Inspector General in Bankruptcy v Coshott

Link copied
Case Copied 48 min read

FEDERAL COURT OF AUSTRALIA

Inspector General in Bankruptcy v Coshott [2014] FCA 42

Citation: Inspector General in Bankruptcy v Coshott [2014] FCA 42
Parties: INSPECTOR GENERAL IN BANKRUPTCY v ROBERT GILBERT COSHOTT
File number: NSD 1444 of 2013
Judge: GRIFFITHS J
Date of judgment: 7 February 2014
Catchwords: BANKRUPTCY – whether trustee of bankrupt’s estate (“trustee”) or bankrupt liable to pay for the taxation of various bills of costs concerning the trustee’s remuneration and the professional fees of his legal advisers – whether taxation requested by the respondent or the trustee – whether trustee made a claim for remuneration – alternative claim by the applicant that liability to pay for the taxation arises in contract
Legislation: Bankruptcy Act 1966 (Cth) ss 11, 12, 15, 162, 167
Bankruptcy Regulations 1966 (Cth) regs 8.09, 8.10, 8.11, 8.11A
Public Service Act 1999 (Cth) s 65
Cases cited: Adsett v Berlouis (1992) 37 FCR 201
Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570
Attorney-General vGreat Eastern Railway Co (1880) 5 App Cas 473
Wenkart v Pantzer (2003) 132 FCR 204
Wenkart v Pantzer (2006) 223 ALR 384
Date of hearing: 9 December 2013
Date of last submissions: 4 February 2014
Place: Sydney
Division: GENERAL DIVISION
Category: Catchwords
Number of paragraphs: 84
Counsel for the Applicant: Mr A P Spencer
Solicitor for the Applicant: Tresscox
Counsel for the Respondent: The respondent appeared on his own behalf

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1444 of 2013
BETWEEN:

INSPECTOR GENERAL IN BANKRUPTCY
Applicant
AND:

ROBERT GILBERT COSHOTT
Respondent

JUDGE:

GRIFFITHS J

DATE OF ORDER:

7 FEBRUARY 2014

WHERE MADE:

SYDNEY

THE COURT DECLARES THAT:

1.The respondent is the person who requested and/or asked for the taxation conducted by Alyson Wendy Ashe and pursuant to which Ms Ashe signed a certificate of taxation dated 13 February 2013 (“the taxation”).

2.The respondent is and was liable to pay the costs of the taxation 7 days after receipt of the applicant’s tax invoice dated 4 March 2013 in accordance with reg 8.11A(2) of the Bankruptcy Regulations 1966 (Cth) as in force immediately prior to 1 December 2010.

THE COURT ORDERS THAT:

1.The respondent is to pay the applicant $144,962.12 plus interest.

2.The parties are to seek to agree an order for costs by 14 February 2014 and to file an agreed order by close of business on that day. If they cannot reach agreement each is to file and serve their proposed order, together with a supporting written submission not exceeding 2 pages in length, by 18 February 2014. 

3.Final orders will be made on the papers and without a further oral hearing.

4.The application is otherwise dismissed.

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


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 1444 of 2013
BETWEEN:

INSPECTOR GENERAL IN BANKRUPTCY
Applicant
AND:

ROBERT GILBERT COSHOTT
Respondent

JUDGE:

GRIFFITHS J

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Inspector General in Bankruptcy v Coshott and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2014] FCA 42
Decision Date

CaseChat Overview and Summary

The matter of Inspector General in Bankruptcy v Coshott before the Federal Court of Australia concerned the liability to pay for the taxation of various bills of costs related to the trustee's remuneration and professional fees of his legal advisers within the context of a bankrupt's estate. The case revolved around the dispute between the applicant, the Inspector General in Bankruptcy, and the respondent, the bankrupt, regarding who should bear the cost of taxing these bills of costs. Specifically, the case examined whether the bankrupt or the trustee of the estate was liable for these costs, and whether the taxation was requested by the respondent or the trustee.

The central legal issues the court had to resolve were whether the bankrupt or the trustee should bear the cost of taxing the bills of costs, and whether the trustee had made a claim for remuneration that required taxation. Additionally, the court considered the applicant's alternative claim that the liability to pay for the taxation arose from a contractual obligation. The court had to interpret relevant provisions of the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 1978, particularly sections 162 and 167 concerning the trustee's remuneration and the taxation of costs, respectively.

The court concluded that the bankrupt was liable for the costs of taxing the bills of costs. The reasoning was based on the statutory framework provided by sections 162 and 167 of the Bankruptcy Act 1966 (Cth), which outline the procedures for the trustee's remuneration and the taxation of costs. The court found that the bankrupt's request for taxation was valid and that the costs related to the trustee's remuneration and the professional fees of his legal advisers were properly subject to taxation. The court also noted that the trustee had made a claim for remuneration, which necessitated the taxation process. The alternative claim based on contract was not pursued further as the statutory basis provided a clear framework for the court's decision.

The orders of the court mandated that the respondent, the bankrupt, was to pay the applicant, the Inspector General in Bankruptcy, the sum of $144,962.12 plus interest. The court also directed the parties to attempt to agree on an order for costs by a specified date, with provisions for filing proposed orders if an agreement could not be reached. The final orders were to be made on the papers and without a further oral hearing, effectively concluding the matter.

Orders

Orders of the court

1. The respondent is to pay the applicant $144,962.12 plus interest.

2. The parties are to seek to agree an order for costs by 14 February 2014 and to file an agreed order by close of business on that day. If they cannot reach agreement each is to file and serve their proposed order, together with a supporting written submission not exceeding 2 pages in length, by 18 February 2014.

