Hankinson v Brookview Holdings Pty Ltd - [2003] FMCA 507

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HANKINSON v BROOKVIEW HOLDINGS PTY LTD

[2003] FMCA 507

PRACTICE AND PROCEDURE – Bankruptcy – costs – where dismissal by consent – alleged failure of Respondent to notify Applicant of significant defect in claim before joining issue with the proceeding – costs follow the event.

Bankruptcy Act 1966, s.247
Federal Court Rules 2001, O.62

Applicant:

LEAH JOYCE HANKINSON

Respondent Creditor:

BROOKVIEW HOLDINGS PTY LTD

File No:

WZ 116 of 2003

Delivered on:

28 October 2003

Delivered at:

Perth

Hearing Date:

28 October 2003

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Ms Thompson

Solicitors for the Applicant:

Nicholson Clement

Counsel for the Respondent Creditor:

Mr S Stocks

Solicitors for the Respondent Creditor:

Freehills

ORDERS

BY CONSENT:

The Application filed 11 July 2003 be dismissed.

FURTHER ORDER:

The Applicant pay the Respondent Creditor's costs to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules upon the Federal Court Scale.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

WZ 116 of 2003

IN THE MATTER OF THE ESTATE OF GARRY WILLIAM SAME

LEAH JOYCE HANKINSON

Applicant

And

BROOKVIEW HOLDINGS PTY LTD

Respondent Creditor

REASONS FOR JUDGMENT
(Revised from Transcript)

This is an application which has been filed on 11 July 2003 by Leah Joyce Hankinson (the Applicant) who at the time of filing the application was the person administering the estate of the late Garry William Same (the deceased) who died on 6 October 2001. When the matter was listed before me this day it was made clear by the parties that by consent they had agreed that the application should be dismissed. The only issue outstanding between the parties is the issue of the costs of the respondent. The respondent joined issue with the application which had been made pursuant to s.247 of the Bankruptcy Act 1966, by filing a notice of intention to oppose the application or petition on 21 July 2003. In the notice of intention to oppose the respondent states the following grounds:
“1. The Applicant has failed to disclose an indemnity due to the estate of Garry William Same in an amount of TWO HUNDRED AND THREE THOUSAND DOLLARS ($203,000.00) due from Eversun Holdings Pty Ltd.
2. The Applicant has failed to disclose a right of indemnity in the amount of FIFTEEN THOUSAND SEVEN HUNDRED AND SIXTY SEVEN DOLLARS AND SIXTY SEVEN CENTS ($15,767.67) due from Eversun Holdings Pty Ltd.
3. The Applicant has failed to disclose a right of contribution from Leah Hankinson in an amount of SEVEN THOUSAND EIGHT HUNDRED AND EIGHTY THREE DOLLARS AND EIGHTY FOUR CENTS ($7,883.84).
4.The Applicant has failed to disclose a shareholding in Eversun Holdings Pty Ltd.”
It is not necessary for me to recite the background material in detail save to say that since the filing of the notice of intention to oppose the application or petition both sides have relied upon affidavit material. It is also sufficient to note that in the original affidavit material the matters which are said to be complained of in the notice of intention to oppose do not appear to have been disclosed and, indeed, the non disclosure of that material appears to be conceded in the most recent affidavit of the applicant sworn 17 October 2003.
What the deponent says in that affidavit by way of explanation is that she had, on or about 15 May 2001, a conversation with the deceased.

I should note that the applicant and the deceased had lived in a de facto relationship for a period of approximately 7 years prior to the death of the deceased.
In paragraph 5 of her affidavit sworn 17 October 2003 Ms Hankinson deposes to the following. She states:
“On or about 15 May 2001 Mr Same spoke to me and told me words to the effect that he wanted to completely remove himself from having any interest in or association with Eversun. Later that day I observed him filling in a form, drafting a letter and sending the documents by facsimile to what I understood to be the Australian Securities and Investments Commission (ASIC). Based on our conversations earlier that day, I believed at that time that the documents Mr Same sent by facsimile were for the transfer of the share held by Mr Same in Eversun to myself and the resignation of Mr Same as a director of Eversun (Written Instructions).”
Annexed to the affidavit marked LJH 9 was a true copy of an ASIC form 370 and a letter dated 15 May 2001 signed by Mr Same which

