D'Souza v Pattison - [2007] FMCA 116

FEDERAL MAGISTRATES COURT OF AUSTRALIA

D'SOUZA v PATTISON

[2007] FMCA 116

BANKRUPTCY – Application to remove Trustee.

PRACTICE AND PROCEDURE – Application to withdraw or discontinue – whether appropriate to dismiss rather than grant leave to withdraw or discontinue – costs – whether indemnity – nature of allegations – whether ‘high-handed approach’.

Federal Magistrates Court Rules 2001, r.13.10

Australian Guarantee Corporation Ltd v De Jager; De Jager v Registrar of Titles (1984) VR 483
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 397
PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24

Applicant:

RUSSELL D'SOUZA

Respondent:

PAUL PATTISON

File number:

MLG 1552 of 2006

Judgment of:

McInnis FM

Hearing date:

7 February 2007

Delivered at:

Melbourne

Delivered on:

7 February 2007

REPRESENTATION

Solicitor for the Applicant:

Mr S. Mansour

Solicitors for the Applicant:

Voitin Lawyers

Counsel for the Respondent:

Mr G.T. Bigmore QC

Solicitors for the Respondent:

Lander & Rogers

ORDERS

The Application be dismissed.
The Applicant pay the Respondent's costs of and incidental to the application, including reserved costs if any, to be taxed in default of agreement pursuant to the Federal Court Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1552 of 2006

RUSSELL D'SOUZA

Applicant

And

PAUL PATTISON

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

This application, which is listed this day for final hearing, has resulted in an application being made by solicitors for and on behalf of the Applicant to be granted either leave to withdraw or discontinue the application. The application itself is a significant application in that it seeks an order, amongst others, that the Respondent as Trustee of the Applicant's bankrupt estate be removed.
The affidavit material previously filed and relied upon by the Applicant raises significant issues and claims concerning the Trustee. It is not necessary for me to recite in detail the claims set out in the affidavit material of the Applicant, save to note in passing that they do raise what could only be described as significant allegations. The allegations are strenuously contested and denied, and so much is evident from responding affidavit material relied upon by the Respondent.
Before the court this day, the Applicant's representative has indicated that he has instructions to seek to discontinue or withdraw the proceedings, and specifically indicated to the court, and I accept, that he has instructions not to lead evidence in support of this application.
The application for leave to withdraw or discontinue is opposed by Senior Counsel for the Respondent. It has been submitted by Counsel for the Respondent that in this instance, having regard to the fact that the Respondent is ready, willing and able to proceed with the case and has invited the court to accept that the affidavits at the very least be taken to be read and thereby be evidence in the case, in this instance, having regard to those matters and the seriousness of the allegations raised together with the nature of the application, it would be inappropriate for the court to grant the leave to withdraw or discontinue as sought by the Applicant.
The Court notes in passing that the Federal Magistrates Court Rules 2001 (the Rules) by Rule 13.01 provides for discontinuance, and that provision is part of the Rules which provide a process for ending a proceeding early. It is clear that if the Applicant were to discontinue this application then, applying Rule 13.01 in the absence of a notice of discontinuance having been filed at least 14 days before the day fixed for the final hearing of the application, the Applicant is required to seek the leave of the court.
There does not appear in the Rules to be a specific provision allowing for withdrawal, though I take withdrawal and discontinuance for present purposes to be effectively the same. The ultimate outcome of granting leave to withdraw or discontinue would be that the order if made, may then lead to further argument as to costs and would nevertheless enable the Applicant in the circumstances to consider, after the making of such an order, whether or not to simply recommence proceedings of a similar or identical type, relying upon similar or identical material in support.
It is submitted by Counsel for the Respondent that, having regard to the matters set out earlier in this judgment, it would therefore be inappropriate in the court's exercise of its discretion to grant leave to the Applicant to discontinue or withdraw, given that the prospect still remains that the Applicant may seek to commence further proceedings as I have indicated of an identical or similar nature, relying upon identical or similar material in support.
The Applicant's representative indicated from the bar table that the instructions which he has now received from the Applicant to seek leave to withdraw or discontinue appear to be based upon the current health of the Applicant, and specifically the psychological health.
It was noted during the course of submissions that the court does not have before it any affidavit material which specifically addresses the current capacity or otherwise of the Applicant to pursue the proceedings this day in this application in this court. Accordingly, whilst noting what has been asserted from the bar table, I am not prepared to accept that there is any or any adequate evidence upon which this court could rely which would explain the basis upon which the Applicant seeks to either withdraw or discontinue the proceedings.
It is true that evidence has previously been filed for and on behalf of the Applicant by way of affidavit from Dr Peter Farnbach, sworn

