Re: EVERETT THOMSON BENT And: DONALD EDWARD GOUGH and PATRICIA SUSAN GOUGH No. V G215 of 1991 FED No. 368 Costs (1992) 108 ALR 131 (1992) 36 FCR 204
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY GENERAL DIVISION Black C.J.(1), Northrop(2) and Ryan(2) JJ.
CATCHWORDS
Costs - Jurisdiction - Persons not parties to proceedings - power to order costs personally against liquidator of petitioning creditor - Sections 32, 35A Bankruptcy Act 1966 - scope of s.32 Bankruptcy Act 1966 - cf s.27 Bankruptcy Act 1924 - implied limitations to power - when discretion to order costs against a non-party should be exercised - relevance of various considerations - whether appropriate to exercise discretion against a liquidator non- party - appropriateness of drawing analogy between receiver and liquidator - liquidator's perception of factual situation and likely outcome of litigation - liquidator's failure to obtain an indemnity against costs of litigation - respondent's failure to seek security for costs - order expressly empowering liquidator to bring proceedings - extent of duty on judge to identify considerations affecting exercise of discretion.
Solicitor for the Appellant: J.M. Smith and Emmerton
Counsel for the Respondents: Dr I. Hardingham
Solicitor for the Respondents: Corrs Chambers Westgarth
ORDER
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the respondents' costs of this appeal.
Note: Settlement and entry of orders is dealt with in O.36 of the Federal Court Rules.
JUDGE1
This is an appeal from an order for costs made against a non-party, the liquidator of the petitioning creditor in a bankruptcy proceeding. The order was made by Fogarty J, a judge of the Family Court of Australia, in a proceeding transferred to the Family Court by an order made by this Court pursuant to s.35A of the Bankruptcy Act 1966. Section 35A was introduced into the Bankruptcy Act by the Family Court of Australia (Additional Jurisdiction and Exercise of Powers) Act 1988; the section…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
The case of Adsett v Berlouis involved a dispute between the liquidator of a bankrupt estate and the bankrupt himself. The nature of the dispute was centered on the costs incurred during the litigation, specifically whether the court had the jurisdiction to order the liquidator of a petitioning creditor to personally pay the costs of the proceedings. This case was heard in the High Court of Australia.
The legal issues that the court was required to decide were multifaceted. Firstly, the court needed to determine the scope of Section 32 of the Bankruptcy Act 1966, and how it compared to Section 27 of the Bankruptcy Act 1924. Secondly, the court had to consider whether there were any implied limitations to the power to order costs against a non-party, and if so, when the discretion to exercise this power should be applied. The court also had to evaluate the appropriateness of drawing an analogy between the roles of a receiver and a liquidator, particularly in relation to their perception of the factual situation and the likely outcome of the litigation. Additionally, the court examined the liquidator's failure to obtain an indemnity against the costs of litigation, as well as the respondent's failure to seek security for costs.
The court's reasoning and outcome were based on a detailed analysis of the statutory provisions and case law. The court found that the power to order costs against a non-party, such as a liquidator, was limited and should only be exercised in exceptional circumstances. The court determined that the liquidator's perception of the factual situation and the likely outcome of the litigation were relevant considerations, but not determinative. The court also found that the liquidator's failure to obtain an indemnity against the costs of litigation and the respondent's failure to seek security for costs were factors to be considered in exercising the discretion. Ultimately, the court held that the exercise of the discretion was not appropriate in this case, and the appeal was dismissed. The court ordered that the appellant pay the respondents' costs of the appeal.
Orders
Orders of the court
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay the respondents' costs of this appeal.
Note: Settlement and entry of orders is dealt with in O.36 of the Federal Court Rules.