Zollo v Official Trustee
[2005] FMCA 619
•13 May 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ZOLLO & ANOR v OFFICIAL TRUSTEE | [2005] FMCA 619 |
| COSTS – Bankruptcy – indemnity costs – circumstances in which award of indemnity costs will be awarded. |
| Bankruptcy Act 1966 (Cth), s.116(2) |
| Citibank Ltd v Parker (2000) 181 ALR 115 Hughes v Car Buyers (2004) 210 ALR 65 |
| Applicant: | ALESSANDRO ZOLLO & ANOR |
| Respondent: | OFFICIAL TRUSTEE |
| File number: | ADG 222 of 2003 |
| Judgment of: | Lindsay FM |
| Hearing date: | 4 March 2004 |
| Date of last submission: | 4 March 2004 |
| Delivered at: | Adelaide |
| Delivered on: | 13 May 2005 |
REPRESENTATION
| Applicant: | In person |
| Counsel for the Respondent: | Mr G Gretsas |
| Solicitors for the Respondent: | Gretsas Chrzaszcz |
ORDERS
That the applicants do pay the respondents’ costs of and incidental to the applications filed on 17 September 2003 and 22 April 2004 being such costs as may be agreed within 28 days or as may be taxed upon application following the expiry of that period.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 222 of 2003
| ALEXANDRA ZOLLO & ANOR |
Applicant
And
| OFFICIAL TRUSTEE |
Respondent
REASONS FOR JUDGMENT
On 10 March 2005 I delivered my judgment in respect of two applications brought by the applicants. They were each dismissed. Application has been made that the respondent have its costs of each application and have them on an indemnity.
The first application was that which took the greater time. It was for declarations which would have had the effect of discharging the bankruptcies. If successful, the applications would have had this effect because I would have found the date of the lodgement of Statements of Affairs by the parties to have been more than three years prior to the hearing.
The application was refused because I did not accept the evidence of the applicants as to the date of filing of those documents. I do not propose to repeat the reasons for that determination herein.
The second application was brought when judgement on the first was reserved. It did not take very long to determine. It sought orders requiring the respondent to “permit or support” certain Magistrates Court (State) proceedings. It was misconceived. There was nothing the trustees could do to advance the applicant’s claim.
Tamberlin J in Citibank Ltd v Parker (2000) 181 ALR 115 at [6] and [7] sets out succinctly the general position relating to costs in this jurisdiction of the Court:
“[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.
[7] As Young J in the Supreme Court of New South Wales observed in Ramirez v Sandor’s Trustee (No 2) (SC(NSW), Young J, 23 October 1997, BC9705824, unreported) at p 3:
‘ … there is no special rule as to the payment of costs to or by an Official Trustee or liquidator. Ordinarily, such people will not sue unless they either have sufficient funds to discharge their obligations in the litigation, or they have an indemnity as to costs from interested creditors. As a general rule, liquidators or Official Trustees who proceed without covering their costs in this way are at risk : see Ex parte Angerstein [1874] 9 Ch App 479.’ ”
The applicants were wholly unsuccessful in each claim. Nothing has been put by Mr Zollo, who appeared for his wife and himself as to why costs should not follow the event. There will be an order for costs in each matter. However, should they be on an indemnity basis?
The relevant authorities as to the power of the Court to make an award of indemnity costs are usefully summarised (and applied) by Walters FM in Hughes v Car Buyers (2004) 210 ALR 65 at paragraphs [91]-[96] and summarised succinctly at [93] especially:
“It is clear from the above authorities that, unless the justice of a particular case requires, or some special or unusual feature arises, the ordinary rule in favour of party-party costs should be departed from.”
The applicants failed in the first application because I did not believe them (the case depended almost entirely on the evidence of Mr Zollo). He said different things at different times as to how the documents were lodged. I found that I could not rely on his evidence. Indeed I went further and was satisfied beyond a reasonable doubt that the first time the documents were filed was on 19 August 2003. Furthermore, I rejected the case of the applicants that Mrs Tragauer, the Official Trustee, in some way during the court of conversations with the applicant, misled him as to whether a Statement of Affairs had been filed or in some way induced him not to take the step of filing those documents.
In effect, I found that the claim for declarations was wholly without substance on the basis of facts known to the applicants, i.e. the facts relating to the failure to file the documents.
So the applicants lost. They will pay costs. But I think it would be an imposition too far to make the award of costs of an indemnity basis. Applications are often won or lost on the credibility of a party or their witnesses. Something more would usually be required before an indemnity costs order would be made. I do not find the case to be sufficiently special or unusual to warrant such an order.
As to the second application, that is an even closer run thing. The applicant had already brought and discontinued a similar application in August 2003. The one remedy available to the applicant – an appeal from the determination of the learned magistrate that the property claimed was not exempt property for the purposes of s.116(2) of the Bankruptcy Act – was not utilised by the applicants. But it must be borne in mind that the applications are without legal training. It is a finely balanced matter, but in the end, I think an award of party/party costs will achieve a just and equitable result in the circumstances of this application. Again, the applicant’s conduct of such proceedings were not sufficiently unusual or special such as to warrant an order for indemnity costs to be made.
I certify that the preceding eleven (11) are a true copy of the reasons for judgment of Lindsay FM
Associate: S. Smart
Date: 12 May 2005
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