases where the losing party’s conduct warrants such a departure from the usual rule. The Court found that the mother's wholly unsuccessful application, her refusal to accept a resolution, and her lack of insight into the prolonged litigation warranted such a departure. The Court also considered the financial resources of both parties, with the mother having engaged in significant legal expenditure and having the means to do so, which further supported the justification for an indemnity costs order.

The Court concluded that the mother's conduct justified an order for indemnity costs in favour of the father. This order recognises the substantial legal costs incurred by the father in defending the mother's unsuccessful application and unreasonable refusal to resolve the matter. The Court also noted the mother's financial ability to engage in the litigation, reinforcing the appropriateness of the indemnity costs order.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The father in his submissions emphasised the extensive litigation history of the matter, the mother’s conduct throughout the prolonged period, and the lack of insight with regard to the persistent litigation and the protracted effect upon the child. He concludes that he should not have to incur substantial legal costs in defending the indefensible. CONCLUSION ON JUSTIFYING CIRCUMSTANCES I am satisfied that, in the circumstances, the conduct of the mother, her wholly unsuccessful application and her unreasonable refusal to take a path of resolution proffered by the father justifies a costs order in the father’s favour. INDEMNITY COSTS The award of indemnity costs in this Court has regularly been called a significant departure from the normal standard. In Harris & Dewell (No 2) [2018] FamCAFC 180 the Full Court said at [23]–[25]: 23. In Kohan and Kohan [(1993) FLC 92-340 (“Kohan”)], the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive [Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225], that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage [2013] FamCAFC 105; (2013) 49 Fam LR 197 (“Prantage”), Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded ([86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.24. That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [[2001] HCA 26; [2001] HCA 32; (2001) 179 ALR 406 at [40]]. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”. 25. The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation. Holden CJ in Munday v Bowman (1997) FLC 92–784 at 84,660 outlines the various factors that could cause the finding of costs on an indemnity basis as per Colgate-Palmolive Co v Cussons Pty Limited (1993) 46 FCR 225:(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts;(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud;(c)Evidence of particular misconduct causing loss of time to the court and to other parties;(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and(e)An imprudent refusal of an offer to compromise.

Ratio Decidendi

Legal Principle Established

The mother made no claim for costs. Therefore, the first question is whether the father has established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in his favour. The second question is whether, if there are circumstances justifying a costs order, the wife should pay the father’s costs on a higher basis than party/party costs, and in particular on an indemnity basis.SECTION 117(2A) CONSIDERATIONSSection 117(2A)(a) – the financial circumstances of each of the parties The father placed reliance upon the mother having engaged a solicitor and Queen’s Counsel for the Rice & Asplund threshold hearing to emphasise that the mother had funds to engage in the litigation. He also noted that the mother provided evidence of her attendance upon two psychologists who have both provided reports for the Court. From this, the father asks the Court to infer the mother had sufficient financial resources to fund these expert reports. The father also pointed out that the mother currently makes a child support payment to the father in the sum of $876.75 per month pursuant to the Child Support (Assessment) Act 1989 (Cth). There was no dispute the mother’s child support assessment reduced as of 1 October 2021 to $689.33 per month. The mother argues that her financial circumstances are dire. She states her current weekly income is $963, with her living expenses often exceeding this amount. She claims a need to borrow from family and friends to assist. In her submissions, she points to a grant of legal aid as evidence of impecuniosity. But, as pointed out below under s 117(2A)(b), this is inaccurate. There was no grant of legal aid for the purposes of her fresh parenting application, but only for a subsequent appeal. Indeed, the mother gave evidence that she has taken out a personal loan of $32,650 for to pay her legal fees in relation to the substantive application to which this costs judgment relates, with weekly repayments of $130.26 per week over the next seven years. Her own evidence is that she has incurred legal fees of $33,934.18. This is some evidence of an ability to service a personal loan. The mother claimed in her affidavit that the father holds significant assets and receives an income in excess of $300,000 per annum, which has not been accounted for in the child support assessment. The assessment currently indicates that the father’s income is estimated to be $71,421 for the 2020-2021 financial year. The mother relied upon ASIC searches showing the father is the sole director of a number of companies. However, no information was provided to demonstrate the nature of the companies and their relevance to the father’s financial position. She also claimed the father owns several private and commercial properties, a European motor vehicle valued at $93,000, and currently pays approximately $35,000 in school fees per year for the child to attend private school. Therefore, the mother argues that the child support assessment is not reflective of the father’s lifestyle and the child’s educational requirements.