Maclean v Brylewski, in the matter of Maclean

1. In Maclean v Brylewski, in the matter of Maclean [2025] FCAFC 133 we allowed an appeal from a decision of the primary judge dismissing an application by the appellant, Ms Maclean, to annul her bankruptcy. The parties have since made written submissions about the costs of the appeal and of the proceeding below. We determine the outcome of those issues in these reasons, each in turn. Familiarity with the main judgment is assumed.
2. The issues that have been raised make it unnecessary to recite any principles, other than the basic one that s 43 of the Federal Court of Australia Act 1976 (Cth) gives the Court a broad discretion as to costs which permits it to fashion orders that do justice in all the relevant circumstances. That discretion will be exercised judicially, in light of the ordinary rule of fairness that a successful party in litigation is entitled to an award of costs in its favour, in order to indemnify it against liability that would not have been incurred had the litigation not been brought or defended by the unsuccessful party: see Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at 97, 120; and Idenix Pharmaceuticals LLC v Gilead Sciences Pty Ltd (No 2) [2018] FCAFC 7 at [3].

1. Ms Maclean submits that the costs of the appeal should follow the event and that the respondents should pay those costs, given that the appeal was allowed and the orders of the primary judge were set aside.
2. The first and second respondents, the Brylewskis, submit that there should be no order as to the costs of the appeal. They submit that Ms Maclean was successful on procedural unfairness grounds that are not attributable to any fault by the Brylewskis. They say that it was inherently preferable that there be a contradictor on the question of the fairness of the proceeding below, and it was appropriate for them to fulfil that role.
3. The Brylewskis also submit that:

(a) the issue of the solvency of Ms Maclean was remitted and is yet to be determined, so the Brylewskis should not be liable for the considerable time and expense incurred on the appeal in relation to solvency;

(b) Ms Maclean did not have success on various issues agitated in the appeal, including issues about the admission of fresh evidence;

(c) the Brylewskis voluntarily assumed certain costs for which an appellant would normally be responsible, such as the preparation of the Part A and Part B appeal books and producing transcripts of interlocutory hearings below; and

(d) Ms Maclean had pro-bono representation and the manner of calculating her costs has not been disclosed.

1. In response to the last of these points, Ms Maclean has filed an affidavit sworn on 7 November 2025 by one of her solicitors, Dennis Olthof, which produces costs agreements between her and her solicitors in the appeal and her barrister in the appeal.
2. Specifically to the costs of the third respondent (Ms Maclean's Trustee in bankruptcy), Ms Maclean submits that the Court should order that he is not entitled to claim indemnity against her bankrupt estate for his liability for costs to her, or for his own costs of the appeal. She points out that the Trustee took a strong adversarial position on the appeal, even to the extent of seeking indemnity costs from her should the appeal have been dismissed.
3. The Trustee opposes any order for the costs of the appeal against him. That is because the only ground that was successful was ground 2, concerning the conflict of interest of the solicitor representing Ms Maclean before the primary judge, and the Trustee did not take a position on that ground. The question the Trustee did take a position on was Ms Maclean's solvency, which he says he did as a result of inadequate disclosure by Ms Maclean of her financial position. He characterises his approach in the appeal as merely putting forward information that went to that question. On that basis, he claims that he acted reasonably so that he is entitled to indemnity out of the bankrupt estate.

1. As between Ms Maclean and the Brylewskis, the costs of the appeal should follow the event. The Brylewskis defended the appeal vigorously, and Ms Maclean was successful. While the deficiencies in the proceeding below were not the fault of the Brylewskis, and while the Court had the benefit of them acting as contradictors in the appeal, they were contradictors because they took an adversarial position to Ms Maclean in pursuance of their own interests. While there is nothing inappropriate about that, it places them in the usual position of persons unsuccessfully resisting a proceeding, and the usual costs consequences should follow.
2. It is true that this Court made no determination on the issue of Ms Maclean's solvency. But each party took the risk that it may or may not have been necessary to determine that issue in the appeal, depending on the Court's decision in relation to ground 2 and whether it was appropriate to remit the matter to a judge in the original jurisdiction. Ultimately, the consequence of taking that risk should be visited on the unsuccessful party, not the successful one. So as between Ms Maclean and the Brylewskis, the costs of agitating the issue of solvency should also follow the event.
3. The particular issues on which Ms Maclean was unsuccessful, such as the admission of fresh evidence, are insufficiently separable from the conduct of the appeal as a whole to warrant any apportionment in favour of the respondents.
4. The costs that the Brylewskis voluntarily assumed are costs for which they, as the unsuccessful party, would have been liable anyway, so there is no need to take account of them in any separate way.

