Devren Pty Ltd v Miller
[2017] FCCA 1646
•14 July 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DEVREN PTY LTD v MILLER & ANOR | [2017] FCCA 1646 |
| Catchwords: BANKRUPTCY – Costs – whether costs should be ordered against petitioning creditor or solicitor who issued the creditor’s petition – where petition issued without authority. |
| Legislation: Federal Circuit Court Rules2001, r.21.07(1) |
| Cases cited: Zimmerman Holdings Pty Ltd & Ors v. Wales & Ors and Barel v. Zimmerman Holdings Pty Ltd [2002] NSWSC 447 |
| Applicant: | DEVREN PTY LTD |
| First Respondent: | PETER JOHN FRANCIS MILLER |
| Second Respondent: | SUSAN MARY MILLER |
| File Number: | BRG 844 of 2015 |
| Judgment of: | Judge Jarrett |
| Hearing date: | By written submission |
| Date of Last Submission: | 24 May 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 14 July 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Lillas and Loel Lawyers |
| The Respondents appeared in person. |
ORDERS
Stuart Derby Loudon pay the respondents’ costs of and incidental to the creditors petition issued on 15 September, 2015 fixed in the sum of $1,244.26.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 844 of 2015
| DEVREN PTY LTD |
Applicant
And
| PETER JOHN FRANCIS MILLER |
First Respondent
| SUSAN MARY MILLER |
Second Respondent
REASONS FOR JUDGMENT
On 18 May, 2016 I delivered judgment on a creditor’s petition issued against the respondents: see Devren Pty Ltd v Miller & Anor [2016] FCCA 1194. That followed an earlier application that I dealt with concerning a bankruptcy notice.
The creditor’s petition alleged an act of bankruptcy constituted by the failure of the respondent to comply with a bankruptcy notice served upon them. The bankruptcy notice, in turn, was based upon a costs order secured by the petitioning creditor against them in another court. By the time the creditor’s petition was issued, the company that had the benefit of the costs order upon which the bankruptcy notice was based had been deregistered.
I dismissed the creditor’s petition on the basis that it was issued without the authority of the entity entitled to the debt represented in the perfected costs order – namely ASIC. It was issued without the authority of the company. I concluded that the solicitors had caused the issue of the creditor’s petition without any authority from the petitioning creditor or the entity entitled to the benefit of the costs order that supported the bankruptcy notice. That was no formal defect in the proceedings that could be cured by s.57(1) or capable of being cured by the application of s.57(2) of the Federal Circuit Court Act 1999 (Cth). I concluded that the petition was a nullity because the petitioning creditor was deregistered when the petition was issued. It was signed by the petitioning creditor’s solicitors without authority, although since the issue of the creditor’s petition, the company’s registration has been reinstated.
I noted that the respondents should have their costs, but the question was against whom? I made the following directions:
2. Within 21 days of the date of these orders, the respondents file and serve any submissions that they wish to make about whether an order for costs should be made against the petitioning creditor or the solicitor who signed the creditor’s petition, or both;
3. Within 42 days of the date of these orders, the petitioning creditor and the solicitor who signed the creditor’s petition file and serve any submissions that they wish to make about whether an order for costs should be made against the petitioning creditor or the solicitor who signed the creditor’s petition, or both.
Those directions were to permit the petition creditor’s solicitors the opportunity to be heard as to why a costs order ought not be made against them.
The respondents filed a bill of costs and written submissions in support of an order that the solicitors should pay those costs. The respondents have filed the required bill of costs totalling $1,244.26 on 24 May, 2016.
The solicitors have not filed any submissions as directed.
Solicitors who cause the issue of proceedings without the authority of the party on whose behalf they purport to issue those proceedings should ordinarily meet the costs of the other parties to those proceedings: Yonge v. Toynbee [1910] 1 KB 215; Attorney-General v Wylde (1946) 47 SR (NSW) 99, 109; Nominal Defendant v Kisse & Anor [2001] QDC 290. In Zimmerman Holdings Pty Ltd & Ors v. Wales & Ors and Barel v. Zimmerman Holdings Pty Ltd [2002] NSWSC 447, Bryson J explained:
5. Yonge v. Toynbee [1910] 1 KB 215 has often been referred to in the context of applications for costs against solicitors. It appears that the Court of Appeal of England proceeded on the basis that a solicitor who does not in fact have authority to represent a plaintiff is liable to other parties on an implied contract that he had authority: see Buckley LJ 255 and 257. Buckley LJ was of the view that it was open to the solicitors to prove facts excluding an implied contract but that that had not been done: 227 and 228. Swinfen Eady J also appears to have disposed of the matter on contract law and agency law principles of warranty of authority; see 341, but also referred to a different basis in principle for his conclusion: see his Lordship’s reference at 234 to the Court’s authority over its own officers. Vaughan Williams LJ agreed with expressions of doubt – see 235. The judgments were not, in any clear way, grounded on discretionary considerations supporting the making of an order for costs; the Court of Appeal appears to have seen itself as directly enforcing a contractual or quasi contractual liability which the solicitor had incurred.
Those general rules were not applied by his Honour because they had been overtaken by the provisions of the Supreme Court Act 1970 (NSW) and Pt.52A of the Rules of Court which made specific provision for costs against a person who purports without authority to conduct proceedings in the name of another person (Pt.52A r4(5)). However no similar rules exist in the Federal Circuit Court Rules2001, although there are rules that relate to the payment of costs by solicitors to which I shall refer shortly.
Moreover, a case which is advanced, not to vindicate the legal rights of an applicant, but for an ulterior purpose will clearly enliven the jurisdiction of the Court to make an order against the solicitor: Flower & Hart v White Industries Ltd (1999) (No.2) 163 ALR 744. The issuing of legal process without authority from the petitioning creditor, which has ceased to exist, is plainly the issuing of proceedings for an ulterior purpose.
Further, rule 21.07 (1) of the Federal Circuit Court Rules 2001 provides ample power for the Court to make an order for costs against the solicitors in this case. That rule provides:
21.07 Order for costs against lawyer
(1) The Court or a Registrar may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
(a) to be incurred by a party or another person; or
(b) to be thrown away;
because of undue delay, negligence, improper conduct or other misconduct or default.
Here, the issue of the proceedings by the solicitor who purported to act for the petition creditor was without authority. The petitioning creditor had been deregistered. That is something about which the solicitor ought to have known.
It is appropriate to order that the solicitor who signed the creditor’s petition and caused its issue pay the respondents’ costs of the creditor’s petition fixed in the sum of $1,244.26.
I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Jarrett
Associate:
Date: 14 July 2017
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