Discussion
42 The first issue concerns ss 33(1) and 178(2) of the Bankruptcy Act and para 1 of Ms Bechara's interim application, each of which is set out above.
43 By s 178(2) of the Bankruptcy Act Ms Bechara and Mr Akcan had 60 days from 27 June 2014 to apply to the Court under s 178(1) for orders relating to Mr Reidy's determination of voting entitlements. This is because, on the evidence, there is no doubt that Ms Bechara and Mr Akcan became aware of Mr Reidy's decisions to which they object on that day. Accordingly, their application is out of time.
44 For Mr Kerr it was submitted that the period of 60 days in s 178(2) may not be extended under s 33(1) because, in its terms, s 178(2) expressly provides to the contrary of any such extension. I disagree. Section 178(2) does not provide to the contrary of s 33(1). Section 178(2) merely provides a time limit of 60 days which is then amenable to extension under s 33(1). The submissions for Mr Kerr did not point to any authority to support the proposition that s 178(2) provides to the contrary for the purposes of s 33(1) and I am unable to see how the provisions can be construed in this manner.
45 Accordingly, the Court is vested with discretion to extend time to enable Ms Bechara and Mr Akcan to apply to the Court for the orders they seek.
46 The second issue is whether the discretion ought to be exercised in favour of Ms Bechara and Mr Akcan to extend time. It was submitted for Mr Kerr that no extension of time should be granted, in effect, because Ms Bechara and Mr Akcan had taken no action about their complaints for many months, and had acted only when Mr Kerr sought confirmation of his appointment to enable the substantive management of the bankrupt estates. But for the fact that Mr Kerr chose to commence this proceeding, prompting the filing of the interim application by Ms Bechara and Mr Akcan, it is likely I would have accepted these submissions. However, the present position is that Mr Kerr has chosen to obtain certainty (as is appropriate) by commencing this proceeding. In these circumstances it is not inappropriate, to do justice between the parties, to enable Ms Bechara and Mr Akcan to act as contradictors. To act as effective contradictors, however, it is necessary to extend the time limit for the making of an application prescribed by s 178(2) of the Bankruptcy Act. If that time is not extended, Ms Bechara and Mr Akcan would not be able to act as effective contradictors because of the operation of s 258 of the Bankruptcy Act, the issue to which I now turn. Accordingly, an order to the general effect of order 1 in the interim application of Ms Bechara and Mr Akcan should be made.
47 The third issue concerns the operation of s 258 of the Bankruptcy Act, which is set out above. It was submitted for Mr Kerr, and disputed on behalf of Ms Bechara and Mr Akcan, that Mr Kerr could rely on s 258(b) and the minutes of the meetings of creditors of the bankrupt estates on 27 June 2014 to prove, unless the contrary is shown, that Mr Kerr had been validly appointed. The basis on which this submission was disputed on behalf of Ms Bechara and Mr Akcan remains unclear. Plainly, Mr Kerr was appointed the trustee of the bankrupt estates on 27 June 2014. Given the terms of s 258(b), which provides that all resolutions passed or proceedings taken at such a meeting shall be deemed to have been duly passed or taken, Mr Kerr's appointment is taken to have been the subject of a valid resolution unless the contrary is shown. It is a matter for Ms Bechara and Mr Akcan, who assert to the contrary, to show by admissible evidence why the resolutions passed at those meetings are not valid and, in such an event, why it is also just and equitable that an order be made in consequence.
