Mansfield and Mansfield and Ors (No.4)
[2019] FCCA 318
•13 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MANSFIELD & MANSFIELD & ORS (No.4) | [2019] FCCA 318 |
| Catchwords: FAMILY LAW – Property proceedings – husband beneficiary of trust – wife’s joinder application not granted – indemnity costs sought by third parties – considerations of a just costs order – consider the financial circumstances of the parties with respect to a costs order – no special or unusual feature of the case to justify indemnity costs – matters to be considered. |
| Legislation: Family Law Act 1975, ss.117, 79(2). Federal Circuit Court Act 1999, s.3(2). Federal Circuit Court Rules, rr.21:02(2), 21.10, 21.15, 21.16. |
| Cases cited: Mansfield & Mansfield [2017] FCCA 13 Prantage & Prantage [2013] FamCAFC 105 |
| Applicant: | MS MANSFIELD |
| First Respondent: | MR MANSFIELD |
| Second Respondent: | MR MANSFIELD SENIOR |
| Third Respondent: | MS MACRI |
| Fourth Respondent: | COMPANY 1 PTY LTD |
| Eighth Respondent: | COMPANY 2 PTY LTD |
| File Number: | ADC 4119 of 2014 |
| Judgment of: | Judge Brown |
| Hearing date: | 1 August 2018 |
| Date of Last Submission: | 1 August 2018 |
| Delivered at: | Adelaide |
| Delivered on: | 13 February 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr I Robertson SC / Ms T Lewis |
| Solicitors for the Applicant: | Jacqui Ion Lawyers |
| Counsel for the First Respondent: | Mr R Weil |
| Solicitors for the First Respondent: | Scanlan Carroll Pty Ltd |
| Counsel for the Second, Third, Fourth & Eighth Respondents: | Mr H Abbott SC |
| Solicitors for the Second, Third, Fourth & Eighth Respondents: | DMAW Lawyers |
ORDERS
The applicant pay costs to the second, third, fourth and eighth respondents in an amount of $20,632.80.
IT IS NOTED that publication of this judgment under the pseudonym Mansfield & Mansfield & Ors (No.4) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 4119 of 2014
| MS MANSFIELD |
Applicant
And
| MR MANSFIELD |
First Respondent
| MR MANSFIELD SENIOR |
Second Respondent
| MS MACRI |
Third Respondent
| COMPANY 1 PTY LTD |
Fourth Respondent
| COMPANY 2 PTY LTD |
Eighth Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to an application for costs, in family law proceedings, which involved not only the spousal partners concerned, but also various other third parties. One of the parties to the marriage concerned unsuccessfully sought to join these third parties, in her suit with the husband. The third parties now seek costs against her.
On 5 November 2014, Ms Mansfield “the wife” commenced proceedings, pursuant to the Family Law Act 1975, against Mr Mansfield “the husband” seeking final orders in respect of the care of their children and the division of property, as a consequence of the end of the marriage between them.
The parties married in … 2008 and finally separated in October 2014. They have two children, currently aged 12 & 11. Apart from one factor, the circumstances surrounding their marital life and financial situation are not unusual and, as such, this court, a lower level court of general federal jurisdiction, particularly in the family law area, created by government to adjudicate matters expeditiously and cheaply, was an appropriate forum to formalise the issues arising between them, following their separation.
The factor, which has rendered this case out of the norm from other matters, ordinarily determined by the Federal Circuit Court, is that the husband’s father, Mr Mansfield “Mr Mansfield Senior” is a self-made millionaire, who controls assets, particularly agricultural land, of significant value, through a complex web of discretionary trusts and companies.
It was entities related to Mr Mansfield Senior, which the wife sought to involve in the adjudication of her family law dispute with the husband. The wife is not a wealthy person. The costs sought from her amount to a little under $100,000.00. One any view, it is very significant sum of money.
Besides the husband, Mr Mansfield Senior has one other child, his daughter, Ms Macri. He has been divorced from the husband and Ms Macri’s mother for many years. There is no doubt that Mr Mansfield Senior loves both the husband and Ms Macri, both of whom enjoy a cordial relationship with their father.
The husband and Ms Macri are discretionary beneficiaries (along with others) of the various trusts created by Mr Mansfield Senior. In addition, Ms Macri has provided book-keeping services to her father, over many years, although she is not his actual accountant.
As such, it would be naïve for the court to consider that they are not aware that Mr Mansfield Senior is an extremely wealthy person. Indeed, the wife herself was well aware of this fact during her marriage to the husband.
Given the closeness of his relationship to his children, it is likely that after Mr Mansfield Senior’s death, the husband and Ms Macri will inherit the significant majority of Mr Mansfield Senior’s wealth. However, whilst Mr Mansfield Senior remains alive, it was my finding that he remains steadfast in his desire to control his wealth, as he sees fit and subject to his absolute direction.
The wife, through the agency of those advising her, sought to subpoena documents relating to the trust and companies associated with Mr Mansfield Senior, in order to see for herself if the husband was more than a discretionary beneficiary of these entities and particularly whether he himself was able to exert control, either directly or in some other covert way, over these assets to benefit himself.
