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Robins v Black [2009] FMCA 45 (30 January 2009)

Last Updated: 26 February 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ROBINS v BLACK

BANKRUPTCY – Creditor’s Petition – respondent debtor’s opposition to Creditor’s Petition – judgment reserved after hearing – matter settled immediately prior to delivery of written judgment.

COSTS – Application for costs – claim for indemnity costs.


Colgate Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225
Ford Motor Company of Australia Ltd v Jefferson Ford Pty Ltd [2007] FCA 998
Genovese v BGC Construction Pty Ltd (No. 2) [2007] FMCA 601
Hammond v New South Wales [2002] FCA 424
Lee v Mavaddat [2005] WASC 68
Maneros & Anor v Korakas & Anor [2007] FMCA 2129
Re Hardwick [1976] Qd R 264
Upton v Tasmanian Perpetual Trustee [2007] FCAFC 57
Winspear v Mackinnon [2008] FCA 322

Quick on Costs, Vol.2, Lawbook Co. (accessed on Legal Online, 29 January 2009)

Applicant:
ANDREW ARTHUR ROBINS

Respondent:
RICHARD DAMIEN BLACK

File number:
SYG 2263 of 2007

Judgment of:
Lloyd-Jones FM

Hearing dates:
19 September 2007, 5 November 2007, 4 December 2007, 20 March 2008, 22 April 2008, 26 September 2008, 5 December 2008

Delivered at:
Sydney

Delivered on:
30 January 2009

REPRESENTATION

Counsel for the Applicant:
Mr M Condon on 19 September 2007, 4 November 2007, 5 December 2007 and 20 March 2008; Mr A Robins appeared for himself at other times.

Solicitors for the Respondent:
Mr M Carr of Foreshaws Neill Solicitors on 19 September 2007 and 4 November 2007; Mr R Black appeared for himself at other times.

ORDERS

(1) The respondent pay the applicant’s costs of the proceedings (including reserved costs) as agreed or as taxed, on a party/party basis.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2263 of 2007

ANDREW ARTHUR ROBINS

Applicant


And


RICHARD DAMIEN BLACK

Respondent


REASONS FOR JUDGMENT

(As corrected)

Application

  1. This is an application concerning the costs of proceedings over a number of days before this Court and the dismissal of the proceedings on 12 May 2008 due to settlement between the parties immediately prior to delivery of a reserved judgment.
  2. The parties acknowledge that the respondent debtor, Richard Damien Black, is liable for an order for costs following dismissal of the Creditor’s Petition, as the debt was paid immediately prior to delivery of the reserved judgment. The nature of the costs order is in dispute and the petitioning creditor, Andrew Arthur Robins, seeks indemnity costs which is opposed by the respondent.

The proceedings

  1. This was a Creditor’s Petition for a sequestration order which was opposed. Mr Robins, presented a petition filed 23 July 2007 for the sequestration of Mr Black’s estate. Mr Robins relies on an alleged act of bankruptcy, being an alleged return of a writ of execution that was unsatisfied. Mr Black, by his amended grounds of opposition filed on 27 September 2007, seeks to set aside the Creditor’s Petition on the grounds that there has been no proper return of the writ of execution pursuant to s.40(1)(d)(ii) of the Bankruptcy Act 1966 (Cth) and that no act of bankruptcy has been committed.
  2. This matter was referred to this Court by Hedge R on 18 September 2007 and fixed for hearing on 19 September 2007. On that date Mr Carr, for the respondent, sought an adjournment to allow for a Notice of Motion to set aside the writ in the Local Court (proceedings 5258 of 2006) to be listed for hearing on 11 October 2007. A costs order was made for the respondent to pay the applicant’s costs thrown away that day. That Notice of Motion was heard and dismissed with costs by Dillon M on 11 October 2007.
  3. The opposition to the Creditor’s Petition was heard on 5 November 2007 and 4 December 2007, after which I reserved my judgment. On 20 March 2008 an urgent application was listed at the request of Mr Robins, seeking an order over certain residential properties registered in Mr Black’s name. I made orders restraining Mr Black from dealing with the nominated properties until 5.00pm on 22 April 2008. I also made an order that all costs were to be agreed, or if not, to be assessed.
  4. The matter was listed on 22 April 2008 for handing down of the reserved judgment. At the commencement of that listing, the parties settled the matter at the bar table moments before judgment was to be handed down. Consequently, I stood the matter over until 12 May 2008 for further directions at the request of the parties. The issue of costs was raised and preliminary submissions made. Because of the tension during the conduct of the matter over the numerous hearing days, I believe that the best course to follow was for the parties to file written submissions in respect of costs instead of allowing any further ventilation of the issues in dispute between the parties in Court. At the directions hearing on 12 May 2008, the Court was advised that the parties could not agree on costs. The orders made on 12 May 2008 were that:
  5. Both parties were late in complying with the above orders, with Mr Robins filing his submissions on 19 July 2008 and Mr Black filing his on 15 September 2008.
  6. As indicated above, this matter has been fiercely contested between the parties over numerous days. Any attempt to settle the costs issue voluntarily between the parties was not achievable. Unfortunately, both parties filed very substantial written submissions with considerable focus on the issues already argued at the hearing. The submissions also include other issues not previously addressed in Court.

