ABL Nominees Pty Ltd v Trinick

1. The first respondent pay the applicants' costs of the proceeding, fixed in a lump sum amount of $121,928.98.
2. Pursuant to the undertaking given by Mr Glenn Douglas Trinick and the orders made by the Court on 21 December 2015, the first respondent pay to Mr Stephen Michell in his capacity as trustee of the bankrupt estate of David Martin Irvin any funds withdrawn from the estate of the second respondent pursuant to the orders made on 21 December 2015 and used to pay the costs, fees or other expenses of Gretsas & Associates Lawyers.
3. The first respondent pay the applicants' costs of the interim application dated 1 June 2017. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BESANKO J: 1 On 22 August 2016, I made an order that pursuant to s 222 of the Bankruptcy Act 1966 (Cth) (the Act) that a Personal Insolvency Agreement executed by Mr Glenn Trinick as controlling trustee, and Mr David Irvin as the debtor, on 9 October 2015, be set aside. I also made an order that a sequestration order be made against the estate of Mr David Martin Irvin pursuant to s 222(10) of the Act, and an order that further consideration of the applicants' application for the appointment of a trustee and for an order for costs be adjourned to a date to be fixed. Those orders followed a substantial trial. My reasons for making those orders are set out in ABL Nominees Pty Ltd v Trinick (Trustee) [2016] FCA 996. The history of the proceeding is set out in those reasons and those reasons should be read with these reasons. 2 Mr Trinick passed away on 14 July 2016. As I have said, I delivered judgment and made orders on 22 August 2016. There was then considerable delay as the applicants considered how they wished to proceed. 3 The applicants now apply for the following orders: (1) The first respondent pay the applicants' costs of the proceeding, fixed in a lump sum amount of $121,928.98. (2) Pursuant to the undertaking given by Mr Glenn Douglas Trinick and the orders by this Court on 21 December 2015, the first respondent pay to Mr Stephen Michell, in his capacity as trustee of the bankrupt estate of David Martin Irvin, any funds withdrawn from the estate of the second respondent pursuant to the orders made on 21 December 2015. (3) The first respondent pay the applicants' costs of the interim application dated 1 June 2017. 4 The applicants' application is supported by affidavits of Ms Karen Michelle Guazzelli sworn on 2 June 2017, 2 August 2017, 10 August 2017 (2 affidavits) and 15 September 2017 respectively. Ms Guazzelli is a member of the firm of solicitors which acts for the applicants. 5 On 11 August 2017, I made the following order: 1. Leave is granted pursuant to Rule 8.21(1)(f) and Rule 9.11 of the Federal Court Rules 2011 (Cth) to amend the originating application to substitute the administrators of the deceased estate of Glenn Douglas Trinick, James Glenn Trinick and Linda Christina Trinick, for Glenn Douglas Trinick as First Respondent in this proceeding. 6 I am satisfied that the first respondent to the proceeding, now the administrators of the deceased estate of Mr Glenn Douglas Trinick, the second respondent, Mr David Irvin, and the trustee of his bankrupt estate, Mr Stephen Michell, have been notified of this application. None of those parties appeared at the hearing of the application. Mr Michell indicated to the applicants' solicitors that he consented to the second order set out above. 7 The trial before me occupied four days. Mr Trinick was represented by Gretsas & Associates Lawyers and his counsel was Mr G Gretsas. He actively opposed the applicants' application. Mr Irvin appeared in person on the second, third and fourth days of the trial and, by contrast, his submissions were brief. The main protagonists at the hearing were the applicants on the one hand, and Mr Trinick on the other. In the substantive reasons, I outlined the evidence called at the trial (at [54]-[64]). Mr Trinick gave evidence and he was cross-examined at length. He was an unsatisfactory witness. In my reasons, I said the following: [57] Mr Trinick swore three affidavits which were tendered and comprised his evidence-in-chief. He was cross-examined at length by counsel for the applicants. Unfortunately, he was not a satisfactory witness. He displayed considerable frustration with, and anger towards, the applicants throughout his evidence. His frustration and anger was at times directed towards the applicants' counsel who he referred to as a liar and time-waster. More than once he described the applicants' claims as fraudulent. At times, he gave long-winded and rambling answers containing what appeared to be internal inconsistencies and which were, at the very least, difficult to follow. He appeared to date the deterioration of his relationship with the applicants to the first meeting of creditors on 15 July 2015 and the applicants' complaint about him to the AFSA. I will refer to aspects of Mr Trinick's evidence later in these reasons when I deal with specific topics. At this stage, I record the fact that I found him an unsatisfactory witness and I do not think that I can rely on his evidence. 8 I found Mr Trinick's evidence on a number of topics to be unsatisfactory (at [106], [112] and [145]). 9 I found that by the time of the second meeting of creditors, which was held on 7 October 2015, Mr Trinick had lost his objectivity as far as the applicants' claims were concerned. I refer to the findings I made about that topic (at [116]). I also expressed conclusions that supported an order that the Personal Insolvency Agreement should be set aside, but went on to consider the applicants' case that Mr Trinick did not adequately investigate Mr Irvin's affairs and did not provide proper advice to creditors (at [117]-[118]). I expressed certain conclusions as to the investigations carried out by Mr Trinick and his report to creditors (at [135], [146]). I identified them as additional reasons for an order setting aside the Personal Insolvency Agreement (at [159]). 10 It should be noted that in their Originating Application, the applicants also sought an order for an inquiry into Mr Trinick's conduct as controlling trustee pursuant to s 179 of the Act. Before the trial, I made an order which meant that the trial proceeded with respect to the orders sought pursuant to s 222 or s 222C of the Act. The application for an inquiry pursuant to s 179 of the Act remained to be determined. In view of Mr Trinick's death, that application is no longer pursued. The significance of this matter is that what proceeded to trial was an application to set aside the Personal Insolvency Agreement. Mr Trinick was the party who played the major role in resisting the application. 