Dimos v Willetts
[2000] VSCA 154
•25 August 2000
SUPREME COURT OF VICTORIA
COURT OF APPEAL Not Restricted
No. 9150 of 1991
| LEO DIMOS |
| Appellant |
| v |
| JEFFREY WILLETTS and THE REGISTRAR OF TITLES |
| Respondents |
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JUDGES: | TADGELL, ORMISTON and BATT, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 7 and 8 February 2000 | |
DATE OF JUDGMENT: | 25 August 2000 | |
MEDIUM NEUTRAL CITATION: | [2000] VSCA 154 | |
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REAL PROPERTY – Torrens title – Caveats – Whether notice of dealing given – Evidence of Titles Office practice – Admissibility and sufficiency – Form of notice – Transfer of Land Act 1958, ss.90(1) and 113(1) – Interpretation of Legislation Act 1984, s.49(1)(a).
REAL PROPERTY – Torrens title – Mortgage – Alteration – Whether authorised and authorised in writing – Point abandoned below – Instruments Act 1958, s.126.
PRACTICE AND PROCEDURE – Interest – Sum ordered to be held in trust pending trial – Whether successful claimant “the creditor” – Supreme Court Act 1986, s.58(1).
PRACTICE AND PROCEDURE – Costs – Order that one defendant pay “plaintiff’s costs of the proceeding” – Held not to include plaintiff’s costs of claim against other defendant dismissed with costs – Rule in Kelly’s Directories v. Gavin & Lloyds [1901] 2 Ch.763 obsolete.
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APPEARANCES: | Counsel | Solicitors |
For the appellant | Mr R.L. Berglund, Q.C. and | Leo Dimos & Associates |
| For the first-named respondent | Mr A. McK. Flower | W.E. Pearcey & Ivey |
| For the second-named respondent | Dr I.J. Hardingham, Q.C. and Mr I.S. Williams | Victorian Government Solicitor |
TADGELL, J.A.:
Having had the benefit of reading in draft the reasons prepared by the other members of the Court, I need do little more than express my obligation to them and my agreement. I venture, however, to add some remarks of my own on two matters that have been dealt with by Batt, J.A.
The first concerns the meaning to be attributed to the expression “prepaying” in s.49(1)(a) of the Interpretation of Legislation Act 1984. Although the expression, or one of its cognates, has long been part of statutory language here and elsewhere, the concept of prepaid post has never, so far as I know, been statutorily defined. So far as is now relevant, the concept owes its origins to the 19th century reforms in the English postal service for which Sir Rowland Hill is generally given credit. Before 1840 varying rates of postage were applied to letters individually, according to the distance travelled, payment being usually sought from the recipient. The charges, apart from being troublesome to calculate, tended to be expensive for long-distance mail and therefore often difficult to collect : addressees were wont to refuse to accept delivery by declining to pay. Moreover, in the days when private servants were commonly used for the purpose of metropolitan delivery, pre-paying a letter to be sent by the “two-penny post“ used to be thought by some to be “little short of an insult”[1] to an addressee of any serious rank. There appears also in those days to have been an apprehension by senders of mail that pre-payment of the postage was likely to lessen incentive in the postman to deliver promptly or, perhaps, at all. For these among other reasons the postal service, not widely popular, was in need of reform. Hill’s investigations revealed to him that the chief expense lay not in the mail’s carriage, or the extent of its journey, but in the calculation and application of the postage charges and attempts to collect them. He recommended that most of the problems might be solved by the introduction of a postal service reliant on inexpensive, uniform prepaid rates and delivery on scheduled rounds by disinterested third parties. Thus was introduced in 1840 the well-known Penny Post, dependent as it was for its success on the celebrated “penny black” adhesive stamp.
[1]Robert Smith Surtees, Ask Mamma, lxxviii (1858).
Although use of the neologism “prepaid” was apparently thought by some to be “barbarous”,[2] the Penny Post that spawned it was an immediate success. The innovation of 1840 was no doubt attractive to those responsible for conducting the postal service, avoiding the necessity in most ordinary cases to calculate charges and to collect them from addressees. It was presumably attractive also to users of the service on account of its comparative cheapness and efficiency; and, eventually, no less so to the addressee – relieved of any necessity to question the postman or to make payment – than to the sender, whose letter stood a substantially increased probability of being both timeously delivered and accepted by the addressee.
[2]Oxford English Dictionary, 2nd ed., citing E.B. de Fonblanque, Life and Labours of Albany Fonblanque, (vi) 508 (1874).
Central to the original concept of prepaid post were, true enough, the relief of the addressee from payment and the imposition on the sender of an obligation to pay for the service before it was provided. As the concept has developed it has been by no means dominated, however, as I should think, by an ineluctable necessity, as between the sender and the postal authority, for actual payment in advance provided that an arrangement for payment by the sender acceptable to the authority can be reached. Even more radical variations might be accommodated within the original theme without destroying the basic concept. For example it has been commonplace for many years[3] that a potential recipient, no doubt by arrangement with the postal authority, intimates to potential senders “no stamp required” (or something similar), assuming liability to pay if delivery is made. Such an arrangement might well qualify, for all practical purposes, as providing for prepaid post and to be fairly described as doing so. In the event I have, however, no need to descant on the possibilities of innovation; for I agree with Batt, J.A. that the prospect of a failure of the Registrar of Titles to make service of a notice by prepaid post (howsoever understood) has not been shown by Mr Dimos, whose counsel sought in argument to rely on such a prospect.
[3]Certainly since before 1984, the date of the statute now under consideration referring to the concept of pre-paid post.
The other matter that I would mention concerns the award to Mr Willetts of interest pursuant to statute. While agreeing with Batt, J.A. that the award of interest should not have been made, I shall express my reasons in my own words since it is a question on which we are differing from the learned trial judge.
Section 58(1) of the Supreme Court Act 1986, which the judge treated as authorising the award of interest, derives from s. 2 of Act 6874, the Supreme Court (Interest on Judgments) Act 1962, which replaced s.78 of the Supreme Court Act 1958 with a new version of s.78. The pre-1962 version of s.78 had stood unaltered (in all respects now material) in each of the four consolidations of the Supreme Court Act from 1890 onwards. A comparable provision had been first enacted in Victoria as s.422 of the Supreme Court (Common Law Procedure) Statute 1865, deriving from s.28 of The Civil Procedure Act, 1833 (3 & 4 Will. 4, c. 42), sometimes known as Lord Tenterden’s Act. This last had provided that –
“Upon all debts or sums certain, payable at a certain time or otherwise, the jury on the trial of any issue, or on any inquisition of damages, may, if they shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time, or if payable otherwise, then from the time when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term [sic] of payment; provided that interest shall be payable in all cases in which it is now payable by law.”
The Victorian section of 1865, obviously modelled on the Imperial one, varied the language so that it began “Upon all debts or sums certain hereafter to be recovered in any action, the jury may if they think fit allow interest to the creditor at a rate not exceeding…” etc.; and it provided for specific maximum interest rates, including a rate in respect of bills of exchange and promissory notes, and substituted a different (but presently immaterial) proviso at the end. Save for these modifications, and the omission in the 1865 statute of the phrase “until the term of payment” and some inconsequential differences in style, the provisions of the 1833 and the 1865 sections were to all intents and purposes the same. Section 224 of the Supreme Court Act 1890 of Victoria, re-enacting the 1865 section, inserted immediately before the words “the jury” the words “the Court at the hearing or”; and thus the provision stood (save for some minor variations in style) in the succeeding consolidations until, as s.78 of the 1958 Act, it was repealed and replaced in 1962.
Interest claimed under s.224 of the Supreme Court Act 1890 (if not payable upon a contract express or implied) was held by Hood. J. in Coane & Grant v. The Thomas Bent Land Company [4] to be awardable only by way of damages : the section indicates, as his Honour said –
“… that it is a question for the jury [or presumably, in an appropriate case, the Court] to calculate, as damages, what interest they will allow to a creditor whose debt has not been paid…The words of the section referring to ‘at the hearing or on the trial’ show clearly that what was contemplated was that where the plaintiff has a claim for a sum certain he may in addition thereto get interest, but he is only to get it by way of damages.”
Rodway v. Lucas [5] and Sheba Gold Mining Co. v Trubshawe [6] are to the same effect.
[4](1891) 17 V.L.R. 198.
[5](1855) 10 Exch. 667; 156 E.R. 607.
[6][1892] 1 Q.B. 674.
There are, it is true, some important differences between s.58 of the Supreme Court Act 1986 Act on the one hand and the 1962 version of s.78 of the Supreme Court Act 1958 and its forbears on the other. It is necessary no longer to apply for interest at the hearing or trial : David Leahy (Aust.) Pty. Ltd. v. McPhersons Ltd.[7] Again, there is no reference in s.58, as there was in the pre-1962 version of s.78, to “the debtor”; and there is less discretion than there was under the pre-1962 section as to the making of an award of interest : interest is to be awarded in all cases to which the section applies “unless good cause is shown to the contrary”. Even so, (leaving aside the specifically identified cases where interest is payable “in respect of any bill of exchange or promissory note” and where the debt or sum recovered was payable by virtue of some written instrument and at a date or time certain) an award of interest under s.58, being a matter of calculation at least by reference to the rate at which and the period for which it is to be awarded, remains in my opinion an award by way of damages, as it always was; and, in spite of the removal of a reference in the section to “the debtor”, it is awardable against, and only as against, a debtor; and it is to be calculated and payable, as it always was, from the time when demand of payment was made.
[7][1991] V.R. 367, at 380.
It follows, I consider, from the language of s.58, understood in the light of its history and according to the reason of the thing, that interest is awardable under the section, as it always was under its predecessors, in favour of a party who recovers in a proceeding, against that party’s debtor, a debt or sum certain. Leaving aside again the cases specifically identified, an award of interest runs “from the time when demand of payment was made”; and I think that naturally refers to a demand of payment made by a creditor in that capacity upon a debtor in that capacity. I am further of opinion that s.58(1) contemplates that a debt or sum certain is recovered from a debtor of the creditor who recovers it. That, I consider, was not this case.
It is a curious feature of the case that nowhere, so far as I can see from the material, has there been an actual claim made by either of Messrs Willetts or Dimos against the other – whether by court process or pleading or otherwise – for payment of the $20,000 that was the subject of the order made by Gobbo, J. on 7 August, 1991. Perhaps it was assumed that such a claim was notionally made and that, having regard to the nature of the order, the $20,000 held pursuant to it would necessarily go as part of the spoils of the litigation. That may be the way the trial judge saw it, for early in his reasons he referred to an assertion by Mr Willetts of priority of his registered interest “to support his claim to the $20,000 held in trust”; and his Honour said of Mr Dimos that he “claims payment of the amount of $20,000 held in trust by” Mr Willetts. His Honour ultimately expressed the conclusion that “the claim of Mr Willets against Mr Dimos for the sum of $20,000 should succeed”.
