Baycorp Collections PDL (Australia) Pty Ltd v Gosh (No 4)

[2016] FCCA 636

FEDERAL CIRCUIT COURT OF AUSTRALIA

BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LTD v GOSH (NO. 4) [2016] FCCA 636

Catchwords:
BANKRUPTCY – Costs – whether debtor should be ordered to pay the creditor’s costs – assessment of costs claimed by creditor – whether costs claimed include work which creditor was prevented to undertake because of orders made by the Credit and Investments Ombudsman – whether it was reasonable for creditor to retain counsel – whether there was doubling up of work between solicitor and barrister.

Legislation:

Federal Circuit Court Rules2001 (Cth), r.21.02(2)(a)

Applicant: BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED

Respondent: RATNA GOSH

File Number: SYG 235 of 2015

Judgment of: Judge Manousaridis

Hearing date: 15 March 2016

Delivered at: Sydney

Delivered on: 15 March 2016

REPRESENTATION

Counsel for the Applicant: Mr A Kaufmann

Solicitors for the Applicant: Baycorp Legal

No appearance behalf of or by the first, second or third supporting creditors

Counsel for the Fourth Supporting Creditor: Mr M W E Maconachie

Solicitors for the Fourth Supporting Creditor: Higgins & Dix

The respondent appeared in person

ORDERS

1. The respondent pay the applicant’s costs of the proceedings to date set in the amount of $23,330.

2. The delivery of judgment on the creditor’s petition heard on 17 December 2015 is adjourned to 9.30 am on 19 April 2016.

3. The listing of 18 March 2016 at 9.30 am is vacated.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 235 of 2015

BAYCORP COLLECTIONS PDL (AUSTRALIA) PTY LIMITED

Applicant

And

RATNA GOSH

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. The applicant creditor (Baycorp) applies for an order for costs in relation to a creditor’s petition it has filed and has been pursuing.  This application for costs is made in circumstances where the respondent has already paid the debt on the basis on which the creditor’s petition is based.  The questions for me to determine, therefore, are whether I should make an order for costs and, if so, in what amount I should assess those costs.  I first turn to whether an order for costs should be made. 

2. I do not understand Dr Ghosh to submit that the Court should not make an order for costs; however, even if she were to submit otherwise, I would have made an order for costs, as I propose to do so now. Dr Ghosh has paid the debt.  That fact by itself indicates that it was entirely reasonable for Baycorp to seek to have a bankruptcy notice issued and, on the basis of the noncompliance with that bankruptcy notice, to proceed by filing a creditor’s petition.  In addition, the matters that I considered in my reasons for decision, which I published on 9 February 2016, indicate that Dr Ghosh did not have any arguable grounds for resisting the application for a sequestration order.  In those circumstances, her decision to pay the debt on 29 January 2016 was more than reasonable. 

3. That then leads me to the question of the assessment of costs. There is no question that the Court has power to set the amount of costs and that power is to be found in r.21.02(2)(a) of the Federal Circuit Court Rules2001 (Cth).

4. In support of the assessment of its costs, Baycorp relies on an affidavit prepared by its solicitor, Mr David Wilkinson made on 17 February 2016.  That affidavit attaches a bill of costs itemising various matters and attaching specific amounts to each of those matters.  The bill deals with Mr Wilkinson’s costs and these total $7,323.18 and the bill also attaches disbursements, the two most significant being counsel’s fees. 

5. Dr Ghosh objects to various, and in fact most, items claimed, although the grounds on which she objects to the amounts claimed are but few and are based on broad principles.  First, she submits that the fees of Mr Kaufmann are excessive for two reasons.  One is that his fees involve a doubling-up of the costs incurred by or claimed by Mr Wilkinson. I will return to that issue in a moment. Second, the amount of work that counsel ought to have undertaken in the matter should be 10 hours, not the amount of time counsel has in fact undertaken.  In Dr Ghosh’s submission, Baycorp should be entitled to claim no more than $3,000 for counsel’s fees. 

6. I do not accept that submission.  As I have set out in my reasons for judgment which I published on 9 February 2016, these proceedings have followed a fairly intricate procedural route requiring legal work of more than 10 hours.  I have read the fee notes issued by counsel and, although they may exhibit work which may not in part be recoverable on a taxation, they nevertheless disclose to me a reasonable exertion of effort, and by no means excessive effort, to deal with the matters as they have arisen in the course of these proceedings.  At this stage, I will not say anything about the amount I consider the applicant would be entitled by way of counsel’s fees because, as I will shortly note, the applicant has proposed an amount which, in my opinion, will obviate the necessity for me to look at specific items.