For obvious reasons, it was in the wife’s interests to expand, if possible, the pool of marital assets available for division between her and the husband and ascertain what financial resources were potentially available to the husband, who otherwise presented himself as a person of unexceptional means. This indeed being the position, which he had presented throughout the proceedings, deposing that his father did not provide him with any financial largess.
Mr Mansfield Senior and Ms Macri resisted the various subpoenas concerned. I over-ruled their objections and directed that documents related to the various trusts in question be produced to the court on the basis that the wife had a potential interest in ensuring that the relevant trusts were properly administered. The relevant documents were subsequently inspected by the wife’s solicitor and counsel.
At this stage, my ruling related solely to the issue of whether the documents should be made available to the wife, not whether they were specifically relevant to the wife’s application or any potential assertion regarding their potential forensic application to the substantive proceedings.[1]
[1] See Mansfield & Mansfield [2017] FCCA 13
The subpoena issue first arose in April of 2016 and was finalised in January of 2017. At an earlier stage, the proceedings between the husband and wife had been fixed for a three day final hearing, which was scheduled to take place in February of 2017.
At this stage, the issues between the parties centred on the wife’s application to live with the children of the marriage in suburban Adelaide rather than in Town A, where the parties had lived during their relationship, along with the division of their marital assets, which ostensibly largely consisted of their former family home, an investment property, each of modest value and subject to mortgage and some farming land, at Town B, adjoining land controlled by the husband’s father.
The time in February was not utilised for the purpose for which it had originally been allocated. Rather, approximately a fortnight prior to the date scheduled for the final hearing to commence, the wife’s solicitors issued subpoenas to give evidence to Mr Mansfield Senior, Ms Macri and Mr C, Mr Mansfield Senior’s accountant.
In these circumstances, the three days set aside for the final hearing were largely utilised by counsel for the wife examining Mr Mansfield Senior, Ms Macri and Mr C about Mr Mansfield Senior’s financial affairs and the degree of involvement, if any, of the husband in those affairs, particularly whether he had any interest in his father’s assets, which was potentially amenable to these proceedings.
As I have already observed, in earlier judgments provided to the parties, if I had known what were the issues sought to be raised by the wife, in the February 2017 proceedings, I would have had little hesitation in transferring the case to the Family Court. However, not having been provided with such hindsight, I was compelled to carry on with the proceedings, as best I could.
At the conclusion of the evidence taken from Mr Mansfield Senior, Ms Macri and Mr C, I directed that the wife, if she wished to pursue any matter arising from their evidence, should file an amended application, to this effect, within forty-two days. It being the case that counsel for the wife had foreshadowed such an application being made as a consequence of their interpretation of this evidence.
Against this background, on 28 April 2017, the wife filed the promised amended application, which named Mr Mansfield Senior and Ms Macri as respondents, along with companies associated with Mr Mansfield Senior. Ultimately, it was accepted that these companies are Company 1 Pty Ltd and Company 2 Pty Ltd. It being conceded, by counsel for the wife that other entities, in the form of trusts, could not be joined as parties, as they are not legal persons.
On 18 May 2017, Mr Mansfield Senior, Ms Macri, Company 1 Pty Ltd and Company 2 Pty Ltd filed a response to this amended application seeking, amongst other things, an order dismissing the wife’s application against them. They retained senior counsel to argue the matter on their behalf.
This application was supported by an affidavit of their solicitor, David Meegan. Mr Meegan’s affidavit is a lengthy document, which is composed largely of documents relating to Mr Mansfield Senior’s somewhat abstruse business affairs and estate planning, which had occupied several years.
Those advising the wife now complain that the information contained in this affidavit and the documents attached to it was provided to them late and without any proper level of elaboration. Its late disclosure, in turn, is said to have followed a process of obfuscation and recalcitrance from the husband, Mr Mansfield Senior and Ms Macri throughout the course of the proceedings but particularly following the issue of the 2016 subpoenas.
It is the wife’s position, if all concerned had been more forthcoming, the lengthy proceeding would not have been necessary as she would not have been compelled to join Mr Mansfield Senior and the others to the proceedings. It is also her case that Mr Mansfield Senior and Mr C’s evidence revealed a number of dubious transactions, involving the husband, in respect of the transfer of valuable parcels of land at Town B around about the time the parties separated.
Essentially, it the wife’s position that given this lack of cooperation with her and her legal advisors, particularly in respect of the Town B land, she had no alternative but to follow her lawyer’s advice and attempt to join the various entities concerned in her suit against the husband in order to discover what was the potential extent of the marital estate, including whether the husband had attempted to divest himself of assets to defeat her claim.
In these circumstances, it is asserted that the various third parties’ actions, following the issues of the various subpoenas, in not being more transparent in respect of revealing their proprietary interests to her, have brought the wife’s application upon themselves and, as such, it would be neither proper nor just for an order for costs to be made against them.
On the other hand, the third parties contend that they were under no obligation to make any form of disclosure to the wife, given the lack of any marital or other formal relationship between her and them. Rather, they did what had been directed of them, following the hearing of their objection to subpoena and then duly attended, at court, to give evidence, when presented with the relevant subpoenas.
