Snowball v Singh (No 3)
[2024] FedCFamC2G 589
•1 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Snowball v Singh (No 3) [2024] FedCFamC2G 589
File number(s): MLG 1844 of 2023 Judgment of: JUDGE FORBES Date of judgment: 1 July 2024 Catchwords: BANKRUPTCY – costs – application for lump sum costs order – where creditor entitled to costs - exercise of court’s discretion - lump sum costs order made Legislation: Bankruptcy Act 1966 (Cth) s 32
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) r 13.01
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 17.05
Federal Court Rules 2011 r 40
Cases cited: Doyle v Lewis (No.2) [2023] FedCFamC2G 488
Harrison v Schipp [2002] NSWCA [22].
Lowbeer v De Varda and Lowbeer v Tov-lev [2017] FCCA 1658
Snowball v Singh (No. 1) [2024] FedCFamC2G 415
Snowball v Singh (No. 2) [2024] FedCFamC2G 415
Timbercorp Finance Pty Ltd (In Liq) v Gulabovski (No. 2) [2013] FedCFamC26 69
Division: Division 2 General Federal Law Number of paragraphs: 22 Date of last submission/s: 18 June 2024 Date of hearing: On the papers Place: Melbourne Counsel for the Applicant: Mr Boadle Solicitor for the Applicant: Sanicki Lawyers Solicitor for the Respondents: Hone Legal & Conveyancing ORDERS
MLG 1844 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF ASHIL ROHIT SINGH AND LOUISE NATALIE SINGH, BANKRUPTS
BETWEEN: THOMAS ERICK SNOWBALL
Applicant
AND: ASHIL ROHIT SINGH
First Respondent
LOUISE NATALIE SINGH
Second Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
9 MAY 2024
THE COURT ORDERS THAT:
1.The Respondents pay the Applicant Creditor’s costs of and incidental to the application for review fixed in the sum of $18,129.10.
2.That the Applicant Creditor’s costs be paid from the estates of the bankrupt Respondents in accordance with the Bankruptcy Act 1966 (Cth).
3.That the Applicant Creditor serve a copy of these orders upon the Respondents.
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 FORBES
INTRODUCTION
On 9 May 2024, the Court dismissed the bankrupt respondents’ application, affirmed the orders made by Judicial Registrar Ellis on 29 February 2024 and ordered that any application by the applicant creditor for his costs of the review application be made by written submissions. On that date, the Court published its reasons for those orders. The Court also separately published reasons explaining why an adjournment application by the bankrupt respondents was dismissed.
The applicant creditor has applied for his costs of the review application to be fixed in the sum of $18,129.10 and be paid from the estates of the bankrupt respondents. The applicant seeks, in the alternative, that his costs be taxed.
The application for costs is to be determined on the papers.
For the reasons that follow, I have determined that it is appropriate for the applicant’s costs to be fixed in the sum of $18,129.10, with such costs to be paid from the estates of the bankrupt respondents.
BACKGROUND
These reasons assume familiarity with the reasons I gave for the orders made in Snowball v Singh (No.1) [2024] FedCFamC2G 415 (Snowball No. 1) and Snowball v Singh (No.2) [2024] FedCFamC2G 415 (Snowball No.2).
Briefly, on 29 February 2024 Judicial Registrar Ellis made a sequestration order against the estates of the bankrupts. The respondents filed an application for review of the Judicial Registrar’s orders and that application was heard by me on 24 April 2024. On the day of the review application, the respondents made an unsuccessful application for an adjournment of the proceeding. The substantive application for review was then heard de novo and I subsequently determined that the orders made by the Judicial Registrar should be affirmed.
In accordance with orders made by the Court in (Snowball No. 2), the applicant creditor filed a written submission dated 23 May 2024 in support of his application for costs. Despite being afforded the opportunity to do so, the bankrupt respondents who were unsuccessful in the review application did not file a reply submission.
The applicant creditor contends that he succeeded in having the bankrupt respondents’ application dismissed in the following circumstances:
(a)despite it being the bankrupt respondent’s application, the respondents did not advance the grounds on which the review was sought, they failed to comply with the Court’s directions and failed to respond to correspondence from the applicant creditor’s solicitors[1];
(b)the bankrupt respondents wasted time and resources on an unsuccessful adjournment application which was only foreshadowed shortly prior to the hearing[2]; and
(c)the Court found that the bankrupt respondents should pay the applicants creditor’s costs of the review application “unless persuaded otherwise”[3].