I believe to be the written instructions.
In the same affidavit at paragraph 6 the deponent states:
“In late 2001 Mr Robinson of the accounting firm Bird Cameron contacted me with respect to the finalisation of the annual return of Everson (2001 Annual Return). Annexed hereto and marked LJH10 is a true copy of the 2001 Annual Return. I queried with Mr Robinson the fact that, in light of Written Instructions, the 2001 Annual Return contained a statement that Mr Same was a shareholder. Mr Robinson then wrote on the 2001 Annual Return words to the effect that Mr Same was deceased and that I was the sole shareholder. I do not recall discussing this in any detail with Mr Robinson or querying the effect of these words. I believed at the time that this was carrying out the intent of Written Instructions. At the time that this took place Mr Same had been deceased for about 8 weeks and I was emotionally distressed as well as extremely concerned about my financial survival, the possibility of the loss of my home, the running of the Head Studio and the many other matters which I was dealing with as a result of Mr Same’s death. I did not understand at that time that the share which Mr Same held in Eversun was an asset of the Estate. I did not seek or obtain legal or accounting advice in relation to this matter at that time and was not aware that the transfer of the share was an issue until it was raised by Brookview Holdings in about July 2003. I certainly did not intend to mislead the court of any person or do anything that was incorrect or wrong.”
I should add for the sake of completeness that as the matter is the subject of a consent order for dismissal no issue is taken as to the conduct of the deponent in terms of any suggested misleading of the court.
It was argued for and on behalf of the applicant that in the circumstances of this case the court should make no order as to costs. As I understood it the basis upon which that submission was made included reference to the paragraph to which I have referred in the affidavit of Ms Hankinson sworn 17 October 2003. Further reference was made to correspondence from the applicant's solicitors to solicitors then acting for and on behalf of the respondent as early as 4 March 2003 which indicated what was thought to be and what was ultimately deposed to be the asset and liability position of the deceased. It is conceded that what was asserted in that correspondence ultimately proved to be incorrect and the instructions given to the solicitors acting for the applicant were then clearly deficient.
It is submitted, however, that upon being made aware of that misapprehension through that correspondence and subsequent correspondence that the respondent in the circumstances rather than simply joining in the proceedings by way of filing the notice of intention to oppose could and should have brought to the attention of the applicant the error in the material and by doing so would have avoided the need for costly litigation which then ensued. It is argued that in those circumstances, given the misunderstanding and what has been described as misapprehension of the applicant, it would be more appropriate if the court should make no order as to costs.
In seeking an order for costs the respondent's representative has argued that in circumstances of this kind, where material is provided by way of affidavit evidence which has a demonstrable error, it is not the duty of the respondent to then point out the error. It is submitted that in any event the notice of intention to oppose the application or petition filed on 21 July 2003 at the very least that date clearly set out what was ultimately the subject of affidavit material, the concerns of the respondent and the claimed errors and omissions of the applicant in the material which had been earlier relied upon. It was submitted that costs should follow the event and it was submitted that the filing of the notice of intention to oppose had occurred in circumstances where there was litigation pending and it was the most appropriate and indeed most responsible step the respondent could have taken at that time.
It is again not necessary for me to recite what appears in the affidavit material in relation to the pending proceedings elsewhere. In my view, having heard the submissions from both sides and having considered the affidavit material to which both have referred I am satisfied that in this application the normal rule should apply and costs should follow the event. I make that finding based upon my understanding of the knowledge and indeed both assumed knowledge and what might be described as imputed knowledge to the applicant as to the financial affairs of her deceased partner. It seems clear on the affidavit material to me that there had been a seven-year relationship and very few assets. The significant asset was clearly the interest which the deceased and the applicant had in the company Eversun Holdings Pty Ltd.
In my view, prior to commencing proceedings of the kind it was incumbent upon the applicant to ensure that all the relevant facts were made known to the parties and indeed that proper and accurate instructions given and advice sought from the solicitors then advising the applicant. Although in practical terms it may have been desirable for the respondent to bring to the attention on a date earlier than July 2003 the true situation concerning the matters ultimately raised in the notice of intention to oppose, I do not believe as a matter of law there is a duty upon a respondent to do so in the circumstances of a case of this kind. Therefore the applicant having commenced the proceedings and, perhaps more importantly, having continued the proceedings including the filing and serving of affidavit material after 21 July 2003 has placed the respondent in the position where costs are incurred and in circumstances where in my view the appropriate order of the court is that costs follow the event.
Accordingly, the orders of the court are:
BY CONSENT:
(1)The Application filed 11 July 2003 be dismissed.
FURTHER ORDER:
(2)The Applicant pay the Respondent Creditor's costs to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules upon the Federal Court Scale.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 28 October 2003