Petridis & Petridis
[2021] FedCFamC1F 231
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Petridis & Petridis [2021] FedCFamC1F 231
File number(s): HBC 133 of 2018 Judgment of: MCGUIRE J Date of judgment: 2 December 2021 Catchwords: FAMILY LAW – COSTS – application by court appointed Trustee for Sale for costs in relation to the sale of properties – order that the reasonable costs of the Trustee for Sale be paid on a costs incurred basis as taxed by a Registrar – order that the apportionment of the costs between the parties be reserved for determination at the substantive trial Legislation: Family Law Act 1975 (Cth) s 117 Division: Division 1 First Instance Number of paragraphs: 26 Date of hearing: 1 November 2021 Place: Hobart Counsel for the Applicant: Mr Trezise Solicitor for the Applicant: Dobson Mitchell Allport Counsel for the Respondents: Mrs Petridis appearing in person Counsel for the Respondents: No appearance Counsel for the Respondents: No appearance Counsel for the Respondents: No appearance Counsel for the Respondents: No appearance Counsel for the Respondents: Mr F Petridis appearing in person by TEAMS ORDERS
HBC 133 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR TAMSON AS TRUSTEE FOR THE BANKRUPT ESTATE OF MR PETRIDIS
Applicant
AND: MS PETRIDIS
First Respondent
MR PETRIDIS
Second Respondent
L PTY LTD (ACN …) (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
2 DECEMBER 2021
THE COURT ORDERS THAT:
1.That the costs claimed by the applicant trustee, Mr Tamson, solely in his role as Trustee for Sale for the properties situate at H Street and C Street both in Suburb E in Tasmania be paid on a reasonable costs incurred basis and as taxed by Registrar Weidmann of this Court or such other Registrar as may be available and then be paid from monies held on trust from the proceeds of sale of the properties at H Street and C Street, both in Suburb E in Tasmania.
2.That the issue of apportionment of such costs paid as between the first respondent wife, the second respondent husband, the Trustee in Bankruptcy for second respondent husband and sixth respondent son be reserved for determination at the substantive trial.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym of Petridis & Petridis has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGUIRE J
APPLICATION
There are substantive property proceedings between the applicant Ms Petridis and the first respondent Mr Petridis who are the primary parties but where the first respondent is an undischarged bankrupt and his trustee in bankruptcy, Mr Tamson, is the fourth respondent having been joined as a party to these proceedings under consent orders made by Benjamin J on 3 July 2018.
The second and third respondents are corporate entities operated by the primary parties. The sixth respondent is Mr F Petridis who is the son of the primary parties.
The substantive proceedings are long-running and relatively complex. A tentative trial date has been given for 24 January 2022. I confirmed that date and made procedural orders on 1 November 2021 at the conclusion of this hearing.
The interlocutory application now before me is made by the fourth respondent, Mr Tamson, for costs on a 'costs incurred' basis in respect of his appointment as Trustee for Sale in respect of properties at H Street, Suburb E and C Street, Suburb E both in Tasmania together with chattels to be included in the contracts for sale. On 1 April 2021 Deputy Chief Justice McClelland, then having carriage of this file, made orders as follows:
BY CONSENT
1.Paragraph 10 of the orders made by the Court on 3 December 2020 are varied such that it will read as follows:
Without admission as to need or necessity, the Trustee is appointed as sole Trustee for the Sale of the Property and Chattels in accordance with section 80(1)(e) of the Family Law Act 1975 (Cth) and in accordance with the contract for sale which is Exhibit A in these proceedings.
THE COURT FURTHER ORDERS THAT:
2.The Fourth Respondent is authorised to produce this order to third parties to demonstrate his power to do all such things to complete the sale of these properties in accordance with the orders made 3 December 2020 and these orders.
3. The costs of these proceedings are reserved to the final hearing.
THE COURT NOTES THAT:
A.Ms Petridis agrees that the Trustee will execute the contract on her behalf.
B.Mr F Petridis undertakes to return a copy of the contract for sale with his digital signature to the solicitor for the Trustee by 4.30pm today, 1 April 2021.
C.The Trustee for Sale notes that he will copy in the other parties in all correspondence with respect to the sale of the property.
By an amended application in a case filed 12 July 2021 the fourth respondent trustee (‘the applicant trustee’) seeks the following orders, inter-alia:
Costs as Trustee for Sale
1.Pursuant to sections 80(1)(k) or 117(2) of the Family Law Act 1975 (Cth), the remuneration, disbursements, costs and expenses of the fourth respondent in acting as court appointed trustee for sale pursuant to orders of this Honourable Court of 1 April 2021 (Court Appointed Trustee) be paid to him in the amount of:
a.$124,336.41 for work done up to and including 24 June 2021;
b.Plus further amounts incurred for work done on and from 25 June 2021, including this Application in a Case, capped at $15,000 plus GST.
