Watson, in the matter of Lin v Lin
[2025] FedCFamC2G 566
•17 April 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Watson, in the matter of Lin v Lin [2025] FedCFamC2G 566
File number(s): SYG 2218 of 2024 Judgment of: JUDGE D HUMPHREYS Date of judgment: 17 April 2025 Catchwords: BANKRUPTCY – Costs assessment – Where the Bankruptcy Notice set aside – Where the Creditor’s Petition was dismissed - Where costs ordered are costs that are reasonably payable on a party-party basis – Appropriate discount applied Legislation: Bankruptcy Act 1966 (Cth) s 52(2)
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 214(3)
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth)
Cases cited: Bobb v Wombat Securities Pty Ltd (No2) [2013] NSWSC 863
In the matter of Palladium Consulting Pty Limited [2013] NSWSC 92
Division: Division 2 General Federal Law Number of paragraphs: 32 Date of last submission/s: 21 March 2025 Date of hearing: 10 March 2025 Place: Parramatta Solicitor for the Applicant: Self-represented litigant Counsel for the Respondent: Mr Lees Solicitor for the Respondent: Ms He (Ren Zhou Lawyers) ORDERS
SYG 2218 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF JINGXIAN LIN
BETWEEN: ADAM BRUCE WATSON
Applicant
AND: JINGXIAN LIN
Respondent
ORDER MADE BY:
JUDGE D HUMPHREYS
DATE OF ORDER:
17 APRIL 2025
THE COURT ORDERS THAT:
1.The Applicant is to pay the Respondent’s legal costs fixed in the sum of $44,108.32 within 28 days of the date of this order.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE D HUMPHREYS
INTRODUCTION
This judgment relates to the quantum of costs payable by Mr Adam Watson (the applicant) to Ms Jingxian Lin (the respondent) in respect of proceedings initiated by Mr Watson in this Court seeking a sequestration order against the respondent that was ultimately dismissed.
For the reasons set out below, the Court orders that the applicant pay the respondent’s costs fixed in the sum of $44,108.32 within 28 days of this order.
BACKGROUND
The matter has a somewhat complicated history, and it is appropriate to provide a brief chronology of the main events related to it.
On 2 September 2024, the applicant claimed to serve the Bankruptcy Notice on the respondent. The respondent denies that this document was, in fact, served on her.
On 5 September 2024, the applicant filed a creditor’s petition with the Court. On 10 October 2024, a Registrar of this Court made a sequestration order against the respondent in her absence.
On 2 December 2024, the respondent lodged an application for a review of the Registrar’s decision to make a sequestration order against her.
Following various requests, on 13 December 24, a hearing took place before His Honour Judge Zipser, the relevant duty Judge. Judge Zipser confirmed a final hearing date for the review application on 7 February 2025 and made orders for the parties to file and serve further evidence and submissions. While the respondents filed certain evidentiary material, the applicant failed to file any evidence or written submissions.
On 7 February 2025, the review application was heard before myself and I ordered that the 10 October 2024 sequestration order against the respondent be annulled. Orders were also made allowing Mr Watson to file and serve any amended creditor’s petition and documentation in support of the matter for the final hearing listed on 14 March 25.
On 8 February 2025, the applicant emailed the Court to unilaterally request the withdrawal of the proceedings. The Court denied this request as the applicant did not file the proper notice of discontinuance nor make any offer to consent to an order to pay some or all of the respondent’s costs.
On 5 March 2025, the applicant again emailed the Court requesting a dismissal but did not provide a notice of discontinuance.
On 10 March 2025, a directions hearing was held, during which the Court ordered that the hearing date of 14 March 2025 be vacated, that the Bankruptcy Notice dated 2 September 2024 be set aside, and that the applicant's creditor's petition be dismissed pursuant to s 52(2) of the Bankruptcy Act 1966 (Cth). The Court also determined that the question of costs would be decided in chambers on the papers.
Further orders were made that the applicant was to file and serve any written submissions by 28 March 2025. On 28 March 2025, the applicant requested a further two-week extension to serve the written submissions, which was granted; however, the Court notes that as of the date of this judgment, no written submissions have been received from the applicant in relation to the matter of costs.
Further, the Court notes that no formal Notice of Discontinuance has been filed by the applicant.
EVIDENCE BEFORE THE COURT
In addition to written submissions, the Court has been provided with two affidavits. The first is an Affidavit of Ms Chao He, a solicitor employed by Ren Zhou lawyers, dated 21 March 2025. Ms He stated she had day-to-day carriage of this matter and set out a detailed chronology. Ms He deposes that as of 3 March 2025, the respondent has incurred legal costs and disbursements totalling $50,464.32. This comprises of solicitor’s fees of $25,828.00, counsel’s fees of $22,572.00, and other disbursements of $2,064.32. The precise make-up of these amounts is set out further in Ms He’s affidavit.
