BEAMAN and BOND

[2015] FCWA 107

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: JURISDICTION OF COURTS (CROSS-VESTING) ACT 1987

BANKRUPTCY ACT 1966

LOCATION: PERTH

CITATION: BEAMAN and BOND [2015] FCWA 107

CORAM: CRISFORD J

HEARD: WRITTEN SUBMISSIONS

DELIVERED : 4 DECEMBER 2015

FILE NO/S: PTW 3223 of 2013

BETWEEN: DIANNE ELIZABETH BEAMAN

Applicant

AND

CRAIG DAVID BOND
First Respondent

AND

CHRISTOPHER MICHAEL WILLIAMSON and DAVID ASHLEY NORMAN HURT
Second Respondents

Catchwords:

COSTS – Where the substantive proceedings were cross-vested from the Federal Court of Australia to the Family Court of Western Australia – where the applicant seeks the entirety of her costs of the proceedings both in the Federal Court of Australia and the Family Court of Western Australia – where costs generally follow the event and unless there is some special or unusual feature to depart from this practice the costs are usually taxed – where the Court determined that the first respondent pay the applicant’s costs of the proceedings, in the Federal Court of Australia and the Family Court of Western Australia, in accordance with sch 3 of the Federal Court Rules 2011 (Cth).

Legislation:

Bankruptcy Act 1966 (Cth)
Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth)
Family Law Rules 2004 (Cth)
Federal Court Rules 2011 (Cth)

Category: Reportable

Representation:

Counsel:

Applicant: Mr P Hannan

First Respondent : Mr L Christensen

Second Respondents : N/A

Solicitors:

Applicant: Carr & Co

First Respondent : Gadens Lawyers

Second Respondents : Roe Legal Services

Case(s) referred to in judgment(s):

Beaman and Bond [2013] FCA 534

Beaman and Bond [2014] FCWA 21

Beaman and Bond [2014] FCWA 27

Beaman v Bond [2014] FCA 803

Golden West Refining Corporation Ltd v Daly Laboratories Pty Ltd (Unreported, Federal Court of Australia, Carr J, 16 February 1995)

King v Yurisich (No 2) [2007] FCAFC 51

Lindon v The Commonwealth (No 2) (1996) 136 ALR 251

Westpac Banking Corporation v The Bell Group Ltd (in Liq) (No 3) [2012] WASCA 157

1On 30 April 2014 and 4 April 2014 I delivered judgments in these proceedings. The background to the proceedings is contained in the judgments Beaman and Bond [2014] FCWA 21 and Beaman and Bond [2014] FCWA 27.

2The proceedings were commenced by Ms Beaman (“the applicant”) in the Federal Court of Australia. The applicant sought orders, inter alia, pursuant to s 208 of the Bankruptcy Act 1966 (Cth) (“the BA”). Mr Bond (“the first respondent”) filed an application to summarily dismiss the application.

3On 31 May 2013 the proceedings were cross-vested from the Federal Court to the Family Court of Western Australia by McKerracher J. His Honour’s judgment is contained in Beaman and Bond [2013] FCA 534.

4On 1 October 2013, in the Family Court, the matter came before Walters J. On that day orders were made, by consent, that the Family Law Rules 2004 (Cth) (“the FLR”) and the Evidence Act 1995 (Cth) were to be used in the cross-vested proceedings.

5On this occasion the Court is asked to determine an application for the first respondent to pay the applicant’s costs of the proceedings.

Orders sought by the applicant

6The applicant seeks the entirety of her costs of the proceedings, both in the Federal Court of Australia and in the Family Court of Western Australia.

7Throughout her submissions, received by the Court on 22 April 2014, she makes it clear that the costs include those associated with:

•the first respondent’s application for summary dismissal;

•an appearance in the Federal Court, on 20 May 2015, where McKerracher J made programming orders and after reserved the costs of that day; and

•an appearance in the Federal Court, on 31 May 2015, where McKerracher J made an order for the proceedings to be cross‑vested to the Family Court of Western Australia including the first respondent’s application for summary dismissal. The costs were reserved.

8There is some overlap between the various limbs identified by the applicant, but in essence she seeks all her costs associated with her application attacking an authority signed by the first respondent on 11 April 2013, under s 188 of the BA, in favour of Messrs Williamson and Hurt (“the second respondents”).

Orders sought by the first respondent

9The first respondent maintains that this Court does not have any discretion to award costs. However, counsel for the first respondent posits an alternate position in his written submissions, received by the court on 3 June 2014, as follows:

31.It is not in dispute that the Court in exercising its discretion ought to grant some form of order for costs in favour of the Applicant against the First Defendant but should only order that as a percentage of the total costs.