As such, it is their combined position that they could do nothing more. In these circumstances, they contend that they have been put to considerable expense, as a consequence of what they would characterise as the wife’s misconceived actions. They assert that the wife was motivated by unfounded speculation rather than any properly forensic basis for the joinder.
Ultimately, on 2 May 2018, I dismissed the wife’s application to join Mr Mansfield Senior, Ms Macri, Company 1 Pty Ltd and Company 2 Pty Ltd, as parties to these proceedings and dismissed any claim which the wife might have against any of these individuals in her suit against the husband.[2] As a consequence of this decision, these individuals seek an award of costs against the wife, which she resists. These reasons for judgment are directed to resolving this controversy.
[2] See Mansfield & Mansfield & Ors (No3) [2018] FCCA 970
The normal rule, in civil proceedings, is that costs follow the event. Essentially the unsuccessful party pays the costs of the party, who has succeeded. This is not the position in family law proceedings.
Rather, the starting point in family law proceedings is that each party should bear his or her own costs, unless there are circumstances justifying the making of a costs order in favour of one of the parties concerned
The rationale for this rule is that the subject matter of family law proceedings is intensely private in nature and emotionally laden, dealing as it does with the care of children and the division of property, in the context of marital breakdown – a misfortune, which affects many in our society.
Even the most reasonable of individuals are likely to find it difficult to resolve such issues and, as a consequence, will find it necessary to have recourse to a court exercising jurisdiction, under the Family Law Act 1975, to resolve controversies arising. For this reason, the legislature has seen fit to categorise family law litigation differently to other more commercially based litigation.
However, it is essentially the position of Mr Mansfield Senior, Ms Macri and the corporate entities related to them that they are strangers to the marriage between the parties and have been unwillingly brought into the controversies arising between them, to which they have nothing of relevance to add.
As such, they assert it would be unfair to them, given the court has found that there can be no basis for their joinder, if an award of costs is not made in their favour. Their application is supported by an affidavit of their solicitor, David Meegan.[3]
[3] See affidavit of David Joseph Meegan filed 15 June 2018
Mr Meegan has deposed that, between 29 May 2017 and 29 March 2018, his firm rendered bills to Mr Mansfield Senior and the other relevant respondents in an amount of $98,385.94, which attracted GST of $9,833.84. This sum included fees of senior counsel, who appeared for the relevant respondents on the summary dismissal application.
Mr Mansfield Senior, Ms Macri and the two relevant companies have indicated that they have incurred costs and disbursements in the sum of $98,385.94 and seek reimbursements of these costs on an indemnity basis.
Mr Meegan has further deposed that this amount does not include any sums billed to his various clients in respect of advice provided to them in respect of the subpoenas issued against them prior to their formal joinder as parties to the matrimonial proceedings between the husband and wife.[4]
[4] See affidavit of David Joseph Meegan filed 13 July 2018 at [15]
In addition, Mr Meegan has directed an employed solicitor of his firm to calculate the costs potentially allowable to his clients, by way of costs, pursuant to schedule 3 of the Family Law Rules 2004. The amount so calculated is $63,487.50.
It is the submission of Mr Abbott of senior counsel, for the second, third, fourth and eighth respondent, that costs should be awarded in their favour on an indemnity basis and failing this pursuant to the Family Law Rules 2004.
Mr Robertson of senior counsel, for the wife, seeks that the application for costs should be dismissed. It is the wife’s position that her actions, given the conduct of the various respondents concerned, in the context of her litigation with the husband, cannot be regarded as unreasonable, particularly given what was revealed about the transfer of the Town B land. As such, she had no alternative but to join Mr Mansfield Senior and the other respondents to these proceedings. In these circumstances, she resists the application for costs.
The legal principles applicable
Section 117(1) of the Family Law Act abolishes for the purpose of family law proceedings, the general rule that, in civil proceedings, costs follow the event. It provides that each party should bear his or her own costs in such proceedings.
However, pursuant to section 117(2) if the court is of the opinion that there are circumstances that justify it in doing so, it may subject to a number of stipulated considerations, make such order as to costs as it considers just.
The relevant considerations are set out in section 117(2A) of the Act and are as follows:
·The financial circumstances of each of the parties to the proceedings;
·Whether any party to the proceedings is in receipt of legal aid;
·The conduct of the parties to the proceedings, including in respect of issues of discovery and production of documents;
·Whether the proceedings were necessitated by the failure of a party to comply with previous orders of the court;
·Whether any party to the proceedings has been wholly unsuccessful in the proceedings;
·Whether any party has made an offer in writing to settle the proceedings and the terms of any such offer;
·Such other matters as the court considers relevant.
The court’s discretion to make an order for costs is a wide one and includes the authority to make an order for indemnity costs. However, the discretion remains one which must be exercised carefully and judicially.
In this context, orders for indemnity costs are extraordinary or exceptional in nature. In Kohan & Kohan[5] the Full Court of the Family Court characterised an order for indemnity costs as “being a very great departure from the normal standard”. In this context, the Full Court said as follows:
“The court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.”
