Jones v Porsche Centre Melbourne Pty Ltd, in the matter of Jones [2000] FCA 1423

FEDERAL COURT OF AUSTRALIA

Jones v Porsche Centre Melbourne Pty Ltd, in the matter of Jones [2000] FCA 1423

COSTS – setting aside a Bankruptcy Notice – whether the usual rule that costs follow the result should be applied – whether costs of setting the Bankruptcy Notice aside resulted from the applicant's lax conduct - where applicant had failed to defend a civil proceeding resulting in a default judgment - where Bankruptcy Notice issued to enforce the default judgment

Federal Court of Australia Act 1976 s 35A(5) Ritter v Godfrey [1920] 2 KB 47 cited Oshlack v Richmond River Council (1998) 193 CLR 72 followed IN THE MATTER OF ANTHONY JONES ANTHONY JONES v PORSCHE CENTRE MELBOURNE PTY LIMITED N 7592 OF 2000 TAMBERLIN J SYDNEY 13 OCTOBER 2000

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7592 OF 2000

IN THE MATTER OF: ANTHONY JONES

BETWEEN: ANTHONY JONES

APPLICANT

AND: PORSCHE CENTRE MELBOURNE PTY LIMITED

RESPONDENT

JUDGE: TAMBERLIN J

DATE OF ORDER: 13 OCTOBER 2000

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The application for review is granted. 2. Order 3 made by the Registrar on 22 August 2000 be set aside. 3. The applicant to pay the costs of the respondent in the Federal Court proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7592 OF 2000

IN THE MATTER OF: ANTHONY JONES

BETWEEN: ANTHONY JONES

APPLICANT

AND: PORSCHE CENTRE MELBOURNE PTY LIMITED

RESPONDENT

JUDGE: TAMBERLIN J

DATE: 13 OCTOBER 2000

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This is an Application for Review of a Registrar's decision. It is brought pursuant to s 35A(5) of the Federal Court of Australia Act 1976 ("the FCA"). The review is by way of re-hearing and is not confined to judicial review in the narrow sense of being limited to errors of law or principle in the decision under review. 2 On 22 August 2000, Registrar Mathieson made an order by consent that the Bankruptcy Notice served on Anthony Jones ("Jones") by Porsche Centre Melbourne Pty Limited ("Porsche") should be set aside. After hearing argument the Registrar also made an order that Porsche should pay the costs of Jones. It is the order as to costs that is appealed. The Bankruptcy Notice was issued on 24 May 2000. It was supported by a judgment debt owing pursuant to a judgment of the Magistrates' Court of Victoria which was entered on 17 April 2000 ("the Victorian judgment"). The application to set the Bankruptcy Notice aside was filed on 10 July 2000. The Victorian judgment was set aside by consent. Jones agreed to pay the costs of Porsche of the application to set aside the Victorian judgment in an amount of $300. There was no agreement as to the costs relating to the Bankruptcy Notice or the application to set it aside. 3 The basis for the Registrar's decision was, in substance, that the parties had agreed the Bankruptcy Notice should be set aside and that therefore Jones had succeeded entirely in his claim. In exercising his discretion as to costs the Registrar followed the accepted principle that costs should normally follow the outcome: see Ritter v Godfrey [1920] 2 KB 47. The relevant principles were considered by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at 97 where his Honour said: "The expression the 'usual order as to costs' embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation." (Emphasis added) 4 Later his Honour referred to the traditional exceptions to the usual order as to costs and pointed out that they focus on the conduct of the successful party, and that such conduct may disentitle the successful party to the beneficial exercises of the discretion. The underlying question is whether the conduct in question resulted in the unnecessary incurring of costs. His Honour indicated that the Court may properly depart from the usual order as to costs where the successful party by its lax conduct effectively invites the litigation. 5 In the present case it is pointed out on behalf of Porsche that the Victorian judgment, which formed the basis of the Bankruptcy Notice, was entered after Jones had failed to file an Amended Defence within the required time. This default by Jones in failing to file resulted in the issue of the Bankruptcy Notice and gave rise to the application to set it aside. If the Amended Defence had been filed within time the present proceeding would not have been necessary. 6 In my view an important consideration in the present matter is that the Bankruptcy proceedings were instituted as a consequence of the failure of Jones to file an Amended Defence within the required period. An explanation was proffered in relation to this insofar as it is asserted that default occurred as a consequence of incorrect advice from New South Wales solicitors. However, this is not something for which Porsche can be considered responsible. 7 In the circumstances I am satisfied that this is a case which falls within the class of exceptions to the general principle and, therefore, Jones should bear the costs incurred by Porsche in relation to the issue and setting aside of the Bankruptcy Notice. 8 Accordingly, I grant the application for review. I set aside the order as to costs. I order that Jones should pay the costs of Porsche of the Federal Court proceedings. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.