Federal Court of Australia

Brushe v Stanton [2026] FCA 740

ORDERS

THE COURT DECLARES THAT:

1.    The transfer of $916,821.33 to the respondent on 2 September 2021 is void against the applicant pursuant to ss 120 and 121 of the Bankruptcy Act 1966 (Cth).

THE COURT ORDERS THAT:

2.    The claims for relief in paragraphs 2 and 3 of the Application filed on 23 September 2024 be dismissed.

3.    The respondent pay 25% of the applicant’s costs on a party-and-party basis.

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

REASONS FOR JUDGMENT

(DELIVERED EX TEMPORE AND REVISED)

RANGIAH J:

1    The applicant is the trustee (the Trustee) of the bankrupt estate of Scott Gregory Hookey (the bankrupt).

2    On 2 September 2021, some 18 months before the bankruptcy, the bankrupt caused an amount of $916,821.33 to be transferred to the respondent, who was his father-in-law.

3    The Trustee brought proceedings seeking the following relief:

1.    A declaration that the payment of $916,821.33 into the Respondent’s Bank of Queensland Bank Account ending #9106 on 2 September 2021 was a transaction that is void against the Applicants:

a.    pursuant to section 120 of the Bankruptcy Act 1966 (Act) or,

b.    pursuant to section 121 of the Act.

2.    An order that the Respondent pay to the Applicants the sum of $916,821.33, or such other sum as determined by the Court.

3.    An order that the Respondent pay interest on any judgement sum from 25 January 2023 or, alternatively, from the date of service of this Originating Application at the rates referred to in the Interest on Judgements Practice Note at paragraph 2.2 thereof.

4.    Further or other relief as the Court deems appropriate.

(Emphasis in original.)

4    The parties have resolved the proceeding and jointly seek the following orders:

(a)    A declaration that the transfer of $916,821.33 to the respondent on 2 September 2021 is void against the applicant pursuant to ss 120 and 121 of the Bankruptcy Act 1966 (Cth); and

(b)    An order that the claim for relief sought in paragraphs 2 and 3 of the Application filed on 23 September 2024 be dismissed.

5    The respondent expressly concedes that the transfer of $916,821.33 to the respondent on 2 September 2021 is void against the Trustee pursuant to ss 120 and 121 of the Bankruptcy Act 1966 (Cth) (the Act).

6    A question arises as to the utility of the proposed declaration in circumstances where the Trustee no longer seeks any order for payment of the money transferred to the respondent. A declaration must produce some real consequences for the party: Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406 at 414.

7    The Trustee’s counsel points to a proof of debt lodged by the respondent for $530,059.18 in the bankruptcy. The Trustee intends to reject the proof of debt under the set-off mechanism in s 86 of the Act and, in doing so, would rely upon the proposed declaration. For this reason, I am persuaded that the declaration is directed to determination of a real controversy and will produce real consequences for the parties and that it is appropriate to make the declaration.

8    It remains necessary to determine the appropriate order as to the costs of the proceeding.

9    The Trustee submits that as he was successful in obtaining the declaratory relief, he should have his costs of the proceeding on the standard basis. The respondent resists that order and contends that the Trustee ought to pay his costs on the indemnity basis because he made an offer on 13 March 2025 to pay the Trustee $10,000 in full and final satisfaction of the claim and the Trustee has been unsuccessful in his claim for the respondent to pay the Trustee a sum of money. The respondent made a further offer on 22 May 2026, just over a week before the trial date, to pay the Trustee $50,000 on the basis that the proceeding be dismissed with no order as to costs. As I understood it, the respondent did not rely on this offer to any greater extent than the earlier one.

10    The Trustee submits in response that the respondent’s offers did not offer the declaratory relief which he ultimately obtained and submits that the offer does not bear upon the question of costs.

11    An award of costs is in the discretion of the Court or Judge: s 43 of the Federal Court of Australia Act 1976 (Cth). Ordinarily, costs follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72 at [67].

12    Rule 25.14 of the Federal Court Rules 2011 (Cth) provides:

25.14    Costs where offer not accepted

(1)    If an offer is made by a respondent and not accepted by an applicant, and the applicant obtains a judgment that is less favourable than the terms of the offer:

(a)    the applicant is not entitled to any costs after 11.00 am on the second business day after the offer was served; and

(b)    the respondent is entitled to an order that the applicant pay the respondent’s costs after that time on an indemnity basis.

…

13    The parties’ submissions canvassed a range of issues said to be relevant to costs, including: assertions as to why they arrived at the compromise; the consequences of the declaratory order for actions the Trustee might take against the bankrupt in the future; the course of pleadings; and the extent to which the pleadings and filed affidavits dealt with the claim for declaratory relief as opposed to the payment of money. In the end, I have found these factors to be of little use in determining the appropriate order for costs.

14    The case is somewhat different to one where the issues are fully argued and determined by the Court and each party achieves some measure of success. The case is also somewhat different to one where the proceeding terminates before there has been any final hearing. In the present case, a hearing had to take place to determine whether the declaration ought to be made. However, it can be accepted that the outcome is largely a product of the compromise between the parties.

15    The respondent has agreed to the declaration being made, while the Trustee has agreed not to pursue the claim for payment of the $916,821.33. Accordingly, each party has achieved a measure of success.

16    The respondent made offers to compromise the proceeding which were not accepted. It is true that the compromise means that he does not have to pay any amount to the Trustee, but, on the other hand, the Trustee has obtained the benefit of the declaration when agreement to such a declaration was not a part of offers made by the respondent. I do not consider the Trustee to have achieved a judgment less favourable than the offers.

17    In Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119, the Full Court observed at [11]:

The usual practice is that costs follow the event and that the Court will order the recovery of costs by the successful party on a party-party basis but success or failure on separate issues may lead the court to engage in a process of apportionment… It is appropriate that, where one party, although successful overall, raised and pursued unsuccessful grounds or abandoned grounds that the other party was expected to meet in preparation of and in the course of the hearing, and as a consequence costs have been thrown away or incurred, such costs should be paid by the successful party.

18    Although that case was concerned with mixed success on the separate issues that were argued to the point of determination by a Court, the Full Court’s comments have relevance to the present case where the parties have made compromises to resolve the different claims for relief.

19    In Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) v Lane Industries Pty Ltd (1993) 26 IPR 261, the Full Court observed at 272:

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation.

20    My assessment of the present case is that the Trustee has had a somewhat greater measure of success than the respondent. The Trustee has the benefit of a declaration which will be useful in respect of the respondent’s proof of debt in the bankruptcy.

21    Applying a broadbrush approach, I will order that the respondent pay 25% of the Trustee’s costs on a party-and-party basis.

Associate:    

Dated:     12 June 2026