FEDERAL COURT OF AUSTRALIA

Campbell v van der Velde as trustee of the bankrupt estate of Marilyn Anne Rowan, in the matter of Rowan (No 2) [2020] FCA 823

ORDERS

THE COURT ORDERS THAT:

1.    The respondent is to pay 90% of the applicants’ costs of the proceedings on a party and party basis.

2.    The applicants be awarded a lump sum for their costs in an amount to be determined by a Registrar of the Court.

3.    By 4.00 pm Friday, 26 June 2020, the applicants are to file and serve any evidence upon which they propose to rely on the issue of quantification of the lump sum.

4.    By 4.00 pm Friday, 10 July 2020, the respondent is to file and serve any evidence upon which he proposes to rely on the issue of quantification of the lump sum for costs and any submissions, not exceeding 10 pages.

5.    By 4.00 pm Friday, 17 July 2020, the applicants are to file and serve any submissions in reply, not exceeding 5 pages.

6.    The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) to determine the quantum of the lump sum for costs payable pursuant to Orders 1 and 2 above in such manner as he or she deems fit including, if thought appropriate, on the papers.

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

REASONS FOR JUDGMENT

FARRELL J:

INTRODUCTION

1    On 14 November 2019, the Court delivered reasons in relation to a dispute between Neil Colin Campbell (Neil Campbell or Mr Campbell) and Terry Grant van der Velde, the remaining trustee of the bankrupt estate of Marilyn Anne Rowan (Mrs Rowan), about the nature and extent of their interests in 19 Applecross Avenue, Castle Hill in New South Wales (19 Applecross Avenue or lot 1102): see Campbell v van der Velde as trustee of the bankrupt estate of Marilyn Anne Rowan, in the matter of Rowan [2019] FCA 1871 (Earlier Reasons).

2    As directed, the parties conferred about the orders to be made to give effect to the Earlier Reasons and the Court made the following declarations and orders on 11 December 2019.

3    The Court declared that:

(1)    The purchase and subsequent development of lot 1102 was pursuant to a joint venture agreement between Neil Campbell and Mrs Rowan.

(2)    The joint venture terminated on 31 August 2006 and the registered holders as tenants in common of lot 1102 held their interest upon constructive trust.

(3)    The payments recorded in the schedules marked exhibits K and O in these proceedings as contributions towards the purchase and development of lot 1102 (including finance costs) inure, through Neil Campbell, for the benefit of (and without making any determination of the respective rights or liabilities between them) Neil Campbell, Cheryl Anne Campbell (Neil’s wife, Cheryl Campbell), Colin Malcolm Campbell (Neil’s father, Colin Campbell), Autus Australia Pty Ltd and Innovated Leasing Pty Ltd (both companies controlled by Neil Campbell in which Neil, Cheryl and Colin Campbell were shareholders), and not for Mrs Rowan’s benefit.

(4)    From 1 September 2006, Mrs Rowan held and holds, in the proportion that 1,349,459.49 bears to 1,366,147.49, her registered title to a 98/100 share of lot 1102 as a tenant in common on constructive trust for Neil Campbell and those with a right to claim through him.

4    The Court ordered that (among other things):

(1)    Neil Campbell pay to the trustee the sum of $18,323.06 on or before 12 December 2019 in full satisfaction of the remaining beneficial interest of Mrs Rowan’s bankrupt estate in lot 1102.

(2)    Upon receipt of the sum of $18,323.06, the trustee provide to Neil Campbell the following dealings, duly executed and in a form capable of registration at NSW Land Registry Services:

(a)    a Bankruptcy Application form 04BAP pursuant to s 90 of the Real Property Act 1900 (NSW) in which the trustee applies to be registered as proprietor of the 98/100 share of lot 1102 as tenant in common;

(b)    a Transfer in which the trustee is named as transferor in respect of the 98/100 share of lot 1102 as a tenant in common and Neil Campbell is named as the transferee of that share; and

(c)    a Withdrawal of Caveat form 08WX in respect of Caveat AJ785807.

(3)    The applicants will be solely liable for any stamp duty or other fee incidental upon the execution and registration of the Transfer.

(4)    The amended notice of cross-claim be dismissed.

(5)    Costs be reserved.

5    On 12 December 2019, the Court ordered counsel to confer with a view to providing a list of issues to be addressed in submissions on costs and a timetable for the provision of those submissions. The agreed issues are as follows:

(1)    What, if any, is the effect of offers made prior to the commencement of proceedings?

(2)    What, if any, is the effect of any changes of position?

(3)    How, if at all, do issues of proportionality play out?

(4)    Do the trustee’s duties of commerciality make any difference to costs?

(5)    What costs orders, if any, should be made?

6    The parties also agreed that costs are suitable to be quantified as a lump sum and agreed to quantification being determined by a Registrar using the methodology contained in the Costs Practice Note (GPN-COSTS).

LEGAL PRINCIPLES

7    Relevantly to these proceedings, s 43 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) provides as follows:

43    Costs

(1)    The Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) …

…

(2)    Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.

(3)    Without limiting the discretion of the Court or a Judge in relation to costs, the Court or Judge may do any of the following:

(a)    make an award of costs at any stage in a proceeding, whether before, during or after any hearing or trial;

(b)    make different awards of costs in relation to different parts of the proceeding;

(c)    order the parties to bear costs in specified proportions;

(d)    award a party costs in a specified sum;

(e)    award costs in favour of or against a party whether or not the party is successful in the proceeding;

(f)    order a party’s lawyer to bear costs personally;

(g)    order that costs awarded against a party are to be assessed on an indemnity basis or otherwise;

…

8    Relevantly to submissions made in relation to this Court’s exercise of the discretion to order costs in these proceedings, in Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 (Sangare), the High Court (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ) said (footnotes omitted):

24    It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion “cannot be narrowed by a legal rule devised by the court to control its exercise”, the formulation of principles according to which the discretion should be exercised does not “constitute a fetter upon the discretion not intended by the legislature”. Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.

25    A guiding principle by reference to which the discretion is to be exercised – indeed, “one of the most, if not the most, important” principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. … There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the “just resolution of the real issues in civil proceedings with minimum delay and expense”, that might have been taken into account to justify refusing the appellant an order for its costs.

…

28    The circumstance that the appellant is a public authority is likewise irrelevant. As McHugh J said in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 107 [92]:

“The law judges persons by their conduct not their identity. In the exercise of the costs discretion, all persons are entitled to be treated equally and in accordance with traditional principle. The fact that a successful [party] is a public authority should not make a court less inclined to award costs in its favour. Gone are the days when one could sensibly speak of a public authority having ‘available to them almost unlimited public funds.’”

29    McHugh J dissented in the result in Oshlack, but those observations were not contrary to the reasoning of the majority in that case.

30    The amicus submitted that orders for costs are intended to be compensatory, not punitive. As a general proposition, so much must be accepted. …

…

32    Whether a party is rich or poor has, generally speaking, no relevant connection with the litigation. It may be said, by way of qualification to that general proposition, that a party’s financial position may be relevant to the extent that it may inform the structure of a costs order. For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order. That said, any such qualification was not invoked in the present case.

33    For the sake of completeness, it may be observed that in Oshlack this Court, by majority (Gaudron, Gummow and Kirby JJ, Brennan CJ and McHugh J dissenting), set aside the decision of the Court of Appeal of the Supreme Court of New South Wales and restored the decision of the Land and Environment Court of New South Wales that there be no order as to costs in respect of the appellant's unsuccessful challenge to the local authority's consent to a development application. The majority in this Court held that it was open to the Land and Environment Court to conclude that the litigation was motivated by a desire to ensure obedience to environmental law and to preserve the habitat of endangered fauna, and that there was, objectively speaking, a “‘public interest’ in the outcome of the litigation” . It could also be said in favour of the order made by the Land and Environment Court that it was not unfair to require the local authority to bear its own costs of litigation where it had an interest in resolving uncertainty attending the valid exercise of its powers, and wide standing provisions facilitated the bringing of such litigation. None of these considerations can be said to be relevant in this case. The litigation here was brought to vindicate the respondent's private interest in his reputation by the recovery of damages.

9    A successful plaintiff who has failed on certain issues may be deprived of costs on those issues, or even ordered to pay the defendant’s costs of them. This course, while open, is one on which the Court embarks with hesitancy. It may be appropriate to award costs of a separate issue where a clearly definable and severable issue, on which the otherwise successful party failed, has occupied a significant part of the trial: Waterman v Gerling (Costs) [2005] NSWSC 1111 at [10].

10    Those principles are accepted by the parties in these proceedings.

11    The trustee also relied on the statement of principle in the Full Court of the Federal Court of Australia’s decision in Umoona Tjutagku Health Service Aboriginal Corporation v Walsh [2019] FCAFC 32; (2019) 268 FCR 401 (Umoona) at [41]-[46] (White, Perry and Banks-Smith JJ). Insofar as those passages extend beyond the principles set out above, they are relevantly as follows at [44]-[46]:

44    To put it another way, it is correct to say that what amounts to success is not always revealed merely by reading the orders of the court. As the Western Australian Court of Appeal explained in Frigger v Professional Services of Australia Pty Ltd (No 2) [2011] WASCA 103 (S) (Frigger):

12.    … Where an appellant has been successful in obtaining what is, in effect, a variation in their favour of orders below, there may remain valid reasons to not award costs in favour of the appellant where the appellant has not been successful in the underlying, real contest: Laws v Australian Broadcasting Tribunal (1989) ALD 522; (1989) 85 ALR 659, 677. Where appellants have only won a nominal victory then the court may not award costs. Success in proceedings is to be determined by the “reality” of the circumstances involved: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [70] (McHugh J); Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 401.

