Draper v Official Trustee in Bankruptcy
[2008] FMCA 557
•13 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DRAPER & ANOR v OFFICIAL TRUSTEE IN BANKRUPTCY & ANOR | [2008] FMCA 557 |
| BANKRUPTCY – Application for refund of costs paid – interpretation of costs orders of Full Court. |
| Bankruptcy Act 1966 (Cth) |
| First Applicant: | KEITH LAWRENCE DRAPER |
| Second Applicant: | BARBARA OLIVE DRAPER |
| First Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY FOR THE BANKRUPT ESTATE OF KEITH LAWRENCE DRAPER |
| Second Respondent: | BRUCE JAMES CARTER (TRUSTEE IN BANKRUPTCY) |
| File Number: | ADG 260 of 2003 |
| Judgment of: | Simpson FM |
| Hearing date: | 13 March 2008 |
| Date of Last Submission: | 13 March 2008 |
| Delivered at: | Adelaide |
| Delivered on: | 13 March 2008 |
REPRESENTATION
| First Applicant: | Appears in person |
| Second Applicant: | No Appearance |
| Counsel for the First Respondent: | Mr G Gretsas |
| Solicitors for the First Respondent: | Gretsas & Associates |
| Counsel for the Second Respondent: | No Appearance |
| Solicitors for the Second Respondent: | Cowell Clarke |
ORDERS
The applicants’ oral application is dismissed.
The applicants pay the first respondent’s costs on an indemnity basis for which they shall be jointly and severally liable.
The question of costs being fixed as a lump sum be reserved.
The first respondent shall file and serve an affidavit dealing with the quantum of costs claimed, to be filed and served no later than 21 days prior to the adjourned date.
The matter is adjourned to 14 May 2008 at 9.30 am.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 260 of 2003
| KEITH LAWRENCE DRAPER |
First Applicant
| BARBARA OLIVE DRAPER |
Second Applicant
And
| OFFICIAL TRUSTEE IN BANKRUPTCY FOR THE BANKRUPT ESTATE OF KEITH LAWRENCE DRAPER |
First Respondent
| BRUCE JAMES CARTER (TRUSTEE IN BANKRUPTCY) |
Second Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
The current application I have before me is an oral application by Keith Lawrence Draper and his wife Barbara Olive Draper, the applicants, seeking orders against the Official Trustee in Bankruptcy for the Bankrupt Estate of Keith Lawrence Draper, the first respondent, that the first respondent pay the applicants the other half of the costs referred to in order 2 of the orders of the Full Court of the Federal Court of Australia (“Full Court”) of 22 December 2006.
The background
This action commenced as an action solely against the second respondent[1] Bruce James Carter who was the then Trustee of the Bankrupt Estate of Mr Draper. The first respondent was joined at a later stage after her appointment to replace the second respondent.
[1] This party was originally the first and only respondent. When the Official Trustee was joined she was joined as first respondent and the original first respondent became the second respondent. In these reasons the respondents will be referred to as described in paragraphs 1 and 2 of these reasons.
It is unnecessary in these reasons to explain the nature of the applicants’ action against the two respondents save to say that a hearing was held before Lindsay FM in February 2005 and a decision delivered by him on 23 September 2005. The applicants were unsuccessful against both respondents and were ordered to pay the costs of each. The applicants appealed. Before the appeal was decided the applicants paid the first respondent the costs that were ordered in their favour.
The applicants’ appeal was heard and a decision given on 10 November 2006. The applicants were partly successful and partly unsuccessful. The detail of the extent to which they were successful and unsuccessful is not relevant to the determination of the question that is before me today. On 10 November 2006 an order was made inter alia by the Full Court setting aside the costs orders that Lindsay FM had made. The Full Court also ordered a new trial before a different federal magistrate and orders giving the parties an opportunity to provide written submissions in relation to costs.
On 22 December 2006, the Full Court made the following further orders:
1. Each party bear his or her costs of the appeal.
2. The costs of the proceedings before the Federal Magistrates Court as between Keith Lawrence Draper and Barbara Olive Draper and the Official Trustee in Bankruptcy be as follows:-
(a)Keith Lawrence Draper and Barbara Olive Draper pay to the Official Trustee in Bankruptcy one half of the costs of the Official Trustee in Bankruptcy;
(b)The other half of those costs be reserved to the Federal Magistrate who re-hears and determines the issues in respect of which the Court has ordered a new trial.
3. There be no order for the costs of the proceedings before the Federal Magistrates Court as between Keith Lawrence Draper and Barbara Olive Draper and Bruce James Carter as Trustee of the Bankrupt Estate of Keith Lawrence Draper.
As a result of order 2(a) of the orders of 22 December 2006 the first respondent refunded to the applicants’ half of the costs that had already been paid by the applicants to the first respondent pursuant to Lindsay FM’s order.