To remark upon the absence of an actual claim on either side for payment of the sum that was the subject of the order made by Gobbo, J. is no mere pedantry : no such claim or demand for the sum could properly have been made by either Mr Willetts or Mr Dimos in the capacity of a creditor upon the other in the capacity of a debtor. It might have been thought to follow naturally, following the learned judge’s findings, that Mr Willetts should receive the sum that was the subject of the order. His entitlement did not however, in my opinion, derive from his capacity of a creditor; and the sum of $20,000 was not a “debt or sum certain recovered” from a debtor.
The order made by Gobbo, J. provided that the sum of $20,000 retained from the proceeds of the sale by Mr Willetts as mortgagee be held by him “on trust pending further order of the Court”. No doubt Mr Willetts was thereby required to act in some respects as a trustee and was in a sense constituted and appropriately described as a trustee. He was, however, in effect a stakeholder with an obligation to preserve the money pending further order of the Court. It is unclear whether Mr Dimos regarded the order as requiring Mr Willetts to act strictly as a trustee for, as Batt, J.A. points out,[8] the solicitor for the former told the trial judge that the $20,000 was paid into a bank account in their joint names. Whether Mr Willetts is correctly to be regarded in all respects as a trustee or as akin to a kind of stakeholder[9], I am not able to see how he can by any stretch be characterized as a creditor of Mr Dimos in respect of the $20,000 from the time it was set aside pursuant to the order made by Gobbo, J. If he could be so characterized it would appear to follow that, had Mr Dimos succeeded in the litigation, he would equally have been capable of characterization as a creditor of Mr Willetts and entitled thereby, as against him, to an award of interest under s.58. It cannot be that each of them was at once a creditor and debtor of the other. Nor is it any more logical to regard each as being a potential or incipient or contingent creditor of the other depending on the outcome of the litigation : consistently with what Batt, J.A. points out, there could be no period during which interest was awardable if no party became a creditor until judgment was pronounced.
[8]See [55], footnote 80; but as against that I note that Mr Willetts, in an affidavit sworn on 5 February, 1998, deposed that “On 26 August 1991, I established with the National Australia Bank at its branch at 483 Sydney Road, Brunswick National Cash Management Account Number 20 715-8630 (“the bank account”) Such investment is an authorised trustee investment and accorded with the Order of Mr Justice Gobbo. ….On that day I paid into the bank account the sum of $20,000.”
[9]As to which see Westblade v. Adams (1984) 3 B.P.R. 9319; Eighth SRJ Pty. Ltd. v. Merity (No 2) (Young, J., Supreme Court of New South Wales, 10 April, 1997)
For these reasons I agree that the award of interest should be set aside.
ORMISTON, J. A.:
In this appeal I have had the benefit of reading the comprehensive judgment of Batt, J.A. in draft form relating to the matters of substance. For the reasons he has stated I would agree that each of the grounds of the appeal on those matters has not been made out, except as to interest. I also agree with his reasons, and those of Tadgell, J.A., for reversing the order as to interest. As to each of these matters I agree with the orders proposed by Batt, J.A. I now turn to the questions of costs also raised by the appellant.
Costs
The appellant's complaint as to costs has two aspects. The learned trial judge ordered that the appellant as first defendant to "pay the plaintiff's costs of the proceeding including reserved costs …" That was interpreted by the learned Taxing Master, as confirmed by the judge sitting in the Practice Court, as requiring the first defendant to pay the whole of the plaintiff's costs, including those additional costs referable to his claim against the successful second defendant, who in turn had received the benefit of an order by the trial judge that her costs be paid by the plaintiff. The trial judge had, however, refused to make either of the orders known respectively as a Sanderson order or a Bullock order: see Sanderson v. Blyth Theatre Co.[10] and Bullock v. London General Omnibus Co.[11]
[10][1903] 2 K.B. 533.
[11][1907] 1 K.B. 264.
The first defendant (as I shall continue, for convenience' sake, to call the appellant) contends in the first place that the Taxing Master and Practice Court judge were wrong in treating the trial judge's order as intended to require him to pay all the plaintiff's costs, including those referable to his unsuccessful claim against the second defendant. If he be wrong in that contention, the first defendant seeks to challenge the trial judge's order for costs as an erroneous exercise of his discretion.
This Court was uncertain whether the trial judge had any such intention and so, in accordance with its powers pursuant to R.64.22(5) made written enquiry of the learned trial judge as to the object or intent of his order for costs, particularly in the light of the fact that there seemed from the transcript to have been no discussion of the question, notwithstanding detailed submissions as to the possible making of a Sanderson or Bullock order. Lest it be thought that such a request was an unusual exercise of this Court's powers on appeal, inasmuch as court orders should be left to speak for themselves, as it were, unless application be made under the "slip rule", the procedure here adopted seems to have been either authorised or approved by the Court of Appeal in Korner v. H. Korner & Co. Ltd.[12] It should, however, be noted that what was there approved was, more precisely, an enquiry by a taxing master or a judge on review to the trial judge for the purpose of resolving any ambiguities or uncertainties in the terms of a costs order. It may also be said that, although Singleton, L.J. (with whom Jenkins, L.J. concurred) merely expressed the opinion that "great trouble and expense would be saved if either party were able to go back to the judge" (emphasis added), for subsequently[13] they appeared to suggest that an alteration in the rules to bring about some such means of solving that kind of problem would be necessary. Thus, although they expressed the opinion that it was "in the public interest" that that should be the case, it may be concluded that they merely expressed disapproval of existing practice without providing any remedy other than the suggested amendment to the relevant rules. Fortunately in this Court there is express power under the rules to call for a report from the trial judge, although one should be cautious about treating that rule as permitting this Court in the ordinary case to go behind the language of a formal court order. Generally errors in expression should be corrected under the slip rule, but Korner suggests that in matters such as the interpretation of costs orders further enquiry may obviate necessity for applications to amend such orders.
[12][1951] Ch. 10 at 19.
[13]Ibid.
The Court has now received a succinct and helpful response from the learned judge which states:
"(i) The matter was adverted to; and
(ii)It was not intended by Order 3 that Dimos [the first defendant] should be ordered to pay Willetts' [the plaintiff's] costs of his unsuccessful claim against the Registrar [the second defendant]."
I have not been able to find that part of the transcript in which the question was adverted to as there was only a limited part of that transcript included in the Appeal Book. The judge's reasoning in this respect is not available but one may gather from his report that there was no express statement of his reasons.
So it is, perhaps, preferable that the Court proceeds to deal with the matter upon the basis that there either could not be or was no such report by the trial judge.
The simplicity and conventional form of the judge's order belies the difficulty here raised in applying it. The difficulty arises, of course, because there was more than one defendant and relief was obtained, as is not unusual, against only one such defendant, with the customary, though not necessarily invariable, consequence that the successful second defendant obtained her costs.
The present dispute arose when it was contended before the learned Taxing Master that, notwithstanding that the plaintiff had failed in that part of his action which he brought against the second defendant and therefore had suffered an order to pay that party's costs, he should nevertheless get the whole of his costs, including all necessary additional costs arising solely out of the claims he brought against that second defendant and that those costs should be borne by the first defendant.[14]
[14]For the present I omit those costs relating to the joinder in the first place of the Registrar in 1991 for conformity's sake, so as to bind the Registrar in relation to the outcome of the claim against the first defendant. To that claim the Registrar would ordinarily do no more than indicate that he or she would abide the order of the Court. The additional costs here referred to were those incurred when an amended statement of claim was served and filed making specific claims against the Registrar pursuant to s.110 of the Transfer of Land Act 1958.
When the Taxing Master gave his reasons for dealing with the appellant's objections he dealt with his contentions by saying, "On the plain meaning of the words, my view is to the contrary." He said that the practice has been for the Court to adopt "words of limitation" such as "the costs … as against the second defendant",[15] if the judge's intent was to avoid the operation of the rule of practice referred to in Kelly's Directories Ltd. v. Gavin & Lloyds[16]. When the matter was taken to the judge in the Practice Court upon application for review, his Honour dismissed that application likewise following what was said to be the principle in Kelly's Directories. His Honour set out an extensive passage from the judgment of Byrne, J. in that case[17], stating that he agreed with his Lordship's analysis of the practice as to costs orders. His Honour also said that the proceeding was one where the claim of the plaintiff against the defendant Registrar was of little consequence inasmuch as the real claim against the Registrar was that brought pursuant to R.11.15 by the first defendant. Unfortunately his Honour overlooked the further amended statement of claim which was served on the defendants by the plaintiff on 21 August 1997 shortly before the commencement of the trial. In paragraph 12 of that amended pleading it is clear that the first respondent was also seeking, although in the alternative, to show that the entry in the Victorian Land Register leading to postponement of his interest was due, inter alia, to the omission, mistake or misfeasance on the part of the Registrar or an officer in the Registry so that he was entitled to an indemnity pursuant to s.110 of the Transfer of Land Act 1958 for his losses, as was sought in paragraph C of the prayer for relief.
[15]The learned master's meaning is obscure. Probably he meant that "words of exclusion" should be used. Otherwise the order in present case might have been confined to costs as against the first defendant.
[16](No. 2) [1901] 2 Ch. 763.
[17]Kelly's Directories at 766-767.
The outcome of this aspect of the appeal therefore, depends very largely upon whether the so called practice in Kelly's Directories forms part of the law and practice applied by the courts in this State. Naturally, I would place great weight upon the considered opinion of the learned Taxing Master, who must be one of the most experienced taxing officers in the common law world. It seems, however, that in his unreserved reasons he was at least in part influenced by the fact that there was a reference to that decision twice[18] in what used to be the standard textbook on costs in this State, namely Oliver on the Law of Costs (1960), the work also of an experienced taxing officer. What was said to be the outcome of Kelly's Directories was there summarised in these terms[19]:
"Where one defendant is ordered to pay the plaintiff's costs and the action is dismissed against the other defendant, the unsuccessful defendant must, in the absence of a special order, pay the whole of the plaintiff's costs, and is not entitled to any deduction on account of the joinder of the successful defendant …".
[18]At pp.69 and 70.
[19]At p.69. The summary at p.70 is even briefer.
But does Kelly's Directories truly stand for such a wide proposition and, if it does, does that represent the current and binding practice as to what costs will ordinarily be ordered where a plaintiff succeeds against one defendant and fails against another?
