Osborne v Gangemi

REASONS FOR JUDGMENT 1 On 4 November 2011, I made orders including the setting aside of the Personal Insolvency Agreement made by Antonio Gangemi ("Gangemi") under Part X of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"). My reasons for judgment were also delivered on that day and are published as Osborne v Gangemi [2011] FCA 1252. 2 The orders that were made on 4 November 2011 reserved the question of the legal costs of the second and third respondents ("the Trustees"). An application has been made by the Trustees for an order for their costs. A costs order is sought against the second applicant ("Osborne"), the third applicant ("Jafari") and also against Pasquale Lanciana ("Lanciana"). 3 On 14 October 2009, Lanciana commenced this application and was initially the sole applicant in the proceeding. On 4 February 2011, Lanciana was given leave to withdraw as an applicant. The question of whether Lanciana should pay the Trustees' costs was then reserved. 4 Earlier and on 19 April 2010, Lanciana informed the Court that he did not intend to continue with his application. On that day and on the application of Osborne and Jafari, orders were made that Osborne and Jafari be joined as applicants. Lanciana took no further part in the proceedings after 19 April 2010, other than as a witness called under subpoena by Osborne. 5 Each of Osborne, Jafari and Lanciana resist the Trustees' application for costs. 6 For the reasons that follow, I have determined that the application should be dismissed.

Should Osborne and Jafari be ordered to pay the trustees' costs? 12 The Trustees contend that their costs incurred after 19 April 2010 and until the first day of the trial should be paid by Osborne and Jafari. The Trustees' submission is premised on the proposition that Osborne and Jafari adopted allegations made against the Trustees and their staff by Lanciana and did not withdraw those allegations until the first day of the trial. 13 The Trustees application for costs was accompanied by copies of correspondence flowing between Osborne's solicitors and the solicitors for the Trustees ("the correspondence"). Although not formally tendered, each of the parties have relied upon the correspondence and none have raised any objection to this application being determined by reference to it. 14 Osborne and Jafari were successful applicants. The usual principle is that a successful party is not ordered to pay costs. An order of costs is discretionary, but good reason needs to be identified to substantiate an order for costs made against a successful party. In my view, no sufficient reason has been established by the Trustees to warrant a cost order being made against Osborne or Jafari. 15 Firstly, as I have described at [8], Lanciana made no specific allegation of wrongdoing against the Trustees or their staff although his affidavit was critical of them. Secondly, the basis upon which the Trustees contend that they were right to apprehend that such criticism was necessarily adopted by Osborne and Jafari is not clear. Thirdly, when Contentions were filed by Osborne on 2 July 2010, no allegations personal to the Trustees or their staff were made. Fourthly, a fair reading of the correspondence exchanged between Osborne's solicitors and those of the Trustees shows that from at least 23 July 2012 Osborne's solicitors advised the Trustees that Osborne was not pursuing any allegations against the Trustees or their staff and that to their knowledge no other party to the proceeding was so engaged. 16 For all those reasons, it seems to me that any assumption made by the Trustees that Osborne and Jafari were making allegations against them which compelled their participation in the proceeding (beyond that necessitated by their opposition to the relief sought) was an assumption made without a proper foundation. The costs consequences (if any) are fairly to be born by the Trustees and not Osborne or Jafari. 17 Accordingly, I decline to make any cost orders adverse to Osborne or Jafari. The Trustees should pay the costs of Osborne and Jafari incurred in responding to this application. 18 The Court will make orders as follows: 1. The application of the second and third respondents for costs be dismissed. 2. The second and third respondents pay the applicants' costs of the application and those of Pasquale Lanciana. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg.

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