Case: Re Smith; ex parte Inspector-General in Bankruptcy [1996] FCA 1076
Outcome: referred to
The applicants contended that they were not seeking to re-open their case but merely to finish it. Alternatively, they submitted that this was a "clear case" in which leave to re-open should be given, since there would be "no reagitation of any issue". They also argued that what they termed the "decision" of 15 April 2005 was "in the nature of a determination of a preliminary question". The applicants submitted that there were numerous factors militating in their favour in any exercise of discretion, including the reasonableness of their reliance on the decision in Re Smith; ex parte Inspector-General in Bankruptcy and Brown [1996] FCA 1076 (" Re Smith "), the absence of prejudice to the respondents, the absence of formal pleadings, and public policy. 16 The applicants estimated their loss as $115,348 and sought to recover $100,000 under the bond. They submitted that the Court is not discharged from an obligation to assess loss simply because quantification was "not a simple exercise" and was imprecise. In ascertaining the loss that flowed from the breach of the bond, there were, so the applicants said, three relevant questions: (1) what action was required to be taken by them once they became aware of a possible breach of the bond?: (2) What resources were used to take such action?: and (3) How can those resources be valued for the purpose of quantifying a loss? 17 The applicants contended that no issue of managerial time arose, although if it did, they were entitled to recover in respect of such time. They submitted that the employee status of relevant officers did not disentitle the applicants from recovering the costs claimed for them. They contended that "the value of the time they have spent is the cost of the resources used by the applicants in carrying out their duties following a breach of the bond". They maintained that they were entitled to recover the costs referable to Bradshaw's prosecution and submitted that the Court could award exemplary damages. 27 There are a number of factors militating in favour of granting the applicants leave to re-open their case. There is a matter of the public interest and public policy involved. There has been a serious breach on Bradshaw's part of his duties as a trustee, which also constituted a breach of the condition of his bond. There was evidence of loss to the Commonwealth before the Court at the first hearing. The Commonwealth has been obliged to investigate Bradshaw's misconduct and has determined to prosecute him for his criminal misconduct. This has involved time and money. If the Commonwealth were able to quantify its loss, then it would be entitled to payment under the bond to the extent of that quantified loss (but not exceeding $100,000). If the Court were to grant leave to re-open, the costs that the respondents have unnecessarily incurred might be met by a costs order in their favour. The evidence that the applicants seek to present concerns an issue that the Court has not previously considered and the respondents have indicated that they would not seek to cross-examine the relevant deponents. The applicants' conduct at the first hearing was explicable by reference the decision in Re Smith , although, as stated in Bradshaw (No 1) at [41], this decision provided only limited guidance. There were no pleadings in which issues of the present kind might have been ventilated prior to the first hearing. Apart from the matter of costs, the respondents identified no prejudice to them if leave were granted, save for the fact that the parties had at all times until the directions of 15 April 2005 proceeded on the basis that the applicants would not and could not quantify the Commonwealth's loss.