FEDERAL COURT OF AUSTRALIA

Green v Official Trustee in Bankruptcy, in the matter of Schneller [2003] FCA 214

PRACTICE AND PROCEDURE – costs – bankruptcy – whether applicant should pay costs of all parties - where bankrupt and her husband sought to appear – where overlap in submissions between bankrupt and Trustee – where applicant unsuccessful in motion.

Federal Court of Australia Act 1976 (Cth), s 43

Jackson v Salisbury [2000] FCA 1133 referred to

Theo v Official Trustee in Bankruptcy [1998] FCA 862 referred to

IN THE MATTER OF JENNIFER SCHNELLER

RICHARD GREEN v OFFICIAL TRUSTEE IN BANKRUPTCY

N 7469 of 2001

MOORE J

SYDNEY

19 MARCH 2003

IN THE MATTER OF JENNIFER SCHNELLER

THE COURT ORDERS THAT:

1. The applicant pay the Official Trustee in Bankruptcy’s costs of the application as taxed or agreed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE MATTER OF JENNIFER SCHNELLER

REASONS FOR RULING ON COSTS

Introduction

1                     On 7 March 2003 I gave judgment in an application which concerned, amongst other things, an application by the applicant to have the costs of proceedings in the Supreme Court (“the Supreme Court costs”) to be paid out of the estate of Jennifer Schneller (“the bankrupt”): see Green v Official Trustee in Bankruptcy, in the matter of Jennifer Schneller [2003] FCA 164. The history of the matter is sufficiently set out in the earlier judgment. There is an outstanding question of what costs orders should be made in this proceeding.

2                     The Official Trustee in Bankruptcy (“the Trustee”) appeared in the application represented by Ms Nash. The Trustee had a direct interest in the application not only because the applicant sought orders requiring payment of the Supreme Court costs out of the bankrupt’s estate, but also because the applicant sought a variation of costs orders made in favour of the Trustee by Hill J in earlier proceedings in this Court.

3                     There was no opposition to an order that the applicant pay the Trustee’s costs of the present application. However the applicant does resist any costs order being made in this proceeding in favour of the bankrupt and her husband who appeared and were represented by counsel. The bankrupt and her husband were not a party to the application, though they sought to appear. Ultimately that course was not opposed by the applicant. No orders were made regularising or formalising the position of the bankrupt and her husband.

4                     It is not clear to me what the husband’s interest was in this proceeding, at least in resisting the orders sought by the applicant. He also is liable under the Supreme Court costs order and one would have thought that it would be to his benefit for that order to be satisfied from the estate of his wife. However the bankrupt did have at least a theoretical interest because, if certain of the orders sought by the applicant had been made, her estate would be diminished by the satisfaction of the Supreme Court costs order, potentially diminishing any surplus which may ultimately enure to her when the administration of her estate is complete. However save for the possibility that the Supreme Court costs order might be set aside on appeal, she would remain liable to meet that costs order in any event.

5                     At the hearing of the present application, the position of the Trustee was that it opposed any variation of the costs orders made by Hill J but otherwise did not oppose the application because the bankrupt and her husband opposed it. However the solicitor for the Trustee did indicate she wished to make submissions about the Court’s jurisdiction to make an order under s 109(10) of the Bankruptcy Act 1966 (Cth). The submission was made that the Court did not have jurisdiction under that section to make the orders sought. Ultimately a submission was also made on behalf of the Trustee that the principles in Re James Ex parte Condon (1874) L.R. 9 Ch. App. 609 were not satisfied such as to justify the orders sought by the applicant. Effectively submissions were made by the Trustee addressing the four bases on which the applicant sought the various orders and the import of the submissions was that none of the orders should be made on the grounds advanced by the applicant.

6                     Counsel for the bankrupt and her husband also made submissions about s 109(10) and Re James Ex parte Condon (1874) L.R. 9 Ch. App. 609 though the submissions made on the latter matter were a little more extensive than those made by the Trustee. The Court is generally alert to ensure that an unsuccessful party is not unreasonably required to pay several sets of costs when a person has intervened in proceedings in which there is already a party and there is a repetition or a substantial overlap of the cases presented: see, for example, Jackson v Salisbury [2000] FCA 1133. A specific example of the application of the general principle in bankruptcy proceedings is found in the judgment of the Full Court in Theo v Official Trustee in Bankruptcy [1998] FCA 862.

7                     In the present matter, the bankrupt and her husband elected to appear in the application and, for that purpose, retained a solicitor and counsel. It has not been suggested they were required to do so. As events transpired, the solicitor appearing for the Trustee substantially dealt with the issues the bankrupt and her husband sought to address through counsel. I do not consider, in those circumstances, that it would be equitable to exercise the discretionary power conferred by s 43 of the Federal Court of Australia Act 1976 (Cth) to require the applicant to pay not only the Trustee’s costs but also the costs of the bankrupt and her husband. Accordingly I propose only to order that the applicant pay the Trustee’s costs as taxed or agreed.

Associate:

Dated: 19 March 2003