7. The next matter on which Dr Ghosh relies is her assertion that many of the items, perhaps a substantial majority of the items, relate to work which had been undertaken in contravention of an order or direction made by the Credit and Investments Ombudsman. In my reasons for judgment published on 9 February 2016, I refer to the matter having been adjourned on 3 March 2015 to permit the Credit and Investments Ombudsman an opportunity to investigate a complaint Dr Ghosh had made against the applicant.  I there inferred that the complaint before the Credit and Investments Ombudsman had been resolved because the matter had been relisted for hearing on 12 May 2015.  What I there said was a matter for inference.  However, in the hearing before me there was tendered into evidence a copy of a letter from the Credit and Investments Ombudsman dated 18 May 2015, and in paragraph 15 of the letter the Ombudsman states that, for the reasons stated earlier in the letter, it was unable to assist Dr Ghosh any further.

8. Notwithstanding that letter, Dr Ghosh has submitted that the investigation by the Credit and Investments Ombudsman continued and it was, in fact, resolved late last year.  Dr Ghosh insisted that she had filed evidence to establish that matter but she was not able to identify it with any greater particularity. 

9. In any event, whether or not there was any such order in place, no effort was made by Dr Ghosh, as far as I can tell, to have the creditor’s petition stayed, although I do note that in my reasons for judgment which I published on 9 February 2016 I do refer to Dr Ghosh having stated, in an email she sent to the Court on 14 December 2015, that there was an order issued by the Credit Ombudsman all year not to serve Dr Ghosh.  I there dealt with that statement on the basis that there was no evidence of any order or prohibition in relation to any of the steps Baycorp had taken to obtain the order and judgments on the basis of which the bankruptcy notice was issued.

10. For these reasons, I do not accept that the fact that there was an order or direction issued by the Credit and Investments Ombudsman deprives Baycorp from recovering any amount for work done by it or on behalf of it. 

11. The next matter on which Dr Ghosh relies is what she says is the doubling-up of activities between Mr Wilkinson and Mr Kaufmann, who is the counsel retained in the matter.  Her general submission was that this was not a case appropriate for the briefing of counsel.  Having regard to the procedural history of this matter and the issues raised by Dr Ghosh, I do not accept that submission.  In any event, having regard to the manner in which Baycorp is prepared to have its costs assessed, whether or not it was appropriate for Baycorp to instruct counsel will have no bearing on the outcome of my assessment of Baycorp’s costs.

12. The fourth matter on which Dr Ghosh relies relates to the transcript.  She submits it was not reasonable for the applicant to obtain transcript.  I disagree with that submission.  The transcript was relevant to deal with issues of service and, indeed, affidavits attaching the transcript were read on the hearing of the creditor’s petition and some of the transcript is referred to in my reasons for judgment which I published on 9 February 2016. 

13. For those reasons, I do not accept any of the submissions Dr Ghosh has made as to the unreasonableness of the costs claimed by the applicant creditor.  I should also note here that Dr Ghosh submits that the costs should be assessed in an amount no greater than the costs for which this Court assessed the applicant creditor’s costs in a previous bankruptcy matter.  There is no basis on which I could be satisfied that that amount would reflect the reasonable costs that ought to be recovered by the applicant creditor in this proceeding.

14. I then turn to what I have already foreshadowed, and that is the basis on which the applicant creditor would be prepared for the Court to deal with the application for its assessment of its costs, and that basis is as follows.  The total costs and disbursements claimed in the bill, which is annexed to the affidavit of Mr Wilkinson, is $35,091.91.  Counsel for Baycorp accepts that the GST component of this amount should be excluded.  If that is done, the total costs and disbursements are $31,901.  Counsel further indicated that the amount which would reflect a reasonable assessment of those costs is 75 per cent of $31,901, and if that is done the costs claimed would be $23,925.  I note that that amount would be the equivalent of the amount Baycorp claims less substantially all of the costs of Mr Wilkinson. 

15. In my opinion, having regard to what is generally involved on an assessment of costs, 75 per cent might be slightly higher than one ought reasonably to expect, but not much higher.  In my opinion, a more appropriate discount should be 70 per cent, and that would take into account the $265 of item 16, which ought not to have been included.  So on that calculation, in my opinion the reasonable amount of costs that Dr Ghosh should be ordered to pay is $22,330. So I propose to assess costs, which exclude the costs of today, in that amount.  I will not make an order until I hear submissions about what I should do about today’s costs.

16. Dr Ghosh also submitted that there are stay orders in place in relation to the judgments in relation to which her bankruptcy notice has been issued. I dealt with that submission in my reasons for judgment which I published on 9 February 2016. The stay, to the extent it did exist, was not relevant to the proceedings on the creditor’s petition.  In my reasons for judgment which I published on 9 February 2016, I found that the stay was not in place on the day on which the bankruptcy notice was issued.  For that reason, any stay Dr Ghosh may have obtained is not relevant to the proceedings on the creditor’s petition.

17. I propose to order that Dr Gosh pay Baycorp’s costs of the day set in the amount of $1,000.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Date: 1 April 2016