Jurisdiction

  1. Section 86(b) of the Federal Magistrates Act 1999 (Cth) provides that the Federal Magistrates Court Rules 2001 (Cth) may make provision for costs of proceedings in the Federal Magistrates Court. Section 79(2) of the Federal Magistrates Act provides that in general federal law proceedings, the Court “has jurisdiction to award costs in all proceedings... other than proceedings in respect of which any other Act provides that costs must not be awarded”. Section 79(3) provides that costs are in the discretion of the Court, “(e)xcept as provided by the Rules of the Court or other Act”.
  2. Rule 13.01 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) provides that a person entitled to costs in a Bankruptcy Act proceeding “is entitled to costs in accordance with Order 62 of the Federal Court Rules unless the Court otherwise orders”.
  3. Section 32 of the Bankruptcy Act provides that the Court may “make orders as to costs as it thinks fit”. That section makes clear that costs in bankruptcy proceedings are entirely within the Court’s discretion: Re Hardwick [1976] Qd R 264 per Dunn J at 266.

Order for costs

  1. The usual practice, not to be lightly departed from, is that costs be on a party-party basis: Colgate Palmolive Company & Anor v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233 per Sheppard J:
  2. This approach has been considered recently in Lee v Mavaddat [2005] WASC 68 at [17] per Roberts-Smith J in supplementary reasons:
  3. In Winspear v Mackinnon [2008] FCA 322, Marshall J made the following observations at [4]-[5]:
  4. In Upton v Tasmanian Perpetual Trustee [2007] FCAFC 57 at [142]-[143], Graham J (with whom Kiefel and Besanko JJ agreed) stated:

Indemnity costs

  1. The relevant authorities on circumstances in which a court will depart from the usual practice have been summarised in Genovese v BGC Construction Pty Ltd (No. 2) [2007] FMCA 601 at [47]- [48] per Lucev FM:
  2. The other significant aspect of indemnity costs is that they are designed to indemnify, not punish. In Ford Motor Company of Australia Ltd v Jefferson Ford Pty Ltd [2007] FCA 998 at [3], Jessop J applied Hammond v New South Wales [2002] FCA 424 per Gray J:
  3. I also note the reference in Mr Black’s written submissions to the passage in Quick on Costs, Vol. 2, Lawbook Co. at [4.270], entitled “Indemnity Costs Excessive”:
  4. I also note the further comment in Quick on Costs at [4.250] which states:

