Re: Turner

[1993] FCA 1078

JUDGMENT No. LQ.Z,,CI.,,,I d.%iI.

PETER JAWS TURNEB

Debtor

Applicant

RULING ON COSTS

SYDNEY 5 MAY 1993

(heard in Perth)

Judgment was given in this matter on 24 December 1992. Costs were then reserved until the successful trustee had had an opportunity to make submissions. These submissions were actually filed on 29 January 1993 as directed but they have only recently been brought to my attention.

-

y219911 101 ALR 235 at 244 and 246. If costs

are awarded, it is submitted that they should not include the

fees of senior counsel who appeared for the trustee.

The acceptance of the Official Receiver's submission that there should be no order as to costs would mean that either the debtor's estate or the trustee personally would have to meet the trustee's costs. The trustee argued that the costs should not be paid out of the debtor's estate and that he

should not have to pay the costs personally. He said that:

1.	the Official Receiver had failed to have the deed invalidated;
2.	the trustee had not "worn down" the creditors or been guilty of any deceptive or confusing conduct;
3.	no creditor had complained;
4 .	there had been substantial performance of the deed;
5.	no substantial benefit to creditors would have been achieved by bankruptcy over the deed; and

In the reasons for judgment in the substantive matter, I found that there was a doubt about the validity of the deed of assignment but that the discretion provided for in section 222(1) of the Bankruptcy Act should not be exercised to declare it void. In this event, the Official Receiver submitted that there should be no order as to costs: Musolino

6 .    there was no public interest in the proceedings.

I agree that there is no reason for ordering the trustee to pay his own costs from personal funds. In fact the Official Receiver made no submission that he should. That leaves a balancing between whether the Official Receiver should do so or whether the trustee's costs should be borne by the debtor and his creditors. In my opinion it should be the Official Receiver.

Firstly of course the Official Receiver did not obtain the orders he was seeking in the application. In other words, the proceedings failed.

Secondly, the Official Receiver said at the 'hearing that the motive or part of the motive for the proceedings was that the procedure of several meetings adopted by the trustee was a "common practice" among trustees in Part X activities and that it was important that the practice be discouraged. There is no evidence of this common practice, only a statement from the bar table. For the purposes of this ruling, I accept the statement as true. But I know nothing of the other cases which make up the common practice so as to compare them with this case. No doubt if this particular trustee had been involved in the practice in some way, some evidence would have been proffered. Even if there were evidence of this common

practice, this was not the way or should not have been the primary means of dealing with it. The moneys of particular	creditors and debtors who have agreed on a way to handle
insolvency are not primarily in existence and should not generally be used to highlight inappropriate procedures by registered trustees generally or to fund lesson-teaching litigation by government authorities at no risk to themselves. Litigation is a costly and not a theoretical exercise. In such circumstances as these, it should be resorted to only

when there is no other or better way of protecting the interests of the particular creditors involved, or of the public where it has an interest in the outcome of the particular litigation. This litigation had no or few such elements.

As for senior counsel, I do not believe that a Judge should ordinarily enter into an arena which the law gives at first instance to a taxing officer. I will merely record that the matter was uncommon and of some complexity. If it was the type of test case suggested by the Official Receiver, the trustee had every reason to protect his own and the particular creditors1 and debtor's interests with whose care he was charged, and to maximise the chances of maintaining the deed. Senior counsel undoubtedly assisted that proper goal. From the point of view of the Court, the assistance given by senior counsel in the resolution of the matter was positive and considerable. The law says that it is a matter for the taxing officer and so it will be here. But if I were the taxing

officer, I would allow the fees for senior counsel.

The Official Receiver will pay the trustee's costs as agreed or taxed.