Forrest (Bankrupt) v Forrest

REASONS FOR JUDGMENT 1 On 19 November 1999, the Official Trustee in Bankruptcy applied to the Court for the issue of summonses for the examination of the bankrupts and their children under s 81 Bankruptcy Act 1966 (Cth). After their issue the examinations were set down for hearing to commence on Monday 13 March 2000 before a Deputy District Registrar. When the Trustee's legal representatives attended at the Court on that date, they were informed that due to the unavailability of a Deputy District Registrar to hear the matter, the examinations were adjourned to a date to be fixed. I am informed that the Deputy District Registrar who was to hear the matter that day was ill. 2 The Official Trustee now seeks the costs thrown away by the adjournment, by way of issue of a costs certificate under s 10(3) Federal Proceedings (Costs) Act 1981 (Cth). I have treated the Trustee's letter as the application required by subs (3). Section 10 is entitled "Costs Certificates - Incomplete Proceedings" and by subs (1) applies to this Court. Subsections (2), (3) and (4) then provide: "(2) Subject to this Act, where any proceedings in a court to which this section applies are rendered abortive by reason that the person, or a person, before whom the proceedings are being conducted dies, resigns, or is removed or dismissed from, his or her office, suffers a protracted illness or otherwise becomes unable to continue with, or to give judgment in, the proceedings, the court may, on the application of a party to the proceedings, grant to that party a costs certificate in respect of the proceedings. (3) Subject to this Act, where: (a) the hearing of any proceedings in a court to which this section applies is discontinued and a new hearing is ordered; and (b) the discontinuance and new hearing are not attributable to the neglect, default or improper act of any party to the proceedings; the court may, on the application of a party to the proceedings, grant to that party a costs certificate in respect of the proceedings. (4) The certificate that may be granted under subsection (2) or (3) by a court to a party to proceedings that have been rendered abortive or the hearing of which has been discontinued, as the case may be, is a certificate stating that, in the opinion of the court, it would be appropriate for the Attorney-General to authorize a payment under this Act to that party in respect of such part as the Attorney-General considers appropriate of any costs incurred by that party in relation to those proceedings." 3 I have no difficulty in accepting the examinations as "proceedings in a court" for the purposes of the Act; and there is no suggestion that the adjournment was due to any conduct on the part of the Trustee. The question which the application raises is whether the section applies to proceedings which are adjourned at the outset, as distinct from those which are substantially undertaken and then discontinued because of some problem which renders their continuance impossible or undesirable. 4 In Coulson v Gosford Meats Pty Ltd (1985) 7 FCR 106, Gray J held, in the context of industrial proceedings, that a hearing which had been fixed to commence on a particular date but which did not because of the unavailability of a judge to hear it, had been "discontinued" within the meaning of s 10(3)(a) of the Act. His Honour observed that, whilst the hearing had not actually begun, it had been fixed for hearing and did not proceed. That would appear, in his Honour's view, to suffice. In Re Palmdale Insurance Ltd (1994) 122 ACTR 33 Higgins J, in a case involving similar circumstances, held that a certificate was appropriate and declined to follow a decision of Muirhead J in Re Morris; Morris v Maroudas (1986) 66 ALR 699, to which I shall shortly refer, to the contrary. In the view of his Honour, although the word "discontinuance" had an established meaning in relation to an action, "…it by no means follows that it carries that same sense of interruption and finality when used in relation to a hearing"; and an adjournment to a new date could be regarded as the ordering of a "new hearing". His Honour concluded: "It seems to me that the view expressed by Gray J is to be preferred. Section 10(3) is intended to provide compensation to a party deprived of a hearing and put to the expense of a new hearing due not to the default of any party but the failure of the court system or other adventitious cause whereby a hearing has to be aborted and recommenced. That abortion may be at the very outset of the hearing or part-way through. The Explanatory Memorandum circulated prior to the passage of the Federal Proceedings (Costs) Act reveals that the purpose of s 10(3) was to empower a court to issue a certificate under the Act where proceedings are rendered abortive or discontinued through no fault of any party. That intent seems consistent with the approach taken by Gray J." 5 In Re Morris, at issue was the costs of a prior adjournment ordered by Muirhead J because, through no fault of the party applying for the certificate, the other party had received insufficient notice of the hearing. His Honour held: "Counsel for the applicants, who relies on sub-s (3) submits that the adjournment ordered through no fault of his clients was tantamount to a discontinuance of the hearing of the proceedings. The word 'discontinuance' has a well established meaning. It envisages the cessation of something that was on foot. It is a word which is not to be found in the Bankruptcy Act 1966 and as far as I can see there are no specific provisions for discontinuance of an application as opposed to adjournment or dismissal. Section 33(1)(a) of the Bankruptcy Act empowers the court to adjourn matters before it. The adjournment I granted was not a discontinuance of the hearing of the application. The hearing had not commenced. Nor did I order a 'new hearing' as a hearing had neither been conducted nor initiated. I simply postponed the hearing to a later date. In my opinion sub-s (3) as is the case with sub-s (2), seeks to grant relief to litigants whose liability for costs is increased by reason of the fact that a hearing on foot is aborted by circumstances not contributed to by fault or neglect of any party to the proceedings. It is in my view an extension to the relief granted in sub-s (2) which is more specific in setting out the circumstances. It may for instance be referable to cases where the sickness or death of counsel intervenes under circumstances which require a discontinuance of the hearing which is under way at the time - probably a rare event - but one which as a matter of justice may persuade a court in the interests of justice to recommence the hearing de novo. It may also apply to disruption of a hearing or interference with the court's capacity to continue the hearing by external causes. Finally I comment that had the legislature intended to cover adjournments it would surely have inserted the words 'or adjourned', or 'adjournment' after the words 'discontinued' and 'discontinuance' respectively in s 10(3). To grant a certificate in the present circumstances would be to place an interpretation on the sub-section which would not only have wide ramifications but which would unduly strain the wording of the sub-section in a manner contrary to the apparent legislative intent. 6 I respectfully agree with his Honour. The word "discontinuance" has a well established meaning with respect to court proceedings. It conveys something having commenced and then ceasing prior to its conclusion. As the title to the section notes, the proceedings are 'incomplete'. That is not the same as the adjournment of proceedings, which may be stood over prior to or after commencement. An important practical distinction between the two is that discontinued proceedings are likely to involve the incursion of costs which are entirely wasted, because the proceedings have to be started again afresh. The additional circumstance to which the section refers is that those costs are not able to be recovered against the other party, for the reason that the discontinuance occurred without either of the parties' default. There may be many reasons for an adjournment, but it is not so likely, even where no party is at fault, that substantial costs will be entirely duplicated. In the present case I would not have thought that to be the situation. To hold that the section applies to adjournments is, in my respectful view, to give it an unwarranted extension. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel. Associate: Dated: 7 July 2000 Solicitor for the Applicant: Broadley Rees Lawyers Date of Judgment: 7 July 2000