13 December 2006, which refers to consultations with the Applicant commencing in or around late 2003 on the basis that the Applicant suffers "from a major depressive disorder, and his financial difficulties are a significant contributor to this disorder". The affidavit material further refers to observations made of the Applicant by Dr Farnbach.
The affidavit does not refer to the current situation of the Applicant, who I note as a result of other proceedings dealt with by this court has in fact recently embarked on overseas travel. I refer to proceedings MLG 1629 of 2006. Counsel for the Respondent has invited the court to consider the travel of the Applicant as evidence of a capacity to at least travel, and by inference to attend this court.
I am further told from the bar table that a further application for travel within the next two or three weeks is contemplated by the Applicant. Again, to the extent that I do not have evidence on oath concerning that proposal, I do not at this stage consider it material upon which I can rely. I can however rely upon the past history of proposed travel which is evident in the file to which reference has been made.
In my view, the court clearly has a discretion in matters of this kind. As with any discretion, the discretion must be exercised judicially. It is relevant in my view, in exercising the discretion whether to grant leave to discontinue or withdraw, to take into account the nature of the claim before the court, the affidavit material relied upon in support of the claim by the Applicant, and the response by the Respondent.
It is also relevant to take into account that the indication given by the Applicant of a desire to seek to discontinue or withdraw was only recently provided to the court and, I infer, recently provided to the Respondent. Indeed, the court received notice of the intention of the Applicant on Monday of this week. It is also relevant in my view to take into account that the Respondent attends court and is ready, willing and able to proceed with the matter. The Respondent has invited the court to take into account the rebutting affidavit material filed and served on behalf of the Respondent.
Taking those matters into account it is my conclusion that in this instance, where the Respondent is ready, willing and able to proceed, and having regard to what I consider to be serious and significant allegations arising from the application more particularly referred to in the supporting affidavit material, it would not be appropriate to simply grant leave to the Applicant to withdraw or discontinue.
For the purpose of this hearing, noting that the Applicant's instructions are not to lead evidence, I am prepared to take as read the Respondent's affidavit material in reply as follows:
Affidavit of Paul Anthony Pattison sworn 1 February 2007
Affidavit of Malcolm Howell sworn 1 February 2007
Based upon that material, and having regard to my decision to refuse leave to withdraw or discontinue, it follows in my view that the appropriate order of the court is that the application be dismissed.
Having announced my decision in relation to the substantive application which resulted in an order that the application be dismissed, Counsel for the Respondent then submitted that in this instance it is appropriate that there be an order that the Applicant pay the Respondent's costs of and incidental to the application, including reserved costs if any, on an indemnity basis.
In support of that submission reference was made to the nature of the allegations in the affidavit material relied upon by the Applicant and what is described as the high-handed approach of the Applicant in commencing and pursuing the proceedings at least until this stage. Further reference was made to the application being what could be described as a weak application, although it was conceded that the application itself does not directly or indirectly raise allegations of forgery and/or fraud, though clearly at least partly the allegations raise what might be described as criminal or quasi-criminal conduct.
It was otherwise noted in the affidavit material to which reference was made in the submissions, that there at least appears to be a suggestion deposed to in the affidavit of the Respondent sworn 1 February 2007 that emails relied upon by the Applicant appear to have been inaccurate and/or appear to have been altered after being sent; and that that constitutes conduct of a kind which should enliven this court's discretion to make an indemnity costs order.
The Applicant's representative has helpfully referred to relevant authorities, which I note were also referred to by the Respondent namely, the leading decision of Australian Guarantee Corporation Ltd v De Jager; De Jager v Registrar of Titles (1984) VR 483 (De Jager). The circumstances of that case clearly involved issues of fraud and a forged instrument. Reference was made to the decision of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 397, where in that case His Honour relevantly dealt at p.401 with the expression "high-handed presumption" as follows:
“No doubt the expression “high-handed presumption” was appropriate in the case Tadgell J had to decide, and he needed to go no further; but in order to establish a convenient principle in such cases it is necessary to be a little more prosaic. I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.”
Further reference was made to the decision of the Supreme Court of Victoria Court of Appeal in the matter of PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24 (PCRZ) as follows:
“[31] I now turn to the appellant’s submission that his Honour erred in awarding solicitor and client costs in favour of the respondents.
[32] It is clear that a trial judge has, subject to acting judicially, a wide discretion to order that the costs of a successful party be paid at a level higher than party and party and an appellate court will be slow to interfere with the exercise of that discretion. Generally speaking, an error of principle must be shown in the way the discretion was exercised or some substantial injustice must be established in the result arrived at.
[33] The determination of what should be the appropriate costs order in a case obviously depends on the particular circumstances of it and, therefore, decisions in other cases on the issue can only be of general assistance. In Bass, the learned President warned against references to other cases for the purpose of establishing inflexible guidelines which would be determinative of the manner in which the court’s discretion is to be exercised on the question now under consideration. In that case, solicitor and client costs were ordered in the plaintiff’s favour in circumstances where, as the trial judge found, the proceeding has been precipitated due to the defendant council resiling from its previous view as to the plaintiff’s rights and the other defendant reneging on a previous arrangement. Nevertheless, other decisions on the issue, treated with appropriate caution, can provide a useful guide to the manner in which the discretion on the costs question should be exercised.”
It is submitted on behalf of the Applicant that this is not a case where the court could be satisfied that the conduct of the Applicant is of a nature which could be regarded as high-handed, and/or in any event that the allegations raised, serious though they are, could be regarded as analogous to allegations of fraud and/or forgery. Otherwise, it is submitted that the Applicant had instructed lawyers and received advice to pursue the application. Applying the authorities, it was submitted that in this case the court in the exercise of its discretion should not be satisfied that it is appropriate to make an order for indemnity costs.
In my view, in considering whether or not the court should make an order for indemnity costs, the court has, as is clear from the decision of the court in PCRZ, a very wide discretion. It is further appropriate the court takes into account whether or not it could properly be found that in this case, by pursuing this claim and the supporting allegations set out in the affidavit material, the court could conclude the conduct of the Applicant was high-handed.
In my view, applying the authorities to which reference has been made, and having regard to the facts and circumstances of this application,