45    The breadth of the discretion as to costs is reflected among other things in s 43(3)(c) and (e) of the FCA Act which respectively permit the Court to make orders that the parties bear costs in specified proportions and to award costs in favour of or against a party irrespective of whether the party is successful in the proceeding: see also Oshlack at [40]. Thus, as the High Court held in Gray v Richards (No 2) [2014] HCA 47; (2014) 89 ALJR 113:

2.    The disposition of costs is within the general discretion of the Court. Ordinarily, that discretion will be exercised so that costs are awarded to the successful party, but other factors may have a significant claim on the discretion of the Court. The disposition which is ultimately to be made in any case where there are competing considerations will reflect a broad evaluative judgment of what justice requires.

(Emphasis added; citations omitted)

46    The interests of justice include considerations of the cost-effectiveness of litigation. Thus a court may conclude that a departure from the general rule is warranted where substantial issues are raised by the successful party which unduly extend the time and expense of litigation: A, DC v Prince Alfred College Inc (No 2) [2016] SASCFC 27 at [6]-[11] (the Court). As counsel for Ms Walsh pointed out, the relevance of such considerations is highlighted by the obligation imposed upon a party and a party’s lawyer by subss 37N(1) and (2) respectively of the FCA Act to conduct proceedings in a way that is consistent with the overarching purpose in s 37M, namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

12    Those principles must also be accepted.

13    The trustee drew the Court’s attention to the discussion of the relevance of the Civil Dispute Resolution Act 2011 (Cth) (CDR Act) to the question of costs in a number of cases.

14    The trustee relied on Umoona at [72], where the Full Court considered disentitling considerations and said the following at [72](6):

Ms Walsh made no attempt to engage in any meaningful sense in pre-trial negotiations for settlement and had not complied with the genuine steps requirement. That said, only limited weight can be given to this consideration as there was no challenge to the primary judge’s findings that Ms Walsh’s failure to comply with the CDR Act did not have any significant consequences: Walsh (Costs) at [50]-[53].

15    Umoona was an appeal from the decision in Walsh v Umoona Tjutagku Health Service Aboriginal Corporation (No 3) [2017] FCA 1203 (Walsh). At [50]-[53], the primary judge said:

50    In exercising the discretion to award costs, the Court may take account of whether a person has taken genuine steps to resolve the dispute and filed a genuine steps statement in accordance with the provisions of the Civil Dispute Resolution Act 2011 (Cth) (CDR Act). Whether a person has taken genuine steps to resolve a dispute is to be assessed having regard to the person’s circumstances and the nature and circumstances of the dispute: s 4 of the CDR Act. For the respondents it is argued that Ms Walsh did not comply with the provisions of the CDR Act before or after commencing the proceedings.

51    The requirements of the CDR Act do not weigh heavily in the balance in this case. Whilst Ms Walsh did not particularise the quantum of her alleged damages until some months after the action was commenced, I do not consider that delay to have had any substantive bearing on the prospects of the matter settling.

52    The failure of Ms Walsh to make a counter offer is a relevant consideration, however in the detailed affidavit material relied upon by UTHSAC in support of its application for costs, nowhere is it said that UTHSAC would have agreed to terms of settlement that did not contain a term such as that contained in cl 3.3 of the proposed deed. Moreover, while UTHSAC was correct in forewarning Ms Walsh about the strength of its case on the statutory bar, UTHSAC did not confine its case (and therefore its expenditure) to that issue. Together with Mrs Larkins, UTHSAC put Ms Walsh to proof on nearly every aspect of her case.

53    If there has been a failure by Ms Walsh to strictly comply with the requirements of the CDR Act I do not consider the failure to have had any significant consequences so as to justify the discretion as to costs being exercised differently than it otherwise would be in relation to either respondent.

16    The trustee referred to consideration of the role of the CDR Act and the requirements of ss 37M and 37N of the Federal Court Act by Perry J in Qantas Airways Limited v Lustig (No 2) [2015] FCA 782 (Qantas v Lustig) at [20]-[23] and by Rangiah J in Australian Firearms and Munitions Pty Ltd v Attorney-General (No 2) [2018] FCA 1937 (Australian Firearms) at [4]-[13].

17    Relevantly, in Qantas v Lustig at [20]-[22], Perry J said:

20    Section 6 of the CDR Act requires an applicant to file a genuine steps statement at the time of filing the application. That statement must specify the steps taken to try to resolve the issues in dispute or the reasons why no such steps were taken. Section 7, in turn, requires a respondent who is given a genuine steps statement by an applicant to file a genuine steps statement before the hearing date stating either that the respondent agrees with the applicant’s genuine steps statement or specifying the respects in which, and the reasons why, the respondent disagrees. Under s 11 of the CDR Act, the Federal Court may take into account in exercising powers in relation to civil proceedings, whether a genuine steps statement was filed by a person required to file such a statement and whether the person took genuine steps to resolve the dispute. Those matters may also be taken into account in exercising the discretion to award costs by virtue of s 12 of the CDR Act.

21    The CDR Act does not, however, prescribe any specific steps which the parties must take in order to satisfy the obligation to take genuine steps or impose a proscriptive pre-action protocol. Rather, s 4(1A) provides that “a person takes genuine steps to resolve a dispute if the steps taken by the person in relation to the dispute constitute a sincere and genuine attempt to resolve the dispute, having regard to the person’s circumstances and the nature and circumstances of the dispute” (emphasis in the original). Examples of such steps are given in s 4(1) as including:

(a)    notifying the other person of the issues that are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute;

   (b)    responding appropriately to any such notification;

(c)    providing relevant information and documents to the other person to enable the other person to understand the issues involved and how the dispute might be resolved;

(d)    considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process;

   (e)    if such a process is agreed to:

(i)    agreeing on a particular person to facilitate the process; and

(ii)    attending the process;

(f)    if such a process is conducted but does not result in resolution of the dispute—considering a different process;

(g)    attempting to negotiate with the other person, with a view to resolving some or all the issues in dispute, or authorising a representative to do so.

22    That list does not limit the steps that may constitute genuine steps (s 4(2), CDR Act).

18    The Court notes that in Qantas v Lustig at [24], Perry J noted that, while Qantas did not file a genuine steps statement when the proceedings were instituted, it did file such a statement setting out the steps which had been taken. At [25], her Honour noted that the respondents never filed a genuine steps statement and neither took issue with Qantas’ genuine steps statement until the question of costs arose, and therefore, in resolving the issue of costs, little weight could be given to their complaint with respect to the steps identified by Qantas. At [25]-[26], Perry J went on to say:

25    … Furthermore, the assumption underlying Mr Lustig’s submissions that the Court should focus on the making of offers in determining whether genuine steps were taken by Qantas to resolve the dispute, cannot be sustained given the width of the definition of “genuine steps” and the examples of genuine steps given in s 4(1) of the CDR Act: see at [21] above.

26    That being so, Qantas advised of the issues that may be in dispute before any proceeding was instituted and these were further developed in the course of the VCAT proceedings. Offers were made by both the first and second respondents after instituting the VCAT proceedings and there is nothing to suggest that they were not given genuine consideration by Qantas. Qantas also made a counter offer to Mr De Simone. Those attempts to resolve the dispute underlying the VCAT proceedings by negotiation having been unsuccessful, no criticism can be made in my view of Qantas then seeking an authoritative determination in the courts of the question of whether VCAT had jurisdiction in the first instance. It must also be borne in mind that if jurisdiction had existed, then the issue of resolving the substantive dispute would have arisen more acutely and the processes enacted by the VCAT Act to facilitate alternative dispute resolution would have been available: see in particular, ss 83-84 (power to require parties to attend a compulsory conference) and ss 88-89 (power to refer a matter to mediation).

19    In Australian Firearms at [3], Rangiah J noted submissions made by the applicant in relation to the conduct of that case by the respondent, including the failure to comply with the CDR Act by filing a genuine steps statement; the failure to explain why he considered that the Administrative Decisions (Judicial Review) Act 1977 (Cth) did not apply in that case; the resultant failure to comply with ss 37M and 37N of the Federal Court Act and other alleged defects in the applicant’s conduct of that case. At [8] and [10]-[13], Rangiah J said:

8    Section 13 of the CDR Act provides that the powers in that Act are available in addition to any powers the court has under other legislation. Section 37N(4) of the FCA Act provides that in exercising the discretion to award costs in a civil proceeding, the Court must take account of any failure to comply with the duty imposed by, relevantly, subsection (1). That subsection requires the parties to conduct the proceeding (including negotiations for settlement of the dispute) in a way consistent with the overarching purpose. The overarching purpose is described in s 37M of the FCA Act as the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

…

10    I find that the respondent failed to file a genuine steps statement and failed to take all necessary genuine steps to attempt to resolve the dispute. While the respondent took a genuine step to resolve the dispute by stating that his position was that the ADJR Act did not apply, he should have gone further by explaining the basis of that position in response to the applicant’s request for an explanation. The respondent’s failures may be taken into account pursuant to s 12(1)(a) of the CDR Act.

