Roy Galvin & Co Pty Ltd v Ives

Roy Galvin & Co Pty Ltd (the creditor) applied for the substituted service of a creditors' petition against Mr. Ives (the debtor). Shortly before the hearing of the creditor's petition, the debtor lodged and had accepted a debtor's petition. The primary dispute concerned the costs associated with the creditor's application for substituted service.

The court was required to determine whether the costs of the application for substituted service should be awarded on an indemnity basis, notwithstanding the subsequent lodging and acceptance of a debtor's petition.

Judge Lucev reasoned that the creditor had been put to considerable expense in seeking substituted service due to the debtor's conduct in evading service. The court found that the debtor's actions were designed to frustrate the creditor's legitimate attempts to pursue its debt through bankruptcy proceedings. In such circumstances, where a party's conduct has unnecessarily increased the costs incurred by the other party, an award of costs on an indemnity basis is warranted. The court applied the principle that costs should follow the event, but also that indemnity costs may be awarded to reflect unreasonable or obstructive conduct.

The court ordered that the costs of the application for substituted service be paid by the debtor on an indemnity basis.