Hones v Gorczynski

[2002] FMCA 253

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HONES v GORCZYNSKI [2002] FMCA 253

BANKRUPTCY – Creditor’s petition – dismissal by consent – whether either party entitled to a costs order.

COSTS – General discretion as to costs – whether applicant creditor unreasonably commenced bankruptcy proceedings – whether respondent debtor tardy in raising issues leading to the dismissal of creditor’s petition.

Bankruptcy Act 1966 (Cth), ss.32, 51
Federal Magistrates Act 1999 (Cth), s.79
Federal Magistrates Court Rules 2001 (Cth)
Legal Profession Act 1987 (NSW), ss.192, 193

Legal Profession Regulations 1994

Re B Vanechteld (1960) 18 ABC 258
Re Murray V Vilkelis-Curas ex parte: Deputy Commissioner of Taxation of the Commonwealth of Australia (unreported, 4 November 1985, Federal Court of Australia, per Jenkinson J)
Udovenko v Mitchell (1997) 160 ALR 161

Applicant:

BRIAN KEITH HONES

trading as HONES LAWYERS

Respondent: PETER FRANCIS GORCZYNSKI

File No: SZ374 of 2001

Delivered on: 1 November 2002

Delivered at: Sydney

Hearing Date: 4 October 2002

Judgment of: Driver FM

REPRESENTATION

Solicitors for the Applicant: Hones Lawyers

Counsel for the Respondent: Mr Papallo

Solicitors for the Respondent: AWM Dickinson & Son

ORDERS

1. There is no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ374 of 2001

BRIAN KEITH HONES

trading as Hones Lawyers

Applicant

And

PETER FRANCIS GORCZYNSKI

Respondent

REASONS FOR JUDGMENT

Introduction

1. Both parties in these proceedings have sought an order for costs arising out of a creditor’s petition.  The background facts are that on 2 May 2000 the respondent was served with a statement of liquidated claim for a debt for unpaid legal fees.  On 22 June 2000 default judgment was obtained against the respondent in the New South Wales Local Court.  On 29 May 2001 the respondent was served with a bankruptcy notice that was not complied with.  Bankruptcy proceedings were commenced by the applicant in July 2001.  On 28 February 2002 the default judgment was set aside.  In March 2002 the creditor’s petition was set aside by consent save as to costs.

2. The resolution of the issue of costs has been unusually protracted.  The issue between the parties has been argued strenuously and even simple procedural steps have been contested.  The issue of costs was meant to be heard in August 2002 but the date was vacated, ostensibly by consent.  Subsequently, a dispute arose as to whether the date had been vacated by consent.  Because of difficulty in obtaining a subsequent hearing date convenient to the parties and the Court I ultimately gave the parties the option of appearing on 4 October 2002 or putting in written submissions.  Mr Papallo appeared for Mr Gorczynski on 4 October 2002.  The applicant put in written submissions on 16 October 2002.

3. The applicant seeks costs pursuant to s.32 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) and s.79(2) and (3) of the Federal Magistrates Act 1999 (Cth) and the Federal Magistrates Court Rules 2001 (Cth). The applicant submits that the respondent should bear the costs of the creditor’s petition because the respondent did…