Pekar v Rickards Legal (No 2)
[2016] FCCA 670
•31 March 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PEKAR v RICKARDS LEGAL (No 2) | [2016] FCCA 670 |
| Catchwords: BANKRUPTCY – Application for indemnity costs consequent upon dismissal of application for annulment of bankruptcy pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth) – indemnity costs ordered. |
| Legislation: Bankruptcy Act 1966 (Cth), s.109 |
| Ogawa v University of Melbourne (No. 2) [2004] FCA 1275 Emanuel Management Proprietary Limited (in liquidation) & Ors v Foster’s Brewing Group Ltd & Ors and Coopers & Lybrand & Ors [2003] QSC 299 |
| Applicant: | FIMA PEKAR |
| Respondent: | RICKARDS LEGAL |
| File Number: | MLG 1636 of 2015 |
| Judgment of: | Judge Hartnett |
| Hearing date: | 25 February 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 31 March 2016 |
REPRESENTATION
| The Applicant: | In Person |
| Counsel for the Respondent: | Mr Rickards |
| Solicitors for the Respondent: | Rickards Legal |
ORDER
The Applicant pay the Respondent’s costs of the proceeding commenced by Application dated 17 July 2015 on an indemnity basis and as a priority payment pursuant to s.109 of the Bankruptcy Act 1966 (Cth). Such costs to be taxed in default of agreement from the commencement of the proceeding.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1636 of 2015
| FIMA PEKAR |
Applicant
And
| RICKARDS LEGAL |
Respondent
REASONS FOR JUDGMENT
By an Application dated 17 July 2015 the Applicant sought orders that:-
“1. The sequestration order made on 2 October 2014 against the estate of Fima Pekar be annulled pursuant to s.153B of the Bankruptcy Act 1966 (Cth).
2. The Respondent pay the Applicant’s costs.
3. Such further orders or other orders as this Honourable Court deems appropriate.”
By Orders made on 28 October 2015 the Court dismissed the application dated 17 July 2015 and said in paragraphs 52 and 53 of the published reasons delivered on 28 October 2015 the following:-
“52. There is no evidence before this Court that would satisfy it that the Sequestration Order ought not to have been made. Indeed, there is significant evidence to the contrary.
53. This application is entirely without merit and shall be dismissed.”
The Court refers to and relies upon the published reasons delivered on 28 October 2015 and in particular as to the relevant prior history set out therein commencing at paragraph 18 onward.
That history is of extensive litigation commenced by the Applicant against the Respondent and over a number of years. The Application determined on 28 October 2015 was not the end of the litigation. On 3 February 2016, the Applicant filed a further complaint in the Magistrates Court of Victoria at Moorabbin in respect of a tax invoice (the tax invoice) for $6,302.73, dated 29 July 2011, rendered to the Applicant for work carried out on his behalf by Rickards Legal in relation to the Applicant’s involvement in numerous legal proceedings against the owners corporation, Gough Partners Proprietary Limited, in the unit where he resides. As set out in the published reasons of 28 October 2015, the Applicant has taken numerous proceedings and other steps to seek to attack the tax invoice and to seek a refund of the moneys paid by him pursuant to it. The Magistrates Court complaint number G10340588 dated 3 February 2016 was one further such complaint. Those proceedings were instituted despite the Applicant being an undischarged bankrupt. On 1 March 2016, the application was struck out. The Court noted in its orders:-
“Plaintiff is bankrupt and no cause of action is disclosed. The filing of this claim is an abuse of the court’s process.”
The Respondent seeks an order that the Applicant pay the costs of the proceedings consequent upon the Applicant filing his Application of 17 July 2015 on an indemnity basis. The Respondent relies upon r.40.02 of the Federal Court Rules 2011 (Cth) which is as follows:-
“A party or a person who is entitled to costs may apply to the Court for an order that costs:
(a) awarded in their favour be paid other than as between party and party; or
(b) be awarded in a lump sum, instead of, or in addition to, any taxed costs; or
(c) be determined otherwise than by taxation.
Note 1 The Court may order that costs be paid on an indemnity basis.
Note 2 The Court may order that the costs be determined by reference to a cost assessment scheme operating under the law of a State or Territory.”
The Court notes the provision contained in r.13.01 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) which is as follows:-
“(1) Subject to Division 13.2, a person who is entitled to costs in a proceeding to which the Bankruptcy Act applies is entitled to costs in accordance with Part 40 of the Federal Court Rules 2011 unless the Court otherwise orders.
(2) In making an order for costs, the Court may fix the amount of the costs.
(3) If the Court fixes the amount of the costs, Part 40 of the Federal Court Rules 2011 does not apply to a bill of costs submitted for the costs, except for the issue of a certificate of taxation.”
The Respondent relies upon Submissions dated 11 November 2015. The Applicant relies upon Submissions dated 24 February 2016.
The Respondent also relies upon letters dated 6 August 2015 and 11 September 2015 sent by the Respondent to the Applicant. In each of those pieces of correspondence, the Respondent makes clear to the Applicant that if he proceeds with his application, which in the Respondent’s view had no basis; was doomed to fail; and was, further, “scandalous, vexatious and without any merit at all” (as set out in the correspondence of 11 September 2015) that the Respondent would seek costs of the application on an indemnity basis. The Respondent noted to the Applicant that “substantial work and effort had to be undertaken to deal with your current application, including the extensive affidavits filed in the proceedings” (see letter of 11 September 2015).