[5] See Kohan & Kohan (1993) 93-340 at 79,614
There is no closed category of cases in which indemnity costs may appropriately be awarded. However, in Palmolive Co v Cussons Pty Ltd[6] the Full Court of the Federal Court indicated that the kinds of situation in which indemnity costs might be considered included those in which a litigant had:
·Commenced or continued an action knowing it to have no chance of success;
·Made false or irrelevant allegations of fraud;
·Made groundless allegations, which prolonged the case concerned; and
·Imprudently refused an offer to compromise.
[6] See Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
If the court determines to make an order for costs, it has a wide discretion as to the calculation of such costs. Pursuant to Rule 21.02(2) of the Federal Circuit Court Rules 2001
In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
Accordingly, the discretion provided by Rule 21.02(2) provides potential different mechanisms, for the awarding of costs, under either the rules of this court or the Family Court or indeed on generic discretionary basis. This is reflective of the potential differences, particularly in respect of issues of complexity, which may arise from the nature of the jurisdiction conducted in each court.
However, Rule 21.10 of the Federal Circuit Court Rules 2001 provides a minimum level of entitlement, in respect of any award of costs, if made by the Federal Circuit Court. The rule provides as follows:
Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance with Parts 1 and 2 of Schedule 1; and
(b) disbursements properly incurred.
Pursuant to Rule 21.15 the court may certify that it was reasonable for any party to employ an advocate to appear on his or her behalf in a proceedings. If such a certification is made, the amount payable for counsel to appear is the “daily hearing fee and advocacy loading in accordance with parts 1 & 2 of Schedule 1” [see Rule 21.16].
Rule 21.10 and the schedule under it create a scale of costs by reference to the occurrence of fixed events. The procedure in question is clearly designed to allow the ready calculation of costs incurred following the various procedural stages of litigation from filing to finalisation with judgment.
It is a system which is most amenable, in its application, to less complex forms of litigation. In my view, this mechanism was in keeping with the objects of the Federal Circuit Court as set out in section 3(2) of the Federal Circuit Court Act 1999,which include the following:
·To enable the Federal Circuit Court to operate as informally as possible in the exercise of judicial power; and
·To enable the Federal Circuit Court to use streamlined procedures; and
·To encourage the use of a range of appropriate resolution dispute processes.
Mr Bilkens, a solicitor in the firm instructed by the wife has made his own calculations regarding the costs sought by the various respondents concerned, in these proceedings, pursuant to both the rules of the Family Court and this court. He deposes that pursuant to the relevant Family Court provisions, the costs allowable to the respondents are $27,829.76 and, if calculated pursuant to the Federal Circuit Court Rules, an amount of $20,726.28.[7]
[7] See affidavit of Aris Bilkens filed 26 July 2018
Discussion
At the outset, although it is somewhat trite to say so, proceedings involving former spouses are invariably emotionally charged and frequently characterised by significant levels of mistrust and suspicion.
Such emotions do not easily assist the participants to such litigation to be completely dispassionate or subjective about how the proceedings are to be conducted. Individuals, for obvious reasons, do not behave pragmatically or always in their objective best interests, when under stress or deeply unhappy.
In proceedings arising under Part VIII of the Family Law Act, the court is required to exercise a controlled discretion to alter the proprietary interests of the spousal partners concerned, as it considers just and equitable [section 79(2)].
Accordingly, the ultimate outcome of proceedings under the Act, in respect of property division, cannot always be easily discerned at the outset of the proceedings concerned. It is not formulaically determined by any pre-determined arithmetical method or subject to any pre-set presumption.
During many marriages, the parties concerned choose to divide their familial responsibilities along what, for want of a better descriptor, can be characterised as conventional lines. One spouse assumes responsibility for care of any children and the discharge of home making responsibilities; whilst the other spouse is responsible for financial matters, particularly how income is earnt and distributed.
In such circumstances, one spouse may have little interest in how the family’s finances are managed and will be trusting that they are being conducted appropriately. The other spouse may be disinclined to share information, with the other, regarding how he or she receives and allocates income and other assets.
As such, one spouse may know a great deal about the family’s financial circumstances and the other little if anything at all. When the parties concerned separate, for obvious reasons, such state of affairs is not likely to assist the parties concerned being able to negotiate on a level playing field.
These difficulties are compounded when the manner in which a family earns its income is uncommon, particularly if it involves complex accounting mechanisms, including the use of discretionary trusts, involving third parties, rather than through the provision of a salary, subject to PAYG tax.
In such cases, whilst one party may have been content to remain ignorant of the family’s financial affairs, during the marriage and focus on home making responsibilities, particularly whilst he or she was enjoying a comfortable standard of living, on the demise of the marriage concerned, he or she is likely to be gravely concerned about the implications of how, in the past wealth has been generated and what this means, for his or her financial security, following marital breakdown.
In such circumstances, the spouse concerned is likely to face a steep learning curve about the implication of these issues and their ramifications for his/her financial situation, particularly in the future. This may not be an easy exercise to pursue in the emotionally charged and mistrustful circumstances of matrimonial property proceedings.