48 The fourth issue concerns Mr Reidy having admitted Westpac to vote in the amount of its claim of $1,602,168.69. One basis on which Ms Bechara and Mr Akcan objected to the admission of Westpac for voting purposes, as set out in the minutes, relates to the allegation that the value of security should be deducted. Insofar as this related to the residential loan agreement, it is apparent from Westpac's proof of debt that no claim was made for the amount received on sale of the property, being $218,574.31. The claim was only for the claimed balance, being an unsecured amount, of $57,655.69. Insofar as this related to any security over the property of Gabrielle and Rosabelle Pty Ltd, as pointed out in the minutes, that is an entity separate from the bankrupts. Gabrielle and Rosabelle Pty Ltd as trustee for The Cross Group Trust was the customer under the facility which was the subject of a guarantee and indemnity by Gabriel and Rosabelle Cross, the bankrupts. There was no requirement that Westpac deduct from its claim against the Crosses the value of any security it held as against Gabrielle and Rosabelle Pty Ltd as trustee for The Cross Group Trust, which is a third party. Further, under the guarantee and indemnity the guaranteed money was $1,510,000. Westpac was entitled to demand payment of that amount in the circumstances set out in cl 3.1 which included the customer being unable to pay. By cl 19.2 Westpac was entitled to claim against each of the Crosses before enforcing any rights it might have against, amongst others, the customer. Gabrielle and Rosabelle Pty Ltd had been placed in receivership on 10 December 2013. Accordingly, by the terms of the guarantee and indemnity provided, Westpac was entitled to claim the full amount guaranteed from each of the Crosses, being $1,510,000. Consistently with this approach, in Bechrose Pty Ltd v Jefferson (1999) 94 FCR 494; [1999] FCA 1153 Drummond J observed that:
[45] But it appears to be a settled rule of bankruptcy law that where a creditor proves in the bankruptcy of a guarantor and (as here) the guarantor is only responsible for the amount in fact owing by the principal debtor, any payment by or on behalf of the principal debtor received by the creditor before proof must be taken into account by the trustees in valuing the creditor's proof; a creditor claiming in a guarantor's bankruptcy is not, however, obliged to bring into account, in reduction of the amount of the debt sought to be proved, payments received from the principal debtor after submission of proof, let alone an estimate of what it may be able to obtain by realising the principal debtor's security. This rule is subject only to the qualification that the creditor is not entitled to recover more than 100 cents in the dollar. If the creditor who has proved in the guarantor's bankruptcy ends up with more than 100 cents in the dollar, it must account to the bankrupt guarantor or, more accurately, to his trustee, for the excess. See Re Blakeley (1892) 9 Morr 173; Re Houlder [1929] 1 Ch 205 at 209 - 210; Re Amalgamated Investment & Property Co Ltd [1984] 3 All ER 272 at 287 - 292 and Re Hunter; Ex parte Bank of New South Wales [1982] Qd R 131 and O'Donovan and Phillips, The Modern Contract of Guarantee (3rd ed, 1996) pp 471 - 473.
49 Another basis on which the argument for Ms Bechara and Mr Akcan was put in respect of Westpac concerns the fact that ss 64ZA(3) and (4) use the word "creditor". Accordingly, a person other than a creditor is not entitled to vote and each person who is a creditor is entitled to vote. The case put for Ms Bechara and Mr Akcan is that merely annexing a loan agreement and guarantee and indemnity does not prove that Westpac is a creditor. In support of this argument, reliance was placed on evidence from Mr Kerr that the proof of debt was not supported by any vouchers (see s 84(2)) substantiating the shortfall of $57,655.69 from the proceeds of sale or that $1,544,513 was owed by Gabrielle and Rosabelle Pty Ltd and thus claimable under the guarantee and indemnity. Mr Kerr said that, as part of his management of the bankruptcy, he would in the ordinary course seek further supporting documents for the claim of guarantee and indemnity but not for the $1,544,513 on the basis that the full guaranteed amount could be claimed from the Crosses until the whole debt to Westpac owed by Gabrielle and Rosabelle Pty Ltd was satisfied.
50 These submissions overlook the fact that it is Ms Bechara and Mr Akcan who challenge the decision of Mr Reidy to admit Westpac for voting purposes. It is for them to prove that Westpac was not a creditor. Insofar as the conduct of Mr Reidy is concerned, the submissions are also contrary to the structure of the Bankruptcy Act and the approach taken in the authorities to the issue of voting entitlements.
