Rodrigues v customOz Services Pty Ltd
[2023] FedCFamC2G 444
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Rodrigues v customOz Services Pty Ltd [2023] FedCFamC2G 444
File number(s): SYG 70 of 2023 Judgment of: JUDGE LAING Date of judgment: 30 May 2023 Catchwords: COSTS – application to set aside bankruptcy notice – where proceedings challenging the adjudication underlying the judgment debt were unsuccessful – where the applicants’ debt to the respondent was consequently paid prior to determination of the set aside application – where the parties agreed that the set aside application should be dismissed – costs ordered in favour of the respondent Legislation: Bankruptcy Act 1966 (Cth) ss 32, 41
Building and Construction Industry Security of Payment Act 1999 (NSW) s 25
Civil Procedure Act 2005 (NSW) s 133
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 190
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
Federal Court Rules 2011 (Cth)
Cases cited: Cavanah & Anor v Advance Earthmoving & Haulage Pty Ltd [2008] FMCA 427
Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34
Division: Division 2 General Federal Law Number of paragraphs: 24 Date of last submission/s: 5 May 2023 Date of hearing: Determined without oral hearing Place: Sydney Counsel for the Applicants: Mr T Bland Solicitor for the Applicants: O’Brien Lawyers Counsel for the Respondent: Ms B K Nolan Solicitor for the Respondent: Beyond Property Legal Solutions ORDERS
SYG 70 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: FRANK SYDNEY RODRIGUES
First Applicant
JANINA DOROTHY RODRIGUES
Second Applicant
AND: CUSTOMOZ SERVICES PTY LTD
Respondent
order made by:
JUDGE LAING
DATE OF ORDER:
30 May 2023
THE COURT ORDERS THAT:
1.These proceedings be finalised on the basis that the applicants pay the respondent’s costs fixed in the amount of $13,000.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LAING:
On 21 April 2023 I made orders dismissing by consent an application filed on 12 January 2023 seeking to set aside a bankruptcy notice (Bankruptcy Notice). The parties have sought for the issue of costs to be determined on the papers, following the filing of written submissions.
BACKGROUND
The Bankruptcy Notice was issued in consequence of the applicants’ non-satisfaction of a judgment entered in the Local Court of New South Wales on 28 November 2022 (Judgment). This was entered pursuant to s 133 of the Civil Procedure Act 2005 (NSW) giving effect to the decision of an adjudicator (Adjudication) under s 25(1) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). The Bankruptcy Notice was served on the applicants on 22 December 2022.
On 12 January 2023, the applicants commenced the current proceedings seeking to set aside the Bankruptcy Notice. The applicants contended that the Judgment upon which the Bankruptcy Notice was based was interim in nature and liable to be set aside on the basis that it was illegal, beyond jurisdiction, irregular and/or based upon non-compliance with the provisions of the SOPA.
Reliance was placed by the applicants upon proceedings that, at the time, had been commenced in the Moss Vale Local Court seeking to set aside the Judgment. Those proceedings were subsequently discontinued.
The applicants then commenced proceedings in the Supreme Court of New South Wales seeking a declaration that the Adjudication was void. The applicants sought leave to amend their application in these proceedings to rely upon the Supreme Court proceedings. However, on 17 April 2023, those proceedings were dismissed with costs.
On 21 April 2023, the matter was listed for directions before the Court. This was after the matter had been allocated to a Judge of this Court, following multiple previous listings before Registrars. At the listing on 21 April 2023, I was informed that a supplementary order had been made in the Supreme Court proceedings releasing the amount of the debt to the respondent. This order was made after the applicants had informed the Court that they did not object to such an order being made.
The situation, then, by the time that the matter came before me was that the Judgment debt that was the subject of the Bankruptcy Notice had been paid. The parties therefore sought, by consent, dismissal of the application seeking to set aside the Bankruptcy Notice. This leaves outstanding only the issue of costs.
PRINCIPLES
Rule 13.01(1) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) provides:
13.01 Basis for costs
(1)Subject to Division 13.2, a person who is entitled to costs in a proceeding to which the Bankruptcy Act applies is entitled to costs in accordance with Part 40 of the Federal Court Rules 2011 unless the Court otherwise orders.
(2) In making an order for costs, the Court may fix the amount of the costs.
(3)If the Court fixes the amount of the costs, Part 40 of the Federal Court Rules 2011 does not apply to a bill of costs submitted for the costs, except for the issue of a certificate of taxation.
Rule 40.03 of the Federal Court Rules 2011 (Cth) provides that if the Court reserves the question of costs, and no further order is made, costs follow the event. This reflects the general position in civil proceedings, which is that costs usually follow the event.
Section 32 of the Bankruptcy Act 1966 (Cth) (Act) provides that the Court “may, in any proceeding before it… make such orders as to costs as it thinks fit”.
In Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 (Qin), McHugh J stated (at 624-625) (footnotes omitted):
In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission[7] where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.
