Bufalo v Official Trustee in Bankruptcy
[2008] FMCA 206
•28 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BUFALO v OFFICIAL TRUSTEE IN BANKRUPTCY & ORS | [2008] FMCA 206 |
| COSTS – BANKRUPTCY – Unsuccessful application under s.178 of Bankruptcy Act1966 – successful first respondent entitled to costs – parties who sought to be joined unsuccessful (second & third respondents) – prolongation of hearing by joined parties – joined parties to bear the costs incurred by the unsuccessful applicant and the successful first respondent attributable to joined parties involvement – request that unsuccessful applicant pay the costs of the joined parties refused – joined parties to pay their own costs as joinder unnecessary and prolonged the hearing of the justiciable issue – relatively simple matter compounded by joined parties pursuing unnecessarily their own interests – joined parties to pay the costs awarded against them directly to first respondent with balance to be paid by applicant. |
Federal Magistrates Court Rules 2001, Rule 21.15
Federal Court Rules, Order 62
Bankruptcy Act 1966, s.178
| Applicant: | GIOVANNI BUFALO |
| Respondent: Second Respondent: Third Respondent: | THE OFFICIAL TRUSTEE IN BANKRUPTCY PRIMELIFE CORPORATION LTD EDUARD CHRISTIAAN SENT |
| File Number: | MLG 154 of 2007 |
| Judgment of: | O’Dwyer FM |
| Hearing date: | 14 February 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 28 February 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Bergland QC |
| Solicitors for the Applicant: | Hunts Lawyers |
| Counsel for the Respondent: | Ms Oana |
| Solicitors for the Respondent: Counsel for the second and | Aitken Walker & Strachan Mr Marzella |
Solicitors for the second and
third Respondents: Russell Kennedy, Solicitors
ORDERS
The applicant pay the first respondent’s costs of and incidental to the proceeding (including all reserved costs), save for:
(i)two-thirds of the costs of and incidental to the hearing; and
(ii)the costs of and incidental to the joinder of the second and third respondents.
The second and third respondents pay the first respondent’s costs of and incidental to their application to be joined to the proceeding and two-thirds of the first respondent’s costs of and incidental to the hearing.
The second and third respondents pay the applicant’s costs of and incidental to their application to be joined to the proceeding and two-thirds of the applicant’s costs of and incidental to the hearing.
The Court certifies under Rule 21.15 of the Federal Magistrates Court Rules 2001 that it was reasonable for the first respondent to employ an advocate (in addition to a solicitor) to appear for it in the proceeding
The Court certifies under Rule 21.15 of the Federal Magistrates Court Rules 2001 that it was reasonable for the applicant to employ two advocates, being Senior and Junior Counsel (in addition to a solicitor) to appear for him in the proceeding.
The costs to be paid in accordance with this order be calculated on the Federal Court Scale in accordance with Order 62 of the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 154 of 2007
| GIOVANNI BUFALO |
Applicant
And
| THE OFFICIAL TRUSTEE IN BANKRUPTCY |
Respondent
And
PRIMELIFE CORPORATION LIMITED
Second Respondent
And
EDUARD CHRISTIAAN SENT
Third Respondent
REASONS FOR JUDGMENT
Introduction
This proceeding comes to me on an application in respect of costs as between the parties to a hearing that took place before me over three days from 13 August 2007 to 15 August 2007 inclusive. There are also reserved costs in interlocutory proceedings leading up to the hearing.
The proceeding related to an application under s.178 of the Bankruptcy Act 1966 where the applicant sought the first respondent (the trustee) assign to him choses-in-action arising out of Supreme Court proceedings that were on foot at the time of the applicant's bankruptcy. The second and third respondents (the respondents) sought to be joined to the proceeding because of their manifest interest in the outcome.
The joinder of the respondents was unsuccessfully resisted by the applicant.
The applicant was unsuccessful in his application for an assignment.
The trustee now seeks its costs.
Neither the applicant, nor the respondents, can sensibly - nor do they - resist an order that the trustee's costs be paid.
However, there are issues as between the applicant and the respondents as to how those costs ought to be paid, and there is also an issue between the applicant and the respondents as to costs payable between them.
Costs arising out of the joinder of the respondents
The respondents sought to be joined to the proceeding because of their manifest interest in its outcome. They were competitors with the applicant for the assignment of the choses-in-action and also would have been put to disadvantage should the applicant have been successful in acquiring an assignment.
At the hearing the respondents were supportive of the trustee's position but, in pursuit of their own interests, went a great deal further. Principally, the respondents argued that the choses-in-action sought to be assigned were hopeless for various reasons as set out in the judgment. The carriage of the proceeding at the hearing was principally done by the respondents in pursuit of the assertion of hopelessness. Their contentions in this regard proved unsuccessful.
It is not unfair to say that in pursuit of the principal interests of the respondents the proceeding took, in my view, two days more than it needed. The position of the trustee was clear and the justiciable issue between the parties was narrow. The involvement of the respondents, in my view, unnecessarily expanded the issues and prolonged the hearing.
The respondents joined the proceeding, in circumstances where it was not necessary, in order to prosecute their own interests. As a consequence they should bear the costs themselves of their own joinder. It was an expense and an involvement the respondents assessed as being necessary in their own interests, and they should carry the burden of the costs associated with it. Any argument that the applicant should bear their costs associated with the resisted application to join, in my view, is without substance.
Time taken on first day of hearing
The respondents submit that the first day of the hearing was wasted over the issues arising from the applicant’s notice to produce; which notice was set aside. Whilst there is some merit in this, the reality was that the respondents sought to be joined in circumstances that ultimately proved unjustified. Their involvement caused an unnecessary prolongation of the hearing. I am not persuaded that I should make any adjustment in my assessment because the first day was occupied by argument between the applicant and the respondents on the merit of the notice.
What proportion of trustee’s costs should be met by the respondents
As indicated, it is my strong view that two days of the hearing were unnecessarily taken up by the prosecution, and response to that prosecution, of the respondents' allegations concerning the hopelessness of the choses-in-action. The respondents, therefore, should bear the trustee’s costs to the extent of two-thirds of the costs associated with and incidental to the actual hearing.
In addition, the respondents should pay the trustee’s costs of and incidental to the respondents’ application to be joined, such as they might be.
Costs as between the applicant and the respondents
It follows from my earlier assessment of the justification for the involvement of the respondents, that the applicant should not bear any of the costs associated with or incidental to the interlocutory proceedings concerning the joinder of the respondents. For their own reasons, the respondents chose to pursue what they thought was in their best interest in circumstances where it was unnecessary. The determination of the justiciable issue could have been done without the respondents’ involvement. There should be no order, in those circumstances, in favour of the respondents for costs against the applicant.
In the same vain, the applicant also incurred costs unnecessarily because of the respondents’ involvement. The respondents should pay the costs of the applicant to that degree.
Conclusion
The involvement of the respondents in this proceeding was unnecessary, prolonged the hearing and ultimately proved to be of no value; save for a determination that the proceedings were not hopeless as alleged – a finding that goes against the general contention of the respondents; which contention they argued justified their involvement in the proceeding. In that regard they were proved wrong and to that extent the costs follow the event. That is to say, they bear their own costs and should pay all costs associated with the joinder proceedings, including the applicant’s and the trustee’s, and two-thirds of the costs of the applicant and trustee in relation to the hearing.
The applicant should pay the trustee’s costs of and incidental to the proceeding, save for those properly payable by the respondents as set out above.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of O’Dwyer FM
Associate: Gail Car
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