11    Further, the obligation under s 37N(1) of the FCA Act required the respondent to explain his position that the ADJR Act did not apply. The respondent was not excused from complying with his obligation merely because the lawyers representing the applicant were seeking an explanation of a proposition of law. That conduct might have been considered appropriate at a time before ss 37M and 37N commenced, but is no longer acceptable. The respondent has provided no satisfactory excuse for its failure to provide the explanation.

12    However, the Court retains a discretion under s 43(2) of the FCA Act to make the costs order it considers appropriate. It is relevant to consider whether the applicant incurred costs as a result of the respondent’s failure to comply with s 7(1) of the CDR Act and s 37N(1) of the FCA Act. There is no evidence that it did. The respondent’s argument that the ADJR Act did not apply was eventually explained in the respondent’s notice of objection to competency and, later, in his outline of submissions. The applicant did not then discontinue the proceeding, but instead proceeded to a hearing, unsuccessfully arguing that the ADJR Act did apply. The obvious inference is that the applicant would have taken the same course even if the explanation had been given prior to the commencement of proceedings. The applicant has provided no evidence to the contrary.

13    The respondent’s failures to comply with s 7(1) of the CDR Act and s 37N(1) of the FCA Act had no material consequence. The purpose of awarding costs is compensatory, not punitive. Those failures provide no adequate reason to depart from the usual position that costs should follow the event.

BACKGROUND AND SUBMISSIONS

Correspondence between 1 December 2008 and 16 January 2012

20    In the Earlier Reasons at [47], the Court set out material details of correspondence between solicitors for Mrs Rowan and either Neil Campbell or his solicitors between 1 December 2008 and 16 January 2012 dealing with:

(1)    Requests by Mrs Rowan that Mr Campbell secure the discharge of her liability under the mortgage over lot 1102 and pay to her the “balance of the monies contributed by her” ($16,688) on the basis that $50,000 which she had provided as deposits for the purchase of lot 1102 and lot 1105 (25 Applecross Avenue at Castle Hill) had been repaid to her in late October 2004 and amounts paid by her on account of stamp duty and loan application fees remained outstanding. If those requests were not complied with, Mrs Rowan’s legal advisers threatened to approach the Supreme Court of New South Wales to obtain orders for the sale of lot 1102, the division of sale proceeds and costs.

(2)    Claims made by Mr Campbell that Mrs Rowan owed Autus Australia $50,000 which he said it lent to her in late October 2004 (which Mrs Rowan denied on the basis that the $50,000 paid to her was the return of the deposits which she paid on lots 1102 and 1105), Neil Campbell’s willingness to remove Mrs Rowan’s name from the title of lot 1102 on the basis that she pay the costs associated with that process, and possible claims for contribution from Mrs Rowan on the basis that the development of lot 1102 had been loss making.

21    That correspondence did not resolve the issue between Mrs Rowan and Mr Campbell. It is recorded here by way of background. It was not relied on by either the applicants or the trustee.

Correspondence in evidence between 5 June 2012 and 12 August 2015

22    On 5 June 2012, Autus Australia commenced proceedings in the Local Court of New South Wales against Mrs Rowan seeking repayment of a loan of $50,000 plus interest (in aggregate $87,189.80) on the basis of an oral agreement said to have been made in June 2004 and memorialised in a loan agreement which appears to be dated 15 November 2005, bearing Neil Campbell’s signature on behalf of Autus Australia and Mrs Rowan’s signature: see the Earlier Reasons at [35]-[37] and [48].

23    Between 30 July 2012 and 28 October 2013, Mr Campbell’s lawyers and Mrs Rowan’s lawyers corresponded in relation to the Local Court proceedings and the terms on which Mrs Rowan might be released from liability under the mortgage over lot 1102 and transfer her interest in lot 1102 to Mr Campbell: see the Earlier Reasons at [49]-[58].

24    By a letter labelled “without prejudice save as to costs” and dated 30 July 2012 from Mrs Rowan’s lawyers to Mr Campbell’s lawyers (see the Earlier Reasons at [49]-[50]), Mrs Rowan again denied that she owed Autus Australia $50,000 and asserted that the payment had been a return of the deposits which she paid on lots 1102 and 1105. Mrs Rowan’s solicitor raised a range of technical issues related to the alleged oral and written loan agreement and other matters on the basis of which it was suggested that Autus Australia’s action would not be successful. The letter concluded by noting that Mrs Rowan was “essentially assetless”, that, aside from the joint venture, she had no real property, no accumulated wealth of any significance and a leased car. The letter stated that Mrs Rowan was “tired of her dispute with Mr Campbell”. She offered to enter into “an appropriately worded Deed” under which:

1.    [Mrs Rowan] will transfer her share of 19 Applecross Road to Mr Campbell;

2.    As a condition of the above, Mr Campbell is to arrange for the refinancing of the loan on the property, so as to remove [Mrs Rowan] as a liable party;

3.    [Mrs Rowan] and Mr Campbell are to mutually release each other from any claims that they may have against each other, and Mr Campbell is to indemnify [Mrs Rowan] against any future claim by Autus Australia (given that, as a deregistered company, it cannot even give an effective release).

25    That offer was not accepted.

26    By letter dated 23 August 2012, Mr Campbell’s then solicitors responded, indicating that the Local Court proceedings had been discontinued due to the fact that Autus Australia had been deregistered. The letter went on to say:

We agree, however, that if possible all parties are best served through a resolution of differences between the parties.

On our instructions, our client is entitled to:

 1.    Repayment of the loan of $50,000 plus interest (total to date of $36,560.81);

2.    Transfer to Mr Campbell of 19 Applecross Avenue together with attendant costs;

3.    Payment of [Mrs Rowan’s] pro rata share of losses on the development – yet to be quantified.

In the interest of early resolution, we are instructed to propose the following:

 1.    Payment within 28 days of $50,000;

2.    Transfer to Mr Campbell of 19 Applecross Avenue and 50% of the attendant costs of doing so;

3.    Mr Campbell will arrange refinancing so as to remove your client as a liable party;

4.    The parties to provide mutual releases in respect of all claims including any claim by Autus Australia.

27    By letter dated 10 September 2012, Mrs Rowan’s solicitors responded, noting the fundamental disagreement between Mr Campbell and Mrs Rowan concerning whether there was a loan and the underlying joint venture, and saying that Mrs Rowan reiterated her position that she does not owe money to Autus Australia and that (on a proper accounting) she is owed money by Mr Campbell. The letter suggested that, given her current financial status, Mrs Rowan was “judgment proof”, so that irrespective of merit, there was nothing to be obtained by Mr Campbell that would be better than (or equal to) that which Mrs Rowan had already offered. The letter confirmed that the offer made on 30 July 2012 remained open.

28    Between 28 March 2013 and 8 July 2013, correspondence ensued between the solicitors. Mr Campbell sought to get Mrs Rowan to execute a statutory declaration in order to obtain a concessional rate of stamp duty on the transfer of lot 1102 to him under s 55(1)(b) of the Duties Act 1997 (NSW) (Duties Act). Mrs Rowan’s solicitors responded by asserting that Mrs Rowan did not accept the contents of the proffered draft statutory declarations and they disagreed that their content would meet the requirements of the Duties Act to enable Mr Campbell to have any transfer of lot 1102 stamped at concessional rates: see Earlier Reasons at [53].

29    On 5 August 2013, Mrs Rowan’s lawyers wrote to Mr Campbell’s lawyers, saying that it remained their client’s position that the properties were purchased on the understanding that they would be mutually developed for profit. The letter said that, on that basis, Mrs Rowan paid a total of $66,688 comprising the deposits, stamp duty and loan application fees and she believed that the $50,000 paid to her by Mr Campbell in 2004 was in repayment of the deposits. The letter reiterated the offer made in the letter dated 30 July 2012 and said that, for “clarification”, any costs of the transfer of the property or refinancing were to be borne by Mr Campbell alone: see Earlier Reasons at [54].

30    On 26 August 2013, Mr Campbell’s then solicitors wrote to Mrs Rowan’s solicitors reiterating Mr Campbell’s view that there had been an intended arrangement that Mrs Rowan would pay the deposits for five properties, three for herself and two for Mr Campbell. Instead, Mrs Rowan had paid the deposits on two properties, and “[i]n the circumstances the agreement between our clients was modified with the development of one property as a “joint venture” which had not been the original intention and was contrary to the original agreement”. The letter stated that these facts fell within the terms of s 55 of the Duties Act. It threatened that if Mrs Rowan remained unwilling to declare the statutory declaration, Mr Campbell would have “little alternative but to seek the reinstatement” of Autus Australia and recommence proceedings in the Local Court. It concluded:

That said in a final effort to resolve the dispute between our respective clients we are instructed to propose resolution of the matter as follows:

  I.    Payment to our client within 28 days of the sum of $25,000

2.    Transfer to our client of 19 Applecross Avenue with you client meeting 50% of the attendant costs of doing so.

3.    Our client to refinance 19 Applecross Avenue and remove your client’s liability.

4.    Both your client and ours to provide mutual releases in respect of all claims including the claim made by our client that your client contribute to the cost of remedial work upon 19 Applecross Avenue. Particulars of the remedial work have been provided to you.

