Culleton v Macquarie Leasing Pty Ltd (No 2)

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FEDERAL COURT OF AUSTRALIA

Culleton v Macquarie Leasing Pty Ltd (No 2) [2015] FCA 1478

Citation: Culleton v Macquarie Leasing Pty Ltd (No 2) [2015] FCA 1478
Appeal from: Macquarie Leasing Pty Limited v Culleton [2014] FCCA 1714
Parties: RODNEY NORMAN CULLETON v MACQUARIE LEASING PTY LIMITED (ACN 002 674 982)
File number: NSD 1220 of 2014
Judge: PERRY J
Date of judgment: 21 December 2015
Catchwords: COSTS – where appeal allowed by consent following the appellant effectively recasting the appeal – whether costs order in the Court below should be set aside – whether previous costs order made with summary judgment should be set aside – whether the appellant should be awarded his costs of the appeal – where appellant successful – where appellant’s conduct in the Court below was not suggestive of compliance with r 1.03(4) of the Federal Court Rules 2001 (Cth) – where grounds of appeal were not advanced in the Court below – where respondent conceded at first available opportunity once appraised of appellant’s new case
Legislation: Bankruptcy Act1966 (Cth) s 43
Bankruptcy Regulations 1996 (Cth) reg 16.01
Federal Circuit Court Rules 2001 (Cth) r 16.05
Federal Court of Australia Act 1976 (Cth) s 25(2B)(bb)
Federal Court Rules 2011 (Cth) r 1.03, 36.01
Cases cited: Cachia v Hanes (1994) 179 CLR 403
Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261
Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750
Hughes v Western Australian Cricket Association (Inc.) (1986) ATPR 40-748
Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229
Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450
Summers v Repatriation Commission (No 2) [2015] FCAFC 64
Date of hearing: 15 December 2015
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 55
Counsel for the Appellant: Mr N Kidd SC
Solicitor for the Appellant: Levitt Robinson Solicitors
Counsel for the Respondent: Ms E Glover
Solicitor for the Respondent: Douros Jackson Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1220 of 2014
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN:

RODNEY NORMAN CULLETON
Appellant
AND:

MACQUARIE LEASING PTY LIMITED (ACN 002 674 982)
Respondent

JUDGE:

PERRY J

DATE OF ORDER:

21 DECEMBER 2015

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Order 2 of the orders made by the Federal Circuit Court on 31 October 2014 is set aside.

2.There be no order as to costs in relation to the dismissal of the Creditor’s Petition in Federal Circuit Court proceedings number SYG 3241 of 2013.

3.Insofar as the order made on 9 March 2015 awarded costs of the appeal to the respondent up to and including that date, that order is confirmed.

4.The appellant is to pay the respondent’s costs of and incidental to the appeal as agreed or assessed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE…

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Details
Case
[2015] FCA 1478
Decision Date

CaseChat Overview and Summary

In the case of Culleton v Macquarie Leasing Pty Ltd (No 2), the appellant, Mr Culleton, appealed against the decision of the Federal Circuit Court which had granted a sequestration order to the respondent, Macquarie Leasing. The primary issue before the court was whether the costs order made in the Court below should be set aside and if the appellant should be awarded his costs of the appeal. The court also considered whether the previous costs order made with the summary judgment should be set aside.

The court examined the principles of awarding costs, which include that a successful party is generally entitled to its costs unless there are special circumstances justifying some other order. The court found that Mr Culleton's conduct in the Court below did not suggest compliance with the relevant rule and that the grounds of appeal were not advanced in the Court below. However, once Macquarie was appraised of Mr Culleton's new case, it conceded at the first available opportunity. The court concluded that the costs order made by the Federal Circuit Court should be set aside, and there should be no order as to costs in relation to the dismissal of the Petition. The order as to costs made on 9 March 2015 should be confirmed, and the appellant should be required to pay the respondent's costs of the appeal from 10 March 2015.

