Sijabat in Her Capacity as Joint and Several Trustee for the Bankrupt Estate of Do v Do in his Capacity as a Former Joint Trustee of the Andrew Superannuation Fund (No 2)
[2022] FedCFamC2G 250
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Sijabat in Her Capacity as Joint and Several Trustee for The Bankrupt Estate of Do v Do in his Capacity as a Former Joint Trustee of the Andrew Superannuation Fund (No 2) [2022] FedCFamC2G 250
File number(s): CAG 74 of 2019 Judgment of: JUDGE W J NEVILLE Date of judgment: 8 April 2022 Catchwords: BANKRUPTCY - Costs – interest – date from which interest is calculated – interest and costs ordered. Legislation: Federal Circuit and Family Court of Australia Act 2021 (Cth) s 211 Cases cited: Caason Investments Pty Ltd v Cao (No. 2) (2015) 237 FCR 351
Kazar v Kargarian (2011) 197 FCR 113
Latoudis v Casey (1990) 170 CLR 534
Oshlack v Richmond River Council (1998) 193 CLR 72
Division: Division 2 Family Law Number of paragraphs: 23 Date of last submission/s: 22 February 2022 Date of hearing: On the papers Place: Canberra Counsel for the Applicant Mr J Dooley Solicitor for the Applicant Chamberlains Law Firm Counsel for the First Respondent Mr J K Raftery Solicitor for the First Respondent Roser Lawyers Counsel for the Second Respondent Mr M J Heath Solicitor for the Second Respondent Matthews Folbigg Pty Ltd Third Respondent No appearance ORDERS
CAG 74 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: LOUISA MENG LI IN HER CAPACITY AS JOINT AND SEVERAL TRUSTEE FOR THE BANKRUPT ESTATE OF TIEN DUNG DO, ALSO KNOWN AS TEIN DUNG DO SIJABAT
Applicant
AND: TIEN DUNG DO, ALSO KNOWN AS TEIN DUNG DO, IN HIS CAPACITY AS A FORMER JOINT TRUSTEE OF THE ANDREW SUPERANNUATION FUND
First RespondentDO CONSTRUCTION PTY LTD IN ITS CAPACITY AS TRUSTEE OF THE ANDREW SUPERANNUATION FUND ACN 153 972 877
Second RespondentVAN THU NGUYEN TRINH
Third Respondent
ORDER MADE BY:
JUDGE W J NEVILLE
DATE OF ORDER:
8 APRIL 2022
THE COURT ORDERS THAT:
1.Within 7 days of the date of these Orders, being by 15 April 2022, the Applicant is to provide Chambers with an engrossed Minute of Orders and declarations in accordance with (a) the principal judgment, (b) the Orders already agreed between the parties, and (c) these reasons in relation to the remaining outstanding issues regarding costs, interest and declaration regarding the Gozzard Street property.
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 W J NEVILLE:
Introduction
Judgment in this matter was delivered on 14th December 2021 (“the principal judgment”). The Orders issued that day directed the parties to provide a Short Minute of Orders to give effect to those reasons within 14 days. Regrettably, an agreed Minute was not provided.
The scope of the contest now is extremely narrow, as the respective Minutes and submissions set out below make plain.
In the absence of agreement, the parties provided their individual Minutes of Orders Sought and were directed to file brief written submissions in relation to their respective costs Orders sought. In the interests of brevity, and having regard to the very narrow compass of the issues in dispute, the First and Second Respondents provided a joint Minute of Orders sought and written submissions. They are set out below.
As a result of the Court’s findings in the principal judgment, as noted in the submissions below, Orders 1, 2, 3, 5 and 7 (concerning the form of declarations, and dismissal of the claim concerning the Gozzard Street property) were agreed. There remain, however, three outstanding issues: (a) the terms and scope of the costs Order in the Applicant’s favour (Issue 1); (b) the terms and scope of any award of interest (Issue 2); and (c) a limited cost Order and declaration in the First and Second Respondents favour (Issue 3).
For the very brief reasons that follow, in relation to each of the issues, they are determined as follows:
(a)The Applicant’s costs should not be confined to be awarded against only the First Respondent. The costs Order in the Applicant’s favour should be against the First and Second Respondents. Each of them actively participated in the proceeding, and never sought to confine any part of the claims against the First and Second Respondents to one Respondent only.[1] The Order regarding costs should be, and will be, as sought by the Applicant regarding what might be regarded or termed “the principal costs Order”.