31    On 4 September 2013 Mrs Rowan’s solicitors wrote to Mr Campbell’s then solicitors rejecting that offer and renewing the offer made in their letters of 30 July 2012 and 5 August 2013.

32    On 3 October 2013, Mr Campbell’s then solicitors wrote to Mrs Rowan’s solicitors enquiring whether she would be prepared to provide a letter stating that she no longer wishes to have further dealings with 19 Applecross Avenue and is happy to have her name removed from title to the property.

33    On 28 October 2013, Mrs Rowan’s solicitors replied that she was only willing to provide the requested letter in exchange for: Mr Campbell refinancing the loan on lot 1102 removing her as a liable party, release from claims by Mr Campbell and indemnity against claims by Autus Australia and an undertaking that Mr Campbell be responsible for any costs incurred in refinancing and transfer.

34    Mr Campbell and Mrs Rowan did not finalise and execute any arrangement before Mrs Rowan presented a debtor’s petition on 12 August 2015 and Mr Moretti and Mr van der Velde were appointed as the trustees of her bankrupt estate: see Earlier Reasons at [59].

Correspondence between 19 October 2015 and 15 August 2016 between the trustees and Mr Campbell’s solicitors

35    The applicants rely on correspondence between the trustees and Mr Campbell’s solicitors between 19 October 2015 and 15 August 2016.

36    The applicants say that the parties’ attempts to resolve the dispute leading to this proceeding relevantly began with Mr Moretti’s letter (on behalf of the trustees) to Mr Campbell’s then legal advisers dated 19 October 2015 which relevantly said:

We make these initial observations:

Joint Venture

In 2001 the bankrupt and your client agreed to enter into a joint venture to purchase and develop two properties located at 19 & 25 Applecross Avenue Castle Hill NSW. Your client attempted to formalise the Joint Venture around February 2003. We note that as the property at 25 Applecross Avenue was sold at this stage, the draft Joint Venture Agreement only dealt with the remaining property at 19 Applecross Avenue.

We note that the bankrupt contributed the following amounts to the Joint Venture:

a.    $50,000 deposit for the two properties,

b.    $14,488 for the stamp duty and

c.    $2,200 in legal costs.

We attach a copy of the bankrupt’s bank statement and cheque butts confirming she paid the stamp duty and legal costs. I do not believe your client denies the bankrupt paid the deposit of $50,000.

We are advised that no proper accounting for the development and sale of 25 Applecross Avenue Castle Hill has been provided. It would appear however, that your client may have attempted to account for the development by virtue of an undated letter addressed to the bankrupt and again by letter to the bankrupt's solicitors, Elliot Tuthill Solicitors on 18 December 2008. We attached a copy of these letters for your information.

We request that your client provide us with the appropriate accounting for the purchase and development costs of the property at 25 Applecross Avenue together with supporting documentation. Further, we require a full accounting for the sale of the property at 25 Applecross Avenue be provided.

Given the above, we deny your clients assertion that he is entitled to the bankrupts interest the property. We require the above specified documents to assist our investigations into your clients claim in the property.

Residency

We note the property at 19 Applecross Avenue Castle Hill is used as your clients’ principal place of residence and business. Please inform your client that as he is occupying the property, all payments he has made (and makes) such as council rates, mortgage and other levies are seen as an occupancy fee in consideration of occupying the property. Please confirm your client will continue to meet these costs including maintaining the property. We note you will provide our office with copies of all rate notices and a copy of the insurance policy.

Refund of $50,000

You have advised your client has refunded the $50,000 paid by the bankrupt towards the properties. We deny your client made this payment. We understand that a company called, Autus Australia Pty Ltd (a company associated with your client and now deregistered) is purported to have loaned $50,000 to the bankrupt. A loan agreement was executed on 15 November 2005. We believe your client may be referring to this loan. Please confirm if our understanding is incorrect. We also note your comment in relation to a $50,000 debt owed to your client by the bankrupt on page two of your letter.

Agreement

You have indicated that an agreement was entered into between your client and the bankrupt to transfer the bankrupts' interest to your client in 2013. The bankrupt and her legal advisors, deny any such agreement. Further, based on our review we have found no evidence of such an agreement. Please provide us with an executed agreement for our consideration.

37    Mr Campbell’s current solicitors (Gillis Delaney Lawyers) wrote to the trustees on 20 November 2015 advising that they had been given a copy of a letter from the trustees to Mr Campbell dated 31 August 2015. The letter said (among other things):

We are instructed that:

1.    the Bankrupt loaned our client $50,000 by paying the deposit of $50,000 on behalf of our client to enable him to purchase of the Property;

2.    the Bankrupt signed the contract and was recorded on title as a registered proprietor as a means of securing repayment of the loan for $50,000;

3.    later, in 2004, the Bankrupt received $50,000 from our client's company Autus Australia Pty Ltd in 2004 in repayment of the Bankrupt's loan of $50,000 and the Bankrupt's solicitor provided a written acknowledgment in relation to the repayment;

4.    our client has paid all mortgage payments, Council rates, construction costs and insurance premiums in relation to the Property whereas the Bankrupt made only the payment of $50,000 towards the acquisition of the Property by loan which was repaid in 2004; and

5.    shortly before your appointment the Bankrupt agreed to sign a Transfer in registrable form so that our client could be recorded as the registered proprietor. The sequestration of her Estate then occurred and the Transfer has not been signed and provided to our client.

In view of the above, the Bankrupt's interest in the Property now vested in the Trustees has so vested subject to a resulting trust in favour of our client in respect of all of the payments he made for the acquisition, construction costs, mortgage payments, Council rates, insurance and maintenance of the Property.

Our client has compiled most of the documents which will substantiate the resulting trust. The bulk of these documents are bank account statements in connection with mortgage payments over about the past decade, however we are instructed that evidence of the payments in the other categories will also be provided.

Our client will be able to complete the compilation in about the next fortnight and we will arrange for a copy set of those documents, arranged chronologically, to be provided to you by early to mid December 2015.

We would then appreciate the opportunity to meet with you, if possible in your firm's city office, with our client, so that we are able to discuss these issues with a view to reaching a mutually satisfactory outcome.

38    On 27 November 2015, the trustees wrote to Mr Campbell’s solicitors, allowing them until 11 December 2015 to respond before holding a meeting and pointing out that:

We note your client is claiming that the only amount paid by the bankrupt towards the above property was $50,000 (which was repaid). As detailed and evident in our 19 October 2015 letter, the bankrupt also paid stamp duty and legal costs in the sums of $14,488 and $2,200 respectively which were not repaid.

Please ensure your client addresses all the queries outlined in our letter of 19 October 2015 addressed to Turner Freeman Lawyers, particularly in relation to the Joint Venture.

39    Attached to the letter of 27 November 2015 was a copy of the letter dated 19 October 2015 referred to above.

40    On 12 February 2016, Mr Campbell’s current solicitors wrote a letter to the trustees in which Mr Campbell’s position as to a “sequence of events” was explained and cross-referenced to a bundle of documents. In all, the letter (of nine pages) and documents comprised 286 pages. Among other things, the letter accepted that $50,000 had been paid to Mrs Rowan in October 2004 in repayment of the deposits she had made on lots 1102 and 1105. The letter also accepted that the concept of a joint venture had been discussed. However, it asserted that, although Mr Campbell sought to memorialise the joint venture by providing a draft joint venture agreement to Mrs Rowan by email on 4 February 2003 and he followed this up by a further email on 25 September 2003, Mrs Rowan did not respond and the concept of a joint venture never progressed any further and was abandoned. The letter contained a proposal as follows:

Proposal

39.    Our client's position, as will be apparent from the content of this letter, is that the Bankrupt's interest in 19 Applecross Avenue is held subject to a resulting trust for our client.

40.    Given the resulting trust, the Bankrupt's interest does not vest in the Trustees under section 58(1) of the Bankruptcy Act, or if it does so vest, is subject to the resulting trust.

41.    Under either of these alternatives, the scope for the Trustees to make a recovery from the property is very limited.

42.    Our client is prepared to meet to attempt to resolve the situation. Our client to date has demonstrated his willingness to resolve this matter. He paid stamp duty on a Transfer which the Bankrupt agreed to sign, but failed to sign. Our client wishes to avoid litigation if possible, although will defend any claim the Trustees might bring in respect of the property, including any application which affects the rights of our client, his wife Cheryl and their children, to occupy their home.

43.    We ask that any meeting take place at a mutually convenient time in the near future, at your firm's city office, after you have had the opportunity to closely consider this letter and the enclosed documents.

…

45.    For a resolution to be acceptable to our client, the Trustees will need to provide a signed Transfer in registrable form, so that on registration of the Transfer the Bankrupt's interest is removed from title.

46.    If the Trustees require a payment from our client to the Bankrupt Estate in return, it would be calculated having regard to the following:

(a)    $16,888 was the amount of stamp duty which the Bankrupt paid in 2001 in relation to 19 and 25 Applecross Avenue and the loan fee of $2,200. Since 2009, $16,888 is the amount which she has been prepared to accept (pages 56 and 57);

(b)    the Bankrupt's actions and inaction at various times since 2001, which caused our client losses of more than $200,000; and

(c)    The benefit of new furniture which the Bankrupt used, and for which our client paid the amount of $7,873.

