Talent v Official Trustee in Bankruptcy (No 2)

[2019] ACTSC 287

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Talent v Official Trustee in Bankruptcy (No 2)

Citation:

[2019] ACTSC 287

Hearing Date:

Determined on written submissions

DecisionDate:

17 October 2019

Before:

Mossop J

Decision:

See [11]

Catchwords:

COSTS – APPLICATION FOR INJUNCTION – Orders made by consent – whether costs should be awarded in favour of one party – merits of underlying family provision claim not determined – costs reserved

Legislation Cited:

Bankruptcy Act 1966 (ACT)

Family Provision Act 1969 (ACT), s 8

Jurisdiction of Courts (Cross-vesting) Act 1993 (ACT), s 12

Cases Cited:

Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302

Talent v Official Trustee in Bankruptcy [2019] ACTSC 274

Parties:

John Talent (Plaintiff)

Official Trustee in Bankruptcy (First Defendant)

Nadia Talent as executor of the estate of the late Joan Talent (Second Defendant)

Representation

Solicitors

Ray Swift Moutrage & Associates (Plaintiff)

Australian Government Solicitor (First Defendant)

Gil-Jones Barker (Second Defendant)

File Number:

SC 414 of 2019

MOSSOP J:

Introduction

1. These proceedings were commenced by Originating Application dated 22 August 2019.  They involve a combination of proceedings under the Bankruptcy Act 1966 (Cth) and the Family Provision Act 1969 (ACT). So far as the bankruptcy proceedings were concerned they sought a declaration that the plaintiff’s bankruptcy was discharged no later than 26 May 2004, or in the alternative, other relief. The family provision application involved a claim for an extension of time in which to make an application under s 8 of the Family Provision Act, as well as interlocutory relief permitting the plaintiff to continue to reside at a residential property in Ainslie which forms part of the deceased estate of his mother.

1. On 2 September 2019 the plaintiff filed an Application in Proceedings seeking an injunction against the sale of the Ainslie property and an order permitting him to reside at the premises until further order of the court.  The application identified that as part of his Family Provision Act claim he seeks a life interest in the Ainslie property.  That application was heard before me on 6 September 2019.  Various affidavits were read and two of the deponents were cross-examined.  There were then some discussions between the parties which led to consent orders.  Those consent orders involved the executor (the second defendant) undertaking not to commence ejectment proceedings for four weeks (order 1), the executor making a formal offer to resolve the proceedings within four weeks (order 2), the application in proceedings dated 2 September 2019 being dismissed (order 3) and the question of costs of the application being determined by written submissions (order 4).  There were also other orders made by consent providing a timetable for the filing and service of evidence relating to the family provision claim.

1. Written submissions on costs were filed in relation to costs in accordance with the timetable.

1. Prior to the determination of the question of costs, on 3 October 2019 another judge of the court made orders substituting the Official Receiver as the first defendant in place of the Official Trustee in Bankruptcy and transferring the part of the proceedings relating to the Bankruptcy Act to the Federal Court of Australia: Talent v Official Trustee in Bankruptcy [2019] ACTSC 274. That left the executor as the only defendant in the Supreme Court and the Official Receiver as the only defendant in the Federal Court.

Costs as between plaintiff and executor

1. The plaintiff submitted that the appropriate order is that there be no order as to costs of the Application in Proceedings dated 2 September 2019.  In the alternative, he submitted that costs should be costs in the cause.  The submissions identified the fact that by reason of the consent orders there was no “event” for costs to follow.  The plaintiff also submitted that the orders had provided, albeit on a time-limited basis, the protection from ejectment that he had sought in the application.

1. The executor’s submissions made reference to the difficulties in making costs orders where the judge has not had to determine the merits of the parties’ positions.  The executor relied upon a number of factors which were said to justify the making of a costs order in her favour.  The submissions contended that the plaintiff had failed to identify any arguable legal or equitable interest to justify the granting of an injunction or any arguable basis for final relief in the family provision proceedings involving the granting of a life estate in the property.  The submissions also referred to some indications given by the executor that if the plaintiff was compelled to leave the Ainslie property he would not be left without a roof over his head.  The submissions contended that the orders made on 6 September 2019 involved a substantial victory for the executor and involved in effect a capitulation by the plaintiff.  They contended that the making of the application was unreasonable.  In submissions in reply the executor submitted that if an order was not made in her favour then it would be inappropriate to make an order that costs be costs in the cause.  That is because it would mean that the cost of the application would be recoverable if the plaintiff succeeded in any way on the family provision application, even if he failed to establish an entitlement to a life interest that would have justified the granting of injunctive relief.

1. In circumstances where parties have resolved an interlocutory application by consent it is generally undesirable for the court to be compelled to examine in detail the merits of the respective contentions that would have had to have been resolved if the matter had not settled.  There is therefore often a proper basis for the making of no order as to costs or making an order that costs be costs in the cause.  An order in favour of one party or the other may be appropriate where one party has had a substantial victory and the other a substantial loss or where there has been a marked difference in the reasonableness of the actions taken by the parties: see Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5]. In this case, the merits of the application for an injunction are closely related to the substantive merits of the claim for family provision. In my view, it is not appropriate to attempt to assess the merits of that claim at this stage of the proceedings. Further, although the manner in which the proceedings had been conducted up until that point was not a model of competence and diligence so far as the plaintiff’s side of the record was concerned, I do not consider that in relation to the application in proceeding, the conduct was such as to warrant a costs order in favour of the executor even though the application was resolved by consent orders.

1. Given that the application was based upon the proposition that it was designed to protect the position of the plaintiff pending a determination of whether he was entitled by way of family provision to a life interest in the Ainslie property, the appropriate costs order is likely to be significantly influenced by whether or not he succeeds in establishing such an entitlement at the hearing.  In my view it is appropriate that the costs of this application be determined in light of the outcome of the proceedings or, if there is a further application for an injunction, after that application is determined.  For that reason the costs will be reserved.

Costs as between the plaintiff and Official Trustee in Bankruptcy

1. As pointed out above, following the reservation of the question of costs, the Official Trustee in Bankruptcy was removed as a party to these proceedings and the proceedings, insofar as they involve the Bankruptcy Act, were transferred to the Federal Court.

1. Following transfer of that part of the proceedings, I am not satisfied that this court continues to have jurisdiction in relation to the matter so as to permit it to deal with pre‑transfer costs.  The Federal Court does, however, have jurisdiction to deal with pre‑transfer costs orders: Jurisdiction of Courts (Cross-vesting) Act 1993 (ACT), s 12. I will therefore make no costs order on this aspect of the proceedings.

1. The order of the Court is:

1.     The costs of the Application in Proceeding dated 2 September 2019 as between the plaintiff and the executor of the estate of the late Joan Gwen Talent are reserved.

I certify that the preceding eleven [11] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: 17 October 2019