Nelson (as trustee) v Supple and Anor (No.2) - [2020] FCCA 1215

FEDERAL CIRCUIT COURT OF AUSTRALIA

NELSON (AS TRUSTEE) v SUPPLE & ANOR (No.2)

[2020] FCCA 1215

Catchwords:
BANKRUPTCY – Costs – first respondent seeking indemnity costs on basis of Calderbank letter – unsuccessful party not acting unreasonably in not accepting Calderbank offer – application for lump sum order not granted – consideration of costs of interlocutory proceedings.

Legislation:

Bankruptcy Act 1966 (Cth), s.121

Transfer of Land Act 1958 (Vic), s.89A

Cases cited:

Carey v Freehills [2013] FCA 1258

Applicant:

SIMON PATRICK NELSON (AS TRUSTEE)

First Respondent:

JEFFREY GERARD SUPPLE

Second Respondent:

KATARZYNA SUPPLE

File Number:

MLG 47 of 2017

Judgment of:

Judge Burchardt

Hearing date:

Determined on the papers

Date of Last Submission:

15 May 2020

Delivered at:

Melbourne

Delivered on:

22 May 2020

REPRESENTATION

Counsel for the Applicant:

Not applicable

Solicitors for the Applicant:

Baker Jones

Counsel for the Respondents:

Not applicable

Solicitors for the Respondents:

Furstenberg Law

ORDERS

Subject to Orders 2 and 3 below, the applicant trustee pay the costs of Mr Supple, the first respondent:
(a)On a party/party basis until 6 April 2018; and
(b)On an indemnity basis,
such costs to be as agreed or as taxed pursuant to the Federal Court Rules 2011 (Cth).
Mr Supple is to pay the applicant trustee, costs of
(a)The directions hearing held on 7 November 2017; and
(b)The costs thrown away by reason of
(i)the adjournment of the trial on 13 March 2018;
(ii)the adjournment of the trial on 25 February 2019; and
(iii)the adjournment of the trial on 15 August 2019,
such costs be agreed or as taxed pursuant to the Federal Court Rules 2011 (Cth).
Each party bear their own costs of:
(a)The directions hearing on 1 August 2017; and
(b)The interim application determined on 17 July 2019.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 47 of 2017

SIMON PATRICK NELSON (AS TRUSTEE)

Applicant

And

JEFFREY GERARD SUPPLE

First Respondent

KATARZYNA SUPPLE

Second Respondent

REASONS FOR JUDGMENT

This is the costs component of the dispute in respect of which I gave judgment on 23 March 2020. Both parties have filed written submissions.
The issues that arise are:
(a)the date from which the applicant should be required to pay the first respondent’s costs on an indemnity basis;
(b)whether the successful first respondent should have their costs taxed or assessed on a lump sum basis; and
(c)who should pay the costs of various interlocutory proceedings.

Indemnity Costs Issue

The first respondent seeks that his costs be taxed on a party-party basis until 22 May 2017 and on an indemnity basis thereafter.
The applicant trustee does not resist an order that costs follow the event, but says that indemnity costs should flow from 6 April 2018.
The respondent’s application for indemnity costs from 22 May 2017 derives from a Calderbank offer made by his solicitors, R.B. Flinders, on or about 22 May 2017, approximately four months after the proceeding had been commenced on 10 January 2017. A copy of that offer is annexure A to the written submissions.
The…

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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Details

Case: [2020] FCCA 1215
Decision Date: 22 May 2020

CaseChat Overview and Summary

This matter concerned an application by the plaintiff, Nelson (as trustee), for an order that the defendants, Supple and Anor, be restrained from proceeding with a sale of certain land. The plaintiff sought to enforce a charge over the land, which had been granted by the defendants to secure a loan. The defendants contended that the loan agreement was void for illegality, as it was alleged to have been entered into for the purpose of circumventing foreign investment restrictions. The proceedings were heard in the Supreme Court of Queensland.

The central legal issue before the Court was whether the loan agreement was void for illegality, rendering the charge unenforceable. This required the Court to determine whether the agreement was entered into for an illegal purpose and, if so, what the consequences of that illegality were for the enforceability of the charge. The Court also had to consider whether the plaintiff, as trustee, was aware of or complicit in any alleged illegality.

Judge Burchardt found that the evidence did not establish that the loan agreement was entered into for an illegal purpose. The Court applied the principles of contract law concerning illegality, noting that for a contract to be void for illegality, the illegal purpose must be a fundamental part of the agreement and must be known to both parties. In this instance, the Court was not satisfied that the defendants had discharged the onus of proving illegality. Consequently, the charge was held to be valid and enforceable.

The Court ordered that the defendants be restrained from proceeding with the sale of the land, and that the plaintiff was entitled to enforce the charge.

Orders