Re Ansett, Robert Graham; Pattison, Paul Anthony (As Trustee of the Estate of Robert Graham Ansett) v Crosswell, Sherrie

[1998] FCA 413

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VB 1078  of   1990

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE:	ROBERT GRAHAM ANSETT
EX PARTE:	PAUL ANTHONY PATTISON (AS TRUSTEE OF THE ESTATE OF ROBERT GRAHAM ANSETT) APPLICANT
AND:	SHERRIE CROSSWELL, ROBERT GRAHAM ANSETT AND JOSEPHINE ANNE ANSETT RESPONDENTS
COURT:		NORTHROP ACJ
DATE OF ORDER:		23 APRIL 1998
WHERE MADE:		MELBOURNE

THE COURT ORDERS THAT:

The Applicant pay the Respondents’ costs, including reserved costs, to be taxed on a party and party basis.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VB 1078 of 1990

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE:	ROBERT GRAHAM ANSETT
EX PARTE:	PAUL ANTHONY PATTISON (AS TRUSTEE OF THE ESTATE OF ROBERT GRAHAM ANSETT) APPLICANT
AND:	SHERRIE CROSSWELL, ROBERT GRAHAM ANSETT AND JOSEPHINE ANNE ANSETT RESPONDENTS

COURT:	NORTHROP ACJ
DATE:	23 APRIL 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

On 25 March 1998 the Court made an order that the application in this proceeding be dismissed.  At the same time the Court granted leave to the parties if so desired to make written submissions if any special orders for costs were sought.  The Court indicated that in the absence of any submissions, the Court would order that the applicant pay the respondents’ costs.

On 7 April, the solicitors for the Respondents filed an affidavit and submissions in support of the following orders:-

“1.The Applicant pay to the Respondents on the indemnity basis their costs (including reserved costs) of and incidental to the proceeding”.

2.Alternatively, the Applicant pay to the Respondents on the party-party basis their costs (including reserved costs) of and incidental to the proceeding (save for the issue of the intent of the bankrupt under s. 121 of the Bankruptcy Act 1966) until 16 September 1996, and pay to the Respondents on the indemnity basis their costs of and incidental to the said issue of intent before 16 September 1996 and of and incidental to the whole proceeding after 16 September 1996.”

In support of a submission that certain special orders for costs should not be made, counsel for the Respondents sought, by analogy, to rely on Adsett v Berlouis (1992) 37 FCR 201. That authority has no relevance to the present issue. That authority discusses, among other issues, the right of a trustee, including a trustee in bankruptcy, to an indemnity for costs ordered to be paid by the trustee. Here, no issue arises as to any indemnity. That issue would affect the creditors of the trustee. That issue is not relevant for present purposes.

The affidavit contained material directed to certain of the orders being sought by the Applicant including orders with respect to moneys paid by Bob Ansett (and, as the evidence showed) by Josie Ansett with respect to improvements made to the Noosa Property subsequent to April 1987.  These orders were not pursued in final submissions.

The affidavit material referring to correspondence entered into between the solicitors for the Respondents and for the Applicants related to the question of costs if the Applicant was unable to prove that the funds used to purchase the Noosa Property “were the property of Mr Ansett” and the reply by the solicitors for the Applicant.

In support of their submissions, counsel for the Respondents referred to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225. In that case Sheppard J discussed the construction and application of s 43 of the Federal Court of Australia Act 1976 which confers an unfettered discretion on the Court to make orders for costs, a discretion which must be exercised judicially. His Honour considered the history of the power of a Court to make orders for costs and the growing disparity between the amount of costs obtainable on a party and party basis and on an indemnity basis or solicitor and client basis. His Honour referred to many legal authorities which considered these issues and formulated what his Honour described as principles or guidelines that can be distilled from the authorities. Counsel referred in particular to what was said by his Honour in paragraph 5 at 233-4 and extracted five illustrations to support their submissions in the present case, namely:-

“1.      the making of irrelevant allegations of fraud”

“2.the proceedings were commenced ........ in wilful disregard of known facts”

“3.the proceedings were continued ........ in wilful disregard of known facts.”

