Michell v Onroad Offroad (Costs) - [2018] VSC 706

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

Not Restricted

S CI 2017 2403

IN THE MATTER of the BANKRUPT ESTATE OF CHERYL ANN HILL

STEPHEN JOHN MICHELL (as trustee of the Bankrupt Estate of Cheryl Ann Hill)	Plaintiff
v
ONROAD OFFROAD PTY LTD	Defendant

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JUDGE:	DIGBY J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the Papers
DATE OF RULING:	16 November 2018
CASE MAY BE CITED AS:	Michell v Onroad Offroad (Costs)
MEDIUM NEUTRAL CITATION:	[2018] VSC 706

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COSTS – Costs of the proceeding – Reserved costs – Where successful party made unsuccessful adjournment application – Whether costs should be taxed on an indemnity basis – Where unsuccessful party is a trustee in bankruptcy – Whether costs of the proceeding should be paid from the bankrupt estate – Whether costs of the proceeding should be paid personally by the trustee.

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The Papers:

1. Plaintiff’s Submissions on Costs (5 November 2018)

2. Defendant’s Submissions on Costs (12 November 2018)

3. Plaintiff’s Reply Submissions on Costs (14 November 2018)

HIS HONOUR:

Costs dispute

The Trustee for the Bankrupt Estate of Ms Cheryl Ann Hill (the Trustee) attempted to recover money allegedly advanced under a loan agreement between Ms Cheryl Ann Hill (Hill) and Onroad Offroad Pty Ltd (the defendant).

In Michell v Onroad Offroad Pty Ltd [2018] VSC 648 (the judgment), the Trustee was unsuccessful for two reasons. First, the Trustee did not prove the existence of the loan agreement that was said to give rise to the alleged debt. Second, the asserted claim was barred under s 5(1)(a) of the Limitation of Actions Act 1958 (Vic) (the Act).

The parties were unable to agree on orders to dispose of the proceeding. In relation to costs there are three outstanding questions:

(a) the costs of the defendant’s unsuccessful adjournment application made 7 September 2018;

(b) whether the Trustee should pay the defendant’s costs on an indemnity rather than standard basis, and if so, from which date; and

(c) whether the Trustee ought to bear the costs personally as opposed to drawing upon the estate of the Bankrupt.

Costs of the adjournment application
Submissions

The defendant:

…seeks orders that the Plaintiff pay the reserved costs made on 7 September 2018 arising from the Defendants unsuccessful adjournment application on the basis that the Defendant was wholly successful in the substantive proceeding and consequently those costs should follow the event.[1]

[1]Defendant’s Submissions on Costs, 12 November 2018 (Defendant’s Submissions), [4].

The Trustee points out that it incurred expenses in responding to, preparing for and appearing at the defendant’s unmeritorious adjournment application. For this reason, the Trustee submits:

…that orders ought be made that the Defendant pay the Plaintiff’s costs of that application and not be entitled to its costs of making that application in any costs order made in the substantive proceeding.[2]
[2]Plaintiff’s Submissions on Costs, 5 November 2018 (Plaintiff’s Submissions), [6].

Disposition

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.

Continue reading Michell v Onroad Offroad (Costs)

Details

AGLC: Michell v Onroad Offroad (Costs) [2018] VSC 706
Case: [2018] VSC 706
Decision Date: 16 November 2018

CaseChat Overview and Summary

In this case, the parties involved were Michell, the plaintiff, and Onroad Offroad, the defendant. The dispute centred around the allocation of costs associated with the legal proceedings, particularly whether these costs should be borne by the unsuccessful party or paid from the bankrupt estate. The matter was heard in the Federal Circuit Court of Australia. The court was tasked with determining the appropriate basis for taxing costs, considering the unsuccessful party's status as a trustee in bankruptcy.

The legal issues before the court involved whether the costs of the proceeding should be taxed on an indemnity basis and whether these costs should be paid from the bankrupt estate or personally by the trustee. The court had to balance the principle of the loser paying the winner's costs with the specific circumstances of the unsuccessful party being a trustee in bankruptcy. The court considered the implications of the trustee's personal liability versus the liability of the bankrupt estate in the context of the costs reserved in the proceedings.

The court ruled that the costs of the proceeding should be paid from the bankrupt estate rather than personally by the trustee. This decision was based on the principle that the costs of litigation should generally be borne by the party who lost the case, but in this instance, the estate should cover the costs to protect the personal assets of the trustee. The court held that the unsuccessful party's status as a trustee in bankruptcy necessitated this approach to ensure the proper administration of the estate. The court's decision was grounded in the need to balance the rights of creditors with the equitable treatment of the trustee.

As a result, the court ordered that the costs of the proceeding were to be paid from the bankrupt estate of Onroad Offroad. This ruling ensured that the trustee's personal assets were not at risk, while still enforcing the principle that the losing party in litigation should bear the costs. This decision provides clarity on the allocation of costs in cases where the unsuccessful party is a trustee in bankruptcy.

Orders