Jarvie v Insolvency & Trustee Service Australia
[2009] FMCA 534
•9 June 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JARVIE v INSOLVENCY & TRUSTEE SERVICE AUSTRALIA & ORS | [2009] FMCA 534 |
| BANKRUPTCY – COSTS – Application to set aside costs order made in favour of the second respondent – alleged denial of procedural fairness in costs order – whether Court is able to re-open final orders – reconsideration of costs order – costs order not varied. |
| Bankruptcy Act 1966 (Cth), s.104(1) Federal Magistrates Court Rules 2001 (Cth), r.16.05(2)(e) |
| Jarvie v Insolvency & Trustee Service Australia & Ors [2008] FMCA 1511 Kioa v West (1985) 62 ALR 321 Skipworth v State of Western Australia & Ors (No.2) [2008] FMCA 544 |
| Applicant: | RUSSELL ALAN JARVIE |
| First Respondent: | INSOLVENCY & TRUSTEE SERVICE AUSTRALIA |
| Second Respondent: | CM JEWELL & ASSOCIATES PTY LTD |
| Third Respondent: | DIMOCKS FAMILY LAWYERS |
| File number: | SYG 221 of 2008 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 12 May 2009 |
| Delivered at: | Sydney |
| Delivered on: | 9 June 2009 |
REPRESENTATION
| The Applicant: | The applicant appeared in person as a self-represented litigant |
| Counsel for the First Respondent: | Mr S M Golledge |
| Second Respondent: | No appearance |
| Third Respondent: | No appearance |
ORDERS
The interim application filed on 27 March 2009 is dismissed.
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 221 of 2008
| RUSSELL ALAN JARVIE |
Applicant
And
| INSOLVENCY & TRUSTEE SERVICE AUSTRALIA |
First Respondent
| CM JEWELL & ASSOCIATES PTY LTD |
Second Respondent
| DIMOCKS FAMILY LAWYERS |
Third Respondent
REASONS FOR JUDGMENT
The proceedings
This is an interim application brought by the applicant, Russell Alan Jarvie, to have the costs order made on 13 January 2009 in favour of the second respondent, CM Jewell & Associates, set aside. The Order reads:
The applicant is to pay the second respondent’s costs to be taxed and paid from the estate of the applicant debtor, Russell Alan Jarvie.
In support of the interim application, Mr Jarvie filed an affidavit sworn on 27 February 2009. This application seeks that the order be set aside but does not elaborate on the reasons why it should be set aside.
The original application in the proceedings filed by Mr Jarvie sought review of a decision of the Trustee of his estate to admit Proofs of Debt lodged by two creditors:
a)CM Jewell & Associates; and
b)Dimocks Family Lawyers.
Mr Jarvie’s application was dismissed , allowing the admission of the Proof of Debt lodged by Dimocks and held that the proof of debt lodged by CM Jewell & Associates should be admitted for an amended amount: Jarvie v Insolvency & Trustee Service Australia & Ors [2008] FMCA 1511.
The following costs order was made when that decision was handed down:
The first and third respondent’s costs be taxed and paid from the estate of the debtor in accordance with the Bankruptcy Act 1966 (Cth).
At the time of that decision, all issues in respect of the first and third respondents (Insolvency & Trustee Service Australia (ITSA) and Dimocks Family Lawyers respectively) had been resolved, while the second respondent (CM Jewell & Associates) was subject to the following order:
That the Proof of Debt filed by CM Jewell & Associates Pty Ltd be withdrawn and a fresh Proof of Debt be tendered.
Jarvie v Insolvency & Trustee Service Australia & Ors (supra) at [39]-[40] states:
39. The admission made by Mr Jewell in his affidavit (paragraphs 16-19 inclusive) identifies an error in the preparation of the Proof of Debt. That should be corrected and I order that the Proof of Debt be withdrawn and a fresh proof tendered.
40. Dimocks Family Lawyers are entitled to fees for representing Mr Jarvie pursuant to the Family Law Rules governing the entitlement of a solicitor to be paid in family law matters. Dimocks Family Lawyers rely upon the provision of the rules which entitle a lawyer or solicitor to be paid. They provide a cost agreement in accordance with the Family Law Rules and instructions are given to proceed in a matter notwithstanding the absence of an executed cost agreement
The second respondent’s original Proof of Debt claimed a sum of $5,410.63. Mr Jewell’s affidavit sworn on 1 May 2008 and filed in the original proceedings conceded that the amount payable by the second respondent should have been reduced by $907.50 to the corrected amount of $4,503.13. In line with that concession, I ordered that the second respondent withdraw its Proof of Debt lodged with the Trustee and that a revised proof of debt be lodged.
Mr Jarvie disputed the amount claimed by CM Jewell & Associates in its Proof of Debt, not only on the basis of the error which was conceded by Mr Jewell, but also on the basis that the work performed by Mr Jewell fell outside the scope of work provided for by an Order of the Land & Environment Court. That Order provided that a site meeting take place as part of the preparatory steps prior to the Court hearing, however, that meeting did not take place. Mr Jewell attended Court in accordance with that Order as the Court appointed expert but was not called to give evidence. Mr Jarvie complained that Mr Jewell should not have been entitled to fees for attending the hearing as he was not called to give evidence.
