Re Kukas, Juraj (George)

[1997] FCA 554

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION                 )    No. VB 1567 of 1994

BANKRUPTCY DISTRICT OF THE STATE  )

OF VICTORIA  )

RE:      BANKRUPT ESTATE OF JURAJ (GEORGE) KUKAS

EX PARTE: ROBERT WILLIAM MORTON

Trustee of the Estate of JURAJ (GEORGE) KUKAS

JUDGE MAKING ORDER: Ryan J

DATE OF ORDER:     26 June 1997

WHERE MADE:       Melbourne

MINUTES OF ORDER

THE COURT ORDERS:

1. That the costs of the application herein dated 13 December 1996 (including any reserved costs) be taxed as between party and party and paid by the respondent Trustee.

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

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION                 )    No. VB 1567 of 1994

BANKRUPTCY DISTRICT OF THE STATE  )

OF VICTORIA  )

RE:      BANKRUPT ESTATE OF JURAJ (GEORGE) KUKAS

EX PARTE: ROBERT WILLIAM MORTON

Trustee of the Estate of JURAJ (GEORGE) KUKAS

CORAM:    Ryan J

DATE:     26 June 1997

PLACE:    Melbourne

REASONS FOR JUDGMENT ON COSTS

RYAN J: On 16 May 1997 I ordered that the summons issued to Constantine Bilionis pursuant to s. 81(1) of the Bankruptcy Act 1966 be set aside. On the same day, reasons for that order were published. At the request of Counsel for Robert William Morton ("the Trustee") who was the respondent to the application, I afforded the parties an opportunity to make written submissions on the orders as to costs which should be made in consequence of the order of 16 May 1997.

On behalf of the applicant, it was submitted that an order should be made for costs to be taxed as between solicitor and client or on an indemnity basis. It is accepted on both sides that the Court has a discretion in exercising the jurisdiction under s. 43 of the Federal Court of Australia Act 1976. That discretion is generally exercised by making an order for costs in favour of the successful party to be taxed as between party and party. Special circumstances may justify departure from that general rule by ordering costs on a solicitor-client or indemnity basis. The categories of special circumstances in this context are not closed but include the commencement or continuation of hopeless proceedings for some ulterior motive or in wilful disregard of the known facts or the clearly established law; (Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401).

I have clearly reviewed all of the circumstances to which Mr North of Counsel pointed in his careful written submissions on behalf of the applicant.  However, I have not been persuaded, on balance, to depart from the general rule and accede to the applicant's request.  Without attempting an exhaustive review of the circumstances tending for and against that exercise of the discretion, I point first to the fact that it was not until full reflection after detailed argument extending over two days that it became clear that the issue of the summons under s. 81 had been procured on deficient material. Secondly, there is no suggestion that the Trustee was actuated by any purpose ulterior to the pursuit of the best interests of the creditors of the bankrupt as he perceived them.

It is true that the applicant, through his solicitors, volunteered, after his application had been issued, to provide answers to five questions addressed to his solicitors by letter from the Trustee's solicitors dated 3 February 1997.  As well, the answering letter by the applicant's solicitors foreshadowed the present application for solicitor and own client costs.  However, the requirements of r. 129(1) of the Bankruptcy Rules in its present form had not previously been the subject of judicial exposition except in Re Huybrechts;  Ex parte Huybrechts v Knight (1991) 31 FCR 394 which concerned a rather simpler question than those which arose in this case. Moreover, it is to be remembered that the Trustee had the benefit of the exercise, in his favour, of the discretion of a Registrar of this Court.

Accordingly, the order for costs in favour of the applicant will indicate that they be taxed on the usual party and party basis.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment of his Honour Justice Ryan.

Associate:

Date:

Counsel for the Applicant    :    Mr T. North

Solicitors for the Applicant :    Giasoumi Papasavas Zervos

Counsel for the Respondent   :    Mr T. McLean

Solicitors for the Respondent     :    Norton Smith & Co

Written submissions filed

on behalf of Applicant      :    2 June 1997

Written submissions filed

on behalf of Respondent     :    15 June 1997

Date of Judgment            :    26 June 1997