10Counsel for the first respondent further submits that the applicant would only be entitled to 25 per cent of her costs. This would represent the costs of the proceedings only insofar as they relate to the substantive matter. It would not include any costs relating to the first respondent’s application for summary dismissal, or costs associated with the seeking of the costs order itself.

11The application for summary dismissal, which the first respondent filed in the Federal Court on 23 May 2013, was dismissed by this Court on 29 August 2013. The relevant order reads:

1The First Respondent’s Form 1 Application filed 23 May 2013 be dismissed and the Applicant’s application for costs of the application be reserved.

The Law

12As this matter was the subject of a cross-vesting order, s 12 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) is relevant to an application for costs:

12Orders as to costs

Where a proceeding is transferred or removed to a court, that court may make an order as to costs that relate to the conduct of the proceeding before the transfer or removal if those costs have not already been dealt with by another court.

13Section 32 of the BA states:

The Court may, in any proceeding before it, including a proceeding dismissed for want of jurisdiction, make such orders as to costs as it thinks fit.

14Orders were made, by consent, on 1 October 2013 that the FLR were to be used in these proceedings. Chapter 26 of the FLR is titled “Cases to which the Bankruptcy Act 1966 applies”. Rule 26.30 is outlined below:

26.30Order for costs

(1)Unless the court otherwise orders, a person who is entitled to costs in a case to which the Bankruptcy Act applies is entitled to costs in accordance with Part 40 of the Federal Court Rules 2011.

(2)In making an order for costs, the court may fix the amount of the costs.

(3)If the court fixes the amount of the costs, Part 40 of the Federal Court Rules 2011 does not apply to a bill of costs submitted for the costs, except for the issue of a certificate of taxation.

15In accordance with r 26.30 I will turn to Pt 40 of the Federal Court Rules 2011 (Cth) (“the Rules”) in determining the current application.

16Rule 40.03 and r 40.04 of the Rules are of particular relevance and are outlined below:

40.03Costs reserved

If the Court reserves the question of costs, and no further order is made, costs follow the event.

40.04Costs on interlocutory application or hearing

If no order for costs is made on an interlocutory application or hearing, the costs of the application or hearing:

(a) if an order is made in favour of any party – follow the event; or

(b) if no order is made in favour of any party – are taken to be costs in the cause of the successful party to the proceeding.

17This Court will make costs orders in relation to these proceedings by reference to s 32 of the BA as guided by both the FLR and the Rules.

18It appears to be common ground that costs should be assessed on the Federal Court scale rather than the scale of costs used in the Family Court of Australia or the Family Court of Western Australia.

Discussion

19The purpose of a costs order is not to punish the unsuccessful party but to compensate the successful one (King v Yurisich (No 2) [2007] FCAFC 51). The legislation makes it clear that a court may make such orders as to costs as it thinks fit. Any award of costs in a bankruptcy case is discretionary.

20I firstly deal with the costs of the proceedings, as a whole. Although the usual rule is that costs follow the event there are a number of exceptions. Relevantly here, an exception might arise where the ultimately successful party has succeeded on some issue, or issues, but lost on others.

21If a party is unsuccessful in relation to some issues, it may be reasonable, in the circumstances, that they be deprived of those costs. In some circumstances they may even be ordered to pay the other party’s costs of those issues. For this purpose, issues refers generally to the bases of the claim or may constitute disputed questions of fact or law (Westpac Banking Corporation v The Bell Group Ltd (in Liq) (No 3) [2012] WASCA 157)).

22I accept, where there is a considerable overlap in all the evidence, a successful party should not be deprived of their costs or have the quantum reduced. Where there is such an overlap it may be impossible to identify a significant body of evidence that relates solely to the claim with respect to which a party was successful (Golden West Refining Corporation Ltd v Daly Laboratories Pty Ltd (Unreported, Federal Court of Australia, Carr J, 16 February 1995).

23Whilst ultimately only successful on one of the bases put forward, the applicant, nonetheless, presented arguments that had, at least, some merit for all the bases relied upon. I refer to my reasons of 4 April 2014 in this respect.

24This was not an easy matter and as I commented in my judgment of 4 April 2014:

128.The practical effect of the BA procedures has been to gain, what can only be termed, as some form of collateral advantage for Mr Bond. This is not a purpose contemplated by the BA and, using the words of earlier authority, is simply extraneous to that legislation. ...

25I accept that a successful party is entitled to have a reasonable expectation of recovering costs unless there is some exception that fits the circumstances of a particular case. I am not satisfied there are any circumstances here that would deprive the applicant of a full recovery of her costs. I consider it appropriate that the applicant receive all her costs of the proceedings.

