Re Berlouis, H.L. & Ors Ex parte Berlouis, H.L. & Ors v Adsett, N

[1991] FCA 859

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	) No. QB 716 of 1991
STATE OF OUEENSLAND	)

RE:	HARRY LOUIS BERLOUIS . RAYMOND LOUIS BERLOUIS . ARMANDE CELISCA BERLOUIS AND LIONEL JEAN BERLOUIS
EX PARTE:	HARRY LOUIS BERLOUIS, RAYMOND LOUIS BERLOUIS, ARMANDE CELISCA BERLOUIS AND LIONEL JEAN BERLOUIS
NOEL ADSETT

Respondent

MINUTES OF ORDER

JUDGE VXING ORDER:	PINCUS J.
DATE OF ORDER:	10 DECE:<BER 199 1
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.   The trustee of the bankrupts' estate, Noel Adsett, pay the costs of the appllcatlon to cornnut the bankrupts for alleged contempt and no part of those costs so ordered to be pald be lncluded In any sum payable to the trustee under the compositions.

REGISTRY

2.    The sald trustee pay his own legal costs and outlays of the application for hls removal as trustee and of the appllcatlon for the approval of the compositions and the annulment of the bankruptcies of the bankrupts and that no part of such costs and outlays be lncluded in any sum payable to the trustee u n d e r the composltlons.

Settlement	and entry of orders is dealt wlth in Rule
124 of the	Bankruptcy Rules.

0 7 JAN 1992

AUSTRALIA PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION

BANKRUPTCY DISTRICT OF THE	)	No. QB 716 of 1991
STATE OF OUEENSLAND	)

RE:	HARRY LOUIS BERLOUIS, RAYYOND LOUIS BERLOUIS. ARMANDE CELISCA BERLOUIS AND LIONEL JEAN BERLOUIS
EX PARTE:	HARRY LOUIS BERLOUIS. RAYYOND LOUIS BERLOUIS. ARMANDE CELISCA BERLOUIS AND LIONEL JEAN BERLOUIS
NOEL ADSETT

Respondent

CORAM: PINCUS J.

PLACE: BRISBANE

DATE: 10 DECEXBER 1991

EX TEXPORC REASONS FOR JUDGMENT

Yesterday, I gave judgment in a number of appllcatlons and, in the result, the trustee was unsuccessful. A question arlses as to the trustee's costs. The trustee was unsuccessful in the sense that, during the course of the

hearing, his counsel put an end to the d~spute as to whether

or not he should contlnue as trustee by announcing that he would resign, which he ultimately did. Secondly, the motion to commit for contempt was dismissed and, thirdly, the substantial polnt taken agalnst the composition falled. Mr. O'Grady, who appeared for the trustee, argued that the trustee had not falled on a fourth question, in the matter of costs, but had, in substance, succeeded as to that because the attempt to have the Court deal with the costs in the way the

bankrupts sought failed. But that was so only because I accepted the assurance of Mr. O'Grady that it was impossible for the trustee to be ready in time fully to contest those issues sought to be raised about costs. Mr. O'Grady also submits that the point he raised as to the composition had substance and that there was a genuine difficulty in determining the effect of the composition, and in my opinion that is so.

In litigation generally, the loser pays the winner's costs and, prima facie, there would be an order for costs agalnst the trustee as the unsuccessful party in this litigation - unsuccessful in the sense that he either failed or abandoned his position in respect of each of the applications. But it is pointed out that under the compositions, the bankrupts and their partners will, subject to taxation, be responsible for discharging the trustee's costs and this may include any costs ordered today against the trustee. Mr. Dutney Q.C. submits, and it appears not to be