(b)The First and Second Respondent shall pay interest as sought by the Applicant. The date from which interest is to be payable is from the date of the demand, namely 28th August 2018, for reasons as set out below.
(c)The declaration sought by the “active Respondents” (as they were termed during the hearing) regarding the Gozzard Street property should be made. It is neither opposed nor consented to by the Applicant. There should be no further Orders regarding costs as sought by the active Respondents regarding the “non-use” of a second Affidavit of the Trustee, Ms Sijabat.
[1] I note simply the fact that the Third Respondent took no active part in the litigation.
Applicant’s Orders sought
The Applicant’s Amended Orders proposed and sought in the light of the reasons delivered last December were provided to the Court by email dated 22nd February 2022. These Orders identified in red the issues considered to be in dispute between the parties and were as follows (emphasis in original but for the purpose of this judgment underlined):
1.A declaration that the payments by or on behalf of or for the benefit of Mr Tien Dung Do, also known as Mr Tien Dung Do (Mr Do), totalling $437,767 during the financial year ending 30 June 2013 into the Andrew Superannuation Fund are void as against the Applicant within the meaning of s 128B of the Bankruptcy Act 1966 (Cth) (Act).
2.A declaration that the payments by or on behalf of or for the benefit of Mr Do totalling $7,159.00 during the financial year ending June 2014 into the Andrew Superannuation Fund are void as against the Applicant within the meaning of s 128B of the Act.
3.A declaration that the payments by or on behalf of or for the benefit of Mr Do totalling $25,000.00 during the financial year ending 30 June 2015 into the Andrew Superannuation Fund are void as against the Applicant within the meaning of s 128B of the Act.
4.The Second Respondent is to pay $469,926.00 plus interest to the Applicant.
5.A declaration that the payments made by Mr Do to the Third Respondent on 28 July 2015 totalling $30,000.00 are void as against the Applicant within the meaning of s 120 of the Act.
6.The Third Respondent is to pay $30,000.00 plus interest to the Applicant.
7.The Applicant's claim with respect to the property known as Unit 4 of Unit Plan 2983, Block 6-13 on Deposit Plan 10267, Section 14 Gungahlin, also known as Unit 4, 38 Gozzard Street, Gungahlin ACT 2912 is dismissed.
8.The First and Second Respondents are to pay the Applicant's costs with respect to orders 1 to 4 as agreed or taxed.
9.The Respondents are to pay the Applicant’s costs with respect to orders 5 and 6 as agreed or taxed.
10.The Applicant is to pay the Second Respondent’s costs with respect to order 7 as agreed or taxed.
11.Pre-judgment interest with respect to order 4 above commences on 30 September 2016 and is to be calculated at the rate of the RBA cash rate plus 4%, being $124,218.70 for the period 30 September 2016 to 22 February 2022 and continues to accrue at a rate of$52.79 per day.
12.Pre-judgment interest with respect to order 6 commences on 30 September 2016 and is to be calculated at the rate of the RBA cash rate plus 4%, being $8,113.60 for the period 30 September 2016 to 22 February 2022 and continues to accrue at a rate of $3.37 per day.
First and Second Respondents’ Orders sought
The First and Second Respondent’s joint Orders sought were provided to the Court by email dated 28th January 2022. They were as follows (emphasis in original):
1.A declaration that the payments by or on behalf of or for the benefit of Mr Tien Dung Do, also known as Mr Tien Dung Do (Mr Do), totalling $437,767 during the financial year ending 30 June 2013 into the Andrew Superannuation Fund are void as against the Applicant within the meaning of s 128B of the Bankruptcy Act 1966 (Cth) (Act).
2.A declaration that the payments by or on behalf of or for the benefit of Mr Do totalling $7,159.00 during the financial year ending June 2014 into the Andrew Superannuation Fund are void as against the Applicant within the meaning of s 128B of the Act.
3.A declaration that the payments by or on behalf of or for the benefit of Mr Do totalling $25,000.00 during the financial year ending 30 June 2015 into the Andrew Superannuation Fund are void as against the Applicant within the meaning of s 128B of the Act.
4.The Second Respondent is to pay $469,926.00 to the Applicant.