Pursuant to orders of the Full Court of 10 November 2006 the matter came back to the Federal Magistrates Court. When the matter first came before me on 15 October 2007, Mr Gretsas, who was solicitor and Counsel for the first respondent, sought to be excused from further attendance as the only remaining issue that had been identified by the Full Court was seen to be an issue that was only between the applicants and the second respondent.
On 15 October 2007 Mr Draper was late arriving at Court. Prior to Mr Draper arriving there had been some discussion about Mr Gretsas being excused from further attendance. The following exchange took place when Mr Draper arrived at Court:
“HIS HONOUR: What do you want to happen this morning?
MR DRAPER: What I say is Mr Gretsas shouldn’t be even on the case – he’s got no interest in this any more - and Cowell Clarke should be here.”
(I note that Cowell Clarke were – and still are solicitors for the second respondent).
“MR DRAPER: Cowell Clarke should be here. I don’t know whether that's the Cowell Clarke representative there; I've never met him before.”
And then a little later on in the morning this exchange took place:
“HIS HONOUR: As far as Mr Gretsas is concerned, as I understand your position you say his client has no interest in the case and Mr Gretsas can leave. Is that the situation?
MR DRAPER: That's what I'm saying because - - -
HIS HONOUR: Mr Gretsas was just about to leave when you arrived.
MR DRAPER: Right.
HIS HONOUR: I think I might let Mr Gretsas go now, unless there's any reason that you say - any reason why he should remain.
MR DRAPER: He shouldn't argue on this matter at all.
HIS HONOUR: Okay. I think you are again excused, Mr Gretsas.”
Soon after this exchange Mr Gretsas left and took no further action in the proceedings. At the end of the hearing on 15 October 2007 the Court said this:
“HIS HONOUR: Noting that with the consent of Mr Draper and Mr Leech on behalf of the first respondent Mr Gretsas for the official trustee in bankruptcy is excused from further attendance.”
The matter was then adjourned. No attempt was made by Mr Draper to stop Mr Gretsas from leaving, nor did Mr Draper say anything that indicated that Mr Gretsas’ client had anything further to do with the litigation.
The matter came on again on 31 October 2007, and consistent with the indication that we had given to Mr Gretsas, he did not attend and his client was not represented. The matter proceeded in the absence of Mr Gretsas on 31 October 2007 with the Court making an order that the matter (that is the remaining issue to be decided between the applicants and the second respondent) be referred to mediation in accordance with the rules of the Federal Magistrates Court. If the Court had been told that there was any outstanding issue in relation to Mr Gretsas’ client, it is highly likely that the Court would have made an order that they too attend the mediation. Given the assurance that was given, not only by Mr Draper for the applicant, but also the second respondent, no order was made that the first respondent attend the mediation. The mediation between the applicants and the second respondent took place and was successful in that the issues between them were resolved.
The next thing that happened was that in early December 2007 Mr Draper sent a letter to the Registrar of the Federal Magistrates Court, Ms Christie. I have not been able to find a copy of that letter on the Court file, but I do have a copy of a letter that was sent by Ms Christie to Mr Draper. That letter is dated 11 December 2007 and says in part as follows:
On my reading of your letter you are concerned that as the consent orders recently made in this matter refer only to dismissal of the application as against the second respondent, there may remain an issue in relation to the costs of the first respondent reserved to the federal magistrate rehearing the issues in respect of which a new trial was ordered by the Full Court of the Federal Court of Australia.
I understand than on 15 October Simpson FM, with the consent of you and the second respondent, excused Mr Gretsas for the first respondent from further attendance in this matter, but note your concern that an order dismissing the action as against the first respondent and dealing with the costs reserved to the federal magistrate may be necessary to finally dispose of the matter.
I have discussed your letter with Simpson FM who has directed that the matter be listed for further consideration by him at 9.30 am on 18 December 2007.
The matter came before me again on 18 December 2007. At that stage Mr Gretsas attended on behalf of the first respondent. It appeared to me on that occasion that what Mr Draper was seeking was an order for costs against the first respondent. I made the following orders:
1. Further consideration on the question of costs is adjourned to 10 am on 11 February 2008.
2. Applicant file and serve such affidavit material as he intends to rely upon on or before 21 January 2008.
3. The applicant file and serve an outline of argument by 4 February 2008.
4. The respondent file and serve such affidavits as he intends to rely upon on or before 31 January 2008.
5. The respondent file and serve an outline of argument by 7 February 2008.
At the hearing on 11 February 2008 – that is the adjourned date – I was informed that certain documents had not been properly served, with the consequence that one or other of the parties before me needed more time to prepare for the hearing. I therefore adjourned the matter to today’s date to give the parties a proper opportunity to consider all material and put all submissions that they wished to.