3. Final orders will be made on the papers and without a further oral hearing.

4. The application is otherwise dismissed.

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

Background

Background to the litigation

It is convenient to first summarise the relevant background facts before outlining the relevant legislative provisions and the parties’ respective arguments. Summary of relevant background facts The applicant is the Inspector-General in Bankruptcy, which is an office created by s 11(1) of the Act. He is the chief executive of the Insolvency and Trustee Service Australia (ITSA), which is an executive agency established under s 65 of the Public Service Act 1999 (Cth) and has responsibility for the administration and regulation of the personal insolvency system in Australia. ITSA’s name was recently changed to the Australian Financial Security Authority, but it is convenient to continue to refer to it as ITSA because that was its name at the time of the relevant events. On 7 November 2008, a sequestration order was made against the respondent’s estate. On 18 December 2008, Mr John Burke replaced the official trustee as trustee of the respondent’s estate. On 16 September 2010, the respondent sent an email at 2:44 pm to Mr Bradley O’Brien at ITSA, in which he made a request, which was expressed to be made pursuant to reg 8.09, for the taxing officer to tax what he described as a claim made in his estate by Mr Burke “in the sum of $626,787.50 for remuneration and costs”. This request was made in the context of litigation, the parties to which included the respondent and his trustee in bankruptcy. That litigation had been allocated to the docket of Rares J. In the course of the litigation, the respondent raised the possibility of there being an annulment of his bankruptcy under s 153A of the Act. For that to occur, it was necessary for the trustee to be satisfied that all the bankrupt’s debts had been paid in full (see s 153A(1)). A “bankrupt’s debts” is defined in s 153A(6) as including “the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee”. Mr O’Brien replied to the respondent in an email sent at 5:29 pm on 16 September 2010 advising that the respondent should contact Mr Karolyi at ITSA concerning his request for a taxation. Mr O’Brien also stated that, for completeness, if the respondent was relying on a previous email from Mr O’Brien to him as notice of the trustee’s claim for remuneration, his earlier email “contained estimates only, albeit based on my discussion with the trustee” and that there may be an issue as to whether Mr O’Brien’s earlier email was “sufficient ‘notice’ for the purposes of seeking a taxation”. By a further email sent on 16 September 2010 at 5:57 pm, the respondent informed Mr O’Brien that he had “an email from Mr Burke setting out his claim for remuneration and Nash and Johnson’s costs”. The reference in the respondent’s email to “Nash and Johnson” is a reference to Mr Burke’s legal advisers. Mr Burke’s email was not adduced in evidence for reasons which were unexplained. It is apparent, however, that the respondent was relying upon that email as setting out the trustee’s claim for remuneration and costs and was not simply relying on Mr O’Brien’s earlier email which provided an estimate of those costs. It is also evident from this communication, as is the case with his earlier email, that the respondent intended to request a taxation not only of Mr Burke’s remuneration but also the costs and disbursements incurred by Mr Burke as trustee of the respondent’s estate, including presumably the professional fees of Mr Burke’s legal advisers.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Division 2 of Part VIII of the Act dealt with remuneration and costs. Section 162, which dealt with the subject of a trustee’s remuneration, was relevantly in the following terms:162 Trustee’s remuneration—general [see Table B](1)Subject to section 161B, the remuneration of the trustee of the estate of a bankrupt may be fixed, from time to time, by resolution of the creditors or, if the creditors so resolve, by the committee of inspection.….(4)Where the remuneration of the trustee is not fixed by the creditors or the committee of inspection, the trustee is to be remunerated as prescribed by the regulations.…(6)Where a trustee receives remuneration for his or her services, a payment in respect of the performance by another person of the ordinary duties that are required by this Act to be performed by the trustee shall not be allowed in his or her accounts unless the payment was authorized by resolution of the creditors or by the committee of inspection.(6A)The trustee must, in relation to the trustee’s remuneration, give such notices to the bankrupt and creditors as are required by the regulations.… Section 167, which dealt with the taxation of costs, was in the following terms, noting that the Act did not then contain a s 167(2):167 Taxation of costs(1)The trustee of a bankrupt’s estate may require a bill of costs for services provided by a person in relation to the administration of the estate to be taxed by a taxing officer. The trustee may make the requirement on the trustee’s own initiative, or at the request of the bankrupt or a creditor.(3)A person whose bill of costs is required to be taxed may deliver for taxation a bill containing detailed items or a bill for a gross sum.(4)Where a bill of costs for a gross sum is delivered for taxation, the person by whom the bill is delivered shall furnish the taxing officer with such details of the costs covered by the bill as the taxing officer requires.(5)The taxing officer shall satisfy himself or herself before passing a bill that the employment of the person in respect of the particular matters out of which the costs arise was duly authorized and was reasonable and necessary.(6)Where the trustee proposes to distribute a final dividend, the trustee shall, not later than 28 days before the date on which the trustee proposes to do so, request each person whose bill of costs is required to be taxed to give the person’s bill to a taxing officer.(7)If a person so requested to deliver his or her bill fails to do so within 28 days after receipt of the request, the trustee shall declare and distribute the dividend without regard to any claim of that person in respect of the matters as to which the bill was requested and in that case neither the trustee nor the estate of the bankrupt is under any further liability in respect of the claim.(8)A person interested may appeal to the Court from a decision of the taxing officer in allowing or disallowing a bill of costs or bill of charges or an item in such a bill.(9)In this section:taxing officer means a person appointed by the Inspector General for the purposes of this section.