51 The first point to make is this. On 27 June 2014 Mr Reidy did nothing more than determine questions about voting entitlements in accordance with s 64ZA(8) of the Bankruptcy Act. He did not admit any proof of debt in accordance with s 102. Ms Bechara did not appear to appreciate this distinction in the evidence she gave.
52 The second point is this. A person whose proof of debt is ultimately rejected under s 102 is nevertheless a creditor within the meaning of Div 5 of Pt IV. This is because of the definition of "creditors and their representatives" in relation to a meeting set out in s 63A(1). These are the people entitled to vote at the meeting; and by s 64ZA(8) it is the trustee who determines any questions about entitlements to vote. Within the scheme of the Bankruptcy Act it is incorrect to assume, as the submissions for Ms Bechara and Mr Akcan did, that a person who claims to be a creditor is not a creditor for the purposes of Div 5 of Pt IV merely because that person has not provided vouchers by which the claimed debt can be substantiated as set out in s 84(2). To the contrary, for the purposes of a meeting (in contrast to adjudication of a proof of debt), as s 64D discloses, what is required is a written statement setting out the amount in respect of which the creditor claims that the bankrupt is indebted to the creditor. Westpac's proof of debt constituted such a written statement and thus Westpac was not precluded by s 64ZA(6) from voting. For this reason Mr Kerr's evidence that he would require the claim to be substantiated as part of his management of the bankrupt estates is immaterial. No doubt he would in order to adjudicate on the proof of debt; but that is not the function Mr Reidy was performing on 27 June 2014.
53 In Starkey v Rondo Building Services Pty Ltd (2005) 145 FCR 423; [2005] FCA 1081 (Starkey) French J (as he then was) explained as follows:
[46] The admission by the trustee of a person to vote does not involve a final determination of that person's proof of debt. The Act requires only that, at the time of the first meeting, a creditor is required to have submitted a written statement setting out the amount which the creditor says is owed (s 64D(a)) and 'brief particulars of the transaction and circumstances that gave rise to the debt' (s 64D(b)(ii)). No doubt a statement of particulars that discloses on its face a frivolous or baseless claim or a debt not provable in bankruptcy would lead to the trustee refusing entitlement to vote. To that extent the particulars may be seen as providing a procedural protection against frivolous or baseless claims: Re Zantiotis; Ex parte Andrew (unreported, Federal Court, Beaumont J, 17 May 1998). But generally speaking the section contemplates the trustee acting in a summary way on the information available and does not require him or her to determine the matter finally: Re Spanney; Ex parte Holtzmann (1936) 38 WALR 13. Cooper J pointed out in Staples v Milner (1998) 83 FCR 203 that the trustee's decision is not final and only relates to the right to vote at the meeting. Against this background the objections raised by Rondo to the four creditors can be considered.
…
[49] In my opinion, having regard to the summary character of the trustee's decision-making on entitlements to vote, his decision to allow Mrs Olsen to vote cannot be impugned. There may not have been sufficient information to justify finally admitting the proof of debt but there was enough for the purpose of the decision whether to permit Mrs Olsen to vote at the meeting. The material provided did not exclude the possibility of an agreement for repayment at a particular date nor indeed did it necessarily exclude the possibility of a written agreement. These were matters which might have been the subject of further inquiry relevant to the question of the application of the limitation period. It was not necessarily a matter for determination at the creditors meeting.
54 To the extent that reliance was placed on Re McLean; Ex parte Friends' Provident Life Office (1992) 36 FCR 502 (Re McLean) to support any contrary proposition, the submissions are misconceived. Starkey concerns the trustee's functions. Re McLean concerns the function of the court on a challenge to voting entitlements, in which it is the challenger who must prove the asserted fact of a person being or not being a creditor in a specific amount. In Re McLean a creditor excluded from voting brought the proceeding seeking a declaration that a deed executed pursuant to a resolution passed at the meeting was void. The proceeding was founded on s 222 of the Bankruptcy Act which provided that:
(1) Where there is a doubt, on a specific ground, whether … a deed of arrangement was entered into in accordance with this Part … a creditor … may apply to the Court for an order under subsection (2).
