Yeo (Trustee), in the matter of Trim (Bankrupt) v Trim

1. The petitioning creditors, Mr Andrew Reginald Yeo and Ms Gess Rambaldi, are the Trustees of the estate of Mr Russell Trim, a bankrupt. The debtor is Mr Darren Trim (Mr Trim).
2. On 21 December 2023, a creditor's petition was filed seeking sequestration of Mr Trim's estate. The relevant act of bankruptcy relied upon was Mr Trim's failure to comply with a Bankruptcy Notice served on 23 August 2023.
3. On 3 October 2024, Registrar Edwards made orders including that Mr Trim's estate be sequestrated pursuant to the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). Mr Trim sought a review of the registrar's decision.
4. On 24 October 2024, Mr Trim filed an application for a review of the Registrar's decision. Mr Trim sought orders that the Creditor's Petition be dismissed and the sequestration order be set aside. The review application was heard on 20 December 2024.
5. On 15 August 2025, I handed down a judgment in the review. I dismissed the amended creditor's petition filed on 23 July 2024 and set aside the sequestration order made by Registrar Edwards against Mr Darren Trim on 3 October 2024.
6. I found in favour of Mr Trim on two bases. The first was the failure of the creditors to file an affidavit of search and an affidavit of debt prior to the hearing. Rule 4.06 of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules) prescribes the filing of those affidavits, and I found that the failure to do so was fatal to the applicant's application. The second was the confusion in the Bankruptcy Notice occasioned by the creditor's reliance on two different sources of interest.
7. I made further orders requiring any party seeking costs to file and serve their submissions in support of any such application, and for the opposing party to file their submissions in reply. On 29 August and 22 September 2025, the respondent and applicant respectively, filed their submissions on costs.
8. Mr Trim seeks costs against the applicants. The applicants oppose that application and seek an order that Mr Trim pay their costs. The parties have consented to the costs applications being determined on the papers.
9. These reasons assume familiarity with the reasons I gave for the orders made in Yeo (Trustee), in the matter of Trim (Bankrupt) v Trim [2025] FedCFamC2G 1307.

1. In the ordinary course, costs should follow the event[1]. Nonetheless, the Court has a broad discretion to award costs to a party in a proceeding.
2. Relevantly, section 32 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) provides that the Court may make such orders as to costs "as it thinks fit" in any proceeding before it.
3. Pursuant to rule 22 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), the Court may order costs and in doing so may set the amount, set the method by which the costs are calculated or refer the costs to taxation.
4. The Court's discretion to award costs is further refined by Division 13.1 of the Bankruptcy Rules.
5. Pursuant to r 13.01 of the Bankruptcy Rules, subject to Division 13.2 and unless the Court otherwise orders, a person who is entitled to costs in a proceeding in which the Bankruptcy Act applies is entitled to costs according to Part 40 of the Federal Court Rules 2011 (Cth) (the Rules). The award of such costs is in the discretion of this Court and when making an order for costs the Court may fix the amount.
6. Division 13.2 makes provision in relation to the costs that may be charged by a legal practitioner for a creditor for work done in relation to a creditor's petition, but it does not apply if the Court fixes the amount of the costs.
7. Although the discretion afforded to the Court is broad, it must be exercised judicially and in the context of the relevant court rules. The discretion should also be exercised by having regard to the orthodox approach whereby costs follow the event and the successful party is entitled to be indemnified (wholly or partially) for its professional legal costs actually incurred.

1. Mr Trim made the following submissions in support of his costs application:

(1) costs should follow the event, and as such he is entitled to an order that the applicant pay his costs of the creditor's petition;[2]

(2) whilst the presumption that costs follow the event can be displaced where the conduct of the successful party is such as to disentitle them to costs, no such disentitling conduct arises in this matter;

(3) the application for review was brought promptly following the sequestration order and the matter was progressed to a first directions on 7 November 2024. It cannot therefore be said that he was dilatory or conducted himself in such a way as to give rise to incurring unnecessary or excessive costs;[3]

(4) costs should be awarded on a party-party and lump sum basis, rather than the matter proceeding to taxation. Mr Trim further submits that he is not registered for GST, and as such, the award of costs should include provision for the GST paid by Mr Trim on his costs.

1. Mr Trim annexed to his submission a schedule of solicitor's fees incurred in relation to the application for review. That statement provides details of the solicitor's costs incurred and descriptions of the tasks performed. Also annexed to his submission were invoices issued from the two counsel who appeared in the review proceedings.
2. Mr Trim quantified his legal costs and disbursements as follows:

(1) filing fees of $475;

(2) solicitor's fees of $8,477; and

(3) counsel fees of:

(a) $2,775 in respect of Ms Stephanie Forward-Smith; and

(b) $9,157 in respect of Mr Andrew Bailie.