The hearing
There are two affidavits on behalf of the applicant that I have been asked to consider. One was filed on 18 January 2008 and the other on 11 March 2008. I have considered the material in those two affidavits filed on behalf of the applicants. I also received from Mr and Mrs Draper an outline of argument which I have also considered. I have not found the material provided by Mr Draper (and I here refer to both the affidavits and the outline of argument) as being particularly helpful.
If what the applicants are seeking is an order for costs, the affidavit material provided does not properly address the issues that are relevant to an exercise of a discretion, nor does the outline of argument address the issues that need to be addressed on such an application. During argument before me I attempted to have Mr Draper concisely indicate what the order was that he was seeking and he had quite some difficulty in telling me what that order was.
As I understand what Mr Draper is now seeking is not an order for costs against the first respondent, but rather a refund of the balance of certain moneys that were paid by him to the first respondent after the decision of Lindsay FM. I am therefore approaching the application on this basis, namely an order that the first respondent pay the applicants the other half of the costs referred to in order 2 of the Full Court of 22 December 2006.
Mr Draper directs my attention to the order made on 22 December 2006 that I have detailed earlier in these reasons. He seems to believe that order 2(b) of those orders allow me to make an order that the half of the costs that were ordered and were paid by him to the first respondent can be ordered to be refunded to the applicants. In my view, the proposition that he puts is illogical. Order 2 of the orders of 22 December 2006, simply had this effect; that whereas Lindsay FM ordered that the applicants pay the first respondent all of the first respondent’s costs, the Full Court was saying that the first respondent should repay half of these costs, and that the other half of the first respondent’s costs that they would be seeking from the applicants would be left to be decided by the federal magistrate who decided the remaining issue.
So that rather than it being a case where the applicants were entitled to take advantage of Order 2 to have the other 50 per cent of the cost paid back, it was really an order that was made for the benefit of the first respondent. Had the matter proceeded to a hearing, then it seems to me a possible order might have been that this Court order that the applicants pay the other 50 per cent, or some portion of it, to the first respondent. Theoretically it would have been possible for the parties to have been back to the position that we were in when Lindsay FM made his order for costs, namely, that the applicants pay the first respondent all of the first respondent’s costs.
No application has been made by the first respondent that I make an order that the balance of those costs be paid by the applicants and I do not intend to make any such order. But it is incorrect for Mr Draper to conclude that order 2 of the orders of 22 December 2006 gives the applicants any right to make an application for moneys to be paid by the first respondent to the applicants. Were I to make such an order, it would seem to me to be completely contrary to order 2(a) of those orders which indicated that the first respondent was to get half of its costs.
As I read order 2 it has this effect, that the first respondent is entitled to half of their costs of the action from the applicants and may be entitled to more than that. It does not give the applicants any right to a refund of any costs at all. For that reason I have decided that the applicant’s oral application should be dismissed and I do not propose to make any costs order in the applicants’ favour.
I have not considered a further significant argument that has been put forward by the first respondent about why no order should be made in the applicants’ favour, and that is this, that even if there was any opportunity for the applicants to make an application for the refund of moneys or for the payment of costs, an estoppel arises as a result of Mr Draper indicating at the hearing on 15 October 2007 that the first respondent had no further involvement in the litigation and that the applicant had no objection to the first respondent not being represented at the hearing.
It seems to me that that conduct by Mr Draper seriously prejudiced the first respondent’s position. If in fact there was any right that the applicants had - which I do not believe there is - to make an application for any order against the first respondent in relation to those moneys an estoppel arises. It is not difficult for me to conclude that had Mr Draper not said what he did, that Mr Gretsas would have remained in Court to represent the first respondent in this hearing and the Court would have made an order that the first respondent also be present at the mediations that were conducted.
It seems to me that the first respondent’s position has been seriously prejudiced by Mr Draper’s statement that they no longer needed to be part of the proceedings.
For those reasons I reject the applicants’ application.
Costs order against the applicants
There has been an application made by the first respondent for an order for costs against the applicant or applicants. They seek those costs on an indemnity basis. In my view the first respondent has been put to significant unnecessary expense in Mr Draper’s application.
It is clear that there was no proper basis for the application. No litigant, properly advised, would have pursued such an application. In those circumstances I consider it appropriate to make an order on an indemnity basis. In relation to costs I also take into account that the applicants have filed lengthy affidavits that have nevertheless required reading and response by the first respondent. The affidavits and the outlines of argument by the applicants have, as I have mentioned earlier, been quite unhelpful and have put the other party, let alone the Court, to significant time and trouble to try and work out exactly what it is that Mr Draper was seeking.
Parties and their legal advisors should ensure that affidavits are kept as brief as possible and to the point and do not include extraneous material. I realise that Mr Draper does not have legal qualifications, but he and others in a similar position need to understand that it puts everybody to a lot of time and expense when material is presented in that fashion, and that is undesirable.
I make the orders to be found at the beginning of these reasons.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Simpson FM
Associate: Julie Davey
Date: 13 March 2008
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