The court's decision was based on the principles of awarding costs and the conduct of the parties in the proceedings. The court found that while Mr Culleton was successful in his appeal, his conduct in the Court below did not warrant an award of costs to him. The court also noted that Macquarie had conceded at the first available opportunity once it was aware of Mr Culleton's new case. The final orders of the court were to set aside the costs order made by the Federal Circuit Court, confirm the order as to costs made on 9 March 2015, and require Mr Culleton to pay the respondent's costs of the appeal from 10 March 2015.

Orders

Orders of the court

1. Order 2 of the orders made by the Federal Circuit Court on 31 October 2014 is set aside.

2. There be no order as to costs in relation to the dismissal of the Creditor’s Petition in Federal Circuit Court proceedings number SYG 3241 of 2013.

3. Insofar as the order made on 9 March 2015 awarded costs of the appeal to the respondent up to and including that date, that order is confirmed.

4. The appellant is to pay the respondent’s costs of and incidental to the appeal as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

An application by Macquarie for indemnity costs of the appeal was ultimately not pressed.2. BACKGROUND2.1 The decision of Federal Circuit Court By a creditor’s petition filed on 23 December 2013 (the Petition), Macquarie applied for a sequestration order under s 43 of the Bankruptcy Act1966 (Cth) against the estate of Mr Culleton. The Petition alleged that Mr Culleton owed Macquarie the amount of $96,738.50. The debt comprised the sum of $94,304.66, being that amount of the judgment of the District Court of Western Australia entered in default on 8 March 2013 for breach of a Chattel Mortgage Agreement, together with interest. Mr Culleton opposed the Petition by way of a Notice of Grounds of Opposition to the Petition filed on 18 June 2014. The hearing of the Petition was adjourned five times, once on the application of Macquarie and otherwise on the application of Mr Culleton so that he could file further evidence and a Notice of Grounds of Opposition to the Petition. Despite Mr Culleton’s applications for adjournments being granted on 29 April 2014, 13 May 2014, 10 June 2014 and 24 June 2015, he did not then appear at the hearing of the Petition on 14 July 2014, and the sequestration order was made in his absence. Later that day the sequestration order was set aside pursuant to r 16.05 of the Federal Circuit Court Rules 2001 (Cth) (FCC Rules) and listed again for hearing the following day. The Petition and Notice of Grounds of Opposition to the Petition ultimately proceeded before the primary judge on 15 July 2014 and, in relation to Mr Culleton’s application for leave to re-open, on 17 September 2014. While the appellant had been legally represented for most stages of the proceedings in the Court below, he represented himself at both hearings (reasons of the Court below at [9]). Neither party sought to cross-examine the others’ witnesses (reasons of the Court below at [10]). In his reasons, the primary judge set out matters of background described by his Honour as “uncontentious” (at [4]):5.On 19 August 2013, the Official Receiver issued a Bankruptcy Notice in respect of the said debt, addressed to [Mr Culleton].6.On 5 October 2013, the said Bankruptcy Notice was placed in a sealed envelope addressed to [Mr Culleton], and left affixed to padlocked gates at 329 (Lot 13061) McKenzie Road, Williams in the State of Western Australia. This matter was not put in contention by [Mr Culleton]. He maintained, however, that he did not receive it.7.If service was effected in accordance with the relevant legislation, [Mr Culleton] committed an act of bankruptcy by failing to comply with the said Notice on or before 28 October 2013. The question at trial was whether the bankruptcy notice was served on Mr Culleton at his “last-known address” for the purposes of reg 16.01(1)(c) of the Bankruptcy Regulations 1996 (Cth) (Bankruptcy Regulations). Regulation 16.01(1) of the Bankruptcy Regulations provides relevantly that a document required to be served on a person “may be … (c) left, in an envelope or similar packaging marked with the person's name, at the last-known address of the person”.By reg 16.01(2), a document served on a person in accordance with reg 16.01(1)(c) is, “in the absence of proof to the contrary”, taken to have been received by, or served on, the person when, relevantly, “the document is left”.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Finally, it is true that certain aspects of preparation of the appeal were not rendered otiose by reason of the recasting of the appeal, such as preparation of the appeal book. Nonetheless, in the event, the appellant’s first written submissions on the appeal dated 25 May 2015 were (very properly) not pressed by the appellant, which I understand also to be the appellant’s position with respect to his written submissions in reply dated 21 August 2015. Furthermore, it will be recalled that the appellant advised the respondent on 27 October 2015 that he no longer sought to rely upon the five affidavits served on 23 October 2015 but on a further affidavit. In short, the work undertaken by Macquarie in preparing for the appeal on the basis of the first notice of appeal and submissions and evidence filed was in large part wasted up to the date of the hearing. The conduct by the appellant of his case in raising these issues only at the hearing of the application to set aside summary judgment on the appeal and the appeal on 28 October 2015 is difficult to reconcile with the obligations upon a party under s 37N of the FCA Act (see above at [44]). 4. CONCLUSION For these reasons:(1)order 2 of the orders made by the Federal Circuit Court on 31 October 2014 awarding the respondent its costs should be set aside;(2)there should be no order as to costs in relation to the dismissal of the Petition in Federal Circuit Court proceedings number SYG 3241 of 2013;(3)the order as to costs made on 9 March 2015 should be confirmed; and(4)the appellant should be required to pay the respondent’s costs of the appeal from 10 March 2015.

