Gomez and Gallagher

[2018] FamCA 552

FAMILY COURT OF AUSTRALIA

GOMEZ & GALLAGHER [2018] FamCA 552

FAMILY LAW – COSTS – Indemnity Costs – Where the father was wholly unsuccessful in his application for parenting orders – Where the father initiated proceedings on a false factual basis – Where the father’s conduct in relation to the proceedings justify an order for indemnity costs – Indemnity costs ordered against the father.

Family Law Act 1975 (Cth) ss 117, 117AA, 117AC, 118
Family Law Rules 2004 (Cth) rr 19.04, 19.08, 19.10, 19.18

Gallagher & Gomez [2017] FamCA 944
Yunghanns & Ors & Yunghanns (2000) FLC 93-029
Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225
Kohan & Kohan (1993) FLC 92-340
Muldoon & Carlyle (2012) FLC 93-513
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364
J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42
Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433

APPLICANT: Ms Gomez

RESPONDENT: Mr Gallagher

FILE NUMBER: CSC 110 of 2015

DATE DELIVERED: 24 July 2018

PLACE DELIVERED: Townsville

PLACE HEARD: Cairns

JUDGMENT OF: Tree J

HEARING DATE: 20 February 2018

REPRESENTATION

SOLICITORS FOR THE APPLICANT:	Cope Family Law
THE RESPONDENT:	In person

Orders

1. The father pay the mother’s costs on an indemnity basis as assessed in the sum of $81,322.59.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Gomez & Gallagher has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CAIRNS

FILE NUMBER: CSC110 of 2015

Ms Gomez

Applicant

And

Mr Gallagher

Respondent

REASONS FOR JUDGMENT

Introduction 

1. On 23 November 2017, for reasons delivered that day,[1] I dismissed the application brought by Mr Gallagher (“the father”) that he be reintroduced into the parties’ two children’s lives. Instead, I made orders as sought by Ms Gomez (“the mother”) that the children have no contact with the father whatsoever. I did so expressly on the basis that any reintroduction of the father into the children’s lives would so adversely affect the mother and her capacity to parent the children, that it was not in the children’s best interests.

   [1]Gallagher & Gomez [2017] FamCA 944.

2. Now by Application in a Case filed 21 December 2017, the mother seeks an order that the father pay her costs on an indemnity basis, in the sum of $81,322.59. The father opposes such an order.

3. On 20 February 2018 I ordered a timetable for the exchange of written submissions, at the conclusion of which the decision in relation to the mother’s costs application would be reserved. This is that decision and the reasons for it.

BACKGROUND FACTS

1. Detail of the background facts to this case are sufficiently contained in my earlier reasons, and do not need to be repeated. However it is apposite to emphasize a number of them, as follows:

   ·As at the time of trial, the father was 33 years of age and the mother 32 years of age. They commenced their relationship in their late teens, and it lasted for about 11 years. Two children were born to the relationship, who at the time of trial were three and four years of age;

   ·The facts which led to the parties’ separation are unique. For some years, although pretending to be someone else, the father had stalked the mother by sending her emails and text messages, employing an elaborate regime so as to conceal the fact that it was he who was undertaking the stalking. The mother genuinely became fearful for her safety, and perhaps life. Notwithstanding knowing that she was petrified, the father continued his stalking behaviour, even to the point of setting fire to the mother’s brother’s car;

   ·Ultimately police were involved, and after they investigated, charged the father with stalking and arson. He was convicted of both offences on his plea of guilty, and sentenced to a period of actual imprisonment;

   ·The parties’ youngest child was born after separation, and the father has never seen or spoken to her.

   ·These proceedings were commenced by the father on 18 February 2015, at which time he was continuing to falsely deny that he had ever stalked the mother, or had set fire to her brother’s car. As initially framed, he sought orders for equal shared parental responsibility, and a regime of time with the children culminating in orders which would see him spend alternate weekends, and some mid-week time, with the children, together with one half of all school holidays;

   ·On 19 September 2017 the father amended his application such that he contended the mother should have sole parental responsibility for the children, who would live with her, but be reintroduced/introduced to the him, ultimately spending unsupervised time with him on alternate weekends and each Wednesday night;

   ·As I have indicated, the father’s application wholly failed and the mother’s response wholly succeeded.

