Federal Court of Australia

Thompson v Lane (Trustee) (Costs) [2023] FCA 568

ORDERS

THE COURT ORDERS THAT:

1.    The second respondent’s costs pursuant to Order 2 of the Orders made on 10 March 2023 be paid out of the appellant’s bankrupt estate with the same priority accorded by s 109(1)(a) of the Bankruptcy Act 1966 (Cth) to the first respondent’s costs.

2.    The quantum of the costs payable to the second respondent pursuant to Order 2 of the Orders made on 10 March 2023 be awarded in a lump-sum pursuant to rule 40.02(b) of the Federal Court Rules 2011 (Cth), to be determined by a Registrar of the Court, who shall upon such determination, make an order fixing the amount of those costs.

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

REASONS FOR JUDGMENT

GOODMAN J

A. Introduction and Background

1    These reasons for judgment deal with applications by the respondents for further or ancillary orders concerning the costs of the appeal in Thompson v Lane (Trustee) [2023] FCAFC 32.

2    On 18 February 2022, Logan J made an order dismissing the appellant’s application to annul her bankruptcy, and published his reasons for doing so: Thompson v Lane (No 3) [2022] FCA 128. On 24 May 2022, his Honour made orders concerning the costs of that proceeding: Thompson v Lane (No 4) [2022] FCA 616.

3    The appellant filed a notice of appeal against the orders made in Thompson v Lane (No 3). On 10 March 2023, the Full Court (Charlesworth, Downes and Goodman JJ) ordered that the appeal be dismissed and that the appellant pay the respondents’ costs of the appeal.

4    On 13 March 2023, the Full Court made an order allowing the respondents to file and serve any proposed minute of further or ancillary orders relating to the costs of the appeal and an outline of submissions in support thereof. The Full Court also ordered that any application by a respondent for further or ancillary orders be heard and determined by a single judge. That task has been allocated to me.

5    The respondents each filed submissions. The appellant filed submissions in response. The respondents filed no submissions in reply. On 12 May 2023, the parties agreed that the respondents’ applications should be determined on the papers.

B. first respondent’s application

6    The first respondent seeks the following order:

The first respondent’s costs of and incidental to the appeal be paid from the bankrupt estate of Emma Narelle Catheryn (sic) Thompson, such costs to be determined in accordance with Part 40 of the Federal Court Rules 2011.

7    However, in circumstances where the Full Court has already ordered that the appellant pay the respondents’ costs of the appeal (see [3] above) such an order is unnecessary.

C. Second respondent’s application

8    The second respondent seeks the following orders:

(a)    the Second Respondent’s costs to be paid out of the Appellant’s bankrupt estate with the same priority accorded by s 109(1)(a) the Bankruptcy Act 1966 (Cth) to the First Respondent’s costs; and

(b)    the costs for which this order provides be fixed by a Registrar on a lump-sum basis.

The appellant’s over-arching submission

9    Before dealing with the particular orders sought by the second respondent it is convenient to address an over-arching submission made by the appellant to the effect that there should be no order as to costs in favour of the second respondent when: (1) no evidence of a valid costs agreement between the second respondent and its lawyer or of payment of legal costs under such an agreement has been adduced; (2) costs have been unnecessarily incurred; and (3) the second respondent commenced and continued the proceeding below in contravention of ss 94(2) and 100(5) of the Body Corporate and Community Management Act 1997 (Qld).

10    I do not accept this submission. As noted at [3] above, the Full Court has already made an order that the appellant pay the respondents’ costs. Further, whilst the first and second matters referred to in the previous paragraph may be relevant to the assessment of the quantum of the costs to be paid, they were not relevant to the making of an order that costs be paid.

11    For completeness, I note that the appellant’s over-arching submission was also made in broadly similar terms with respect to the first respondent, save for the third matter referred to in [9] above, and with the addition of a contention that the first respondent failed to adduce evidence of compliance with legislative requirements to provide mandatory costs disclosure. This submission fails for the same reasons.

