FEDERAL COURT OF AUSTRALIA

Wilson, in the matter of Wilson v Official Trustee in Bankruptcy
[2000] FCA 1041

COSTS – application to vary orders for costs – nature of the interests of respondents to an application for the annulment of sequestration orders

Bankruptcy Act 1966 (Cth)

IN THE MATTER OF ERNEST ARTHUR WILSON AND PATRICIA LORRAINE WILLIAMS

ERNEST ARTHUR WILSON AND ANOR v OFFICIAL TRUSTEE IN BANKRUPTCY AND ANOR

N 8139 OF 1999

EMMETT J

18 JULY 2000

SYDNEY

REASONS FOR JUDGMENT

1                     On 9 December 1999 I decided an application filed on 14 October 1999 seeking the annulment of sequestration orders made against the applicants (Wilson v Official Trustee in Bankruptcy [1999] FCA 1760).  For the reasons that I delivered on that day I ordered that the application be dismissed.  The Official Trustee in Bankruptcy had been represented by counsel.  For part of the proceedings the respondents, the petitioners, had also been separately represented by counsel.  However, counsel for the petitioners sought to be excused during he course of the proceedings after I had made rulings on objections to affidavits.  The petitioners were successful in those objections.

2                     After I gave my reasons for dismissing the application, counsel for the Official Trustee sought an order for costs and also indicated that he had been asked by counsel for the petitioners to seek an order for the costs of the petitioners’ limited involvement in the proceedings.  I indicated that I was not disposed to make an order in relation to the petitioners’ costs.  The petitioners have now sought to be heard in relation to the question of their costs and have asked that I vary the order for costs by ordering that the applicants pay the costs of all of the respondents. 

3                     The petitioners were joined as parties to the application and they were properly joined.  However, it has not been suggested to me that the interests of the Official Trustee and the petitioners in relation to the question of annulment were in any way inconsistent. 

4                     I have been taken to some correspondence that preceded the hearing.  On the view that I have formed, I do not consider that it is relevant.  Nevertheless, I will say something about it.  On 1 October 1999 the Official Receiver wrote to the solicitors for the petitioners.  In that letter the Official Receiver, inter alia, said as follows:

“Please find enclosed a copy of my letter of even date to Mr Wilson and Ms Williams which speaks for itself.  I have also enclosed a copy of the Orders made by Neaves J. on 23rd April 1986 when he made a Sequestration Order against Mr Wilson after he (Wilson) admitted on oath that he was indebted to your clients in excess of $20,000.00

………………………

I have also included a copy of the judgment of the Full Federal Court of Australia delivered on 21st September 1999, which provides an insight into the trustee’s view that the current application involving your clients is a further abuse of process.  I trust that you and your clients share the trustee’s view and will support the trustee in an application to have Mr Wilson's application struck out.”

The letter to the applicants that was referred to in that letter ended as follows:

“You are further advised that the Trustee intends applying to the Federal Court to have your applications struck out on the grounds that they are an abuse of process.  It is noted that in its judgment of 21st September 1999 the Full Federal Court at page 3, para 11 made reference to such an abuse of process when refusing you leave to appeal the judgment of Branson J. who dismissed your previous application.”

5                     On 22 October 1999 the solicitors for the petitioners wrote to the Official Receiver saying, inter alia:

“We note that this matter is set down in court on 26 October 1999.  It is the writer’s understanding that the Official Receiver will indicate to the court on that day that he is also representing the interests of the second respondent and that you will keep us advised of the outcome of proceedings on that day.  Obviously our clients have incurred expense in consulting the writer and it may be that the court is prepared to make an order of costs in favour of our client.”

6                     On 25 October 1999 the Official Receiver wrote to the petitioners solicitors referring to the letter of 22 October 1999 and saying:

“It appears that your clients are not withdrawing their claims in respect of estates as hoped by Wilson & Williams.  I will advise you of the outcome of the hearing tomorrow a.s.ap.”

7                     On 11 November 1999 the petitioners solicitors wrote again to the Official Receiver ending as follows:

“We note that this matter is due in Court on 23 November 1999.  Our client is concerned about his escalating legal costs.  It would be a significant financial burden for our client to be separately represented on 23 November 1999.  Is the Official Receiver prepared to instruct the Australian Government Solicitor to act as our unpaid agent on that day?”

There is no evidence of any response to that request.  As I have said, in fact, the petitioners were represented for a short time. 

8                     Counsel for the petitioners does not suggest to the court that the reason for separate representation was based in any way on any concern that all arguments in opposition to annulment would not be advanced by counsel for the Official Trustee.  Rather, it was suggested that separate representation for the petitioners was based on a concern that an application for expungement of the petitioners’ proof of debt was also before the court and that allegations that were made in the annulment proceedings were also made in the expungement proceedings.  Be that as it may, I do not consider that that is a justification for separate representation.  If the annulment application was successful, that would be an end of the expungement proceedings.  If the annulment application failed, no finding could in any way affect the petitioners prejudicially in the expungement proceedings. 

9                     Ordinarily, where there are multiple respondents and an application fails, costs would follow the event and each respondent would be entitled to an order for costs.  That would ordinarily be because separate relief is sought against separate respondents.  An application for annulment of bankruptcy, however, is in a different category.  A sequestration order is an order in the interests of the community and it is an order that can be made on the application of any creditor, so long as the prerequisites of the Bankruptcy Act 1966 (Cth) are satisfied.  Similarly, an order for annulment affects all parties who have an interest in the bankruptcy.  Their interests, however, although they may be varied in monetary amount, are the same so far as the question of annulment is concerned.

10                  If there were any suggestion that the Official Trustee, for whatever reason and assuming complete propriety in that regard, was not proposing to advance all matters in opposition to the annulment that a particular creditor considered should be advanced, that could well be a justification for that creditor seeking to appear separately and to advance those arguments.  If those arguments succeeded that may well be a justification for ordering costs in favour of that creditor.  It may also be a reason why the Official Trustee would not be entitled to an order for costs.  That is to say, if the Official Trustee opposed annulment on a basis that was unsuccessful and did not advance arguments that were ultimately upheld, that might be a reason why the court might decline to give the Official Trustee his costs of opposing. 

11                  But, as I have said, in this case there was no suggestion of concern on the part of the petitioners that all arguments would not be advanced by counsel for the Official Trustee.  In the circumstances I do not consider that it is appropriate that there be orders for two sets of costs.  Accordingly, I decline to make any further order in relation to costs.

Associate:

Dated:              31 July 2000