FEDERAL COURT OF AUSTRALIA

Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen (No 3) [2009] FCA 1482

COSTS – s 43(2) Federal Court of Australia Act 1976 (Cth) – interlocutory proceedings – previous order that matter to be transferred to the Family Court – whether the trial judge will be in the best position to determine where costs should ultimately fall – both parties successful on two interlocutory issues – whether departure from the general rule in Order 62 rule 3(3) Federal Court Rules 1979 justified

Held: costs to be reserved to the trial judge

Federal Court of Australia Act 1976 (Cth) s 43(2)

Federal Court Rules 1979 O 62 r 3(3)

Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 related

Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen (No 2) [2009] FCA 1383 related

JT Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122 cited

Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545 cited

Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 cited

NICK JIM COMBIS TRUSTEE OF THE PROPERTY OF PETER JENSEN, A BANKRUPT v ILDIKO ELIZABETH JENSEN

QUD 315 of 2007

COLLIER J

10 DECEMBER 2009

BRISBANE

THE COURT ORDERS THAT:

Costs in these proceedings be reserved to the trial judge.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     The background to this judgment is set out in full in Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen [2009] FCA 778 and Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen (No 2) [2009] FCA 1383. In Combis, Trustee of the Property of Peter Jensen (Bankrupt) v Jensen (No 2) [2009] FCA 1383 I ordered that these proceedings be transferred to the Family Court of Australia. The only outstanding matter for decision at this stage relates to costs incurred in the following proceedings:

1.                  An application by Mrs Jensen for a stay of the proceedings for abuse of process. Mrs Jensen was unsuccessful in respect of this application.

2.                  A notice of motion filed by Mrs Jensen for leave to amend the Defence and file and serve a Cross-Claim. Mrs Jensen was successful in respect of this notice of motion.

3.                  The trustee’s amended notice of motion in which the trustee sought to strike out various paragraphs of the Amended Defence and Cross-Claim. The trustee was successful in respect of this notice of motion.

4.                  An application by Mrs Jensen for transfer of the Federal Court proceedings to the Family Court. Mrs Jensen was successful in respect of this application.

Submissions of the trustee

2                     In summary the trustee submitted as follows:

·                    The trustee was wholly successful upon its motion seeking to strike out para 7e and para 10 of the Amended Defence and para 24 of the Cross-Claim. To that extent the trustee was also wholly successful in respect of its opposition to Mrs Jensen’s application for leave to file the Amended Defence and Cross-Claim. Accordingly the trustee is entitled to costs in respect of its notice of motion to strike out various paragraphs of the Defence and its opposition to the Cross-Claim, and also in respect of Mrs Jensen’s application for leave to file the Amended Defence and Cross-Claim.

·                    Costs of the notice of motion for transfer of the proceedings to the Family Court should be costs in the cause of the trustee’s application.

·                    Notwithstanding the provisions of O 62 r 3(3) of the Federal Court Rules, the trustee should have leave to tax the costs ordered in his favour, and such costs be paid forthwith because:

o                   Mrs Jensen’s notice of motion to stay the trustee’s proceedings was a discrete application, brought after considerable delay, which failed.

o                   The trustee’s notice of motion to strike out paragraphs in the Defence and his opposition to para 24 of the Cross-Claim were discrete issues which removed those paragraphs in the proceedings. The trustee’s costs in respect of this notice of motion ought not to have been incurred.

o                   Such order will not involve multiple taxations.

Submissions of Mrs Jensen

3                     In summary, Mrs Jensen submitted as follows:

·                    The trustee has been successful in respect of two applications – namely the application brought by Mrs Jensen for a stay, and the trustee’s application to strike out parts of the defence and counterclaim. Mrs Jensen has been successful in respect of two applications – namely her application to file an amended defence and Cross-Claim, and her application to transfer proceedings to the Family Court of Australia.

·                    The appropriate order for costs at this stage is that costs be reserved to the trial judge because the trial judge will be in the best position to determine, on a review of the ultimate outcome of the proceedings, whether one or other of the parties had acted unreasonably.

