Vangsnes v Dunn

[1999] FCA 821

FEDERAL COURT OF AUSTRALIA

Vangsnes v Dunn [1999] FCA 821

TRYGVE VANGSNES V ROBERT GEORGE DUNN
N 7413 OF 1999

THE HON JUSTICE MARCUS EINFELD AO
SYDNEY

8 JUNE 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 7413 OF 1999

BETWEEN:	TRYGVE VANGSNES Applicant/Debtor
AND:	ROBERT GEORGE DUNN Respondent/Creditor

JUDGE:	THE HON JUSTICE MARCUS EINFELD AO
DATE:	8 JUNE 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The debtor applies to set aside a bankruptcy notice.  The application does not state the grounds upon which the notice is sought to be set aside, but refers to an affidavit which was filed in April 1999 to support a motion for a stay of execution of the judgment which forms the basis of the notice.  This motion was filed in the Supreme Court.  At the time when the affidavit was sworn, the motion had not been disposed of but I am informed that it was subsequently concluded unfavourably to the debtor and that he has appealed to the Court of Appeal against the dismissal of his motion.  That appeal is outstanding.  I have seen the affidavit but it provides no basis for setting aside the bankruptcy notice.

2. The debt which is the subject of the bankruptcy notice arises from an order for indemnity costs in favour of the respondent creditor following upon proceedings taken by the debtor in the Supreme Court.  The affidavit of the debtor in support of the refused application for a stay sets out in fairly complex detail the circumstances which led to the judgment for costs, but does not appear to provide a basis for the stay of proceedings which the debtor sought, as the Supreme Court seems to have decided.  In substance what he says in the affidavit is that there should be an inquiry into the respondent creditor as the liquidator of a company called KKL Kangaroo Line Pty Limited.  No such inquiry appears to be in place.  The debtor informs me that he applied to the Principal Registrar of the Supreme Court in this connection but that the application for an inquiry has not been granted and the debtor has been referred to the police.  He says that he has not gone to the police yet. 

3. None of that evidence would form any basis for setting aside the bankruptcy notice.  The debtor’s overall claim is that the order for indemnity costs, which now amounts to almost $70,000 with interest, was completely unjustified and that the ordering of those costs was insupportable.  The problem with that argument is that the order was appealed to the Court of Appeal and rejected albeit, in the debtor’s submission, on the grounds that it was an interlocutory order and should have been subject to an application for leave to appeal.  Without having read or been acquainted with what the Court of Appeal said in this connection, it is unlikely, subject to time limitations, that if there had been any merit in the appeal, the Court would not have found a way to deal with it.

4. The applicant has failed to supplement his affidavit with any information from the Bar table which could provide any evidence to support his application to set aside bankruptcy notice of any of the grounds appropriate for such an order.  He says that he is in fact solvent and will, if finally pressed to do so, pay the amount of the debt.  This is also not a matter which can be raised on an application to set aside a bankruptcy notice although it can of course be raised by way of negotiations for a settlement of a lesser sum than is the subject of the judgment.  No order of the Court on this application can prevent the parties from negotiating a mutually satisfactory outcome to this matter.  Solvency can also be raised in opposition to a petition for a sequestration order but that point has not yet been arrived at. 

5. No other grounds have been advanced which even come close to a statutory or discretionary ground for setting aside the bankruptcy notice.  The debtor also says that he should not be in the Bankruptcy Court at all but as I pointed out in argument, it is he who brought himself before the Bankruptcy Court by his application to set aside the bankruptcy notice, no one else.  As I also explained, the Bankruptcy Court is not generally the place for an investigation of the appropriateness of the original order which forms the basis of a bankruptcy notice.  It is certainly not a place that can mandate or arbitrate a settlement between the parties and of course it cannot order the creditor to accept or even consider any offer by the debtor.  The Bankruptcy Court is limited by parliamentary statute to apply the terms of the statutory code to the circumstances brought before it and none of the relevant statutory provisions have been activated by anything which the debtor has put before the Court on his application.

6. Moreover, nothing the Bankruptcy Court can do will permit it on this application to investigate the justice and fairness of the original order for indemnity costs or, even for that matter, its appropriateness in terms of the evidence upon which it was made.  It can certainly not order an inquiry into the conduct of a liquidator to investigate circumstances which the debtor considers to be inappropriate or worse.  For those reasons I am left in the position where the application is unsupported by any evidence at all and therefore must be dismissed. 

7. The creditor seeks indemnity costs on the application and the matter is not without difficulty.  The application to set aside the bankruptcy notice manifestly had no merit and no chances of success at all.  As I pointed out, absolutely no evidence was presented to the Court upon which the application could have been granted.  Indeed the application does not even identify a ground upon which it could be granted and no ground emerged in the course of discussion.  This application is in fact the next step in what has obviously been a long history of litigation between these parties or in related proceedings.  There must be an end to litigation at some time and because indemnity costs have been awarded against the debtor before, as explained in a judgment at the time, he obviously was aware of such a possibility and of some of the criteria at least upon which that order is made.