The parties to property proceedings, brought under the Family Law Act, in this court, are under a duty to make a “full and frank disclosure” of their financial circumstances.[8] This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”[9]
[8] See Federal Circuit Court Rules at Rule 24.03
[9] Per Smither J in Briese & Briese (1986) FLC 91-713 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[10]
[10] Weir & Weir (1993) FLC 92-338
Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act, does not arise merely by virtue of the rules or practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court, in each property proceeding arising before it, to consider all aspects of the financial circumstances of the parties concerned.[11]
[11] Luciano & Luciano [2000] FamCA 401 at [373]
However, in cases involving a fundamental imbalance of knowledge, between the parties concerned, regarding the financial circumstances of their marriage, it is not unknown for one spouse to be delinquent in respect of his or her obligation to make full disclosure of his/her financial circumstances. For obvious reasons, in such cases, there may be powerful motivations which lead to such delinquency. These include both greed and malice.
In this particular case, it has been the husband’s position throughout that he is a person of modest means, who pursues self-employment providing him with a modest level of income. He has never denied that his father is a wealthy person, but he has consistently maintained that Mr Mansfield Senior has not shared any of this wealth directly with him. He denies that he has not fully disclosed his financial affairs.
In her affidavit material, the wife has never suggested that she and Mr Mansfield enjoyed a standard of living, which was not reflective of the income which each generated during their marriage. In addition, she has never suggested that the husband creamed off moneys surreptitiously from her.
In my view, this is significant. I accept that the wife is suspicious of the husband. As I have observed in earlier judgments, these proceedings were particularly vitriolic in nature. Each party made stringent attacks on the character of the other. The husband engaged a private detective to undertake covert surveillance of the wife.
However, apart from her inchoate suspicions of the husband and the fact that Mr Mansfield Senior is wealthy, she was not able to point to any specific activities, during the parties’ marriage, which are capable of objectively supporting her suspicions that Mr Mansfield might have received clandestine payments, from his father, or that he was, in some way, acting in concert with him, to hide assets from her.
The husband has not disputed that he is a discretionary beneficiary of various trusts operated by Mr Mansfield Senior. In addition, he has conceded that he has been a director of corporate trustees relating to these trusts, including in respect of entities controlling land at Town B.
In these circumstances, I accepted that the wife did have an interest in ascertaining whether these trusts had been properly administered and, on this basis, I over-ruled the objections made to these subpoenas by Mr Mansfield Senior and the other respondents.
As far as I can ascertain, the wife does not assert that the husband has been recalcitrant in respect of his obligation to make full and frank disclosure to her. Nor is it asserted that either Mr Mansfield Senior or Ms Macri did not comply with the subpoena directed towards them, after their respective objections to these subpoena were over-ruled.
Rather, the wife complains that she was not given any collateral information about the documents concerned and she was placed in a position where she had to force their production. This may be so. It is also understandable given the antipathy between the husband and wife and the natural resentment Mr Mansfield Senior and Ms Macri are likely to experience on being drawn into the litigation between them.
However, neither Mr Mansfield Senior nor Ms Macri were under any legal obligation to make formal disclosure to the wife. In addition, given that they were not parties to the proceedings, at this stage, they had no duty or responsibility to explain any transaction disclosed in the documents produced to either the wife or those advising her. They did not have to volunteer background information about any of the documents to her.
Following the production of the documents in question, the wife was free to follow whatever forensic option she considered fit. She chose to issue further subpoenas to give evidence directed towards Mr Mansfield Senior, Ms Macri and Mr C. In this way, she was able to explore the implications, so far as her suit against the husband was concerned, of any particular transactions, which those documents revealed. This process was extensive, occupying three days of court time.
Neither Mr Mansfield Senior nor Ms Macri can be described as having been willing witnesses. In particular, Mr Mansfield Senior made little secret of his view that he considered his financial affairs to be none of the wife’s business. They each testified under compulsion. However, this does not mean that they were not each candid in their evidence.
I was not called upon, immediately following the evidence of Mr Mansfield Senior, Ms Macri or Mr C to rule upon its legal implications, so far as the case then brought by the wife against the husband. Rather, the wife’s counsel sought to adjourn the proceedings in order for Ms Mansfield to consider her position and, if she was so inclined, institute proceedings against any other legal person.
So far as Mr Mansfield Senior was concerned, I ultimately made the following findings, which can be summarised as follows:
·He was an honest person, whose evidence I accepted;
·He was a self-made person, who was desirous of retaining control of his wealth, as he saw fit, during his lifetime;
·His financial affairs were convoluted but there was nothing sinister about this state of affairs;
·I accepted his evidence that the various irregularities, surrounding the transfer of the parcels of land at Town B were due to oversight rather than any desire to defeat any potential matrimonial property claim likely to be brought by the wife against the husband.
In particular, the evidence did not indicate any clear cut transfers of property to the husband during the course of the parties’ marriage from Mr Mansfield Senior to the husband. This finding is significant, when it is placed against the entirety of the wife’s affidavit evidence, which does not assert that either she or Mr Mansfield enjoyed a standard of living which was out of keeping with their shared income or that there were regular transfers of property to her former husband from Mr Mansfield Senior.
In these circumstances, in my view, it was an exercise not without risk for the wife to join Mr Mansfield Senior, Ms Macri and the corporate trustees to these proceedings. Although Mr Mansfield Senior’s financial affairs were haphazard, I found he remained in control of them. Apart from her suspicions, the wife had no concrete evidence available to her that it was otherwise.
