In the Matter Of KANG
[2015] FCCA 2456
•14 August 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| IN THE MATTER OF KANG | [2015] FCCA 2456 |
| Catchwords: BANKRUPTCY – Costs application where applications to be substituted as petitioning creditors withdrawn or dismissed. |
| Legislation: Federal Circuit Court of Australia Act 1999 (Cth), s.79 |
| Sony Computer Entertainment Australia Pty Ltd v Dannoun (No.2) [2001] FCA 1530 |
| First Applicant: | NORBERT KELVIN |
| Second Applicant: | AMADU BANGURA |
| Third Applicant: | PETER RICHARD NAGLE |
| Respondent: | EDWARD KANG |
| File Number: | SYG 2639 of 2014 |
| Judgment of: | Judge Barnes |
| Hearing date: | 14 August 2015 |
| Delivered at: | Sydney |
| Delivered on: | 14 August 2015 |
REPRESENTATION
| Counsel for the First and Second Applicants: | Mr Nagle |
| Solicitors for the Respondent: | Goldsmiths Lawyers |
ORDERS
Leave be granted to Peter Richard Nagle to withdraw the entirety of his application to review the Registrar’s decision of 23 April 2015.
The Amended Interim Application filed on 8 July 2015 be dismissed.
Norbert Kelvin, Amadu Bangura and Peter Richard Nagle pay the costs of these proceedings on an indemnity basis, subject to the proviso that Mr Nagle’s liability be limited to costs incurred up to and including 30 July 2015.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2639 of 2014
| NORBERT KELVIN |
First Applicant
| AMADU BANGURA |
Second Applicant
| PETER RICHARD NAGLE |
Third Applicant
And
| EDWARD KANG |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This matter came before me as an application by the three Applicants to review a decision of a registrar of the Court made on 23 April 2015 filed on 8 May 2015. The application also sought an order that one of the Applicants be substituted as the petitioning creditor in bankruptcy proceedings against the respondent Mr Kang.
Relevantly, the Registrar had dismissed applications for substitution made by each of the Applicants and made orders dismissing the creditor’s petition and that the three Applicants pay the Respondent’s costs from 1 April 2015 on an indemnity basis. The Registrar provided detailed reasons.
At a directions hearing, after discussion of issues in relation to the review application, the Applicants were given the opportunity to file an amended application and any further affidavit evidence in relation to the application to review the exercise of powers by the Registrar. Subsequently, extensions of time were, by consent, granted in relation to the filing of affidavit evidence. The parties filed written submissions.
This matter has had a relatively long history. There has been ample time for the Applicants to clarify the basis on which review was sought in circumstances where the Registrar had dismissed the application of each Applicant to be substituted as petitioning creditor.
An amended interim application was filed on 8 July 2015. As discussed at the start of the hearing today, there remained a lack of clarity in relation to precisely what decision or exercise of power was the subject of the review application and as to the orders sought.
At the start of the hearing today, Mr Nagle, the Third Applicant, informed the Court that he had, by email of 30 July 2015, indicated that he wished to withdraw from these proceedings. However he appeared for Mr Bangura and Mr Kelvin. In the absence of opposition from the Respondent, I granted Mr Nagle leave to discontinue his application for review.
The matter was stood down for some time for the First and Second Applicants to consider whether they were seeking review of the Registrar’s decision to dismiss both their applications for substitution and other issues raised about the proceedings. The Applicants then unsuccessfully sought an adjournment. I did not consider the interests of the administration of justice warranted a further adjournment, given the history of the matter, in particular the time it had been before the Court and the fact that issues about the scope and nature of the review application had been raised in the past. However, I took an early luncheon break to enable the Applicants to consider precisely what orders they were seeking and other issues.
When the hearing resumed Mr Nagle indicated that he sought an order from the Court dismissing the application in its entirety. The Respondent did not oppose that application. In those circumstances I made that order.
The Respondent now seeks the costs of these proceedings on an indemnity basis. As Mr Nagle withdrew on 30 July 2015, costs on an indemnity basis are sought from him only up to that time. Mr Nagle conceded that he should be liable for costs on an indemnity basis up to 30 July 2015. Hence what I have to say hereafter does not relate to him.
The Respondent contended that it had not been established that there was any arguable basis for the applications of Mr Bangura and Mr Kelvin, that the matter had not “got off the ground”, that it had been dismissed on the application of the Applicants, that there were serious deficiencies in every material respect in the application, amended application and a proposed further amended application set out in detail in the Respondent’s written submissions and intended to be relied on had the review application proceeded.
It was also pointed out that the Applicants had been given the indulgence of time this morning. They had sought, unsuccessfully, a further adjournment and then had, ultimately, completely abandoned their applications.
Notwithstanding that there was no evidence or argument before me in relation to the strength of their case, the Applicants submitted that they had a “semi-arguable case” and that while they should be liable for the Respondent’s costs, it should be on a party-party basis. It was submitted that the circumstances were not such as to be so unreasonable as to warrant the imposition of an indemnity costs order in the sense considered in Sony Computer Entertainment Australia Pty Ltd v Dannoun (No.2) [2001] FCA 1530. This submission was put on the basis that the facts in this case were very different from the facts considered in the Sony case.
The Court has power under s.79 of the Federal Circuit Court of Australia Act 1999 (Cth) to award costs in all proceedings before the Court. The power conferred by these provisions is in similar terms to s.43 of the Federal Court of Australia Act 1976 (Cth) relied on by Lindgren J in the Sony case. The discretion to award costs is unfettered, but it must be exercised judicially and in the context of the rules of Court.
It is not disputed that a costs order should be made in favour of the Respondent to the review application. In issue is whether the circumstances are such as to warrant the imposition of an indemnity costs order. Insofar as an attempt was made to distinguish the Sony case, clearly that did involve very different circumstances. However, as Lindgren J observed in Sony (at [4]), the general principle is that circumstances that warrant indemnity costs must be “special”, “must take the case out of the “ordinary” category of case” and “must involve behaviour associated with the conduct of the proceeding by the person sought to be made liable which is so unreasonable as to make it unjust that the other party should be limited in its recovery to party and party costs”. Thus, there should be some special or unusual feature in the case to justify the court departing from the ordinary practice in relation to the award of costs.
It has not been established that the Applicants had an arguable case. The hearing did not proceed to a consideration of the merits. Having regard to the background to and history of the proceedings in this Court, the issues raised and the opportunities given to the Applicants to address difficulties and the lack of clarity in the manner in which the application, the amended application, and the proposed amended application were formulated, what has occurred this morning and the ultimate concession by Mr Kelvin and Mr Bangura that their application for review should be dismissed in its entirety, I am satisfied that this is a case in which the circumstances are special and the case is outside the ordinary category of case. The Applicants’ conduct has been sufficiently unreasonable that it is appropriate that costs should be awarded on an indemnity basis. In particular, the abandonment of the Applicants’ case on the day it was listed for hearing, in circumstances where a number of opportunities were afforded to them to clarify the basis of their case, is such as to warrant an order for costs on an indemnity basis.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Associate:
Date: 8 September 2015
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