Thomson v STX Pan Ocean Co Ltd (No.2)
[2011] FMCA 947
•12 December 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| THOMSON v STX PAN OCEAN CO LTD (No.2) | [2011] FMCA 947 |
| BANKRUPTCY – Costs – applicant successful – usual order as to costs for successful party – indemnity costs – question of law – imprudent refusal of offer of compromise. |
| Bankruptcy Regulations 1996 (Cth), Rule 4.04 |
| Calderbank v Calderbank [1975] 3 All ER 333 Colgate-Palmolive Co v CussonsPty Ltd (1993) 46 FCR 225 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 Hobartville Stud Pty Ltd v Union Insurance CoLtd (1991) 25 NSWLR 358 J–Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No.2) (1993) 46 IR 301 Singer v Berghouse (1993) 67 ALJR 708 |
| Applicant: | DAVID JOHN THOMSON |
| Respondent: | STX PAN OCEAN CO LTD |
| File Number: | BRG 541 of 2011 |
| Judgment of: | Burnett FM |
| Hearing date: | 20 July 2011 |
| Date of Last Submission: | 21 September 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 12 December 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr L. Jurth |
| Solicitors for the Applicant: | Worcester & Co |
| Counsel for the Respondent: |
| Solicitors for the Respondent: | McCullough Robertson |
ORDERS
That the respondent pay the applicant’s costs of and incidental to the application to be assessed on the indemnity basis.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 541 of 2011
| DAVID JOHN THOMSON |
Applicant
And
| STX PAN OCEAN CO LTD |
Respondent
REASONS FOR JUDGMENT
By application returnable on 20 July 2011 the applicant debtor sought orders that the respondent creditor’s bankruptcy notice purportedly served upon him be set aside on the grounds that it was invalid for failure to comply with the requirements of r.4.04(2) and (3) of the Bankruptcy Regulations 1996 (Cth). The applicant was successful and now applies for costs of the application including an order that the costs be assessed on the indemnity basis.
The applicant contends that the normal rule is that costs follow the event and unless good reason is shown to the contrary ought apply in this case.[1] This is the customary rule and no authority is advanced against it.
[1] Singer v Berghouse (1993) 67 ALJR 708 at 709.
The respondent creditor resists such an order on two grounds. Respectfully the first is misconceived. The respondent contends that the applicant debtor had not sought an extension of time for compliance or applied for a stay of the relevant judgment. However that submission ignores the fact that the notice was invalid and accordingly was a nullity. In those circumstances there was no notice in respect of which an extension of time for compliance was necessary nor one in respect of which there was a need for a stay of the underlying judgment.
More substantially the respondent contends that there were practical difficulties in complying with the regulations as were identified in the matters addressed in the judgment.
However notwithstanding the technical difficulties identified, that of itself does not demonstrate “special or extraordinary circumstances”.
It follows in my view that the customary order ought apply, that being that the unsuccessful party pay the costs; in this case the respondent pay the successful applicant’s costs.
The applicant also seeks an order that the costs be paid on the indemnity basis. In this regard it particularly relies upon the creditor’s approach to the application by it causing the proceeding to continue to a full hearing in wilful disregard of known facts and against clearly established law and by it imprudently refusing numerous offers of compromise. In this case although the defects complained of in support of the applicant’s application were of a highly technical nature, the fact remains they were evident and critical.
In addition it is contended for the applicant debtor that the respondent ought to have been aware of the defect and its likely effect on the outcome of the application if not sooner, at least by reason of the affidavit filed in support of the application on 30 June 2011 wherein the defects were identified. The application was followed by a letter of offer to resolve threatening an application for indemnity costs in the event that that result did not follow. A similar invitation was made by subsequent correspondence of 5 July and 8 July.
In response to the applicant’s submissions the respondent contends that there was no wilful disregard put to known facts on the respondent’s part but rather that the issue was one of technicality. While that might be so, the respondent proceeded in the face of clearly established law. It is well settled that such a matter will found the necessary “special or unusual feature” of the case to justify the court departing from the usual order and practice in respect to costs. See Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 at 401; J–Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No.2) (1993) 46 IR 301 at 303 – both cited with approval in Colgate-Palmolive Co v CussonsPty Ltd (1993) 46 FCR 225 at 233.
Although the facts of this case were somewhat unusual the law was well settled and its application led to the inevitable outcome, namely success for the applicant.
Moreover, the applicant having put the respondents on notice from the date the application was commenced and particularly having alerted it to the prospects of an application for indemnity costs, the respondents continued refusal to compromise did in my view constitute an imprudent refusal of an offer to compromise.
For its part the respondent says the offer did not comply with the court rules, and furthermore that the offer of compromise was not a genuine offer of compromise.
Whilst it is correct to assert that the offer did not comply with the formal rules of compromise, the offer of compromise was plainly extended in a Calderbank[2] context. In the circumstances of an application which was returnable within fourteen days of the filing of the initiating application it is plain that the court rules would not have accommodated a more formalistic approach. The respondent also contends that the offer of compromise is not a genuine offer relying upon Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 368. However the facts in that case are plainly distinguishable from those in this instance. In that case the plaintiff claimed a sum of money under an insurance policy. In that context an offer of compromise was made for a sum which was $1.00 short of the full claim. The court had but little difficulty in determining no genuine offer of compromise had been made.
[2] Calderbank v Calderbank [1975] 3 All ER 333
In a case such as the present there could be little scope for compromise. The application was of a technical nature where the applicant was either to be entirely successful or entirely unsuccessful. However, despite that the Calderbank offer served to put the respondents on notice that if the applicant’s application was not conceded to by a number of days following the date of offer then the applicant would proceed to engage both junior and senior counsel to prosecute the application. In that sense it can be seen that the applicant offered to compromise on the basis that there being an immediate concession of the application with limited costs in the event of non-concession but otherwise the applicant would engage counsel and thereby expose the respondent to the prospect of a more onerous costs order. The respondent rejected that offer and in my view did so imprudently and it is therefore in the circumstances just and reasonable that it pay costs on the indemnity basis.
Orders
The respondent pay the applicant’s costs of and incidental to the application to be assessed on the indemnity basis.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 12 December 2011
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