Tsakirakis v Official Receiver in Bankruptcy
[2014] FCCA 517
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TSAKIRAKIS v OFFICIAL RECEIVER IN BANKRUPTCY & ANOR | [2014] FCCA 517 |
| Catchwords: COSTS – Parties directed to file submissions in relation to costs – relevant principles – respondents to contribute equally on party-party basis. |
| Legislation: Administrative Decisions (Judicial Review) Act 1977 (Cth), ss.5, 6, 7 Bankruptcy Act 1966 (Cth), ss.30, 15(5), 120, 121 139ZQ, 139ZS, 139ZT Conveyancing Act 1919 (NSW), s.27A Federal Circuit Court Rules 2001 (Cth), r.21.02 |
| Armstrong v Boulton [1990] VR 215 Armstrong v Landmark Corporation Ltd [1967] 1 NSWR 13 Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225 Citibank Ltd v Parker (Trustee of Estate of Stivactas) & Anor (2000) 181 ALR 115 Ex parte James; Re Condon (1874) LR 9 Ch App 609 Gladstone Park Shopping Centre Pty Ltd & Anor v Wills & Ors (1984) 6 FCR 496 Hamod & Anor v New South Wales & Anor (2002) 188 ALR 659 Hypec Electronics Pty Ltd (in liq.) v Mead & Ors (2004) 61 NSWLR 169 Keith Bray Pty Ltd v Hamburg-Amerikanische [1970] 3 NSWR 226 Monier Ltd v Metalwork Tiling Co of Aust Ltd (No.2) (1987) 43 SASR 588 Oshlack v Richmond River Council (1998) 193 CLR 72 Re Rose, a bankrupt; Godfrey v Whitton [2006] FCA 823 Sheikholeslami v Tolcher (No.2) [2012] FCA 199 Tapp v LawCover Insurance Pty Ltd [2013] FCA 35 Terry v Official Receiver [1998] FCA 1341 Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 Thiess v TCN Channel Nine Pty Ltd (No.5) [1994] 1 Qd R 156 Tsakirakis v Official Receiver & Anor (2013) 276 FLR 66 |
| Applicant: | THEODORE TSAKIRAKIS |
| First Respondent: | OFFICIAL RECEIVER IN BANKRUPTCY |
| Second Respondent: | SAMUEL PISCOPO |
| File Number: | SYG 2507 of 2012 |
| Judgment of: | Judge Lloyd-Jones |
| Delivered at: | Sydney |
| Delivered on: | 21 March 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Johnson |
| Solicitors for the Applicant: | Matthews Folbigg Lawyers |
| Counsel for the First Respondent: | Mr G McGrath |
| Solicitors for the First Respondent: | Lobban McNally Lawyers |
| Counsel for the Second Respondent: | Mr D Allen |
| Solicitors for the Second Respondent: | Proctor & Associates |
ORDERS
The first respondent pay 50% of the applicant’s costs as agreed or taxed.
The second respondent pay 50% of the applicant’s costs as agreed or taxed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2507 of 2012
| THEODORE TSAKIRAKIS |
Applicant
And
| OFFICIAL RECEIVER IN BANKRUPTCY |
First Respondent
| SAMUEL PISCOPO |
Second Respondent
REASONS FOR JUDGMENT
Judgment in these proceedings was delivered on 24 April 2013 in Tsakirakis v Official Receiver & Anor [2013] FCCA 106 in favour of the applicant, Theodore Tsakirakis, but costs were reserved pending submissions by the parties. The power of the Court to order costs is set out in s.79 of the Federal Circuit Court of Australia Act 1999 (Cth) and in Part 21 Rule 21.02 of the Federal Circuit Court Rules 2001 (Cth).
Background
In setting out the following background material I have quoted directly from the submissions prepared by the parties to these proceedings. I have not made further attribution as this would make the summary unwieldy.
The parties to the proceedings are:
a)Theodore Tsakirakis, the applicant;
b)Official Receiver, first respondent;
c)Samuel Piscopo, in his capacity as Trustee of the bankrupt estate of Joanna Tsakirakis, the second respondent (the “Trustee”).
