Boensch v Pascoe - [2008] FCA 412

FEDERAL COURT OF AUSTRALIA
Boensch v Pascoe [2008] FCA 412
COSTS - inquiry sought into trustee’s conduct – no inquiry ordered – trustee entitled to costs of defending application for an inquiry – no funds in bankrupt estate – whether costs should be paid from bankrupt estate or ordered separately against the bankrupt.
Bankruptcy Act 1966 (Cth) s 178, s 179
Federal Court of Australia Act 1976 (Cth) s 43
Boensch v Pascoe (2007) FCA 1977
Maxwell-Smith v Donnelly (2007) FCAFC 180
Maxwell‑Smith v Donnelly (2007) FCA 894
Pantzer v Wenkart (2006) 153 FCR 466
FRANZ BOENSCH v SCOTT DARREN PASCOE
NSD 2403 OF 2006
BUCHANAN J
27 MARCH 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 2403 OF 2006

BETWEEN:

FRANZ BOENSCH
Appellant

AND:

SCOTT DARREN PASCOE
Respondent

JUDGE:

BUCHANAN J

DATE OF ORDER:

27 MARCH 2008

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.Mr Pascoe’s costs of defending the primary proceedings assessed on a party/party basis, are to form part of the trustee’s costs of the administration of the bankrupt estate of Mr Boensch;

2.Mr Pascoe is to pay Mr Boensch’s costs of the costs application but only where funds are available in Mr Boensch’s bankrupt estate to meet the costs referred to in Order 1.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 2403 OF 2006

BETWEEN:

FRANZ BOENSCH
Appellant

AND:

SCOTT DARREN PASCOE
Respondent

JUDGE:

BUCHANAN J

DATE:

27 MARCH 2008

PLACE:

SYDNEY

REASONS FOR JUDGMENT
BUCHANAN J:

In the primary proceedings which I decided on 13 December 2007 (Boensch v Pascoe (2007) FCA 1977) Mr Boensch sought orders under ss 178 and 179 of the Bankruptcy Act 1966 (Cth) including an order that an inquiry be ordered into the conduct of Mr Pascoe as the trustee of his bankrupt estate. In the earlier judgment I dismissed all his claims. Mr Pascoe now seeks his costs of defending the proceedings on a party/party basis. The award of costs is in the discretion of the Court - see s 43 of the Federal Court of Australia Act 1976 (Cth). The discretion must be exercised judicially but normally costs follow the event. There is no reason why Mr Pascoe should not have an order for his costs in this case. Mr Boensch did not suggest otherwise.
The only question is whether Mr Pascoe’s costs of defending the proceedings should be part of the costs of administering Mr Boensch’s bankrupt estate or should be met in some other way. As I understand the submissions made for Mr Pascoe, it is argued that I should make an order for costs directly against Mr Boensch. Mr Boensch argued that any costs should be paid from his bankrupt estate. It appears that there are no funds at present in the estate, although Mr Pascoe is continuing to pursue steps which I referred to in…

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 Boensch v Pascoe

Details

AGLC: Boensch v Pascoe [2008] FCA 412
Case: [2008] FCA 412
Decision Date: 27 March 2008

CaseChat Overview and Summary

In the case of Boensch v Pascoe, the primary dispute before the court was related to the costs associated with a legal proceeding and the administration of a bankrupt estate. The case was heard in the Federal Circuit Court of Australia. Mr Boensch, the bankrupt, sought to recover costs from Mr Pascoe, which were incurred in the primary proceedings and a subsequent application for costs. The central legal issue before the court was whether Mr Pascoe should be liable for Mr Boensch's costs in the primary proceedings, and if so, under what conditions.

The court examined the provisions of the Bankruptcy Act 1966 and relevant case law to determine the appropriate course of action regarding the costs. It was noted that Mr Pascoe had successfully defended the primary proceedings, and his costs had been assessed. The court was required to consider whether these costs should be incorporated into the costs of administering the bankrupt estate, and if so, under what circumstances. Additionally, the court needed to decide if Mr Pascoe should bear the costs of the costs application, and if so, whether this should be contingent upon the availability of funds in Mr Boensch's estate.

In its reasoning, the court held that Mr Pascoe's costs of defending the primary proceedings should indeed form part of the trustee's costs of the administration of Mr Boensch's bankrupt estate. The court found that these costs could be considered as part of the general costs of administration, which are payable by the bankrupt's estate. However, the court ruled that Mr Pascoe should only pay Mr Boensch's costs of the costs application if funds were available in Mr Boensch's estate to meet those costs. This decision was based on the principle that the costs of litigation should not unduly burden a party if there are no available funds to cover them.

Orders

Orders of the court

1. Mr Pascoe’s costs of defending the primary proceedings assessed on a party/party basis, are to form part of the trustee’s costs of the administration of the bankrupt estate of Mr Boensch;

2. Mr Pascoe is to pay Mr Boensch’s costs of the costs application but only where funds are available in Mr Boensch’s bankrupt estate to meet the costs referred to in Order 1.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

BUCHANAN J

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Ratio Decidendi

Legal Principle Established

Established by: BUCHANAN J

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2403 OF 2006

BETWEEN:	FRANZ BOENSCH Appellant
AND:	SCOTT DARREN PASCOE Respondent

JUDGE:	BUCHANAN J
DATE OF ORDER:	27 MARCH 2008
WHERE MADE:	SYDNEY

JUDGE:	BUCHANAN J
DATE:	27 MARCH 2008
PLACE:	SYDNEY