FEDERAL COURT OF AUSTRALIA Charan v Gleeson (No 2) [2013] FCA 1005 Citation: Charan v Gleeson (No 2) [2013] FCA 1005 Parties: USHA WATI CHARAN v BRUCE GLEESON IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF PRASHANT PRASHIKAR CHARAN File number: NSD 1761 of 2011 Judge: MCKERRACHER J Date of judgment: 3 October 2013 Catchwords: BANKRUPTCY – payment of money into Court by applicant as security for costs – appeal dismissed – respondent sought order for payment of money out of Court – where applicant subsequently became bankrupt – whether money paid into Court vested in the bankrupt's estate Legislation: Federal Court Rules 2011 (Cth) r 2.42(2) Cases cited: Bailey v Marinoff (1971) 125 CLR 529 Charan v Gleeson [2012] FCA 236 London County Council v Monks [1959] Ch 239 Re Lovering; Galladin Pty Ltd (Receiver and Manager Appointed) v Jackson (1994) 50 FCR 587 Date of hearing: Determined on the papers Date of last submissions: 23 September 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 12 Counsel for the Applicant: The applicant filed submissions in person Counsel for the Respondent: Mr JD O'Connor Solicitor for the Respondent: Gillis Delaney Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1761 of 2011 BETWEEN: USHA WATI CHARAN Applicant AND: BRUCE GLEESON IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF PRASHANT PRASHIKAR CHARAN Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 3 OCTOBER 2013 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The moneys paid into Court by the applicant in the proceedings pursuant to the orders of Rares J of 14 December 2011 and any interest earned on the said moneys be paid to the respondent's solicitors forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1761 of 2011 BETWEEN: USHA WATI CHARAN Applicant AND: BRUCE GLEESON IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF PRASHANT PRASHIKAR CHARAN Respondent JUDGE: MCKERRACHER J DATE: 3 OCTOBER 2013 PLACE: PERTH REASONS FOR JUDGMENT Introduction 1 Mr Gleeson seeks payment out of Court to him, a sum paid into Court by Mrs Charan by way of security of costs on an appeal. His application is opposed. Further, Mrs Charan seeks to contend that the decision in the appeal should be reversed. Background 2 The original proceedings giving rise to this disputation were commenced in November 2010 by Mr Gleeson (as trustee in bankruptcy) against Mrs Charan and her husband seeking various orders including orders pursuant to s 120 and s 121 of the Bankruptcy Act 1966 (Cth) (BA). On 21 September 2011, judgment was given in favour of Mr Gleeson in the Federal Magistrates Court (now the Federal Circuit Court of Australia). Mrs Charan and her husband were ordered to pay the costs of the proceedings in that Court. 3 Mrs Charan appealed to this Court from the decision of the Federal Magistrates Court. 4 On 14 December 2011, pursuant to r 36.09 of the Federal Court Rules 2011 (Cth) (FCR), Rares J ordered Mrs Charan to pay security in the sum of $16,000 for Mr Gleeson's costs of the appeal. That amount was duly paid. 5 The appeal was heard and on 16 March 2012 in Charan v Gleeson [2012] FCA 236 I dismissed the appeal and ordered Mrs Charan to pay Mr Gleeson's costs, to be taxed if not agreed. The parties have been able to agree little. The costs were taxed. Costs in the appeal 6 By an affidavit sworn by Mr Gleeson's solicitor on 15 July 2013, she deposes to the fact that Mr Gleeson has incurred costs in the sum of $42,644.84 including GST in relation to the appeal commenced by Mrs Charan. The costs were assessed by this Court at $24,000 with a certificate of taxation dated 30 April 2013 issuing in respect of those costs. Mr Gleeson seeks an order for the payment out of the sum paid into Court together with interest in order to satisfy in part the costs order in his favour. Bankruptcy of Mrs Charan 7 Since judgment was given in the appeal, Mrs Charan has become bankrupt. The trustees in bankruptcy were served with all papers relevant to Mr Gleeson's application. They do not oppose it. 8 In the circumstances, the fact that trustees in bankruptcy were appointed on or about 6 June 2012 does not render the sum paid into Court part of the bankrupt estate. The money paid into Court does not form part of Mrs Charan's estate as the costs order was made prior to the sequestration against her estate on 6 June 2012. The payment in was also well prior to the sequestration date. As the order was made that the costs be paid before the bankruptcy of Mrs Charan, the effect was that her beneficial interest, if any, in the sum paid into Court was divested in favour of a beneficial interest in Mr Gleeson on the making of the costs order in his favour or, alternatively, Mr Gleeson became a secured creditor in respect of the judgment in his favour of the sum paid into Court such that the moneys do not vest in the trustee in bankruptcy of Mrs Charan's bankrupt estate: see Re Lovering; Galladin Pty Ltd (Receiver and Manager Appointed) v Jackson (1994) 50 FCR 587 per Hill J (at 596-597) citing Danckwerts J in London County Council v Monks [1959] Ch 239 (at 243-244). 9 In order to release the funds paid into Court pursuant to the costs order in his favour, it was necessary for Mr Gleeson to apply pursuant to r 2.42(2) FCR for an order that the money, together with any interest earned on the money, be paid out to him. That application could not be made until the costs were taxed as Mrs Charan did not agree to the amount of costs claimed: see r 40.12 FCR. 10 Now that the taxation process has been completed, it is clear that the order for payment out should be made. Although judgment had been given, an order disposing of the proceeding does not have the effect of making the Court functus officio where there are specific and relevant statutory provisions which may require the Court to undertake some additional judicial function: Bailey v Marinoff (1971) 125 CLR 529 per Barwick CJ (at 530). In this case, it was necessary for the Court to deal with the provisions under the Rules involving r 40.12 FCR and r 2.42(2) FCR. It is clear that the funds must be paid out to Mr Gleeson and if any further authority is needed, r 1.32 FCR relevantly provides that 'The Court may make any order the Court considers appropriate in the interests of justice'. Opposition by Mrs Charan 11 Mrs Charan filed written submissions opposing the payment out and inviting me to reopen the appeal entirely, requesting me 'in the interests of justice' with reference to r 1.32 FCR and r 1.38 FCR 'to reconsider the appeal judgment delivered on 16 March 2012' (amended formatting). 12 Extensive submissions were advanced as to why I should give a decision other than the decision I gave over 18 months ago. There has been no appeal from the decision and the time for appeal has lapsed. Even if the Rules relied upon to support a reopening of the case enabled me to do so (and it is clear that they do not), it is manifestly not in the interests of justice that the appeal be reopened given that any time for further appeal has long since expired. The interests of finality of litigation far outweigh any suggestion that the appeal should be reargued. The submissions by Mrs Charan are, with great respect, entirely misconceived. There is no proper ground whatsoever for opposing the order that the sum paid into Court by way of security should be released to the successful party. Accordingly, I make the following order: 1. The moneys paid into Court by the applicant in the proceedings pursuant to the orders of Rares J of 14 December 2011 and any interest earned on the said moneys be paid to the respondent's solicitors forthwith. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 3 October 2013