The Trustee was not named as a respondent in the initial application, but became a respondent pursuant to an order made by this Court on 17 December 2012 on the motion of the Trustee. The proceedings concern a notice issued pursuant to s.139ZQ of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”) on 11 October 2012 by the Official Receiver at the request of the Trustee, addressed to the applicant.
The applicant commenced the proceedings by filing an application on 2 November 2012 seeking:
a)A declaration pursuant to s.30 of the Bankruptcy Act that the decision of the Official Receiver to issue the s.139ZQ Notice was an abuse of process on the part of the Official Receiver in accordance with his powers under the Bankruptcy Act; and
b)Ancillary orders.
The ancillary orders sought by the applicant in the initial application were:
a)The decision of the Official Receiver to issue the s.139ZQ Notice be reviewed pursuant to the provisions of ss.5, 6 or 7 of the Administrative Decisions (Judicial Review) Act 1977 (Cth);
b)The s.139ZQ Notice be set aside;
c)The Official Receiver pay the costs of the applicant as assessed on an indemnity basis; and
d)Such further other orders as the Court deems fit.
On 30 November 2012, leave was granted by the Court to the applicant to amend his initiating application. The Amended Application was filed by the applicant on that day. Under the Amended Application no change was made to the declaration(s) sought by the applicant. The amendments were only to the ancillary orders sought by the applicant, specifically:
a)The reference to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the “ADJR Act”) was removed from the pleadings (but remains in the heading of the Amended Application);
b)The applicant abandoned its claims under s.7 of the ADJR Act;
c)The applicant now includes the ground upon which it relies in support of its application for an order that the Official Receiver’s decision be reviewed; and
d)The order that the s.139ZQ Notice be set aside was changed to an order instead that the decision of the delegate on behalf of the Official Receiver made on 12 October 2012 communicated on that day be set aside.
During the hearing of the Amended Application on 19 December 2012, leave was granted by the Court for the applicant to file a further amended application after the hearing, but the hearing proceeded on a basis of the amendments outlined by the applicant’s counsel that were to be made to the Amended Application. The only change made to the Amended Application was the inclusion in the heading of the pleadings of the reference to s.15(5) of the Bankruptcy Act.
The applicant filed in support of the application his points of claim which where amended with leave of the Court on 18 December 2012. The Amended Points of Claim particularised the applicant’s claim:
a)For a declaration that the s.139ZQ Notice was an abuse of process;
b)For review of the decision of the Official Receiver, by its delegate under s.15(5) of the Bankruptcy Act and ss.5 and 6 of the ADJR Act.
The Official Receiver opposed the applicant’s claim, while the Trustee did not file a response to the applicant’s claim or any evidence. The Trustee made submissions at the hearing, opposing the applicant’s claim in the proceedings.
On 24 April 2013 judgment was delivered in the proceedings (Tsakirakis v Official Receiver & Anor (2013) 276 FLR 66) and the Court ordered the s.139ZQ Notice to be set aside.
Applicant’s Submissions
Mr Johnson, for the applicant, submits that there is no specific rule that exists for “costs to follow the event”, however, as a matter of general law the rule is that a successful applicant in civil litigation receives the general costs of the proceedings: Keith Bray Pty Ltd v Hamburg-Amerikanische [1970] 3 NSWR 226 at 227 per McFarlan J; Armstrong v Landmark Corporation Ltd [1967] 1 NSWR 13 at 15 per Street J.
Mr Johnson indicated that the factual circumstances are dealt with in full in the judgment, however:
a)An earlier Notice, under the provisions of s.139ZQ of the Bankruptcy Act was unconditionally withdrawn by the Official Receiver, upon the basis that it would be inappropriate for it to remain in existence when the Trustee was maintaining proceedings. Invalid execution of Notice (this earlier notice is not subject to these proceedings);
b)The Trustee, when he became aware of the existence of the proceedings, agitated the delegate of the Official Receiver to cause that delegate to re-exercise the decision-making power to issue a new s.139ZQ notice which is the subject of the proceedings;
c)The delegate was mindful that the issue of a new notice could constitute an abuse of process of the Court or of a proceeding under the Bankruptcy Act;
d)Non-compliance with a notice issued pursuant to s.139ZQ of the Bankruptcy Act constituted to actual knowledge of the decision-maker and also the Trustee, a criminal offence as set out in the terms of s.139ZT of the Bankruptcy Act.