(2) Upon the hearing of an application made under subsection (1), the Court may, subject to this section, make an order -
(a) declaring that the deed … is void, or that it is not void, on the ground specified in the application …
(b) …
55 Heerey J said at 511:
The issue of entitlement to vote at the meeting has to be decided once and for all. There is no later occasion on which the issue may fall to be decided. So the situation is not truly analogous to that which arises on a summons for final judgment or application for interlocutory injunction where the possibility of a subsequent full hearing on the merits is in contemplation. Likewise the alleged "counter-claim, set-off or cross demand" considered in Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346 and Re Brink; Ex parte Commerical Banking Co of Sydney Ltd (1980) 44 FLR 135 was one which, according to the claim of the debtor in the bankruptcy court, could be raised at a future date in another court. The Act confers a right to vote on creditors, not persons who have an arguable case that they are creditors. It may be that complex issues of fact and law are raised, but that is a matter to be dealt with by appropriate procedural directions and cannot be determinative of the nature of the jurisdiction conferred on the court.
The contrary view would create an anomalous position. If all a creditor had to show under s 222(1) was an arguable case that the alleged debt was owing, it would logically follow that a debtor complaining of the inclusion of a disputed debt by the chairman would only have to show an arguable defence to make out a claim under the same provision. Since there might be an arguable claim and an arguable defence in respect of the same debt, the court would face a dilemma if arguability is the test. The creditor would say "I should have been allowed to vote because I have an arguable claim" and the debtor would say "the creditor should have been excluded because I have an arguable defence."
56 Similarly, in Re Dingle & Cockerill; Westpac Banking Corporation v Worrell (1993) 47 FCR 478, the Full Court made these points:
• "… where there is a question whether a particular person is entitled to vote, that is a matter for the trustee: see subs (8). If the trustee needs time to determine the question, the meeting must be adjourned for a period not exceeding 14 days: see subs (9). The trustee's decision, of course, determines only the person's right to vote at that meeting. As Bowen CJ said in Re Levy; Ex parte Scholefield Goodman & Sons Ltd (1980) 50 FLR 99 at 112, in relation to s 201 of the Act (which confers a similar power on the chairman of a meeting called to consider a Part X proposal), the power is not "to make a final ruling on a debt … but to rule for the purposes of the meeting in a summary way avoiding technicalities and delays" (at 483).
• "We think that the Court should be equally reluctant to intervene in cases where the vote has already been taken. Section 64ZA(8) commits to the trustee the question whether a person is entitled to vote. Finality is important. Where the complaint is that a person has been erroneously excluded from voting, we agree with Drummond J that the Court should at least insist upon proof that the excluded person is in fact a creditor and that his or her vote would have affected the fate of the proposal" (at 485 - 6).
• "We also agree with Drummond J that, when the court is called upon to determine whether a person is entitled to vote as a creditor, it must act on the material before it; it is not limited to the material before the trustee or chairman: see Re Tregonning; Ex parte Friends' Provident Life Office (1983) 74 FLR 327 at 330 and Re McLean; Ex parte Friends' Provident Life Office (1992) 36 FCR 502 at 510" (at 486).
57 This does not mean that, in the present case, Mr Kerr must prove Westpac is a creditor. Mr Kerr is entitled to rely on s 258. It is for Ms Bechara and Mr Akcan, who claim that Westpac is not a creditor, to prove to the contrary. That is not proved merely by pointing to the lack of vouchers substantiating Westpac's claim. Consistently with the reasoning in Re McLean, the contentions of Ms Bechara and Mr Akcan simply fail at the first hurdle because they have not attempted to prove that, in fact, Westpac was not a creditor of the bankrupts in the claimed amount at the time of the meeting on 27 June 2014.