·                    Alternatively, as the trustee has been successful in two applications and Mrs Jensen successful in two applications, the appropriate order may be that there be no order as to costs. The reason for this is that if the Court were to award costs to the successful parties on each of the applications, the result would be that the parties would be forced to incur the expense of having their costs assessed with the ultimate resolution most likely being that the costs would effectively cancel each other out.

·                    Although the trustee was successful in its application to strike out parts of the Amended Defence and Cross-Claim, in light of the fact that the proceedings have been transferred to the Family Court the strike out application has resulted in no net gain for the trustee. This is because the factual issues raised in the struck out pleadings will be ventilated in the Family Court in any event.

·                    Mrs Jensen was successful in her application for the proceedings to be transferred to the Family Court. If the Court is not minded to reserve costs, in the alternative Mrs Jensen is entitled to her costs in respect of the transfer of the proceedings to the Family Court.

·                    In any event the general rule as found in O 62 r 3(3) of the Federal Court Rules is that an order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order. The trustee has not demonstrated that the demands of justice require a departure from that general rule.

Consideration

4                     As a general proposition the award of costs is in the discretion of the Court: s 43(2) of the Federal Court of Australia Act 1976 (Cth). Having considered the helpful and extensive submissions of the parties as to costs, I have formed the view that the appropriate order is that the costs be reserved to the trial judge. I form this view for the following reasons:

5                     1.         First, I agree with Mrs Jensen that the trial judge will be in the best position to determine, on a review of the ultimate outcome of these proceedings, the appropriate place for costs to fall. If, for example, the trustee’s claim is ultimately unsuccessful the trial judge may well consider that costs should follow the event, including in respect of interlocutory applications. Such a determination is however for the future.

6                     2.         Second, at this stage of the proceedings both parties have been successful to varying extents. I am not persuaded by the trustee’s submission that the trustee was wholly successful in respect of its opposition to Mrs Jensen’s application for leave to file the Amended Defence and Cross-Claim. Indeed, the trustee opposed leave being granted to file the Cross-Claim for reasons other than the material in para 24 of the Amended Defence and Cross-Claim. In particular I note that another major reason for the trustee’s opposition to the filing of the Cross-Claim was because the Cross-Claim sought to introduce issues relevant to a s 139ZQ notice served by the trustee previously on Mrs Jensen relating to another property in dispute between them (TS 6 October 2009 p 20 l 11 to p 22 l 41).

7                     3.         Third, I am not persuaded by the trustee’s submission that costs of the notice of motion for transfer should be costs in the cause of the trustee’s application in this court to be transferred to the Family Court. While the trustee had, appropriately, commenced these proceedings in this Court and had a prima facie right to have his claim heard in this Court, Mrs Jensen was well within her rights to apply for an order that the proceedings be transferred to the Family Court. I do not agree that Mrs Jensen sought, unsuccessfully, to have the proceedings transferred to the Family Court at the hearing of 31 March 2009 – in fact although counsel for Mrs Jensen invited the Court to make the order of its own initiative, no formal application for transfer was made. I do not think that, at this stage, an order should be made that such costs should be costs in the cause and awarded according to the final award of costs in the action (cf comments of Lord Denning in JT Stratford & Son Ltd v Lindley (No 2) [1969] 3 All ER 1122 at 1123).

8                     4.         Finally, even were I minded to order costs in favour of the trustee in whole or in part, I am not persuaded that the demands of justice require a departure from the general rule that an order for costs of an interlocutory proceeding shall not entitle a party to have a bill of costs taxed until the principal proceeding has concluded (cf Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 at 312, Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545). Although the trustee was successful in its notice of motion to strike out paragraphs of the Defence and in its opposition to para 24 of the Cross-Claim, the principal proceedings will now continue in the Family Court. In my view it is for the trial judge in that Court to determine where costs should fall, including in respect of the interlocutory proceedings.

Associate:

Dated:         10 December 2009