As to the first question, it is by no means clear what the decision was taken originally, or in later years, to stand for. Although there are many reported cases as to what are the appropriate orders for costs where there has been partial success against one or more of a number of defendants, especially in relation to applications for Sanderson and Bullock orders, but also in the course of disputes as to the allocation of costs, Kelly's Directories has been referred to only on a handful of occasions in England and Australia in reported judgments. Moreover, there are but a few brief references to the case in a number of the standard textbooks on practice and costs, many of which are delphically expressed.
Before examining those cases and textbooks it is desirable to state what conclusions I have reached. In my opinion the decision in Kelly's Directories has been taken, in certain works, including unfortunately Oliver on Costs, to stand for too wide a proposition. At most Byrne, J. determined no more than that, where a plaintiff is successful in a Chancery suit against one defendant and unsuccessful against another, who receives no order for payment of its costs, the plaintiff is ordinarily entitled to an order for the costs of the proceeding, which order, when correctly construed, will comprehend all the costs necessarily and properly incurred in bringing the proceedings against both defendants. Moreover, even if the practice so described should be seen as extending to cases where the successful defendant itself obtains an order for costs, then, having regard to the costs regime then applying in the various divisions of the High Court of Justice, the practice of making such an order, as well as its interpretation, should be seen as having been confined to proceedings in the Chancery Division.[20] In the King's Bench Division an order for costs in favour of the plaintiff against the one of defendants was seen merely as reflecting the common law practice that costs followed "the event" and thus was construed as entitling the plaintiff to recover all costs incurred in prosecuting its claim against the unsuccessful defendant only and as excluding costs incurred in suing the successful defendant.[21] Notwithstanding the history of the rules both in England and this State whereby all provisions relating to costs following in the event were eventually repealed, the common law and thus the Queen's Bench and King's Bench Division practice on this issue was accepted as prevailing over the Chancery practice, so that the "rule" reflected in Kelly's Directories should now be treated as obsolete.[22] That is not to say, however, that a judge, whether in England or Victoria, may not exercise the court's discretion so as specifically to grant the plaintiff all its costs against the unsuccessful defendant, including those costs incurred which solely relate to suing the successful defendant. That would merely be a variant, a less comprehensive variant, of a Sanderson or Bullock order.
[20]It may not be insignificant that this decision reviewed a decision of one of the Chancery Taxing Masters in the last year that they separately exercised their jurisdiction. When the Rules of the Supreme Court of January 1902 amalgamated those Masters into the central office of the Supreme Court, they became members of what came to be known as the Supreme Court Taxing Office as from 11 January 1902. Thereafter difficulties arose over the succeeding 30 years, and arguably 65 years, as to the extent to which common law practice and chancery practice concerning costs ought to prevail, notwithstanding Order LXV's preference for the chancery principle that all costs should be "in the discretion of the Court". There were a considerable number of changes to the rules over this period, in particular as to the extent to which the common law principle of costs following the event should apply in jury actions, as was originally provided for in r.1 of Order LXV, or more generally. Similar problems arose in Victoria: see e.g. Jelbarts Pty. Ltd. v. McDonald [1919] V.L.R. 478, but specific references to costs following the event disappeared from the English Rules in 1929 and in Victoria in 1938, so that much of the earlier case law is now inapplicable. The matter need not be examined in detail for, as will be seen, the common law practice in the King's Bench Division ultimately prevailed, presumably upon the basis that, where Order LXXII r.2 provided that "the present procedure and practice remain in force", and there was a conflict, the practice prevailed which was considered by the Court to be the most convenient: cf. Newbiggin Gas Co. v. Armstrong (1879) 13 Ch.D. 310 and Puddephatt v. Leith (No. 2) [1916] 2 Ch. 168 at 179.
[21]See e.g. Hobson v. Sir W.C. Leng & Co. [1914] 3 K.B. 1245: cf. O'Sullivan v. Morton [1911] V.L.R. 249.
[22]See, as to the King's Bench Division Practice, Butterworth's Costs ed. by Treagus & Rainbird (1951) Vol. 1 p.78, and as to its ultimate acceptance, see the Supreme Court Practice (1985) para.62/9/11, with which should be compared para.62/9/12 of the preceding 1982 edition. See below para.[41].
I may add, for what it is worth, that none of those who have heard this appeal, and none of a number of senior members of both the Court of Appeal and the Trial Division of this Court who have been consulted, has heard of an order of this kind being construed as including the costs incurred against a successful defendant. I would venture to suggest that very many orders have been made in this State upon the understanding that no such rule as that seen to be derived from Kelly's Directories is applicable. To accept the meaning given to the trial judge's order by the Taxing Master and by the judge in the Practice Court would countenance an inconsistency, albeit not a direct inconsistency, inasmuch as the plaintiff would receive, without specific order, from the first defendant the costs of issues relating to the claim against the second defendant on which not only had he failed on the merits but also in respect of which the second defendant herself has obtained an order for costs. Of course, they have each incurred their own costs (so that they are not identical) but the plaintiff should not recover costs from a party to whom they do not relate and in respect of a claim in which he has failed, unless the judge specifically orders that they be so recovered.
It is necessary to state in broad terms why this should be so, as it would appear to deny an understanding which the Taxing Master appears to have about orders of this kind and I would differ from his views with the greatest reluctance.
Nevertheless, Kelly's Directories was a case which was determined in circumstances different from the present. The differences lie not so much in the nature of the action as in the manner of its disposition. One may accept, for present purposes, that an action such as the present, arising out of claims between competing mortgagees and chargees, would be a suit in equity, or at least partly so, and thus of a kind brought in the Chancery Division and therefore subject to the broad discretionary rules as to costs imported, at various times to a greater or lesser extent, from the High Court of Chancery at the time the Judicature Acts were passed in England and Victoria. Kelly's Directories involved a copyright claim against the first defendant Gavin, the infringing party, and the second defendant, the Committee of Lloyds, alleged to be partners in or party to the printing of the infringing article. The plaintiff had obtained injunctive relief from Byrne, J. against Gavin, together with costs, but no relief had been given against Lloyds.[23] Nevertheless, in the circumstances no order for costs had been made in favour of the successful defendant Lloyds, nor had any order for costs been made in favour of the plaintiff against Lloyds. At the drawing up of the order, at which the first defendant was then represented, the order for costs was settled as requiring that defendant to pay the plaintiff "their costs of this action up to and including this judgment".[24]
[23]See the report of the trial: [1901] 1 Ch. 374.
[24] [1901] 2 Ch. at 764.
Byrne, J., in later considering these events and the Taxing Master's conclusion that the meaning of his earlier order was clear, agreed that that was so, so that the first defendant had to bear all the plaintiff's costs including those relating to its claim against the second defendant. The judge said[25] that, now that the order had been passed and entered, he was bound by it "as it now stands". He referred to the Chancery practice of moulding costs orders to meet the circumstances of the case[26], and drew attention to the forms of orders which could have been made limiting the effect of an order of the kind he had been asked to make[27]. As no qualification appeared in the order given at the trial, he would not go behind the unqualified terms of the order requiring, as he felt, payment of all the plaintiff's costs by the first defendant and he would not reframe the order, which could have been formulated differently at trial or, possibly, at the time the order was drawn up.[28]
[25][1901] 2 Ch. at 766.
[26]For this purpose he referred to the judgment of Lord Esher, M.R. in Stumm v. Dixon & Co. (1889) 22 Q.B.D. 529, from whom Fry, L.J. dissented.
[27]He gave a specific example of an order made by Joyce, J. during the previous sittings: see at 767.
[28]What is remarkable is that the question of costs was raised by counsel then appearing for Lloyds, the eminent commercial barristers T.E. Scrutton and F.D. MacKinnon. His Lordship concluded his reasoning at the trial ([1901] 1 Ch. 374 at 382) by saying: "The plaintiffs are entitled to an injunction against Gavin with costs, but are not entitled to costs as against Lloyds." It would seem that about the only thing he did not then say was that the latter costs should not be recovered against the defendant Gavin. At the later hearing he seemed more impressed by the fact that that defendant, who was not represented at the trial, was represented when the order was drawn up and took no objection to the form of order, which he then construed in the wide way that he did.
For reasons which have already been suggested, Kelly's Directories has, to my knowledge, only been cited on three subsequent occasions in reported English authority. In the first of those cases, Badische Anilin und Soda Fabrik v. Hickson[29], also heard in the Chancery Division, Warrington, J. followed Kelly's Directories in not entirely dissimilar circumstances in relation to a costs order in a patent action. There again there were two defendants but the action against the defendant company was settled before trial and an order made staying proceedings as against that defendant. The plaintiff had succeeded at trial[30] against the individual defendant (on two patents out of three), at the end of which there was an order that the plaintiff's costs of the action up to and including judgment (other than those relating to the third patent) should be taxed and paid by the individual defendant. The Taxing Master followed Kelly's Directories saying that he had not been directed to make any deduction on account of the joinder of the defendant company. They should not be treated as "costs thrown away" so as to make them then irrecoverable. On review his Lordship said[31] that the case was essentially the same as Kelly's Directories, the only difference being that the action against the defendant company had been terminated at an earlier stage. He said that it was the practice in the Chancery Division for judges to make orders at the trial dealing with the costs by making special directions in respect to "any particular costs [that] ought or ought not to be borne …"[32]. He distinguished a case, also distinguished by the Taxing Master, which is mentioned only in the Annual Practice at that time[33], Dunn v. Northey, by saying that there the judge had held that the costs had been "thrown away" so that they could not therefore be allowed to the plaintiff. Again, Badische Anilin v. Hickson seems to have dealt with the very special case where there was no order either way in respect to the costs relating to the claim against a successful defendant other than that made against the unsuccessful defendant at trial.
[29] (1906) 23 R.P.C. 149.
[30](1905) 22 R.P.C. 63.
[31]At 152.
[32]At 151.
[33] 1902 edition; and also in the annual editions for some years thereafter.