1. The Trustee is correct to say that he did not resist ground 2. But he mischaracterises his approach concerning the issue of solvency as merely putting information before the Court. In truth, the Trustee took an adversarial position in the appeal, arguing that Ms Maclean was not solvent so that the appeal should be dismissed. He suggested that the invoices from Mr Adamson could not be ignored, and that with those invoices Ms Maclean was insolvent, when the Brylewskis themselves had drawn the primary judge's attention to doubts about those invoices.
2. The Trustee has not explained why it was reasonable for him to take an adversarial position on the question of solvency, or on the question of the annulment of the bankruptcy as a whole. We conclude that it was not reasonable; the Trustee has no apparent interest in the outcome, as he will be entitled to recover costs properly incurred from Ms Maclean's estate even if it is annulled: s 154(1)(b) of the Bankruptcy Act 1966 (Cth).
3. It follows from this conclusion and the basic principles discussed in Adsett v Berlouis [1992] FCA 368; (1992) 37 FCR 201 at 210-211 that the Trustee should not be entitled to recover his costs in respect of the appeal from the assets of the bankrupt estate, whether that be his costs liability to Ms Maclean or his own costs.
4. There is no good reason to adopt an alternative suggestion advanced by Ms Maclean, that the Brylewskis pay the Trustee's costs. There is no basis in the evidence to think that the Brylewskis were responsible in any way for the Trustee's conduct of the proceeding.
5. In the circumstances, the Trustee will be ordered to be liable for Ms Maclean's costs and disbursements of the appeal in relation to the issue of solvency (so not in relation to ground 2). As to the apportionment of costs concerning the issue of solvency, we adopt the percentage of 30% advanced by the Brylewskis as a suitably impressionistic assessment: see Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 at [52]. To that extent, then, the Trustee will be jointly and severally liable with the Brylewskis.

The arrangements as to costs between Ms Maclean and her representatives

1. As to the basis on which Ms Maclean's legal representatives will charge, Mr Olthof's affidavit discloses that both Ms Maclean's solicitors and the barrister that appeared for her entered into written costs agreements with Ms Maclean. Both of the agreements provide that the lawyers would charge only if a costs order was made in Ms Maclean's favour, and their fees would be calculated on the usual time basis, capped at the amount of costs actually recovered from other parties. The indemnity principle which is a necessary condition of the liability of an unsuccessful party for the costs of the successful party is therefore engaged.
2. Rule 4.19 of the Federal Court Rules 2011 (Cth) empowers the court to order that any costs payable by the respondents be paid directly to the pro bono lawyers. Ms Maclean has instructed her lawyers to seek a costs order of that kind. The order is appropriate and will be made.
3. The costs of the appeal will be referred to a Registrar of the Court for assessment, if not agreed between the parties.

1. Ms Maclean submits that no orders should be made requiring her or her bankrupt estate to pay the costs of the proceeding below, and no indemnity out of her estate to the Trustee should be allowed. She submits that the costs of the proceeding at first instance were incurred because of the failure of the solicitor who represented her in the proceeding, Mr Adamson, to recognise an objectively apparent conflict of interest. She does not seek any order for costs against the respondents.
2. Ms Maclean submits that an order should be made that any costs claimed by Mr Adamson in the proceeding below be disallowed. However, as we have already informed the parties, we consider that this is not within the scope of the Court's appellate jurisdiction. If any party wishes to pursue orders as to the costs of the proceeding below which may prejudice Mr Adamson, they will need to make application in the original jurisdiction, on notice to him in the usual way. Ms Maclean's written submissions in reply appear to interpret this as the Court directing that it would only determine the costs of the appeal. That is incorrect; the Court confirmed to the parties that it was going to determine the inter partes costs of the proceeding below.
3. Ms Maclean also submits that the Court should order that her estate be indemnified by Mr Adamson as against costs claimable by the Trustee. However this too is outside the appellate jurisdiction that is exercised by the Full Court, and is an order that should only be sought on proper notice to Mr Adamson.
4. The Brylewskis submit that justice would be best served by Ms Maclean being required to pay their costs of the proceeding below. That is because the substantive orders of the primary judge were set aside due to failures that are not attributable to the Brylewskis; indeed, their solicitor sought to draw attention to concerns of the kind that led this Court to find that the judgment below was to be set aside. The Brylewskis also point out that they will need to face the costs of the remitter hearing. They also rely on what they say will be the limited financial consequences for Ms Maclean given that she is applying to avoid personal liability for Mr Adamson's costs, which would mean she could potentially recover the costs of the Brylewskis in the proceeding below.
5. The Trustee opposes any order to the effect that he is unable to claim an indemnity for his costs of the proceeding below from the bankrupt estate. He does so essentially on the same grounds as he puts in relation to the appeal.