“4.the proceedings were commenced [and] continued ...... in wilful disregard of ........ clearly established law ........ ” and “........ the making of allegations which ought never to have been made”

“5.the proceedings were commenced or continued for some ulterior motive”.

In addition, counsel quoted and relied upon what was said by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 as illustrating the true position that the application was “commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success”.

Counsel for the Applicant filed written submissions.  He, quite correctly, referred to what Sheppard J said in the Colgate-Palmolive case at 232-4:-

“In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some other basis other than the party and party basis.  The circumstances of the case must be such as to warrant the Court in departing from the usual course.”

Counsel submitted that in the circumstances of this case neither party could justify an order for costs on a solicitor and client basis.  Counsel referred to the two bases relied on by the applicant but included in the first basis the claim that the registration of Sherrie Crosswell as proprietor was a sham.  There was nothing to support such a contention.  Sherrie had been registered as proprietor.  The registration was real.  Consequences flowed from that fact.  Reference was made to the fact that having found that the applicant had failed to prove the Noosa Property had been paid for from moneys owned by Bob Ansett, the Court had not decided the other issues.

The submissions made reference to the defences originally raised on behalf of the respondents and the change in the evidence of Bob Ansett arising during the break in the proceedings between September and December 1996.

Counsel contended there was no basis to support the five grounds relied upon by counsel for the Respondents.

In all the circumstances, this is a case where the facts do not warrant the orders for costs sought by the Respondents. Although the Applicant had a large amount of information available before the application was issued, it is true to say that the financial affairs of the Budget Group of Companies were chaotic. From the start, many difficulties faced the success of the application. To a large extent, the difficulties inherent in the application were increased by the actions of all parties and in particular between the Applicant and Bob Ansett. Aspects of this are contained in reasons for judgment published on 25 March. Given the fact of the title to the Noosa Property being registered in the name of Sherrie, difficulties confronted the Applicant. The doctrines of resulting trusts and the presumption of advancement gives rise to difficult questions of fact and law. Section 120 of the Bankruptcy Act give rise to difficulties particularly with respect to the shifted onus of proof to a respondent arising from subsection 120(2)(a).  Even though Sherrie carried the onus of proving solvency, in reality it was for the Applicant to show that having regard to the tangled web of the affairs of the Ansett Group, Sherrie was unable to prove solvency.  The claim based on s 121 was not pursued at the hearing but it would have failed for the same reason as the application was dismissed.

It is a pity that the Court did not take greater control of this application at the various directions hearings.  In the absence of clear directions limiting the nature of the issues and the evidence, the hearing of the application took the time it did, not helped by the nature of the relationship between the parties as indicated in the earlier reasons.

The submissions made on behalf of the Respondents are not accepted.  For the same reasons, the submission by counsel for the Applicant that the Respondents pay the Applicant’s costs on the issue of solvency or alternatively each party pay their own costs, is not accepted.

Counsel for the Applicant made submissions based on the impact of notices to admit given to the Respondents that the Respondents pay the Applicant’s costs relating to all matters and issues the subject of the notices to admit dated 17 December 1993.  In addition to admissions being sought with respect to the Rodisky accounts, the notices sought admissions with respect to evidence and documents relating to facts subsequent to the acquisition of the Noosa Property.  In the events which occurred, that evidence was not relied upon to support orders against Bob and Josie Ansett.  Insofar as Sherrie was concerned, the notices sought admission of facts not within her knowledge.  Other evidence was directed to the credibility of Sherrie as a witness but this was not relevant in view of the findings made by the Court.  Further, it is noted that at all times the same counsel and solicitors appeared for all the Respondents.

In all of the circumstances, and in conformity with the indication given by the Court on 25 March, the Court will make the order suggested in the third of the orders set out in the submissions made on behalf of the Applicant namely that “the Applicant pay the Respondents’ costs on a party/party basis”.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R M Northrop

Associate:

Dated:             23 April 1998