Mansfield and Ors & Mansfield and Anor

[2019] FamCAFC 186

FAMILY COURT OF AUSTRALIA

MANSFIELD AND ORS & MANSFIELD AND ANOR [2019] FamCAFC 186

FAMILY LAW – APPEAL – INDEMNITY COSTS – Where the appellants are third parties to the marriage – Application by first respondent wife to join appellants to the proceedings below dismissed – Application by appellants for indemnity costs dismissed –  Where the joinder attempt was “imprudent” – Where the disparity between the financial circumstances of the primary appellant and the first respondent is great – No appealable error – Application for costs of costs application dismissed below without reasons – Appeal allowed in part – Re-Exercise – Application for costs of costs application dismissed.

FAMILY LAW – APPEAL – COSTS – Where the appeal is largely unsuccessful – Where the first respondent has incurred legal expenses unnecessarily – Where an order for costs will occasion no financial discomfort for the primary appellant – Costs order made.  

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) Sch 3
Federal Circuit Court Rules 2001 (Cth) Sch 1, r 21.02(2)

Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR 406; [2001] HCA 26
Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 367 ALR 146; [2019] NSWCA 61
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Hand & Bodilly [2013] FamCAFC 98
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kohan and Kohan (1993) FLC 93-340
Limousin v Limousin (Costs) (2007) 38 FamLR 478; [2007] FamCA 1178
Prantage & Prantage (2013) FLC 93-544; [2013] FamCAFC 105
Robinson and Higginbotham (1991) FLC 92-209; [1991] FamCA 4
Stephens v Stephens (Enforcement) (Costs) (2010) 44 Fam LR 117; [2010] FamCAFC 172
Yunghanns v Yunghanns (2000) FLC 93-029; [2000] FamCA 681

FIRST APPELLANT: Mr Mansfield Senior

SECOND APPELLANT:	Ms Macri
THIRD APPELLANT:	Company 1 Pty Ltd
FOURTH APPELLANT:	Company 2 Pty Ltd
FIRST RESPONDENT:	Ms Mansfield
SECOND RESPONDENT:	Mr Mansfield

FILE NUMBER: ADC 4119 of 2014

APPEAL NUMBER: SOA 15 of 2019

DATE DELIVERED: 25 October 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Adelaide

JUDGMENT OF: Strickland, Ryan (via video link) & Kent JJ

HEARING DATE: 9 September 2019

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 13 February 2019

LOWER COURT MNC: [2019] FCCA 318

REPRESENTATION

COUNSEL FOR THE APPELLANTS: Mr O'Leary

SOLICITOR FOR THE APPELLANTS: DMAW Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Robertson SC with Ms Stanley

SOLICITOR FOR THE FIRST RESPONDENT: Jacqui Ion Lawyers

SOLICITOR FOR THE SECOND RESPONDENT: No appearance

Orders

1. The appeal be allowed in part.

2. The appellants’ application that the first respondent pay the costs of their application for costs be dismissed.

3. That the appellants pay the first respondent’s costs of and incidental to the appeal in the amount of $25,000 within twenty-eight (28) days.

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 Mansfield and Ors & Mansfield and Anor 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).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE

Appeal Number: SOA 15 of 2019
File Number: ADC 4119 of 2014

Mr Mansfield Senior

First Appellant

Ms Macri

Second Appellant

Company 1 Pty Ltd
Third Appellant

Company 2 Pty Ltd
Fourth Appellant

And

Ms Mansfield

First Respondent

Mr Mansfield
Second Respondent

REASONS FOR JUDGMENT

Introduction

1. By Amended Notice of Appeal filed on 15 March 2019, Mr Mansfield Senior, Ms Macri and two related corporate entities (“the appellants”) appeal from an order for costs made on 13 February 2019.  The order was made in their favour against Ms Mansfield (“the first respondent”) in the context of proceedings under the Family Law Act 1975 (Cth) (“the Act”) between the first respondent and her former husband, Mr Mansfield (“the second respondent”).In the course of those proceedings, the first respondent sought to join the appellants as parties.  The primary judge dismissed the first respondent’s application which triggered an application by the appellants for the first respondent to pay their costs. 

2. The appellants sought costs on an indemnity basis and, failing that, in accordance with Schedule 3 of the Family Law Rules 2004 (Cth) (“Family Law Rules”). The primary judge was satisfied that an order for costs against the first respondent was appropriate and fixed the amount payable at $20,632.80. His Honour described the first respondent’s attempt to join the appellants as “imprudent” but concluded that this alone did not justify an order for indemnity costs in favour of the appellants [108]. Rather, it was appropriate that costs be calculated in accordance with Schedule 1 of the Federal Circuit Court Rules 2001 (Cth) (“Federal Circuit Court Rules”) which, including the item for “advocacy loading” in respect of counsel’s appearances, achieved the amount ordered.

