O'SULLIVAN v Central Sydney Area Health Service and Anor (No.2) - [2005] FMCA 1657

FEDERAL MAGISTRATES COURT OF AUSTRALIA

O'SULLIVAN v CENTRAL SYDNEY AREA HEALTH SERVICE & ANOR (No.2)

[2005] FMCA 1657

BANKRUPTCY – Costs application – normal rule applied.

Bankruptcy Act 1966 (Cth), ss.27, 32

Latoudis v Casey (1991) 170 CLR 534
Nair-Marshall v Secretary, Department of Family and Community Services [2005] FCA 1341
Ruddock v Vadarlis [2001] FCA 1965

Applicant:

BRENDAN O'SULLIVAN

First Respondent:

CENTRAL SYDNEY AREA HEALTH SERVICE

Second Respondent:

THE OFFICIAL TRUSTEE IN BANKRUPTCY

File Number:

SYG 1439 of 2005

Judgment of:

Smith FM

Last submission:

18 October 2005

Delivered at:

Sydney

Delivered on:

16 November 2005

REPRESENTATION

Counsel for the Applicant:

Mr C Murtough

Solicitors for the Applicant:

DPN Company

Counsel for the First Respondent:

Mr A Moses

Solicitors for the First Respondent:

Bolzan & Dimitri

Solicitors for the Second Respondent:

Lobban McNally

ORDERS

The applicant must pay the costs of the first respondent as agreed or as taxed under Order 62 of the Federal Court Rules and calculated at

80 per cent of the costs payable under those Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1439 of 2005

BRENDAN O'SULLIVAN

Applicant

And

CENTRAL SYDNEY AREA HEALTH SERVICE & ANOR

First Respondent

THE OFFICIAL TRUSTEE IN BANKRUPTCY

Second Respondent

REASONS FOR JUDGMENT

On 8 July 2005 I gave ex tempore reasons for dismissing the application in this matter, and set a time-table for written submissions to be made on issues of costs. My reasons were subsequently revised and published as O’Sullivan v Central Sydney Area Health Service & Anor [2005] FMCA 968.
It is unnecessary for me to repeat the background to the matter or my reasons. In short, I declined to make declaratory orders concerning the effect of the applicant’s bankruptcy on his ability to continue proceedings against the first respondent under the Anti-discrimination Act 1977 (NSW) which are pending in the NSW Administrative Decisions Tribunal. I considered that the material before me was insufficient to allow the Court to be satisfied as to necessary facts, that the application was premature due to a lack of clarity about the relief sought by the applicant in the Tribunal, and that the issues would be better decided by the Tribunal and not this Court.
The first respondent applied for an order for costs against the applicant as agreed or taxed. No application was made for a costs order against a legal representative of the applicant, although rule 21.07 was cited and it was suggested that this “is a matter for the Court”. However, in the absence of a clear application and supporting submission, I would not contemplate making such an order.
In relation to costs against the applicant, the first respondent submitted that the normal rule should be applied: that costs should follow the event, citing Latoudis v Casey (1991) 170 CLR 534, and Ruddock v Vadarlis [2001] FCA 1865.
The submissions of counsel for the applicant in response were extensive and diffuse. I have considered all of them. Some submissions appeared to canvass the correctness of my principal judgment and the exercise of my discretion to refuse substantive relief. However, plainly, I should address the issue of costs upon the basis that I correctly dismissed the application for the reasons I gave.
Counsel for the applicant submitted that the determination of costs should await the outcome of the proceedings before the Administrative Decision Tribunal (ADT), and in particular its ruling on the bankruptcy issues. However, in my opinion, that outcome could have no bearing on my discretion in relation to the proceeding in this court which was completed by my order. In my opinion, whatever the outcome in the ADT, it would not establish that the first respondent should not receive its costs in the application which I dismissed. I also consider that the first respondent is entitled to have its application for costs decided without further delays. My deciding the costs application now can have no effect on the applicant’s position in relation to the ADT proceedings.
Counsel submitted that there were special circumstances which justified departing from the normal rule. These circumstances included counsel’s reading of s.27 of the Bankruptcy Act 1966 (Cth), a letter from the Insolvency and Trustee Service Australia (ITSA), and the raising of the bankruptcy issue by the respondent in the correspondence to which I referred in my previous judgment. However, in my opinion, none of these matters justifies a departure from the normal course. The correspondence shows that the applicant was aware that he had an alternative course of seeking a ruling of the ADT in relation to the bankruptcy issues, and chose to commence the proceeding in this Court which I dismissed. I do not consider that any conduct of the first respondent disentitles it from a costs award.
In relation to the quantum of a costs award, counsel for the applicant contended that costs should be limited on the basis that the first respondent could have made a submitting appearance. However, I consider that it was appropriate for the first respondent to engage counsel and to actively assist the court to address the issues raised by the application. I was grateful for that assistance. I do not consider that its costs should be discounted in any respect. I think it unlikely that there was any duplication of costs which might also be incurred by the first respondent in the ADT proceedings, but this is a matter which, if necessary, can be addressed by a costs assessor.
Under s.32 of the Bankruptcy Act the court has power to “make such orders as to costs as it thinks fit”. The principles applicable to such a power were recently identified by Spender J in Nair-Marshall v Secretary, Department of Family and Community Services [2005] FCA 1341 at [6]-[8]:
[6] Toohey J in Hughes v Western Australia Cricket Association (Inc) & Ors (1986) ATPR 40-748 said at 48,136:
‘The discretion must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.
1. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey (1922) 2 KB 47.
...’
[7] It is correct to say, as the respondent submitted, that:
‘The primary purpose of costs orders are to be compensatory in the sense that they are awarded to indemnify the successful party against the expense to which they have been put by reason of the legal proceedings: Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543 and per McHugh J at 566 to 567.’
[8] McHugh J, in relation to the exercise of discretion, said in Oshlack v Richmond River Council (1998) 193 CLR 72 at 96:
By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs …
If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
Taking into account all the circumstances of the present matter, I consider that these principles should be applied so as to make an award of costs in favour of the first respondent.
Rule 21.2 of the Federal Magistrates Court Rules allows me to set a method by which costs should be calculated and to refer the costs for taxation under Order 62 of the Federal Court Rules. I consider that this course is appropriately adopted in the present case, and that costs should be calculated at 80 per cent of the scales applied on taxation in the Federal Court. Those costs will include the costs incurred in relation to the costs application which I have dealt with in these reasons and any reserved costs.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate: Iliya Marovich-Old

Date: 16 November 2005