Trkulja v Morton (No 2) [2005] FCA 1044

Trkulja v Morton (No 2) [2005] FCA 1044

The respondent's costs should be taxed and paid out of the applicant's bankrupt estate, rather than ordered against the applicant personally, because a personal costs order would make the trustee a creditor of the bankrupt and create an unacceptable conflict between the trustee's personal interest in executing a costs judgment and his duties in deciding whether assets should be treated as part of the bankrupt estate. The trustee should not be placed in that position, and costs out of the estate is the lesser of the evils.

Jurisdiction
Australia
Judgment Date
22 August 2005
Procedural Posture
Bankruptcy Costs Application Following Dismissal of Application to Remove Trustee in Bankruptcy / Costs Determination After Application Dismissed
Outcome
Respondent's application for a costs order different from the order initially pronounced was unsuccessful; respondent's costs, except for the costs of that application, are to be taxed and paid out of the applicant's bankrupt estate.
Legal Topics
['trustee in Bankruptcy' 'application to Remove Trustee' 'costs Out of Bankrupt Estate' 'personal Costs Order Against Bankrupt' 'conflict of Interest']
['bankruptcy' 'costs'] ['trustee in Bankruptcy' 'application to Remove Trustee' 'costs Out of Bankrupt Estate' 'personal Costs Order Against Bankrupt' 'conflict of Interest']

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Procedural Posture

Bankruptcy Costs Application Following Dismissal of Application to Remove Trustee in Bankruptcy / Costs Determination After Application Dismissed

Legal Issues

  1. 1 ["Whether the respondent trustee's costs of successfully resisting the bankrupt's application for removal should be ordered against the bankrupt personally or taxed and paid out of the bankrupt estate." "Whether a personal costs order would create an unacceptable conflict between the trustee's personal interest as a judgment creditor and fiduciary duties in administering the bankrupt estate."]

Ratio Decidendi

The respondent's costs should be taxed and paid out of the applicant's bankrupt estate, rather than ordered against the applicant personally, because a personal costs order would make the trustee a creditor of the bankrupt and create an unacceptable conflict between the trustee's personal interest in executing a costs judgment and his duties in deciding whether assets should be treated as part of the bankrupt estate. The trustee should not be placed in that position, and costs out of the estate is the lesser of the evils.

Court Disposition

Respondent's application for a costs order different from the order initially pronounced was unsuccessful; respondent's costs, except for the costs of that application, are to be taxed and paid out of the applicant's bankrupt estate.

Orders

  • ["The respondent's costs, except for the costs of the respondent's application for a costs order different from that first pronounced on 30 May 2005, be taxed and paid out of the bankrupt estate of the applicant in accordance with the Bankruptcy Act 1966 (Cth)."]