opposed by Mr. O'Grady, that it is convenient for the Court	now to decide on whom the burden of the costs of thls
litigation should ultimately fall. There appears to me not a great deal of point in my deciding, for example, that the trustee should pay the costs of the motion for committal ar~d
leaving it for later determination whether the liability falls back on the partles in whose favour that order for costs was made. It appears to me that the practical course is for me to determine the ultimate liability for the costs of this litigation. When the matter was argued yesterday, I felt unable to do that because I had not studied the papers, particularly from the point of view of determining ultimate liability for costs, but I have now done so.
It is, perhaps, worthy of mention that the trustee briefed separate Queen's Counsel to appear on the application for issue of a warrant, but that counsel (as appears from the transcript at p.39) seemed only concerned to establish a position as to costs; he ultimately submitted, not that the bankrupts should be committed to prison, but that a warrant should issue and lie in the Registry and his contention was that I should hold that the application for committal was a reasonable one. In my oplnion, it was not. It 1s also to be noted that the offer to reslgn on the part of the trustee was not made at the outset but first emerged in concrete form at p.42 of the transcript.
There are some reasons for concern in the way in which the litigation was conducted. It appears to me that economy was not to the forefront of the trustee's mlnd. It
may be said in his defence that he acted from over-enthusiasm and allowed hlmself to be beguiled into taklng part in what may be described as vindictive exchanges where the interests of the creditors became a secondary consideration. I must say that Mr. Adsett impressed me in the wltness box as a person who would not ordinarily do this and I have a feeling that this conduct is uncharacterlstic of the man. That is, one would not expect him to do what, on the face of it, was quite silly and extravagant - to brief two Queen's Counsel to appear for him in the one case when, as to at least one of the matters (the motion for committal) there was no practical point involved anyway. That sort of litigation may be able to be afforded by major public enterprises, but not by the
~erlouis .
Mr. O'Grady also implied that the trustee, or trustees generally, should not be unduly discouraged from assisting the Court when such assistance S necessary. I agree with that contention and I have taken it into account in favour of Mr. Adsett. It has to be kept in mind, however, that in the end the substantial fight, really, was about trustee's costs.
I flnd it necessary to deal with the motlon for committal separately. I do not propose to reiterate the history of that matter, but it is necessary to say that I
reject the contention that the motion for committal was, in any way, brought about by direction of Spender J. That seems to be a very t h m excuse for bringing the motion, which was
abandoned. The trustee should pay the costs for the motion to commit and I am also of opinlon that those costs should not fall back on the bankrupts.
The other two matters, and I will call them two matters - firstly, the motion for removal of the trustee and, secondly, the motion concerning annulment and the composition - fall into a different category, and that particularly applies to the latter.
I have already said that the question raised by Mr. O'Grady concerning the composition was one of substance which needed to be determined. There is, on the other hand, some force in Mr. Dutney's contention that it might have helped a little if one of the trustee's representatives at the meeting, which was quite lengthy, had raised the point then, when it might have been able to be cleared up by the addition or deletion of a few words. It appears that this was not done, as I understand Mr. Adsett's evidence, because of the feeling that the chairman at the meetlng, Mr. Lippiatt, had an overwhelming personality, and again that does not seem to me to be a very good excuse for inactivity.
As to the general approach of the Court, I said yesterday, and I think it correct, that the Court has to
discourage extravagance in this sort of litigation - and this seems to me to be a plain case of extravagance. The remedy
for anything that happened was to run off to Court and I think the message needs to be sent that there must be care to avoid using the Courts unnecessarily and in an expensive way.
I have already dealt with the costs concerning the motion for committal. I propose to lump together the costs for the application for removal of the trustee and the costs relating to the annulment and composition issues. In respect of the applications concerning those matters - that is the application for removal of the trustee and the application concerning annulment and compositron - the order will be that the trustee pay his own legal costs and outlays and that no part of such costs and outlays be included in any sum payable to the trustee under the compos~tlons. I do not propose to make any order for costs agalnst the trustee In respect of those applications. As to the motlon for committal, as I have mentioned, the order will be that the trustee pay the costs of the motlon for committal and it wlll be further ordered that no part of those costs so ordered to be pald be lncluded ln any sum payable to the trustee under the composltlons.

I certlfy that thls and the flve preced~ng pages are a true copy of the reasons for judgment hereln of hls Honour Mr. Justlce Pincus

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