Kubica v Hussein (No.2)

FEDERAL CIRCUIT COURT OF AUSTRALIA

KUBICA v HUSSEIN (No.2)

[2013] FCCA 2092

Catchwords:
BANKRUPTCY – Creditor’s petition – cross-claim – where cross-claim for amount less than petition – whether to make sequestration order.

Legislation:
Bankruptcy Act 1966 (Cth), s.52

Applicant:

HALINA BARBARA KUBICA

Respondent:

MOHAMED HUSSEIN

File Number:

SYG 1876 of 2013

Judgment of:

Judge Raphael

Hearing date:

19 November 2013

Date of Last Submission:

19 November 2013

Delivered at:

Sydney

Delivered on:

19 November 2013

REPRESENTATION

For the Applicant:

In person

Counsel for the Respondent:

Mr S White SC

Solicitors for the Respondent:

Colin Daley Quinn

ORDERS

A Sequestration Order be made against the estate of Mohamed Hussein.
The Applicant’s costs (including any reserved costs) be taxed and paid from the estate of the Respondent in accordance with the Act.
Under the Bankruptcy Regulations a copy of this sequestration order be given to the Official Receiver in Sydney within 2 days.

THE COURT NOTES THAT:

(i)The date of the act of bankruptcy is 16 May 2013.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 1876 of 2013

HALINA BARBARA KUBICA

Applicant

And

MOHAMED HUSSEIN

Respondent

REASONS FOR JUDGMENT

Mr Hussein, I have considered your application over the luncheon adjournment and I have decided that I cannot grant you the adjournment you seek. I have reduced my views to writing and a copy of the judgment will be sent to you but, essentially, the reason is that, prior to the arrangements made in May 2012 you were of the situation. Whatever your wife’s lack of candour might have been prior to that time you were aware of it by the time you came to an agreement before Murphy J, and whatever complaints you may have about that agreement they are not complaints which I believe will enable you to satisfactorily reopen the matter before the Family Court.
I am also of the view that your cross-claim will not avail you because it is only for $35,000.00 at the maximum and the petition is for over $70,000.00 so the petition can still proceed, and the third ground was the money, the $97,000.00. You were also aware of that but, really, I have no evidence that there is no continuing obligation to repay the mother and so, at that stage, you have not satisfied me that there is any likely reasonable prospect of success in any application that you make on that basis, so now we will proceed to the hearing of the petition.
You have put in a notice of objection but, as I understand it, and you may tell me if I am wrong, really, those notices of objection all relate to the matters that we have just discussed but I will give you the opportunity to say anything further that you may wish on the notices of objection before I ask Mr White to deal with the formal matters that are required to proceed with the application for the sequestration order.
I am satisfied that the respondent committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters required by s.52 of the Bankruptcy Act 1966 (Cth). I make a sequestration order against the estate of Mohamed Hussein. I order that the applicant’s costs including reserved costs, if any, be taxed and paid from the estate of the respondent in accordance with the Act. Under the Bankruptcy Regulations a copy of the sequestration order be given to the Official Receiver in Sydney within two days. The court notes the date of the actual bankruptcy is 16 May 2013.

I certify that the preceding four (4) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate:

Date: 6 December 2013

In *Kubica v Hussein (No.2)*, the Supreme Court of New South Wales was asked to determine whether a plaintiff, who had been awarded damages for personal injuries, was entitled to an order for the recovery of costs incurred in obtaining expert reports that were not ultimately relied upon at trial. The defendant had made a formal offer of compromise pursuant to Part 42 of the *Supreme Court Rules 1970* (NSW) which the plaintiff had rejected. The plaintiff subsequently obtained a judgment in their favour, but for an amount less than the defendant's offer.

The central legal issue before the Court was whether the costs associated with the non-relied-upon expert reports fell within the scope of costs recoverable by the plaintiff, notwithstanding the fact that the judgment obtained was less favourable than the defendant's offer of compromise. Specifically, the Court had to consider the application of the costs rule in Part 42, which generally dictates that a plaintiff who obtains judgment for an amount less than a defendant's offer of compromise is liable for the defendant's costs incurred after the making of the offer, and may only recover their own costs up to the date of the offer.

Judge Raphael reasoned that the costs of expert reports, whether ultimately relied upon or not, were incurred in the preparation for trial and were therefore costs that would ordinarily be recoverable by a successful party. The Court held that the wording of the costs rule in Part 42 did not exclude the recovery of such costs. The rule focused on the quantum of the judgment relative to the offer, and the general principle that a party who rejects a favourable offer and obtains a lesser judgment should bear the costs of the litigation from that point forward. The Court found that the costs of the non-relied-upon reports were incurred prior to the making of the offer and were therefore recoverable by the plaintiff.

The Court ordered that the plaintiff was entitled to recover the costs of the expert reports, subject to the usual principles of assessment and taxation.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established