5.A declaration that the payments made by Mr Do to the Third Respondent on 28 July 2015 totalling $30,000.00 are void as against the Applicant within the meaning of s 120 of the Act.
6.The Third Respondent is to pay $30,000.00 to the Applicant.
7.The Applicant's claim with respect to the property known as Unit 4 of Unit Plan 2983, Block 6-13 on Deposit Plan 10267, Section 14 Gungahlin, also known as Unit 4, 38 Gozzard Street, Gungahlin ACT 2912 (the Property) is dismissed.
8.A declaration that the First Respondent holds the Property on trust for the Second Respondent and that it is an asset of ‘the Andrew Superannuation Fund’ of which the Second Respondent is trustee.
9.In respect of orders 1 to 4:
a.the First Respondent is to pay the Applicant's costs subject to order 9(b);
b.the Applicant is to pay the First Respondent’s costs incurred in reviewing and printing the affidavit of Louisa Meng Li Sijabat dated 1 April 2021 and exhibit LS3.
10.The Respondents are to pay the Applicant’s costs with respect to orders 5 and 6 as agreed or taxed.
11.The Applicant is to pay the Second Respondent’s costs with respect to order 7 and 8 as agreed or taxed.
Applicant’s written submissions
The Applicant’s written submissions were provided to the Court by email dated 22nd February 2022. They were as follows (emphasis in original):
1.Judgment was delivered on 14 December 2021 (Sijabat v Do [2021] FedCFamC2G 353). The parties have not been able to agree as to the appropriate costs orders. The version proposed by the 1st and 2nd Respondents was circulated at 5.03pm on 28 January 2022 (Respondents’ Orders). The version proposed by the Applicants was circulated at 5.45pm on 28 January 2022.
2.Orders 1, 2, 3, 5 and 7 (concerning the form of declarations, and dismissal of the claim concerning the Gozzard Street property) are agreed.
3.Orders 4 and 6 are agreed save as to interest. The Applicants seek interest under s 211(2) of the Federal Circuit and Family Court of Australia Act 2021. Under s 211(3) interest must be ordered unless the Court is satisfied that good cause has been shown for not making an order under the subsection. Here, there is no good cause – this was a case where there was no undue delay by the Applicants, and therefore interest should follow. Under s 211(3)(c), interest can be given at such rate as the Court thinks fit on the whole or any part of the period from when the cause of action arose to the date of entry of judgment. The Applicants submit that the appropriate period is from the date of their appointment (30 September 2016) to the date of the orders. As for the rate, the rates used in the Federal Court of Australia (of the RBA cash rate plus 4%) are, it is submitted, appropriate. The Applicants understand (from correspondence) that the Respondents will contend that an award of interest should not be made as the Applicants’ lawyers are acting on a no win no fee basis; that the amount recovered will be insufficient to pay them; and therefore they have not been kept out of their money. The underlying factual proposition is not made good (see eg [11] of Annexure A of the Judgment). Further, that contention fails to appreciate the Applicants’ duties to take proceedings to recover funds into the estate, and (if recovered) those funds are paid out according to the priorities in s 109 of the Bankruptcy Act. There is nothing in making payments according to legislation warranting against an award of interest.
4.By order 8 in the Respondent’s Orders, they seek a declaration as to the Gozzard Street property. The Applicants neither consent to nor oppose this order, although the matter did not receive attention in submissions.
5.As to costs, the first issue is the appropriate costs order in respect of orders 1 to 4. The Applicants seek that the 1st and 2nd Respondents pay their costs. The 1st and 2nd Respondents differ from this in two respects: (i) seeking that only the 1st Respondent be liable for costs, and (ii) that the Applicants pay costs in respect of an affidavit and exhibit that were not put into evidence.
6.As to the first matter, the Applicants submit that both the 1st and 2nd Respondents should be liable for costs, not just the 1st Respondent. In its Defence dated 5 February 2021, the 2nd Respondent denied / not admitted the relevant pleas of the Statement of Claim (see eg [33]-[37], [40]-[44], [47]-[51]). At [16](i) of its opening outline, the 2nd Respondent opposed the relief in respect of the contributions (see J [90]). In its closing submissions (J [91]), the 2nd Respondent adopted the 1st Respondent’s submissions (at [1] which dealt with the contributions in detail), and made further submissions as to the contributions (at [6]-[10]). The further submissions made by the 2nd Respondent after judgment was reserved also addressed the contributions (especially [3]-[6]).