(the costs)
2.Further and alternatively to order 1, the Costs of the Court Appointed Trustee in the amount set out in order 1 be paid to him pursuant to section 58 of the Trustee Act 1898 (Tas) and/or the inherent jurisdiction of the Supreme Court of Tasmania, conferred by section 79 of the Judiciary Act 1903 (Cth).
3.Further and alternatively to orders 1 and 2, the Costs of the Court Appointed Trustee are to be paid on and indemnity basis, as taxed by a Registrar of this Honourable Court.
4.The Court Appointed Trustee’s Costs are paid out of the proceeds of sale of:
a.H Street, Suburb E, more particularly described in certificate of title volume … folio …; and
b.C Street, Suburb E, more particularly described in certificate of title volume … folio ….
The balance of that application is not prosecuted given the proximity to trial.
It can be seen that the applicant trustee seeks costs, including disbursements, for work completed on the sale of the two properties up to and including 24 June 2021 in a sum of $124,336.41 plus further amounts incurred from 25 June 2021 'capped at $15,000 plus GST'.
The applicant trustee seeks that the costs be paid out of the proceeds of sale of the properties at H Street and C Street, Suburb E.
There is no issue that there are sufficient funds to meet the costs sought.
The first respondent wife and the sixth respondent son both oppose the application and specifically the quantum of the costs sought. Although technically not having standing by reason of his bankruptcy, it is abundantly clear that the second respondent husband, Mr Petridis, also challenges the order sought and/or the quantum of costs asserted.
The application is supported by an affidavit of Mr Tamson sworn 7 July 2021 and setting out in great detail over 35 pages his assertion as to work completed by reason of his appointment as Trustee for Sale.
It should be emphasised that counsel for the applicant trustee in this application made it clear that the costs claimed are in respect only of the appointment of the applicant trustee as Trustee for Sale by reason of His Honour’s orders and not in respect of any work completed by reason of his status as trustee in bankruptcy of the second respondent husband.
I am told that the applicant trustee instructed solicitors, O Lawyers, to act as the conveyancers with costs and disbursements of those solicitors being in the region of $3,300.
The applicant trustee’s affidavit then attempts to justify the applicant's costs in respect of various issues. There were issues of obtaining insurance for the properties pending sale such being challenged by the first respondent wife and the sixth respondent son. There were issues in respect of securing withdrawals of eleven caveats across the two properties where the sixth respondent son raised questions and objections. There were issues with the sixth respondent son requesting (or 'insisting') that the trustee obtain a land tax waiver or refund in respect of C Street. There were significant issues in respect of the alleged removal of chattels, being terms of the contracts, by the second named respondent husband to the extent that the applicant trustee felt obliged to employ the assistance of security guards and to effect changes of the locks on the properties. There was an issue in respect of the applicant trustee seeking to assign to himself registered mortgages on the properties such being challenged by the sixth respondent son and which ultimately did not occur. There were issues with negotiation of a discount to the purchase price given the alleged removal of the chattels. There were general issues in respect of other creditors and their rights to any funds from the proceeds of sale.
Generally in respect of the above matters, the Trustee for Sale had instructed Dobson Mitchell Allport, solicitors, to act for him in that role as indeed they do in his role as trustee in the husband's bankruptcy.
At paragraph [132] of his affidavit, the applicant trustee here sets out details of the sum of $124,336.41 including (including GST) as:
a.my remuneration the amount of $75,114.05. A copy of a redacted WIP report for tasks that I and my staff performed is at BB–335 to 346. I have redacted some of these entries as I consider that they are privileged;
b.minor disbursements, such as search fees in the amount of $708.87. A list of these disbursements is that BB–347;
c.T Auctioneers and Valuer’s costs, to value the Missing Items, in the amount of $825.00. A copy of this invoice is at BB–348;
d.the cost of insuring the H Street Property, C Street Property and Chattels for the period 1 April 2021 to 11 June 2021 estimated in the amount of $6,294.86. Copies of invoices relating to this amount are at BB–349 to 360. I have apportioned insurance costs incurred against H Street (taken out for a longer period) accordingly and deducted credits received for early cancellation of the policy;
e.P Company security course for deployment of security guards to the Properties and to DMA and installation of alarm system and change of locks in the amount of $8,996.73. A copy of P Company's invoices for this work is at BB–361 to 364;
f.Q Company for attempted (but obstructed) change of locks in the amount of $232.50. A copy of Q Company's invoices at BB–365;
g.DMA fees in the amount of $31,973. A redacted WIP report for DMA is at BB–366 to 385. They have redacted some of the entries on this WIP report where those entries contain privileged information;
h.DMA disbursements (search fees) - $191.40. A redacted draft invoice for DMA's invoices is at BB–386.
