Barry v COSHOTT

[2016] FCCA 381

FEDERAL CIRCUIT COURT OF AUSTRALIA

BARRY & ANOR v COSHOTT [2016] FCCA 381

Catchwords:
COSTS – Whether costs should be awarded – whether either party acted unreasonably in the conduct of the matter – no order as to costs.

Legislation:

Bankruptcy Act 1966, s.32

Federal Circuit Court of Australia Act 1999, s.79(2)(iii)
Federal Circuit Court Bankruptcy Rules 2006, r.13.01

Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin (1997) 186 CLR 622

First Applicant: STEPHEN MICHAEL BARRY

Second Applicant: MARTIN PEARCE BOARD

Respondent: LJILJANA COSHOTT

File Number: SYG 1846 of 2014

Judgment of: Judge Street

Hearing date: Decided on the papers

Date of Last Submission: 25 February 2016

Delivered at: Sydney

Delivered on: 7 March 2016

REPRESENTATION

Solicitors for the Applicant: Mr J Merewether
Merewether & Co

Solicitors for the Supporting Creditor: Ms S Nash
O’Neill Partners Commercial Lawyers

Counsel for the Respondent: Mr A Cheshire SC

Solicitors for the Respondent: Martin Place Lawyers

ORDERS

1. No order as to costs

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1846 of 2014

STEPHEN MICHAEL BARRY

First Applicant

MARTIN PEARCE BOARD

Second Applicant

And

LJILJANA COSHOTT

Respondent

REASONS FOR JUDGMENT

1. This is an application for costs by the substituted petitioning creditors in circumstances where the petition was dismissed by consent on 15 December 2015.  On that occasion the parties indicated they wished to put on evidence and submissions relating to costs and the applicant, in substance, seeks costs in the total amount of $13,404.

2. In the petition, the subject of the applicants’ substituted claims, the alleged debts, were substantially in excess of the amount identified on 15 December 2015 which was $26,303.66.  It was that amount that the applicants paid in relation to the consent order for dismissal of the petition.  Part of the costs being sought by the applicants include the professional time of one of the applicants as well as the legal costs incurred by the applicants (substituted petitioning creditors). 

3. The respondent contends that an order should be made that the applicants pay the respondent’s costs on the basis of alleged unreasonable conduct by the applicants in pursuing debts far in excess of the amount that was ultimately the subject of payment by the respondent. 

4. The original petition was filed on 3 July 2014.  The application for substitution was made on 10 June 2015 alleging debts of $156,046.54 plus accrued interest, and other debts totalling $108,230.45.  On 18 June 2015 an amended creditor’s petition was filed with the substituted creditors, being the applicants.  On 18 June 2015 an affidavit of debt was filed in support of that amended petition maintaining a claim for debt in respect of the amount of $156,046.54 to both petitioning creditors and an amount of $108,230.45 to one of the petitioning creditors.

5. On 15 December 2015 a further amended creditor’s petition was filed alleging that the respondent owed the petitioning creditors six separate amounts totalling $128,065.33. 

6. The Court has taken into account the affidavit of James Farquhar Merewether, dated 28 January 2016, and the affidavit of Stephen Michael Barry, dated 28 January 2016.  The Court has taken into account the applicants’ submissions, filed on 29 January 2016; the respondent’s submissions, filed on 23 February 2016; and the submissions in reply, filed on 24 February 2016.

7. The Court’s powers in relation to the making of a costs order are identified in s.32 of the Bankruptcy Act 1966 (Cth), and s.79(2)(iii) of the Federal Circuit Court of Australia Act 1999, and r.13.01 of the Federal Circuit Court Bankruptcy Rules 2006.  The costs power is the subject of a broad discretion to be exercised judicially. 

8. The Court is not persuaded that either party has acted unreasonably and is of the view that the applicable principle to apply in this case is as identified by McHugh J in Re Minister for Immigration  & Ethnic Affairs (Cth); Ex Parte Lai Qin (1997) 186 CLR 622 at [624] and [625]:

   If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. 

9. In the circumstances of the present case, I regard the principle as identified by McHugh J as applicable and, accordingly, the Court makes no order as to costs. 

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge Street

Associate: 

Date:  7 March 2016