The Court accepts that the Applicant was clearly on notice that there was no legal basis to his application. Further, he was clearly on notice that the Respondent would seek indemnity costs in the event the application was dismissed.
Following the making of the Sequestration Order on 2 October 2014 against the Applicant’s estate, the Applicant filed two applications with respect to that order. The first was an application for review of the decision of Registrar Caporale, the Registrar having made the Sequestration Order. That application was dismissed by Judge Burchardt on 12 February 2015 with an order for costs against the Applicant’s bankrupt estate. Some five months later, the application of 17 July 2015 was filed by the Applicant. That application, as set out in the reasons for judgment, contained no new facts and nothing additional to the matters before His Honour Judge Burchardt on the application for review filed by the Applicant on 20 October 2014.
The Application of 17 July 2015 was prepared by Koroneos Lawyers for the Applicant. That firm acted for the Applicant until filing a Notice of Withdrawal on 10 August 2015. Prior to that the Applicant’s Affidavit of 16 July 2015 had been prepared by Koroneos Lawyers and sworn before Mr Mark Koroneos, Solicitor, then acting for the Applicant.
The Applicant claims to be a self-represented litigant because on the hearing of this matter, he was a litigant in person. He had, however, received some legal advice in respect of his Application and legal assistance in the preparation of his material before the Court. The Applicant himself has been engaged with the legal process over many years. He has appeared in a number of jurisdictions, as set out in the Reasons for Judgment of 28 October 2015. On the hearing of this matter, he cross-examined Mr Michael Rickards, the principal of Rickards Legal, the Respondent.
The Applicant chose to ignore the correspondence of the Respondent to him of 6 August 2015, at which time he was legally represented, and of 11 September 2015 to the effect that his Application had no basis and that indemnity costs would be sought against him. Indeed, the Court found that his Application was entirely without merit.
The Applicant seeks some concession with respect to the question of costs on the basis of his self-representation. Given the preceding matters, the Court does not consider it appropriate or in the interests of the administration of justice to grant such concession.
The Applicant has been the subject of numerous earlier costs orders against him, including an indemnity cost order pursuant to the order of Senior Member Smithers made on 11 January 2013. He is familiar with court practices, having been involved in extensive litigation with the Respondent. He has displayed in each of his pieces of litigation a total lack of objectivity, and has caused to the Respondent hardship and expense. It is difficult to see how the conduct of the Applicant could not be described as vexatious.
The Applicant in these proceedings continues to make serious allegations against the Respondent, including an allegation of fraud, without any evidence or proper basis for doing so. He has made allegations with no factual basis, and I am satisfied he ought to have reasonably known that his application had no prospect of success.
The Court has determined that the Applicant is insolvent. The Applicant’s assertions to the contrary in the Affidavit material he put before the Court was found to be wrong. I accept the submission of the Respondent that the expense and difficulties caused by the Applicant’s unreasonable behaviour, overshadow any limitations that arose from his status as self-represented. Whilst, as a general rule, a Court will be more reluctant to make an order for indemnity costs against a litigant-in-person than against a represented litigant (see Ogawa v University of Melbourne (No. 2) [2004] FCA 1275) in the circumstances of this case it is appropriate the Court overcome such reluctance.
The making of a costs order is a discretionary matter. In this case, the Applicant pressed on with his litigation when he was on notice and should himself have been aware, on a proper consideration of his own case, that it was hopeless. The action should never have been commenced. In applying for costs on an indemnity basis the Respondent is seeking to depart from a more usual order of party/party costs.
The law relating to indemnity costs was conveniently summarised by Chesterman J in Emanuel Management Proprietary Limited (in liquidation) & Ors v Foster’s Brewing Group Ltd & Ors and Coopers & Lybrand & Ors [2003] QSC 299. His Honour said relevantly at [17] and [18]:-
“[17] The authority to which attention is usually directed is
Colgate-Palmolive Co. v Cussons Pty Ltd(1993) 46 FCR 225 in which Sheppard J identified a number of circumstances in which it may be appropriate to make an order for indemnity costs. They include:
(i) Making allegations of fraud knowing them to be false or making irrelevant allegations of fraud.
(ii) Misconduct that causes loss of time to the court and the opponent.
(iii) Commencing or continuing proceedings for some ulterior motive or in wilful disregard of known facts or clear law.
(iv) Making groundless allegations.
(v) An imprudent refusal of an offer to compromise.
‘The question must always be whether the particular facts and circumstances … warrant the making of an order for payment of costs other than on a party into party basis.’
[18] Rosniak v Government Insurance Office (1997) 41 NSWLR 608 (at 616) has perhaps taken the position furthest in deciding that it is not necessary for the party seeking the protection of indemnity costs to establish ethical or moral delinquency by its opponent. It is enough to show ‘unreasonable conduct’ of some sort. That case itself demonstrates that the inexactness of such a test can give rise to difficulty in its application.”
The particular facts and circumstances of this matter as described in these reasons, are such that the Court determines to make the indemnity costs order which the Respondent seeks. The Applicant’s unreasonable conduct which included the making of false allegations and pursuit of hopeless litigation requires the Court to exercise its discretion and award indemnity costs in favour of the long suffering Respondent. There was nothing further the Respondent could do to avoid this litigation and its accrual of costs once it had commenced. A strong message needs to be sent to the Applicant that perhaps might discourage the continuation of his conduct.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Date: 31 March 2016
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