Federal Court of Australia

Ogbonna v CTI Logistics Ltd (No 8) [2025] FCA 1525

ORDERS

THE COURT ORDERS THAT:

1.    The orders of the Federal Circuit and Family Court (Division 2) made 20 September 2022 be set aside and in lieu thereof there be the following orders.

(1)    The creditors’ petition be dismissed.

(2)    The respondent (appellant) pay 80% of the applicants’ (respondents’) costs of the application to be fixed on a lump sum basis.

2.    The appellant pay 80% of the respondents’ costs of the application for leave to institute an appeal and other application for which costs were reserved in paragraph 4 of the orders of 2 November 2023 to be fixed on a lump sum basis.

3.    The appellant pay the respondents’ costs of the interlocutory applications reserved in paragraphs 1 and 2 of the orders of 12 September 2025 to be fixed on a lump sum basis.

4.    The respondent pay the appellant’s costs, if any, of the appeal to be fixed on a lump sum basis.

5.    The parties file a minute of proposed orders for fixing the amounts of costs in accordance with paragraphs 1, 2, 3, and 4 of these orders, submissions and any materials in support by 4:30pm (AWST) on 17 December 2025.

6.    The determination of the appropriate amounts of the lump sum cost be referred to the Registrar.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

FEUTRILL J:

1    On 12 September 2025, the Court made orders on the appellant’s notice of appeal that the appeal be allowed and the question of what orders should be made in consequence of allowing the appeal be reserved as well as reserving the question of costs of interlocutory applications that had been heard together with the appeal and the costs that had been earlier reserved after a decision by which the appellant was given leave because a vexatious proceedings order had been made against him to file a notice of appeal.

2    The sequestration order the subject of the appeal was made against the appellant on 20 September 2022. For the reasons given in Ogbonna v CTI Logistics Ltd (No 7) [2025] FCA 1125 at [70], I was of the view that the appellant’s trustee in bankruptcy should be afforded an opportunity to be heard and make submissions on the appropriate order to be made upon allowing the appeal.

3    Certain authorities suggest that there might be a choice between exercising the power to annul the bankruptcy under s 153B of the Bankruptcy Act 1966 (Cth) or make an order setting aside the order of the primary court in exercise of the Court’s power on appeal under s 28 of the Federal Court of Australia Act 1976 (Cth). The consequence of an annulment would be that the burden of the trustee’s costs would fall on the appellant. It also may be doubtful that it would be appropriate to make an order under s 153B on appeal from an order where the appeal court has found that the sequestration should not have been made in the first place. In any event, the Court has power to make an order dealing with the trustee’s costs under s 28 of the Federal Court Act: Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131; 216 FCR 375 at [55] (Allsop CJ, Katzmann and Perry JJ).

4    The appellant’s trustee in bankruptcy in this case filed written submissions and has sought no order as to its costs, and therefore no order will be made with respect to the costs of the trustee in bankruptcy. The appropriate order on allowing the appeal is that the sequestration order of the primary judge be set aside.

5    The respondents have filed a minute of proposed orders and have made written and oral submissions regarding the costs that should be ordered in the appeal, on the interlocutory applications dealt with in the appeal and with respect to the costs of the proceeding before the primary judge.

6    Broadly speaking, the order that the respondents seek with respect to the decision of the primary judge is that they have their costs thrown away or wasted as a consequence of that proceeding, because none of the grounds of opposition that the appellant raised before the primary judge were successful either before the primary judge or on appeal. They otherwise accept that the costs of prosecuting the petition cannot be recovered by the respondents in that proceeding. They also seek an order that the appellant pay their costs of two interlocutory applications that were determined for the reasons explained in Ogbonna (No 7). One application was dismissed and one application was only partly successful, and to the extent it was successful it was not opposed by the respondent.

7    The third category of costs concerns costs associated with the application for leave granted in respect of the vexatious proceedings order. The respondents seek all their costs of that hearing that were reserved in November 2023 largely because that application was, in the main, unsuccessful and the Court ordered that the appellant be permitted to file a notice of appeal limited to one ground of appeal, which, with some modification, was ultimately the ground upon which the appellant succeeded.

