Inspector‑General in Bankruptcy v Bradshaw [2006] FCA 22
BANKRUPTCY – application to reopen – discretionary factors militating for and against reopening – parties proceeded on an understanding that the applicants would not adduce evidence on quantification of loss – interest in finality of litigation – whether applicants made an election between alternative rights – application to reopen refused
McGregor on Damages (16th ed, Sweet & Maxwell Ltd, 1997)
INSPECTOR‑GENERAL IN BANKRUPTCY AND THE COMMONWEALTH OF AUSTRALIA v DAVID ANTHONY BRADSHAW AND ACE INSURANCE LIMITED
VID 972 OF 2004
KENNY J 31 JANUARY 2006 MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 972 OF 2004
BETWEEN:
INSPECTOR-GENERAL IN BANKRUPTCY FIRST APPLICANT
THE COMMONWEALTH OF AUSTRALIA SECOND APPLICANT
AND:
DAVID ANTHONY BRADSHAW FIRST RESPONDENT
ACE INSURANCE LIMITED (FORMERLY KNOWN AS CIGNA INSURANCE AUSTRALIA LIMITED) SECOND RESPONDENT
JUDGE:
KENNY J
DATE OF ORDER:
31 JANUARY 2006
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The application to re-open the applicants’ case be refused.
AND THE COURT DECLARES THAT:
2.The condition of the bond entered into by the First Respondent under section 155 of the Bankruptcy Act 1966 (Cth) has been contravened.
3.The condition of the bond entered into by the Second Respondent as surety for the bond entered into by the First Respondent under section 155 of the Bankruptcy Act 1966 (Cth) has been contravened.
AND THE COURT FURTHER ORDERS THAT:
4.The application filed on 12 August 2004 be otherwise dismissed.
5.The parties file and serve short submissions on costs on or before 4:30 pm on 7 February 2006.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 972 OF 2004
BETWEEN:
INSPECTOR-GENERAL IN BANKRUPTCY FIRST APPLICANT
THE COMMONWEALTH OF AUSTRALIA SECOND APPLICANT
AND:
DAVID ANTHONY BRADSHAW FIRST RESPONDENT
ACE INSURANCE LIMITED (FORMERLY KNOWN AS CIGNA INSURANCE…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22
Case
[2006] FCA 22
Decision Date
CaseChat Overview and Summary
In the case of Inspector-General in Bankruptcy v Bradshaw, the applicants sought to recover costs associated with the investigation and prosecution of the respondents. The applicants argued that despite not quantifying their losses, they were entitled to recover the costs incurred in relation to the breach of a bond. This included claims for managerial time and employee costs. The applicants further contended that they were entitled to exemplary damages. The central legal issues before the court involved determining whether the applicants were entitled to recover costs without quantifying them and whether the employee status of the officers conducting the investigation impacted the applicants' entitlement to recover costs.
The court examined the applicants' position that they had not quantified their losses from the outset of the proceedings. Despite a clear directive from the court to provide details of the costs incurred, the applicants did not provide such details until later in the proceedings. The court found that the applicants' insistence that the costs "cannot be quantified" was misleading and that a reasonable reader would interpret this as a refusal to quantify costs. The court held that the applicants' failure to quantify their losses precluded them from recovering costs. Additionally, the court found that the employee status of the officers did not disentitle the applicants from recovering costs, but this did not change the outcome as the applicants were already precluded from recovering costs due to their failure to quantify losses.
The court refused the application to re-open the applicants’ case, declaring that the conditions of the bond had been contravened by both respondents. The court dismissed the application filed on 12 August 2004, affirming that the applicants were not entitled to recover costs without first providing a quantified amount. The court's decision underscored the importance of providing detailed cost information as required by the court, and it highlighted that failure to do so would prevent recovery of costs regardless of other factors such as employee status.
Orders
Orders of the court
1. The application to re-open the applicants’ case be refused.
AND THE COURT DECLARES THAT:
2. The condition of the bond entered into by the First Respondent under section 155 of the Bankruptcy Act 1966 (Cth) has been contravened.
3. The condition of the bond entered into by the Second Respondent as surety for the bond entered into by the First Respondent under section 155 of the Bankruptcy Act 1966 (Cth) has been contravened.
AND THE COURT FURTHER ORDERS THAT:
4. The application filed on 12 August 2004 be otherwise dismissed.
5.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
KENNY J
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Established by:
KENNY J
The applicants contended that no issue of managerial time arose, although if it did, they were entitled to recover in respect of such time. They submitted that the employee status of relevant officers did not disentitle the applicants from recovering the costs claimed for them. They contended that “the value of the time they have spent is the cost of the resources used by the applicants in carrying out their duties following a breach of the bond”. They maintained that they were entitled to recover the costs referable to Bradshaw’s prosecution and submitted that the Court could award exemplary damages. Consideration This is a case in which it was clear to the parties from the commencement of the proceeding, and now to the Court, that the applicants had determined to carry on their case without seeking to quantify their loss. In Bradshaw (No 1) at [5], I referred to a letter from the applicants’ solicitors dated 7 July 2000, stating that they would provide details of the costs incurred by the Commonwealth in relation to its investigation and prosecution of Bradshaw. Bradshaw deposed, and it was not disputed, that no such details were provided prior to the hearing. The full significance of this becomes clear when regard is had to certain subsequent correspondence. A letter of 25 August 2004 from Ace’s solicitors to the applicants’ solicitors was an exhibit to Ms Golding’s affidavit (upon which the second respondent relied at this later stage of the proceeding). This letter asked the applicants to “quantify and provide particulars of … costs” and also stated “the amount of costs to the Commonwealth is relevant to the extent to which the bond can be called upon”. The applicants’ letter in reply dated 27 August 2004, which was also an exhibit, specifically said:“It is the applicants’ position that the costs incurred by the Commonwealth deposed to at paragraphs 131 and 132 of the affidavit of Terrence Clarke are not relevant as to whether the applicants are entitled to payment under the bond. The costs referred to at paragraphs 131 and 132 were not costs chargeable nor charged to the Commonwealth by the officers who undertook the investigations and within the Office of the Director of Public Prosecutions and therefore cannot be quantified.” Counsel for the applicants sought to explain what was intended by this letter. He submitted that the reference to “not costs chargeable” was a reference to the fact that no bills were sent by the people who did the work. This may be accepted. The reference to inability to quantify was, so he said, a reference to the fact that there could be no quantification “with any mathematical accuracy”. It may be that this was what the author intended but I doubt that a reader in the respondents’ position would have understood the relevant statement in this way. The gloss that counsel for the applicants would place upon the clear statement in the letter (namely, that the costs “cannot be quantified”) is without foundation.