FEDERAL COURT OF AUSTRALIA
Vegas Enterprises Pty Ltd v Rumsley [2017] FCA 35
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Details
- Case
- [2017] FCA 35
- Decision Date
CaseChat Overview and Summary
Vegas Enterprises Pty Ltd brought an application against Rumsley for a declaration that it was entitled to set-off an order for costs against a cross-claim costs order. The application was also for an order setting aside a debt appropriation order, and for other relief. The Court was required to decide whether the order for costs made in favour of Vegas in an earlier proceeding could be set off against the costs order made against Vegas in the cross-claim in the same proceeding, and whether the Court should exercise its inherent jurisdiction to order the set-off. The Court was also required to decide whether a debt appropriation order based on the cross-claim costs order could be set aside, where Rumsley allegedly failed to disclose that the purported assignment of the costs order was subject to challenge in related proceedings. The Court found that a party in Rumsley's position may have laboured under some obligation to fully disclose circumstances to the Registrar, but in the exercise of discretion, the Court would not set aside the debt appropriation order in the particular circumstances of this case where it had determined that set-off was not available to Vegas in any event. The Court found that the appropriate order in those circumstances would appear to be that the application be dismissed, and that the applicant pay the costs of the first respondent, to be taxed if not agreed. The Court also found that the time for compliance with the debt appropriation order made by Deputy District Registrar Stanley on 20 May 2015, be extended to 8 February 2017.
Orders
Orders of the court
1. the application be dismissed;
2. the time for compliance with the debt appropriation order made by Deputy District Registrar Stanley on 20 May 2015, be extended to 8 February 2017; and
3. the applicant pay the costs of the first respondent, including any reserved costs, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
In regard to the debt appropriation order, the issue is whether the order ought to be set aside because of Mr Rumsley’s alleged failure to inform the Court that the purported assignment of the cross-claim costs order was the subject of challenge in other related proceedings.BACKGROUND The background to this proceeding is conveniently summarised by what Gilmour J said in the related proceeding Williamson (Trustee) v Rumsley, in the matter of Clifford (a Bankrupt) (No 2) [2015] FCA 1246, as cited by the Full Court of this Court in Rumsley v Vegas Enterprises Pty Ltd [2016] FCAFC 84 at [3] (North and Reeves JJ): 2In 2009 Mr Philip George Clifford brought proceedings against … Vegas Enterprises Pty Ltd (Vegas) and its directors in matter WAD 28 of 2009 (the Proceedings). Vegas in turn, brought a cross-claim against Clifford which on 15 March 2010 was dismissed by consent. Vegas was ordered to pay the costs of the cross-claim, to be taxed (the cross-claim costs order).3The Proceedings were dismissed on 24 August 2010 and Clifford was ordered to pay Vegas’ costs of the Proceedings (the Proceedings’ costs order).4Clifford and … Mr Alan Phillip Rumsley, his solicitor of record, entered into a Deed of Assignment dated 16 March 2012 by which Clifford purported to assign his right, title and interest in relation to the cross-claim costs order to Rumsley (the Assignment). I say ‘purported’ because [Williamson] impugn[s] the validity of the Assignment pursuant to s 120 of the Bankruptcy Act 1996 (Cth) (Bankruptcy Act). That issue is yet to be heard and determined.5On 25 May 2012, a certificate of taxation was issued to Vegas with respect to the costs of the Proceedings in the sum of $510,790.6Clifford, pursuant to s 20 of the Property Law Act 1969 (WA) (PLA), gave written notice dated 29 May 2012 of the Assignment to Vegas.7On 26 February 2013, Clifford became a bankrupt by way of a debtor’s petition.8On 22 May 2013, [Williamson was] appointed as trustee… of Clifford’s bankrupt estate under s 157 of the Bankruptcy Act.…10On 9 January 2015, Rumsley was joined as a party to the Proceedings as an assignee of the cross-claim costs order in order to give him an entitlement to be heard on the taxation of the cross-claim costs.11On 2 February 2015, a certificate of taxation was issued to Clifford with respect to the cross-claim costs order in the amount of $110,000. On 17 May 2013, Mr Rumsley lodged a proof of debt in Mr Clifford’s bankrupt estate claiming that he was owed $550,000 in legal fees incurred acting for Clifford. On 20 May 2013, Vegas lodged a proof of debt in Mr Clifford’s bankrupt estate claiming that he owed $647,198.11 for costs in a number of proceedings, including WAD 28 of 2009. On 19 September 2014, Mr Clifford wrote to Vegas confirming the notice provided on 29 May 2012 of the purported assignment of the cross-claim costs order. Vegas says that Mr Clifford’s trustees in bankruptcy notified Mr Rumsley, by letter dated 7 January 2015, that they had avoided the purported assignment by stating as follows: Our client’s position is that the transaction is voidable under sections 120 and 121 of the Bankruptcy Act 1966 (Cth) and our client now so avoids it.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
In these circumstances, assuming, but without deciding, that a party in Mr Rumsley’s position may have laboured under some obligation to fully disclose circumstances to the Registrar, in the exercise of discretion, I would not set aside the debt appropriation order in the particular circumstances of this case where I have determined that set-off is not available to Vegas in any event.CONCLUSION AND ORDER In these circumstances the application for a declaration that the applicant is entitled to set-off the proceedings costs order against the cross-claim costs order is refused, as is the application for an order setting aside the debt appropriation order. The appropriate order in those circumstances would appear to be that:(1)the application be dismissed; and(2)the applicant pay the costs of the first respondent, to be taxed if not agreed.
Ratio Decidendi
Legal Principle Established
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