Harrison v Eriksson [2016] FCA 924

FEDERAL COURT OF AUSTRALIA

Harrison v Eriksson [2016] FCA 924 Appeal from: Harrison v Eriksson [2015] FCCA 2963

File number: ACD 138 of 2015

Judge: JAGOT J

Date of judgment: 12 August 2016

Catchwords: COSTS – interlocutory application to vacate costs orders – where appellant ordered to pay the respondent's costs of and incidental to the appeal as agreed or taxed

Cases cited: Harrison v Eriksson [2015] FCCA 2963

Date of hearing: Heard on the papers

Date of last submissions: 8 August 2016

Registry: Australian Capital Territory

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: General and Personal Insolvency

Category: Catchwords

Number of paragraphs: 13

Solicitor for the Appellant: Mr T Hall of Hall Partners

Counsel for the Respondent: Mr D Hassall

Solicitor for the Respondent: Capital Lawyers

Table of Corrections

12 August 2016 In order 2, "out of the appellant bankrupt's estate" has been added following "or taxed".

ORDERS ACD 138 of 2015

BETWEEN: RACHEL HARRISON Appellant

AND: CHRISTOPHER ERIKSSON Respondent

JUDGE: JAGOT J DATE OF ORDER: 12 AUGUST 2016

THE COURT ORDERS THAT:

