Re Theo, Sol Ex Parte Official Trustee in Bankruptcy

[1997] FCA 242

CATCHWORDS

PRACTICE AND PROCEDURE - taxation of costs - bankruptcy - whether Deputy District Registrar of Federal Court lacks power to tax costs payable to litigant in bankruptcy proceedings - where respondents legal practitioners - whether entitled to recover same range of costs as if they had retained other legal representation.

Bankruptcy Act 1966 (Cth) - ss 14, 167, 315
Bankruptcy Rules - r 4
Federal Court Rules - O 77 r 1, O 62 rr 8 and 39

Cases Considered

Cameron v Cole (1944) 68 CLR 571
Cachia v Hanes (1994) 179 CLR 403
Cashman & Partners v Secretary, Department of Human Services and Health (1995) 61 FCR 301

RE SOL THEO; EX PARTE OFFICIAL TRUSTEE IN BANKRUPTCY
QB 1422 OF 1990

DRUMMOND J
BRISBANE
8 APRIL 1997

IN THE FEDERAL COURT OF AUSTRALIA  No QB 1422 of 1990
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE
STATE OF QUEENSLAND

RE:SOL THEO

Applicant

EX PARTE:OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

MINUTES OF ORDERS

CORAM:  Drummond J
DATE OF ORDER:  8 April 1997
WHERE MADE:  Brisbane

THE COURT ORDERS THAT:

1. The applicant’s notice of motion is dismissed.

NOTE:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA  No QB 1422 of 1990
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE
STATE OF QUEENSLAND

RE:SOL THEO

Applicant

EX PARTE:OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

CORAM:Drummond J

DATE:8 April 1997

PLACE:Brisbane

REASONS FOR JUDGMENT

Mr Theo applies for an order that “a taxation of bills of costs filed by the statutory trustees for sale pursuant to orders of the Court of 2 September 1996 and 3 October 1996 be reviewed”.

However, as Mr Theo made clear in argument, he seeks an order setting aside the certificates of taxation of those costs on the ground that, since the 1996 amendments to the Bankruptcy Act 1966 (Cth), which came into effect on 16 December 1996, the Deputy Registrar of this Court has no power to tax the costs in question.

On 2 September 1996, Kiefel J dealt with an application by Mr Theo to stay orders made by Heerey J on 1 August 1996, at the behest of Mr Theo’s trustee in bankruptcy, whereby Heerey J appointed Mr Philp and another as co-trustee on the statutory trust for sale of certain properties in which Mr Theo had an interest jointly with his wife.  Mr Theo had transferred his interest in these properties to his wife shortly before his bankruptcy; Heerey J found these transfers were void as against the trustee in bankruptcy.  Kiefel J dismissed Mr Theo’s stay application and ordered that he pay the statutory trustee’s costs of the application:  they had been made respondents by Mr Theo to the stay application.

By a further application by Mr Theo, dealt with by Kiefel J on 3 October 1996, he sought what he termed “clarification” of Heerey J’s orders of 1 August 1996; he also sought an order that, upon his provision of a bank guarantee, the statutory trustees for sale be removed, together with an order staying execution of Heerey J’s orders of 1 August 1996 with respect to Mr and Mrs Theo’s residence.  This application was disposed of by Kiefel J ordering that the statutory trustees not enter into any unconditional contract for sale of any of the properties the subject of Heerey J’s orders until determination of Mr Theo’s pending appeal.  Kiefel J ordered that Mr Theo pay the costs of the statutory trustees of their appearance that day:  once again, they had been made respondents by Mr Theo to his application.

Mr Theo’s appeal against Heerey J’s judgment was allowed by the Full Court on 7 November 1996.  It was only Heerey J’s judgment, including his order appointing the statutory trustees for sale, that was set aside.  The Full Court did not interfere with Kiefel J’s orders of 2 September or 3 October 1996.  Those orders, as orders of the Federal Court, a superior court of record, therefore stood as authority for the statutory trustees to recover from Mr Theo their costs of 2 September and 3 October, despite Mr Theo’s successful appeal, subject only to those costs being quantified by taxation.  Those orders will continue to have full effect unless and until they are set aside.  See Cameron v Cole (1944) 68 CLR 571 at 590.

The costs payable by Mr Theo to the statutory trustees under these two orders were taxed by a Deputy District Registrar of this Court, over Mr Theo’s objection, on 7 March 1997 and certificates of taxation were issued on 10 March 1997.

In so far as Mr Theo relies on s 167 of the Bankruptcy Act in support of his argument that the Deputy District Registrar had no authority to tax those costs, his reliance is misplaced.  That section, both prior to and after the 1996 amendments, deals only with the taxation of costs recoverable by persons involved in various capacities in the administration of a bankrupt estate by way of remuneration for services provided by those persons in connection with the administration.  The costs the subject of Kiefel J’s orders were costs which the statutory trustees recovered, not for services performed in that capacity, but rather by way of the limited indemnity to which they were held entitled in their capacity as successful litigants against whom Mr Theo had brought the two applications in question.

That the trustees were both solicitors in practice and that they acted for themselves in this litigation does not, on the law as it presently stands, deny them the entitlement to recover much the same range of costs as they could have recovered if, instead of acting for themselves, they had retained other legal representation:  see Cachia v Hanes (1994) 179 CLR 403 at 411-413 and Cashman & Partners v Secretary, Department of Human Services and Health (1995) 61 FCR 301 at 312-313. I reject Mr Theo’s submission to the contrary.

