Sanchez, M.A. v Smits, L.G

[1994] FCA 188

188

JUDGMENT NO. ........ ........ .. I ........ ..,,

IN THE FEDERAL COURT OF AUSTRALIA	1
GENERAL DIVISION	) No. B509 of 1992
BANKRUPTCY DISTRICT	1
OF THE STATE OF NEW SOUTH WALES	1

Re :  MICHAEL ANGEL SANCHEZ

Debtor

RECEIVED	Ex parte:	LEONARDUS GERARDUS
SMITS AND JOHN ANTHONY

- ..l8 APR 1994	LESLIE trading in
FEDERAL COURT OF	partnership as SMITS

AUSTRALIA

PAlNClPAL	LESLIE BARWICK
REGISTRY	Creditors

REASONS FOR JUD-NT

EINFELD J SYDNEY 13 APRIL 1994

When giving judgment in this matter on 28 February 1994, I reserved the question of costs to permit further submissions. These submissions have now been received. As previously noted, the applicant Sanchez seeks an order for indemnity costs. The respondent Smits Leslie Barwick (SLB) seeks an order for their costs, or alternatively no order as to costs.

There is no doubt that the Court has power to order indemnity costs and has done so quite often. Justice Sheppard recently said that indemnity costs will be ordered in "the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule": Colaate-Palmolive	Com~anv and Anor v Cussons Ptv Ltd unreported 10 November 1993 approach to the matter, and undoubtedly his Honour was using a	at page 18. Whilst I agree with the thrust of his Honour's
shorthand expression when he spoke of "the usual rule", I must confess to some unease at the concept of a "usual rule" in the light of provisions such as section 43 of the Federal Court Act. The "usual rule" that the successful party will receive an order for costs arose when no such legislative intention had appeared. It seems to me that this rule has been replaced by a statutory regime which leaves the matter in the unfettered discretion of each Court to be exercised judicially in light of all the circumstances of the particular case. On the other hand, I agree that if there is nothing else remarkable about the case, successful parties should expect to have their costs paid, at least on a party/party basis, by unsuccessful parties.
Sanchez's argument was that in a fight over legal fees owing to his firm, Smits' evidence lacked candour and his conduct of the litigation was wasteful, perhaps malicious, and completely unrelated to his chances of success. SLB argued that the litigation came about because Sanchez had failed to defend the
Local Court proceedings where judgment was obtained against
him, despite being legally represented from the outset. They
pointed to Sanchez's admission of the debt and his failure to advise them of the sale of the real estate agency while the debt was still partially unpaid. SLB said that Sanchez did not seek their consent to the setting aside of the judgment or respond to their efforts to settle the case. This, they argued, resulted in litigation and expense that were unnecessary.
There is some merit in both positions, but I see no circumstances established which would deny the successful party an order for costs. I should also add my agreement with what fell from Justice Young in the Equity Division of the Supreme Court of New South Wales in National Commercial Bank v Wimborne unreported 6 May 1992 and Patronis v Oinoi and Kam~i
Ptv Ltd unreported 30 November 1993. His Honour commented that while indemnity costs are being awarded more often than previously, he himself would not make an order until seeing a draft bill for the reason that some lawyers use the order to make excessive and unjustified charges. No bill has been submitted in this case but if I had been minded to make an order for indemnity costs I would have permitted time for that to be done.
The respondents will pay the applicant's costs on a party and party basis.