ASPITE v Schotte - [2011] FMCA 858

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ASPITE & ANOR v SCHOTTE

[2011] FMCA 858

BANKRUPTCY – Costs – application that Respondent’s costs of certain issues be paid on an indemnity basis – applicable principles.

Bankruptcy Act 1966 (Cth)
Federal Magistrates Court Act 1999 (Cth), ss.73, 79

Bankruptcy Regualtions 1996 (Cth)
Federal Court Rules 1979, o.23, rr.3, 5, 11
Federal Magistrates Court Rules 2001, rr.1.05(2), 1.05(3)(b)

Colgate-Palmolive Co v Cusson Pty Ltd (1993) 46 FCR 225
Davids HoldingsPty Ltd v Coles Myer Ltd (1995) ATPR 41-383
Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601
Hamod v State of New South Wales (2002) 188 ALR 659
Vero Insurance Ltd v Scriven [2010] FMCA 352
Zodiac Investments v Brelsford [1999] FCA 1482

First Applicant:

DANTE ASPITE

Second Applicant:

BARTHOLOMEW RANDO

Respondent:

LEITH RAELYNN SCHOTTE (AKA LEITH TEGART SCHOTTE)

File Number:

SYG 732 of 2011

Judgment of:

Lloyd-Jones FM

Hearing dates:

19 July, 15 September and 26 September 2011

Delivered at:

Sydney

Delivered on:

8 November 2011

REPRESENTATION

Counsel for the Applicants:

Mr A Lang

Solicitors for the Applicants:

Anderson Lawyers

Counsel for the Respondent:

Mr B Adam

Solicitor for the Respondent:

Mr K Liu

ORDERS

The Respondent pay the Applicants’ costs of the hearing on 19 July 2011 on a party party basis.
The Respondent pay the Applicants’ costs of the hearings on 15 and 26 September 2011 on an indemnity basis.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 732 of 2011

DANTE ASPITE

First Applicant

BARTHOLOMEW RANDO

Second Applicant

And

LEITH RAELYNN SCHOTTE (AKA LEITH TEGART SCHOTTE)

Respondent

REASONS FOR JUDGMENT

Background

The Applicants filed a Creditor’s Petition against the Respondent on 15 April 2011. The Respondent elected, initially, to oppose the Petition and put on evidence in support of that. Prior to the eventual dismissal of the Creditor’s Petition the matter was adjourned on four occasions at the request of the Respondent debtor’s lawyers. Costs were reserved on one occasion, but otherwise no orders were made in respect until the proceedings were finally dismissed on 26 September 2011.
The Respondent filed a debtor’s petition with ITSA on 14 September 2011 and as a result the Creditor’s Petition against the Respondent was stood over pending acceptance by the Official Receiver. The parties were in agreement that the Petition should be stood over, but not about what costs orders should be made. The Petitioning Creditors sought their costs on an indemnity basis, which was opposed by the Respondent Debtor.

Legislative provisions

These proceedings were brought under the Bankruptcy Act 1966 (Cth) which does not have any special provisions relating to costs.
The Court has jurisdiction to award costs under s.79(2) of the Federal Magistrates Act 1999 (Cth) (“the FM Act”). Pursuant to s.73(3) of the FM Act the Court has a discretion to order costs subject to the Federal Magistrates Court Rules 2001 (Cth) (“the FMC Rules”) unless any other Commonwealth Act has specific costs provisions.
Part 21 of the FMC Rules governs costs in…

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.

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Details

Case: [2011] FMCA 858
Decision Date

CaseChat Overview and Summary

In the Federal Magistrates Court of Australia, the case of ASPITE & ANOR v SCHOTTE [2011] FMCA 858 was heard, with the applicants, Dante Aspite and Bartholomew Rando, seeking costs from the respondent, Leith Raelynn Schotte, on an indemnity basis. The proceedings were brought under the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 1996 (Cth). The applicants filed a creditor's petition against the respondent on 15 April 2011, and the respondent initially opposed the petition and provided evidence in support of the opposition. However, the respondent later filed a debtor's petition with the Insolvency and Trustee Service Australia (ITSA), leading to the standing over of the creditor's petition pending acceptance by the Official Receiver. The applicants sought their costs on an indemnity basis, which was opposed by the respondent.

The court considered the applicable principles and legal issues, including the discretion to award costs under s.79(2) of the Federal Magistrates Act 1999 (Cth) and the provisions of the Federal Magistrates Court Rules 2001 (Cth). The court found that costs should only be awarded on an indemnity basis where exceptional circumstances exist, such as where the action appears to be an abuse of process or where a party should have known that they had no chance of success. The court also noted that the usual practice is to award costs on a party and party basis, and that there must be a special or unusual feature in the case to warrant a departure from the ordinary practice.

The court considered the evidence presented by both parties and found that the respondent did not take reasonable steps to put forward an adequate defense for solvency or address the question of the Family Court orders that were the purpose of the adjournments sought in this court. The court also found that the respondent's filing of a voluntary debtor's petition at the very late stage of the proceedings meant that the whole exercise of these proceedings had been a waste of time and resources for the parties. As a result, the court ordered that the respondent pay the applicants' costs of the hearings on 15 and 26 September 2011 on an indemnity basis, and the applicants' costs of the hearing on 19 July 2011 on a party and party basis.

Orders