Costs on a priority basis

12    I turn now to the first order sought by the second respondent.

13    As the Full Court (Heerey, Drummond and Dowsett JJ) explained in Lawman v Queensland Building Services Authority [2000] FCA 174 at [5], s 32 of the Bankruptcy Act 1966 (Cth) provides the Court with a wide power with respect to costs orders, which extends in an appropriate case to ordering that a party to proceedings in bankruptcy entitled to the costs of those proceedings should have those costs out of the estate in a particular priority. I do not accept the appellant’s submission that I should not follow Lawman because it was decided in 2000. The age of a decision is not of itself a relevant matter. There is no reason to doubt the force of the views expressed in Lawman, which I note were followed by Logan J in Thompson v Lane (No 4) at [8]. See also Kerr (Trustee), in the matter of Cross (Bankrupt) v Bechara (No 2) [2015] FCA 444 at [9] to [10] (Jagot J).

14    Whether a case is an appropriate case for the making of such an order will, of course, depend upon its facts. In Lawman, the party in whose favour a priority order was made was recognised by the Full Court at [5] as having successfully resisted the annulment application made by the bankrupt in that case, thereby preserving the bankrupt’s property for distribution among the bankrupt’s creditors generally. Similarly, in Thompson v Lane (No 4), Logan J held that the second respondent was the active party contradictor in respect of the appellant’s annulment application (at [7]); that by successfully resisting the appellant’s annulment application it had acted not solely in its own interests and had preserved the property in the appellant’s bankrupt estate for distribution among the creditors of that estate generally (at [9]); and that as a result the second respondent’s costs should be paid on a priority basis (at [11]).

15    Contrary to the appellant’s submissions, the position on the present appeal is not distinguishable. It is clear from the conduct of the appeal, and in particular the written submissions, that the second respondent was the active contradictor and obtained a result to the benefit of the general body of the appellant’s creditors. Thus, I am satisfied that this is an appropriate case for the making of the first order sought by the second respondent.

Fixed costs

16    The second order sought by the second respondent is an order that its costs be fixed by a Registrar on a lump-sum basis.

17    The Court’s discretion as to costs is found relevantly in s 32 of the Bankruptcy Act and s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), as supported with respect to the fixing of costs by r 13.01 of the Federal Court (Bankruptcy) Rules 2016 (Cth) and r 40.02(b) of the Federal Court Rules (2011) (Cth). The discretion is broad, but its exercise is informed by s 37M of the FCA Act which requires that it be exercised in a manner which best promotes the over-arching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. The exercise of the discretion is also informed by the Court’s Costs Practice Note, which states at [3.3] and [4.1] the Court’s preference for the making of a lump-sum costs order. Further, in Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 at 406 to 407, the Full Court (Allsop CJ, Besanko and Middleton JJ) explained:

16    ... The Costs Practice Note provides that the Court’s preference, wherever it is practicable and appropriate to do so, is to make a lump sum costs order so as to finalise costs and avoid potentially expensive and lengthy taxation hearings. It makes clear that the Court should now proceed on the basis that taxation “should be the exception” and confined to matters which are unable to be determined otherwise: Costs Practice Note at [3.3]. The guiding principles are to reduce delay and cost when quantifying costs: Costs Practice Note at [3.1].

…

19    Whilst the Costs Practice Note now suggests that most cases should have a lump sum costs order approach applied unless there is some characteristic that would make it unsuitable, a lump sum costs order is not mandated in all instances. In all cases it is a matter for the Court to exercise the discretion given to the Court by the Federal Court Act and the Rules as appropriate: see Sigalla at [18]-[19].

20    There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality.

18    In my view, a lump-sum costs order should be made. Such an order would be consistent with the Court’s expressed preference that such orders be made. As this has been protracted litigation over a bankrupt estate and the costs are payable from that estate, a lump-sum order is best suited to achieving a result minimising the quantum of further costs to be incurred. Further, as Logan J explained in Thompson v Lane (No 4) (at [22]) when making a lump-sum costs order at first instance, Registrars of this Court are well-placed to make a lump-sum determination as a result of their regular work in that area, including their familiarity with amounts which are reasonable to allow for counsel and solicitors on a party and party basis.

19    The appellant did not make any specific submissions as to whether a lump-sum costs order should be made. Her submissions were all dependent upon her over-arching submission, which I have rejected (see [9] and [10] above).

D. CONCLUSION

20    Orders to the effect of those sought by the second respondent should be made. I will make orders accordingly.

Associate:

Dated:    2 June 2023