7.Put another way: the 2nd Respondent could have taken a passive role concerning the contributions and abided by the orders of the Court. Instead, it gave active opposition. It was unsuccessful. In those circumstances it is appropriate for a costs order to follow.
8.Thus, as for the first matter, the Applicants contend that their proposed order 8 be made (“The First and Second Respondents are to pay the Applicant’s costs with respect to orders 1 to 4 as agreed or taxed”).
9.As for the second matter ([9](b)) of the 1st and 2nd Respondents’ proposed orders), there is no basis for requiring the Applicants to pay the costs of reading and printing an affidavit that was not read. That is effectively penalising the Applicants for running the case in an efficient way and responsibly refining the material that they put before the Court prior to the hearing, rather than tendering material without exercising forensic judgment. As cases get closer to hearing and further analysis takes place, it is common for parties to reduce the number of materials they tender (often after cross-examination or in closing submissions). That the Applicants sensibly took that course at the outset of the trial is no reason for awarding costs.
10.Order 9 of the Applicants’ orders corresponds with order 10 of the Respondents’ Orders, concerning the claim as against the 3rd Respondent, and is agreed.
11.Order 10 of the Applicants’ orders corresponds with Order 11 of the Respondents’ Orders. This is agreed save as the reference in the latter to order 8 (which is the declaration referred to in [4] above). There should be no reference to order 8 in that order as the matter was not ventilated.
First and Second Respondent’s written submissions
The First and Second Respondent’s joint written submissions were provided to the Court by email dated 22nd February 2022. These were as follows (emphasis in original, footnotes omitted):
Introduction
1.On 14 December 2021, the Court requested the parties provide Short Minutes of Order to give effect to the reasons. In the interests of brevity and non duplication the First and Second Respondents provide this submission jointly.
2.The effect of the competing short minutes provided by the Applicants and First and Second Respondents is that the dispute between the parties is limited to:
(a) whether an order for pre-judgment interest ought to be made; and
(b) the appropriate orders as to costs.
3.The First and Second Respondents tender a bundle of documents which has been provided with these submissions. The documents are relevant to the issue of costs and tendered pursuant to s131(2)(h) of the Evidence Act 1995 (Cth).
Background
4.The genesis of the claim by the Applicants was an order made in the Magistrates Court of the ACT, on 7 July 2015, for Mr Do to pay Goongarline Properties Pty Ltd $50,000. Mr Do was liable for that sum as he was a guarantor under a lease.
5.On 13 May 2016, Mr Do was served with a bankruptcy notice.
6.On 30 September 2016, Ms Sijabat and Mr Combis were appointed Trustees of Mr Do's estate.
7.On 28 August 2018, the Applicants sent a letter of demand to 'The Trustee of the Andrew Superannuation Fund' which stated.
8.On 28 October 2019, the Applicants commenced proceedings.
9.On or about 1 April 2021, the Applicants served the affidavit of Ms Shijbat affirmed 1 April 2021 (the 1 April 2021 affidavit) and exhibit LS3 (exhibit LS3).
10.Exhibit LS3 contained 3,961 pages and filled 10 large lever arch folders. As will be seen below, the Applicants ultimately relied upon eight documents from LS3 at the hearing.
11.Correspondence passed between Roser Lawyers, Matthews Folbigg Lawyers and Chamberlains regarding the 1 April 2021 affidavit and exhibit LS3. The correspondence is contained in the bundle of documents tendered with this submission.
12.As will be seen in the correspondence, the solicitors for the First and Second Respondents made multiple requests for clarification as to which paragraphs from the I April 2021 affidavit the Applicants would read and which pages from exhibit LS3 the Applicant would tender.
13.On 1 June 2021, the Applicants advised that, aside from eight documents, the 1 April 2021 would not be read nor would the Applicants tender exhibit LS3.
14.The Applicants was successful in obtaining judgment in the sum of $469,926.00.
Interest
15.If the Court is not satisfied that good cause has been shown for not making an order, the Court must award interest that the Court thinks fit on the whole or any part of the money or any period between the date when the cause of action arose and the date as of which judgment is entered.