1. Mr Trim puts his total costs at $20,884 (exclusive of GST). The total of Mr Trim's claim for costs is $22,925.45 inclusive of GST.
2. Mr Trim submits that the work performed on his behalf and the fees incurred by solicitors was largely performed by a solicitor under supervision; and that those fees were calculated in accordance with Schedule 3 of the Rules.
3. Mr Trim retained two barristers throughout the course of the proceedings. Ms Stephanie Forward-Smith (at a rate of $225 per hour) gave advice regarding his application for review of the Registrar's decision and prepared the same, and appeared at the first directions hearing on 7 November 2024. Mr Trim subsequently retained Mr Bailie (at a rate of $272.25) who appeared at the final hearing on 20 December 2024.

1. The applicants rely on the following grounds which they say partially or entirely diminish any costs to which Mr Trim may be entitled:

(1) relying on Quaresmini v Crouch and Lyndon (a Firm) [2011] FMCA 71 (Quaresmini) the creditors argue that the presumption that costs follow the event is rebuttable when the event occurs as a result of the successful party's previous failure to act. They submit the facts in Quaresmini which led to a refusal to grant costs mirror the facts in this matter;

(2) the validity of the underlying judgment debt is not subject to dispute or an application for re-hearing. It is submitted that my findings do not disturb the fact that Mr Trim is insolvent and indebted to the applicants. Whilst the Bankruptcy notice was invalid, materially the Applicant is capable of being bankrupted and the Bankruptcy Notice and the proceeding Creditor's Petition were initiated and prosecuted in good faith by the applicants;

(3) Mr Trim has caused further delay and further increased costs by failing to bring the application of review promptly; and

(4) had Mr Trim not changed counsel, some significant portion of billable work charged by Mr Baillie would not have been incurred. It is submitted that any costs awarded should be discounted by $1,633.50 to reflect the additional costs created by the Respondent in changing counsel.

1. In Quaresmini Jarrett FM (as he then was) set out the relevant facts which influenced his decision to depart from the usual rule; at [7] and [8] his Honour said:

Mr Quaresmini failed to respond to the Bankruptcy Notice when it was properly served upon him. He failed to respond to the creditor's petition when it was properly served upon him. He failed to appear on the hearing of the creditor's petition. Subsequently he filed his application to review the making of the sequestration order out of time.

There is no adequate explanation for Mr Quaresmini's failure to respond to the bankruptcy notice or the creditor's petition. There is no adequate explanation of the delay in bringing the application for review

1. The creditors contend that Mr Trim conducted himself in a similar manner.
2. In the present case, the petitioning creditor obtained a judgment against Mr Trim for $78,000 plus interest plus costs on 18 April 2019. That judgment was entered against Mr Trim because he had defaulted on a settlement agreement made in March 2018. In February 2020 the parties entered into the Forbearance Deed pursuant to which Mr Trim agreed to pay $93,000 in three instalments. He again defaulted on those payment obligations.
3. The Bankruptcy Notice was issued on 8 August 2023 and served on 23 August 2023. By reason of his failure to comply with the Bankruptcy Notice, a sequestration order was made against the Mr Trim on 3 October 2024. Mr Trim appeared at the creditor's petition hearing with representation but he did not raise the arguments on which he has now been successful.
4. Mr Trim filed his application for review of that decision on 24 October 2024, being 21 days after and the last day within time to file his application.
5. On 7 November 2024 I made orders requiring Mr Trim to file his submissions no later than 21 November 2024. Those orders were subsequently vacated by consent, and I extended the time for the filing of submissions to 28 November 2024. Mr Trim filed his submissions on 28 November 2024.
6. The creditors say the relevant case history demonstrates that Mr Trim has not acted in good faith, he has delayed proceedings and caused the petitioning creditors to incur unnecessary costs. They point to the facts that Mr Trim has consistently failed to pay debts for which he is plainly liable, that he chose not to raise arguments about the validity of the bankruptcy notice until the very last minute and that his claims of solvency had no substance.

1. As Weinberg J stated in Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338:

a balance must be struck between the rights of the appellant, who should never have been made bankrupt in the first place, and the Official Trustee, who has simply done what the Act requires him to do. In my view, the particular circumstances of this case require that that balance tilt in favour of the appellant.