Consideration

  1. It is important to note that Mr Black conceded a cost order against him on 12 May 2008, when the amount claimed in these proceedings was paid and the proceedings dismissed. Provision was made for time to resolve the issue of costs, which included settlement of previous cost orders made on 19 September 2007 and 12 May 2008.
  2. A letter of 14 May 2008 addressed to Mr Black from Mr Robins states:
  3. Mr Robins proposed the following orders:
  4. That offer lapsed and it was apparent that there was no prospect of an informal resolution to the costs issue. The Court was advised of that position and the parties reverted to preparing written submissions on costs. As I have indicated above, the submissions on costs reverted to a detailed re-ventilation of a number of issues between the parties. Both the applicant and the respondent made accusations against the other party regarding their behaviour and conduct in these proceedings.
  5. The original debt fell due in 2001 and 2002 and was the subject of proceedings in both the Local and Supreme Courts of New South Wales. If Mr Black was solvent at all times, as he claims, then costs may have accumulated because of proceedings which may not have been necessary. After settling the proceedings in this Court and conceding that a cost order was to be made against him, Mr Black did not fully pursue an opportunity to settle costs. There is no evidence before the Court that Mr Black made a counter offer or pursued negotiations. A compromise immediately before the delivery of a reserved judgment compelled an order of costs against Mr Black on the principle that “where conduct of a debtor has rendered the petition nugatory”, an order for costs is attracted by the debtor: Maneros & Anor v Korakas & Anor [2007] FMCA 2129.
  6. The offer made to Mr Black was an estimate of costs based on comparisons with similar proceedings. By his failure to negotiate an agreed settlement, a formal costs order is now required. Mr Robins seeks an indemnity costs order. The issues to be considered before making such an order were considered in Genovese v BGC Construction Pty Ltd (No. 2) and set out at [14] above.
  7. Mr Robins also referred to a discussion on indemnity costs in Ritchie’s Uniform Civil Procedure NSW at [42.5.5] and relies on the following principles listed in that service which he claims were present in this matter, either directly or by analogy:
    1. a party has misled the Court;
    2. a party has maintained proceedings that the party should have known had no real prospects of success;
    1. proceedings were maintained for an ulterior purpose;
    1. the conduct of the proceeding has caused unreasonable delay and expense;
    2. a defendant unreasonably delayed an admission of liability;
    3. a party obtained a judgment no better than a prior settlement offer by the other party.
  8. Detailed written submissions were filed by Mr Black denying these claims. Mr Black relies on Quick on Costs at [4.250] which is cited above at [19].
  9. As I have indicated above both parties submitted written detailed submissions addressing the issue of costs. The substantial part of these submissions revisited the disputed issues between the parties in an attempt to re-canvass them before the Court. The submissions also contained denials of certain aspects of the other party’s submissions. The Court has no intention of revisiting these issues. Again, despite the orders in respect of costs being limited to one set of submissions from each party, the issue was raised in an attempt to pursue a course of replies and counter replies. Submissions to this effect were submitted to the Court. However, at a directions hearing on 26 September 2008 I advised both parties that I did not intend to accept any further submissions than those covered by the orders made on 12 May 2008.
  10. I acknowledge that the dispute between the parties has been vigorously pursued in this and the State courts. Considerable tension remains between the parties despite the resolution of the outstanding debts. Both parties have merits to their argument and at the same time weaknesses in their entrenched positions. I do not intend to further evaluate the arguments and counter arguments put forward by the parties in justifying the claims of costs. I am not prepared to penalise one side with an indemnity costs order and allow the other side to benefit from that order. Consequently, I intend to order costs on a party/party basis.

I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.


Associate:


Date: 16 February 2009


CORRECTIONS

  1. Representation for the Applicant corrected and now reads as follows “Mr M Condon on 19 September 2007, 4 November 2007, 5 December 2007 and 20 March 2008. Mr A Robins appeared for himself at other times.”
  2. Representation for the Respondent corrected and now reads as follows “Mr M Carr of Foreshaws Neill Solicitors on 19 September 2007 and 4 November 2007; Mr R Black appeared for himself at other times.”
  3. Paragraph 5 line 4 – delete “a freezing” and insert “an”.
  4. Paragraph 5 line 5 – delete “a freezing order” and insert “orders”.
  5. Paragraph 6 line 1 – delete “12 May 2008” and insert “22 April 2008”.
  6. Paragraph 6 line 4 – delete “dismissed the application and the issue” and insert “stood the matter over until 12 May 2008 for further directions at the request of the parties”.
  7. Paragraph 7 line 1 – delete “failed to” and insert “were late in”.
  8. Paragraph 28 corrected and now reads as follows “As I have indicated above both parties submitted written detailed submissions addressing the issue of costs. The substantial part of these submissions revisited the disputed issues between the parties in an attempt to re-canvass them before the Court. The submissions also contained denials of certain aspects of the other party’s submissions. The Court has no intention of revisiting these issues. Again, despite the orders in respect of costs being limited to one set of submissions from each party, the issue was raised in an attempt to pursue a course of replies and counter replies. Submissions to this effect were submitted to the Court. However, at a directions hearing on 26 September 2008 I advised both parties that I did not intend to accept any further submissions than those covered by the orders made on 12 May 2008.”
  9. Paragraph 29 corrected and now reads as follows “I acknowledge that the dispute between the parties has been vigorously pursued in this and the State courts. Considerable tension remains between the parties despite the resolution of the outstanding debts. Both parties have merits to their argument and at the same time weaknesses in their entrenched positions. I do not intend to further evaluate the arguments and counter arguments put forward by the parties in justifying the claims of costs. I am not prepared to penalise one side with an indemnity costs order and allow the other side to benefit from that order. Consequently, I intend to order costs on a party/party basis.”
  10. Paragraph 30 – deleted.


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