16.It is apparent from the letter of demand and the award of the court that there will be no funds applied to any creditors. In other words, all funds received will be paid to the Trustee and legal representatives. In the absence of confirmation to the contrary, the Trustee and legal representatives must be assumed to have been acting on a 'no win no fee' basis.
17.Interest is awarded to compensate a party for the detriment that he or she has suffered by being kept out of his or her money and not to punish a Respondent.
18.The Applicants costs and its legal representatives' entitlement to costs does not arise until the orders are made by the Court. The First and Second Respondents submit that it follows that they have not been kept out of their money and no order for interest ought to be made.
19.Moreover, in the ordinary course, in the context of a preference claim, interest should be allowed from the date of the demand for payment. That is, the date on which it can be said that the payments were a preference. There is no reason to depart from the ordinary course in this case. Thus, subject only to the question of which demand, there being two in this case, interest should run from the date that the Trustees made demand of the amount claimed in the proceeding.
20.The First and Second Respondents contend that the Applicants ought not be entitled to interest prior to the date of the demand, being 28 August 2018.
21.Moreover, in Kazar v Kargarian Foster J (with whom Greenwood and Rares JJ agreed at [l]-[11]) said:
Delay (without more) in the commencement of proceedings will rarely disentitle an applicants from an award of pre-judgment interest pursuant to s 5 IA of the Federal Court Act (Kalls Enterprises Pty Limited (in liq) v Balog/ow (No 3) [2007] NSWCA 298 at [10]-[l l]). It may be relevant to the exercise of the discretion to award interest although some reasonable time needs to be afforded to an applicants to allow him or her to investigate whether an action can and should be brought. This is especially so when the claim is brought by a liquidator.
22.To date, the Applicants have not provided any explanation as to the delay between the letter of demand (28 August 2018) and the commencement of proceedings; over one year later (28 October 2019).
23.The First and Second Respondents propose the following orders:
(a) there be no order for interest;
(b) in the alternative, interest awarded from 28 October 2019 ( date the proceeding was commenced);
(c) in the alternative, interest awarded from 28 August 2018 ( date of the demand).
Costs
24.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.
25.The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. To assist the Court, the parties must avoid undue delay, expense and technicality.
26.If material is struck out of an affidavit, unless the Court otherwise directs, any costs caused by the material struck out must be paid by the party who filed the affidavit. A party may apply to the Court for an order that any costs that have been improperly, unreasonably or negligently incurred be disallowed.
27.An affidavit should not contain material which is inadmissible, unnecessary, irrelevant, prolix, scandalous or argumentative.
28.Prior to addressing the general costs orders, the following matter is relevant to the Court's discretion. The First and Second Respondents were required to spend what can only be described as a monumental waste time reviewing the 1 April 2021 affidavit and exhibit LS3. As noted above, exhibit LS3 ran for 3,961 pages and filled 10 lever arch folders. Ultimately, the Applicants tendered only eight documents from exhibit LS3.
29.Despite numerous requests, it was not until 1 June (one business day prior to the hearing) that the Applicants advised which documents were intended to be relied upon from exhibit LS3.
30.Although the material was not struck out, rule 15.16 is instructive in that it considers an appropriate costs order for material which is served but not admitted into evidence. Moreover, the requirement to review the voluminous material resulted in the First and Second Respondents improperly and unreasonably incurring costs. This circumstance is clearly relevant to discretion.
31.There appeared to be no thought as to the material which was placed in exhibit LS3. That point is illustrated by there being multiple blank pages and is supported by the Applicants only tendering eight documents. The Applicants ought to be liable for the Respondents' costs of reviewing the 1 April 2021 and exhibit LS3.
32.In terms of the costs related to order 6, the Applicants objected at the hearing to the First and Second Respondents making submissions in respect of that claim. It is difficult to understand why the First and Second Respondents should be liable for costs for an issue which the Applicants say they had no right to be heard.
33.Furthermore, there is no reason to depart from the usual orders as to costs as set out by the Court at paragraph 135 of the judgment which was that the Applicants pay the Second Respondent's costs of the failed Gozzard Street property claim and the First Respondent pay the Applicants costs of the remaining claims (aside from the claim against the third respondent).
34.The Applicants' proposed orders for costs are inconsistent in that in respect of orders I to 3 (the voidable transaction claim) the Applicants seeks to implicate both the First and Second Respondents but with respect to order 7 (the Property claim) the Applicants seek to distinguish between the First and Second Respondents. Once again, it is difficult to understand the Applicants logic in the costs orders sought.