In my view, the evidence disclosed by Mr Mansfield Senior, Ms Macri and Mr C did not obviously indicate that the pool of marital assets was anything other than the husband had described it or that his and his father’s various assets were anything other than distinct from one another.
The wife has never been able to point to any example of a transfer, which has resulted in a material benefit to the husband. The wife has never characterised her case as being one based on the fact that the husband enjoyed a standard of living which could not be explained by his apparent financial circumstances.
Rather, my ultimate finding was that the husband was a person who had a wealthy parent, who was likely to want to benefit his children, after his death. As such, Mr Mansfield had financial expectations but not any specific proprietorial or equitable interest in his father’s affairs. Mr Mansfield did not dispute that this was the case in his affidavit material to the court.
Mr Mansfield Senior’s oral evidence to the court, provided under subpoena in February 2017, was piecemeal in nature. This was unavoidable. Mr Mansfield Senior is an elderly person, who was in poor health at the time. Given the manner in which he was compelled to give evidence, no formal affidavit had been prepared. In addition, counsel for the wife had no specific allegations of malfeasance to put to him. In these circumstances, I do not resile from my earlier characterisation of the exercise as being a fishing expedition.
However, as I indicated in my earlier reasons for judgment, I accepted that Mr Mansfield Senior had candidly tried to answer the questions put to him. His evidence revealed that he had accumulated significant wealth, over many years, through a variety of endeavours. These included businesses in South Australia and far North Queensland; the operation of a business; and farming activities.
I found he was an intelligent and driven person, but not one who was sensitive to the niceties of accounting or trust management. As such, the changes and development in his various financial affairs had not always kept pace with the accounting machinery designed to accommodate them.
Mr C’s evidence suffered from the same deficiencies in that there was no prepared affidavit and he was called upon to recall matters over many years in respect of many related financial entities. However, once again, I found him to be an honest person, who candidly conceded that his firm had made significant errors in respect of aspects of taxation and estate planning surrounding the various parcels of land at Town B and distributions from one of the trusts.
It was Mr C’s evidence that the need to make transactions rectifying those errors was independent of any circumstance surrounding the separation of the husband and wife. Ultimately, in respect of the Town B land, I found as follows:
“…there is no evidence to support the contention that the transfer of the Town B parcels of land from Company 2 Pty Ltd to Mr Mansfield Senior and Company 1 Pty Ltd was anything other than a piece of estate planning on the part of Mr Mansfield Senior. The wife and those advising her are undoubtedly suspicious about the temporal proximity of these transactions to the date of the separation of the husband and wife and perhaps the separation did precipitate Mr Mansfield Senior’s desire to put into effect an equalisation of his assets, between his son and daughter, for estate purposes. However, suspicion and coincidence alone are not sufficient to create control over the assets concerned in the husband.”[12]
[12] See Mansfield & Mansfield & Ors (No3) ) [2018] FCCA 970 at 162
I concede that the wife did not have access to this finding prior to her decision to join Mr Mansfield Senior and the other respondents to her proceedings. Rather, what she had was the ad hoc evidence of Mr Mansfield Senior and Mr C and her former husband’s evidence that he had no direct interest in his father’s affairs and her own evidence that, overtly at least, the husband did not seem to have had access to large financial resources, emanating from outside the marriage, during the period of their cohabitation.
In between the institution of her proceedings, which focussed in large part on the Town B land and the setting aside of various transactions relating to it, and the publication of the reasons for judgment dismissing her application, the wife and those advising her were provided with one further significant piece of evidence. This was the affidavit of Mr Meegan, to which was attached copious documents, relating to Mr Mansfield Senior’s affairs, including those relating to the Town B land.
In the reasons for judgment, relating to the dismissal application, I said as follows, in respect of Mr Meegan’s affidavit:
“I concede Mr Meegan’s affidavit is difficult and cumbersome. It reflects the manner in which the parties have elected to approach this litigation, which is that no quarter, assistance or concession will be given to the other. These proceedings have been marked by a singular lack of cooperation between the parties and with no consideration as to how they can be effectively managed to reduce costs.”[13]
[13] Ibid [116]
It is the position of Mr Robertson, senior counsel for the wife that the documents previously provided under subpoena, did not provide any exculpatory explanation for the various transactions, which the wife sought to impugn in her amended application. In these circumstances, he submitted as follows:
“The court should infer that when it suited Mansfield Senior to produce the documents he did so. Until then, he forced the applicant to try and discover what, if any explanation, there was for the impugned transaction that prima facie appeared to run down the trust assets for trusts of which she and her children and the husband are beneficiaries.”[14]
[14] See applicant’s submission as to costs filed 27 June 2018 at [9(g)]
In opposition, Mr Abbot of senior counsel, for Mr Mansfield Senior and the related respondents, contends that the production of Mr Meegan’s affidavit to her, in tandem with his own detailed written submissions provided on 31 May 2018, should have put the wife and those advising her on notice that her action against the various respondents concerned was based on shifting sands and, as such, had no foundation. This was particularly so, when the extensive oral evidence of Mr Mansfield Senior and Mr C, which she had herself elicited, was considered.