Mr Johnson submits that the proceedings sought to review the decision of the Trustee under the provisions of the ADJR Act and alternatively, under the provisions of the Bankruptcy Act. The position of the official Receiver was that as a matter of form the Official Receiver would in most events not stand behind any such Notice and leave any “defence” to the Trustee. The Trustee sought to be joined and participate in the proceedings, taking a more active role in relation to the proceedings then the Official Receiver.
Mr Johnson submits that Theodore Tsakirakis has been wholly successful in relation to the application against both the Official Receiver and Trustee. In those circumstances the appropriate order for costs is that the Official Receiver and the Trustee pay the costs of Mr Tsakirakis, to be agreed or taxed in accordance with the provisions of Part 40 of the Federal Court Rules 2011 (Cth); Part 21, Rule 21.02(2)(c) of the Federal Magistrates Court Rules 2001 (Cth).
Official Receiver’s Submissions
Mr McGrath, on behalf of the Official Receiver, submits that:
a)Each party should pay its own costs of the proceedings;
b)If the Court is not inclined to make an order that each party pay its own costs and is inclined to award costs to the applicant, then those costs should be paid by the Trustee; and
c)Alternatively, if the Court is inclined to make an order that the Official Receiver pay some part of the costs of the applicant, then the Official Receiver submits that in such circumstances and order for costs should be made allocated between the Official Receiver and the Trustee; and
d)The applicant is not entitled to indemnity costs.
Mr McGrath submits that, generally, costs are at the discretion of the Court, but that discretion must be exercised judicially. The general rule is that costs follow the event. There is no special rule as to the costs of the Official Receiver or the Trustee in the context of bankruptcy proceedings and it is necessary to closely examine the circumstances of each case; Citibank Ltd v Parker (Trustee of Estate of Stivactas) & Anor (2000) 181 ALR 115 per Tamberlin J at [6], approved in Sheikholeslami v Tolcher (No. 2) [2012] FCA 199. In support of the submission that each party pay its own costs, the Official Receiver acknowledges the applicant has ultimately obtained a judgment in his favour. However, the applicant has only been partially successful with his application. Specifically:
a)No declaration (or any finding) has been made by the Court that the issue of the s.139ZQ Notice was an abuse of process. This declaration was sought by the applicant. It constituted the main contest between the parties and the evidence between the parties; and
b)No declaration or order has been made by the Court setting aside the decision of the delegate of the Official Receiver. This order was sought by the applicant.
If the Court is not inclined to make an order that such party pay its own costs, then the Official Receiver submits any order of costs should be made having regard to existing authorities relating to costs on challenges to notices issued by the Official Receiver pursuant to s.139ZQ of the Bankruptcy Act. The general rule is that the Trustees who sought the issue of the Notice should bear such costs.
Mr McGrath submits that there are a number of circumstances that exists in this matter which have been cited by the Court as reasons for not making an order for costs against the Official Receiver. They are:
a)The s.139ZQ Notice states clearly that it is issued by the Official Receiver on behalf of the Trustee: Citibank Ltd v Parker (supra) per Tamberlin J at [12];
b)The “real party with an interest” in the issue of the s.139ZQ Notice is the Trustee, not the Official Receiver: Citibank Ltd v Parker (supra) per Tamberlin J at [12]. This paragraph was discussed with approval in Re Rose, a bankrupt; Godfrey v Whitton [2006] FCA 823 per Graham J at [20]-[21];
c)There was nothing on the face of the Schedule that a accompanied the s.139ZQ Notice at the time to indicate in any way there was no basis for the Trustee’s claim: Citibank Ltd v Parker (supra) per Tamberlin J at [2]; and
d)There is no suggestion that the s.139ZQ Notice is defective as to form: Citibank Ltd v Parker (supra) per Tamberlin J at [3].
Mr McGrath submits that the Official Receiver must acknowledge the statement of his Honour Graham J at [23] in Re Rose, a bankrupt; Godfrey v Whitton (supra) where he stated:
23.... Nevertheless, it is not inappropriate to observe that in the case of notices issued by the Official Receiver at the request of a trustee there will be circumstances when it is appropriate for the Official Receiver to bear some responsibility for the notices.
