FEDERAL COURT OF AUSTRALIA McKellar v PCS Resources Ltd [2002] FCA 123 BANKRUPTCY – application for an interlocutory injunction to stay taxation of a bill of costs until the Trustee in Bankruptcy receives notification of bankruptcy – whether s 60(2) of the Bankruptcy Act 1966 (Cth) operates to stay costs orders made against an applicant prior to bankruptcy Bankruptcy Act 1966 (Cth) s 60(2), (3) ANDREW McKELLAR v PCS RESOURCES LTD N 110 OF 2002 HELY J 14 FEBRUARY 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 110 OF 2002 BETWEEN: ANDREW McKELLAR APPLICANT AND: PCS RESOURCES LTD RESPONDENT JUDGE: HELY J DATE OF ORDER: 14 FEBRUARY 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The proceedings be dismissed with costs. 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 110 OF 2002 BETWEEN: ANDREW McKELLAR APPLICANT AND: PCS RESOURCES LTD RESPONDENT JUDGE: HELY J DATE: 14 FEBRUARY 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 There is scheduled to take place at 2.15 pm this afternoon in the Victorian Registry of the Court a taxation of a bill of costs in proceedings number VG 555 of 1998. Those proceedings were instituted on 13 October 1998 by Mr Andrew McKellar and Mr Christopher Murray as applicants ("the applicants") against a number of respondents. 2 On 13 August 1999 and on 26 November 1999 Weinberg J made orders for costs against the applicants in relation to interlocutory motions and directed that the costs could be taxed and should be paid forthwith. It is the costs ordered to be paid pursuant to those orders which are the subject of taxation this afternoon. The sum involved, I am told, is of the order of $45,000. 3 On 23 May 2000 the second applicant was made bankrupt. It is the contention of the remaining applicant, Mr Andrew McKellar, that the effect of s 60(2) of the Bankruptcy Act 1966 (Cth) ("the Act") is to stay proceedings number VG 555 of 1998 until the Trustee in Bankruptcy receives the notification referred to in that section. I am informed by Mr Baran, counsel for the applicant, from the bar table that his instructing solicitors first became aware of the fact of Mr Murray's bankruptcy on 29 January 2002. Mr O'Grady of Minter Ellison, who appeared by telephone to oppose this application, is content for me to proceed for the purposes of this application upon the basis that what I have been told by Mr Baran accords with the fact. 4 Some proceedings took place before Weinberg J on 1 February 2002 which touched and concerned, amongst other things, this issue of a stay. Those proceedings have not been finally determined as his Honour allowed the parties time to lodge written submissions. 5 The application for taxation of the bill of costs was made on 9 January 2002 and the appointment for hearing this afternoon was fixed at about that time. No explanation has been forthcoming as to the delay between 29 January 2002 and the making of this application which, so far as the materials before me reveal, was first foreshadowed in correspondence passing between the parties yesterday. I said earlier that Mr O'Grady appeared by telephone in order to oppose this application, but I should say in fairness that as the matter was being discussed before me the documents upon which the application was based were in the process of transmission to Mr O'Grady. It has therefore been necessary to deal with the matter in a hurry. 6 The conclusion to which I have come is that the applicant has not established a sufficiently arguable case to justify the relief which he seeks, particularly when account is taken of the delay in making the application and the balance of convenience. Section 60(2) applies to stay an action commenced by a person who subsequently becomes a bankrupt. I will assume for present purposes that the effect of s 60(2) is to stay the action commenced by each of the applicants on the bankruptcy of either of them. But my provisional view is that s 60(2) does not operate to stay costs orders which were made against those applicants prior to the bankruptcy. I say "provisional view", because time has not permitted full research and argument. 7 That this is so, I think, emerges from a consideration of s 60(2) and subs (3). Irrespective of the election which the Trustee in Bankruptcy makes, the orders made by Weinberg J prior to the bankruptcy will continue to operate. If the Trustee elects to prosecute the proceedings instituted by the applicants those orders will continue to operate in accordance with their terms. If the Trustee elects to discontinue the action then the same result will follow. All that will happen as a result of the proceedings this afternoon is that a certificate will issue quantifying costs. Whether the amount of the costs as so quantified would be provable in the bankruptcy is not an issue which arises at this stage. 8 All that I decide for present purposes is that I am not satisfied that the applicant has established a sufficiently arguable case to justify deferring a taxation which has been scheduled for some time to take place this afternoon, particularly as no satisfactory explanation is proffered for the delay in making the application. On that basis, I am not prepared to make an order in terms of paragraph 1 of the application. 9 The order that I make is that the application for an interlocutory injunction is dismissed with costs. 10 The applicant accepts that for all practical purposes, the refusal of interlocutory relief means that there is no point in pursuing the application further. Accordingly, the application is dismissed with costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely. Associate: Dated: 20 February 2002 Counsel for the Applicant: D Baran Solicitor for the Applicant: Dorrough Smart Counsel for the Respondent: P O'Grady, Solicitor Solicitor for the Respondent: Minter Ellison Date of Hearing: 14 February 2002 Date of Judgment: 14 February 2002