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[2002] FCA 115
Federal Court of Australia
2002-02-21
Beaumont J
Original judgment source is linked above.
BEAUMONT J: 1 Having previously indicated, on a provisional basis, some proposed orders, I have now heard further argument on the form of the orders to be made in the proceedings at this stage. 2 The orders provisionally proposed, subject to any further submissions, were: "1. Note the agreement of the parties referred to in par 2 of my reasons for judgment dated 21 December 2001. 2. Application stood over generally, with liberty to restore on 7 days' notice. 3. Declare that the applicant (the first cross-respondent) has been effectively released from any liability to the third cross-respondent. 4. Reserve liberty to the bankrupt to apply to the Court, on such notice as a Judge of the Court may allow, for an order that the first respondent (the second cross-respondent) call a meeting of creditors pursuant to s 73(2) of the Bankruptcy Act 1966. 5. Order that the second respondents (the cross-applicants) pay the costs of the proceedings of the applicant (the first cross-respondent) up to and including 12 October 2001. 6. Order that the second respondents (the cross-applicants) pay the costs of the proceedings of the first respondent (the second cross-respondent) on a submitting basis only. Reserve liberty to the first respondent (the second cross-respondent) to apply, on such notice as a Judge of the Court may allow, for any further order for his costs. 7. Suspend the operation of these orders up to and including 14 February 2002." 3 It will be convenient to deal with the Application first.
ORDERS TO BE MADE ON THE APPLICATION 4 Clearly, the agreement mentioned in par 1 of the proposed orders ought to be noted. However, apart from costs (to be dealt with below), it does not appear that there is any live issue presented by the amended Application, requiring determination at this point, given the conclusion, dealt with on the cross-claim, that Mr Pitman has now (i.e. by virtue of the operation of the Settlement Deed made on 8 October 2001) been discharged from any potential liability to Abignano and Genallco. In other words, the issues originally raised by the Application now appear to be moot. In particular, given the effective release of Mr Pitman, he will no longer be able to vote at any meeting of creditors or otherwise participate in the administration of the bankrupt's estate. 5 However, the Application, in its original and evolving form, appeared to tender a wide range of complex issues in the administration of the bankrupt's estate. Since the general body of creditors has an interest in the outcome of the whole of the proceedings, and since it is conceivable, however unlikely, that a point may arise in the future which bears in some way upon at least some of the subject matter of the Application, rather than dismissing it, I think it is finally preferable to stand it over, reserving (as in par 2) liberty to restore should circumstances emerge warranting a review of some aspect of the matter. 6 In their respective written submissions, counsel for Mr Pitman and for the intervenors have nominated a range of questions, some factual, others legal, invariably complex which, they say, the Court should now address in the context of Mr Pitman's application. But, in my view, none of them has any longer any practical significance, given Mr Pitman's exit from the scene. I decline their respective invitations to adjudicate upon what have become moot questions.
ORDERS TO BE MADE ON THE CROSS-APPLICATION 7 Plainly there should be a declaration in terms of par 3. (Given the grant of leave to Throvena to substitute its proof referred to in [54] of my reasons dated 21 December 2001, no formal order to this effect is now required.) 8 Throvena also seeks an order directing the Trustee to call a fresh meeting under s 73(2). The Trustee will be bound to do so within a reasonable time. At the moment, I am not persuaded that the Trustee will refuse to do so. However, I will reserve liberty to apply, if necessary, as par 4 states.
COSTS 9 In my opinion, the question of costs ought to be approached, on a by and large basis, by considering the application and cross-application together. 10 So viewed, it is apparent that whilst the Trustee and the bankrupt are to be regarded as submitting parties, the real disputants (i.e. contradictors in the application and cross-application) were Throvena and Mr Pitman. 11 It is further to be borne in mind that whilst, to the above extent, this was adversarial litigation, the character of the contest, as one arising in the complex administration of a fund or estate, is significant. This was not merely a private dispute and, as mentioned the general body of creditors is interested in the outcome. 12 It appears that, until the Settlement Deed became operative on 8 October 2001, Mr Pitman had not been effectively discharged from liability. This, in my view, justified his claim for interim relief enjoining the original s 73 meeting. Although that injunction was later discharged, this occurred because there was then no live threat to proceed with the original proposal. Until 12 October 2001, Mr Pitman was not aware that he had been effectively released. Up to that point (i.e. the Settlement Deed), Throvena had failed to establish that Mr Pitman had been effectively released. Broadly speaking then, Mr Pitman had been successful in the litigation as a whole. This, in my view, justifies an order in terms of par 5. He should not, however, receive costs beyond that time. Nor, in my view, should Throvena, given its failure to seek leave to substitute its proof until very late in the proceedings. 13 The Trustee should receive costs upon a submitting basis only. If the Trustee seeks more costs, he will need, as par 6 provides, to apply.
GENERAL 14 It follows that, upon further consideration, I do not propose to vary the orders provisionally made on 8 February 2002, and they will now come into effect. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.
Counsel for the Applicant: Mr A Ogborne
Solicitor for the Cross-Applicants (Intervening Creditors): Hunt & Hunt
Date of Hearing: 14 February 2002
Date of Judgment: 21 February 2002
Pitman
Pantzer