26I will now turn to the costs associated with the first respondent’s application for summary dismissal. At [55] of McKerracher J’s judgment, his Honour said:

Although Ms Beaman has succeeded on the cross-vesting argument, until determination of Mr Bond’s summary dismissal application, if it is pursued in the Family Court, costs of that application should be reserved to be determined by the Family Court. I therefore order that:

1.This proceeding, including the first respondent’s interlocutory application for summary dismissal, be cross-vested to the Family Court of Western Australia.

2.Costs of this proceeding be reserved to that Court.

27Counsel for the first respondent maintains that the proceedings were effectively discontinued. They were, however, dismissed. The submissions filed on behalf of the first respondent suggest:

9.All the issues were eventually aired in the principal proceedings. Hindsight suggests that (for the reasons set out in the final decision) the application would not have been successful but only on a very narrow ground of the Applicant.

28With respect, the first respondent would not have been at all successful in his summary dismissal application. Hindsight is not the test for an application for summary dismissal and I find that the matters put forward by the applicant, although ultimately unsuccessful, were arguable points and not “doomed to fail” (Lindon v The Commonwealth (No 2) (1996) 136 ALR 251).

29I consider the applicant is entitled to the entirety of her costs, given the intertwining of the orders reserving costs made by McKerracher J on 31 May 2014 and my order of 29 August 2014 dismissing the first respondent’s application. The applicant was the successful party.

30I will lastly deal with the costs orders made on 20 and 31 May 2014 by McKerracher J. Given the application of r 40.03 of the Rules I consider the applicant would be awarded her costs associated with these two court events. However, as I have already determined she is entitled to her costs overall, there is no need for any specific order in this regard. Her costs of these court events are already captured.

Messrs Williamson and Hurt

31The second respondent made it clear at the commencement of the proceedings in this Court that it submitted to any order save as to an issue on costs.

32The applicant says that the second respondent did not, however, submit to the application she made to cross-vest the proceedings to this Court and in which she was successful. On that basis she suggests that a costs order should be made against the second respondents. The cross-vesting application was successful.

33I do not see this as a basis upon which the second respondent should be included in any costs order. The objection to the cross-vesting application was not an objection to the substance of the application relating to the validity of the personal insolvency agreement but rather a disagreement on the appropriate forum for litigation. I do not consider that to be indicative of a failure to generally submit to the outcome of the court in the substantive proceedings.

34On 4 April 2014, I made orders as follows:

IT IS ORDERED THAT:-

UPON THE UNDERTAKING of the Second Respondents, CHRISTOPHER MICHAEL WILLIAMSON and DAVID ASHLEY NORMAN HURT, and subject to paragraph 2 hereof, to retain the funds from the property of the First Respondent, CRAIG DAVID BOND, until they receive a direction from the Family Court of Western Australia:

…

2The Second Respondents be authorised to retain sufficient funds from the property of the First Respondent that the Second Respondents hold to enable the Second Respondents to pay:

(a)their remuneration; and

(b)any costs, charges or expenses properly and reasonably incurred by the Second Respondents while the First Respondent’s property was subject to control under the Division.

35The applicant filed her submissions, in support of her application for costs on 22 April 2014. The first respondent replied by submissions filed 3 June 2014.

36After the receipt of the submissions there was considerable activity by Mr Bond. Initially he sought a stay of my orders in this Court (Beaman and Bond [2014] FCWA 27). He also sought a stay in the Federal Court pending an appeal against my judgment he lodged in that court (Beaman v Bond [2014] FCA 803). Neither stay was successful and ultimately the appeal did not proceed. The first respondent then took further proceedings pursuant to the BA.

37On 5 June 2014 the first respondent became bankrupt pursuant to a debtor’s petition accepted by the Official Receiver and appointed Mr Daniel Peter Juratowitch as the trustee in bankruptcy.

38I made further orders in this Court on 10 June 2015 which transferred funds that had originally been held by the second respondents to Mr Juratowitch.

39On 17 June 2014 the applicant made an application pursuant to ss 30, 32 and 153B of the BA, in the Federal Circuit Court of Australia. The orders sought were, inter alia, to annul the first respondent’s bankruptcy.

40I do not consider it appropriate to now involve the second respondents in any payment of the applicant’s costs.

Orders

1The First Respondent, CRAIG DAVID BOND, shall pay the costs of the Applicant, DIANNE ELIZABETH BEAMAN, of these proceedings, both in the Federal Court of Australia and in the Family Court of Western Australia, in accordance with sch 3 of the Federal Court Rules 2011 (Cth).

2In default of agreement by the applicant and the first respondent as to the amount of the costs referred to in paragraph 1 above, such costs shall be assessed by a Registrar of the Family Court of Western Australia.

3There be liberty to apply with respect to the implementation of these orders.

I certify that the preceding [40] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate