Bates v Bechara (No 4)

[2021] FedCFamC2G 304

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Bates v Bechara (No 4) [2021] FedCFamC2G 304

File number(s):	SYG 821 of 2016
Judgment of:	JUDGE A KELLY
Date of judgment:	30 November 2021
Catchwords:	BANKRUPTCY – COSTS – Where orders made affirming sequestration order against respondent’s estate and dismissing respondent’s interim application – where Full Court had remitted application for de novo review of registrar’s decision including an order as to costs – where Full Court addressed earlier costs orders – where stay made on enforcement of orders until all orders made consequent upon the remitter of the application for review – where applicant sought costs of de novo hearing – where respondent submitted applicant pay costs as agreed or assessed, respondent pay costs as agreed or assessed, and each party bear their own costs – applicable principles – where costs ought follow the event – where petitioning creditor is entitled to costs – quantification of costs.
Legislation:	Bankruptcy Act 1966 (Cth), ss 32, 100, 109 Federal Circuit and Family Court of Australia Act 2021 (Cth), s 214 Judiciary Act 1903 (Cth), s 39B Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth), rr 13.01, 13.02 Federal Court Rules 2011 (Cth), r 40.12
Cases cited:	Alrjoob v Minister for Home Affairs [2018] FCA 1144 AOJ15 v Minister for Immigration and Border Protection [2017] FCA 675 Bates v Bechara(No 2) [2021] FCCA 1809 Bates v Bechara (No 3) [2021] FedCFamC2G 155 Bates v Bechara [2021] FCCA 1693 Bechara v Bates (2021) 388 ALR 414 Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333
Division:	Division 2 General Federal Law
Number of paragraphs:	22
Date of hearing:	On the papers
Place:	Melbourne
Applicant:	In person
Respondent:	No appearance

ORDERS

SYG 821 of 2016

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

PHILIP BATES

Applicant

AND:

MARIA BECHARA

Respondent

ORDER MADE BY:	JUDGE A KELLY
DATE OF ORDER:

THE COURT ORDERS THAT:

1.The order made on 5 July 2016 that the petitioning creditor’s costs fixed in the sum of $4,667.75 be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth) be affirmed.

2.The costs of the petitioning creditor, including reserved costs, of and incidental to the respondent’s application for review following remitter of that application pursuant to the order of the Full Court of the Federal Court of Australia made on 16 March 2021, including reserved costs, be fixed in the sum of $30,000 and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

JUDGE A KELLY

Introduction

1. These reasons explain why orders for costs have been made in relation to the respondent debtor’s application for review of the exercise of power by a registrar who made an order for the sequestration of her estate.  They should be read in conjunction with the reasons published on 26 July 2021, Bates v Bechara [2021] FCCA 1693; 5 August 2021, Bates v Bechara(No 2) [2021] FCCA 1809; and 15 October 2021, Bates v Bechara (No 3) [2021] FedCFamC2G 155.

2. On 15 October 2021, orders were made affirming the sequestration order made on 5 July 2016 against the respondent’s estate, and dismissing her interim application filed on 25 July 2016 seeking review of the exercise of power by a registrar of the court.  Conformably with directions the parties filed submissions in relation to costs which I have considered.

3. No useful purpose is served by reiterating the protracted procedural history of the matter.  What is necessary is to identify the matters in respect of which the present application for costs does and does not or cannot relate. By way of overview, on 7 April 2016, Mr Bates presented a creditor’s petition and on 25 July 2016, after the sequestration order was made against the debtor’s estate on 5 July 2016, the then bankrupt applied for a review of the registrar’s exercise of power.  It is this application which has occupied various courts for the past six years.

4. When in Bechara v Bates (2021) 388 ALR 414, the application for a de novo review of the registrar’s exercise of power to make a sequestration order was remitted, the Full Court:

   (a)quashed orders made by the then Federal Circuit Court on 8 December 2016, 3 March and 17 May 2017, including, in each case, as to the costs of such applications;

   (b)remitted the application for de novo review of the orders made on 5 July 2016, including the order as to costs made on that date.  The order made on 5 July 2016 as to costs was that “[t]he applicant creditor’s costs fixed in the sum of $4,667.75 be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.”  The orders of the registrar made on that date have been affirmed: Bates v Bechara (No 3) [2021] FedCFamC2G 155, [66]. The adoption of that course left undisturbed the order made as to costs that, accordingly, remains in place;

   (c)

   ordered the petitioning creditor “pay the applicant’s costs of the application.”  

   
   

   The application to which that order refers is the “application under s 39B of the Judiciary Act 1903 (Cth) directed at quashing the decision of the Circuit Court,”: (2021) 388 ALR 414, [10], [138]. It is no function of this review to be concerned in relation to the order for costs made by the Full Court in relation to the application made under s 39B of the Judiciary Act 1903.  That order has been made and remains operative according to its terms;

   (d)also ordered that “such costs, and all other outstanding orders for costs as between the parties in litigation in the Federal Circuit Court of Australia, the Federal Court of Australia and the High Court of Australia, not be enforced and no steps be taken to enforce such costs until after orders are made consequent upon the hearing of the creditor’s petition in the application for review.”  This part of the Full Court’s order operates, in effect, as a stay on enforcement until all orders made consequent upon the remitter of the application for review have been made.

5. In my view, the only costs which remain the subject of the present application are costs associated with the remitter of the application for review since the Full Court’s order made on 16 March 2021.  Stated in other terms, the Full Court quashed orders for costs that were made on 8 December 2016, 3 March and 17 May 2017.  Having quashed those orders for costs, no further issue arises in relation to them.  Those costs orders were quashed because the Full Court concluded there had been no valid review of the registrar’s exercise of power on 5 July 2016.

