Zohar v Hicks (No.2) - [2004] FMCA 109

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ZOHAR & ORS v HICKS (No.2)

[2004] FMCA 109

PRACTICE & PROCEDURE – BANKRUPTCY – COSTS – Where the applicants were successful on their claim for a declaration that certain mortgages were void pursuant to section 120 of the Bankruptcy Act – offers of compromise – Order 23 of the Federal Court Rules 1976 – costs awarded to the applicant on a party/party basis.

Bankruptcy Act 1966 (Cth), ss.120, 120(4), 122
Supreme Court Act 1935 (WA)
District Court of Western Australia Act 1969 (WA)
Federal Court Rules 1976, Order 23

Zohar & Ors v Hicks [2002] FMCA 308
Brady v Official Trustee (No 2) [2001] FMCA 87
Bartrop v Nilant & Anor [2003] FMCA 23

Applicant:

OREN ZOHAR AND CHARLES PHILIPPE LOUIS NILANT as Trustees of the property of Connor Joseph McGrath & Martina Elizabeth McGrath

Respondent:

DAVID FREDERICK HICKS

File No:

WZ79 of 2001

Completed on:

2 July 2004 by Bryant CFM

Delivered on:

28 July 2004 by McInnis FM

Delivered at:

Perth

Hearing date:

27 May 2003 (via telephone)

Judgment of:

Bryant CFM

REPRESENTATION

Counsel for the Applicant:

Mr Aristei

Solicitors for the Applicant:

Carles Solicitors

Counsel for the Respondent:

Mr Ashdown

Solicitors for the Respondent:

BJW Ashdown

ORDERS

It is declared that pursuant to s.120 of the Bankruptcy Act 1966 (Cth) mortgages H459648 secured over the property at 239 Scarborough Beach Road, Doubleview and H459649 secured over 241B Scarborough Beach Road, Doubleview are void as against the applicants.
Pursuant to s.120(4) of the Bankruptcy Act the consideration to be paid to the respondent is $21,385.22 plus costs ordered in the District Court of Western Australia in action number 2374 of 1999 (the District Court costs ) up to and including the 15 February 2001, and interest on the sum of $21,385.22 from 18 June 1999 to 15 February 2001 calculated at 12.25 per cent (the interest).
The District Court costs up to and including 15 January 2001 be taxed or agreed, and paid to the respondent, or be set off against any cost order in favor of the applicants made pursuant to these orders.
The interest be paid to the respondent or be set off against any cost order in favour of the applicants made pursuant to these orders.
The respondent be entitled to retain the sum of $22,745 which sum is to be set off against the sums owing to him pursuant to Order (2) hereof.
That the respondent pay the applicants' costs in relation to these proceedings on a party/party basis and in default of agreement to be taxed pursuant to the Federal Court scale.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

WZ79 of 2001

OREN ZOHAR AND CHARLES PHILLIPE LOUIS NILANT As Trustees of the property of Conor Joseph McGrath and Martina Elizabeth McGrath

Applicants

And

DAVID FREDERICK HICKS

Respondent

REASONS FOR JUDGMENT

Introduction

The application for determination is an application for costs sought by the applicants against the respondent following orders made on

24 December 2002 in

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] FMCA 109
Decision Date: 28 July 2004 by McInnis FM

CaseChat Overview and Summary

Zohar v Hicks (No.2) is a case involving the determination of the validity of certain mortgages under the Bankruptcy Act 1966 (Cth) and the quantification of compensation due to the respondent. The court was asked to declare the mortgages over properties located at 239 Scarborough Beach Road, Doubleview and 241B Scarborough Beach Road, Doubleview void, as well as to calculate the consideration owed to the respondent and the interest on that amount. The matter was heard in the Federal Court of Australia.

The primary legal issues before the court were whether the mortgages were void under section 120 of the Bankruptcy Act 1966 (Cth) and, if so, the correct amount of compensation due to the respondent. This involved interpreting the statutory provisions and determining the applicable interest rate for the period in question. The court had to consider the appropriate legal principles and statutory framework to resolve these issues.

The court found that the mortgages were indeed void as against the applicants under section 120 of the Bankruptcy Act. It further determined that the consideration to be paid to the respondent was $21,385.22, plus the District Court costs up to and including 15 February 2001, and interest on the sum of $21,385.22 from 18 June 1999 to 15 February 2001 at 12.25 per cent. The court outlined the statutory basis for these findings and the methodology for calculating the interest. Additionally, it ordered that the District Court costs and the interest be either paid to the respondent or set off against any cost order in favor of the applicants.

The court made several orders to effect the compensation to the respondent and to manage the costs of the proceedings. It declared the mortgages void, set the compensation amount, and ordered the payment or set-off of the District Court costs and interest. Furthermore, it directed that the respondent retain a specific sum to be set off against the compensation amount and ordered the respondent to pay the applicants' costs on a party/party basis, to be taxed pursuant to the Federal Court scale if not agreed upon.

Orders

Orders of the court

It is declared that pursuant to s.120 of the Bankruptcy Act 1966 (Cth) mortgages H459648 secured over the property at 239 Scarborough Beach Road, Doubleview and H459649 secured over 241B Scarborough Beach Road, Doubleview are void as against the applicants.

Pursuant to s.120(4) of the Bankruptcy Act the consideration to be paid to the respondent is $21,385.22 plus costs ordered in the District Court of Western Australia in action number 2374 of 1999 (the District Court costs ) up to and including the 15 February 2001, and interest on the sum of $21,385.22 from 18 June 1999 to 15 February 2001 calculated at 12.25 per cent (the interest).

The District Court costs up to and including 15 January 2001 be taxed or agreed, and paid to the respondent, or be set off against any cost order in favor of the applicants made pursuant to these orders.

The interest be paid to the respondent or be set off against any cost order in favour of the applicants made pursuant to these orders.

The respondent be entitled to retain the sum of $22,745 which sum is to be set off against the sums owing to him pursuant to Order (2) hereof.

That the respondent pay the applicants' costs in relation to these proceedings on a party/party basis and in default of agreement to be taxed pursuant to the Federal Court scale.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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