His Honour Graham J was there referring to the case of Terry v Official Receiver [1998] FCA 1341 which he had discussed at [22] of Re Rose, a bankrupt; Godfrey v Whitton (supra). His Honour pointed out that the allocation of two-thirds of the costs to the Trustee and one-third to the Official Receiver in Terry (supra) occurred in circumstances where the Official Receiver had issued a Notice in the form different from that requested by the Trustee. In the present case, the form of the Notice issued by the Official Receiver did not differ from the form requested by the Trustee and the exception noted by his Honour does not apply. If the Court is against this submission, it is further submitted any apportioning of the costs to the Official Receiver would be a very small percentage.
Submissions for the Trustee
Mr Allen, appearing for the Trustee, submits that there ought to be no order for costs as:
a)The Trustee was in no way at fault, as he asked for a notice which was issued and when it was rescinded because there was an issue as to the authority of the person who issued it, asked for a new notice. Accordingly, the Trustee was entitled to ask;
b)There was no criticism of his conduct;
c)He was an interested party;
d)He applied to be joined in the application, which was unsuccessfully opposed. Normally he would be entitled to costs of the joinder; and
e)The applicant did not succeed on the majority of its arguments.
If a costs order is contemplated, it ought to be considered after the hearing of the s.120 application.
Consideration
I initially turn to the submission that the costs orders in these proceedings should be treated as costs in the cause until hearing and resolution of the issue concerning the s.120 and s.121 of the Bankruptcy Act and s.37A of the Conveyancing Act 1919 (NSW). There was a cross-claim issued by the Trustee on 14 September 2012 in proceedings SYG 1469 of 2012 (Theodore Tsakirakis v Samuel Piscopo), seeking a declaration that the transfer of $400,000 from the bankrupt (Joanna Tsakirakis) to her son Theodore Tsakirakis on 24 April 2005 is void and/or void against the Trustee, pursuant to ss.120 and 121 of the Bankruptcy Act. To place this in context, a separate application was also launched by Theodore Tsakirakis against the Official Receiver, identified as proceedings SYG 1469 of 2012 filed on 5 July 2012, seeking orders pursuant to s.139ZS of the Bankruptcy Act that a Notice issued to s.139ZQ of the Bankruptcy Act to Theodore Tsakirakis by the Official Receiver dated 10 August 2011 in respect to the bankrupt estate of Joanna Tsakirakis be set aside.
Subsequent to the filing of that application a cross-claim was brought in those proceedings by Samuel Piscopo, the Trustee of the bankrupt Estate of Joanna Tsakirakis. The parties initially indicated to this Court that both matters could be resolved during the same hearing with this matter, SYG 2507/2012, being addressed first and then followed by proceedings SYG 1469/2012. Both proceedings were listed for hearing, concurrently, on 5, 6 and 7 December 2012, however, before that date, interim applications were filed in these proceedings which necessitated the matter to proceed initially without the hearing of proceedings SYG1469/2012. The Application in a Case was heard on 24 April 2013.
The concurrent hearing of both matters was re-scheduled for 19 and 20 December 2013, however, prior to that date, the Court was notified that both proceedings had been settled and the hearing dates were to be vacated. The short minutes of order of both matters are in near identical terms, except for the respective proceeding numbers. Those orders are as follows:
1. The Court notes that these proceedings as between the Applicant and the Second Respondent have been settled on a without admissions basis upon the basis that:
a) The Applicant will pay or cause to be paid to the Trustee (the Second Respondent) in full and final satisfaction of all claims the Trustee has against him including any orders for costs that may have been made in the present proceeding listed for hearing and the Review Proceedings (Proceeding no. SYG 2507/2012), in respect of which there is an outstanding Judgment on costs, an amount of $60,000 inclusive of GST to the extent that that may be applicable;
b) The Applicant will release the Trustee in respect of any claims he may have in the present proceeding and in the Review Proceeding in respect of which there is an outstanding Judgment upon which the Applicant is seeking an order for costs against the Trustee, the Second Respondent, except to the extent that in the Review Proceeding the Applicant retains the ability to proceed with the claim for costs against the Official Receiver (the First Respondent);
c) The existing Cross-Claim brought by the Trustee, the Second Respondent, against the Applicant be dismissed upon the basis that any existing costs orders as between the Trustee and the Applicant are vacated and there be no order as to costs in respect of the Cross-Claim or any other aspect of the proceeding as between the Trustee and the Applicant.