35.The First and Second Respondents submit that the orders must be consistent. There is no consistency in separating the orders in the way contended by the Applicants. Consistency requires, in the First and Second Respondents submission, that either:
(a) the First Respondent, alone, is liable for the costs associated with the voidable transaction claim (and the Applicant ought to pay the costs of the Second Respondent); or
(b) the First Respondent and Second Respondent are liable for the Applicants' costs associated with the voidable transaction claim and the Applicant is liable for both the First and Second Respondents' costs of the Property claim.
Conclusion
36.In summary it has to be remembered that the Applicants commenced these proceedings for what was only a $50,000 debt. On the Applicants own submission, in answer to a question from the Court dated 20 October 2021, would be a nil return to the Bankrupt largely because legal and professional fees incurred, which it is now clearly dwarf the original debt.
37.This circumstance is relevant to the overall discretion in relation to costs and is made in support of orders as to costs the First and Second Respondents seek to be made.
Orders
38.The First and Second Respondents contend that orders ought to be made as stated above.
Outline of principle
Given the very narrow scope of the issues left in dispute, I need only note the following.
First, the terms of s.211 of the FCFCOA Act[2] are as follows:
[2] Federal Circuit and Family Court of Australia Act (Cth) s 211.
211 Interest up to judgment
(1) This section does not apply to family law or child support proceedings.
Note: See section 117B of the Family Law Act 1975 in relation to family law or child support proceedings.
Application for interest order
(2) A party to proceedings that are:
(a) in the Federal Circuit and Family Court of Australia (Division 2); and
(b) for the recovery of any money (including any debt or damages or the value of any goods) in respect of a particular cause of action;
may apply to the Court or a Judge for an order under subsection (3).
Interest order
(3) If:
(a) an application is made under subsection (2); and
(b) the Federal Circuit and Family Court of Australia (Division 2) or the Judge is not satisfied that good cause has been shown for not making an order under this subsection;
the Court or the Judge must either:
(c) order that there be included in the sum for which judgment is given interest at such rate as the Court or the Judge thinks fit on the whole or any part of the money for the whole or any part of the period between:
(i) the date when the cause of action arose; and
(ii) the date as of which judgment is entered; or
(d) without proceeding to calculate interest in accordance with paragraph (c), order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest.
Exceptions
(4) Subsection (3) does not:
(a) authorise the giving of interest upon interest or of a sum in lieu of such interest; or
(b) apply in relation to any debt upon which interest is payable as of right, whether by virtue of an agreement or otherwise; or
(c) affect the damages recoverable for the dishonour of a bill of exchange; or
(d) limit the operation of any enactment or rule of law which, apart from this section, provides for the award of interest; or
(e) authorise the giving of interest, or a sum in lieu of interest, otherwise than by consent, upon any sum for which judgment is given by consent.
(5) If:
(a) the sum for which judgment is given (the relevant sum) includes; or
(b) the Federal Circuit and Family Court of Australia (Division 2) in its absolute discretion, or a Judge in that Judge’s absolute discretion, determines that the relevant sum includes;
any amount for:
(c) compensation in respect of liabilities incurred which do not carry interest as against the person claiming interest or claiming a sum in lieu of interest; or
(d) compensation for loss or damage to be incurred or suffered after the date on which judgment is given; or
(e) exemplary or punitive damages;
interest, or a sum in lieu of interest, must not be given under subsection (3) in respect of:
(f) any such amount; or
(g) so much of the relevant sum as, in the opinion of the Court or the Judge, represents any such amount.
(6) Subsection (5) does not preclude:
(a) interest; or
(b) a sum in lieu of interest;
being given, under this section, upon compensation in respect of a liability of the kind referred to in paragraph (5)(c), where that liability has been met by the applicant, as from the date upon which that liability was so met.
Secondly, in their submissions, the First and Second Respondents refer to the Full Court decision in Kazar v Kargarian.[3] From that decision, it is sufficient to record that the plurality of Greenwood and Rares JJ, at [4] – [9] helpfully summarised basal principle in relation to the awarding of costs. Their Honours also agreed with the detailed judgment of the third member of the Court, Foster J.