I am satisfied that this application is one which could be distinguished from the facts and circumstances confronting the court in De Jager. There is clearly no allegation specifically of fraud or forgery by the Applicant against the Respondent.
The conduct of the Applicant in commencing the application based upon the Applicant's perception of the matters set out in his affidavit material is not in my view conduct of a kind which would attract the description of "high-handedness". It may be presumptuous and it may be to some extent conduct which in the absence of tested evidence at the very least appears to be somewhat cavalier, but not in my view sufficient in its gravity or in the nature of the material relied upon to be properly regarded as ‘high‑handed’.
In the exercise of the court's discretion as to whether to make an indemnity costs order, in my view it is also relevant to take into account the desirability of litigants terminating at an early stage proceedings. In this case, whilst that may have only resulted in a two‑day hearing reduced to a one-day hearing, it has nevertheless achieved a beneficial outcome in terms of the total amount of costs.
I have significant reservations about the allegations made in this application by the Applicant which I regard as allegations of a serious and significant nature. However, those reservations do not lead me in the exercise of my discretion to conclude that this application could properly be regarded as high-handed. It follows therefore that in my view the appropriate order in relation to costs would be that the Applicant pay the Respondent's costs of and incidental to the application, including reserved costs if any, to be taxed pursuant to the Federal Court Rules in the absence of agreement.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 7 February 2007