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Sexual harassment solicitor ordered to pay indemnity costs

The facts

Junior/trainee solicitor Catherine Mia Hill began working with Owen Hughes’ Bangalow based law firm Beesley and Hughes Lawyers in May 2015. The evidence showed that that he thought Hill was attractive, wanted to be in a relationship with her and that he communicated that to her.  Hughes offered to represent her in a mediation for her own family law matter, and she agreed.

Hughes made various comments and sent numerous emails to Hill, including the following:

“My feelings towards you have grown”,

“it meant a lot to me not just professionally that you have come into my life”

“it was so nice you trusting me with your own case”

“it is clear we both like each other personally and well, you know a lot of relationship (sic) started in the work environment something like 60% plus according to a report on the ABC”.

On a work trip to Sydney in July 2015, Hill found Hughes dressed in a singlet and boxer shorts only, lying on a mattress in the room she was supposed to sleep in on two separate occasions. Each time he asked for a hug after being asked to leave, and she reluctantly complied.

Numerous other emails of a personal nature followed, including persistent expressions of his love for her and comments that he would find a Ukrainian woman to work with him if she continued to turn him down. Hill’s evidence was that she told him to stop and when she told him that she had a boyfriend in England, his emails became more persistent and threatening, including 7 emails being sent by him to her on Monday 12 October 2015.

On 4 June 2016, Hughes sent Hill an email saying he could only afford to employ her for two days a week and making various comments about her personal life based on information he had acquired acting for her in her family law matter. On Thursday 9 June 2016, he sent another email seeking to justify his use of personal comments of her and saying that he would fight any complaint she brought against him. She resigned and finished working for Beesley and Hughes Lawyers later that month.

Relevant law

Section 37N of the Federal Court of Australia Act 1976 (Cth) provides that:

“(1) The parties to a civil proceeding before the Court must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.

(2) A party’s lawyer must, in the conduct of a civil proceeding before the Court (including negotiations for settlement) on the party’s behalf

(a) take account of the duty imposed on the party by subsection (1); and

(b) assist the party to comply with the duty.

(3) The Court or a Judge may, for the purpose of enabling a party to comply with the duty imposed by subsection (1), require the party’s lawyer to give the party an estimate of:

(a) the likely duration of the proceeding or part of the proceeding; and

(b) the likely amount of costs that the party will have to pay in connection with the proceeding or part of the proceeding, including:

(i) the costs that the lawyer will charge to the party; and

(ii) any other costs that the party will have to pay in the event that the party is unsuccessful in the proceeding or part of the proceeding.

(4) In exercising the discretion to award costs in a civil proceeding, the Court or a Judge must take account of any failure to comply with the duty imposed by subsection (1) or (2).”

Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 118 ALR 248 opined the pre-eminent test for a discretionary award of indemnity costs:

“The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis” 

His Honour cited authority while identifying special circumstances previously found by Courts to constitute facts which warrant the making of indemnity costs:

“I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra).”

Primary judge’s decision

Judge Vasta held that Hughes had through his course of conduct made an unwelcome sexual advance towards Hill. Hughes’ apparent attempt to distinguish romantic advances and sexual ones was rejected. Judge Vasta further accepted Hill’s evidence that she was offended, humiliated and intimidated by Hughes’ conduct and held that Hughes would have anticipated that it would have that effect. The particular circumstances that Judge Vasta had regard to in making such findings were:

    • ● that Hill and Hughes were in an employer/employee relationship;
    • ● that Hughes had also been engaged as the “legal representative” of Hill;
    • ● that Hill was “anchored” to the Northern Rivers region because of her life circumstances and, as such, needed employment in that area;
    • ● Hughes knew that Hill suffered from anxiety.

On the question of damages, Judge Vasta found that Hughes’ conduct caused Hill to have a psychological injury, and because his conduct was “obviously unwarranted, persistent and threatening”, a sum of compensatory damages of $120,000 was awarded against Hughes, with a further $50,000 awarded for aggravated damages. In addition, costs were awarded to Hill. 

Federal Court’s decision

Evidently unhappy with Judge Vasta’s scathing decision, Hughes appealed to the Federal Court.

Hughes contended that Judge Vasta had erred in finding that the Hughes’ conduct towards Hill constituted a sexual advance, conduct of a sexual nature, sexual harassment and a breach of s 28B of the Sex Discrimination Act 1984, instead portraying himself as a modern Mr Darcy.

Perram J dealt with this ground of appeal with the following colourful observation:

“Consequently, I reject the submission of Senior Counsel for the Appellant that these were the actions of a Mr Darcy. The facts of this case are about as far from a Jane Austen novel as it is possible to be.

Hughes also submitted that Judge Vasta had erred in law by awarding a manifestly excessive amount of $120,000 in general damages, but Perram J, after analysing the uncontested evidence that Hughes had caused Hill to suffer an adjustment disorder with mixed anxious and depressed mood, opined that:

“What is the ruin of a person’s quality of life worth? I flatly reject the Appellant’s contention that it was not worth $120,000 and the allied submission that such a finding was not open on the evidence. It seems to me to have been entirely within the range of available awards for general damages in a case of this seriousness where actual psychological harm was occasioned to the Respondent by the Appellant’s repeated and self-indulgent actions.”

Perram J noted:

“In my opinion, the trial judge was correct to condemn the Appellant’s conduct of the trial as, in effect, a continuation of his harassment of the Respondent. This appeal is devoid of merit and I would infer was pursued for the same purpose. Some of the submissions were, in my opinion, insulting. It should not have been brought and, in my opinion, should be emphatically dismissed.”

On 15 January 2021, Justices Collier, Reeves and Perram ordered that Hughes pay indemnity costs of the appeal:

“the finding that the appeal had been pursued to further the Appellant’s harassment of the Respondent has the consequence that the appeal was, as the Respondent correctly submitted, an abuse of the Court’s processes. The pursuit of a meritless appeal for the ulterior purpose of harassing the Respondent is more than sufficient to warrant an order that the costs be paid on an indemnity basis: Colgate Palmolive v Cussons [1993] FCA 536; (1993) 46 FCR 225 at 233 per Sheppard J. Conducting a proceeding in this manner breaches the duty parties have to act consistently with the overarching purpose of the Court’s civil procedure provisions: see Federal Court of Australia Act 1976 (Cth) (‘the Act’) s 37M and s 37N(1). In exercising the discretion to award costs, s 37N(4) of the Act requires the Court to take into account any failure to comply with this duty: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 2) [2017] FCAFC 116 at [3] per Jagot, Yates and Murphy JJ.”



This appeal was of highly dubious merit, and it was found to have been instituted for an improper purpose of harassing the successful plaintiff. This is a salutary lesson on the risks of pursuing appeals with poor prospects, particularly when the party appealing’s wrongful conduct was the subject of the litigation at first instance.

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