58 Westpac had complied with the requirements of s 64D of the Bankruptcy Act. The fact that Westpac's claim was not substantiated by vouchers in accordance with s 84(2) did not mean that Mr Reidy was bound to exclude Westpac from voting. Westpac's claim was cogent on its face. Nothing in the circumstances gave rise to any obligation on the part of Mr Reidy to consider excluding Westpac from exercising its voting entitlements. Ms Bechara and Mr Akcan have not discharged their onus to prove Westpac was not a creditor. It follows that the challenge of Ms Bechara and Mr Akcan to Mr Reidy's decision to admit Westpac in the amount of $1,602,168.69 for the purposes of voting at the meeting on 27 June 2014 is unsustainable. Accordingly, para 4 of their interim application must be dismissed.
59 The fifth issue is Mr Reidy's treatment of Mr Akcan's claim. Mr Akcan had claimed in the amount of $1,623,286.10. The amount of $400,000 (representing Mr Akcan's one third share in the business Rosabelle's Bistro) and $244,678.72 (representing the verdict in Mr Akcan's favour pursuant to the judgment of the Supreme Court proceedings) were allowed in full. The balance of about $978,607, representing Mr Akcan's estimate of the value of the costs order in his favour, were discounted in part, so that Mr Akcan's entitlement to vote was decided to be $1,261,514.35. This equates to a discount of about 37% of the claim for costs.
60 The submission for Mr Akcan is that his claim should have been accepted in full for voting purposes.
61 There are a number of difficulties which this submission confronts. First, the annexure to the minutes of the meeting of creditors discloses what discounts Mr Reidy made and why he made them. Some are based on the fact that the claims included costs in respect of different proceedings in which Mr Akcan did not have a costs order against the Crosses. It was proper for Mr Reidy to disallow these amounts. One was a claim for 100% of the cost of a report for which Mr Akcan had paid half only. Allowing 50% of this claim was also proper. Some claims related to amounts post-dating the sequestration order and were thus not debts provable in the bankruptcy. In respect of some otherwise appropriate claims Mr Reidy allowed 75% representing his estimate of what Mr Akcan would be likely to recover on taxation or assessment of the costs. All of these adjustments were proper. No cogent submission has been put forward as to why Mr Reidy's decisions about Mr Akcan's voting entitlements should be impugned. In this regard, authority supports Mr Reidy's approach. In Conway v Insolvency & Trustee Service Australia [2003] FCA 943 Allsop J (as he then was) dealt with a liability under an order for costs, explaining that:
[21] The legal right held by McDonalds in this case derived from the order of the District Court that Mr Conway pay McDonalds' costs. The provisions of the District Court Act 1973 (NSW) and the Legal Profession Act 1987 (NSW) to which Mr Fury has made reference in his submissions make it plain that the legal nature of that liability is one which can only be estimated by reference to the agreement of the parties or the assessment of the costs pursuant to those statutes.
62 In the present case, there is nothing to suggest that Mr Reidy's estimate might be incorrect. To the contrary, examination of the documents supporting Mr Akcan's claim indicate that, if anything, Mr Reidy erred in Mr Akcan's favour as to the costs likely to be recovered pursuant to any agreement or on taxation or assessment of his costs. It must be recalled that Mr Akcan's entitlement arose under an order for costs on the ordinary (that is, a non-indemnity) basis. He is not entitled to recovery of 100% of his costs incurred in the proceedings against the Crosses. Nor is his entitlement comparable to that of Mr Petrucco whose claim is based on solicitor-client costs, the Crosses having been Mr Petrucco's (and his predecessors in title's) clients. Mr Akcan's claim plainly included costs in other legal proceedings not covered by the costs order. It also plainly included costs after the date of the sequestration orders. Further, Mr Akcan changed lawyers a number of times. Substantial costs were incurred in work which would be unlikely to be recoverable on taxation or assessment due to the multiplicity of lawyers involved and the resulting duplication of work which is apparent on the face of the supporting documents. Mr Reidy's adjustments, as noted, if anything erred in Mr Akcan's favour as to the amount he was likely to recover, having regard to these circumstances.