8. There is always a difficulty for people who represent themselves in litigation of a technical kind which does require some knowledge of the law in order to know what the chances of success are.  When people opting to represent themselves apparently do have access to funds which at least would enable them to get advice if not representation in the proceedings, there is a consequence to the way in which their pleading of their case might otherwise be approached.  Moreover, there are now a myriad of facilities for free or pro bono legal advice which are available to anybody who can establish impecuniosity or a sufficient lack of funds to enable them to access the schemes.  Many lawyers advertise at least one consultation without fee at all.  The fact is that had the debtor taken his case to any reasonably competent lawyer, he would have been advised that this application to set aside the bankruptcy notice had no merit at all.

9. On the other hand, the creditor wrote to the debtor last evening inviting him to withdraw these proceedings and stating that if he did not do so, they would seek to have the application dismissed with costs.  There was no mention of indemnity costs in that letter.  The question therefore is whether this case comes within the strictures concerning indemnity costs that have been laid down in a number of decisions in recent years, both of the Supreme Court and of this Court.  I myself have written not inconsiderably about this very subject and like others have pointed out that under the present statutory provisions, the costs to be awarded in legal proceedings are very much at large.  The old idea that there was something that used to be called the “usual order” as to costs, which was that the unsuccessful party was ordered to pay party and party costs, is no longer the standard position.  The awarding of costs is entirely within the discretion of the Court subject to established legal principle.

10. This case is very much on the edge of the relevant criteria.  It appears to have been instituted for the extraneous purpose of delaying or frustrating the recovery of the sum in question.  The debtor admits that he can pay the amount, he says that he is not insolvent, and asserts that that establishes that he should not be in the Bankruptcy Court at all.  On the other hand, he says that he will only be able to pay the debt by cashing in his superannuation and spending roughly a third of it on this debt.  Had he come to these proceedings and offered to pay into Court the amount of the debt or some representative section of it, his position would have been stronger.  Moreover, he sought to delay even these proceedings by first of all claiming that an earlier letter by him to the solicitors for the creditor had not been answered and then because of the letter he received last evening.

11. The letter to which he had not had a reply was actually seeking confirmation that the solicitors for the creditor had a continuing retainer.  As I am informed, the same solicitors have had a retainer in this matter for many years and there never has been a doubt about their entitlement to act for the creditor.  The letter last evening, although it does not refer to the request for confirmation, in fact provides that confirmation, so that that attempt to delay and frustrate the proceedings was also entirely abortive.

12. It may be that the debtor's feeling that there has been injustice in the proceedings has some merit.  I simply do not know because I have not investigated the matter and it is no function of the Bankruptcy Court to do so but he cannot take out these frustrations and apprehensions by launching proceedings in various courts at various times merely to find a venue for airing his discontents and sense of injustice.  That approach merely adds more costs and prejudice to his situation and does not advance his interests at all.  He spent a considerable time both in the affidavit in support of the application and in his submissions telling me that he wanted to settle this dispute.  I should have thought that option to be attractive to the creditor were it not for the fact that there would be hardly any goodwill for a settlement with someone who insists on duplicating or replicating more and more proceedings which just incur more and more costs.  At the end of the day someone has to pay these costs.

13. This particular creditor, whatever be the merits of the debtor’s criticisms of his conduct, has not been shown by any court yet to have been the justified payer of costs which have been imposed upon him by litigation launched and prosecuted by the debtor.  Until the debtor is able to focus his attention on the real matters in issue, and until he can show and build up some reservoir of goodwill on the part of any parties with whom he is in conflict, he is simply adding to his woes and not solving any of his problems.

14. This is the type of circumstance in which indemnity costs are most frequently ordered.  The question that goes into the balance against it is whether the fact that the debtor is representing himself might in some way derogate from what would ordinarily flow in relation to unsuccessful proceedings of this kind.  As it seems to me that this is unlikely to be the end of this confrontation and that the debtor has now received at least three judgments in the Supreme Court in which indemnity costs have been at least some part if not all of the issues litigated, he is not in the same position as litigants who ordinarily represent themselves.  The debtor is thus an informed litigant.  In the circumstances, it seems to me that he really cannot raise any sensible barrier to what would undoubtedly flow to a represented litigant who had commenced proceedings of the kind that have just been occupying this Court.

15. The application will be dismissed with the creditor’s costs to be paid by the debtor on a solicitor and client or indemnity basis. 

I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld AO.

Associate:

Dated:             7 June 1999

The applicant appeared in person.
Solicitor for the Respondent:	Blake Dawson Waldron (Mr Joseph Scarcella)
Date of Hearing:	7 June 1999
Date of Judgment:	7 June 1999