Garner v Central Innovation Pty Limited

[2022] FCA 711

FEDERAL COURT OF AUSTRALIA

Garner v Central Innovation Pty Limited [2022] FCA 711

Appeal from:

Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796

File number(s):

NSD 69 of 2021

Judgment of:

HALLEY J

Date of judgment:

17 June 2022

Catchwords:

PRACTICE AND PROCEDURE – order for costs on appeal to be fixed – funds paid into Court as security for costs be paid to the respondents

Legislation:

Bankruptcy Act 1966 (Cth) s 122

Federal Court Act 1976 (Cth) s 25

Cases cited:

Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796

Commercial Banking Corporation of Sydney Limited v Colonial Financiers of Australia Pty Ltd [1972] VR 702

Garner v Central Innovation Pty Ltd [2022] FCAFC 64

Division:

General Division

Registry:

New South Wales

National Practice Area:

Commercial and Corporations

Sub-area:

Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs:

11

Date of hearing:

The orders were determined on the papers.

Solicitor for the Appellant:

AJH Lawyers

Solicitor for the Respondents:

SD Commercial Lawyers

ORDERS

NSD 69 of 2021

BETWEEN:

GARY GARNER

Appellant

AND:

CENTRAL INNOVATION PTY LIMITED (ACN 123 240 362)

First Respondent

INTERCAD PTY LTD (ACN 072 666 016)

Second Respondent

ORDER MADE BY:	HALLEY J
DATE OF ORDER:	17 JUNE 2022

THE COURT ORDERS THAT:

1.The costs of the respondents of the appeal be fixed in the sum of $117,000.00.

2.The appellant’s funds in the aggregate sum of $100,000.00 which are currently held by the Federal Court of Australia and which were paid into the Federal Court of Australia to provide for the first respondent’s and second respondent’s security for costs of this proceeding, be paid to the first respondent and the second respondent by depositing them into their solicitor’s trust account, details of which are as follows:

Bank: Commonwealth Bank of Australia Ltd

Name: SD Commercial Lawyers’ law practice trust account

BSB: 062 018

Account number: 1049 8710

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

REASONS FOR JUDGMENT

HALLEY J:

1. On 21 April 2022, the Full Court made an order dismissing the appeal with costs from the decision of the primary judge in Central Innovation Pty Ltd v Garner (No 4) [2020] FCA 1796 and published its reasons: Garner v Central Innovation Pty Ltd [2022] FCAFC 64.

2. The appellant had provided security for costs in the sum of $100,000 for the appeal and that sum had been paid into Court pursuant to orders made by Justice Rares on 24 May 2021 requiring the sum to be paid into Court in three tranches between 7 June 2021 and 2 August 2021.

3. The respondents now seek an order that their costs of the appeal be fixed in sum of $117,000 and that the funds paid into Court by the appellant should be released to them by a payment into their solicitors’ trust account. The respondents rely on an affidavit of Stephen D’Emilio sworn 7 June 2022.

4. On 18 May 2022, the appellant became bankrupt upon acceptance of a debtor’s petition by the Official Receiver on that day and Ms Robyn-Lee Erskine (Trustee) was appointed as the trustee of the bankrupt estate of the appellant.

5. The Trustee has confirmed that if the Court makes an order fixing the respondents’ costs of the appeal, she consents to the release of the funds paid into Court up to the amount to which the costs are fixed and to the extent of those funds.

6. As the funds were paid into Court by the appellant as security more than six months prior to the bankruptcy of the appellant, the question of whether the claim by the respondents to the funds held in Court might be voidable under s 122 of the Bankruptcy Act 1966 (Cth) does not arise: cf Commercial Banking Corporation of Sydney Limited v Colonial Financiers of Australia Pty Ltd [1972] VR 702.

7. Mr D’Emilio gives evidence in his affidavit that the respondents’ invoiced costs and disbursements of the appeal, including GST, total $260,109.47 and annexes a hard copy print out of an electronic ledger recording each of the respondents’ invoiced costs and disbursements in the appeal comprising that amount.

8. Mr D’Emilio also gives evidence that Allaway JR made a lump sum costs assessment, at the conclusion of the proceedings before the primary judge, in which he considered that a reduction of 50% on party and party costs was appropriate. Mr D’Emilio states that, in his opinion, a reduction of 50% for party and party costs is excessive but it nevertheless appears to him that a reduction of 50% should be utilised in the present context and applied to the respondents’ costs on the appeal for the purposes of making a fixed costs order on a party and party basis.

9. The respondents submit that after excluding GST, the amount of their invoiced costs and disbursements of the appeal total approximately $234,000 and that after applying a 50% reduction this would give a figure of $117,000, which they submit would be an appropriate figure for a fixed costs order in their favour.

10. Pursuant to s 25(2B)(ab) of the Federal Court Act 1976 (Cth) a single Judge, sitting in Chambers or in open court, may make an interlocutory order after the determination of an appeal to the Court.

11. I am satisfied that a fixed costs order in the sum of $117,000 should be made in favour of the respondents and that an order should be made that the funds currently held by the Court by way of security for the respondents’ costs of the appeal should be paid to the respondents by making a payment to the trust account of the respondents’ solicitors.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley.

Associate:       

Dated:       17 June 2022