KF Capital v Davison [2020] NSWSC 1595

KF Capital v Davison [2020] NSWSC 1595

The first defendant's presentation of a debtor's petition relying on the first plaintiff's debt was a definite and unequivocal capitulation that indirectly but definitely affected the proceedings by causing the first plaintiff's claim to be admitted as a provable debt and engaging the bankruptcy stay. On the authority of Foots, a post-bankruptcy discretionary costs order was not a provable debt and s 58(3) of the Bankruptcy Act 1966 (Cth) did not require leave. The same bankruptcy had an indirect but definite effect on the second plaintiff's claim, the plaintiffs' costs were not readily separable, and the first plaintiff had paid all costs. The evidence permitted a fair, logical and...

Jurisdiction
Australia
Judgment Date
13 November 2020
Procedural Posture
Costs Application in Debt Recovery Proceedings / Notice of Motion for Costs and Gross Sum Costs Order After Proceedings Against the First Defendant Were Stayed by Bankruptcy
Outcome
The plaintiffs' application for costs against the first defendant was granted and a gross sum costs order was made in the amount of $140,000.
Legal Topics
['gross Sum Costs Order' 'costs Where No Hearing on the Merits' "debtor's Petition and Capitulation" 'provable Debts in Bankruptcy' 'stay of Proceedings']
['civil Procedure' 'costs' 'bankruptcy'] ['gross Sum Costs Order' 'costs Where No Hearing on the Merits' "debtor's Petition and Capitulation" 'provable Debts in Bankruptcy' 'stay of Proceedings']

Case Brief

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Procedural Posture

Costs Application in Debt Recovery Proceedings / Notice of Motion for Costs and Gross Sum Costs Order After Proceedings Against the First Defendant Were Stayed by Bankruptcy

Legal Issues

  1. 1 ["Whether the Court should order the first defendant to pay the plaintiffs' costs despite no final orders or hearing on the merits because the principal proceedings were stayed by bankruptcy." "Whether the first defendant's debtor's petition amounted to capitulation in relation to the plaintiffs' claims sufficient to engage the costs discretion." 'Whether s 58(3) of the Bankruptcy Act 1966 (Cth) prevented the plaintiffs from seeking a post-bankruptcy costs order without leave of a bankruptcy court.' "Whether the plaintiffs' costs should be fixed as a specified gross sum under s 98(4)(c) of the Civil Procedure Act 2005 (NSW)."]

Ratio Decidendi

The first defendant's presentation of a debtor's petition relying on the first plaintiff's debt was a definite and unequivocal capitulation that indirectly but definitely affected the proceedings by causing the first plaintiff's claim to be admitted as a provable debt and engaging the bankruptcy stay. On the authority of Foots, a post-bankruptcy discretionary costs order was not a provable debt and s 58(3) of the Bankruptcy Act 1966 (Cth) did not require leave. The same bankruptcy had an indirect but definite effect on the second plaintiff's claim, the plaintiffs' costs were not readily separable, and the first plaintiff had paid all costs. The evidence permitted a fair, logical and...

Court Disposition

The plaintiffs' application for costs against the first defendant was granted and a gross sum costs order was made in the amount of $140,000.

Orders

  • ["The first defendant to pay the first plaintiff's costs of its proceedings against him." "The first defendant to pay the second plaintiff's costs of its proceedings against him." "The plaintiffs' costs of the proceedings against the first defendant including the indemnity costs order made on 23 May 2019 are payable...