Kelly's Directories was next referred to in Hobson v. Sir W.C. Leng & Co.[34] There was only a brief reference[35] to it in the judgment of Buckley, L.J., with whom Kennedy and Phillimore, L.JJ. concurred, but it was not insignificantly distinguished. The Court of Appeal was considering an action for libel against two defendants, one defendant having admitted liability, pleading an apology, while the other pleaded justification. At trial a verdict was found against both defendants for £750 and judgment entered for that sum "and costs to be taxed". It was held that, notwithstanding the generality of that order, the defendant who pleaded justification was alone liable for the costs occasioned to the plaintiff in consequence of that plea and the other defendant was not liable for those costs. Buckley, L.J. referred[36] to an argument as to which of the two judges who decided Stumm v. Dixon should be preferred. It had been argued that the opinion of Fry, L.J., who endorsed in general terms the Chancery practice as to costs of issues, should be followed, as to which Buckley, L.J. said[37]: "If this question had arisen upon a judgment of the Chancery Division I should assent". He then referred to Kelly's Directories, stating that Byrne, J. had proceeded upon the view that in the Chancery Division a general order as to the plaintiff's costs "cannot be read as excepting some costs which it is contended that the plaintiff ought not to have"[38]. His Lordship therefore held[39] that the judgment of the Divisional Court in Stumm v. Dixon should be applied so that "the costs occasioned by the separate pleading of the one defendant ought to be allowed as against him alone". In essence, therefore, the Court allowed apportionment of the costs notwithstanding the terms of the order. As to the latter practice there was much discussion in the authorities at about that time and later as to the precise powers of the taxing masters relating to costs of "the event" and the costs of issues, which need not here be examined for, as far as one can see, they did not deal with costs against successful and unsuccessful defendants: see generally the speeches in Reid Hewitt & Co. v. Joseph[40].
[34][1914] 3 K.B. 1245.
[35]At 1248.
[36]At 1248.
[37]Ibid.
[38]Ibid.
[39]At 1248; see also at 1252. In effect the common law approach of Lord Esher, M.R. prevailed.
[40][1918] A.C. 717; followed in this State in Jelbarts v. McDonald – see fn. 20.
To my knowledge there is but one later reported case in which Kelly's Directories was mentioned in the English courts, namely Korner v. H. Korner & Co. Ltd.[41]. The former case was relied upon solely for the purpose of establishing that the court's order as to costs must be given effect to upon its true construction and that the master had no jurisdiction to separate the costs of issues in the circumstances.It was a case, however, about the proper apportionment of the defendants' costs where all defendants, both successful and unsuccessful, were represented by the same firm of solicitors and the same counsel. In the judgments the only reference to Kelly's Directories was, as has been set out above[42], to show that there could be no further reference to the judge who made the order and regretting that that was the practice. The case therefore says nothing as to the present problem and is in fact the last reported English case in which Kelly's Directories was cited, the practice changing, as already stated, shortly before the publication of the 1985 Supreme Court Practice[43].
[41][1951] Ch. 10.
[42]See above at para.[18].
[43]See above at para.[27] fn. 22 and at para.[41].
In Australia there had only been brief reference to Kelly's Directories, by way of obiter dictum in the Queensland Court of Appeal[44], before the judge in the Practice Court relied upon it in the present case, at least so far as I have been able to discover. The only other reference to the case which I have been able to find is in the reasons for decision of Assessment Officer Osler of the Ontario Supreme Court, where he followed the case without considering the matters here discussed, no argument as to its current relevance having been advanced: see (1988) A.C.W.S.J. Lexis 22356; 13 A.C.W.S. 3d 110.
[44]Orlit Pty. Ltd. v. J.F. & P. Constructing Engineers Pty. Ltd. (Queensland Court of Appeal, 9 August 1993, unreported), per Davies, J.A. and Shepherdson, J. at p.3.
Perhaps of equal significance in this area of practice are the references made to Kelly's Directories in well-known works on practice and costs. It was first noted in the 1902 edition of the Annual Practice under "Apportionment of Costs" in these terms[45]:
"Co-defendant – judgment against one – Where judgment was given against a defendant in default, and such defendant was ordered to pay the plaintiffs their costs up to and including judgment, and the action was dismissed without costs against the other defendants, it was held that the defendant must pay all the costs of the plaintiffs, and was not entitled to any reduction on account of the joinder of defendants against whom the action failed."
[45]At 929.
This statement, with one significant qualification, was repeated in the Annual Practice for the next 65 years: see for example the 1927[46] and the 1963[47] editions. The one important addition to the statement which appeared first in the 1919 edition was by the addition of four words at the beginning of the statement, as follows[48]: "Where judgment was given in a Chancery action ..."[49] (emphasis added). The passage appeared in the same form in the successor work, the Supreme Court Practice, edited by Sir Jack Jacob, in its first edition in 1967 and thereafter until the change in Chancery Practice already referred to, first described in the 1985 edition[50].
[46]At p.1317.
[47]At p.1890.
[48]At p.1217.
[49]In addition the words of the order were accurately quoted in direct speech: "costs of this action" (emphasis added).
[50]Para. 62/9/11 – see fn. 22 above. See also below at para.[41].
The other standard practice book published until its merger with the Annual Practice in 1941 was the Yearly Practice of the Supreme Court. Looking for example at the 1926 edition and final 1940 edition, one finds but two brief references to Kelly's Directories. The first[51] is merely a "cf" reference, but the second[52] broadly states:
"Where one of two defendants was ordered to pay to the plaintiffs their costs of the action the meaning of the order was held to be that the costs included the plaintiff's costs of the action against the other defendant against whom no relief had been given and who had not been awarded any costs ...".[53]
[51]1926 edition p.1291; 1940 edition p.1427. The comparison is with Stumm v. Dixon.
[52]1926 edition p.1357; 1940 edition p.1464.
[53]See 1940 edition at p.1464: cf. p.1427. Although Mr. Williams, Q.C. in the preface to the first volume of the first edition of his Practice of the Supreme Court of Victoria (1964) acknowledged his use of the last (1940) edition of the Yearly Practice, no reference to Kelly's Directories or any related practice may be found in any of the editions of his work, now known as Civil Procedure - Victoria.
The standard work on Chancery Division Practice, Daniell's Chancery Practice, referred briefly and in limited terms to Kelly's Directories in its last (the 8th) edition published in 1914, as follows:
"Where judgment is given against one defendant with costs, and for another without costs, the order will fix the unsuccessful defendant with the whole of the costs of the action, unless special directions are given."[54]
The other authoritative work on Chancery Practice still published at that time, Seton's Forms of Judgments and Orders, in its 7th edition[55] made merely brief comments on costs, referring to Kelly's Directories only for the proposition that the Taxing Master could not alter the effect of a court order[56].
[54]Vol. 1 p.1045. The authority for the proposition appears in the footnote as primarily Kelly's Directories, but there is also reference to another case of Mulkern v. National etc. "(Times, July 17)". But when the latter case was heard and precisely what happened is unknown to me, for I have been unable to find any other reference to the case.
[55]1912.
[56]Vol. 1 p.286.
There was no significant work on King's Bench Practice published after Kelly's Directories was decided. The only current works on costs at the time or shortly after Kelly's Directories was decided were works on the taxation of bills of costs in none of which, to my knowledge, was Kelly's Directories referred to, although that is not entirely surprising given the limited purpose of such works.[57] There was, however, one general work published later, in 1951, in two volumes, called Butterworths Costs, edited by Treagus and Rainbird. The learned authors examined in some detail various circumstances in which costs as to particular issues and parties are apportioned[58]. They observed that in the Chancery Division, as in the old Court of Chancery, it has always been the practice for the court to retain complete discretion over costs and thus to make special orders where it is not desired to include the costs of issues in a general order for costs.[59] There is a brief note as to the outcome of Kelly's Directories, largely in terms of that appearing in the Annual Practice, saying that, where there is such an order to pay the costs of an action, when the action was dismissed against another defendant, the plaintiff is entitled to recover all costs of joining the defendants against whom the action failed[60]. Significantly, however, that note is followed immediately by this comment on King's Bench Division practice:[61]
"This is not the practice in the King's Bench Division, however, in cases where a plaintiff sues two or more defendants and recovers costs against one defendant only, such plaintiff will not be allowed the extra costs incurred by joining the other defendant or defendants unless the judgment or order specifically provides for such costs."
[57]Another reference to Kelly's Directories in a work of general reference, namely Halsbury's Laws of England is limited to a brief comment under the subjects of "co-defendants" or "joinder" in the volumes on "Practice and Procedure" (2nd ed. Vol. 26 pp.98-99 (fn. c), 3rd ed. Vol. 30 p.318; 4th ed. Vol. 37 p.165 para.219), where it is simply asserted that an order against an unsuccessful defendant for costs of the action was held in Kelly's Directories to include costs incurred in pursuing a second successful defendant.
[58]See pp.73-83.
[59]See p.77. Examples of various Chancery Division orders for apportionment are given at pp.78-79.
[60]At p.78. The authors also state: "Where the plaintiff discontinues against one defendant and succeeds against the other, the plaintiff cannot recover the costs 'thrown away'." For this Stumm v. Dixon at 533 is cited.
[61]Ibid.
In my opinion it is highly likely that this authoritative statement of practice led ultimately to the decision that the practice in all Divisions should be the same and that Kelly's Directories should no longer be followed. The change in Chancery practice ultimately occurred almost by a side-wind, certainly not by change of rule or decision of a judge. In the course of a detailed "Report of the Review Body on the Chancery Division of the High Court"[62], a committee, appointed by the Lord Chancellor and consisting of Oliver, L.J. (as he then was) and J.M. Woolf, Esq., CB, turned to a number of "miscellaneous minor matters" which had been raised in the course of considering the "harmonisation" of the procedures in the Chancery and Queen's Bench Divisions. One of these was dealt with in this way:[63]
"(iii)Costs. There is a curious difference of practice in relation to costs. Where a plaintiff sues two defendants and succeeds against one only with costs, the Queen's Bench practice is that in the absence of a special direction, the costs payable by the unsuccessful defendant are restricted to those incurred in proceedings against him. The Chancery practice, following the decision in Kelly's Directories v. Gavin [1901] 2 Ch. 763, is that the unsuccessful defendant is obliged to pay also the plaintiff's costs of proceedings against the defendant against whom he has not succeeded. There seems no good reason for this variation in practice and the Queen's Bench practice seems both fairer and more logical."
Recommendation No. 28[64] then simply stated "that the Queen's Bench practice should be adopted". So a change in Chancery practice was ultimately announced in the 1985 Supreme Court Practice in these terms:[65]
"In the Queen's Bench Division where a plaintiff sues more than one defendant and succeeds against one only, the plaintiff will not be allowed the extra costs incurred by joining the other defendant or defendants unless the judgment or order specifically so provides and in the Chancery Division the practice in such circumstances was held to be that the defendant must pay all the costs of the plaintiff[s], and was not entitled to any deduction on account of the joinder of defendants against whom the action failed (Kelly's Directories …). As a result of Recommendation No. 28 and para.106(iii) of the Report of the Review Body on the Chancery Division of the High Court this practice should no longer be followed and the practice applied in the Queen's Bench Division should be adopted in all cases …"[66]
[62] 1981, Cmnd 8205.
[63] Para. 106 (iii).
[64] At p.101.
[65]Para.62/9/11. Repeated in identical terms in 1999 edition at para.62/B/125.
