Commonwealth Bank of Australia trading as Bankwest v Mastronardo

[2021] FedCFamC2G 71

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Commonwealth Bank of Australia trading as Bankwest v Mastronardo [2021] FedCFamC2G 71

File number(s):

SYG 59 of 2020

Judgment of:

JUDGE MANOUSARIDIS

Date of judgment:

24 September 2021

Catchwords:

COSTS – application by supporting creditors that their costs be paid out of the bankrupt estate of the respondent – whether Court has power to make such order – Court has power but not appropriate to so order.

Legislation:

Bankruptcy Act 1966 (Cth) s 49

Federal Circuit and Family Court of Australia Act 2021 (Cth) s 214(2)

Federal Court of Australia Act 1976 (Cth) s 43

Cases cited:

Commonwealth Bank of Australia trading as Bankwest v Mastronardo [2020] FCCA 2614

Deputy Commissioner of Taxation v Platinum Builders Pty Ltd [2008] FCA 202

Division:

Division 2 General Federal Law

Number of paragraphs:

6

Date of hearing:

1 October 2020

Place:

Sydney

Solicitor for the Applicant:

Ms O Newman of Norton Rose Fulbright Australia, by telephone

First Supporting Creditor, Mills Oakley Lawyers (A Partnership):

Mr C Moloney of Davies Moloney, by telephone

Second Supporting Creditor, Alistair Woodward Little and Others trading as Tresscox:

No appearance by, or on behalf of, the second supporting creditor

Third Supporting Creditor, Urbis Pty Ltd:

Ms J Fulton of Clear View Lawyers, by telephone

The Respondent:

No appearance by, or on behalf of, the respondent

ORDERS

SYG 59 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

IN THE MATTER OF CARMELO ADRIANO MASTRONARDO

BETWEEN:

COMMONWEALTH BANK OF AUSTRALIA ACN 123 123 124 TRADING AS BANKWEST

Applicant

AND:

CARMELO ADRIANO MASTRONARDO

Respondent

ORDER MADE BY:	JUDGE MANOUSARIDIS
DATE OF ORDER:	24 SEPTEMBER 2021

THE COURT ORDERS THAT:

1.The applications by the first and third supporting creditors that their costs be paid out of the bankrupt estate of the respondent are dismissed.

THE COURT NOTES THAT:

2.This order is an order of the Federal Circuit and Family Court of Australia (Division 2).

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

1. On 23 September 2020 I made a sequestration order against the estate of Mr Carmelo Adriano Mastronardo.[1] On 1 October 2020 the first and third supporting creditors applied for an order for costs.

   [1] Commonwealth Bank of Australia trading as Bankwest v Mastronardo [2020] FCCA 2614

2. The first and third supporting creditors each filed a notice of their interest as supporting creditor, and they mentioned their appearance at the commencement of the hearing of the creditor’s petition on 19 June 2020, after which they were excused from participating in the hearing until judgment was delivered. The lawyer for the first supporting creditor also appeared at the directions hearings of 23 April 2020 and 2 June 2020.

3. Neither the first nor the third supporting creditors refer to any authorities in which a court has ordered costs in favour of a supporting creditor in similar circumstances. Nor have the first or third supporting creditors referred to any authorities which consider whether a court has power to order costs in favour of a supporting creditor.

4. My own research has led me to the judgment of Jacobson J in Deputy Commissioner of Taxation v Platinum Builders Pty Ltd [2008] FCA 202. In that case a creditor (first creditor) had filed a winding up application in the Supreme Court of New South Wales (SCNSW) two days before another creditor (second creditor) had filed a winding up application in the Federal Court of Australia (FCA) against the same company. The second creditor did not have, and could not reasonably have obtained, notice of the SCNSW proceeding at the time the second creditor commenced the FCA proceeding. The second creditor’s application came on for hearing in the FCA before the first creditor’s application was due to come for hearing before the SCNSW. When the second creditor’s matter came before the FCA the first creditor applied to be named supporting creditor, and applied for an order that the costs it incurred in both the FCA and the SCNSW proceedings be paid out of the assets of the company. Jacobson J held the FCA had power under s 43 of the Federal Court of Australia Act 1976 (Cth) to make an order that the first creditor’s costs be paid out of the assets of the company; and his Honour made an order to that effect.

5. I am satisfied this Court has power under s 214(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act) to make an order that the costs of a supporting creditor be paid out of a bankrupt estate. I am not satisfied, however, that it is appropriate I order that the costs of the first and third supporting creditors’ costs be paid out of the bankrupt estate of Mr Mastronardo. The first and third supporting creditors were entitled to notify their interest as supporting creditors, and they did so. That by itself, however, does not justify a costs order in their favour. They notified their interests as supporting creditors to ensure they would receive notice if the circumstances referred to in s 49 of the Bankruptcy Act 1966 (Cth) would occur. Those circumstances did not arise. The first and third supporting creditors played no part in the proceeding that led to the making of the sequestration order against the estate of Mr Mastronardo.

6. I will dismiss the first and third supporting creditors’ applications for costs. I will also note that the order I propose to make is an order of the Federal Circuit and Family Court of Australia (Division 2). That is necessary because the seal of this Court that will be affixed to the order I propose to make only includes the words “Federal Circuit and Family Court of Australia”. The FCFCOA Act, however, does not constitute any court by the name of the “Federal Circuit and Family Court of Australia”.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Judge Manousaridis.

Associate:

Dated:       24 September 2021