It has also been recognised, however, that there are cases in which it may be said that a party has effectively capitulated regarding the substance of a dispute. In such cases, it may be appropriate that the party in question be ordered to pay the other party’s costs: see Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34 at [10]-[12] and the cases cited therein.
APPLICATION
The applicants’ submissions focussed to some extent on a dispute that appears to have arisen between the parties regarding the applicants’ proposed amendment of their application to rely upon the Supreme Court proceedings and whether or not those proceedings allowed time to be extended for compliance with the Bankruptcy Notice pursuant to s 41(6A) of the Act. The respondent’s resistance to the amendment appears to have occasioned at least some additional costs in the matter. It appears to have been on the basis that the amendment would deprive the Court of jurisdiction to extend time for compliance with the Bankruptcy Notice under s 41(6A)(a) of the Act.
Had it been necessary to determine that dispute, greater assistance in this regard would have been required from the parties. As it is, I do not presently understand why reliance upon the Supreme Court proceedings was necessary to enliven the power to extend time (as distinct from their role in supporting the set aside application). This is because the set aside application was made within time. Time had been extended by this Court, on successive occasions, to allow determination of that application. The power to extend time under s 41(6A)(b) of the Act therefore appears to have continued to have been available, regardless of whether s 41(6A)(a) was also satisfied. The Registrar appears to have been of a similar view, given their allowance of a further extension of time after the Local Court proceedings had been discontinued. It may be that the position in this regard would have been clarified through hearing of the application. However, without such assistance, I remain uncertain as to why such a significant amount of work done in this matter focussed upon the application of s 41(6A).
The real issue in these proceedings appears to me to have been whether or not the Bankruptcy Notice was to be set aside. That was the relief that was ultimately sought by the applicants in these proceedings. In pursuit of this goal, the applicants appear to have relied heavily on issues taken with the Adjudication that was the basis of the Judgment debt. The proceedings that the applicants relied upon in that regard, in the Supreme Court, have been unsuccessful. The debt has now been paid, through funds transferred to the respondent without objection.
The applicants also suggested, at least at the time that their application to this Court was filed, that the Bankruptcy Notice ought to be set aside because the Judgment was interim in nature. However, such a contention has been left undeveloped. This is notwithstanding the respondent’s reference in submissions to cases such as Cavanah & Anor v Advance Earthmoving & Haulage Pty Ltd [2008] FMCA 427 at [24]-[50] (followed in Bailey v MCH Building Pty Ltd [2011] FMCA 124 and Adams v Northern Plumbing (NQ) Pty Ltd [2010] FMCA 224), which appear to be to the contrary.
The focus of the applicants’ application, rather, appears to have been on challenging the Adjudication upon which the Judgment was based. It seems that this basis for setting aside the Bankruptcy Notice was destined to fail, given the result in the Supreme Court proceedings.
There does not appear to be any proper basis for finding that the respondent acted unreasonably in respect of the issue of the Bankruptcy Notice. Whilst the applicants may have considered that they had a basis for challenging the Adjudication, their attempt to do so through proceedings in the Supreme Court was unsuccessful. They have therefore permitted money to be transferred in satisfaction of the debt. It is that action (i.e. the payment of the debt) that has rendered the continuation of these proceedings unnecessary.
Having regard to the above, I accept the respondent’s submission that the dismissal of these proceedings has effectively been occasioned by capitulation on the applicants’ part and success on the part of the respondent. The debt that the respondent pursued through the Bankruptcy Notice has been paid.
In the circumstances, I consider that an order ought to be made for the payment of at least some proportion of the respondent’s costs.
However, I am not persuaded that it would be appropriate to award the full amount of $19,914.11 sought by the respondent. In support of this amount, the respondent relied upon a Schedule said to have been prepared in accordance with Schedule 2 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), as well as previous affidavits of limited detail.
I have considered the Schedule and the costs that have been sought. I accept that this is a matter in which a number of appearances have occurred before Registrars prior to the matter being listed before me. However, a non-insignificant amount of costs in this matter appears to have related to the issues regarding s 41(6A) of the Act. As explained above, I am not satisfied on the information before me that this issue warranted the amount of attention that it was given. That said, without more fulsome argument on the issue, I am also not inclined to accept the applicants’ submission that the arguments advanced in this regard on the respondent’s part were “untenable” and resulted in such delays that the respondent should pay the applicants’ costs. I observe that those costs were sought in the amount of $15,175.
Having regard to the totality of the material before me, and its limitations, I consider that an award of costs in favour of the respondent fixed in the amount of $13,000 is reasonable in the circumstances of this case. I therefore consider that the purposes of s 190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) would be served by making an order for costs fixed in that amount. This appears a more efficient course than allowing the parties to engage in further protraction of this dispute by leaving the question of quantum to taxation.
CONCLUSION
For the above reasons, I will order that the applicants pay the respondent’s costs of these proceedings fixed in the amount of $13,000.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Laing. Associate:
Dated: 30 May 2023
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