Re Davis, J.N. Summary

JUDGMENT NO. ..l?.k.f;..,

DERAL COURT OF AUSTRALIA 1 No. QB 989 of 19

RE a JOHN NOEL DAVIS and
COLLEEN LESLIE DAVIS
EX PARTE: ROBERT LEE WOLCOTT and

CAROLEE CORBETT WOLCOTT

MINUTES OF ORDER

JUDGE MAKING ORDER: Drummond J
DATE OF ORDER: 28 August, 1992
WHERE MADE: Brisbane
THE COURT ORDERS THAT:

The taxed costs of Robert Lee Wolcott and Carolee Corbett Wolcott pursuant to the order of the Honourable Mr. Justice Spender made on 10 June, 1988 be paid with priority in accordance with the Bankruptcy Act 1966.

NOTE : Settlement and entry of orders is dealt with in Rule

124 of the Bankruptcy Rules.

The applicants' costs of and incidental to this application be taxed and paid with priority in accordance with the Bankruptcy Act 1966.

IN THE FEDERAL COURT OF AUSTRALIA 1 No. QB 989 of 1988
GENERAL DIVISION 1

WKRUPTCY DISTRICT or )

THE STATE OF OUEENSLAND )

RE : JOHN NOEL DAVIS and
COLLEEN LESLIE DAVIS
EX PARTE: ROBERT LEE WOLCOTT and

CAROLEE CORBETT WOLCOTT

Applicants

m: Drummond J

PLACE: Brisbane

DATE: 28 August, 1992

EX TEMPORE REASONS FOR JUDGMENT

This is an application for an order that the taxed
costs of Mr. and Mrs. Wolcott pursuant to an order made by Mr.

Justice Spender on 10 June, 1988 be paid with priority in

accordance with the Bankru~tcv Act 1966 ICthl.

The circumstances are that in June 1988, Mr. & Mrs.

unsuccessful. On 10 June, 1988 Mr. Justice Spender dismissed

notice issued by Mr. and Mrs. Wolcott. They were Davis, who are both now bankrupt, challenged a bankruptcy

the Davis' challenge to the bankruptcy notice and ordered that they pay Mr. and Mrs. Wolcott's taxed costs of and incidental to the Davis' application to set aside the bankruptcy notice.

It was as a result of non-compliance with that notice that sequestration orders were made in relation to Mr.
& Mrs. Davis on 25 August, 1988.

The material indicates that the estates of the bankrupts are insufficient to pay all claims made by unsecured creditors and, indeed, that unless an order of the kind now sought is made in favour of Mr. and Mrs. Wolcott, who were the petitioning creditors, their costs of successfully resisting the Davis' application made in June 1988 are unlikely to be paid otherwise than by attracting a dividend in the ordinary way upon proof being lodged in respect of those costs.

It seems to me that the proceedings in relation to the challenge to the bankruptcy notice were successfully defended by Mr. and Mrs. Wolcott, an act which was for the benefit of all creditors, since the sequestration orders were made in reliance upon non-compliance with that notice. I have power under 37(1) of the Bankru~tcv Act to vary an order of the kind here in question. In these circumstances I am prepared to vary it and to make an order in terms of paragraphs 1 and 2 of the application.

I certify that this and the preceding

page is a true copy of the reasons
for judgment herein of the Honourable

Mr. Justice Drummond.

Associate:

Date : 28 August, 1992

CaseChat Overview and Summary

The case of Re Davis, J.N. involved an application by Robert Lee Wolcott and Carolee Corbett Wolcott to have the costs they incurred in successfully defending a bankruptcy notice issued against John Noel Davis and Colleen Leslie Davis paid with priority under the Bankruptcy Act 1966. The application was heard by Drummond J in the Federal Court of Australia. The Davises, who were subsequently declared bankrupt, had previously challenged the bankruptcy notice, and Mr. Justice Spender had ordered that the Wolcotts' costs be paid by the Davises. The Wolcotts sought an order for priority payment of these costs due to the insufficiency of the Davises' estates to cover all creditors' claims.

The primary legal issue before Drummond J was whether the Wolcotts' costs, which were ordered to be paid by the Davises, should be granted priority status under the Bankruptcy Act 1966. Drummond J considered the implications of the Davises' bankruptcy and the unlikelihood of the Wolcotts recovering their costs unless they were granted priority. Drummond J also noted that the Wolcotts' successful defence of the bankruptcy notice was beneficial to all creditors, as it validated the basis for the sequestration orders against the Davises.

Drummond J found that the Wolcotts' costs were indeed for the benefit of all creditors, as their successful defence of the bankruptcy notice was integral to the subsequent sequestration of the Davises. Drummond J exercised his power under section 37(1) of the Bankruptcy Act 1966 to vary the previous order. Consequently, Drummond J granted the Wolcotts' application and ordered that their taxed costs be paid with priority, as sought. This decision ensured that the Wolcotts could recover their costs, which would otherwise have been unlikely to be paid in full from the Davises' insufficient estates.

The court's final order mandated that the taxed costs of Robert Lee Wolcott and Carolee Corbett Wolcott, pursuant to the order made by Mr. Justice Spender on 10 June 1988, be paid with priority in accordance with the Bankruptcy Act 1966. Additionally, the applicants' costs of and incidental to this application were also to be taxed and paid with priority. This outcome provided the Wolcotts with a means to recover their legal expenses, which were crucial in the process leading to the Davises' bankruptcy.

Re Davis, J.N.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established

DERAL COURT OF AUSTRALIA	1	No. QB 989 of 19
RE	a	JOHN NOEL DAVIS and COLLEEN LESLIE DAVIS

JUDGE MAKING ORDER:	Drummond J
DATE OF ORDER:	28 August, 1992
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

IN THE FEDERAL COURT OF AUSTRALIA	1	No. QB 989 of 1988
GENERAL DIVISION	1
WKRUPTCY	DISTRICT or	)

unsuccessful. On 10 June, 1988 Mr. Justice Spender dismissed	notice issued by Mr. and Mrs. Wolcott. They were Davis, who are both now bankrupt, challenged a bankruptcy	the Davis' challenge to the bankruptcy notice and ordered that they pay Mr. and Mrs. Wolcott's taxed costs of and incidental to the Davis' application to set aside the bankruptcy notice.
It was as a result of non-compliance with that notice that sequestration orders were made in relation to Mr.
& Mrs. Davis on 25 August, 1988.