3. Calculated on an indemnity basis, the appellants sought costs in relation to the failed joinder application in the amount of $98,385.94 plus GST [36]. When the costs of the costs application are factored in, they sought indemnity costs in the amount of $114,135 plus GST. In the alternative, by reference to Schedule 3 of the Family Law Rules, the appellants sought costs in the amount of $92,211.57 plus GST.

4. The appellants contend that the order for costs should be varied to provide that the first respondent pays their costs as assessed on an indemnity basis. In the alternative, that the order be varied to provide for payment in the fixed sum of $92,211.57 plus GST. Failing orders to that effect, the appellants seek costs in accordance with the Federal Circuit Court Rules so that the costs include an adequate amount for counsel fees.

5. At the costs hearing, the appellants also sought an order that the first respondent pay the costs of the appellant’s application for costs.  No such order was made. Although that application was not formally dismissed, the effect of the order which fixed the amount that the first respondent must pay, means that the primary judge refused to make the order sought, but without providing reasons.  The appellants are thus entitled to appeal that decision.  Senior counsel for the first respondent did not suggest otherwise.

6. The first respondent resists the appeal and seeks to uphold the order.

Indemnity costs and appealable error

1. The Full Court noted in Prantage & Prantage (2013) FLC 93-544 (“Prantage”) at [42], that even in jurisdictions where the usual rule is that costs follow the event, it is well settled that indemnity costs “should only occur in an extremely rare situation” (see Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] 179 ALR 406). We agree with Murphy J in Prantage at [152] that in proceedings under the Act, where the usual rule is that each party shall bear his or her own costs, an order for indemnity costs is even more exceptional.

2. In relation to an application for indemnity costs, there are numerous decisions of the Full Court which endorse the principles stated in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate”) concerning the approach to indemnity costs (see for example Yunghanns v Yunghanns (2000) FLC 93-029; Limousin & Limousin (Costs) (2007) 38 FamLR 478). For example, in Hand & Bodilly [2013] FamCAFC 98, the Full Court at [94] adopted Colgate per Sheppard J, in particular:

   24.It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-

   …

   6.   It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

3. In other words, it is well settled that the Full Court should be reluctant to interfere with decisions of a trial judge relating to costs (Robinson and Higginbotham (1991) FLC 92-209 (“Robinson and Higginbotham”); Stephens v Stephens (Enforcement) (Costs) (2010) 44 Fam LR 117). But this reluctance does not mean that this Court should never interfere with the exercise of a costs discretion: “if the result is plainly unjust or if the discretion was exercised on wrong principles then this Court must interfere” (Robinson and Higginbotham at 78,417).

The grounds of appeal

1. At the commencement of the hearing of the appeal, counsel for the appellants was given leave to rely on an Amended Summary of Argument which recast the numerous challenges advanced by the appellants into a form which better grappled with the fact that this is an appeal from a discretionary judgment (House v The King (1936) 55 CLR 499 (“House”)).  The appellants’ contentions were further refined before us and Ground 7 was abandoned.  The remaining grounds were appropriately distilled to three propositions.  Namely, that the primary judge erred in that:

   ·    It was plainly unjust to not award indemnity costs;

   ·    In deciding an order for indemnity costs would not be appropriate, too much weight was given to the disparity in the appellants’ and the first respondent’s financial circumstances, and;

   ·    The appellants’ application for costs of their application for costs was dismissed without reasons.

2. It will be immediately apparent that no error is alleged concerning his Honour’s statement of the applicable principles and it is sufficient to observe that his Honour applied s 117 of the Act, r 21.02(2) and Schedule 1 of the Federal Circuit Court Rules.

Was it plainly unjust to not order indemnity costs?

1. The first question to be answered is whether the orders were plainly unjust.  This is a reference to the final limb of the test identified in House at 505. The premise of this aspect of the test is that the reasons do not explain the result reached (Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 367 ALR 146 at [10]).

2. In support of this ground, counsel gave a narrative account of the appellants’ involvement in the proceedings at the behest of the first respondent. In reality, all this did was highlight that the primary judge gave careful consideration to each and every aspect of the procedural history and did not fail to consider any aspect of it. In other words, it was demonstrated that the decision as to costs was made by a judge with a deep understanding of the proceedings and their nuance. The narrative demonstrated that the primary judge took into account that at least in relation to the transfer of land at Town B by the first appellant, there had been an intermingling of the financial affairs between some of the appellants and the second respondent [100]. This included the transfer of that property at the time of separation which was found to be “convoluted” but not “sinister” [81]. However, the first respondent knew little of the second respondent’s financial arrangements with the appellants and the primary judge understood why she considered this warranted exploration.

3. Notwithstanding objection by the appellants, the first respondent was able to obtain documents produced under subpoena and to have the appellants and others attend to give evidence.  In short, as the primary judge explained, the process by which the first respondent established the facts was not straightforward and at the time the first respondent applied to join the appellants, she did not yet have the benefit of his Honour’s analysis of that material or the evidence given under subpoena. 

4. Nonetheless, by the time the first respondent applied to join the appellants, she had been given a vast volume of material in relation to the Town B transaction and the appellants’ financial affairs.  These were complicated, but once she received this material, her decision to proceed with the joinder application was “highly speculative” [101] and “imprudent” [108]. 