63 For these reasons, the challenge to Mr Reidy's treatment of the voting entitlements of Mr Akcan at the meeting on 27 June 2014 must fail.
64 The sixth issue is Mr Reidy's treatment of Ms Bechara's claim. Ms Bechara's claim was for $669,866.80. Mr Reidy disallowed a part of this as a post-bankruptcy liability. As noted, the disallowed amount consisted of $62,667.83 relating to the costs of compliance with a subpoena and/or notices to produce in the Supreme Court of New South Wales proceedings between Mr Akcan and the Crosses, $173,428.86 being an amount representing Ms Bechara's claim for the further costs ordered to be paid by the Court of Appeal in respect of the District Court proceedings, and $81,404.81 representing Ms Bechara's claim for the costs of the Court of Appeal proceedings.
65 In Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; [2007] HCA 56 (Foots) the High Court dealt with a case in which, before bankruptcy, judgment against the bankrupt had been made and, after bankruptcy, a costs order against the bankrupt was made. The issue was whether the costs under the costs order, made after the bankruptcy, were a debt provable in the bankruptcy. The majority held that the debt under the costs order was not provable in the bankruptcy. In the majority judgment it was said that:
[10] Section 82 limits provable debts both by subject-matter, in that they must answer the statutory descriptions, and temporally, in that they must arise before (not after) bankruptcy. At first glance, neither criterion is fulfilled in the present case: this particular costs order was incurred after bankruptcy, and the appellant was under no obligation to pay those costs beforehand.
[11] A second aspect of s 82 flows from the first. Contrary to the appellant's submissions, there is no express or implied textual support for the notion of a debt being provable if it is incidental to, or consequent upon, a debt which is itself provable. Those debts which are provable are spelled out by the section: matters falling outside those categories are not provable.
66 Insofar as the costs of the Court of Appeal proceedings are concerned, the reasoning in Foots is indistinguishable. The order of the Court of Appeal that the Crosses pay Ms Bechara's costs of the appeal was made on 3 June 2014, after the making of the sequestration orders in October 2013. No debt in respect of that costs order arose before the bankruptcy. It follows that Mr Reidy was undoubtedly correct to exclude $81,404.81 representing Ms Bechara's claim for the costs of the Court of Appeal proceedings.
67 The $173,428.86 representing Ms Bechara's claim for the further costs ordered to be paid by the Court of Appeal in respect of the District Court proceedings is not on all fours with Foots. This is because the orders of the District Court were made on 31 May 2013 before the date of the bankruptcy. These were orders requiring the Crosses to pay Ms Bechara's costs on an indemnity basis from 19 October 2012 but each party to pay their own costs up to that date subject to three exceptions (where Ms Bechara had been ordered to pay the Crosses' costs). Consistently with the reasoning in Foots, the costs payable under the indemnity costs order constituted a debt provable in the bankruptcy, the obligation of Mr Reidy being to estimate the costs that would be recoverable under that order to the best of his ability. In fact, Mr Reidy accepted that the whole of that amount ($153,968.14) was provable in the bankruptcy, a conclusion which gave Ms Bechara a benefit in terms of voting entitlements. The issue is whether the order for party-party costs relating to the period before 19 October 2012 which the Court of Appeal made after the bankruptcy is also provable in the bankruptcy. The argument in favour of Ms Bechara is that the Court of Appeal set aside the order of the District Court and in lieu thereof ordered the Crosses to pay Ms Bechara's costs on a party-party basis for the relevant period. In other words, it is said that the Court of Appeal's costs order operates on and from the date of the District Court's costs order because it is, in fact and law, a substituted order.
68 The Uniform Civil Procedure Rules 2005 (NSW) (the UCPR), r 36.4, provides that:
(1) A judgment or order takes effect:
(a) as of the date on which it is given or made, or
(b) if the court orders that it not take effect until it is entered, as of the date on which it is entered.
(2) Despite subrule (1), if an order of the court directs the payment of costs, and the costs are to be assessed, the order takes effect as of the date when the relevant cost assessor's certificate is filed.