RELEVANT STATUTORY PROVISIONS & LEGAL PRINCIPLES

Cost orders generally

1. The starting point for a consideration of this application is s117 of the Family Law Act which relevantly provides as follows:

   117(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 each party to proceedings under this Act shall bear his or her own costs.

   117(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

   …

2. Family Law Rule 19.08(3) imposes a mandatory obligation in the following terms:

   A party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a Costs Agreement in relation to those costs and, if so, the terms of the Costs Agreement.

3. Rule 19.18 deals with the method of calculation of costs in the following terms:

   19.18(1) The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount assessed in accordance with Schedule 3.

   Example

   For paragraph (1)(c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.

   19.18(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.

   19.18(3) In making an order under subrule (1), the court may consider:

   (a)      the importance, complexity or difficulty of the issues;

   (b)      the reasonableness of each party’s behaviour in the case;

   (c)      the rates ordinarily payable to lawyers in comparable cases;

   (d)      whether a lawyer’s conduct has been improper or unreasonable;

   (e)the time properly spent on the  case, or in complying with pre-action procedures; and

   (f)expenses properly paid or payable.

Principles relating to indemnity costs

1. In order to justify the making of an order for costs on other than a party/party basis, all that is required are particular facts and circumstances of the case in question warranting the making of such an order.[2]  That said, such an order is a very great departure from the normal standard, and hence it is imperative that the court be aware of what the nature of the indemnity is, in the sense of what the costs agreement between the parties seeking the order and their solicitors is.[3]  That said, such an order remains wholly compensatory and not punitive.[4]

   [2]Yunghanns & Ors & Yunghanns (2000) FLC 93-029 adopting Sheppard J in Colgate-Palmolive Company & Colgate-Palmolive Pty Ltd v Cussons Pty Ltd (1993) FCR 225.

   [3]See Kohan & Kohan (1993) FLC 92-340 and FLR 19.08(3).

   [4]See Muldoon & Carlyle (2012) FLC 93-513 at [115].

2. It is well established that proceedings brought in wilful disregard of known facts or clearly established law are one of the established categories which justify indemnity costs.[5]  An instance of that in this court is the decision of Limousin[6] where the Full Court did not disturb a costs order against a solicitor who had failed to have any proper regard to the prospects of success of a claim.

SECTION 117(2A) FACTORS

[5]Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 364; J Corp Pty Ltd v Australian Building Labourers Federation Union of Workers (WA Branch)(No 2) [1993] FCA 42; Colgate-Palmolive (supra and Yunghanns (supra).

[6]Z (A Solicitor) v Limousin (Costs) [2010] FLC 93-433.

Financial circumstances of the parties

1. Both parties are in poor financial shape. The mother’s net asset position (leaving aside superannuation) is about $15,000, whereas the father has net liabilities of somewhere in the order of $32,000. The mother is in employment from which she derives, according to her most recent financial statement, $725.00 per week, however her expenditure exceeds that by about $150.00. For his part, the father is in receipt of social security benefits, and like the mother, his expenses exceed the income he derives from the Commonwealth.

2. The mother is in a slightly better position in relation to superannuation than the father, but given their ages, I give that no weight.

Legal Aid

1. The father was legally aided at the trial before me, but the mother was not. Initially she had qualified for legal aid, but when the parties’ property settlement finalised in July 2015, she no longer qualified, and thereafter had to privately fund legal representation.

The conduct of the parties in relation to the proceedings

1. No criticism is made of the mother’s conduct in the proceedings. However the mother is strongly critical of the father even commencing the proceedings, and, thereafter continuing them. Particularly she says:

   ·The father commenced these proceedings denying that he had stalked the mother, or had set fire to her brother’s car, which denial was knowingly false;

   ·He was well aware, as I found in my judgment, that his stalking of the mother had distressed her, to the point where she was petrified. The course of the father’s stalking conduct was premeditated over some years, deliberate, and calculated to cause the mother distress and anxiety, which was likely to be continued by the mother being required to litigate against the father, given that he was the moving party;

   ·Notwithstanding the expert evidence as to the likely impact of the father being reintroduced/introduced into the children’s life on the mother, the father pressed his application “to the bitter end”.