[66]There followed notes as to the specific outcome in a number of cases such as Dunn v. Northey and Korner v. H. Korner & Co. as previously appearing.
Unfortunately most earlier Australian works on costs were also confined to the taxation of bills of costs and made no reference to Kelly's Directories. The one exception was Phillips & Trebilco on Bills of Costs, which in the 2nd edition[67] had this bald and unqualified statement[68]: "Where one of two defendants is ordered to pay the plaintiffs their costs of action, such costs are all the plaintiff's costs of action, including the costs incurred by joining the other defendant." For this both Kelly's Directories and Badische Anilin v. Hickson were cited as authority, without reference to the particular circumstances there considered. This appears to be the source of the statements in the next Victorian work on costs, namely Oliver on Costs, the principal proposition of which is set out above[69]. There were two loose-leaf services which were temporarily successors to Oliver including Ahern on Costs, but so far as I am able to ascertain none contained reference to Kelly's Directories. The most recent work on costs, which is not now confined to Victorian practice but which purports to be a successor to Oliver[70], Quick on Costs is another loose-leaf service first published in 1996. The work also contains considerable discussion of general principle as to apportionment of costs, but on the present issue the author expresses this view[71]:
"A plaintiff who sues more than one defendant and succeeds against only one of them will not be allowed the extra costs incurred by joining the other defendant or defendants unless a special judgment or order specifically allows them: see below, [4.3670][72]. The modern practice reflects 19th century practice in the Queen's Bench Division. The discredited practice in the Chancery Division, reflected in a decision such as Kelly's Directories, was that the defendant found liable had to pay all the plaintiff's costs and was not entitled to a deduction for the joinder of the defendant or defendants against whom the plaintiff's action had failed except where the plaintiff had discontinued against such defendant or defendants before succeeding against the defendant found liable."[73] (Emphasis added.)
[67]1919.
[68]At p.66.
[69]At para [24].
[70]See Preface p.i.
[71]Para. 4.3400
[72]The paragraph describes the practice relating to the making of Bullock and Sanderson orders.
[73]There follows a reference to the relevant paragraph of the 1995 Supreme Court Practice and to Korner v. H. Korner & Co.
I have already noted that there is no discussion of Kelly's Directories in Williams' Civil Procedure – Victoria[74], nor have I been able to find any reference to that case in any of the current "editions" of the various works on Supreme Court practice published in the other States and Territories or in any work on Federal Court practice.
[74] See para.[38] fn.53.
This description of the relevant authorities would appear to show that the rule in Kelly's Directories has either no continuing application or, at best, a very limited application. That would seem, with respect to the learned master and Practice Court judge, the only correct view. It would be wrong to adapt a decision in the Chancery Division based on very particular circumstances to all litigation with more than one defendant. It was, in the first place, a decision where the successful defendant on the merits, in the sense that no order was obtained against it, did not obtain an order for its own costs. More importantly it was decided at the time when Chancery orders as to costs were spelled out in detail as a matter of practice seemingly derived from the Chancery rule that all costs were in the discretion of the Court. Although that became and remains the general rule both in England and Victoria[75], the common law practice of ordinarily ordering costs to follow the event underlies the exercise of the discretion in most cases. All orders of this Court should be read accordingly. Of course, in any proceeding the "event" may not be confined to a single event, for the rules now permit joinder of defendants and of causes of action and the making of claims between parties other than the plaintiff. Thus the outcome of a counterclaim is a separate "event".[76] Where causes of action are joined, as in the present case, they likewise produce separate events in respect of which a trial judge is entitled to exercise his discretion.[77]
[75]See Supreme Court Act 1986 s.24.
[76]See the careful explanation of how the principle works out in practice in the judgment of Dixon, J. in Smith v. Madden (1946) 73 C.L.R. 129.
[77]It is not necessary here to examine the practice as to costs of a claim based on a single cause of action brought against defendants in the alternative, although for conformity's sake the practice here discussed ought to be preferred.
Where, as in the present case, the Court dismisses a claim against a second or other defendant with costs, that should be construed as dealing with the costs of that claim, if no contrary order is made. Likewise, again as in the present case, an order for costs against an unsuccessful defendant should be construed upon the basis that the Court was dealing with the claim or claims made against that defendant, so that, in the absence of any contrary order, it should be construed as dealing with only the costs necessarily and properly incurred by the plaintiff in prosecuting that claim or those claims. The words "of the action" used here, as in so many court orders, should be read as having implicitly added to them the words "as against the first defendant", but that is strictly unnecessary because the proceeding or event prima facie under consideration was that against the first defendant, who was thereby ordered to pay those costs.
That is not to say, however, that in different proceedings, where there is strictly but one claim or cause of action brought against a number of defendants, other considerations might not apply. In many conventional suits in equity there was a plurality of defendants although there might not have been strictly a number of causes of action or "events" arising from their acts. I would suggest that the learned judges in Kelly's Directories and in Badische Anilin v. Hickson were viewing the plaintiff's claims in those actions as a totality and making orders in accordance with current practice relating to those claims. Doubtless that is why Daniell's Chancery Practice, and later the Annual Practice, accepted Kelly's Directories as authority for the limited propositions set out above. Whether or not that rule was applied across the board in the Chancery Division is now of no consequence, for, in my opinion, the "rule" in Kelly's Directories should now be seen as obsolete, whatever its original justification. It would therefore now be preferable in cases, where no order for costs in favour of a successful defendant is made, to spell out precisely the ambit of any costs orders made whenever other defendants are separately represented (or are unrepresented). Finally, it must always be remembered that a successful plaintiff is entitled, if granted costs, to all costs necessary and proper to the prosecution of its claim, so that any costs incurred in joining additional parties for conformity's sake (for example) may be comprehended by the order, although it is not necessary to express any concluded opinion on that subject. Certainly here the Taxing Master may properly have considered whether the joinder of the Registrar of Titles was justified so as to ensure that the Register should be properly maintained, as seems to have been the position when the proceeding commenced in 1991, but that is quite different from the circumstances arising when the statement of claim was amended so as to add the separate claim pursuant to s.110 of the Transfer of Land Act.
In these circumstances I have concluded that the order of the learned trial judge was correct and expressed in terms which granted the plaintiff his proper costs against the first defendant in respect of his claim or claims made against that defendant but not in respect of his alleged but unsuccessful cause of action against the second defendant Registrar. The costs "of the proceeding" should be so confined. It follows that I consider that the learned Taxing Master and judge in the Practice Court were each in error in construing the trial judge's order for costs in accordance with the so-called rule in Kelly's Directories and in holding that the order for costs in favour of the plaintiff comprehended all costs necessary and proper for prosecuting his claim against the second defendant. Therefore the appeal against the judgment of the judge in the Practice Court should be allowed, his order dismissing the review should be set aside and an order be substituted that the items raised on review (set out in the notice to review dated 7 July 1999) be remitted for reconsideration and taxing by the Taxing Master in accordance with the decision and reasons of this Court.
To summarise, the application for leave to appeal against the costs order of the learned trial judge ought to be refused, but leave to appeal from the order of the learned judge in the Practice Court made 12 August 1999 should be granted and the appeal allowed in the terms set out above.
BATT, J. A.:
Introduction
The Court has before it two appeals by Leo Dimos, the first defendant below, against a judgment given and orders made by two judges of the Trial Division in the one proceeding. The first appeal is against the judgment and orders of the trial judge given and made on 22 December 1997, 9 February 1998 and 27 February 1998. On the first date he granted the first respondent, Jeffrey Willetts, the plaintiff below, relief against the appellant by adjudging that moneys held in trust pursuant to an order of Gobbo, J. made 7 August 1991 be paid to the first respondent, and reserved questions of costs and interest. On the second date he dismissed the appellant’s and the first respondent’s claims against the second respondent, the Registrar of Titles, the second defendant below, and made orders for costs. On the third date he ordered the appellant to pay the first respondent interest of $6,003.32 pursuant to s.58 of the Supreme Court Act 1986. The second appeal, which does not concern the Registrar, is against the order of the Practice Court judge made on 12 August 1999 dismissing with costs the application of Mr. Dimos for review pursuant to Rule 63.57 of the order that the Taxing Master made on 24 June 1999. By the latter order the Taxing Master had refused the application of Mr. Dimos for review by him under Rule 63.56.1 of his interim order made 26 March 1999 taxing and allowing Mr. Willetts’ costs against Mr. Dimos in the sum of $24,944.66, and had confirmed that taxation. In the taxation he had held that the trial judge’s order made on 9 February 1998 that Mr. Dimos pay “the plaintiff’s costs of the proceeding including reserved costs” included Mr. Willetts’ costs of his unsuccessful claim against the second respondent. Besides the two appeals, the Court initially had before it an application: the trial judge having on 27 February 1998 refused leave to appeal against his above-mentioned order as to costs made on 9 February 1998, the Court of Appeal (Callaway and Kenny, JJ.A.) on 31 March 1998, had retrospectively extended the time for the making by Mr. Dimos of an application for leave to appeal against the order as to costs and had ordered that the application be heard by the Court that heard the first-mentioned appeal. The trial judge on 24 July 1998 varied his order for costs so as to make it clear that those costs were costs allowable in the Supreme Court and that Rules 63.24 and 63.25 did not apply to their taxation. This Court on 8 February 2000, during the hearing of the first-mentioned appeal, refused leave to appeal. Naturally, that refusal related to the grounds then propounded (grounds 21 to 27 in the notice of appeal), being in summary that his Honour’s discretion miscarried in ordering, at first implicitly and later explicitly, that Rules 63.24 and 63.25 did not apply. I joined in refusing leave essentially because I was not satisfied of the sufficiency of the prospects of successfully challenging the exercise in this case of the wide discretion as to costs accorded to a primary judge, who necessarily has a better conspectus of the whole proceeding at first instance than this Court can have: cf. Etna v. Arif[78]. Later on 8 February 2000, during argument of the appeal from the order of the Practice Court judge, the Court entertained an oral application by senior counsel for Mr. Dimos for leave to appeal from the trial judge’s order as to costs and to “revive” the general ground as to costs (ground 21) if and so far as, contrary to his submission, that order on its true construction extended to comprehend Mr. Willetts’ costs of his claim against the Registrar. The Court reserved its decision on that application.
[78][1999] 2 V.R. 353 at paras.67-68.
Background
This proceeding concerns a dispute as to priorities between a solicitor as mortgagee for a contributory loan and a solicitor as chargee or mortgagee for his costs. It was begun as long ago as 1991. At least since 7 August 1991 it has nominally involved only $20,000. But during its lengthy history, for a substantial part of which it went to sleep, it has generated no doubt considerable amounts of costs.