(3) Despite subrules (1) and (2), the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules.
69 For reasons not made clear, the submissions for Mr Kerr relied only on r 36.4(1) not r 36.4(2). I do not propose to deal with r 36.4(2) in consequence. Under r 36.4(1) the order of the Court of Appeal setting aside the order of the District Court and making an order for costs in lieu thereof took effect on the date that order was made, which was after the bankruptcy. On this basis, the reasoning in Foots leads to the conclusion that any costs pursuant to that order are not provable in the bankruptcy. Mr Reidy was thus correct to also disallow the amount of $173,428.86.
70 This leaves the amount of $62,667.83 relating to the costs of compliance with a subpoena and/or notices to produce in the Supreme Court of New South Wales proceedings between Mr Akcan and the Crosses. One problem with this claim is that the scheme for dealing with the costs of compliance with a subpoena or a notice to produce is regulated by the UCPR, rr 33.11 and 34.3. A notice to produce issued by the Crosses against Ms Bechara was tendered. Ms Bechara was also served with a subpoena from Mr Akcan and a subpoena by the Crosses. It goes without saying that Ms Bechara cannot prove in the bankruptcy of the Crosses the costs of complying with a subpoena from Mr Akcan, yet this is what she has tried to do (as discussed below). Mr Akcan is responsible for those costs, not the Crosses.
71 In respect of the notice to produce issued by the Crosses r 34.3 of the UCPR is applicable. It provides that:
(1) The court may order the party requiring production to pay the amount of any reasonable loss or expense incurred by the party required to produce in complying with a notice to produce.
(2) If an order is made under subrule (1), the court must fix the amount or direct that it be fixed in accordance with the court's usual procedure in relation to costs.
72 It is not apparent that Ms Bechara has applied for her costs and expenses of complying with the notice to produce to be paid. I do not accept that Ms Bechara had a right to have her costs paid which gave rise to a debt on service of the notice to produce. Rule 34.3 is a statutory scheme for costs recovery which depends on the making of an order for payment. The making of the order and the amount required to be paid are in the discretion of the court. Unless and until such an order is made there is no debt. The same result would apply in the case of the subpoena.
73 Although r 33.6(1) provides that "[a]n addressee need not comply with the requirements of a subpoena to attend to give evidence unless conduct money has been handed or tendered to the addressee a reasonable time before the date on which attendance is required", conduct money under the UCPR is not necessarily the costs of compliance with the subpoena. Any application for those costs is to be made under r 33.11. The case is not analogous to the observations in Re McLean at 512 that a debt is not contingent merely because it is the subject of incomplete litigation. Nor do I find the observations in Foyster v Foyster Holdings [2003] NSWSC 881 helpful to the case for Ms Bechara. Campbell J was dealing with a rule different from the UCPR which provided that:
A subpoena shall not require the person named to attend or produce any document or thing on any day on which his attendance or production by him is required unless a sum sufficient to meet the reasonable expenses of the person named of complying with the subpoena in relation to that day is paid or tendered to him at the time of service of the subpoena or not later than a reasonable time before that day
74 In that context, Campbell J said:
[10] … The rule requires, it seems to me, that the person tendering the subpoena make an estimate of what are the reasonable expenses of the person named of complying with the subpoena, and to tender that amount at the time of service…
75 There is no equivalent requirement in the UCPR. Instead, under the UCPR the requirement for conduct money and the capacity to apply for an order for costs and expenses of compliance to be paid are separate.
