FEDERAL COURT OF AUSTRALIA Ashworth v Metcash Food & Grocery Pty Ltd (No 2) [2015] FCA 318 Citation: Ashworth v Metcash Food & Grocery Pty Ltd (No 2) [2015] FCA 318 Parties: STEPHEN ASHWORTH v METCASH FOOD & GROCERY PTY LTD File number(s): NSD 22 of 2015 Judge(s): GLEESON J Date of judgment: 7 April 2015 Catchwords: COSTS – indemnity costs - where applicant changed basis of argument that bankruptcy notice was invalid shortly before hearing date – application dismissed Legislation: Federal Court of Australia Act 1976 (Cth), s 43 Cases cited: Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77 Fuelxpress Ltd v LM Ericsson Pty ltd (1987) 75 ALR 284 Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 Oil Basins Ltd v Watson [2014] FCAFC 154 Watson v Western Australia (No 3) [2014] FCA 127 Date of hearing: 31 March 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 12 Solicitor for the Applicant: Mr D Bowles of Bowles Lawyers Counsel for the Respondent: Ms RL Gall Solicitor for the Respondent: Patane Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 22 of 2015 BETWEEN: STEPHEN ASHWORTH Applicant AND: METCASH FOOD & GROCERY PTY LTD Respondent JUDGE: GLEESON J DATE OF ORDER: 7 April 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The respondent's application for indemnity costs is refused. 2. For the avoidance of doubt, the applicant pay the creditor's reasonable witness expenses including but not limited to the costs of issuing any necessary subpoenas and conduct money. 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 22 of 2015 BETWEEN: STEPHEN ASHWORTH Applicant AND: METCASH FOOD & GROCERY PTY LTD Respondent JUDGE: GLEESON J DATE: 7 April 2015 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 31 March 2015, I made an order dismissing with costs the applicant's application to have bankruptcy notice BN177198 set aside. 2 When filed, the application to set aside the notice was accompanied by an affidavit sworn by the debtor on 7 January 2015 stating that, at the time of service of the bankruptcy notice, he did not receive a copy of the judgment which was required to be attached to the notice. That affidavit was not relied upon at the hearing on 17 March 2015 and the debtor did not pursue the contention that the bankruptcy notice was defective for failing to attach a copy of the relevant judgment. 3 Instead, the debtor argued that the bankruptcy notice overstated the debt which the creditor was entitled to claim because it included an amount for 14 days' post-judgment interest when, having regard to the form of the bankruptcy notice, the creditor was only entitled to claim for 13 days' post-judgment interest. 4 The respondent now seeks an order for indemnity costs. In support of the application, the respondent relied upon the affidavit of Bruce Patane sworn 30 March 2015. The affidavit deposes to the following facts: (1) on 20 January 2015, the debtor's lawyer was sent the affidavit of service of the bankruptcy notice which evidenced the attachment of the judgment to the bankruptcy notice; (2) on 16 February 2014, the debtor's lawyer was sent two further affidavits in support of the fact that the judgment was attached to the bankruptcy notice; (3) on 19 February 2015, the debtor's lawyers required the deponents of all three affidavits to be available for cross-examination; (4) on 2 and 4 March 2015, there was correspondence between Mr Patane and the debtor's lawyers, as a result of which Mr Patane was no longer required for cross-examination; (5) on the evening before the hearing, the debtor's new lawyer, Mr Bowles, raised for the first time the contention that the amount of the debt in the bankruptcy notice was misstated (this being the issue that was resolved against the debtor by my judgment on 31 March 2015). Mr Bowles did not inform Mr Patane that the applicant would no longer pursue the allegation that the judgment was not attached to the bankruptcy notice at the time of service, nor that he did not intend to cross-examine the witnesses who had been required to attend; (6) the creditor has incurred legal costs and conduct money, as well as costs in relation to witness compensation and expenses for complying with subpoenas. Consideration 5 By s 43 of the Federal Court of Australia Act 1976 (Cth), the Court has a broad jurisdiction to make costs orders including, where appropriate, an order for indemnity costs. 6 "To warrant a departure from the ordinary rule that costs be paid on a party and party basis, there should be some special or unusual feature in the case. The question must always be whether the particular facts and circumstances of the case warrant the making of an order for payment of costs other than on a party and party basis": Watson v Western Australia (No 3) [2014] FCA 127 at [73], citing Colgate-Palmolive Company v Cussons Pty Limited [1993] FCA 536; (1993) 46 FCR 225 at 233, 234; approved in Oil Basins Ltd v Watson [2014] FCAFC 154 at [117] and [162]. See also Hamod v New South Wales [2002] FCAFC 97; (2002) 188 ALR 659 at [20]. 7 The applicant referred to the decision of the Full Court in De Alwis v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 77, in which the Court noted that indemnity costs can be awarded where it appears that a proceeding is commenced or continued in circumstances where the applicant properly advised should have known there was no chance of success. 8 As I understood the submission, it was that the debtor should have known that there was no prospect of success in relation to the contention that the judgment was not affixed to the bankruptcy notice. The application was also based on the debtor's late change of position concerning the ground on which the application to set aside the bankruptcy notice was based. 9 Mr Bowles, the debtor's solicitor, contended that the circumstances do not warrant an order for indemnity costs. To the contrary, he submitted that it was to the debtor's credit that the issues were narrowed so that the matter was run efficiently. 10 It is plainly unsatisfactory that the debtor did not withdraw his contention that the bankruptcy notice did not annex the judgment until the morning of the hearing. However, I am not convinced that this is a matter which warrants an order for indemnity costs in the circumstances. In particular, I am not satisfied that the debtor intended not to agitate this issue at any particular time before the contention was withdrawn. I also do not accept that the debtor should have known that there was no prospect of success on this issue, which is essentially a factual one although, clearly enough, he can be taken to have known that his prospects were weak in the face of the evidence served by the creditor. 11 To the extent that it was put, I also do not accept that the issue argued by Mr Bowles on behalf of the debtor was so weak as to warrant a departure from the usual rules that costs are ordered on a party and party basis. 12 In giving these reasons, I have assumed that party and party costs will include all reasonable witness expenses incurred by the creditor to secure the attendance of the two witnesses who attended court on the day of the hearing: cf. Fuelxpress Ltd v LM Ericsson Pty ltd (1987) 75 ALR 284. To be clear, to the extent that those expenses would not be payable pursuant to the costs order that I have already made, I will order that the applicant pay the creditor's reasonable witness expenses including but not limited to the costs of issuing any necessary subpoenas and conduct money. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate: Dated: 7 April 2015