1. In determining the applications for costs, I must find the right balance.
2. In the present proceeding the debtor was successful insofar as he was granted the relief he sought, namely the setting aside of the bankruptcy notice and the sequestration order. That success would ordinarily engage the principal that costs follow the event.
3. However, in truth the Mr Trim was only partially successful on his application. The better description is that each party enjoyed a measure of success.
4. The bankruptcy notice was found to have been invalid, largely on technical grounds. I found that the content of the bankruptcy notice failed to meet the requirements made essential by the Act and that the form of notice could reasonably mislead a debtor as to what is necessary to comply with it. By reason of those findings, the bankruptcy notice and creditors petition was set aside, as was the sequestration order.
5. But it should not be overlooked that Mr Trim asserted, in the alternative, that if the Bankruptcy Notice was found to be valid, the debt relied upon in the creditors petition was not due and that he is, in any event, solvent and able to pay his debts. A significant body of evidence and submissions were directed to the question of indebtedness and solvency. I found against Mr Trim on those issues.
6. The creditors were put to the cost of having to contest Mr Trim's claim of solvency and they were successful on that point. In my view, an allowance should be made against Mr Trim for having run this meritless alternative argument.
7. Further, a discount should be applied for two other reasons, one substantive and one less so.
8. First, the grounds on which Mr Trim contested the bankruptcy notice were not raised until the review hearing. Although Mr Trim was ultimately successful, he could have, but for some reason did not, agitate the technical grounds before the Registrar, nor did he make his own application for the bankruptcy notice to be set aside when it was served. I accept the creditors submissions that the failure to contest the notice at an earlier stage has caused delay and the incurring of unnecessary costs. In my opinion, there should be some further apportionment in favour of the creditor on account of that aspect of Mr Trim's conduct.
9. Second, I accept the creditor's submission that there will have been some degree of duplication of effort and an increase in cost due to the debtor's decision to change counsel. I regard this as a minor issue but one which nonetheless should be taken into account.

1. The procedure for determining the quantum of costs for a successful party should not be delayed and should be as inexpensive and efficient as possible. Where practicable the Court should consider a lump sum costs order.
2. In Paciocco v Australia and New Zealand Banking Group Limited (No 2) [2017] FCAFC 146, the Full Court (Allsop CJ, Besanko and Middleton JJ) noted (at [20]):

There is no particular characteristic that a case must possess for it to be suitable for the making of a lump sum costs order. Particular circumstances that may make a lump sum order especially appropriate include where in a large and complex commercial matter it would save the time, trouble, expense and aggravation of a taxation; where a taxation would require the parties to consume additional time and incur additional expenditure prolonging already protracted litigation; and generally to avoid an ongoing, counter-productive dispute as to costs, in the interests of achieving finality.

1. In determining whether it is appropriate to make a lump sum costs order, rather than putting the assessment to a taxation, there are a number of relevant considerations. Adopting the approach of Judge Manasouridis in Doyle v Lewis (No 2) [2023] FedCFamC2G 488 at [12], the following may be relevant:

(a) by making a lump sum costs order, the successful party can avoid the additional costs associated with taxation;

(b) the avoidance of the taxation may also benefit the unsuccessful party because, depending on the outcome of the taxation, the further costs of an assessment may have to be borne by the person who is otherwise liable to pay the costs;

(c) a lump sum costs order will put an end to the proceeding, rather than prolonging it;

(d) in a relatively straightforward proceeding, the identification of the costs is easier to ascertain than might be the case in a more complicated proceeding; and

(e) the costs of a taxation may be disproportionate to the quantum of costs sought.

1. In determining a fixed sum, the Court does not engage in a process of taxation or formal assessment. It is open to the Court to apply a much broader brush than would be applied on a taxation, but the approach must still be logical, fair and reasonable. The power to award a lump sum can be exercised when the Court considers that it can do so fairly between the parties where it has sufficient confidence that it can arrive at an appropriate sum on the materials available.[4]
2. Having regard to all relevant matters, I am inclined to the view that the applicants should pay Mr Trim's costs, but not on the party/party basis proposed. In my opinion an order which requires assessment or taxation of costs will only put the parties to further unnecessary expense. I also consider that the costs of a taxation would be disproportionate to the amounts claimed. In all the circumstances, I consider it appropriate to make an order fixing the costs.
3. An allowance against Mr Trim's claim should be made to account for the fact that he was not wholly successful, that his conduct has contributed to delay in the proceedings and that the creditors have incurred costs greater than they would have if Mr Trim had raised his objections to the Bankruptcy Notice earlier.
4. I have determined that the first and second applicants should pay the respondent's costs fixed in the sum of $11,000, an amount which is approximately 50% of the amount claimed. I consider this to be a just exercise of my discretion in the circumstances.

I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes.

[1] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Meshram v Bing Lee Electrics Pty Ltd [2024] FedCFamC2G

[2] Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338 at [36]

[3] Quaresmini v Crouch and Lyndon (A Firm) [2011] FMCA 71; Ravesi v Hegyi [2015] FCCA 1962

[4] See, Harrison v Schipp [2002] NSWCA 27 at [22] per Giles JA and the cases cited therein.