5. Although the appellants invited the primary judge to find that the first respondent’s actions in pursuing the application were “scandalous”, having regard to the matters outlined above, the primary judge did not make that finding. Conscious that an order for indemnity costs would be “a very great departure from the normal standard” the primary judge concluded that the first respondent’s actions provided sufficient justification for an order under s 117(2) to be made against her but that her conduct in and of itself did not justify an award of indemnity costs [108].

6. However, that was not the end of the matter, for as the primary judge said at [47], “[t]here is no closed category of cases in which indemnity costs may appropriately be awarded” and it was necessary to consider and balance all relevant factors.

7. Thus, and consistent with Kohan and Kohan (1993) FLC 92-340 (“Kohan”), in ultimately deciding to not order indemnity costs, the primary judge balanced the first respondent’s conduct of the proceedings and her lack of success with the likely impact of an order for indemnity costs on the financial position of the parties; that is on the appellants and the first respondent. 

8. Turning then to the parties’ financial circumstances (s 117(2A)(a)), it is uncontroversial that the first appellant is wealthy [106] and the first respondent is not [105]. The primary judge knew little about the financial circumstances of the second appellant [106]. However, she had ample opportunity to place evidence on the topic before the primary judge and not having done so, cannot now complain that his Honour failed to consider her circumstances.

9. In relation to the significance of the parties’ financial circumstances, the primary judge said:

   109.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.

   110.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.

10. The effect of those different financial circumstances was, inter alia, that an order for indemnity costs would fall heavily on the first respondent.  As Kohan (and the Act) makes clear, this was a relevant consideration and one that properly weighed against ordering costs on an indemnity basis. Ultimately, it can be seen that at [112] by the use of the word “particularly”, the primary judge placed greatest weight on “the very different financial situation of the parties concerned” in deciding that an order for indemnity costs should not be made.

11. In our view, the primary judge was entitled to reach that view, the effect of which is that the contention that the outcome is plainly unjust has not been established. Self-evidently, we are of the view that the reasons for that conclusion are sufficient.

The parties’ financial circumstances

1. The parties’ financial circumstances and the significance attached to this issue has already been discussed and little more needs to be said.  For the appellants, it is said that the disparity in the parties’ financial circumstances was given too much weight. 

2. As we have already explained, the primary judge was obliged to consider the parties’ financial circumstances.  In so doing, he did not misstate the financial facts or the features of the case against which those financial circumstances stood to be balanced.  The balancing exercise he undertook was detailed and a quintessential exercise of discretion.  Weight challenges are notoriously difficult, particularly in relation to orders for costs.  Simply put, the appellants have not established a proper basis upon which we could interfere with the weight that the primary judge attached to the difference in the parties’ financial circumstances and this aspect of the appeal will also fail.

Costs of the costs application

1. The final matter concerns the appellants’ application for costs of their costs application. The application was made orally and little was said in support of it. There is no reference to the application in the trial reasons and it is feasible that this application was overlooked. However, as the effect of the orders is that the application was refused without reasons, albeit only brief reasons were required, this challenge is established. Fortunately, we are in a position to re-exercise. In circumstances where the appellants were wholly unsuccessful in obtaining an order for costs on an indemnity basis as sought, or an order calculated in accordance with the Family Law Rules as sought in the alternative, (and the first respondent’s co-relative success on those issues), we are not satisfied that the appellants have established circumstances which justify an order in their favour for costs of that application. The appellants’ application for costs of the costs application will therefore be dismissed.

Costs

1. The appeal has been largely unsuccessful and, the effect of the outcome is no different to that achieved in the Court below.  It follows that the first respondent has incurred legal expenses unnecessarily.  She is a public servant and has modest means.  The primary appellant is a multimillionaire and an order for costs will occasion him no financial discomfort.  An order for costs in favour of the first respondent is justified and appropriate.  So much is conceded by the appellants.

2. The first respondent relied upon a Schedule of Costs filed on 6 September 2019 pursuant to an order made by the Appeal Registrar for any party seeking costs to file a schedule of costs to be sought at the scale prescribed by the Family Law Rules. Whilst that schedule particularises the claim for solicitors’ fees in accordance with scale items, totalling $8,353.05, there is no particularisation at all of senior counsel’s fees claimed in the amount of $30,000, nor of junior counsel’s fees claimed in the amount of $8,387.50. Absent such particulars, we cannot be satisfied that a claim totalling more than $38,000 for counsel’s fees, given the nature of this appeal and the issues involved, is at all justified. We are not persuaded, absent the necessary particulars by which the claim advanced could be scrutinised, that an order in terms of the claim advanced would be just. In our judgment, doing the best we can having regard to the nature of this appeal, the issues involved and the outcome of costs claims in comparable cases, the just order for the first respondent’s costs of the appeal is $25,000.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ryan & Kent JJ) delivered on 25 October 2019.

Date:  25 October 2019