2. In this context, it is appropriate to repeat some of the passages of my earlier reasons, as follows:

   125.A number of additional points need to be made.  The first is that one cannot really over-emphasise the enormity of the father’s stalking of the mother and her family.  It was chillingly cold-blooded, to the point of horrifying.  Significantly, there was the degree of pre-meditation which the father admits, conceding that it had been his intention to so stalk the mother since the very first message referring to [Mr G] in 2011.  He then cold-bloodedly and calculatingly, over a considerable period of time, sent emails to the otherwise unused email account, with the express purpose, no doubt, of ultimately using them.  As has been seen, those emails were sent over some years.

   126.Then, in 2014 and 2015, he calculatingly deceived the mother into thinking that he too, shared her concerns in relation to the stalking whilst, all the while not merely engineering it, but calibrating it by reference to her responses in a way that he knew would only further distress her.  There can be no doubt that that was the father’s intention, because he told [Dr D] that he was “trying to push limits” when he decided to send further communications with the mother, notwithstanding that he knew she was then “petrified.”

   127.The mother is perfectly entitled and justified to wish to have no contact with the father, and seeing him as lacking any positive feature.  Whilst that may not be an objective conclusion to reach, it is a perfectly justifiable conclusion for a victim to hold.  As she has often noted, it was a most horrific and breathtaking breach of trust by someone she loved, and absolutely trusted.

   128.The second point that should be made, is that the mother has now discovered other aspects of the father’s life during their relationship which were kept secret from her.  For instance she now knows that he had a bank account which he kept from her knowledge, and a post office box that she did not know about.  Further, it transpires that the father, on occasions during the relationship, had recourse to prostitutes, and even if that be only on the 10 occasions as claimed by the father to [Dr D], it nonetheless (unknowingly to the mother) potentially exposed her to STI’s.  All of this, combined with the stalking of her, means that the mother now realises that the father was living a quite deceptive life, and that she really did not know the true person that she had been in a relationship with for all of those years.  The person that she now believes the father to be, is utterly different to her lived experience of him.  She genuinely believes that she does no know what he is capable of.

   129.The third matter which needs to be addressed is the father’s proposal that the mother should be required to undertake treatment for her anxiety.  This was discussed in the cross-examination of [Dr D] by the father’s counsel.  [Dr D] said that the mother’s treatment, from his perspective, would best be a blend of anti-anxiety medication prescribed by a doctor or psychiatrist, and further psychological therapy, addressed to trying to change the mother’s response to the father.  Leaving aside whether or not the court would have any power – absent consent – to make an order for such therapy, the suggestion by the perpetrator that his victim should be compelled to undertake treatment to cure the very malady which he recklessly and callously created, so that he can obtain some benefit which she opposes, is breathtaking.

   130.[Dr M] gave some evidence in relation to these matters.  He emphasised that the mother essentially has a fear of the unknown – she does not believe that she knows what the father is capable of, and therefore in her eyes he is potentially capable of anything.  He accepted that the mother’s fears in this respect were genuinely held.  Further, he said that her reaction was understandable, because what the father did was a violation of her trust which fundamentally rocked her understanding of relationships and her ability to judge people.  It impacted to the very core of her self-confidence.

   …

   143.The mother’s evidence in this respect was not seriously challenged.  She said:

   ·    I still live in fear of the father (affidavit [149]);

   ·    The long-term damage the father has inflicted on me will never fully heal .. the fear for my safety and the safety of my children was and still is very real ([150]);

   ·    If [the father] has contact with [B] and [C] in any form whatsoever, I truly fear for their safety.  The possibility of him having contact with [B] and [C] is terrifying ([156]);

   ·    If the father relocated to Western Australia, my first thought is one of terror.  My second thought is how am I going to protect my family .. If he relocated to Western Australia, we would be in serious danger for the reasons deposed above and herein.  I would be forever looking over my shoulder.  I do not believe his deceitful nature will ever change ([158]);

   ·    The thought of the father having any contact with the children is sickening to me.  If this was to happen, I do not know how I would cope or what I would do.  I would be distraught beyond words and increasingly inconsolable ([159]).

   …

   156.The evidence really only tells in one direction.  That is that the effect on the mother and her parenting capacity, if the children were to now commence to spend time or communicate with the father, would be to cause dramatic anxiety, panic and fear.  It is likely to see her return to a fear of even going out of the house, and likely to lead to her reduced emotional availability to the children.  In turn, that is likely to reduce her capacity to properly care for the children, and the longevity of that is unable to be predicted.

   …

   169.To my mind the critical issue here is the need for peace in the mother’s home and life.  The effect of the father’s proposal would be to destroy that peace, and to reignite all of the mother’s anxieties which were directly caused by his appalling abuse of her trust, by stalking her in the chilling and callous way that he did.