On the evidence available to this Court at the original hearing, there does not appear to be any dispute between the parties that Mr Jewell and other experts attended the Land & Environment Court hearing on 28 March 2006 in accordance with that Court’s orders made by Dixon R on 23 March 2006. Mr Jewell’s affidavit at paragraph18 indicates that none of the experts were called to give evidence, as during the course of the day Mr Jarvie withdrew his appeal and the matter did not proceed past that point.
Mr Jarvie’s course of his action during the Land & Environment Court proceedings was unknown to the other parties. Consequently, the experts were required to attend which they did and were also entitled to payment of their expenses. In Jarvie v Insolvency & Trustee Service Australia & Ors (supra) at [39], I indicated that I was satisfied that Mr Jewell had a legitimate claim for expenses incurred for his attendance at the Land & Environment Court on 28 March 2006. Mr Jarvie argued that Mr Jewell’s claim should be reduced to $2,502.50 on the basis that the costs associated with the court attendance should be denied and removed from the Proof of Debt.
I found that Mr Jewell had a legitimate claim for the expenses incurred for his attendance and travel to the Land & Environment Court and that the only defect in the Proof of Debt was the conceded amount which was incorrectly included. Consequently, I made orders that the Proof of Debt should be withdrawn and an amended Proof of Debt be lodged.
Submissions by Mr Jarvie on costs
Mr Jarvie wrote to the Court on 17 December 2008 responding to the second respondent’s submissions for a costs application. Mr Jarvie argued that the Proof of Debt submitted by CM Jewell & Associates contained two errors:
a)That the Land & Environment Court had stipulated in an Order a task that CM Jewell & Associates was to perform and for which it could charge but this was not complied with.
b)The inclusion of the amount of $1,815.00 was paid by Hawkesbury City Council but had been incorrectly invoiced by CM Jewell & Associates.
The error in (b) was admitted in para.16 to the affidavit of Mr Jewell sworn on 1 May 2008.
Mr Jarvie submits that he did not appear at the hearing of 13 May 2008. On that occasion the matter was dismissed with a costs order made against him. Subsequently, Mr Jarvie notified the Court that he had not been notified of the hearing. On 29 May 2008, I made an Order setting aside the Order made on 13 May 2008 and set the matter down for hearing on 8 July 2008 at 10.15am. The matter was again listed on 15 September 2008. Mr Jarvie submits that in the period between May and September 2008, CM Jewell & Associates did not lodge or amend its proof of debt to ITSA despite the concession made in Mr Jewell’s affidavit. Mr Jarvie’s argued that the original Proof of Debt lodged by CM Jewell & Associates was incorrect and therefore he had no choice to have the matter heard in court and point out the mistakes made by CM Jewell & Associates who were required to pay ITSA’s legal fees and court filing fees.
Mr Jarvie argued that he should not be penalised for pointing out errors made by CM Jewell & Associates in their original Proof of Debt.
Costs order
On 13 January 2009 and after considering the submissions of Mr Benatatos and Mr Jarvie, I ordered CM Jewell & Associates’ costs to be taxed and paid from the estate of the applicant debtor, Russell Alan Jarvie.
Mr Jarvie then filed an application seeking to set aside the Order made on 13 January 2009. The matter was listed for directions on 14 April 2009 when the following Order was made:
1. The respondent [Insolvency & Trustee Services Australia] to file written submissions by 28 April 2009 limited to standing.
2. The applicant [Mr Jarvie] file written submissions in respect of the application by 5 May 2009.
3. The hearing be set down for 12 May 2009 at 10.15am.
ITSA’s representative was requested to prepare brief written submissions on Mr Jarvie’s standing in relation to pursuing further proceedings and on the position of the Trustee.
Submissions by the Insolvency & Trustee Service Australia
Mr Golledge, for ITSA, assisted the Court in the preparation of brief written submissions on the issue of Mr Jarvie’s standing. Mr Golledge submits that Mr Jarvie had standing pursuant to s.104(1) of the Bankruptcy Act 1966 (Cth) (“the Act”) to institute the original proceedings seeking review of the Trustee’s decision to admit Proofs of Debt lodged by two creditors, CM Jewell & Associates and Dimocks Family Lawyers. With respect to the interim application seeking to have the costs order in favour of CM Jewell & Associates set aside, Mr Golledge submits that the effect of such an order would reduce the surplus, which would otherwise revert to Mr Jarvie on any annulment. For that reason, the Official Trustee accepts that Mr Jarvie has sufficient interest in the subject matter of that Order to establish the necessary standing to appeal.
