FEDERAL COURT OF AUSTRALIA Bendeich v Andresen [2000] FCA 90 BANKRUPTCY - Costs where trustee's original application to terminate a Deed of Arrangement unsuccessful - where Court recognised deed to be ineffective because authority on which it was based not executed in accordance with statutory procedures - relevance and timing of trustee's knowledge of procedural non-compliance - delays caused by unmeritorious arguments of successful party - costs relating to administration of ineffective Deed of Arrangement outside Court's jurisdiction Bankruptcy Act 1966 (Cth) s 188 GRAHAM ROSS BENDEICH V CAROLYN DOROTHY ANDRESEN QG 7283 OF 1999 KIEFEL J BRISBANE 11 FEBRUARY 2000 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 7283 OF 1999 BETWEEN: GRAHAM ROSS BENDEICH Applicant AND: CAROLYN DOROTHY ANDRESEN Respondent JUDGE: KIEFEL J DATE OF ORDER: 11 FEBRUARY 2000 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The respondent pay the trustee's costs of the proceedings up to 2 November 1999. 2. The trustee pay one-third of the respondent's costs incurred after 2 November 1999. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 7283 OF 1999 BETWEEN: GRAHAM ROSS BENDEICH Applicant AND: CAROLYN DOROTHY ANDRESEN Respondent JUDGE: KIEFEL J DATE: 11 FEBRUARY 2000 PLACE: BRISBANE REASONS FOR JUDGMENT 1 Each of the parties seeks an order in their favour for the costs they have incurred in these proceedings. The trustee's application failed because the consent of the solicitor, to exercise the powers conferred by the authority which Mrs Andresen had signed, was not witnessed, as s 188 Bankruptcy Act 1966 (Cth) required, rendering ineffective steps taken with respect to the Part X Arrangement. Mrs Andresen did not successfully defend the application on the other basis put forward by her - her lack of true consent. 2 The issue of costs in the proceedings is substantially to be resolved by considering when the trustee was alerted to the point relating to the authority. There is no suggestion that the trustee was aware of any problem when these proceedings were instituted. A copy of the authority, absent the witness' signature, was exhibited to Mrs Andresen's affidavit of 2 August but I accept that the trustee and his advisers may not have been alert to the omission until 2 November 1999, prior to the hearing on 9 December, when written outlines of argument were exchanged. No other communication by Mrs Andresen's solicitors was made to the trustee concerning the fatal flaw in his application. It seems to me that the trustee should have his costs up to 2 November 1999. The question then is whether Mrs Andresen should have her costs after that time. 3 If the only point pursued by Mrs Andresen had been that upon which the trustee failed, I would have been inclined to make an order in her favour for those costs. The proceedings were however lengthened, to a considerable extent, by Mrs Andresen seeking to put forward, at a very late stage, an unmeritorious argument relating to her lack of understanding. In my view she should have an order only for one-third of the costs incurred after that time. 4 The trustee also sought an order for his costs incurred in the administration of the Deed of Arrangement. I was not referred to any authority for the making of such an order in circumstances where a deed has been held ineffective. The Court's supervisory role with respect to trustees' actions would seem to me only to arise in connexion with effective Deeds of Arrangement. It seems to me unlikely that a trustee would be left in a position where he was not paid for his work. In the absence of any indemnity provided to the trustee for his costs and outlays (whether fixed by the creditors or not) it seems to me however that, whilst he may have remedies against a number of persons in contract, quasi-contract, or tort, the question of liability for his costs cannot be determined in these proceedings. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice . Associate: Dated: 11 February 2000 Counsel for the Applicant: Mr M Martin Solicitor for the Applicant: Messrs Baker Johnson Counsel for the Respondent: Mr P McQuade Solicitor for the Respondent: Messrs McDonald Balanda and Associates Date of Hearing: 10 February 2000 Date of Judgment: 11 February 2000