Ratio Decidendi

Legal Principle Established

On 2 November 2015, the appellant filed and served a draft amended notice of appeal, an affidavit sworn by the appellant’s solicitor and further written submissions. Subsequently, the parties were able to reach agreement on the consent orders set out at [3] above. 3. CONSIDERATION3.1 Relevant principles The Court has power to award costs in all proceedings under s 43 of the FCA Act. That discretion includes power to order the parties to bear costs in specified proportions, and to award costs in favour of or against a party whether or not the party is successful in the proceeding (s 43(3)(c) and (e) respectively). The discretion to award costs must be exercised judicially and in a manner that relates to the particular litigation: Summers v Repatriation Commission (No 2) [2015] FCAFC 64 at [13]-[14] (Kenny, Murphy and Beach JJ). Importantly, it must be borne in mind that costs are compensatory in nature and not punitive: Hockey v Fairfax Media Publications Pty Limited (No 2) [2015] FCA 750 at [37] (White J). While the question of costs is a matter for the Court’s discretion, the general rule is that a successful party is entitled to its costs: Ruddock v Vadarlis (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at 234-235 [11] (Black CJ and French J); Scott v Secretary, Department of Social Security (No 2) [2000] FCA 1450 at [2] (Beaumont and French JJ). In Hughes v Western Australian Cricket Association (Inc.) (1986) ATPR 40-748 at 48,136, Toohey J observed that the discretion must be exercised judicially and identified three principles as to the exercise of the discretion evident from the authorities: 1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v. Godfrey (1920) 2 K.B. 47.2. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v. Farquhar (1893) 1 Q.B. 564.3. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them. In this sense, “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v. Lombardi (1975) 13 S.A.S.R. 4 at p. 12. However, as the Full Court (Gummow, French and Hill JJ) said in Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272:Generally speaking, and notwithstanding the considerations referred to by Toohey J and the other authorities mentioned above, the demands of the community for greater economy and efficiency in the conduct of litigation may properly be reflected in a qualification of the presumption that a successful party is entitled to all its costs. In Commissioner of Australian Federal Police v Razzi (No 2) (1991) 101 ALR 425 at 430, Wilcox J, after referring to the importance of the general principle enunciated by Toohey J, said:But I do not think that courts should be reluctant to recognise the existence of exceptional cases. In these days of extensive court delays and high legal costs the courts should use all proper means to encourage parties to consider carefully what matters they will put in issue in their litigation. If parties come to realise that they will not necessarily recover the whole of their costs, even though they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take.3.2 Costs in the Court below