11 Before the trial, I made a number of orders which are relevant in terms of the second order now sought by the applicants. 12 On 27 October 2015, the Court noted the following undertaking: Upon the applicants giving the usual undertaking as to damages, 1. Subject to paragraph 2 below, the first respondent undertakes to the Court not to take any steps in furtherance of the personal insolvency agreement executed by the first and second respondent on 9 October 2015 ("the PIA"). 2. Notwithstanding paragraph 1, the first respondent shall be at liberty to receive and bank all payments due by Ms Carol Bull pursuant to the PIA. 3. The first respondent undertakes not to take any steps to dispose of any part of the estate of the second respondent. 13 On 4 November 2015, Mr Trinick applied for a variation to his undertaking to permit him to apply funds in payment of his remuneration and expenses incurred. The application sought a variation which was not limited in amount. The application was heard on 6 November 2015. It was refused. 14 On or about 5 November 2015, Gretsas & Associates rendered their first account to Mr Trinick in the sum of $18,934.30 inclusive of GST. On 26 November 2015, Gretsas & Associates rendered their second account to Mr Trinick in the sum of $29,777.80 inclusive of GST. 15 On 27 November 2015, Mr Trinick paid Gretsas & Associates' first account. On or about 17 December 2015, Mr Trinick paid a further $15,000 towards Gretsas & Associates' second account and a further amount of $15,000 was expected to be paid on or about 21 or 22 December 2015. 16 Mr Trinick renewed his earlier application and that application was heard on 21 December 2015. 17 On 21 December 2015, I made the following orders, relevantly: … UPON THE UNDERTAKING of the First Respondent that he will within three business days repay into the Part X estate of the Second Respondent ("the estate") any funds that he has withdrawn pursuant to these orders upon so being further ordered by this Court THE COURT ORDERS THAT: 3. The First Respondent have leave to withdraw from the estate, funds sufficient to pay for his disbursements in the conduct of the estate and in the defence of these proceedings including legal fees, disbursements and GST paid or payable to his legal representatives and realisation charges pursuant to the Bankruptcy (Estate Charges) Act ("the disbursements") limited to the sum of $53,000 inclusive of GST such sum having been paid into the estate by the Second Respondent. 4. To the extent that the First Respondent or his firm has already paid any of the disbursements from their own resources as at the date of these orders, then the First Respondent has leave to reimburse to himself or his firm as the case may be the disbursements already paid, again limited to the sum of $53,000 inclusive of GST. … 18 It is to be noted that Mr Trinick's ability to access monies in the estate was limited to his disbursements in the conduct of the estate or in the defence of the proceedings, including legal fees, disbursements or GST paid or payable to his legal representatives and realisation charges pursuant to the Bankruptcy (Estate Charges) Act 1997 (Cth) limited to the sum of $53,000 inclusive of GST, such sum having been paid into the estate by Mr Irvin. Mr Trinick was at liberty to reimburse himself if he had already paid disbursements of the nature previously indicated. 19 The applicants put before me on the present application a letter from Debt Crisis Solutions dated 30 August 2016. Debt Crisis Solutions is referred to in my substantive reasons (at [12]). In that letter to Mr Irvin's trustee in bankruptcy, the following appears: 3. Costs paid by Mr Trinick Pursuant to approval granted by the Court (refer attached) the $53,000 contributed by Mr Irvin to the controlling trustee was used to partially cover Mr Trinick's expenses. In the event of a subsequent court order requiring a return of these funds, a claim would need to be made against Mr Trinick's deceased estate. 20 The applicants ask me to infer that any amounts withdrawn from the estate of Mr Irvin by Mr Trinick have been used in relation to this proceeding. As I understood the submission, it is that it is possible that funds might have been used to pay the legal fees of Mr Carles (see substantive reasons at [50]) and that it is appropriate that the estate meets those fees. As I understood it, the applicants are content that their proposed order be amended so as to be expressed in terms of funds used to meet the fees, disbursements and any other expenses of Gretsas & Associates. 21 The applicants contend that the second order it seeks is an appropriate order in circumstances where the trustee of a Personal Insolvency Agreement acted unreasonably in defending proceedings. By reason of the matters set out in the substantive reasons, I agree that the first respondent did act unreasonably in defending the proceeding and I will make an order in terms of the second order, subject to an appropriate amendment. I do not think that the first respondent acted prudently and reasonably in defending the proceeding and accordingly, is not entitled to an indemnity (Warner v Mayfair Ltd and Others (2015) 238 FCR 531 at [111]). 22 It also follows from those conclusions that the first respondent should pay the applicants' costs of the proceeding and of this application. 23 The Court has the power to order that costs be awarded in a lump sum (r 40.02(b) Federal Court Rules 2011 (Cth)). The applicants put forward material as to their costs adjusted to reflect the appropriate Court scale and then reduced by 25% to reflect the fact that the costs are to reflect an assessment on a party and party basis. I have had regard to the authorities to which the applicants referred and to the material put forward as to the quantum of the applicants' costs. The costs claimed by the applicants represent approximately 68% of the actual amount of costs incurred and paid. I am satisfied that it is an appropriate case for an award of costs in a lump sum (Beach Petroleum NL and Another v Johnson and Others (1995) 135 ALR 160) largely because I do not think the applicants should be put to any further expense unless strictly necessary and because the appropriate amount can be estimated with a reasonable degree of precision. I will make an order in the amount claimed. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.