1. The appellant's interlocutory application dated 5 June 2016 be dismissed. 2. The appellant pay the respondent's costs of and in connection with the interlocutory application, as agreed or taxed, out of the appellant bankrupt's estate. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JAGOT J: 1 The remaining issue in this matter is costs. 2 Ms Harrison, the appellant, commenced this appeal in December 2015 but, at the same time, sought a stay of the appeal on the basis of other undetermined proceedings to set aside the default judgment against her which was the basis of the original debt she had been found to owe to the respondent. She contended in the appeal that the Federal Circuit Court of Australia had erred in dismissing her application for an extension of time to review a decision of a Registrar dated 17 April 2014 to make a sequestration order against her. In dismissing Ms Harrison's application the primary judge observed that the matter was "utterly disproportionate – in every respect" (Harrison v Eriksson [2015] FCCA 2963) given that the unpaid debt was for $6,127 and the material filed by both parties for the purpose of the application was extensive and likely to have involved substantial cost far exceeding the debt itself (at [1] – [7]), the efforts gone to by the creditor (the respondent to this appeal) being described as "extraordinary" and those of Ms Harrison, it was said, "often bordered on the fanciful" (at [7]), thereby prompting the creditor to yet further efforts to combat Ms Harrison's contentions (also at [7]). 3 The same observation, of utter disproportionality, might be applied to the present appeal, if only on the basis that it took Ms Harrison from December 2015 until 3 May 2016 to advise that she no longer intended to pursue the appeal. In the interim, her appeal prompted the respondent to file, amongst other things, a notice of objection to competency, an application for security for costs, and an application for interlocutory relief to restrain Ms Harrison from dealing with assets of her bankrupt estate, in addition to the respondent having to oppose Ms Harrison's application for a stay and deal with the evolving, and routinely altering, position she presented as to her intentions to obtain legal representation. 4 Ultimately, on 6 May 2016, I made orders in Ms Harrison's absence dismissing her appeal, continuing the injunctions against her to prevent her dealing with assets of her bankrupt estate, and for costs. I made a costs order in the form sought by the respondent as follows: 4. The Respondent's costs of and incidental to the said appeal, including the costs of and incidental to the Appellant Bankrupt's Application for Stay, the Respondent's Notice of Objection to Competency and the Respondent's Application for Security for Costs and for Injunctive Relief in respect of the Bankrupt, and including the Respondent's costs of and incidental to today's hearing and all reserved costs in regard to the said appeal, Application for Stay, Notice of Objection to Competency, and Application for Security for Costs and for Injunctive Relief against the Appellant Bankrupt, shall be paid by the Trustee of the Appellant Bankrupt's bankrupt estate out of the said estate they being costs incurred in defending the Sequestration Order made against the Bankrupt's estate. 5 Despite indicating on 3 May 2016 that she intended to discontinue the appeal, on 20 June 2016 Ms Harrison filed another interlocutory application dated 5 June 2016 seeking to vacate all of the orders I made in her absence on 6 May 2016. Unsurprisingly, this prompted another flurry of activity on the part of the respondent. By the time the matter came before me on 1 July 2016 Ms Harrison had retained a solicitor and, after some debate about the basis on which he was appearing given that he had not filed a notice of appearance, Ms Harrison's position had again changed – she wished only to challenge the costs order that had been made against her in her absence. I made directions for the filing and service of written submissions in relation to that issue, in the hope (fulfilled in the event) that an oral hearing could be avoided. 6 The submissions for Ms Harrison contend that the costs order I made should be set aside and, instead, an order should be made to the effect that Ms Harrison pay the respondent's costs of the appeal as agreed or taxed. According to the submissions the respondent has consistently expended costs unnecessarily (as observed by the Federal Circuit Court), and the effect of my order is to remove any discretion from the taxing officer to discount the respondent's costs including in respect of the applications for security and interlocutory relief. The respondent, for its part, submits in effect that Ms Harrison is the author of her own misfortune and that her conduct is the cause of the disproportionate work which has been involved in the respondent defending the appeal and in defending Ms Harrison's various applications including her application dated 5 June 2016 which initially sought to set aside all of the orders I made on 6 May 2016. 7 I wish to make the following observations. 8 First, the costs order I made on 6 May 2016 is not an order that Ms Harrison pay the respondent's costs of and in connection with the appeal on an indemnity basis. For that to be the case it would have been necessary expressly to state that costs were ordered on an indemnity basis. It follows that, despite the prolixity of the order, the effect of the order is that Ms Harrison is to pay the respondent's costs of and in connection with the appeal as agreed or as taxed. 9 Second, the references to the various applications (for a stay, for security for costs, and for interlocutory relief), as well as the notice of objection to competency and the hearing before me on 6 May 2016 do not mean that the taxing officer, if a bill of costs is to be taxed, is prevented from reviewing the reasonableness of the respondent's costs in respect of those matters. What it does mean is that, contrary to any submission for Ms Harrison, I am satisfied that it was reasonable for the respondent to make the applications it did (for security for costs and interlocutory relief) and for the respondent to both oppose the stay of the appeal and file a notice of objection to competency. If, in so doing, the respondent unreasonably incurred costs, then the taxing officer is free to review those costs as the taxing officer sees fit. I considered, and still consider, this to be appropriate. The respondent was entitled to contend that the appeal was incompetent, to oppose the stay, to seek security for costs, to seek (and obtain, as he did) injunctions against Ms Harrison, and otherwise to defend the appeal. He was entitled to an order for costs in his favour in respect of each of these actions. The issue which remains for taxation is whether, in taking any action, the respondent incurred costs unreasonably or unnecessarily or which are otherwise excessive having regard to the fact that costs have been ordered on the usual, and not an indemnity, basis. 10 Third, my own perception of what has occurred is consistent with that of the Federal Circuit Court. On the one hand, Ms Harrison, by her conduct and lack of legal representation, has taken many steps which have caused costs to be incurred unnecessarily. On the other hand, the respondent has consistently reacted to Ms Harrison's conduct in a manner which has not appeared to focus on costs minimisation. As such, and for example, lengthy affidavits have been prepared for the respondent, not all of which proved necessary either at all or in the detail provided. Beyond this general observation, however, it is for the taxing officer, if a bill of costs is to be taxed, to determine the amounts which fulfil the purpose of the costs order which has been made, and to compensate the respondent for the costs which have been incurred as a result of and in connection with the unsuccessful appeal by the appellant. 11 The only other observation which is appropriate is to record that I refused an application for leave by Ms Harrison to issue a subpoena. The attempt to obtain such leave, outside the confined directions which had been made in relation to the issue of costs, was in keeping with the history of the matter. Leave was refused because the proposed subpoena concerned the basis for the original debt which had been found to be owed by Ms Harrison to the respondent. To permit Ms Harrison to explore that issue, when the only matter yet to be resolved is her application to vary the costs order of 6 May 2016, would have been inappropriate and would have exposed the parties to yet further unnecessary costs. 12 It should be apparent from these observations that I am satisfied that the costs order I made on 6 May 2016 is appropriate and should not be varied. 13 As a result, and consistently with the sorry course of this appeal as a whole, it is also appropriate that the respondent be compensated for having to defend Ms Harrison's interlocutory application dated 5 June 2016 which is thus to be dismissed with costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.