Federal Court of Australia

Shaw v The Official Trustee in Bankruptcy (No 2) [2026] FCAFC 61

ORDERS

THE COURT ORDERS THAT:

1.    Order 2 of the first orders made on 27 March 2026 be vacated.

2.    The appellant pay the respondent’s costs as agreed, or failing agreement, assessed on a lump sum basis, without prejudice to the right of the respondent to claim those costs as a cost of the administration of the appellant’s bankrupt estate.

3.    The appellant’s interlocutory application lodged for filing on 30 March 2026 be dismissed.

4.    The costs of the appellant’s interlocutory application be costs of the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    Order 2 of the first orders made on 27 March 2026 be vacated.

2.    The appellant pay the respondent’s costs as agreed, or failing agreement, assessed on a lump sum basis, without prejudice to the right of the respondent to claim those costs as a cost of the administration of the appellant’s bankrupt estate.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    Order 3 of the first orders made on 27 March 2026 be vacated.

2.    The appellant pay the respondent’s costs as agreed, or failing agreement, assessed on a lump sum basis, without prejudice to the right of the respondent to claim those costs as a cost of the administration of the appellant’s bankrupt estate.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

INTRODUCTION

1    These reasons concern two applications brought after judgment was delivered dismissing Mr Shaw’s appeals in two separate proceedings and his application for leave to appeal in respect of an interlocutory decision in one of the two proceedings: Shaw v The Official Trustee in Bankruptcy [2026] FCAFC 32 (the Principal Judgment). Familiarity with the Principal Judgment is assumed. Unless otherwise stated, we adopt the same definitions and usages as in our earlier reasons.

2    In dismissing each of Mr Shaw’s appeals and the leave application we made orders that Mr Shaw pay the Trustee’s costs. Immediately after judgment was delivered, the Trustee made an oral application seeking leave to apply to vary the costs orders that were made. Mr Shaw was not present when judgment was delivered. Appearances were not required. It was open to the Trustee to bring this application under r 39.04(2) of the Rules which permits an interlocutory application for variation or setting aside to be filed within 14 days after entry. Accordingly, on 27 March 2026 we made orders requiring the parties to file and serve written submissions in relation to the Trustee’s application.

3    The Trustee’s application for different costs orders is made in the context where Mr Shaw is an undischarged bankrupt. The Trustee seeks orders that Mr Shaw pay the Trustee’s costs without prejudice to the right of the Trustee to claim those costs as a cost of the administration of Mr Shaw’s bankrupt estate. Mr Shaw opposes the Trustee’s application.

4    On 30 March 2026, Mr Shaw made a separate application, purportedly under r 39.04. By his application, Mr Shaw seeks an oral hearing; an order to set aside the judgment and orders of 27 March 2026 in NSD9/2022; consequential directions; an order that each party bear their own costs of the proceedings; and an order that the Trustee’s costs not be charged to the bankrupt estate. On 2 April 2026, we made orders requiring the parties to file and serve written submissions in relation to Mr Shaw’s application. The issues addressed in these reasons are: whether the costs orders should be varied in the manner sought by the Trustee; and whether Mr Shaw’s separate r 39.04 application discloses any proper basis to set aside the judgment and orders in NSD9/2022.

5    Both applications were determined on the papers. The material before the Court is summarised below. On the Trustee’s application to vary the costs orders, the Court had before it the Trustee’s written submissions and Mr Shaw’s written submissions opposing the variation (including his amended submissions). On Mr Shaw’s application, the Court had before it his interlocutory application and supporting affidavit dated 30 March 2026, written submissions filed thereafter, and the Trustee’s written submissions in opposition.

LEGISLATIVE FRAMEWORK

6    Rule 39.04 provides:

39.04    Varying or setting aside a judgment or order before it has been entered

(1)    The Court may vary or set aside a judgment or order before it has been entered.

(2)    If an interlocutory application for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the Court may determine the application, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.

(3)    Within 14 days after a judgment or order is entered, the Court may on its own initiative set aside or vary the judgment or order as if the judgment or order had not been entered.

(4)    Despite rule 1.39, the Court may not extend the time fixed by subrule (2) or (3) of this rule.

(5)    Nothing in this rule affects any other power of the Court to set aside or vary a judgment or order.

7    Rule 39.04 confers a discretionary power to vary or set aside a judgment or order before it has been entered: r 39.04(1). Where an interlocutory application is filed within 14 days after entry, the Court may determine it and, if appropriate, set aside or vary the judgment or order as if it had not been entered: r 39.04(2). Rule 39.04 also permits the Court to act on its own initiative within 14 days after entry, and does not permit extension of the time fixed by rr 39.04(2) or (3).

8    The discretion is exercised with caution and with regard to the public interest in the finality of litigation. It may be exercised if the Court is convinced that it has proceeded on a wrong basis or where there is some matter calling for review.

