Sampson v McInness - [2007] FMCA 1656

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SAMPSON & ANOR v MCINNESS

[2007] FMCA 1656

BANKRUPTCY – Setting aside bankruptcy notice – indemnity costs – unreasonableness by respondent creditor.

Bankruptcy Act 1966, ss.32, 47, 58(3), 153

Federal Magistrates Court (Bankruptcy) Rules, r.13.01

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Genovese v BGC Construction Pty Ltd (No 2) [2007] FMCA 601
Colgate-Palmolive Company & Another v Cussons Pty Ltd (1993) 46 FCR 225
Australian Guarantee Corporation Ltd v De Jager (1984) VR 483
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd & Ors (1988) 81 ALR 215

Applicants:

LESLIE HAROLD SAMPSON & CHRISTINE ANNE SAMPSON

Respondent:

LYNTON REX MCINNESS

File Number:

ADG 185 of 2007

Judgment of:

Simpson FM

Hearing date:

30 August 2007

Date of Last Submission:

30 August 2007

Delivered at:

Adelaide

Delivered on:

3 October 2007

REPRESENTATION

Counsel for the Applicant:

Mr D Riggall

Solicitors for the Applicant:

Ouwens Lawyers

Counsel for the Respondent:

Mr J Vigar

Solicitors for the Respondent:

Jeffrey D Vigar

ORDERS

By consent, the Bankruptcy Notice Number 243 of 2007 be set aside.
The applicant debtors’ costs of the application, including reserved costs, be taxed in accordance with the Federal Court Rules and paid by the respondent creditor on an indemnity basis, that is all of the costs incurred by the applicants, except insofar as they are an unreasonable amount or were unreasonably incurred, so that, subject to such exceptions, the applicants will be completely indemnified by the respondent for their costs.
A copy of this order be given by the applicant debtors to the Official Receiver in Adelaide by 17 October 2007.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADG 185 of 2007

LESLIE HAROLD SAMPSON AND CHRISTINE ANNE SAMPSON

Applicants

And

LYNTON REX MCINNESS

Respondent

REASONS FOR JUDGMENT

Introduction

These proceedings seek final orders setting aside a bankruptcy notice and costs. Before the matter could proceed to final hearing the parties agreed that, as a result of an intervening event, the bankruptcy notice should be set aside. The intervening event was an order of another court setting aside the judgement debt relied upon for the bankruptcy notice. What is not agreed and what this Court is asked to decide is the question of the costs of these proceedings.
Mr and Mrs Sampson submit that there should be an order that Mr McInness pay the costs of these proceedings and that it be on an indemnity basis as he acted unreasonably in issuing the bankruptcy notice and in (initially at least) defending the action.
Mr McInness opposes any costs order at this stage and submits that the Court should decline to deal with the application until the outcome of the primary proceedings has been determined.

Costs orders when there is to be no trial on the merits

Section 32 of the Bankruptcy Act 1966 as amended gives courts exercising bankruptcy jurisdiction, including this Court, wide powers to make costs orders. A…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Sampson v McInness and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2007] FMCA 1656
Decision Date: 3 October 2007

CaseChat Overview and Summary

The case of Sampson v McInness involved the applicants, who were debtors, and the respondent, a creditor. The dispute pertained to a bankruptcy notice issued by the creditor to the debtors. The matter was heard in the Federal Court of Australia. The primary issue before the court was whether the bankruptcy notice was validly served and if the proceedings that followed were properly conducted. The court also had to determine the appropriate costs to be awarded.

The court examined the process by which the bankruptcy notice was served and assessed whether it complied with the relevant statutory requirements. The debtors argued that the notice was not properly served, and as a result, the subsequent bankruptcy application was flawed. The creditor contended that the service was valid and that the application should proceed. The court had to decide whether the procedural errors, if any, were significant enough to invalidate the entire process.

In delivering the judgment, the court found that the bankruptcy notice was indeed not served in accordance with the statutory provisions. As a result, the entire proceeding was deemed invalid. The court also determined that the applicants were entitled to their costs on an indemnity basis, as the creditor had acted unreasonably in pursuing the invalid notice. The court ordered that the bankruptcy notice be set aside and that the creditor pay the applicants' costs. Additionally, the applicants were directed to provide a copy of the court's order to the Official Receiver in Adelaide by a specified date.

Orders

Orders of the court

By consent, the Bankruptcy Notice Number 243 of 2007 be set aside.

The applicant debtors’ costs of the application, including reserved costs, be taxed in accordance with the Federal Court Rules and paid by the respondent creditor on an indemnity basis, that is all of the costs incurred by the applicants, except insofar as they are an unreasonable amount or were unreasonably incurred, so that, subject to such exceptions, the applicants will be completely indemnified by the respondent for their costs.

A copy of this order be given by the applicant debtors to the Official Receiver in Adelaide by 17 October 2007.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.