2. The Cross-Claim be dismissed.
3. Any existing costs orders as between the Applicant and the Second Respondent be vacated.
4. There be no orders as to costs as between the Applicant and the Second Respondent, to the intent that each party pay their own costs.
Consequently, the Court’s order that costs in these proceedings be treated as costs in the cause is no longer applicable.
In Oshlack v Richmond River Council (1998) 193 CLR 72 the High Court emphasised that the Court has a general discretion over costs, however, it is well settled that in the absence of special circumstances it exercises its discretion to award costs to the successful party, being that costs follow the event: Thiess v TCN Channel Nine Pty Ltd (No.5) [1994] 1 Qd R 156 at 207-208. The Court has power to make another order but it does so only for good reason: Armstrong v Boulton [1990] VR 215; Monier Ltd v Metalwork Tiling Co of Aust Ltd (No.2) (1987) 43 SASR 588; Gladstone Park Shopping Centre Pty Ltd v Wills (1984) 6 FCR 496.
An award of costs to a party is usually for the whole proceedings although occasionally the costs of separate issues are isolated and may be the subject of a special order, such as in these proceedings. In Oshlack v Richmond River Council (supra), their Honours Gaudron and Gummow JJ rejected the notion that “rules of practice surrounding similar expressed statutory revisions at to costs have hardened and look like rules of law so as to displace the Court’s discretion, emphasised that there is no absolute rule about the exercise of the power that the unsuccessful party must compensate the successful party”.
Mr McGrath referred the Court to the decision in Citibank Ltd v Parker (supra) per Tamberlin J at [6] where his Honour stated:
6. Costs are at the discretion of the Court but that discretion must be exercised judicially. The general rule is that costs follow the event. There is no special rule as to the costs of an Official Receiver or Trustee in the context of bankruptcy and it is necessary to closely examine the circumstances of each case.
Mr McGrath is encouraging the Court to form the view that the role of the Official Receiver was restricted to a purely procedural function of issuing the s.139ZQ Notice in response to a formal request received from the Trustee. I acknowledge Mr McGrath’s submission that there is nothing on the face of the Schedule that accompanied the s.139ZQ Notice to indicate in any way that there is no basis for the Trustee’s claim, in effect, there was no defect as to form. The position of the Official Receiver normally is protected by adherence to a Practice Statement known as “Exercise of the Official Receiver’s Power to assist Trustee’s”, particularly paragraphs [76] and [77] of that Practice Statement. In this context I refer to [94] and [95] of the judgment (Tsakirakis v Official Receiver & Anor (supra)), where it states:
94. As stated in the Practice Statement at [77] the Official Receiver was not required to adjudicate on whether the transfer was actually void, but rather to determine whether the Trustee had provided sufficient evidence. Even if the assumption is that the Official Receiver was satisfied that the material tendered in support of the original notice satisfied that requirement there had been two intervening events that clearly placed the Official Receiver, as the administrative decision maker, on notice that the sufficiency of the original material was now questioned. That consequently required a Court to adjudicate as to whether the transfer was actually void.
95. At the time of the making of the decision to issue the second notice proceedings to determine that question had been initiated and filed in this Court. In those circumstances the Official Receiver was on notice that the material tendered in support of the initial notice was now being challenged. I acknowledge that the parties have been unable to identify any authority directly on point, and that the Practice Statement is purely a guide with no legislative force or effect. Nevertheless, on the material before the Court, the Practice Guidelines at [76](b) and [76](c) are not satisfied, nor at [77] could the Official Receiver be satisfied that the Trustee had provided evidence of a void transfer sufficient to allow the exercise of the discretion. However, the approach adopted by his Honour Black CJ in Halse v Norton (supra) that “the power to issue the notice is conditional not upon the Official Receiver’s opinion or satisfaction that the transaction is void against the trustee, but upon the existence of the facts and circumstances that produce such a result.” With the existence of the two intervening events described above, the validity of the material tendered in support of the original notice has been put in doubt. For an abundance of caution, I believe that the issue of the second s.139ZQ notice should have been delayed until the resolution of those matters by this Court. As there is no bar to the Trustee seeking the issue of a further s.139ZQ notice, he would suffer no permanent detriment if the s.139ZQ notice in dispute in these proceedings were set aside. The structure of the legislation in Subdivision J appears to provide for a mechanism for the revocation and reissue of s.139ZQ notice if it contains a defect.
