Scott & Scott (No. 3)

In the matter of *Scott & Scott (No. 3)*, Austin J of the Family Court of Australia considered an application by an applicant receiver seeking to recover legal costs incurred in litigation between himself and the respondents, Mr Feltos and Ms Scott. The dispute centred on the quantum of these costs, with the respondent wife admitting the amount claimed, but the respondent husband objecting. The applicant sought to recover these costs as a disbursement of his receivership.

The primary legal issue before the Court was whether the legal costs claimed by the applicant receiver were reasonably incurred and, if so, what amount should be awarded. The Court was required to determine the reasonableness of the legal fees separately from the reasonableness of the applicant's conduct in bringing the application against the respondents. The Court also considered the general legal principles governing a receiver's entitlement to recover costs, charges, and expenses properly incurred in the discharge of their duties, noting that such recovery is subject to the receiver having acted reasonably and the costs having been reasonably incurred, with the onus of proof resting on the receiver.

Austin J found that the quantum of legal costs calculated by the applicant's solicitors could not be rationally reconciled with the work reasonably required to contest the subject litigation. Applying the principles that receivers must justify the reasonableness of both the tasks undertaken and the remuneration claimed, and that courts have an inherent jurisdiction to review a receiver's disbursements, the Court determined that a fixed, but significantly reduced, sum was appropriate to avoid further expense and delay. The Court ordered that the respondents remain jointly and severally liable for the applicant's legal costs, assessed in the fixed sum of $21,550, which sum could also be recovered from the assets under the applicant's control. The parties' respective applications for the costs of the current proceedings were listed for further hearing.