47.    The terms of any resolution of the dispute would need to be recorded in a deed of release.

41    On 9 May 2016, Mr Moretti responded in relation to the “sequence of events” set out in Mr Campbell’s solicitors’ letter dated 27 November 2015 as follows (as written):

The bankrupt has provided her comments as to the sequence of events and I now outline these below:

1.    The bankrupt and Mr Campbell became friends during the 1980’s and both held a mutual interest in housing and development.

2.    The bankrupt and Mr Campbell discussed the possibility of building a duplex at his fathers, Colin Campbell’s home at 18a Megan Avenue Bankstown. The bankrupt and her husband sold their property at 27 Raine Place Baden Ridge to assist funding the project. Both Mr Campbell and the bankrupt incorporated a new company, Manor Future Developments Pty Ltd for the purpose of property developments but they never utilised the company.

3.    After the sale of the Barden Ridge Property, Mr Campbell became aware of vacant land in Applecross Avenue Castle Hill where there was five blocks of land available at $250,000 each. Mr Campbell was of the belief it would be possible to finance a development of the five blocks of land. However, they did not have the serviceability to do so.

4.    Other projects were identified by Mr Campbell in Gooraway Drive and Kirrily Way, Castle Hill however, these were not pursued. They went back to the Applecross Avenue project and at that time only two blocks were available. The bankrupt paid deposits of $25,000 for each block in July 2001. It was decided by both Mr Campbell and the bankrupt that one property would be in the name of Mr Campbell and one in the name of the bankrupt, for tax purposes. There was an understanding at that time that the intention was to develop and sell both properties.

5.    There was an agreement between them that they would use the same builder and trades people but they would take responsibility for one project each (Lot 1105 Mr Campbell & Lot 1102 the Bankrupt) and receive $20,000 as a management fee from the sale proceeds of the respectively properties.

6.    Mr Campbell decided around September 2001 that he will keep Lot 1105 as his family home and sell only Lot 1102.

7.    Mr Campbell then proceeded to seek finance and eventually obtained a loan from Obelisk Investors. Settlement for the two blocks of land took place in December 2001. The bankrupt paid the loan fees and stamp duty for both properties totalling $16,888.

8.    A construction loan was approved by Suncorp in February 2003 for $1.65 Million and the planning and construction began. Both Mr Campbell and the bankrupt engaged services of a draftsman for the design and also met with various other supplies to discuss purchases for the properties.

9.    In February 2003, Mr Campbell sent the bankrupt a draft Joint Venture Agreement for comment but the agreement was never signed.

10.    During the development, Mr Campbell made all decisions for both properties without consulting the bankrupt first.

11.    In April 2003, Mr Campbell approached BankWest who approved a construction loan for an amount of $1.65 Million. The bankrupt understood that the loan was to be repaid from the sale proceeds of Lot 1102 and a refinance of Lot 1105 with a suitable long term mortgage.

12.    Mr Campbell did not provide the bankrupt with any invoices or receipts in respect of the development costs as agreed between them. The bankrupt was unable to keep track of the costs of the project.

13.    Lot 1102 was completed around October 2003 and was put on the market with an asking price of $1.35 Million. Mr Campbell received offers of purchase of Lot 1102 which he rejected without any consultation with the bankrupt. Lot 1105 was completed early 2004 and Mr Campbell and his family moved into the property.

14.    Around August, September 2004 Mr Campbell advised he received an offer for Lot 1105 which was “too good to refuse” and sold Lot 1105 with settlement occurring in October 2004. Mr Campbell advised the bankrupt prior to settlement of his intentions to sell Lot 1105 and move in to Lot 1102.

15.    The bankrupt asked Mr Campbell for $25,000 given her financial position at that time. The request was made with the intention of deducting the amount from the sale proceeds of Lot 1102. Mr Campbell advised the bankrupt that he would provide her with $50,000 and paid this to her.

16.    Lot 1102 was still on the market in 2005 and 2006. The bankrupt in September 2006 visited the real estate agent selling Lot 1102 to enquiry about the sale. The agent advised that Mr Campbell removed the property from the market after refusing an offer of $1.15 Million.

17.    The bankrupt subsequently visited Mr Campbell and ask about the sale. Mr Campbell did not mentioned that he had taken the property off the market or the offers that he received. The bankrupt asked Mr Campbell for a final accounting of the building costs during the next year and Mr Campbell did not provide any accounting.

18.    The bankrupt obtained some legal advice in September 2008 and through her solicitor’s requests, Mr Campbell provided a list of construction costs but no supporting documentation.

19.    In January 2012, Mr Campbell pursued the bankrupt for an amount of $85,595.99 and she received a summons to appear in the Local Court in relation to proceedings commenced by Autus Australia Pty Ltd (“Autus”). I understand that the amount of the claim relates to a loan purported to be provided by Autus to the bankrupt plus interest and costs. The loan appears to relate to the amount Mr Campbell provided the bankrupt as detailed in point 15 of this letter.

I understand that Mr Campbell was the director of Autus. It appears that Mr Campbell for tax purposes, loaned her the $50,000 through his company and sought recovery of the loan. The proceedings were later discontinued as the company was deregistered.

42    Save for the characterisation in the last paragraph, the account set out above largely reflects the evidence given by Mrs Rowan in her affidavit affirmed on 10 April 2017. Mr Moretti’s letter then went on to say:

There are some inconsistencies with the series of events as outlined by your client and that of the bankrupt in relation to the development and sale of the properties.

I further point out that your client appears to confirm that he accepts the $50,000 provided to the bankrupt was in repayment of the two initial deposits by the bankrupt of $25,000. I question the reason why your client claimed his company, Autus loaned the bankrupt $50,000 and further issued proceedings to recover the sum due. You client’s explanation is not consistent with the evidence on hand.

I am of the understanding that the intention of your client and the bankrupt was to enter into the project for the purpose of making a profit through the development and sale of the properties. This was further evident by the bankrupt and your client’s agreeance:

•    to set up the company, Manor Property Developments Pty Ltd which was to be utilised for property developments,

•    to each take a management fee of $20,000 for managing the projects, and

•    to work together in the planning, approval and construction of the two properties including preparation of forecasts of the potential returns.

It appears your client made all the decisions without consulting the bankrupt. The bankrupt simply agreed with your clients decisions as she felt she had no choice given the contributions made by your client. The bankrupt sought an accounting of all costs paid by your client for the purpose of making an assessment of the relevant interests in the two properties. This has never been provided.

We would require your client to provide a full accounting of the construction/development costs for both properties and an accounting of the sale of 25 Applecross property. We would appreciate this information prior to any meeting to settle the matter. Please confirm that your client is able to provide an accounting with supporting documentation.

In relation to the proposal outlined in your letter I make the following comments:

1.    Your client’s claim that the bankrupt’s interest is held subject to a resulting trust is unfounded. Your client has not attempted to resolve the matter in a mutual commercial manner considering the original intentions of the project.

2.    I have not seen any willingness from your client to resolve the matter. Payment of stamp duty on the transfer and requesting the bankrupt to sign is not considered an attempt to resolve the matter on any basis. No agreement in terms of a settlement has been discussed.

3.    As your client appeared to make all the decisions without consulting the bankrupt including rejecting offers received on the property at 19 Applecross Avenue, it appears that any losses incurred is the result of your client’s actions.

4.    I do not see how your client’s payment for new furniture should be a factor in determining the interest of the bankrupt estate.

I would only be prepared to assist in the execution of a transfer to your client upon receipt of funds equal to the interest of the bankrupt estate in the property. I would agree to record any settlement by way of a Deed of Release

Before any meeting with your client to discuss a settlement, I would require the documentation as outlined in this letter within 28 days. I note that this was requested in previous correspondence (to your client's previous lawyers) and the documentation has yet to be provided. Upon receipt of the documentation, I will then be in a better position to arrange a meeting to resolve the matter.

43    On 26 July 2016, Mr Campbell’s current solicitors wrote to the trustees enclosing a summons to be filed in the Equity Division of the Supreme Court of New South Wales, an approved but unsworn affidavit of Mr Campbell and the exhibit to that affidavit. The letter advised that the solicitors had instructions to file the documents on 8 August 2016 “unless we receive a reasonable offer of settlement of the dispute”. The letter also advised that Mr Campbell would rely on the letter and previous correspondence in support of a submission that he be awarded costs on an indemnity basis in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586.

44    It appears that this letter went astray, and it was resupplied to the trustees on 2 August 2016. By a letter in response dated 15 August 2016, Mr Moretti said:

I have reviewed the unsworn affidavit of Neil Campbell and the decision you have referred to of Tamer v Official Trustee in Bankruptcy [2016] NSWSC 680 (31 May 2016) and note:

1.    I rely on my comments provided to you previously in relation to the claim outlined by the bankrupt as to a Joint Venture type arrangement and also to the inconsistences in the events as detailed by your client as compared to that detailed by the bankrupt.

2.    The case of Tamer is not similar to the present dispute, we are not seeking to claim the whole interest of the property or the interest as outlined on the Certificate of Title. We are seeking our entitlement in accordance to the contributions made by both parties.

I would be prepared to accept $100,000 payable within 14 days from the date of this letter as settlement of the matter as calculated below.

*Rents calculated on an average of $900 per week for the period October 2004 to October 2016 based on Ms Rowan's entitlement percentage.