[133]There are still some further tasks to perform in my role as court-appointed trustee. For example, I expect I will need to remit the GST received for C Street to the Commissioner for Taxation. I have also incurred costs in preparing this application and this affidavit. I do not expect that these costs will exceed $15,000 plus GST. I will, as I have in the past, keep a record of all costs incurred.
[134]I have performed most of the work in relation to the Bankrupt Estate and all of the work associated with being the trustee for sale without funds. In some instances, X Accountants has paid for my out of pocket expenses from its office account. As the trial of this matter (set down for 19 July 2021) has now been vacated, if I do not obtain the orders that I seek, I – and X Accountants – will be significantly out-of-pocket for an indeterminate period of time. At this stage, I am only seeking my costs as court-appointed trustee for sale be paid, not other costs that I have incurred as Trustee of the Bankrupt Estate. For the reasons set out above, I ask that this Honourable Court make the orders set out in the application in case.
CONSIDERATION
Notably, His Honours orders of 1 April 2021 and 3 December 2020 are silent as to the payment of the costs of the applicant trustee’s appointment as Trustee for Sale of the two properties. This, of course, does not preclude the payment of the costs at this interlocutory stage given the discrete and commercial nature of the appointment as distinct from the applicant trustee’s role as trustee of the second respondent husband's bankruptcy and hence as a party to these s 79 proceedings.
It is clear that significant disbursements have been incurred by the applicant trustee’s firm and that they are ‘out-of-pocket’ payments made because of His Honour’s appointment and despite the proximity of the trial.
Matters of costs are dealt with at s 117 of the Family Law Act 1975 (Cth) where at subsection (1) there is a general rule that each party to proceedings be responsible for his and her own legal costs but subject to a discretion enlivened at subsection (2) and the court to make an award for costs if there are 'justifying circumstances' with reference to the factors at subsection (2A). This matter, however, is not strictly inter partes where His Honour appointed the applicant trustee to a distinct role as 'Trustee for Sale' where in theory His Honour could have appointed a completely independent person or entity to act in that role.
Generally speaking, therefore, the applicant trustee’s right to his costs is unarguable, in my view, given His Honour's order and the separate and discrete commercial role imposed on the applicant trustee by reason of His Honour’s order.
The first respondent wife and sixth respondent son do, however, argue the reasonableness of the quantum of costs sought and the justification for many of those costs. This issue can be dealt with by a taxing officer/registrar albeit in a process which I expect will be a lengthy one.
There remains a third issue for consideration being whether, in all the circumstances, the first respondent wife and the sixth respondent son should be responsible for certain parts of the costs incurred and asserted? For example, the applicant trustee in his role as Trustee for Sale asserts obstructions to the sale by the second respondent husband who, of course, the applicant trustee represents and 'stands in the shoes of' in the substantive proceedings. It is properly argued, however, that if indeed the second respondent husband was solely responsible for any part of the costs of the Trustee for Sale then they might be borne by the husband and, therefore the applicant trustee himself in his role as the husband bankruptcy trustee. This will properly be a matter for sworn evidence and testing which should take place at the trial. In this sense the trustee in bankruptcy sits as a creditor of the parties in his role as “Trustee for Sale” and issues of contributions, and perhaps negative contribution will need to be determined.
CONCLUSION
In conclusion, therefore, I have determined as to the first question that the applicant trustee in his role as appointed ‘Trustee for Sale' should have his reasonable costs for executing that role and the sales of the two relevant properties.
In respect of the second question of the reasonableness of the applicant trustee’s costs as Trustee for Sale and where the quantum of costs is challenged as to its justification and reasonableness then the costs should be taxed by a registrar or senior judicial registrar of this this Court.
As to the third question of the proportionate responsibility of the costs I determine this is a matter for evidence at the trial and where, dependent upon the taxation, apportionment of the costs of the Trustee for Sale can be made from the property pool.
Indemnity Costs
The application in a case seeks costs on an 'indemnity' basis. However, submissions by counsel for the applicant trustee were that the costs be paid on a 'costs incurred' basis which is a term somewhat foreign in this jurisdiction but, in my view completely understandable where the appointment is made 'as Trustee for Sale' as a distinct and commercial role. Given, in any event, that the applicant trustee’s costs are to be taxed as to reasonableness, I am not of the view that the issue of party/party or indemnity costs is relevant given that the issue is not strictly one inter partes. I will make the order in terms of 'costs incurred' as suggested by counsel.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 2 December 2021
SCHEDULE OF PARTIES
HBC 133 of 2018 Respondents
Fourth Respondent:
M PTY LTD (ACN …)
Fifth Respondent:
HOBART CITY COUNCIL
Sixth Respondent:
MR F PETRIDIS
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