   170.Counsel for the father sought to emphasise that the father has paid the price that the community, via his sentence, required him to pay for the commission of his crime, and that in effect, he should be given a second chance.  True it is that he has served his sentence (subject to him remaining on parole until next year) but it is simply not correct to say therefore he deserves a second chance.  Moreover, the cost of that second chance is unlikely to be borne by him, but rather the mother, his victim.

   171.Having traumatised her once, he now proposes to do so again.  That cannot possibly be in the children’s best interests.  I am satisfied that this is one of those rare cases where the children’s best interests are served by ensuring that there is peace and tranquillity in their home.  There will therefore be orders that the father neither spend time nor communicate with the children.

3. The purpose of repeating those extracts is to emphasize that, even as ultimately pressed, the father’s case was to require his victim to be further traumatised so that he, the perpetrator, could obtain some benefit from being involved in his children’s lives. Yet notwithstanding the evidence about that re-traumatisation of the mother, he pressed on with this litigation. I am well satisfied that the father knew all of the facts which compelled that conclusion whilst he was litigating; he may not have actually drawn the conclusion himself, or had it pointed out to him, but it should have been.

Partly or wholly unsuccessful

1. The father was wholly unsuccessful in these proceedings.

Offers in writing

1. The mother makes the point that her response filed April 2015 set out the terms upon which she was prepared to conclude the litigation, and she was successful in achieving that result. She contends that this is the equivalent of an offer, and there is force in that argument. The purpose of s 117(2A)(f) is for the Court to see whether or not a party pressed on with litigation, despite an offer, but ultimately did no better than they could have done if they had accepted it. Here the father did no better than he could have done as at April 2015.

Evaluation

Costs

1. Notwithstanding the usual rule as established by s 117(1) that each party bear their own costs, I am satisfied that there are circumstances in this case that justify an order for costs. Particularly, I rely upon the conduct of the father in relation to the proceedings, in that he commenced them on a false factual basis, and further, that he pressed on seeking to have the children reintroduced into his life, knowing that the emotional cost of doing so would likely be borne not by him, but by the re-traumatising of his former victim. In my view, that is a circumstance which cannot be overlooked and which justifies an order for costs in this case.

Indemnity Costs

1. In commencing these proceedings whilst falsely denying that he had stalked the mother or set fire to her brother’s car, it must be the case that they were brought in wilful disregard of known facts. Of itself, in my view, that would warrant the making of at least an order for partial indemnity. However the following are also, in my view, relevant considerations which point in favour of an order for full indemnity costs:

   ·The father made no challenge to the level of the mother’s reaction to the stalking behaviour during the course of the relationship;

   ·The father made little challenge to the evidence as to the mother’s likely adverse, and potentially severely adverse, reaction to the children spending time with, or communicating with him;

·The father’s only proposal for the reintroduction of the children required his victim to undergo and seek psychological assistance, which is, as I observed in my reasons, simply breathtaking.

1. These matters persuade me that, properly advised, the father should have known that his prospects of succeeding were slight, at best.

2. There is a further unusual aspect to an order for indemnity costs in this case which should also be adverted to, and that is that the solicitors for the mother laudably agreed to act for her at legal aid rates, and not at their usual private fees. That somewhat ironically means that, as regards the solicitor’s component of their fees, an order for indemnity costs sees that component at a sum about $20,000.00 less than those costs calculated by reference to the relevant scale. Therefore it is correct to say, as the mother’s solicitors do, that the impact of an indemnity costs order in this case is far less severe than might usually be expected.

3. In concluding that there should be an order for indemnity costs, I do not overlook the father’s impecuniosity, however as has been observed on many occasions, impecuniosity is not of itself a bar to an order for costs, nor indeed in my assessment, to indemnity costs. That is all the more so when the party against whom the order is to be made is the party who initiated the proceedings, and pressed them to conclusion.

4. As to the quantification of those costs, I am satisfied that the sum claimed by the mother of, $81,322.59, is reasonable and that the items claimed in the various accounts are likewise reasonably incurred and undertaken.

CONCLUSION

1. For these reasons there will be an order that the father pay the mother’s costs on an indemnity basis as assessed in the sum of $81,322.59.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 24 July 2018.

Associate: 

Date: 24 July 2018