Please note that as your client is not willing to provide a complete accounting with supporting evidence of the construction and other costs incurred for the 25 Applecross property, I have relied on the documentation on hand in formulating the above offer.

45    As can be seen, this offer was calculated on the basis that Mrs Rowan had an interest in both lot 1102 and lot 1105. This offer was not accepted and the applicants commenced proceedings in the Supreme Court of New South Wales. Those proceedings were subsequently transferred to this Court.

Trustee’s submissions summarised

46    The trustee says that the conduct of the parties, relevantly Mrs Rowan’s offers prior to the date of her bankruptcy and Mr Campbell’s responses set out above, are to be taken into account on the question of costs. He says it is appropriate to utilise those letters and consider the extent to which the outcome achieved compares to what was on offer during the course of those discussions, the conduct of the party concerned once the proceedings were commenced and the proceedings’ eventual outcome.

47    The trustee contends that no order for costs should be made against him. Rather, he says that “the Applicant” should be ordered to pay his costs, or in the alternative, a proportion of his costs, relying on s 43(3)(b), (c) and (e) of the Federal Court Act. The trustee did not make any suggestion as to what proportion of his costs should be awarded if he was not successful in obtaining an order for his costs. He says that “the Applicant” should be ordered to pay the trustee’s costs because, while there is some doubt as to what “the event” might be in respect of the usual position that costs follow the event in this case, with each party having some success in relation to the issues raised, “the Applicant” unreasonably refused to accept Mrs Rowan’s offers before the proceedings commenced and that disentitles the applicants to costs.

48    The trustee says that, according to established principles, Mrs Rowan’s offers disentitle the applicants to costs. He says that the offers in the letters dated 30 July 2012 and 5 August 2013 from Mrs Rowan’s lawyers to Mr Campbell’s lawyers were made clearly and unambiguously in terms of Calderbank v Calderbank. The offers represented a significant compromise of Mrs Rowan’s entitlement at the time. Mr Campbell continued to claim that Mrs Rowan owed Autus Australia $50,000 until he filed evidence in reply in these proceedings in June 2017 and he pursued the claim to be entitled to the entirety of lot 1102 until 31 May 2018 (at the commencement of the second tranche of hearings). At that time, by his counsel, Mr Campbell offered to pay to the trustee an amount of $16,688, being the balance of the monetary contributions made by Mrs Rowan. He says that, as Mrs Rowan’s offers involved no requirement for payment to her by Mr Campbell, Mr Campbell achieved a worse outcome in the present proceedings in which he was required to pay her $18,323.06, representing the value of her interest in lot 1102.

49    The trustee contends that he took the benefit of all negotiations between Mrs Rowan and Mr Campbell because he represented the interests of all of the creditors of Mrs Rowan’s bankrupt estate and any entitlements vested in him. He submitted that, to the extent any monetary claim arose prior to the date of Mrs Rowan’s bankruptcy, that monetary claim was a debt arguably provable in terms of s 82 of the Bankruptcy Act 1966 (Cth). The fact that other attempts at settlement were explored but not consummated following the trustees’ appointment does not alter the basic proposition that Mrs Rowan’s offers were reasonable, capable of acceptance and would have delivered a substantially better result to the applicants than what was achieved in the orders made on 11 December 2019.

50    The trustee says that Mr Campbell advanced 11 versions of how a joint venture arose, the terms of that joint venture, the advance of the deposits, stamp duty and application fees by Mrs Rowan and the payment of $50,000 to Mrs Rowan being:

(1)    On 25 September 2003, Mr Campbell again proffered the version of the draft joint venture agreement first proffered by Mr Campbell for Mrs Rowan’s consideration on 4 February 2003: see the Earlier Reasons at [19]-[20] and [26];

(2)    The email sent by Mr Campbell to Mrs Rowan on 2 August 2005: see the Earlier Reasons at [41];

(3)    The narrative document (referred to in the Earlier Reasons as the “September 2008 summation”) sent by Mr Campbell to Mrs Rowan on 5 September 2008: see the Earlier Reasons at [44]-[45];

(4)    Mr Campbell’s letter to Mrs Rowan’s lawyers dated 18 December 2008: see the Earlier Reasons at [47(2)];

(5)    Mr Campbell’s letter to Mrs Rowan’s lawyers dated 14 April 2010: see the Earlier Reasons at [47(10)];

(6)    The letter dated 16 January 2012 from Mr Campbell’s then lawyers to Mrs Rowan’s lawyers: see the Earlier Reasons at [47(11)];

(7)    The letter dated 28 March 2013 from Mr Campbell’s then lawyers to Mrs Rowan’s lawyers attaching proposed statutory declarations: see the Earlier Reasons at [53];

(8)    The letter dated 3 September 2015 from Mr Campbell’s then lawyers to the trustees. The Court notes that this was shortly after the trustees were appointed and the letter said (among other things) (as written):

We advise the Transfer of the property from Rowan to our client did not settle in 2013 as our client claims Rowan owes him an additional $50,000.00 and she was not agreeable to repaying same.

We request the Trustee's comply with the agreement to transfer Rowan's 98 shares to our client in accordance with Rowan's agreement in 2013 and we enclose Transfer for signature by the Trustees. The letter from MCW Lawyers shows that Rowan's intention was to remove her name provided she did not have to contribute to any stamp duty requirement or other cost. Our client has paid the stamp duty and did not require Rowan to contribute to any costs.

We submit that it is likely a Court would find that Rowan has no legal or equitable interest in the property on the basis that she did not acquire the property and did not pay any money towards the construction of the dwelling or ongoing costs of the property and loans. Any proceedings will be, with leave, defended and, if necessary, a taking of account will see that everything is owned and/or paid for by our client. Therefore it is likely that such proceedings will be otiose in terms of success for the Trustee and we will seek costs against the Trustees.

In the event that Rowan's 98 shares are not transferred to our client, then our client reserves his rights on the question of costs.

(9)    The letter dated 20 November 2015 from Mr Campbell’s lawyers to the trustees: see [37] above;

(10)    Mr Campbell’s affidavit sworn on 18 August 2016; and

(11)    Mr Campbell’s affidavit sworn on 20 June 2017.

51    The trustee says that some of these versions of Mr Campbell’s account contain similarities but some are diametrically opposed. Because of the way Mr Campbell conducted themselves, Mr Campbell virtually forced the trustee’s hand. Being required to act in the interests of creditors, he could not simply take Mr Campbell’s word as that word was likely to change in the foreseeable future. Mr Campbell’s changes in position led to the need for a determination of the actual terms of the joint venture and a proper accounting, issues which subsumed almost all of the hearing.

52    Faced with inconsistencies, including versions of events which were inherently improbable or contrary to contemporaneous documents, the trustee was justified in running the proceedings as he did. While the trustee acknowledges that he has a duty to act commercially under s 19(1)(j) of the Bankruptcy Act (administering the estate as efficiently as possible by avoiding unnecessary expense), s 19(1)(k) (exercising powers and performing functions in a commercially sound way) and s 19(1)(l) (the duties imposed on the trustee under Sch 2 of the Bankruptcy Act), he also has a positive duty under s 19AA of the Bankruptcy Act to investigate the conduct and examinable affairs of a bankrupt so far as they relate to the bankruptcy and that extends to the dealings which were the subject matter of the present proceedings. He also has an obligation to get in any “property” as defined in s 5 of the Bankruptcy Act which vests in the trustee under s 58 of that Act. The trustee submits that it cannot genuinely be contended that he did not act in a commercial manner nor contrary to his duties. He says that, faced with glaring improbabilities, differing versions and a failure to account, he had at all times complied with his duty of commerciality and that appropriate and timely concessions were made to minimise costs.

53    The trustee says that it was only at the time of the hearing that much of the documentary material eventually relied on by Mr Campbell became available so as to enable the trustee and the Court to consider the position. This had the consequence of substantially increasing the time taken in the hearing and the costs of the hearing as between the parties.

54    The trustee also made submissions concerning the interaction of the CDR Act and ss 37M and 37N of the Federal Court Act relevant to his claim that the applicants are not entitled to costs and the trustee should be awarded his costs. Bluntly, the trustee’s submissions in this regard were not easy to follow but it appears that, in light of the decisions in Umoona, Walsh, Qantas v Lustig and Australian Firearms, the trustee submitted as follows.

55    First, the trustee made the statement in his written submissions at [15] that the question of whether the conduct of a party is sufficient to give rise to a loss of entitlement to costs in whole or in part will depend upon the factual circumstances in which negotiations took place before the commencement of proceedings. He then says that it “is not dependent, as is the present case, upon the fact that no Applicant’s Genuine Steps Statement has been filed”. Then, at [18], the trustee says that the applicants’ failure to provide a genuine steps statement is not excused by the fact that the proceedings were transferred from the Supreme Court to this Court in light of the “equivalent provisions in s. 56 and s. 60 of the Civil Procedure Act 2005 concerning costs and in particular the question of proportionality as is identified in s. 60 although that only applies where the court is actually exercising a relevant discretion and not during the assessment process”. The Court notes that while ss 56 to 60 of the Civil Procedure Act 2005 (NSW) are designed to achieve the just, timely and cost efficient despatch of proceedings which is also the object of ss 37M and 37N of the Federal Court Act; those provisions have nothing to say about the need to file a genuine steps statement.