9    Rule 39.04 does not provide an unfettered discretion to re‑argue or reconstruct a case. Nor is it a “backdoor” method by which an unsuccessful litigant may seek to obtain, in substance, appellate review: Kimber v Clark as trustee of the estate of Kimber (Review of orders) [2025] FCA 1181 at [8] (Perram J).

THE TRUSTEE’S APPLICATION

10    The Trustee’s application to vary the costs orders is made in circumstances where the Trustee did not address the Court on the costs orders that it would seek if, as proved to be the case, it succeeded in resisting Mr Shaw’s appeals and application for leave. That omission is not determinative, but it calls for an explanation. It is inappropriate for a party to say nothing about costs, await the outcome, and then ask the Court to vary its orders: Thomas v Commissioner of Taxation (No 2) [2017] FCAFC 144 at [4]-[5] (Dowsett, Perram and Pagone JJ); Kable v New South Wales (No 2) [2012] NSWCA 361 at [14] (Basten JA).

11    The Trustee explains that it proceeded on the assumption that it would have an opportunity to address costs after judgment. That assumption was incorrect. The better course would have been to foreshadow at the hearing that costs orders other than the usual orders might be sought if the Trustee were successful. That would have enabled the Court to decide whether the parties should make submissions on costs at the conclusion of the hearing (on a hypothetical basis as to outcome) or after judgment. There was no reason why the Trustee could not have addressed in closing submissions the form of costs orders now sought given Mr Shaw’s status as an undischarged bankrupt on the hypothesis that it succeeded.

12    Mr Shaw opposes the variation. In substance, he submits that the Trustee is seeking to improve its position after judgment, without demonstrating any sufficient prejudice or injustice arising from the costs orders as pronounced. He submits that r 39.04 is not to be used to revisit costs, that the Trustee’s proposed wording is unnecessary (as going beyond what is necessary to give effect to the costs orders), and that any question of recourse to the estate should not be effected without an open hearing and/or affording creditors an opportunity to be heard.

13    Although the Trustee ought to have raised the question of the form of any costs orders at the hearing of the appeals, that omission is not fatal. The question is whether, on the basis of the submissions that the Trustee now makes, it is appropriate to exercise the limited power under r 39.04 to vary the costs orders. We are satisfied that it is. Varying the orders in the way now sought by the Trustee will avoid unnecessary dispute about the Trustee’s ability to claim the appeal costs as costs of administration of Mr Shaw’s estate. In the Principal Judgment the history of the litigation between the Trustee and Mr Shaw is described in Annexure A – Chronological list of decisions involving Mr Shaw and The Trustee. Having regard to that history, we are satisfied that varying the costs orders in the way now sought is in the interests of justice in that it will limit the potential for further peripheral disputes and the incurring of costs and consumption of the Court’s resources in a way that is disproportionate to the core dispute.

14    The proposed variation is confined and orthodox. It clarifies the operation of the costs orders in the context of Mr Shaw’s status as an undischarged bankrupt and removes doubt that may otherwise give rise to further disputation and expense. For that reason, and consistently with the overarching purpose, we will vacate each of the costs orders made on 27 March 2026 and in lieu order that Mr Shaw pay the Trustee’s costs as agreed, or failing agreement assessed on a lump sum basis, without prejudice to the Trustee’s right to claim those costs as a cost of the administration of Mr Shaw’s bankrupt estate.

15    It is convenient then to turn to Mr Shaw’s separate interlocutory application.

MR SHAW’S APPLICATION

16    Mr Shaw’s application is distinct. In his interlocutory application in NSD9/2022, Mr Shaw seeks in substance to have the Court set aside the judgment and orders made on 27 March 2026 purportedly pursuant to r 39.04, and then make consequential directions and costs relief. In substance, he seeks an oral hearing; an order setting aside the judgment and orders of 27 March 2026; consequential directions; an order that each party bear their own costs; and an order that the Trustee’s costs not be charged to the bankrupt estate. He states in his supporting affidavit that he brings the application on the basis that (as he alleges) the Court mistook key facts and the state of the law, took into account irrelevant matters and excluded relevant matters, resulting in a miscarriage of justice.

17    Mr Shaw’s application is, in substance, an attempt to reopen and re-argue matters determined in the Principal Judgment. His affidavit and submissions largely repeat matters advanced, or which were available to be advanced, on the substantive hearing of the appeals and the leave application. Mr Shaw does not identify any misapprehension of fact or law, or any other matter calling for review within the limited scope of r 39.04. It follows that the application does not engage the rule.

18    Accordingly, the interlocutory application lodged for filing on 30 March 2026 will be dismissed. The costs of that interlocutory application will be costs of the appeal.

Associate:

Dated:    7 May 2026