Based on her knowledge and experience, Ms He requests the Court to make a lump sum costs order rather than an order of costs assessment or taxation process. In so doing, Ms He deposes that the applicant has not responded to an offer of settlement and that there would be significant additional costs incurred in obtaining an assessment of the costs by way of taxation. Further, Ms He deposes that it would be very difficult for the applicant to meaningfully participate in a taxation of costs assessment or taxation process.
Ms He submits that, in her experience, an assessment process would result in the successful party being granted an amount of between 65 to 75% of reasonably incurred solicitor’s costs, 80 to 100% of barrister’s fees, and 100% of reasonably incurred disbursements. Attached to Ms He’s affidavit are copies of various documents, including tax invoices and other documents associated with the proceedings.
The second Affidavit is from the respondent and is dated 1 December 2024. It sets out the procedural history and the claims of the respondent that the proceedings were wholly defective.
THE LAW IN RELATION TO COSTS
As noted by the respondent in their written submissions, costs are at the discretion of the Court: s 214(3) Federal Circuit and Family Court of Australia Act 2021 (Cth). As with any discretion, it must be exercised reasonably.
Costs will normally follow the outcome of the proceedings. The Court is satisfied it is reasonable in the above circumstances that the applicant should pay the respondent’s legal costs. The fact that the applicant is unrepresented is not a matter that would detract from the normal practice of costs following the event.
Costs may be ordered by the Court on any one of three bases. First, the Court may order costs to be paid on an indemnity basis. Second, the Court may fix an amount of costs on a lump sum basis. Third, the Court may fix costs on a lump sum basis by reference to the relevant scale contained within the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (“the Rules”).
CONSIDERATION
Noting the fact that the matter has been protracted, there had been a significant number of Court events, and that a considerable amount of evidence has been filed, the Court is of the view that fixing costs by reference to the relevant scale of costs contained within the Rules would be inappropriate. Further, in accordance with normal principles, the Court is not satisfied this is a matter where costs on an indemnity basis should be ordered. In so doing, the Court notes that an offer to settle the amount of costs payable in the sum of $25,000.00 was made by the respondent to the applicant but has not been accepted.
Based on the material before the Court, the Court is satisfied that it can arrive at an appropriate gross sum of costs without the need to examine, line by line, each of the items of costs that might be claimed by the respondent; that is, the Court will take a broad-brush approach to the quantification of a lump sum.
The Court is further satisfied that it is appropriate to apply a discount to the gross amount of costs that are claimed in order to ensure that any amount ordered does not represent costs on an indemnity basis but rather costs reasonably payable on a party-party basis.
The Court notes examples of discounts in matters where ordinary fees had been awarded, including a discount of 30%: Bobb v Wombat Securities Pty Ltd (No2) [2013] NSWSC 863; and 15%: In the matter of Palladium Consulting Pty Limited [2013] NSWSC 92. In the latter, the Court allowed two-thirds of solicitor-client cost and counsel fees as charges, resulting in a 15% overall reduction, which was submitted as the usual level of discounting to be applied when an indemnity costs order is not made.
On behalf of the respondent, it was submitted that the amount of work required in this matter was over and above what might normally occur given the fact that bankruptcy is a technical area of law, the fact that the respondent's evidence in the application was relatively broad in scope, the challenge of the service of the statement of claim and the Bankruptcy Notice and the creditor’s petition. Further, additional work was necessary on the basis that the applicant was unrepresented, and that the applicant had failed to file and serve any evidence or engage with the respondent’s offers of settlement in relation to costs.
In addition, at least one hearing date was adjourned late on the basis of the applicant's illness.
The Court has carefully reviewed the attachments to the Affidavits and the provided evidence and is reasonably satisfied that the total amount charged by the respondent’s solicitors is $30,404.00 (inclusive of GST). An appropriate discount in relation to this amount, to reflect costs on a party-party basis, is 40%. This results in a total of $18,242.00 (rounded to the nearest dollar).
Counsel’s fees (including GST) are $29,568. A 20% discount should be applied to this amount, resulting in a total of $23,654.00 (rounded up to the nearest dollar).
Disbursements of $2,212.32 should be paid in full. This totals $44,108.32.
The Court notes that the amounts set out above include costs related to this cost’s application.
The Court notes various concessions made by the respondent regarding the gross amount of costs that should be paid, but the Court is of the view that the above amount more fairly represents the amount of costs that should be paid.
The order of the Court is that the applicant is to pay the respondent’s legal costs fixed in the sum of $44,108.32 within 28 days of the date of this order.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Associate:
Dated: 17 April 2025
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