[3] Kazar v Kargarian (2011) 197 FCR 113; 284 ALR 237. Kazar was cited with approval by the majority in Caason Investments Pty Ltd v Cao (No.2) (2015) 237 FCR 351 at [25] and [26].
At [44] – [47] Foster J also summarised matters of principle regarding costs. And beginning at [64], his Honour also outlined relevant principle regarding the award of interest. This included him, at [70], recording that usually the date of interest would be calculated as from the date of the demand.
Apart from these general references, I need not set out the passages to which I have referred. Nonetheless I am guided by the principles there recorded.
Consideration and disposition
On the issue of the Applicant’s costs, in the light of (a) the Trustees’ success in relation to the claims pursued, with the obvious exception regarding the claim involving the Gozzard Street property, (b) the fact that the First and Second Respondents both filed Defences in February 2021 opposing the Trustees claims, and (c) the active Respondents formally and in all relevant respects, opposed the Trustees’ claims throughout the litigation generally and throughout the course of the hearing in particular, the Applicant should have their costs as sought in the Minute of Order filed in relation to costs against both active Respondents.
On the issue of interest, in the light of (a) the terms of s.211 of the FCFCOA Act, and (b) the instruction of the Full Court in Kazar v Kargarian, the Applicant is entitled to interest from the date of the demand that issued on 28th August 2018. I note that this date was also proposed, in the alternative, by the active Respondents in their submissions. Interest shall be at the rate specified in the Applicant’s Orders sought, and consistent with the practice of the Federal Court.
In relation to the active Respondents seeking costs for what might reasonably be called their preparation regarding, or arising from, a very long Affidavit of Ms Sijabat filed, but not relied upon at the trial, it need only be noted, among other things, that such an argument may well be countered by observing that had the matter resolved without resort to a hearing, even more costs would have been saved. I do not seek to be trite in any way about the large costs that attend litigation.
It is interesting that Applicant and the active Respondents both argue their respective positions, in part, on the basis of “efficient” conduct of the litigation. The Applicant contends that by not relying upon the Affidavit in question, they thereby reduced the scope of the evidence and, in turn, the length of the hearing. On the other hand, the active Respondents contend that they, in effect and in fact, wasted time and resources in preparing to meet the large volume of documents set out in that large Affidavit of Ms Sijabat.
In addition to the comments of the Full Court noted earlier in these reasons in Kazar v Kargarian regarding costs, it is sufficient also simply to note, albeit in the most general terms, the High Court’s comments regarding costs in Latoudis v Casey, and in particular, the individual judgments of Mason CJ, Dawson J (with whom Brennan J agreed), and McHugh J. In each of these judgments, their Honours stressed the compensatory nature of costs, as opposed to any punitive object, and likewise, each of the Justices referred to noted the discretionary nature of costs.[4]
[4] See further the detailed discussion regarding costs in Oshlack v Richmond River Council (1998) 193 CLR 72, especially the reasons of McHugh J commencing at [51] ff with which Brennan CJ agreed, at [3].
In my view, it is one thing to seek and obtain an award of costs relating to a specific issue involved in the trial. It is quite another matter to seek costs in relation to a discrete aspect regarding the conduct of the trial, such as whether a party relies upon an Affidavit or bundle of documents that has been filed. A document having been filed does not, without more, compel a party to rely upon it. Such was the case here.
Both parties, in different ways and in varying degrees, have had success and failure in this litigation. The same is true in relation to the awards of costs. In my view, among other things, to make a discrete award for costs relating to the “non-use” of an Affidavit for which both parties prepared would set a poor precedent. To do so could lead to every document being scrutinised for possible costs applications, with the Court having to determine, either by page number, weight or percentage of use, how much said document was used at the hearing. Litigation is sufficiently complicated and expensive without expecting the Court to engage in such an exercise.
As already noted, both “sides” in the litigation have had some level of success. In my view, the compensatory nature of costs has properly been met. It does not require any further costs Orders to be made.
With all other Orders having been agreed, and with the remaining issues now having been determined by the Court, within 7 days, the Applicant is to file a settled/engrossed form of the Orders and declarations in accordance with the principal judgment, the Orders that have been agreed, and in accordance with these reasons. Once so filed, the Orders and declarations will be made in Chambers.
I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of Judge W J Neville. Associate:
Dated: 8 April 2022
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