The background facts giving rise to the first appeal are set out with clarity and in detail in the principal judgment of the trial judge, and the summary of them which follows is taken largely from that judgment. Mr. Willetts, a solicitor, in May 1989, entered into, and caused to be registered, a mortgage as trustee for clients (“the Willetts mortgage”) securing a loan of $110,000 to George Konstantellos and Georgia Konstantellos (“Mr. and Mrs. Konstantellos”). They and other members of the Konstantellos family had previously borrowed moneys from Mr. Dimos, who also is a solicitor. An unregistered first mortgage, purporting to secure $30,000, was granted to Mr. Dimos by Mr. and Mrs. Konstantellos by their execution of it on 12 April 1984 and 25 October 1984. A charge not in registrable form, purporting to secure $15,000, was also granted by Mr. Konstantellos to Mr. Dimos on 13 March 1987.
The security for each of the sums of $30,000 and $15,000 was or included the land known as 179 Murray Road Preston, being the land described in Certificates of Title Volume 3462 Folio 382 (“title one”) and Volume 4050 Folio 835 (“title two”), of an estate in fee simple in which Mr. and Mrs. Konstantellos were registered as joint proprietors[79]. The property at 179 Murray Road, Preston comprised two adjoining blocks of land – hence the two titles. On the property was a house with a driveway and garage. Most of the house structure was situated on the land in title one, but part of it was situated on the land in the other title.
[79]It is unnecessary to consider the effect of the fact that the charge dated 13 March 1987 was given by one only of the two joint proprietors.
Mr. Dimos lodged two caveats in 1987 to protect his securities. The first in time, numbered M795539Q, which I shall sometimes call “the first caveat”, was lodged with the Registrar on 15 April 1987. It claimed an interest as chargee under the charge dated 13 March 1987. The other, numbered M876074R, which I shall sometimes call “the other caveat” or “the second caveat”, was lodged on 5 June 1987. It claimed an interest as mortgagee. In each caveat Leo Dimos of 226 Swanston Street, Melbourne was named as caveator and the address for service of notice was stated to be Leo Dimos & Associates of 226 Swanston Street, Melbourne. Both caveats were expressed to be lodged against title two and, incorrectly, against Certificate of Title Volume 2462 Folio 382. The errors in the caveats were corrected by deleting the reference to the wrong Certificate of Title in the first caveat on 9 October 1987 and by withdrawing the second caveat as to the wrong Certificate of Title on 9 June 1988. No reference was made in the caveats to title one.
The Willetts mortgage as originally executed by Mr. and Mrs. Konstantellos referred only to title one as security. Mr. Willetts had that title searched before settlement but did not search title two and so was unaware of Mr. Dimos’ claimed interest in it. The Willetts mortgage was lodged for registration on 8 May 1989 and was registered on the basis that, following notice to Mr. Dimos of the lodging of the mortgage to which Mr. Dimos had not objected, the caveats had lapsed to the extent necessary to permit registration of the mortgage. The description of the land in the mortgage as lodged with the Land Titles Office differed from the description in the mortgage as executed by Mr. and Mrs. Konstantellos in that it referred also to title two.
Mr. and Mrs. Konstantellos fell into arrears under the Willetts mortgage and ultimately on 13 April 1991 Mr. Willetts, exercising his power of sale as mortgagee, entered into a contract of sale with three persons as purchasers for the sum of $117,900. Later, problems emerged when it was discovered that there were two caveats in place on title two. Mr. Willetts attempted to secure the withdrawal of the caveats in order to make title to his purchasers, but was not successful. Subsequently, on 2 July 1991, he brought a proceeding against Mr. Dimos by way of originating motion for their removal. The proceeding was partially settled on 7 August 1991 on terms that the caveats would be immediately removed but should be treated, for the purpose of the proceeding, as continuing in existence, and that Mr. Willetts[80] would hold on trust, pending further order of the court, the sum of $20,000 to be retained from the proceeds of sale of the property. On 7 August 1991, Gobbo, J. made an order giving effect to the settlement[81] and in addition also ordered, amongst other things, that the originating motion stand as a writ and that either party have leave to join the Registrar of Titles as a defendant. Mr. Willetts joined the Registrar as second defendant to the principal proceeding[82] pursuant to leave granted on 1 November 1991. On 20 December 1991 Mr. Dimos, by notice under R.11.15, made a claim against the Registrar of Titles for indemnity under the Act in the event that his securities lost their priority, on the ground that the Registrar had failed to give to him as caveator notice as required by s.90(1) of the Transfer of Land Act 1958 (“the Act”). The claims of each solicitor against the Registrar for indemnity under s.110 of the Act in the event that the claimant did not have priority were heard concurrently with Mr. Willetts’ claim against Mr. Dimos and the latter’s counterclaim against the former.
[80]The solicitor for Mr. Dimos told the judge after delivery of judgment on 22 December 1997 that the moneys were in fact held in a joint bank account in the name of both parties, but this seems from the affidavit of Mr. Willetts to which Tadgell, J.A. has drawn attention in fn.8 to have been a misapprehension.
[81]The first caveat is misnumbered, following the originating motion, but the error, which could readily have been corrected, has been overlooked.
[82]This seems to have been done only for conformity when the first statement of claim was filed on 4 November 1991. In his amended statement of claim filed 21 August 1997 Mr. Willetts made a substantive claim against the Registrar.
Issues at trial
At trial Mr. Willetts asserted priority of his registered interest to support his claim to the $20,000 which was in trust. He did not press certain of his claims, such as his claim for compensation against Mr. Dimos pursuant to s.118 of the Transfer of Land Act 1958 (“the Act”) and his claim for Hungerfords[83] damages. He maintained his claim for indemnity against the Registrar in the event that Mr. Dimos was held to have priority over him and thus to be entitled to the $20,000 held in trust, if not more. In that regard Mr. Willetts contended in essence that there was a failure by the Registrar to notify Mr. Dimos of the lodging of Mr. Willetts’ dealing and that this resulted in Mr. Dimos’ retaining priority. Alternatively, it was put that no such notification was sent within the requisite time. Mr. Willetts argued that there was no default on his part.
[83]Hungerfords v. Walker (1989) 171 C.L.R. 125.
In support of his claim to the $20,000, Mr. Willetts relied, by reference to ss.40, 41, 42(1) and 43 of the Act, on the principle of indefeasibility of title and argued that the mortgage, having been registered, received priority over the prior unregistered mortgage and charge on which Mr. Dimos relied. He argued that the caveats lapsed in respect of his registered interest. He also argued that the exercise of the power of sale extinguished the equitable interests of Mr. Dimos.
Mr. Dimos argued that Mr. Willetts could not rely upon what would otherwise flow from registration for two principal reasons. First, the Registrar of Titles, Mr. Dimos alleged, failed to give notice to him as specified in s.90(1) of the Act. As a result, the statutory procedure was not invoked and his failure to take steps to delay the registration of the dealing did not cause the caveats to lapse. He further argued that in those circumstances the Registrar was not authorised to register the mortgage. In the alternative, he argued that any notice given was given in respect of only one of the two caveats and that, in respect of the other caveat, the same propositions would follow, that is, the caveat did not lapse and the dealing should not have been registered. Those arguments affected only the question of priority of the dealings as they related to title two, since there was no caveat lodged by Mr. Dimos in respect of title one. Secondly, Mr. Dimos contended that there was a material alteration made after the execution of the Willetts mortgage which rendered it void. This was the addition of the reference to title two, which he contended was made without the authority of the mortgagors, the other parties to the instrument. He argued that in making the addition (and presenting the mortgage for registration) Mr. Willetts committed fraud within the meaning of the Act and that accordingly the registered mortgage could be challenged and removed from the Register and the priority in time of his (Mr. Dimos’) dealings preserved. Alternatively, he argued that, if the conduct did not constitute fraud, none the less it rendered the mortgage void and that he had rights in personam that he could exercise against Mr. Willetts to protect the priority of his unregistered dealings.
Mr. Dimos made his own claim against Mr. Willetts by way of counterclaim[84]. On the basis of his alleged prior securities, he claimed payment of the sum of $20,000 held in trust and a further amount of $70,947.60 on the ground that the unregistered mortgage and charge, which had priority, secured debts now totalling $90,947.60.
[84]His Honour’s judgment as authenticated does not expressly dismiss the counterclaim or give judgment on it for Mr. Willetts, but its dismissal is necessarily inherent in the granting of relief to Mr. Willetts.
For reasons which will become apparent, I do not find it necessary to elaborate further the claims of either Mr. Willetts or Mr. Dimos against the Registrar or to set out the grounds on which the present Registrar resisted those claims.
The statutory provisions
Section 90 in essence provided that, with certain exceptions, a caveat lapsed after 30 days’ notice given to the caveator unless within that period or any further time permitted the caveator appeared before the Court and undertook to indemnify all persons damnified by the delay and the Court directed the Registrar to delay registration. It also provided for the removal by the Court of a caveat. So far as material, s.90(1) read:
“90.(1) Subject to this Act every such caveat ... shall lapse as to any land affected by any transfer or other dealing other than [certain presently immaterial transfers and dealings] upon the expiration of thirty days after notice given by the Registrar to the caveator that a transfer or dealing has been lodged for registration, but in the case of a transfer or other dealing which does not dispose of the whole of the estate or interest of the registered proprietor in the land affected thereby the caveat shall lapse only to the extent necessary to permit the registration of the transfer or dealing.”
Section 91 prohibited registration of a transfer or dealing affecting land while a caveat was in force. So far as material, s.91(1) provided:
“91.(1) So long as any such caveat remains in force the Registrar shall not except to register or give effect to –
(a) ...
(b) ...; or
(c) a transfer or dealing in respect of which the caveat has lapsed –
record in the Register any change in the proprietorship of or any dealing purporting to affect the estate or interest in respect of which the caveat is lodged.”
Section 113 made provision with respect to the service of notices. So far as material it provided:
“113.(1) Any notice under this Act may be served or given by being sent by letter posted to the person concerned at his address for service ...
(2)Any address of a person as recorded in the Register may be used as his address for service.
(3)The address appointed in a caveat as the place at which notices relating to the caveat may be served shall be the address for service of the caveator.
(4)The Registrar may cause a copy of any notice sent by him to be filed with a memorandum that it has been so sent and the memorandum shall be sufficient proof that the notice was duly sent.
(5) ...
(6) ...
(7)When a notice is sent by letter posted to any person at his address for service and the notice is returned by the post office the Registrar may if in the circumstances and having regard to the provisions of this Act he thinks fit –
(a) direct any further notice to be given; or
(b) direct substituted service; or
(c) proceed without notice.”