76 In any event, and as noted, while Ms Bechara said the Crosses had issued a subpoena requiring her to attend Court so, however, had Mr Akcan. Ms Bechara has not allocated any of her expenses for complying with that subpoena to Mr Akcan. Instead, she has included all such costs in her claim against the Crosses in the bankruptcy. That is untenable. For example, it is evident that while the notice to produce is dated 18 March 2013 many of the costs claimed date from 2012 and, on their face, concern the subpoena Mr Akcan issued. The itemised account shows also that the subpoena to attend on behalf of the Crosses was not served until February 2013. In other words, it is obvious that a large part of this claim concerns costs payable, if at all, by Mr Akcan. Further, despite her evidence that she made a discounted offer on costs to the Crosses for her compliance with their subpoena, her itemised account indicates that she in fact served a bill of costs in respect of that subpoena for only $8,577.55. Yet her claim in the bankruptcy for this subpoena (to attend) and a notice to produce some documents is $62,667.83. It cannot be that the balance relates to the notice to produce documents, compliance with which could not have cost more than compliance with the subpoena to attend.
77 It is not possible to work out what proportion was rightfully claimable against the Crosses (leaving aside the fact of the bankruptcies). However, it is Ms Bechara who asserts Mr Reidy erred and thus it is for her to prove, by admissible evidence, the amount in respect of which she was entitled to be admitted to vote. The rolled up claim she lodged, unsupported by any further evidence, means that Ms Bechara has not proved she was a creditor of the Crosses for any amount in respect of the subpoena and notice to produce.
78 For these reasons Mr Reidy was also correct to disallow the claim for $62,667.83. Alternatively, although she is the person challenging Mr Reidy's ruling Ms Bechara has not proved she is a creditor in any such amount and her challenge must fail.
79 Some further observations should be made.
80 Insofar as there was any reference to the unsecured claim of Rockwell Olivier for $170,828.01 nothing suggested any error by Mr Reidy in admitting Rockwell Olivier for this amount for voting purposes. Again, Ms Bechara and Mr Akcan certainly did not prove anything to the contrary. Nothing was said either about the claims of AADD Investments Pty Ltd.
81 If I am incorrect about any aspect of Ms Bechara's claim then it should be noted that this does not necessarily mean it is just and equitable for an order to be made in her favour. The other creditors controlled voting entitlements of $1,806,868 in the Gabriel Cross bankruptcy and $1,777,775 in the Rosabelle Cross bankruptcy. Mr Akcan, as noted, controlled $1,261,514.35. Any disallowance which took Ms Bechara's voting entitlements below $545,354 in the Gabriel Cross bankruptcy or $516,261 in the Rosabelle Cross bankruptcy would have meant that the voting outcomes would remain unaffected. A person challenging the meeting outcomes must prove that the alleged errors would have made a difference (Re Dingle & Cockerill; Westpac Banking Corporation v Worrell (1993) 47 FCR 478). Not every permutation of Ms Bechara's case would have made a difference.
82 On the basis of the material before me, there are sound reasons for concluding that Ms Bechara was not a creditor of the bankrupt estates in the full amount claimed or anything like it, which provides further support for the quantum of adjustments Mr Reidy made.
83 In respect of the subpoena and notice to produce costs, I refer to my observations above. If anything was properly claimable, then the claim could not reasonably have exceeded $8,577.55.
84 In respect of the costs under the orders of the District Court and the Court of Appeal, those orders excluded "costs orders made on 26 March 2012, 20 July 2012 and 7 March 2013 which costs orders are to remain operative". These were orders in favour of the Crosses against Ms Bechara. Ms Bechara said she did not claim any amount the subject of the costs orders against her, but the documents suggest to the contrary and she could not identify what, if anything, had been excluded. As such, I do not accept her evidence to this effect. It is not possible to ascertain exactly what should have been excluded but, again, the result of this inadequacy is that Ms Bechara has not proved she was a creditor of the Crosses in the amount claimed.
85 In respect of the Court of Appeal costs, for the reasons given no such costs were provable in the bankruptcy.
86 On this basis, it is apparent that Ms Bechara has not only failed to prove any error by Mr Reidy but has also failed to prove that it would be just and equitable to make any order in respect of Mr Reidy's decisions on voting entitlements.
87 For these reasons, the declarations in paras 2 and 3 of Mr Kerr's application should be made, and paras 6, 7 and 8 of the interim application filed for Ms Bechara and Mr Akcan should be dismissed.