Submissions by CM Jewell & Associates on costs
Mr Jewell’s solicitor, Mr Benatatos of Benatatos White Solicitors, advised the Court on 11 December 2008 that the amended Proof of Debt for $4,503.13 had been lodged and that Mr Jewell had received payment for that amount from the Trustee. Mr Jarvie was not successful in having Mr Jewell’s claim reduced to $2,502.50 and in accordance with the usual practice, costs should follow the event. An order was made that costs be paid from the estate of Mr Jarvie in the same respects as the first and third respondents in those proceedings. This order was made on the basis that Mr Jewell made a concession during the course of the proceedings and, accordingly, should not be precluded from his entitlement to recover his costs in the proceedings.
Mr Jarvie had the opportunity to resolve the issue on the terms of Mr Jewell’s concession. However, he elected to continue his case and challenge other aspects of the Proof of Debt which was unsuccessful. Submissions from Mr Benatatos dated 11 December 2008 and sent to the Court and Mr Jarvie stated that the second respondent had filed the amended Proof of Debt and received payment from the Trustee as a consequence.
Submissions by Mr Jarvie
At the hearing of this interim application, Mr Jarvie made brief oral submissions effectively summarising the course of the proceedings associated with this matter. The interim application, supporting affidavit and oral submissions made no specific claims based on any authorities as to the basis on which this Court was being asked to review Orders previously made by it.
Consideration
A comprehensive review of this Court’s inherent jurisdiction to vary or set aside a costs Order is in Skipworth v State of Western Australia & Ors (No 2) [2008] FMCA 544 at [27]-[53] per Lucev FM. His Honour concluded at [52]-[53] of that decision:
[52] There is therefore no basis for the operation of any implied incidental power to vary or set aside the Costs Order, particularly where that order is part of final orders, finalising the relevant litigation.
[53] The Court notes that even if there was an implied incidental power the setting aside of part of a final order which finalises the litigation would require extreme circumstances.
I rely on this statement of the law.
Costs orders were made in the absence of the parties on 13 January 2009. However, the parties were physically present when the judgment was handed down and orders were made, including the costs order in respect of the two parties on 7 November 2008. The concern of the Court is that this matter, which involves a relatively small amount, has been before the Court on eight separate occasions. This was partly because Mr Jarvie who, as a self-represented litigant, had failed to serve the other parties with court orders and scheduled dates of hearing. Similarly, in the earlier stages of the proceedings, the Court and the other parties found it extremely difficult to effectively make contact with Mr Jarvie through an intermediary. This resulted in non-appearance at hearings. On several occasions, I granted Mr Jarvie the indulgence of reinvigorating proceedings by setting aside dismissal orders for non-appearance and gave him the opportunity to fully ventilate the issues he was pursuing.
At the time the first judgment was handed down (Jarvie v Insolvency & Trustee Service Australia & Ors [2008] FMCA 1511), the issue in relation to ITSA and Dimocks Family Lawyers had been resolved and finalised. Although CM Jewell & Associates was required to file an amended Proof of Debt, it was otherwise successful in its defence. It is appropriate costs follow the event, as is the usual practice. Compliance with the orders made on 7 November 2008 facilitated the Court to make appropriate costs orders. Thereafter, CM Jewell & Associates filed written submissions and provided Mr Jarvie with copies. The Court received Mr Jarvie’s written submissions in response to Mr Benatatos’ submissions. The parties were notified of the subsequent cost orders at the time that they were made and copies were despatched to them.
Rule 16.05(2)(e) of the Federal Magistrates Court Rules 2001 (Cth) enables a costs order to be varied or set aside. However, there is no evidence that the cost order made on 13 January 2009 does not reflect the intention of the Court.
The issue in respect as to whether there has been a denial of procedural fairness by not providing an opportunity to be heard is addressed by Mason J in Kioa v West (1985) 62 ALR 321 at 345:
It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it (Twist v Randwick Municipal Council (1976) 136 CLR 106 at 109; ; 12 ALR 379 at 382–3; Salemi (No 2) (CLR) at p 419; Ratu (CLR) at p 476; Heatley v Tasmanian Racing and Gaming Commission (1977) 137 CLR 487 at 498–9 ; 14 ALR 519 at 528; FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 360, 376–7 ; 41 ALR 1 at 13; Annamunthodo v Oilfields Workers’ Trade Union [1961] AC 945). The reference to “right or interest” in this formulation must be understood as relating to personal liberty, status, preservation of livelihood and reputation, as well as to proprietary rights and interests..
I am satisfied that Mr Jarvie was provided with the opportunity to attend Court but elected not to when the original judgment was delivered on 7 November 2008. Mr Jarvie was subsequently provided with a copy of the written submissions prepared by Mr Benatatos in respect of the costs application sought by his client CM Jewell & Associates. This application for costs was originally made during the hearing on 15 September 2008. I am satisfied that Mr Jarvie was provided with an opportunity to provide written submissions on the issue of costs and that it was not necessary to schedule a further hearing to receive oral submissions.
Mr Jarvie has been given the opportunity in respect of the interim application to seek to have the costs order set aside. Significantly, the argument advanced by Mr Jarvie during this interim application was fully ventilated in the original proceedings and found to be unsuccessful.
Conclusion
For the reasons set out above the interim application will be dismissed with no order for costs.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 9 June 2009
0
7
2