56    Second, the trustee says that while, as said by Rangiah J in Australian Firearms, costs are “compensatory, not punitive”, a reduction in costs must take account of the question of fairness and reasonableness as part of the overriding principles in ss 37M and 37N of the Federal Court Act and the CDR Act.

57    Third, the trustee says that, relying on the Full Court’s decision in Umoona at [41]-[46] and [72] and the decision of the primary judge in Walsh at [50]-[53], it is necessary, in the exercise of the costs discretion, to focus on the genuineness of the offers made by Mrs Rowan in the discussions which eventually led the applicants to commence these proceedings. In this regard, he relies in particular on Walsh at [50], which he says is “particularly apposite in the present proceedings having regard to the eventual outcome and results that has been achieved – albeit in hindsight”.

58    In relation to the issue of proportionality, the trustee submitted that that issue was substantially dealt with in the preceding submissions.

59    The trustee went on to note that, in the pleaded case taken to hearing, the applicants sought orders against the trustee for costs on an indemnity basis and that they not be entitled to reimbursement from the property of the estate under their control. The trustee acknowledges that no such submissions were made about this issue following judgment rendered in November 2019. He says however that it was a serious issue concerning a foundational allegation of impropriety in relation to the conduct of the trustee in the manner in which he acted as respondent in the proceedings. He says that should not be accepted having regard to the various positions that were taken by Mr Campbell over an extended period of time and he relies on the cases cited in his submissions relating to costs at [32] all of which would be relevant only if the applicants had pursued the orders foreshadowed. The submissions referred to in this paragraph are irrelevant as they do not relate to any matter in dispute.

Applicants’ submissions

60    The applicants say that the remaining trustee is not entitled to rely on any offers made before Mrs Rowan became bankrupt to displace their prima facie entitlement to costs. As the successful parties, the applicants are entitled to an order that the trustee pay their costs on the basis that the trustee did not achieve an outcome in the proceedings which was equal to or better than the only offer made by the trustees which was capable of acceptance, being the offer made in the trustees’ letter of 15 August 2016 (see [44] above). All other correspondence between them could fairly be characterised only as communications exploring settlement which cannot disentitle the applicants to costs.

61    The applicants’ submissions are as follows.

62    First, the trustee is not entitled to rely on the offers made by Mrs Rowan, who was not a party to the proceedings in circumstances where the trustee was not prepared to repeat the offers made by Mrs Rowan at any time before or during the proceedings which are before the Court;

63    Second, in its dealings with the applicants, the trustee adopted positions which were inconsistent with positions that Mrs Rowan had adopted. Mrs Rowan accepted matters which the trustee did not accept, for instance:

(1)    The joint venture related only to lot 1102;

(2)    The payments made to her in October 2004 totalling $50,000 were properly characterised as repayments of loans she had made to Mr Campbell in relation to the joint venture;

(3)    After the repayment of $50,000, her net contribution to the venture was $16,688; and

(4)    Her entitlement was to be paid $16,688.

In relation to these propositions, the applicants rely on letters dated 29 January 2009, 7 August 2009 and 30 July 2012 from Mrs Rowan’s solicitors to Neil Campbell or his solicitors.

64    In contrast, in his defences and amended cross-claim, in his evidence and in two agreed statements of facts and issues in these proceedings (filed on 4 October 2017 and 23 April 2018), the trustee took the position that:

(1)    The joint venture related to both lots 1102 and 1105;

(2)    The payment of $50,000 in October 2004 was pursuant to the loan agreement with Autus Australia and it did not reduce Mrs Rowan’s contribution to the joint venture; and

(3)    Her entitlement was to more than $16,688.

65    The applicants submit that the trustee’s contention that there were 11 changes of position by the applicants is unfair because some changes are so insignificant as to not be characterised properly as a change of position. Most are immaterial to the incurring of costs and therefore to the exercise of the cost discretion. In relation to those submissions, the applicants say:

(1)    Although their original points of claim denied that there was a joint venture in relation to both lot 1102 and lot 1105, from 20 June 2017, in his evidence in reply, Neil Campbell accepted that there had been a joint venture with respect to lot 1102. That change was reflected in both statements of facts and issues filed in the proceedings and it did not change the manner in which the hearing proceeded other than to result in an amended pleading being filed. On the first day of the hearing, through their counsel, the applicants made an open offer to pay the trustee $16,688.

(2)    Although Neil Campbell at one time adopted a position that the payment of $50,000 made to Mrs Rowan in October 2004 was a loan from Autus Australia, which Mrs Rowan denied at all times, he came to accept that Mrs Rowan was correct in her characterisation of the payment as a return of the deposits paid on lots 1102 and 1105. In the originating process, the applicants pleaded that the payment of $50,000 to Mrs Rowan in October 2004 was in discharge of the on-demand loan made by Mrs Rowan to Mr Campbell in July 2001. The trustee pleaded a bare denial in response. Mr Campbell’s position that the payment in October 2004 was repayment of deposits (adopted in correspondence with the trustees in 2015) is reflected in his affidavit sworn on 20 June 2017 and the agreed statement of issues filed on 4 October 2017 ahead of the first day of the hearing. The trustee never adopted Mrs Rowan’s position on that issue. In that sense, the trustee and Mr Campbell swapped the positions that Mrs Rowan and Mr Campbell had held.

66    The applicants say that, while changes in position are undesirable, the purpose of the award of costs is to compensate, not to punish. Where the changes of position are not material to the preparation of the case for hearing or to the running of the hearing then it is not relevantly disentitling to costs. Neither of the changes of position identified in the preceding paragraph caused the trustee to incur significant costs given the time by which Mr Campbell had reached his final position on those matters. Further the changes of position did not lead the trustee to change his position and his position remained one which was inconsistent with the position adopted by Mrs Rowan before her bankruptcy.

67    Third, the Court’s determination of the proceedings was that Neil Campbell was correct in his positions that:

(1)    The joint venture related only to lot 1102;

(2)    The $50,000 paid to Mrs Rowan in October 2004 was to be taken into account in determining her contribution to the joint venture;

(3)    The $50,000 was not a loan from Autus Australia; and

(4)    The relief available to the trustee was in the vicinity of the net amount Mrs Rowan had contributed to the joint venture, albeit that it was not the same amount.

68    Fourth, whichever party was right in the position they took, there was very limited scope for the trustee to make a recovery in the proceedings;

(1)    Attached to Neil Campbell’s solicitor’s letter dated 12 February 2016 were extensive documents demonstrating that Mr Campbell met borrowing and construction costs of the development of both lots 1102 and 1105. The trustees did not suggest that what was provided was inadequate or ask for more before these proceedings commenced; and

(2)    The trustees denied the existence of a constructive trust with the result that the applicants were left with no choice but to assert their rights by litigating.

69    Fifth, the applicants reject the proposition that offers made by a bankrupt to settle claims in relation to actual or threatened proceedings is some form of interest or property right that vests in the trustee. The submission was made by the trustee without citing authority and the applicants say that there is none. For clarity, the applicants’ position is not that they expect a trustee to lie down and not do any investigation or to simply consent to judgment against him in proceedings. The applicants say they recognise the statutory duties of a trustee, but the rules of litigation are as well-known to trustees as to any litigant, and that is that if they are unsuccessful, the starting point is that they pay costs.

70    To allow the trustee to rely on or take the benefit of offers made by Mrs Rowan with the consequence that the applicants are disentitled to costs would result in the applicants being punished for bringing and maintaining the proceedings when those actions were, at the time, the only way they could establish their proper legal rights and entitlements.

71    Sixth, each party’s failure to file a genuine steps statement is a consideration that the Court may take into account for the purposes of ss 37M and 37N of the Federal Court Act and the CDR Act but it is not material in the ultimate exercise of the Court’s discretion to award costs in this case. That failure may be explained by the fact that the proceedings were transferred from the Supreme Court of New South Wales, where the same requirement does not exist, or it may have been oversight on both sides. What is clear is that both parties engaged in conduct which explored settlement options before the commencement of the proceedings. These are matters which both parties could have pointed to had they filed genuine steps statements. What is relevant is that the only offer made by the trustee which was capable of acceptance was one for $100,000, which the trustee did not better in the proceedings. The orthodox application of the principles in Calderbank v Calderbank would result in that offer having no effect on the ultimate costs orders made.

72    Further, the cases relied on by the trustee in relation to the relevance of the CDR Act are distinguishable on their facts and none involved an offer made by a non-party to the litigation in circumstances where the unsuccessful party has taken positions inconsistent with those taken by the non-party in its offers. Indeed, the trustee did not cite any authority for the proposition that a trustee is entitled to rely on offers made by the bankrupt whose estate the trustee now administers.

73    In relation to the issue of proportionality, the applicants say that there is no concept of proportionality in the Federal Court Rules 2011 (Cth), unlike the Legal Profession Uniform Law (NSW). They concede that it may be a matter relevant at the quantification stage of the process, but that should be dealt with by the Registrar. The Court accepts that submission.