Without expanding further on this point, this clearly places the Official Receiver in a position true to this matter that the normal practice of issuing a s.139ZQ Notice as a strict administrative procedure had been corrupted by the possession of information that challenged the material that was the basis of the initial s.139ZQ Notice, which had not been rectified prior to the issue of the second Notice. Consequently, the Official Receiver must share part of the burden of the applicant’s costs.
In respect of the Trustee, who was also in the position of knowing that the circumstances submitted with the original request for the initial Notice had changed and no attempt had been made to rectify the request in respect to the second Notice, there has clearly been a breakdown in the procedures and processes adopted by both the Trustee and Official Receiver and this liability should be shared. I note that the submissions made by Mr Allen on the Trustee’s behalf, however, Mr Piscopo was well aware that the circumstances in which he sought the issue of the s.139ZQ Notice had materially changed prior to the request for the issue of the second s.139ZQ Notice.
In determining the respective proportions of costs to be met by the Trustee and the Official Receiver, I note that each of those parties fulfil a statutory administrative function and, in the case of the Trustee, it has the relevant duties as the Trustee as an officer of the Court. The established view is that a Trustee would not engage in conduct which could be seen to involve an unfair use of that position: Ex parte James; Re Condon (1874) LR 9 Ch App 609; Hypec Electronics Pty Ltd (in liq) v Mead & Ors (2004) 61 NSWLR 169. I note the submission made by Mr Johnson that in these proceedings the Trustee chose not to seek, as he was entitled to do, to review the decision of the delegate of the Official Receiver under the provisions of s.15(5) of the Bankruptcy Act or the relevant provisions of the ADJR Act, instead without making any formal application as is required to the Official Receiver, but rather, elected to pursue a resolution of this matter on the basis of threats including the lodgement of complaints with the Inspector-General in Bankruptcy to procure a second Notice to be issued to gain an advantage, both in the proceedings which were then on foot and in respect of the negotiations that might have been taking place in associated proceedings: Tapp v LawCover Insurance Pty Ltd [2013] FCA 35 per Rares J at [15]-[17], [27], [31] and [35].
I acknowledge the submissions made by Mr Johnson on behalf of Theodore Tsakirakis, concerning the award of indemnity costs and the principles that apply as summarised by his Honour Sheppard J in Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225. As his Honour indicated at 233 it is settled practice that the Court:
…ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course…
The established view is that there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. I acknowledge that Theodore Tsakirakis ought not to have incurred costs in seeking rectification of administrative orders in the issue of the second s.139ZQ Notice, however, I am not satisfied that the features of the case warrant the departure from the usual cause of awarding costs on a party-party basis. I note the observations of his Honour French J (as he was then) in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 who stated at [8]:
…the categories in which the discretion may be exercised are not closed.
However, this administrative failure does not possess the characteristics of examples contained in the summary in Colgate-Palmolive Co v Cussons Pty Ltd (supra) such as:
a)Making allegations of fraud knowing them to be false;
b)Misconduct that causes loss of time in proceedings;
c)Proceeding commenced and continued for some ulterior motive;
d)Willful disregard of known facts or clearly established law;
e)Making allegations which ought never have been made.
The Court is also referred to the decision in Hamod & Anor v New South Wales & Anor (2002) 188 ALR 659 where the Full Court of the Federal Court at [20] noted:
20. Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail. They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty. Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.
I have formed the view that as these proceedings were only part of a larger dispute between the parties that was ultimately settled prior to final hearing, many of the substantial issues between the parties have not been ventilated before the Court. What has been decided is that the issue of the two s.139ZQ Notices did not comply with the necessary requirements for their issue to be valid. However, the withdrawal of the first notice and the setting aside of the second notice does not prevent the Trustee from seeking the request of the issue of a new s.139ZQ notice, provided that it satisfies all of the necessary requirements for its issue.
Consequently, for the reasons above, in my view the first and second respondents should bear the costs of the applicant equally and I order accordingly.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 21 March 2014
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