1. The Court has already, in its orders of 30 September 2025, set aside the costs orders made below.
2. The costs incurred by all concerned in the proceeding below have essentially been wasted. The resolution of the issues surrounding the bankruptcy of Ms Maclean has not been appreciably advanced by the proceeding below. To the extent that she prosecuted the application and the respondents resisted it, this was done on a basis that was fundamentally flawed, due to the position of conflict of Mr Adamson. This is not due to the fault of Ms Maclean personally (as distinct from or through Mr Adamson) or the fault of the respondents.
3. This waste means that it will not be appropriate to order that the costs of the proceeding below are costs in the remitted proceeding. Whoever is unsuccessful in the remitted proceeding should not have the wasted costs of the original proceeding visited upon them. The just outcome is not to make any order as to the costs of the proceeding below. Once again, if any party chooses to pursue Mr Adamson in relation to those costs, that is a matter to be determined in the original jurisdiction after proper notice to him.
4. It is not relevant that the respondents now face the costs of another hearing in the original jurisdiction. Those costs will fall to be determined in the course of that proceeding. The Brylewskis' submissions about the financial consequences for Ms Maclean of any order concerning Mr Adamson's costs below are speculative. They will have a right to be heard on any proceeding in the original jurisdiction concerning those costs and the judge hearing that proceeding will ensure that Ms Maclean does not receive a windfall.
5. In contrast to the appeal, there is no apparent reason why the Trustee is not entitled to draw on his indemnity from the bankrupt estate for the costs of the proceeding below. All this Court has to go on is the transcript of the final hearing before the primary judge on 24 June 2024, where it does appear that the Trustee did appropriately confine his role to putting material before the Court concerning Ms Maclean's financial position, in the face of a lack of disclosure from her (as represented by Mr Adamson). We make no finding that the Trustee is not entitled to recover his costs of the proceeding below from the bankrupt estate. If there is any doubt or issue about that, it can be resolved by the Trustee seeking directions in the usual way under s 90-15(1) of the Insolvency Practice Schedule (Bankruptcy), being Sch 2 to the Bankruptcy Act.

Certificates under the Federal Proceedings (Costs) Act

1. Ms Maclean applies for certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) for any liability that her estate has if the Trustee is permitted to recover against her estate in either the proceedings below or on appeal (s 7) and the remitted hearing (s 8).
2. However, even if the Trustee is entitled to recover costs from Ms Maclean's estate in relation to the proceeding below, the Court does not have power under s 7 of the Federal Proceedings (Costs) Act to award a certificate in her favour in relation to those costs. The power in s 7 relates only to the costs of an appeal.
3. As to a certificate for the costs of the appeal, the power of the Court to grant it can only be exercised if the respondent lacks means to pay relevant costs, or such payment would cause the respondent undue hardship, or if the whereabouts of the respondent are unknown: s 7(1)(c)‑(e). There is no evidence before the Court establishing any of those matters.
4. In the circumstances it is, however, appropriate for Ms Maclean to have the benefit of a costs certificate under s 8 of the Federal Proceedings (Costs) Act in respect of the remitted proceeding, noting that under s 18 of that Act and reg 6 of the Federal Proceedings (Costs) Regulations 2018 (Cth), the amount payable under the certificate will be limited to $6,000.

I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Jackson, Moore and Stellios.