Temperzone Australia Pty Ltd v Bergan

[2017] FCCA 1533

FEDERAL CIRCUIT COURT OF AUSTRALIA

TEMPERZONE AUSTRALIA PTY LTD v BERGAN [2017] FCCA 1533

Catchwords:
BANKRUPTCY – Application for review of sequestration order – costs.

Legislation: 

Bankruptcy Act 1966, s.109

Applicant: TEMPERZONE AUSTRALIA PTY LTD (ACN 090 057 640)

Respondent: PETER LESLIE BERGAN

File Number: SYG 2758 of 2016

Judgment of: Judge Cameron

Hearing date: On the papers

Date of Last Submission: 28 April 2017

Delivered at: Sydney

Delivered on: 5 July 2017

REPRESENTATION

Solicitors for the Applicant: Mr C. Muir of Oliveri Lawyers

Solicitors for the Respondent: Ms. S. Davis of Breene & Breene Solicitors

ORDERS

1. The applicant for review, Peter Leslie Bergan, pay the petitioning creditor’s costs of the application for review, filed 8 December 2016, in accordance with the provisions of the Bankruptcy Act 1966 (Cth) (the Act), with such costs to be taxed and paid in accordance with the Act, and given the same priority under s.109(1)(a) of the Act as the costs ordered by Registrar Ng on 17 November 2016.

2. The costs incurred by Frank Lo Pilato, the trustee of the bankrupt estate of the applicant for review Peter Leslie Bergan, incurred in relation to the application for review filed 8 December 2016, be treated as costs of the administration of the estate.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 2758 of 2016

TEMPERZONE AUSTRALIA PTY LTD (ACN 090057640)

Applicant

And

PETER LESLIE BERGAN

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 17 November 2016 this Court ordered that the respondent’s estate be sequestrated under the Bankruptcy Act 1966.  On 8 December 2016 the respondent filed an application seeking review of that order seeking orders setting aside the sequestration order and dismissing the creditor’s petition which led to the making of that order.  The application joined the petitioning creditor, Temperzone Australia Pty Limited (“Temperzone”) and the trustee of the respondent’s estate,     Mr Frank Lo Pilato.

2. The respondent’s application was dismissed by consent on 7 April 2017.  On that occasion the parties were given leave to file written submissions on the question of costs, which question was to be decided without an oral hearing.

3. Temperzone and Mr Pilato filed joint written submissions on 28 April 2017.  In conformity with his intentions advised on 7 April 2017, the respondent did not file a written submission.

Applicant’s submissions

1. It was submitted on behalf of Mr Lo Pilato that the costs of this part of the proceeding should follow the event and be considered costs of the respondent’s bankrupt estate. 

2. On behalf of the applicant it was also submitted that costs should follow the event and, further that those costs should be taxed or assessed on an indemnity basis and paid in priority from the respondent’s bankrupt estate.  Temperzone argued that the respondent’s affidavit sworn 2 February 2017 contained evidence tantamount to an admission that the orders of 17 November 2016 had resulted from his own failure to respond properly to the proceeding, rather than some act or omission on its part and that, in the circumstances, the application for costs which respondent made in his application filed on 8 December 2016 warranted an order for costs against him on an indemnity basis.  Temperzone submitted therefore that that, in circumstances where the respondent had sought costs without any reasonable prospects of success, an indemnity costs order should be made in its favour.

CONSIDERATION

1. There is nothing in the conduct of this proceeding which would indicate that costs should not follow the event, as they would in the ordinary course.  It is again worth noting that the respondent made no submission on the question of costs.

2. I accept that, because he was only involved in this matter because of his role and had no practical alternative but to respond to the respondent’s application, that the trustee’s costs should be costs of the administration of the estate:

3. The respondent’s application for the costs of the application which he has now abandoned was not conduct out of the ordinary or of a sort which would justify a special costs order.  Temperzone has not identified another basis upon which an indemnity costs order should be made.  For instance, I note that Temperzone has not submitted that the respondent’s application was unarguable or lacked reasonable prospects of success.  Consequently no special costs order will be made.

4. As to the nature of the order to be made, I accept as correct the applicant’s submission that:

   … as the Application for Review was, in effect, a continuation of the SYG2758/2016 Creditors Petition proceedings, … there is no reason why the Applicant Creditor’s costs should not be paid in priority from the estate of the Respondent pursuant to section 109(1)(a) of Bankruptcy Act 1966 in the same manner as costs are generally paid from the estate of a Respondent to the Creditors Petition.

5. Consequently Mr Lo Pilato is to have his costs of the application as costs of the administration of the estate and Temperzone is to have its costs of the application paid in priority from the estate.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Judge Cameron.

Date: 5 July 2017