74    In relation to the trustee’s duty of commerciality they say that, having regard to the terms of ss 19(1)(j) and 19(1)(k), the trustee is obliged to act in a commercially sound way and to administer the estate as efficiently as possible. In this matter, there was only ever a slim chance that the trustee would make a recovery beyond the contributions made by Mrs Rowan, $50,000 of which had been repaid leaving $16,688 which had not been repaid. That was borne out in the result. Given the material provided to the trustees under cover of the letter dated 12 February 2016, there was no realistic expectation of anything other than a minimal recovery. Against that background, the trustee sought not only to defend the proceedings but to obtain an account in relation to both lots 1102 and 1105. The result was that the hearing was extended by two days and the applicants achieved substantially what they had sought but only after incurring very substantial expense, part of which will not be recoverable on a party and party basis. The fair compensation for the expense to which the applicants have been put is the costs of the proceedings.

CONSIDERATION

75    In what follows, the Court has had regard to the legal principles set out at [7] – [19] above, and in particular to the principles that the most central factors which guide the Court’s discretion under s 43 of the Federal Court Act are the result of the litigation: Sangare at [25]; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [66] (McHugh J) and the purpose of a costs order, being to compensate, not punish. The Court has also taken into account the submissions referred to above.

76    It is incontrovertible that all parties to these proceedings, and especially the applicants, would have been better off had Neil Campbell accepted Mrs Rowan’s offer dated 30 July 2012, which was repeated on 5 August 2013 and 4 September 2013 (see [24], [29] and [31] above), both in the result and having regard to the cost and trouble involved in litigating this matter.

77    Having said that, the Court does not accept that Mr Campbell’s failure to accept the offers made by or on behalf of Mrs Rowan has the impact that the applicants should be disentitled to their costs, even though his conduct in pressing for repayment of a loan which was not in fact made by Autus Australia to Mrs Rowan between September 2008 and October 2013 casts considerable doubt on Mr Campbell’s honesty. That is because:

(1)    The offers were made in the context of litigation brought by Autus Australia against Mrs Rowan, not litigation between Mrs Rowan and Neil Campbell, albeit that there is some identity of issues between that litigation and these proceedings.

(2)    There is not the same identity of interest between a trustee of a bankrupt estate and the bankrupt as there is between a trustee and beneficiaries of a private trust. By saying that, the Court should not be understood to say that there are no circumstances in which the trustee of a bankrupt estate would be entitled to take the benefit of offers made by a bankrupt to settle proceedings, even though no such case has been drawn to the Court’s attention by the parties. It is not impossible to imagine circumstances where the Court’s discretion with respect to costs should be exercised having regard to such offers, for instance, where the trustee elects to pursue litigation commenced by a bankrupt.

(3)    The Court does not accept that, as submitted by the trustee, the fact of having made offers is property which inures to the benefit of the trustee under the Bankruptcy Act.

(4)    The trustees did not renew the offers made by Mrs Rowan in the context of the threat of impending litigation against the trustees to vindicate Neil Campbell’s claims to be entitled to a transfer of the title to a 98/100 share of lot 1102. The only offer of settlement made by the trustees on 15 August 2016 was not better than the outcome achieved by the trustee in these proceedings.

(5)    The trustee took significantly different positions in the litigation to those adopted by Mrs Rowan in her evidence including: that she did owe Autus Australia $50,000 rather than receive $50,000 as repayment of deposits made by her in relation to both lots 1102 and 1105; that the joint venture between Mrs Rowan and Neil Campbell extended to both lots so as to entitle the bankrupt estate to a share of profits in relation to both lots; that Mrs Rowan’s interest in lot 1102 was as disclosed by the title because the applicants were not entitled to relief having regard to the requirements of writing under the Conveyancing Act 1919 (NSW) and because Mrs Rowan was registered as the holder of a 98% interest in an effort to defeat the revenue; and, that an occupation fee was payable for the period of the Campbells’ occupation of both lots.

(6)    Some of the trustees’ positions (for example, concerning the $50,000 payment to Mrs Rowan in October 2004 and whether Mrs Rowan had an entitlement with respect to lot 1105) were taken in the face of the position taken by Mr Campbell in his dealings with the trustees (as at 20 November 2015 (see [37] above) and in his reply evidence filed in June 2017) and the position adopted by Mrs Rowan at all times. Mr Campbell and Mrs Rowan were not in a domestic relationship and they had no common interest in the outcome of the litigation which would justify the trustee in taking a different position, albeit that Mr Campbell gave the trustee reason for pause given the inconsistency of his position that the $50,000 was lent to Mrs Rowan by Autus Australia from September 2008 to October 2013.

(7)    Offers were made by the applicants to pay the trustee $16,688 at the commencement of both tranches of hearing. The outcome achieved by the trustee ($18,323.06) was only marginally better, but the Court recognises that it was a better result.

78    Nor does the Court accept that, in this case, the fact that the applicants did not file a genuine steps statement in accordance with the CDR Act should be given any weight. That is a position which the trustee appears to agree with based on his written submissions at [15], despite the argumentative tenor of his subsequent written submissions. Neither party filed a genuine steps statement. Whether or not the fact that the matter was transferred from the Supreme Court of New South Wales was the cause of the oversight, the Court accepts that it is immaterial in circumstances where it is plain that the parties did take steps with a view to settlement before these proceedings commenced.

79    The question that then arises is whether there is anything in the applicants’ conduct which suggests that the applicants should not be entitled to all of their costs on a party and party basis, having regard to the fact that the trustee, in effect, obtained the relief which it sought, being a full accounting for the contributions claimed to have been made by the applicants and payment of an amount reflecting Mrs Rowan’s interest in lot 1102, which was greater than the $16,688 offered by the applicants at the commencement of the first and second tranches of hearing.

80    The applicants say that, in this matter, there was only ever a slim chance that the trustee would make a recovery beyond the contributions made by Mrs Rowan, of which all but $16,688 had been repaid, and that was borne out in the result. Without authority, the applicants rely on the fact that the trustee has duties under s 19(1)(j) and (k) of the Bankruptcy Act to act efficiently and commercially as conduct disentitling the trustee to costs. They say that, despite the materials provided to the trustees under cover of the applicants’ solicitor’s letter of 12 February 2016, the trustee defended the proceedings and sought an account.

81    These submissions do not take into account that the evidence provided to the trustees on 12 February 2016, which was before the Court at the time of the first tranche of hearings, did not support the declaration sought by Neil and Colin Campbell. That declaration was that, on a true construction of a contract for the sale of land dated 25 July 2001 in respect of lot 1102 and in the events that happened, Neil Campbell is the beneficial owner of all of that land and the interest of Mrs Rowan as registered proprietor of lot 1102 is held on constructive trust for Neil Campbell.

82    The evidence before the Court as at the end of the first tranche of hearings was that there were a number of sources of funding, including Colin Campbell’s police account, a joint bank account of Neil and Cheryl Campbell, and two companies of which Neil, Cheryl and Colin Campbell were shareholders. There was no evidence that Colin Campbell had authorised payments from his account or out of the assets of the two companies of which he was a shareholder and he could give no such authorisation in the proceedings, as he had dementia. There was no evidence of the beneficiaries of Colin Campbell’s estate. The Court was not satisfied that the evidence demonstrated that Neil Campbell was the beneficial owner of all of the interest in lot 1102 registered in Mrs Rowan’s name, being the relief that he and his father sought.

83    Having said that, it was also clear that whoever made the contributions and whatever their actual amount, Mrs Rowan’s financial contributions were limited to $66,688 and it was the evidence of both Neil Campbell and Mrs Rowan that all but $16,688 had been repaid. As pointed out to the parties at the end of the first tranche of hearings, in those circumstances, it would be difficult to accept that it would be just to deny the applicants some relief even though it was not clear in what proportions the interests of Mrs Rowan’s bankrupt estate, Neil Campbell and/or Colin Campbell, Cheryl Campbell or the other entities were held.

84    As a result, the Court granted leave to the parties to amend their pleadings and for the applicants to supplement their evidence and join Cheryl Campbell as an applicant. The applicants amended their pleadings to change the nature of the declarations sought (which did not require the Court to make a declaration of the interest of each of the Campbells or their entities individually) and it became clear before the second tranche of hearings that Neil and Cheryl Campbell (the surviving applicants) were relevantly entitled to the benefit of Colin Campbell’s estate in relation to any interest he held in lot 1102. It was only in his written outline of closing submissions (after the second iteration of the statements of facts and issues had been filed) that the trustee gave up on the bankrupt estate’s claim to be entitled to an interest in the proceeds of the sale of lot 1105.

85    Whether or not the trustee would have been entitled to an order for account, the trustee ultimately got a full accounting, which put the Court in a position to make orders as to the proportions in which the trustee and the “Campbell” camp, through Neil Campbell, had an interest in lot 1102. It was necessary for the applicants to amend their pleadings and put on further evidence to put the Court in a position to make declarations. The trustee obtained a better (albeit marginally so) result than that offered by the Campbells at the beginning of the first and second tranche of hearings. The trustee accordingly had some measure of success.

86    The Court is not persuaded that the applicants are entitled to rely on the trustee’s duties with respect to the administration of the bankrupt estate under the Bankruptcy Act in relation to the issue of costs. In any event, it is clear that none of the parties has behaved wholly commercially or efficiently in the conduct of this matter and that is what matters having regard to ss 37M and 37N of the Federal Court Act.

CONCLUSION

87    Having regard to all of the above, the Court will make orders that the trustee pay 90% of the applicants’ costs on a party and party basis, such costs to be determined by a Registrar of the Court on a lump sum basis.

Associate:     

Dated:    12 June 2020

SCHEDULE OF PARTIES