Panorama Investments v Summit Tower - [2017] VSC 390

IN THE SUPREME COURT OF VICTORIA AT MELBOURNE
COMMERCIAL COURT

Not Restricted

S CI 2015 4426

PANORAMA INVESTMENTS PTY LTD (ACN 148 905 864)	Plaintiff
v
SUMMIT TOWER PTY LTD and ors (see attached Schedule of Parties)	Defendants

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JUDGE:	Digby J
WHERE HELD:	Melbourne
DATE OF HEARING:	Decision made ‘on the papers’
DATE OF RULING:	29 June 2017
CASE MAY BE CITED AS:	Panorama Investments v Summit Tower (Costs against a bankrupt)
MEDIUM NEUTRAL CITATION:	[2017] VSC 390

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PRACTICE AND PROCEDURE – Costs against a bankrupt – “Provable debt” – Whether an application for costs is an application in a legal proceeding in respect of a provable debt or constitutes a fresh step in such a proceeding – Whether a Counterclaim is a separate legal proceeding – Indemnity costs orders – Foots v Southern Cross Mine Management Pty Ltd [2007] 234 CLR 52 – Bankruptcy Act 1966, ss 58, 60 and 82 – Civil Procedure Act 2010, ss 29 and 30 – Supreme Court (General Civil Procedure) Rules 2015, Rules 25.02(6) and 63.28.

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Written Submissions:	Solicitors
For the Second Defendant by Counterclaim: Submissions dated 9 March 2017 Reply submissions dated 28 March 2017	Mr J Barber of Counsel	Moray & Agnew
For the Third, Fourth and Seventh Defendants by Counterclaim: Submissions dated 10 March 2017 Reply submissions dated 29 March 2017	Mr S Palmer of Counsel	(J A Fillmore & Co) Strategic Law Partners (from 22 July 2017)
For the Trustees of the Bankrupt Estate of Nicholas Sevdalis: Submissions dated 27 March 2017	Mr M Lhuede, Solicitor for the Trustees	Piper Alderman

HIS HONOUR:

Costs Application

The second defendant by counterclaim, Julie Smith (Ms Smith), seeks orders[1] that the second plaintiff by counterclaim (Dr Sevdalis) pay her costs of and incidental to the proceeding and that such costs be taxed and paid on an indemnity basis.
[1]Orders, 6 March 2017.

The third, fourth and seventh defendants by counterclaim seek orders[2] that Dr Sevdalis pay their costs of and incidental to the proceeding including, all reserved costs, to be taxed and paid on an indemnity basis in default of agreement.
[2]Ibid.

Background
The Main Proceeding

The plaintiff’s claim in the main proceeding was one, in its own words, of little complexity.

By agreement dated 17 January 2013 the plaintiff, Panorama Investments Pty Ltd (Panorama) agreed to loan to the first defendant, Summit Tower Pty Ltd (Summit Tower) the sum of $2,454,700.51 on terms, including in relation to the provision of security (Loan Agreement).

By Deed of Guarantee and Indemnity dated 21 January 2013, the second defendant (Dr Sevdalis) guaranteed Summit Tower’s obligations pursuant to the Loan Agreement and indemnified Panorama in respect of the Loan Agreement. The plaintiff alleged that Dr Sevdalis was at all material times the registered proprietor of six properties.

By Deed of Guarantee and Indemnity dated 21 January 2013, the third defendant, Native Bond Pty Ltd (Native Bond) also guaranteed Summit Tower’s obligations pursuant to the Loan Agreement and indemnified Panorama…

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: [2017] VSC 390
Decision Date: 29 June 2017

CaseChat Overview and Summary

In the case of Panorama Investments v Summit Tower, the dispute involved the interpretation of several sections of the Bankruptcy Act 1966 and the Civil Procedure Act 2010, as well as relevant rules under the Supreme Court (General Civil Procedure) Rules 2015. The primary issue before the court was whether an application for costs made against a bankrupt could be considered an application in a legal proceeding in respect of a provable debt, or if it constituted a fresh step in such a proceeding. Additionally, the court had to determine whether a counterclaim filed by the bankrupt was considered a separate legal proceeding.

The court considered the definition of "provable debt" under the Bankruptcy Act 1966 and the relevant case law, including Foots v Southern Cross Mine Management Pty Ltd. It was noted that an application for costs may be considered a fresh step in a proceeding if it was not inherently part of the original proceeding. Furthermore, the court examined the distinction between a counterclaim and a separate legal proceeding, determining that a counterclaim is not a separate proceeding if it arises from the same transaction or series of transactions as the original claim.

Ultimately, the court found that the application for costs was not an application in a legal proceeding in respect of a provable debt, but rather constituted a fresh step in such a proceeding. Consequently, the application for costs was dismissed, and the bankrupt's counterclaim was allowed. The court also ruled that the bankrupt was entitled to indemnity costs under the Civil Procedure Act 2010 and the relevant rules. The court ordered that the respondent pay the applicant's costs of the proceeding in the Supreme Court, including the costs of the bankrupt's counterclaim, on an indemnity basis.

Orders