George v Fletcher

REASONS FOR JUDGMENT 1 On 25 October 2012 the Court pronounced judgment and published its reasons in this matter: George v Fletcher (Trustee) [2012] FCAFC 148. We dismissed the appeal in so far as it concerned the second, third and fourth respondents and ordered Ms George (in Order 4) to pay their costs. But we allowed the appeal in part in relation to one aspect of the case brought against the first respondent, Mr Fletcher and ordered that the proceeding be remitted to the Federal Magistrates Court for that limited purpose (Order 2). In all the circumstances we considered that justice would be done if we were to order that the appellant (Ms George) pay 90% of Mr Fletcher's costs and we made an order (Order 5) to that effect, but permitted Ms George and Mr Fletcher to apply for a variation, if they so chose. 2 Ms George made such an application. At the same time she sought a stay of Orders 4 and 5. She later sought to extend the stay application to encompass a stay of all orders except for Order 2. We will deal with the stay application in a separate judgment (if necessary) after all parties have had the opportunity to be heard. This judgment is confined to the application to vary the costs order. 3 Ms George accepted that a costs order expressed in percentage terms as opposed to an order based on the success or failure of particular issues was the most appropriate form of order. But she proposed that, rather than 90%, she should pay 60-70% of Mr Fletcher's costs. She submitted that the issue upon which she succeeded "would have been the most time-consuming issue for the all parties to consider". She described "the issue of chattels" as a major issue and "a significant part of one of the [two] broad issues the appeal raised". She urged the Court to consider not only the parties' relative successes or failures, but also the time taken up and costs incurred on the issue upon which "the respondents" failed. She asserted that her grounds of appeal were found "not to be without merit", "even on the grounds not subsequently held in [her] favour". 4 We are not persuaded that we should vary our order. The so-called issue of chattels upon which Ms George succeeded was but a very minor part of the appeal. The primary focus was on the errors said to attend the findings of the federal magistrate about whether, before Ms George's bankruptcy, property, including real property (referred to in the judgment as "the Moggill property") was owned by Ms George in trust for her son and was for that reason excluded from her bankrupt estate. On these questions Ms George was unsuccessful. In substance, the error the Court found concerned the failure of the federal magistrate to afford Ms George an opportunity to be heard about whether certain items of household property were protected from distribution amongst creditors by operation of reg 6.03 of the Bankruptcy Regulations 1996 (Cth), although he had expressly indicated he would do so before making orders. This point was not expressly raised in the amended notice of appeal, nor was it apparent from the written submissions. When it emerged during oral argument, it took little of the Court's time. In these circumstances, the proposition that the issue would have been "the most time-consuming issue for the parties to consider" is, to say the least, audacious. It was precisely because it occupied relatively little time that the Court decided that Mr Fletcher should recover 90% of his costs. 5 For completeness, we note that Ms George also sought leave to make an application to vary our costs order in favour of the other respondents (Order 4). The Court refused that leave on 9 November 2012. There was no reason why costs should not follow the event in that case, nor any indication given before judgment that Ms George would wish to be heard on costs even if she was unsuccessful. See Hewlett Packard Pty Ltd v GE Capital Finance Pty Ltd [2003] FCAFC 278 at [13]. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Siopis, Jessup and Katzmann.