Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic (No 3)

[2021] FCCA 679

FEDERAL CIRCUIT COURT OF AUSTRALIA

Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic (No 3) [2021] FCCA 679

File number(s):

SYG 2492 of 2019

Judgment of:

JUDGE MANOUSARIDIS

Date of judgment:

9 April 2021

Catchwords:

BANKRUPTCY – COSTS – whether successful applicant should pay the costs thrown away by reason of an earlier hearing date being vacated – whether the second respondent should be ordered to pay the applicant’s costs on an indemnity basis – whether order should be made that the costs the trustees in bankruptcy have incurred in the proceeding be costs in the bankruptcy – second respondent ordered to pay applicant’s costs including reserved costs – no order in relation to trustees’ costs.

Legislation:

Bankruptcy Act 1966 (Cth) s 104(2)

Cases cited:

Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic & Anor [2020] FCCA 1791

Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic (No 2) [2021] FCCA 130

Number of paragraphs:

10

Date of last submission/s:

19 February 2021

Date of hearing:

Decided on the papers

Place:

Sydney

Solicitor for the Applicant:

Mr S Moss of Panetta Lawyers

Counsel for the First Respondents:

Mr H Somerville

Solicitor for the First Respondents:

Emerson Lewis Lawyers

Counsel for the Second Respondent:

Mr D Weinberger

Solicitor for the Second Respondent:

ERA Legal

Table of Corrections
22 April 2021	The letter “s” has been added to the words “first respondent” that appear on the orders page under the words “HENRY KAZAR AND MICHAEL SLAVEN AS JOINT TRUSTEES IN THE BANKRUPT ESATE OF DAMIR JAKOV DELIC”.
The words “second respondent’s” appearing in order 2 on the orders page have been replaced by the words “first respondents’”.
The following has been added after order 2 on the orders page: “THE COURT NOTES THAT these orders have been amended pursuant to r 16.05(2)(h) of the Federal Circuit Court Rules 2001 (Cth) by order made on 22 April 2021”.

ORDERS

SYG 2492 of 2019

IN THE MATTER OF DAMIR JAKOV DELIC

BETWEEN:

DAMIR JAKOV DELIC

Applicant

AND:

HENRY KAZAR AND MICHAEL SLAVEN AS JOINT TRUSTEES IN THE BANKRUPT ESATE OF DAMIR JAKOV DELIC

First Respondents

FIDELITY CAPITAL (AUSTRALIA) PTY LTD ACN 604 621 589

Second Respondent

ORDER MADE BY:	JUDGE MANOUSARIDIS
DATE OF ORDER:	9 APRIL 2021

THE COURT ORDERS THAT:

1.The second respondent pay the applicant’s costs, including all reserved costs.

2.There be no order as to the first respondents’ costs.

THE COURT NOTES THAT these orders have been amended pursuant to r 16.05(2)(h) of the Federal Circuit Court Rules 2001 (Cth) by order made on 22 April 2021.

REASONS FOR JUDGMENT

INTRODUCTION

1. On 5 February 2020 I made an order under s 104(2) of the Bankruptcy Act 1966 (Cth) that the decision of the first named respondents (Trustees) made on 2 September 2019 to admit the proof of debt for $285,142.46 lodged by the second respondent (Fidelity) be reversed.[1]

   [1] Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic (No 2) [2021] FCCA 130

2. I also made orders inviting the parties to file submissions about the orders for costs I should make, and to inform my associate whether the parties are content for me to deal with the question of costs on the papers. All three parties filed submissions, and each of the applicant, the Trustees, and Fidelity indicated they would be content for me to determine the question of costs on the papers.

   COSTS AS BETWEEN MR DELIC AND FIDELITY

3. Mr Delic submits that Fidelity should be ordered to pay Mr Delic’s costs on an indemnity basis. Mr Delic relies on a number of aspects of the history of the proceeding, including the matters that led to the hearing that had been set down on 25 June 2020 being vacated,[2] and to Fidelity applying for leave to reopen. Fidelity, on the other hand, submits that the circumstances which led to the hearing being vacated on 25 June 2020 were due to its being caught by surprise, and, for that reason, I should order Mr Delic pay Fidelity costs thrown away because of the hearing being vacated.

   [2] Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic & Anor [2020] FCCA 1791

4. Two questions, therefore, arise. The first is whether there should be any order that deals with costs thrown away because of the hearing of 25 June 2020 being vacated. The second is whether I should order Fidelity pay Mr Delic’s costs on an indemnity basis.

5. As to the first question, in the judgment I published on 25 June 2020 I concluded Mr Delic had given sufficient notice of the claims he intended to make.[3] I am not satisfied, therefore, Fidelity would have been caught by surprise; and I am, therefore, not prepared to order Mr Delic pay Fidelity’s costs thrown away because the hearing was vacated.

   [3] Delic v Kazar and Slaven as Joint Trustees in the Bankrupt Estate of Delic & Anor [2020] FCCA 1791

6. As to the second question, I am not satisfied that any aspect of Fidelity’s conduct of the proceeding would warrant my ordering that it pay all or any part of Mr Delic’s costs on an indemnity basis. Quite apart from my not being so satisfied, it should not be overlooked that Mr Delic failed on most of the claims he made, and which occupied most of the hearing.

7. I propose, therefore, to order that Fidelity pay Mr Delic’s costs, including all reserved costs.

   COSTS AS BETWEEN MR DELIC AND THE TRUSTEES

8. Mr Delic and the Trustees agree I should not make an order for costs against the Trustees. The Trustees, however, submit I should order that the Trustees’ costs of and incidental to the application be costs in the bankruptcy.

9. I am not prepared to make any such order. Whether the costs the Trustees have incurred in this proceeding are costs that are recoverable out of the bankrupt estate of Mr Delic should be determined on the same basis on which trustees are entitled to recover costs which they have incurred in the course of the administration of a bankruptcy.

10. I therefore propose that there be no order as to the Trustees’ costs.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis.

Associate:

Dated:       22 April 2021