Black v Mills (No.3) - [2017] FCCA 380

FEDERAL CIRCUIT COURT OF AUSTRALIA

BLACK v MILLS (No.3)

[2017] FCCA 380

Catchwords:
COSTS – Creditor’s petition dismissed by consent after creditor recovered by garnishee process judgment the subject of the creditor’s petition – creditor applies for an order for costs – whether debtor acted unreasonably in contesting creditor’s petition – whether creditor was bound to obtain sequestration order – application for costs dismissed.

Legislation:

Legal Profession Act 2004 (Cth), ss.352(1), 357(1), 367(1), 368(1), 368(5), 372
Legal Profession Uniform Law Application Act 2014 (Cth), s.167(a)

Cases cited:

Black v Mills (No.2) [2015] FCCA 1973
Burrell Solicitors Pty Ltd & Anor v Reavill Farm Pty Ltd & Ors [2016] NSWSC 303
Re Mark Lazarus (1940) 11 ABC 249

Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6;

(1997) 186 CLR 622

Applicant:

RICHARD BLACK

Respondent:

BERNADETTE MILLS

File Number:

SYG 3051 of 2014

Judgment of:

Judge Manousaridis

Hearing date:

17 February 2016

Delivered at:

Sydney

Delivered on:

3 March 2017

REPRESENTATION

Counsel for the Applicant:

Mr C K Stewart

Solicitors for the Applicant:

Richard Black and Associates

The respondent appeared in person

ORDERS

The applicant’s application for costs is dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 3051 of 2014

RICHARD BLACK

Applicant

And

BERNADETTE MILLS

Respondent

REASONS FOR JUDGMENT

Introduction

On 13 October 2015 I made an order that the creditor’s petition be dismissed. I made that order by consent after the creditor, Mr Black, satisfied by garnishee process the Local Court judgment on which the creditor’s petition was founded (Judgment). In these reasons for judgment, I consider Mr Black’s application that the respondent, Ms Mills, pay Mr Black’s costs.
These reasons should be read with my reasons for judgment in Black v Mills (No.2) (previous reasons).[1] I there concluded Ms Mills had reasonable prospects of successfully resisting the creditor’s petition. In particular, I concluded Ms Mills had reasonably arguable prospects of establishing she is solvent; and of establishing there are substantial reasons for questioning whether, behind the Judgment, there is in truth and reality a debt due to Mr Black. The basis of my second conclusion were my findings that:
a)part of the Judgment represented fees for work Mr Carr, and not Mr Black, had carried out;[2]
b)there were reasonable grounds for arguing Ms Mills did not assent to Mr Black acting for her; [3] and
c)assuming Ms Mills impliedly assented to Mr Black’s acting for her, it was reasonably arguable Ms Mills agreed that Mr Black do so, not on his own account, but as a solicitor in the practice of Forshaws Neill Solicitors, a practice that was vested in Mr Carr’s trustee in bankruptcy.[4]
[1] [2015] FCCA 1973
[2] [2015] FCCA 1973 at [39]-[41]
[3] [2015] FCCA 1973 at [42]
[4] [2015] FCCA 1973 at [43]-[44]

Principles

Mr Black applies for an order for costs in circumstances where the Court has not determined the merits of the creditor’s petition. The principles that should guide the Court’s…

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.

Continue reading Black v Mills (No.3)

Details

AGLC: Black v Mills (No.3) [2017] FCCA 380
Case: [2017] FCCA 380
Decision Date: 3 March 2017

CaseChat Overview and Summary

In *Black v Mills (No.3)*, the Federal Circuit Court of Australia considered an application by Mr Black for an order that Ms Mills pay his costs. This application arose after Mr Black's creditor's petition against Ms Mills was dismissed by consent on 13 October 2015, following Mr Black satisfying a Local Court judgment through garnishee process. The court's decision on costs was to be read in conjunction with previous reasons where it was concluded that Ms Mills had reasonable prospects of successfully resisting the petition, including arguments regarding her solvency and substantial reasons to question the existence of a debt due to Mr Black.

The primary legal issue before the court was whether to exercise its discretion to award costs to Mr Black, despite the creditor's petition not being determined on its merits. The court was required to consider the principles governing costs orders in circumstances where a matter is resolved by consent or withdrawal before a hearing on the merits, drawing guidance from established case law.

The court applied the principles articulated by McHugh J in *Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin*, which states that while success on the merits typically dictates costs orders, a court may still award costs when there has been no hearing on the merits if one party has acted unreasonably. In this instance, the court noted that it could not try a hypothetical action and that parties who avoid litigation through settlement or extra-curial action should not be burdened with the costs of a litigated action. However, the court retained the ability to award costs if it could conclude that one party's conduct was so unreasonable as to warrant such an order.

The court ultimately dismissed Mr Black's application for costs. It found that the dismissal of the creditor's petition by consent, following the satisfaction of the judgment debt, meant that the merits of the petition were not determined. Applying the principles from *Lai Qin*, the court concluded that it was not appropriate to make a costs order in these circumstances, as there was no finding of unreasonable conduct by Ms Mills that would justify departing from the general rule that costs follow the event, or in this case, the absence of a determination on the merits.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 13 October 2015 I made an order that the creditor’s petition be dismissed. I made that order by consent after the creditor, Mr Black, satisfied by garnishee process the Local Court judgment on which the creditor’s petition was founded (Judgment). In these reasons for judgment, I consider Mr Black’s application that the respondent, Ms Mills, pay Mr Black’s costs. These reasons should be read with my reasons for judgment in Black v Mills (No.2) (previous reasons).[1] I there concluded Ms Mills had reasonable prospects of successfully resisting the creditor’s petition. In particular, I concluded Ms Mills had reasonably arguable prospects of establishing she is solvent; and of establishing there are substantial reasons for questioning whether, behind the Judgment, there is in truth and reality a debt due to Mr Black. The basis of my second conclusion were my findings that:a)part of the Judgment represented fees for work Mr Carr, and not Mr Black, had carried out;[2] b)there were reasonable grounds for arguing Ms Mills did not assent to Mr Black acting for her; [3] andc)assuming Ms Mills impliedly assented to Mr Black’s acting for her, it was reasonably arguable Ms Mills agreed that Mr Black do so, not on his own account, but as a solicitor in the practice of Forshaws Neill Solicitors, a practice that was vested in Mr Carr’s trustee in bankruptcy.[4][1] [2015] FCCA 1973[2] [2015] FCCA 1973 at [39]-[41][3] [2015] FCCA 1973 at [42][4] [2015] FCCA 1973 at [43]-[44] Mr Black applies for an order for costs in circumstances where the Court has not determined the merits of the creditor’s petition. The principles that should guide the Court’s discretion in deciding whether to order costs in these circumstances, therefore, are those that were stated by McHugh J in Re Minister for Immigration & Ethnic Affairs; Ex Parte Lai Qin.[5] [5] [1997] HCA 6; (1997) 186 CLR 622 (Qin) In Qin the applicant applied to set aside a decision of the Refugee Review Tribunal that affirmed a decision not to grant the applicant a protection visa; but she withdrew her application after the Minister for Immigration and Ethnic Affairs decided to grant the applicant a protection visa. The applicant applied for her costs. McHugh J said:[6]In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action…

Ratio Decidendi

Legal Principle Established

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