By s.42(1) the registered proprietor of land[85] was, “except in the case of fraud”, to hold such land subject to such encumbrances as were notified but absolutely free from all other encumbrances with certain immaterial exceptions. By s.42(2) the land included in any folio of the Register was subject to certain rights of others, but no such right is presently relevant. Finally, by s.43, “except in the case of fraud” no person contracting or dealing with or taking or proposing to take a transfer from the registered proprietor of any land was to be affected by notice actual or constructive of any unregistered interest, and the knowledge of the existence of any such unregistered interest was not of itself to be imputed as fraud.
[85]“Land” was defined in s.4(1) as including an interest in land, which, by s.74(2), a registered mortgage conferred.
Decision of trial judge
His Honour, correctly with respect, isolated from the numerous issues of law and fact raised before him the following as the major issues, namely:-
(a)whether any and, if so, what notice of the lodging of the Willetts mortgage was given by the Registrar to Mr. Dimos;
(b)whether the admitted alteration of the mortgage by Mr. Willetts was authorised and, if not, whether it constituted fraud within the meaning of the Act.
As regards the first major issue, having regard to the evidence of the practice of the Land Titles Office and the provisions of the Act, his Honour was satisfied that the Registrar had given proper notice to Mr. Dimos of the lodging of the Willetts mortgage. He further held that the then Registrar had discharged his obligations under the Act in relation to both caveats.
In reaching those conclusions his Honour proceeded as follows. Mr. Willetts and the Registrar were unable to point to direct evidence that the notice to caveator referred to in s.90(1) of the Act was given in this case. They relied instead upon evidence of the practice of the Land Titles Office at the time and pointed to evidence of entries made on the relevant documents in accordance with that practice. His Honour accepted the evidence of Mr. Stafford, an Assistant Registrar of Titles. Mr. Stafford stated that, when a dealing was presented for registration, it passed from the lodging area to an examiner, by whom the dealing was checked against the title. If the examiner found that there was a caveat affecting the title which forbade the registration of the dealing that had been lodged the examiner would give an instruction to another section of the Office to prepare a notice to be sent to the caveator. The dealing, title and caveat would pass to an officer with the instruction from the examiner recorded on a piece of A-4 size paper called an advice paper. It was a working document used by the staff to give instructions to one another. It would be endorsed with an indication that there was a caveat which was affected and which required a notice to be sent. The receiving officer would prepare a notice in standard form. The practice was that an original and copy notice were completed using carbon paper between the original and the copy. The officer with the responsibility to send the notice would then place the original in an envelope addressed to the caveator, attach the copy notice to the caveat and put the envelope with the enclosed notice in a tray for collection by another branch of the Office which was responsible for posting. The staff responsible for sending the notices were also responsible for awaiting responses to them. They had a stamp which they would place on the caveat in the event that the time expired without action having been taken by the caveator. It read as follows:
The third detailed submission was that it was not proved that Mr. Dimos received a notice in respect of either caveat. This argument reflects ground 9 in the notice of appeal. As his Honour noted, the proposition put forward on behalf of the Registrar that a notice which was duly given will be effective even if it is not established that it actually reached the caveator appeared to be accepted by the other parties. Although in oral argument senior counsel for Mr. Dimos at one stage briefly suggested that it was for Willetts and the Registrar to prove that Mr. Dimos had received the notice (or notices), he then referred to Chesterfield v. Pitisano[104] and said that the appellant accepted that the issue was whether the notice (or notices) was (or were) sent. That concession was clearly correct[105]. Accordingly, whatever the position may once have been in the appeal, ultimately this argument was, properly, not persisted in.
[104][1964] V.R. 709 at 712.
[105]See also Ex parte Little (1958) 58 S.R.(N.S.W.) 173; Wilson v. Moir [1916] N.Z.L.R. 480 at 481; and cf. Gunn v. Land Mortgage Bank (1890) 12 A.L.T. 49. The terms of s.113(7)(c) furnish strong support for this interpretation. Further, as counsel in fact mentioned, the Registrar requires certainty, which the sufficiency of sending affords.
Second issue: whether alteration of mortgage authorised
It was contended for Mr. Dimos that the question here was not solely whether the addition was made with the necessary consents but also whether the consents, if given, were given in the appropriate form. The first limb of the argument is alone covered by the single relevant ground of appeal. As to it, a number of arguments were advanced in favour of the conclusion that his Honour erred in finding that an agreement had been made with the solicitors for Mr. and Mrs. Konstantellos authorising the alteration of the mortgage by the addition to it of a reference to title two. It was said, for instance, that the evidence was too vague and uncertain and that the evidence of Mr. Willetts as to his conversation with Mr. Eganides was clearly inconsistent with his answers to interrogatories in several of which he said, without referring to that conversation, that he was unable to answer further. I have considered the various arguments advanced in writing and orally. I am quite unpersuaded that his Honour erred in finding that the alteration was authorised by the solicitors for Mr. and Mrs. Konstantellos. Besides the considerations on which his Honour relied, I mention that, in response to a question from the Bench whether Mr. and Mrs. Konstantellos had ever said that Mr. Eganides proceeded on a wrong basis in agreeing with Mr. Willetts as to the manner of alteration (and thereby confirming the agreement made at settlement for alteration), senior counsel for Mr. Dimos informed us that they had not. Further, when called by counsel for Mr. Willetts, Mr. Konstantellos volunteered in evidence-in-chief that Mr. Willetts said to him, “I give you the money, but I want the house for security.”[106]. Mr. Konstantellos said in chief and when cross-examined on behalf of Mr. Dimos that the house (meaning, the house building at 179 Murray Road Preston) was built on two titles. It is true that in response to strong leading questions in cross-examination for Mr. Dimos Mr. Konstantellos said that he told Mr. Dimos to keep the smaller title and that he would use the bigger title to raise some money on, but the evidence-in-chief reads much more persuasively. Contrary to a submission from Mr. Dimos, I consider that his Honour was entitled to proceed on the footing that Mr. and Mrs. Konstantellos intended to mortgage the land in both titles to Mr. Willetts, so that the agreement which Mr. Eganides’ representative made and the subsequent arrangement as to the mechanics of alteration which Mr. Eganides himself made were in pursuance of his clients’ intention and, indeed, of their agreement with Mr. Willetts; for it would seem that Mr. Willetts and Mr. Konstantellos had agreed upon a loan on the security of the property at 179 Murray Street Preston, which, although Mr. Willetts did not know it at the time, consisted of two titles. I would add this important observation. The argument seemed to assume that it was for Mr. Willetts to show that the alteration was made with authority. In fact, the onus was on Mr. Dimos to show that it was made without authority, for it was he who had introduced the question of authority into the pleadings by alleging as a foundation for his counterclaim against Mr. Willetts that the mortgage had been amended without authority. I am amply satisfied that he failed to make that out.
[106]Emphasis added.
In the course of his oral submissions on the second issue senior counsel for Mr. Dimos began to advance a second argument or a second limb of the argument, namely, that the agreement to amend the mortgage was a contract for the disposition of an interest in land, that the proceeding was an action to enforce it and that the agreement was not in writing signed by agents authorised in writing by Mr. and Mrs. Konstantellos, as required by s.126 of the Instruments Act 1958. Counsel for Mr. Willetts then objected to the development of that argument on the ground, as was the fact, that it was neither covered by the grounds of appeal nor pleaded below. He also pointed out that when counsel then appearing for Mr. Willetts had, during addresses, objected to the same argument below because it had not been pleaded, had said that he would have to call further evidence and had suggested that there were already acts of part performance by Mr. Willetts in evidence, counsel for Mr. Dimos after discussion had said that he would “not pursue the matter”. Before us senior counsel for Mr. Dimos then sought leave to amend the grounds of appeal to include a ground relying on s.126. Late applications to amend pleadings on appeal[107] and especially to plead the Statute of Frauds as a defence[108] are ordinarily viewed with disfavour. It was said for Mr. Dimos (as I recorded it) that there was nothing in the way the case was run below which would have elicited evidence that was not given, but, even if that were so, I am clear that the factors which I have mentioned, and in particular the absence of reference to the point in the appellant’s pleadings and notice of appeal and the express abandonment of the point below[109], show that leave to amend should be refused.
[107]Geelong Building Society (In liq.) v. Encel [1996] 1 V.R. 594 at 602-608.
[108]Compare Williams, Civil Procedure – Victoria, para.36.01.255 and Charlick v. Foley Brothers Ltd. (1916) 21 C.L.R. 249, though see Lee v. Irons [1958] V.R. 436 at 449.
[109]Williams, op.cit., para.[64.01.390].
I would add this. Although senior counsel for Mr. Dimos said that the point went to the heart of the matter, my present view is that it is misconceived. The mortgage is both a contract and an instrument creating an interest in land. But the parties to it are Mr. Willetts and Mr. and Mrs. Konstantellos. Mr. Willetts is not in the present proceeding seeking to enforce the mortgage as a contract for the disposition of an interest in land against the only other parties to it, Mr. and Mrs. Konstantellos[110]. Indeed, even against Mr. Dimos, it may be doubtful whether he is relying upon the mortgage itself as a contract, as opposed to relying upon the fact that it has been registered and that no action was taken timeously by Mr. Dimos as caveator. It is Mr. Dimos who has raised the question of alteration. Be all that as it may, even if Mr. Willetts were suing Mr. and Mrs. Konstantellos on the mortgage as altered, the Statute of Frauds would not ultimately, I think, afford a defence. It may well be, despite what I have called his Honour’s extrapolation from the evidence of Mr. Eganides, that the latter did not consult Mr. and Mrs. Konstantellos about the alteration. But it is clear, for reasons given earlier, that Mr. Konstantellos, on behalf of himself and his wife, and Mr. Willetts were intending respectively to give and to take a mortgage over the title, whatever it was, to the house property at 179 Murray Street, Preston. In those circumstances, if the alteration already made is disregarded, Mr. Willetts could with an appropriate adjournment of the trial (if the point had been pleaded) have obtained rectification of the mortgage by the addition of title two on the basis of oral evidence of common intention, if not of agreement, and the mortgage when rectified would constitute a memorandum for the purpose of the Statute of Frauds: United States v. Truck Motors Ltd.[111] and Bosaid v. Andry[112].
[110]But a third party may in certain circumstances be able to rely on the Statute as having been “charged” upon the contract: Voumard, Sale of Land – Victoria, loose-leaf 5th edn., para[2070].
[111][1924] A.C. 196 at 200-201.
[112][1963] V.R. 465 at 468 and 473.