In these circumstances, Mr Abbott submits as follows:
“The Wife persisted in her speculative and baseless claims even after she received the Meegan affidavit and all the documents and the respondents’ detailed submissions which took her step by step through these documents and their significance in disproving her case, all done at enormous expense to the respondents and carefully handed to her on a platter.
However, rather than take the benefit of this opportunity to acquaint herself with the real facts (as opposed to her wild speculations) and realise that her case was hopeless, she complained vociferously through her counsel about being subjected to this mass of documents, shifting disingenuously from her previous unjustified complaints that Mr Mansfield and Ms Macri had failed to comply with the subpoenas and concealed relevant documents, to a newly manufactured complaint, equally unjustified, that the second – eighth respondents had now given her too many documents, even to the point of seeking to exclude them from evidence. The inescapable inference is that the Wife did not want to know the facts and preferred to keep them out of Court so that she could fend off the summary dismissal application and persist with her unfounded claims and continue to cause the second – eighth respondents maximum cost and inconvenience, presumably hoping that Mr Mansfield would, in his old age and ill-health, be driven to some sort of financial offer.[15]”
[15] See respondent’s submission as to costs filed 31 May 2018 at 33.9 & 33.10
Conclusions
In my view, the wife should have been clearly forewarned, from the material provided to her prior to the summary dismissal application that her application to join Mr Mansfield Senior and the other respondents was very far from being a foregone conclusion. It was supported by nothing arising from her contemporary experience of the financial history of the parties’ relationship together. In this sense, it was largely conjectural.
In my view, such a conclusion should have been in the contemplation of those advising her prior to the production to her of Mr Meegan’s affidavit. As I ultimately found, the evidence of Mr Mansfield Senior and Mr C was unequivocal, particularly in respect of issues of control of the Town B land.
In respect of Mr Mansfield Senior’s evidence, I summarised my finding in regards to it as follows:
“The land at Town B in the parcels concerned was “all my (Mr Mansfield Senior’s) land. I’ve fought all my life to keep the land together and I’m going to go on fighting for it;
He was the appointor of each of the trusts concerned and as such he had “total control” over the trusts;
He had not transferred any properties to the husband, as they remained in the trusts;
He had made transfers over various parcels of land at Town B between the trusts designed to benefit the husband and Ms Macri, after his businesses in Queensland had been sold, to even up the assets between the two trusts;
He had wanted to divide his trusts so it would be equal between the husband and Ms Macri and so both would be happy and there’s be no blue later on;
The husband and Ms Macri would get their half share when he died or when he saw fit. The transfers had been done to avoid disputation after his death;
Neither the husband nor Ms Macri had ever received a distribution from any of the trusts and he had not made any loans or gifts to either of them;
Mr Mansfield Senior had made a will, which provides that Ms Macri and the husband will receive his asset, after his death, but he had no intention that they would receive anything prior, unless he became really, really sick;
In March of 2016, whilst he was in hospital and it was believed he was terminally ill, he had resigned as appointor of the trusts in favour of Ms Macri but this had not affected his view that the property of the trust remained his alone.”
In respect of Mr C’s evidence, I found as follows:
“The effect of Mr C’s evidence was that Mr Mansfield Senior had controlled all the trusts concerned at relevant times and had directed the payment of profits, sometimes erroneously, but none of these profits had physically been received by either the husband or Ms Macri.”
I acknowledge that the wife was entitled to disbelieve the evidence of both Mr Mansfield Senior and Mr C. However, she did so at her peril. In particular, at the time of her joinder of Mr Mansfield Senior and the other respondents, she personally was not able to refute my ultimate finding that her former husband had not physically received any distributions of profit, from any of the trusts concerned or point to his active management or involvement in his father’s affairs. In these circumstances, I remain of the view that her application to pursue Mr Mansfield Senior is to be characterised as being highly speculative and conjectural in nature.
In addition, and more significantly, I am satisfied that both the wife and those advising her should have been well aware of this state of affairs, both before and after the release of the Meegan affidavit. However, for reasons abut which I can only speculate, they chose to go on regardless.
In addition, in my view, the inherent caution, which should attach to any decision to join third parties to matrimonial proceedings, should have become further heightened, following the production of the Meegan affidavit to Ms Mansfield and her solicitors. It was after this event that significant costs were incurred by Mr Mansfield Senior and the other respondents.
Clearly, Ms Mansfield has been entirely unsuccessful in her application to join Mr Mansfield Senior and the other respondents to her action. It is also axiomatic that he and the other respondents viewed themselves as being strangers to the dispute between Ms Mansfield and her former husband. I am of the view that these circumstances justify an awards of costs being made in Mr Mansfield Senior and the other respondents favour.
I accept that Ms Mansfield is not a wealthy person. As I have already observed, it is a source of considerable regret to me that all concerned, in this case, have incurred massive costs, in respect of what I regard to be a commonplace family law dispute, involving modest assets.
Mr Mansfield Senior is a wealthy person. The financial circumstances of Ms Macri are less clear as they were not subject to any great scrutiny in these proceedings. The sources of Mr Mansfield Senior’s wealth lie in his exceptional work ethic demonstrated over many years in a variety of endeavours. It is clear that the wife herself has not played any major part in any of Mr Mansfield Senior’s endeavours. The fact that Mr Mansfield Senior is wealthy does not disqualify him from being awarded costs.
