Background
Janelle Kimber became bankrupt in 2019 after filing her own debtor’s petition. Her trustees later sought orders concerning the sale of her unit. Because she had acquired part of the unit with personal-injury damages, a portion of the sale proceeds was protected from the bankrupt estate under s 116 of the Bankruptcy Act 1966 (Cth). The primary judge reserved 25% of the proceeds as protected money and made orders concerning the unit’s sale, distribution of the proceeds and payment of the trustees’ costs.
Ms Kimber appealed unsuccessfully. In 2023, the Full Court ordered her to pay the respondents’ costs of the underlying proceeding and appeal, to be assessed as lump sums. This proceeding concerned the trustees’ appeal costs. They claimed $141,870.08, including disbursements and a 25% uplift. Ms Kimber opposed the assessment, challenging the supporting documents, the delay in pursuing costs and the legitimacy of the application.
The Court’s Holding
Burley J held that the trustees’ costs were fairly and reasonably incurred. The Court rejected Ms Kimber’s arguments that the costs agreement was ineffective because it was unsigned, that the trustees had to prove the invoices had already been paid, and that relevant documents had not been produced. It also found the delay adequately explained by the extensive related litigation and rejected the contention that pursuing the costs assessment was an abuse of process.
The Court accepted the 25% uplift because the appeal involved a complex and little-explored area of bankruptcy law, required specialist expertise and included difficult material demanding senior-practitioner attention. Because the Full Court had awarded party-and-party rather than indemnity costs, however, Burley J applied a 35% discount to the total claim. The Court fixed the trustees’ costs at $92,215.55 and ordered Ms Kimber also to pay the costs of the costs application.
Key Takeaways
- A lump-sum costs assessment need not reproduce a line-by-line taxation, although the Court may scrutinise invoices, work categories, rates and time claimed.
- An uplift for skill, care and responsibility may be allowed where complexity, specialist knowledge and the demands of the litigation justify it; the Court accepted a 25% uplift here.
- Even where actual costs are reasonable, a discount may be required to reflect a party-and-party costs order and the uncertainty inherent in estimating the outcome of a taxation.
Why It Matters
The decision illustrates the Federal Court’s practical approach to fixing lump-sum costs: actual fees and an appropriate uplift may form the starting point, but the final award must still reflect the narrower scope of party-and-party recovery. It also confirms that nonpayment of invoices, an unsigned retainer accepted through conduct, and delay attributable to related litigation do not necessarily defeat a costs claim.