6. Since remitter on 16 March 2021, this court has made a series of orders addressing the conduct of the application as it proceeded to conclusion on 15 October 2021.  During that period costs were reserved on a number of occasions.

7. Section 32 of the Bankruptcy Act 1966 (Cth) confers jurisdiction to make such order as to costs as it thinks fit. So too, s 214(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FC&FCA Act) confers jurisdiction on this court to award costs in all proceedings before it, including in proceedings under the Bankruptcy Act 1966.  The award of costs is discretionary: FC&FCA Act, s 214(3); see also the Bankruptcy Act, ss 32 and 100(2).

8. Unless the court otherwise orders, subject to Div 13.2 of Pt 13 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules), a person who is entitled to costs in a proceeding to which the Bankruptcy Act applies, is entitled to costs in accordance with Pt 40 of the Federal Court Rules 2011.

9. The applicant requested “in accordance to order 2 at par 178 of Bates v Bechara [2021] FCAFC 34, the costs previously ordered by the registrar of the Federal Circuit Court be affirmed.”  For the avoidance of doubt, I will affirm the order for costs made on 5 October 2021.  Additionally, the applicant seeks his costs of the de novo hearing.

10. The applicant sought $49,239.10 for his costs, comprising costs of the registrar proceeding ($10,547.75) and professional fees ($36,265) and disbursements ($2,426.35) made throughout the de novo hearing and submitted the costs should follow the event and “the court should make a lump-sum cost order to facilitate the administration of the respondent’s bankruptcy”. 

11. As I understood it, the respondent sought three alternative forms of order; being that “the applicant pay the costs of the respondent as agreed or assessed” or “each party bear its own costs” or “the respondent pay the applicant’s costs as agreed or assessed” and adding to the latter that “such costs are stayed pending the determination of an appeal”.   

    Resolution

12. I reject the respondent’s submission that the applicant should pay her costs as agreed or assessed.  In my view, the petitioner is entitled to costs.  Each party sought costs and did so on the basis that such costs should follow the event: Bates v Bechara (No 3) [2021] FedCFam2G 155, [68]. I accept the parties’ submissions that costs ought follow the event. The application for review of the registrar’s exercise of power has been dismissed and the order made on 5 July 2021 has been affirmed. It follows the petitioning creditor is entitled, subject to the court’s exercise of discretion to make an order for costs upon the application for de novo review. 

13. I reject the respondent’s submission that she should pay the applicant’s costs as agreed.  The history of the matter provides no foundation for a conclusion that any such agreement would be reached and there is no good reason why costs should be assessed.  Again, the history of costs assessments in the NSW proceedings speaks loudly as to that.  Certificates of assessment merely became the platform for further proceedings.

14. The respondent submitted the applicant should bear the costs of the application because she “was successful in her application” in that the Full Court made orders that the Court hear and determine her interim application upon de novo review.  That submission is misconceived. 

15. I also reject the respondent’s submission that each party should bear his or her own costs.  No reason was supplied why the court should exercise its discretion in that way.  The reasons for judgment referred to above explain why the court should exercise its discretion as to costs in favour of the applicant.  Further, “the respondent pay the applicant’s costs as agreed or assessed” and adding to the latter that “such costs are stayed pending the determination of an appeal”.  Apart from the application to the High Court, there is no evidence of any appeal.  No stay application is on foot and no reason is shown why a stay should be granted.

16. However, the petitioner is not entitled to costs in accordance with Pt 40 of the Federal Court Rules 2011. That is because on 15 October 2021, the court otherwise ordered when it made orders in relation to costs. Contextually, under Pt 40, if an order for costs is made in favour of a payment of the party’s costs, those costs must be taxed: r 40.12. Relatedly, by r 13.01(2) of the Bankruptcy Rules the court may fix the quantum of costs and in that event, Div 13.2 does not apply: Bankruptcy Rules, r 13.02(2).

17. A number of claims for costs were made in relation to costs of proceedings before a registrar in the period up to 5 July 2016.  It is for the trustee in bankruptcy to accept or reject them as provable debts.  For the reasons at [4(a)] above, the applicant has no further entitlement to seek any part of the costs of the proceeding before the registrar said to be in the sum of $10,547.75.  The applicant has an extant entitlement under previous costs orders or he does not.

18. As to the remainder, where the court determines that it should exercise its discretion to do so, it is the invariable practice of this court to fix costs: Alrjoob v Minister for Home Affairs [2018] FCA 1144 [20]. There is generally no requirement that as a condition to the exercise of its discretion to award costs there should first be production of an itemised bill: AOJ15 v Minister for Immigration and Border Protection [2017] FCA 675, [44].

19. The applicant accepted that since Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333 was decided, neither a barrister nor a solicitor can charge for professional fees as an advocate when acting for himself or herself. To that extent, Mr Bates accepts no costs are allowable in respect of fees that might otherwise have been chargeable by Mr Bates in representing himself.

20. The position is different of course in relation to the professional costs and disbursements charged to Mr Bates in being represented by his solicitors throughout this proceeding and he produced a schedule of the costs and disbursements he has been charged being professional fees ($36,265) and disbursements ($2,426.35).  The respondent does not agree with the figures as assessed by the applicant and submits the “costs claimed by the applicant are grossly excessive”.  The respondent made no attempt to quantify the award for costs sought by the applicant or demonstrate why they were wrong.

21. I have examined the schedules of both costs and disbursements and will allow fix a total sum for those costs at $30,000.

    Conclusion

22. The costs ordered to be payable pursuant to the order made consequent upon these reasons for judgment are payable in the priority provided by par 109(1)(a) of the Bankruptcy Act.  So too are the costs payable and fixed pursuant to the order of the registrar made on 5 July 2016.

I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge A Kelly.

Associate:

Dated:       30 November 2021