Hrycenko v Hrycenko (by his legal representative Hycenko) (No 2)

Federal Court of Australia

Hrycenko v Hrycenko (by his legal representative Hycenko) (No 2) [2022] FCAFC 192

ORDERS

THE COURT ORDERS THAT:

1. The respondent pay the appellant’s costs of the appeal limited to grounds 1 and 1A-D, including any reserved costs relating to those grounds, as agreed or assessed, and otherwise each party is to bear their own costs of the appeal.

1. The respondent, as the applicant petitioning creditor in the Federal Circuit and Family Court of Australia (Division 2) proceeding MLG 2739 of 2020 (primary proceeding), pay to the appellant, he being the respondent debtor in that proceeding, his costs as agreed or assessed in respect of that proceeding, and orders 2 and 3 made in that Court on 28 October 2021 are set aside.

2. The respondent pay the fair and reasonable remuneration and expenses of the former trustee, Mr Michael Badge, in his administration of the estate of the appellant pursuant to the orders made in the primary proceeding as if the administration was being conducted under the Bankruptcy Act 1966 (Cth) and, subject to the application of Div 2 of Pt VIII of that Act, for the review of claims for remuneration and costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1. On 9 September 2022, we allowed the appeal in this matter and made consequential orders: Hrycenko v Hrycenko (by his legal representative Hycenko) [2022] FCAFC 152. We set aside the sequestration order made on 28 October 2021 in the Federal Circuit and Family Court of Australia (Division 2) in the estate of the appellant, Victor Hrycenko (Victor), made upon the application of the respondent George Hrycenko (George) by his legal representative Nicholas Hycenko (Nicholas) and we then relevantly ordered that:

1. The proceeding is adjourned for further submissions in writing or for hearing if necessary on all consequential orders, including costs.

2. The Registrar is directed to provide a copy of these reasons to Mr Michael David Badge (the appointed trustee in bankruptcy), who may be heard before the making of further orders.

3. The parties, and Mr Badge (should he wish to be heard) are to provide in the first place short written submissions, not to exceed three pages, on the question of consequential orders and costs.

2. We have received and considered submissions on behalf of Victor and Nicholas together with affidavits from James O’Donnell (solicitor for Nicholas) and the former trustee Mr Badge. We do not consider that a further hearing is necessary in order to make consequential orders.

3. The consequential issues that must be addressed are:

1. What order for costs should be made in the appeal;

2. What order for costs should be made in relation to the proceeding in the Federal Circuit and Family Court of Australia (Division 2);

3. Should the former trustee receive an order for his costs of administering the estate and if so who should be responsible for those costs and how should the costs be determined;

4. Should Nicholas be granted a costs certificate pursuant to ss 6(1) and/or 10(2) of the Federal Proceedings (Costs) Act 1981 (Cth); and

5. Should the costs orders be framed so as to preserve any rights of Victor, as a beneficiary of the estate of George, to contend that Nicholas ought not be indemnified for part or all of his costs and any costs ordered to be paid by him?

4. We address the issues in that order.

5. The ordinary rule is that costs follow the event. Victor first filed a notice of appeal to this Court on 19 November 2021. It raised 13 grounds to challenge the sequestration order made in the Federal Circuit and Family Court of Australia (Division 2) on 28 October 2021. Ground 1 of the notice of appeal raised as an issue that the petition of Nicholas had lapsed by operation of s 52(4) of the Bankruptcy Act 1966 (Cth) (the Act) on 28 July 2021. Subsequently Nicholas, on 23 November 2021, made an application to the Federal Circuit and Family Court of Australia (Division 2) for an order nunc pro tunc pursuant to a slip rule provision that the time for expiry of the petition be extended. On 14 January 2022, the Federal Circuit and Family Court of Australia (Division 2) granted that application and ordered that the petition be extended to 15 July 2022 pursuant to s 52(5) of the Act.

6. On 25 November 2021, Victor applied in this Court for leave to argue ground 1 of the notice of appeal to the effect that the primary judge erred in making the sequestration order upon the lapsed petition, which argument was not put to the primary judge prior to the making of the sequestration order. The solicitor for Victor explained in his supporting affidavit that the argument was not raised before the sequestration order was made because he overlooked the point. The point was taken by Victor in opposition to the slip rule application.

7. Following the orders made by the primary judge on 14 January 2022, Victor made further application to this Court on 8 February 2022, to amend his notice of appeal to include a challenge to the orders made on 14 January 2022 by the addition of grounds 1A-D to the effect that the primary judge erred in concluding that it was open to him to engage the slip rule provision after the making of the sequestration order.

8. On...