Mr Theo’s other point is that Mr Allen, who, at all relevant times, has held office as a Deputy District Registrar of the Federal Court appointed under s 18N of the Federal Court of Australia Act 1976 (Cth) and who, up to 16 December 1996, also held an appointment under s 14 of the Bankruptcy Act 1966 (Cth) as a Deputy Registrar in Bankruptcy, was not, however, at the time he taxed the two lots of costs in question a “taxing officer” within the meaning of that term in s 167(9), in the form in which it has stood since 16 December 1996. That can be accepted. But, in my opinion, it provides no ground for doubting that Mr Allen’s taxation of the two costs orders in question is legally effective to quantify Mr Theo’s liability under those two orders.

The orders for costs here in question were made pursuant to s 32 of the Bankruptcy Act, a provision unaffected by the 1996 amendments.  Prior to those amendments coming into effect on 16 December 1996, the taxation of costs ordered to be paid by a court exercising jurisdiction in bankruptcy was governed by Part XIII of the Bankruptcy Rules.  Those Rules required such costs to be taxed by “a taxing officer”: see, eg, r 163. Bankruptcy r 4(1) gave that expression “the same meaning as in s 167” of the Bankruptcy Act. Section 167(9) of the Bankruptcy Act in its pre-December 1996 form defined “taxing officer” to mean “a Registrar or Deputy Registrar or a person authorised in writing by a Registrar, with the approval of the Court or the Inspector-General, to exercise the powers and perform the functions of a taxing officer”. The terms “Registrar” and “Deputy Registrar” in this provision as it then stood meant a Registrar in Bankruptcy and a Deputy Registrar in Bankruptcy appointed under s 14 of that Act: see s 5(1). Section 167(9) was amended by the 1996 amendment to define “taxing officer” as “a person appointed by the Inspector-General for the purposes of” s 167.

Section 315 of the Bankruptcy Act, in so far as it previously authorised the making of Bankruptcy Rules under that Act, was repealed as from 16 December 1996.  The Bankruptcy Rules in force under the Bankruptcy Act prior to that date thereafter ceased to have any effect as Rules under that Act.  However, as from 16 December, by force of O 77 r 1 of the Federal Court Rules, those Rules, in the form they were in immediately before that date, continue to have legal force, but only as Rules of the Federal Court and only to the extent allowed by O 77 r(2).

It follows that, when old Bankruptcy Rule 4(1), now in force as a Federal Court rule, gives the expression “taxing officer” in Part XIII of those old Bankruptcy Rules the same meaning that expression had in s 167 of the Bankruptcy Act, it picks up s 167 of the Bankruptcy Act in the form in which it stood immediately prior to the 1996 amendments coming into effect.  But the offices of Registrar and Deputy Registrar in Bankruptcy ceased to exist on 16 December 1996:  see item 57 of Schedule 1 to the amending Act No 44 of 1996.  By items 6 and 11 of Schedule 1 to the amending Act, the definitions of “Deputy Registrar” and “Registrar” were repealed and a new definition of the expression “Registrar” substituted; that term in the Bankruptcy Act now means “the Registrar, a Deputy Registrar, a District Registrar or a Deputy District Registrar of the Federal Court”.  By item 441(1) of the Schedule, this new definition of the term “Registrar” was declared to apply to all provisions of the Bankruptcy Act applying to bankruptcies and other insolvency administrations that are current on or after 16 December 1996.  But for the reasons given, the expression “taxing officer” in Part XIII of the Bankruptcy Rules cannot be read as a reference to the Registrar or a subordinate Registrar of the Federal Court.

However, O 77 r 1(3) of the Federal Court Rules provides that the Federal Court Rules, to the extent that they are consistent with the Bankruptcy Rules as applied by O 77 r 1(2), also apply to the practice and procedure of the Federal Court in the exercise of its jurisdiction in bankruptcy.  Order 62 rr 8 and 39 provide for the taxation of costs under orders made by the Federal Court to be taxed by “a Registrar”, ie, by the Registrar or a District Registrar of the Court, including a Deputy Registrar or a Deputy District Registrar of the Court.  Mr Allen, as I have said, held office as a Deputy District Registrar of the Court at the time he taxed the costs in question.

Order 62 rr 8 and 39 of the Federal Court Rules are consistent with those Bankruptcy Rules which, by force of O 77 r 1(2), apply as Rules of the Federal Court from 16 December 1996.  Order 62 r 8 provides for the taxation of costs ordered to be paid by the Federal Court and the rule, in terms, is not limited to orders made by the Court in the exercise of any particular jurisdiction.  It is a rule of general application to the taxation of costs ordered by this Court in the exercise of any jurisdiction and is in terms well capable of applying to costs ordered to be paid by the Court in its bankruptcy jurisdiction.  The provisions of Part XIII of the Bankruptcy Rules which provided for the taxation of costs ordered to be paid by courts exercising bankruptcy jurisdiction ceased to have any effect from 16 December 1996, when there was no longer any official authorised by those Rules to perform that function.  Order 62 rr 8 and 39 do not therefore conflict with any provision of the Bankruptcy Rules to the extent that the Bankruptcy Rules continue, by force of O 77, to have legal effect.

It follows that Deputy District Registrar Allen was authorised by O 62 rr 8 and 39 of the Federal Court Rules to tax the costs in question.

Mr Theo’s notice of motion must therefore be dismissed.

I certify that this and the preceding six
pages are a true copy of the reasons
for judgment herein of the Honourable
Justice Drummond.

Associate:

Date:  8 April 1997

Applicant appeared in person.

Solicitor for the respondent:  Bennett & Philp

Date of hearing:  2 April 1997