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Getting money out of straw

By Hayley Hitch a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

What do you do when the unsuccessful party, who has just dragged you through the court for no reasonable cause, appears to be a company made of straw? Is it possible to seek costs orders against the director, even though the director is not a party to the proceedings? The Full Court of the Federal Court has recently held that in certain circumstances it will consider such an application.

In Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190, the Court considered what costs orders should be made where it had previously found the application before it had no merit. The Respondent, Mr Johnston, had been awarded compensation by the Fair Work Commission. Two applications by MTGI, as trustee for the MTGI Trust (“MTGI“), for leave to appeal the original decision had been refused by the Full Bench of the Fair Work Commission, and MTGI had also lost the application to the Federal Court for a review of the Full Bench’s decisions.
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New Costs Procedure in the Federal Court – Important Changes for Insolvency Practitioners

By Bonnie McMahon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

On 25 October 2016 the Federal Court of Australia (“the Court”) released a new practice note relating to costs, entitled the “Costs Practice Note” (“the Practice Note”). It is important for all insolvency and legal practitioners to be aware of this Practice Note, as it will be the main guide for Federal Court judges and registrars when they are considering costs related issues.

The Practice Note makes two things very clear:

  • Firstly that taxation of costs will only be used as a last-resort, in exceptional cases; and
  • Secondly that the Court’s preference will be to make a lump-sum costs order, wherever it is practicable and appropriate to do so.

Lump-sum Costs Order Procedure

If parties wish to utilise the lump-sum costs order procedure, they are expected to notify the court of this as soon as possible. Parties do need to need to file a formal application for this, unless they are requested to do so by a judge. Parties can argue for or against the use of a lump-sum costs order, although it will ultimately be at the discretion of the judge, as to whether this order is utilised.
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