8    The last category of costs concerns the costs of the appeal. The respondent accepts that, as the appeal was successful, an order be made that the first respondent pay the appellant’s costs. That is, the respondents otherwise accept that, with respect to the appeal at least, costs should follow the event.

9    The Court has a broad discretionary power to award costs under s 43 of the Federal Court Act. It also has power to vary a costs order made in the Federal Circuit Court under s 28 of the Federal Court Act, and while the discretion is unconstrained by legal rule, it is to be exercised judicially and, in general, in accordance with settled principles that avoid arbitrariness and serve the need of for consistency: Harvard Nominees Pty Ltd v Dimension Agriculture Pty Ltd (in liq) [2023] FCAFC 140, 299 FCR 224 at [15]. In Ruddock v Vadarlis (No 2) [2001] FCA 1865, 115 FCR 229 Black CJ and French J said (citations omitted):

11    Within the general discretion of the courts to award costs it is accepted by decisions in both Australian and English jurisdictions that:

•    Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.

•    Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.

•    A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense “issue” does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.

10    Usually the circumstance in which a successful party is denied all or part of its costs has to do with its conduct of the proceeding. Costs may be refused where the applicant has made an exaggerated claim which has occupied a significant proportion of the proceeding and has only succeeded on a minor aspect of the original claim. Costs may be apportioned according to success or failure of particular distinct or severable issues. Courts may award only a proportion of the successful party’s costs if the conduct of that party was such as to unreasonably prolong the proceeding. The same principles apply to the award of costs on appeal: Ruddock at [15]-[16]

11    Section 51 of the Bankruptcy Act provides, subject to the exception that it is not presently relevant, the prosecution of a creditor’s petition to and including the making of a sequestration order on the petition shall be at the expense of the creditor. Section 32 of the Bankruptcy Act provides that the Court may, in any proceeding before it, including a proceeding dismissed for want of jurisdiction, make such orders as to costs as it thinks fit. While these provisions should be taken into account, it is also relevant that the point upon which the appellant ultimately succeeded was not argued or raised before the primary judge. Therefore, in effect, the costs in the Federal Circuit Court were wasted and unnecessarily incurred.

12    While I accept that it is not appropriate that the costs in the Federal Circuit Court be paid out of the appellant’s estate in terms of the original order, the conduct of his opposition to the creditor’s petition has contributed to the respondents incurring unnecessary costs and addressing grounds of opposition that had no relevance. Accordingly, while it is not appropriate that the respondents recover their costs of prosecuting the petition, it is also not appropriate that the appellant should avoid the consequences of his conduct.

13    Taking these matters into consideration broadly, the appellant should pay the respondents’ costs associated with addressing unnecessary and irrelevant materials, submissions, arguments, and hearings. Adopting a relatively broad-brush approach to the assessment, the appellant should pay 80% of the respondents’ costs in the Federal Circuit Court and of the application for leave to proceed that were reserved in November 2023. That is on the application for leave to proceed because of the vexatious proceedings order that was made.

14    Otherwise, I accept that insofar as the interlocutory applications are concerned in the appeal, as the appellant was unsuccessful on one and only successful on the other because there was no opposition to it, the respondents should have the costs of those applications. As to the costs of the appeal generally, given that costs operate on the indemnity principle, those costs should be minimal and limited to the appellant’s disbursements, such as filing fees and the like, because the appellant is self-represented.

15    The next question is how to assess the costs consistently with the orders I am going to make about them. The Court has power to make an order for payment of a lump sum under s 43(3)(d) the Federal Court Act and r 40.02(b) of the Federal Court Rules 2011 (Cth). Additionally, the Chief Justice has issued a Central Practice Note: National Court Framework and Case Management (CPN-1) and the Costs Practice Note (GPN-COSTS). These powers and practice notes were considered in Paciocco v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; 253 FCR 403 (Allsop CJ, Besanko and Middleton JJ).

16    Consistently with that decision and the Rules and practice notes, the court’s preference, in general, 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. The costs in this proceeding are well suited to a lump sum costs order. That sum will be capable of determination relatively quickly upon the provision of submissions and supporting materials to the court. So, taking account of these principles, it is appropriate to make a lump sum costs order in this case.

Associate:

Dated:    5 December 2025