Re John William O'Brien v Peter Leopold Clyne and the Clerk, St James Centre, Local Court [1986] FCA 29 (18 February 1986)

FEDERAL COURT OF AUSTRALIA

Re: JOHN WILLIAM O'BRIEN
And: PETER LEOPOLD CLYNE and THE CLERK, ST. JAMES CENTRE, LOCAL COURT
No. W929 of 1983
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Jackson J.

CATCHWORDS

Bankruptcy - disagreement between bankrupt & trustee - issue decided by Court - bankrupt's actions not unreasonable or improper - whether costs should be ordered against bankrupt.

Bankruptcy Act 1966, s. 32.

Re Nassoor; Ex parte Official Receiver (1935) 8 A.B.C. 167

Re Dusseck; Ex parte The Trustee v. Australian Mosaic Flooring Ltd (1964) 20 A.B.C. 159

HEARING

SYDNEY
18:2:1986

ORDER

The bankrupt pay to the trustee his costs of and incidental to the application, including reserved costs, to be taxed.

NOTE: Settlement and entry of orders is dealt with in Order 124 of the Bankruptcy Rules.

DECISION

In this matter I gave judgment on 20th December 1985 in favour of the trustee in bankruptcy and the trustee in bankruptcy seeks an order that the respondent pay the costs of the application.

2. The power to award costs is relevantly to be found in s. 32 of the Bankruptcy Act 1966 which provides that:-

"32. The Court may, in any proceeding before it, including

a proceeding dismissed for want of jurisdiction, make such
orders as to costs as it thinks fit."

3. The contention advanced by the bankrupt is that where a difference of opinion arises between the bankrupt and his trustee and the issue falls to be decided by the Court, costs ought not to be awarded against the bankrupt unless his actions are, or the position asserted by him is, unreasonable or improper.

4. In support of that contention the bankrupt relies upon the principle that in general a trustee's costs should be paid out of a bankrupt's estate when the bankrupt is unsuccessful in litigation unless the trustee has acted unreasonably or improperly see e.g. Re Nassoor; Ex parte Official Receiver (1935) 8 ABC 167 and Re Dusseck; Ex parte The Trustee v. Australian Mosaic Flooring Ltd (1964) 20 ABC 159) and then contends that in fairness that principle should be applied equally to an unseccessful bankrupt, at least to the extent of not awarding costs against him merely because his contentions are not sustained.

5. I do not think that the analogy is correct.

6. A trustee is entitled to his costs from the estate of a bankrupt because he is entitled as a trustee to be indemnified for the work performed by him in the realisation of the bankrupt's estate. A qualification to the rule is that if he acts unreasonably or improperly, his entitlement to that indemnity will be treated as not existing.

7. There seems to me no reason why those principles should be then applied to the position as between the parties to litigation inter partes and I decline to do so.

8. In the circumstances I order that the bankrupt pay to the trustee his costs of and incidental to the application including reserved costs to be taxed.