[1] Snowball v Singh (No. 2) at [4]; [6]; [22] – [23]
[2] Snowball v Singh (No. 1) at [7] – [8]; [24]
[3] Snowball No. 2 at [52]
APPROACH TO COSTS IN BANKRUPTCY PROCEEDINGS
The Court has a broad discretion to award costs to the successful party in a proceeding.
Relevantly, section 32 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) provides that the Court may make such orders as to costs “as it thinks fit” in any proceeding before it.
Further, in relation to bankruptcy proceedings in this Court, the entitlement to costs is governed by rr 13.01 and 13.02 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules).
Pursuant to r 13.01 of the Bankruptcy Rules, subject to Division 13.2 and unless the Court otherwise orders, a person who is entitled to costs in a proceeding in which the Bankruptcy Act applies is entitled to costs according to Part 40 of the Federal Court Rules 2011 (Cth). The award of such costs is in the discretion of Division 2 of this Court and when making an order for costs the Court may fix the amount.
Division 13.2 makes provision in relation to the costs that may be charged by a legal practitioner for a creditor for work done in relation to a creditor’s petition, but it does not apply if the Court fixes the amount of the costs.
Although the discretion afforded to the Court is broad, it must be exercised judicially and in the context of the relevant court rules. The discretion should also be exercised by having regard to the orthodox approach whereby costs follow the event and the successful party is entitled to be indemnified (wholly or partially) for its professional legal costs actually incurred.
In Lowbeer v De Varda and Lowbeer v Tov-lev [2017] FCCA 1658 at [30][4], Judge Manasouridis explained the costs indemnity principle in the following way:
“The “costs indemnity principle” provides that “costs are ordered by way of indemnity (or, more accurately, partial indemnity) for professional costs actually incurred in the conduct of litigation. A frequently quoted statement of the costs indemnity principle is that provided by Bramwell B in Harold v Smith:
“Costs as between party and party are given by the law as an indemnity to the person entitled to them. They are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained. Of course, I did not say there are not exceptional cases, in which certain arbitrary rules of taxation had been laid down, but, the general rule, costs are an indemnity, and the principle is this: find out the damnification, and then you will find the costs which should be allowed.”
[4] See Timbercorp Finance Pty Ltd (In Liq) v Gulabovski (No. 2) [2013] FedCFamC26 69 per Mansini J
In determining whether it is appropriate to make a lump sum costs order, rather than putting the assessment to a taxation, there are a number of relevant considerations. Adopting the approach of Judge Manasouridis in Doyle v Lewis (No.2) [2023] FedCFamC2G 488 at [12], the following may be relevant:
(a)by making a lump sum costs order, the successful party can avoid the additional costs associated with taxation;
(b)the avoidance of the taxation may also benefit the unsuccessful party because, depending on the outcome of the taxation, the further costs of an assessment may to have to be borne by the person who is otherwise liable to pay the costs;
(c)a lump sum costs order will put an end to the proceeding, rather than prolonging it;
(d)in a relatively straightforward proceeding, the identification of the costs is easier to ascertain than might be the case in a more complicated proceeding; and
(e)the costs of a taxation may be disproportionate to the quantum of costs sought.
In determining a fixed sum, the Court does not engage in a process of taxation or formal assessment. It is open to the Court to apply a much broader brush than would be applied on a taxation, but the approach must still be logical, fair and reasonable. The power to award a lump sum can be exercised when the Court considers that it can do so fairly between the parties where it has sufficient confidence that it can arrive at an appropriate sum on the materials available.[5]
[5] See Harrison v Schipp [2002] NSWCA [22] per Giles JA and the cases cited therein
DETERMINATION
The applicant creditor annexed to his submission a statement of costs and disbursements incurred in relation to the application for review. That statement provides details of the solicitor’s costs incurred and copies of the invoices rendered to the applicant creditor. Counsel’s fees are claimed as a relevant disbursement and are also substantiated by appropriately particularised fee slips.
The total amount of costs and disbursements claimed amounts to $18,129.10. I am satisfied on the material before me that the costs sought are appropriate and proportionate having regard to the nature of the proceeding. The bankrupt respondents have been afforded the opportunity to file competing submissions or evidence but have not done so.
There is nothing before the Court to warrant any departure from the orthodox approach whereby costs follow the event. The applicant creditor is entitled to indemnification. In my view the costs of a taxation would be disproportionate to the amount claimed and for that reason a lump sum costs order should be made.
Accordingly, I am satisfied it is appropriate to exercise the discretion vested in the Court to order that the applicant’s costs fixed in the sum of $18,129.10 should be paid from the estates of the bankrupt respondents.
The applicant creditor should serve a copy of these orders upon the respondents at their address for service.
I certify that the preceding twenty-one (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 1 July 2024
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