Senior counsel for Mr. Dimos at one point raised another question under this second issue. He suggested that, even if the solicitor for Mr. and Mrs. Konstantellos had agreed to the alteration, the presentation of the altered mortgage to the Registrar would constitute or give rise to a misrepresentation that the document was as signed by the mortgagors, which the solicitor knew not to be the case. This does not seem to have been argued below and is not covered by the grounds of appeal. But in any event that would not amount to fraud within s.42(1) of the Act: having obtained the agreement of a person or persons having ostensible authority to authorise the correction on behalf of Mr. and Mrs. Konstantellos, Mr. Willetts was entitled to treat their signature as applying to the document as altered. Australian Guarantee Corporation Ltd. v. De Jager[113], which was cited, is quite different. The imputation of fraud is unjustified.
[113][1984] V.R. 483.
Third issue: interest
In reasons handed down on 27 February 1998 his Honour held that Mr. Willetts was entitled to interest under s.58 of the Supreme Court Act 1986. So far as material that section provided:
“58(1) If in a proceeding a debt or sum certain is recovered, the Court must on application, unless good cause is shown to the contrary, allow interest to the creditor on the debt or sum at a rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 or, in respect of any bill of exchange or promissory note, at 2% per annum more than that rate from the time when the debt or sum was payable (if payable by virtue of some written instrument and at a date or time certain) or, if payable otherwise, then from the time when demand of payment was made.
(2) ...
(3)A debt or sum payable or a date or time is to be taken to be certain if it has become certain.”
If Mr. Willetts was entitled to interest under s.58, Mr. Dimos does not complain of his Honour’s quantification of the amount. His contention is that the case did not fall within s.58. Relevantly, the judgment given by his Honour on 22 December 1997 was that the money held in trust be paid to Mr. Willetts. Whether the money held in trust be considered as only the original $20,000 the subject of the order of Gobbo, J. of 7 August 1991[114] or as that original sum together with interest thereon re-invested in the bank account as at 22 December 1997, the amount adjudged to be paid to Mr. Willetts was, in my view, a sum certain, though not a debt. Nor was the latter suggested. Senior counsel for Mr. Dimos was prepared to concede that the money had been “recovered” within the meaning of s.58(1), and, despite doubts which the reasons of Tadgell, J.A. strengthen, I am prepared to proceed on that basis without deciding the point,[115] though I observe that even in his amended statement of claim Mr. Willetts did not claim the sum of $20,000.
[114]That order was not expressed to provide that the sum of $20,000 together with any “interest thereon” be held in trust.
[115]Compare Stroud’s Judicial Dictionary, 5th edn., s.v. “Recover”; The Oxford English Dictionary, 2nd edn., s.v. “Recover” (verb 1), sense 5; and Garner, A Dictionary of Modern Legal Usage, 2nd edn., s.v. “Recover back”.
The critical question is whether Mr. Willetts was “the creditor”. There is a subsidiary question as to when the sum was payable. In considering whether Mr. Willetts was “the creditor” I put aside the fact that the proceeding as commenced sought simply the removal of caveats. His Honour considered that the argument for Mr. Dimos, namely, that there was no creditor-debtor relationship in the classic sense between the two men, that a fund was merely created under the control of the Court and that no demand had been made for the money, sought to impose an excessively narrow definition of the term “creditor”. He said that both Mr. Willetts and Mr. Dimos claimed to be entitled to the $20,000 and in that sense might fairly be described as both claiming to be the creditor. The fund having been created, both claimed to be a creditor in relation to the fund. Citing Gibb v. Lombank Scotland Ltd.[116], his Honour stated that the word “creditor” is flexible in its meaning and will vary according to the context. He said that in interpreting the expression regard should be had to the purpose of s.58, namely:
“to compensate the plaintiff for being kept out of his money, although not because he has on that account lost the opportunity to invest it, but because he has thereby been deprived of its use,”[117]
and concluded that Mr. Willetts should, for the purposes of the section, be regarded as a creditor.
[116][1962] S.L.T. 288.
[117]Clarke v. Foodland Stores Pty. Ltd. [1993] 2 V.R. 382 at 396; see also David Leahy (Aust.) Pty. Ltd. v. McPhersons Ltd. [1991] 2 V.R. 367.
I accept that the word “creditor” is flexible in its meaning and varies according to its context. However, the cases show that in the ordinary acceptation of the term a beneficiary is not a creditor of his or her trustee: Ex parte Taylor; In re Goldsmid[118] and Burns & Geroff v. Leda Holdings Pty. Ltd.[119]. Gibb v. Lombank Scotland Ltd. was, if I may say so, an unsurprising decision in which no unduly wide or generous meaning was attributed to the word “creditor”. The missives for the sale of a company had included the following provision, “The company will be in the following form ... with no creditors outstanding.” It was admitted by the seller that certain accountants’ fees and minor sums for agents’ commission as well as an intimated claim followed by an action in court for £4,400 for alleged fraudulent preferences obtained by the selling company on the sequestration of a particular motor trading firm were outstanding. The seller maintained, however, that “creditors” meant those who had liquid claims for debt. It was held by Lord Cameron in the Outer House that the purchasers were entitled to found upon the admitted outstanding claims in seeking reduction of the contract of sale on the ground of breach of the clause stipulating “no creditors outstanding”.
[118](1886) 18 Q.B.D. 295 at 301 per Lindley, L.J. and 302 per Lopes, L.J.
[119][1988] 1 Qd.R. 214 at 229-233, where the cases are discussed and a possible exception recognised where the trustee has defaulted by misappropriating trust moneys. The proposition in the text appears also in Halsbury’s Laws of Australia, vol.27, Trusts, para.430-65, and none of the exceptions there stated is applicable.
Counsel for Mr. Willetts contended that the word “creditor” should be given a broad meaning in the context of s.58 and was simply a shorthand method for denoting a successful plaintiff or someone who recovers a sum certain.[120] If that be so, one may ask why the word “plaintiff” or “claimant” was not used instead of the somewhat more specific word “creditor”. The use of the word “plaintiff” in the passage cited from Clarke v. Foodland Stores Pty. Ltd. did not, and could not, mean that every plaintiff was within s.58(1): the Court was of course speaking in general terms, without reference to the present point. Further, if there is a creditor there must, it seems incontrovertible, be a debtor[121]. On one view, supported by the source of the moneys in question, the debtors were Mr. and Mrs. Konstantellos, the holding of the money on trust simply being a temporary mechanism while the rival claims to the proceeds of sale of the mortgaged property were determined. If one concentrates, however, on the trust mechanism employed, the person liable to make payment to Mr. Willetts was the trustee of the fund, namely, Mr. Willetts himself. But it was against Mr. Dimos that his Honour made the award of interest. If the moneys had been held by a third party, could that person, it may be asked rhetorically, have been ordered to pay interest? If not, on what basis could Mr. Dimos in that case have been so ordered? Again, a person entitled to a debt or sum certain is able to sue the person liable to pay the debt or sum certain, the debtor or obligor. But Mr. Willetts could not and did not sue Mr. Dimos for the sum, which he already held. To the foregoing must be added the fact that ordinarily at the very least a beneficiary is not a creditor of his trustee. No case was cited, and I have found none, applying “creditor” to the present facts. It is true that the expression “the creditor” must here have a meaning apt to “sum certain” as well as to “debt”, but the whole context of the section points to amounts which defendants are liable to pay (and, as I will shortly show, liable from at least the commencement of the proceeding).
[120]I have considered whether “creditor” might mean “judgment creditor”, but the Division in which s.58 occurs is dealing with the position immediately before judgment is authenticated in contrast to Division 7 (s.101). Moreover, Mr. Dimos is not, as would seem to be necessary in the context of judgments, a judgment debtor in respect of the $20,000.
[121]For this the use of the word “debt” is not significant.
There is a further consideration against his Honour’s conclusion and indeed it was the principal point advanced for Mr. Dimos in this Court. By contrast with s.60(1), s.58(1) pre-supposes, contrary to the facts of this case, that the debt or sum certain was payable before the commencement of the proceeding, for it authorises the allowing of interest, unless good cause is shown to the contrary, “from the time when the debt or sum was payable” and, save perhaps in exceptional cases, a debt or sum must be payable before it can be sued for or recovered. It is true that in the alternative s.58(1) authorises the allowance of interest “from the time when demand of payment was made”; but, except where a writ may be treated as itself the demand, a demand necessarily precedes the commencement of the proceeding. Furthermore, the first-mentioned alternative applies “if [the debt or sum certain was] payable by virtue of some written instrument and at a date or time certain.” Now, if his Honour’s interpretation is correct, Mr. Dimos must be treated as the person liable to pay. But, if the first alternative is to be applicable, the only “written instrument” by virtue of which it could be said that the sum was payable by him is the judgment of 22 December 1997, for the order of 7 August 1991 did not make him liable to pay the sum. On that view, there is no period of time over which interest is calculable, for the commencing and concluding dates of the period are one and the same. As to the second alternative, there was no demand here, and there could have been no demand here. In truth, each of the alternative conditions is as inappropriate as the other.
For the foregoing reasons and the reasons given by Tadgell, J.A. I am of opinion that Mr. Willetts was not entitled to interest under s.58 and that paragraph 1 of his Honour’s order made 27 February 1998 must be set aside[122].
[122]It was not suggested in argument for Mr. Willetts that the order could be supported under s.60(1) or otherwise.
Conclusion as to first appeal
It follows that the appeal against the judgment and orders of the trial judge succeeds as to interest but otherwise fails as against Mr. Willetts and fails entirely as against the Registrar.
Second appeal
It was submitted for Mr. Willetts that leave to bring this appeal was required because the Practice Court judge’s order was “as to costs which are in the discretion of the Trial Division” within s.17A(1)(b) of the Supreme Court Act 1986, reliance being placed on the somewhat tentative view of Mason, C.J. on slightly differently worded legislation in Halliday v. High Performance Personnel Pty. Ltd.[123]. That decision technically is not binding on this Court, and I am inclined, with great respect, to doubt the correctness of the submission to us. But since the conclusion of argument[124] it has become obvious to me that the order of the Practice Court judge was made on an interlocutory application for the purposes of s.17A(4)(b), for it did not finally determine the rights of the parties, but was merely consequential upon such determination: cf. In re Jerome[125], and, generally, Benfield v. Australian National Railways Commission[126].
[123](1993) 113 A.L.R. 637 at 638-639 and (more definitely) at 642.
[124]Because the question whether leave should be granted had been argued before us and because, I consider, leave should be given, it was not necessary to invite submissions on whether s.17A(4)(b) applies.
[125][1907] 2 Ch.145.
[126](1992) 8 W.A.R. 285 at 294-295.
The reasons for judgment of Ormiston, J.A. in relation to this appeal, which I have had the considerable benefit of reading, demonstrate why leave to appeal should be given. I agree with his Honour’s reasons and with the order which he proposes.
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