However, regardless of this regret, the fact remains that Mr Mansfield Senior and Ms Macri were not overtly involved in the dispute between the husband and wife and became embroiled in it against their will. The wife had her suspicions about them but little concrete evidence to support these suspicions. In my view this is a further fact which militates in favour of costs being awarded to them.
The wife was imprudent to attempt to join Mr Mansfield Senior and the other respondents to the action. However, in my view, this alone does not justify an award of indemnity costs being made against her. In this regard, I note what was said by the Full Court in Kohan, which was recently affirmed in Prantage & Prantage.[17] It was confirmed that an order for indemnity costs “is a very great departure from the normal standard.”
[17] Prantage & Prantage [2013] FamCAFC 105 at 82
In this particular case, the disparity between the costs available on a party/party basis, pursuant to the Court’s Rules and those sought on an indemnity basis is extreme. In this context, section 117(2A)(a) directs that I am to consider the financial circumstances of each of the parties concerned. These circumstances are also extremely disparate.
Mr Mansfield Senior is a multimillionaire. Ms Mansfield is a public servant, who works part time and has the care of children. On any view, the burden of an indemnity costs order would fall very heavily on her.
Hindsight is a wonderful thing. Acrimonious litigation, in the context of high stakes proceedings involving arrangements for children and the division of property – decisions likely to have long term ramifications for the individuals concerned – do not assist to bring cool-headed and objective decisions to how litigation is to be conducted. No doubt Ms Mansfield relied on the acumen of those advising her. She is not legally qualified.
In all these circumstances, I have come to the conclusion that the overall justice of the case does not warrant the departure from the ordinary norm regarding the award of indemnity costs. Although this case is highly regrettable, in the sense that a case involving a modest asset pool has generated hundreds of thousands of dollars of costs, it does not exhibit any special or unusual feature justifying the imposition of indemnity costs, particularly given the very different financial situation of the parties concerned.
Accordingly, I propose to make an order for costs pursuant to the Rules of the Court and the applicable schedule. In my view, this is the most cost efficient approach to the calculation of costs and will spare the parties the additional costs of a taxation. It is also an approach in keeping with the ethos of the court as a cost effective method of resolving less complicated federal law matters.
I have calculated the costs as follows:
| Item No. | Description | Date | Amount for family law proceedings (incl. GST) |
| Relevant Respondents’ party-party costs up until first court date on 18 May 2017 | |||
| Item 2 | Initiating or opposing an application which includes interim orders (other than procedural orders) up to the completion of the first court date | 18/5/2017 | $2704.00 |
| Item 13 | Daily hearing fee for a short mention (to be added to item 2 above) | 18/5/2017 | $294.00 |
| Item 12 | Advocacy loading – instruction of Hugh Abbott SC to appear at court hearing (being 50% of daily hearing fee) | 18/5/2017 | $147.00 |
| Item 15 | Disbursements – 148 pages of photocopying at $0.75 per page. | 18/5/2017 | $111.00 |
| Relevant Respondents’ party-party costs up until first court date on 18 May 2017 | |||
| Item 3 | Interim or summary hearing – as a discrete event | 29/6/2017 | $1801.00 |
| Item 13 | Daily hearing fee for a short mention (to be added to item 3 above) | 29/6/2017 | $294.00 |
| Item 12 | Advocacy loading – instruction of Hugh Abbott SC to appear at court hearing (being 50% of daily hearing fee) | 29/6/2017 | $147.00 |
| Relevant Respondents’ party-party costs up until first court date on 27 November 2017 | |||
| Item 2 | Initiating or opposing an application which includes interim orders (other than procedural orders) up to the completion of the first court date (Respondents’ Application in a Case filed on 15/11/2017 | 27/11/2017 | $2750.00 |
| Item 7 | Respondents’ preparation and filing of written submissions filed on 23/11/2017 | 23/11/2017 | $5811.00 |
| Item 13 | Daily hearing fee for half day hearing (to be added to item 3 above) | 27/11/2017 | $1099.00 |
| Item 12 | Advocacy loading – instruction of Hugh Abbott SC to appear at court hearing (being 50% of daily hearing fee) | 27/11/2017 | $549.50 |
| Item 15 | Disbursements – 3,420 pages of photocopying at $0.76 per page | 15/11/2017 to 23/11/2017 | $2599.20 |
| Relevant Respondents’ party-party costs up until first court date on 30 January 2018 | |||
| Item 3 | Interim or summary hearing – as a discrete event | 30/1/2018 | $1832.00 |
| Item 13 | Daily hearing fee for a short mention (to be added to item 3 above) | 30/1/2018 | $299.00 |
| Item 12 | Advocacy loading – instruction of Hugh Abbott SC to appear at court hearing (being 50% of daily hearing fee) | 30/1/2018 | $149.50 |
| Relevant Respondents’ party-party costs up until delivery of judgment on 2 May 2018 | |||
| Item 15 | Disbursements – 60 pages of photocopying at $0.76 per page | 2/5/2018 | $45.60 |
| NET TOTAL | $20,632.80 | ||
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and fifteen (115) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 13 February 2019
[16] Ibid at [91] & [99]
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