FEDERAL COURT OF AUSTRALIA
Donnelly v Maxwell-Smith [2010] FCAFC 154
Citation: Donnelly v Maxwell-Smith [2010] FCAFC 154 Appeal from: Maxwell-Smith v Donnelly [2010] FCA 474 Parties: MAX CHRISTOPHER DONNELLY
v INGE AND EUGENE MAXWELL-SMITHFile number: NSD 630 of 2010 Judges: BENNETT, RARES AND MCKERRACHER JJ Date of judgment: 16 December 2010 Catchwords: BANKRUPTCY AND INSOLVENCY – costs and expenses of administration –trustee’s right to indemnity for costs, charges and expenses, including legal costs – orders by Full Court setting aside order that trustee’s costs of proceedings be costs in administration of estate and in lieu ordering that there be no order as to costs – effect of Full Court orders deprived trustee of right to indemnity out of former bankrupts’ estates in respect of those proceedings
Held: appeal dismissed
PRACTICE AND PROCEDURE – leave to appeal – appeal from decision of primary judge to remit to registrar question of what costs, charges and expenses would be allowed on a taxation – whether leave to appeal required – whether order final or interlocutory – principles governing grant of leave to appeal
Held: leave to appeal required and refused
Words and Phrases: “no order as to costs” Legislation: Bankruptcy Act 1966 (Cth) s 179 Cases cited: Adsett v Bertlouis (1992) 37 FCR 201 referred to
Beddoe Donnes v Cottam [1893] 1 Ch 547 referred to
Bienstein v Bienstein (2003) 195 ALR 225 appliedCachia v Haines (1994) 179 CLR 403 referred to
National Trustees Executors & Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268 applied
Oshlack v Richmond River Council (1998) 193 CLR 72 referred to
Pantzer v Wenkart (2006) 153 FCR 466 referred to
Re Hodgkinson [1895] 2 Ch 190 applied
Re Luck (2003) 78 ALJR 177; 203 ALR 1 applied
Trikas v Rheem (Australia) Pty Ltd [1964-5] NSWR 645 referred to
Wentworth v Wentworth [2000] NSWCA 350 referred toDate of hearing: 24 November 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 38 Counsel for the Appellant: N Lucarelli QC and PB Walsh Solicitor for the Appellant: Church & Grace Counsel for the Respondents: I Maxwell-Smith appeared in person
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 630 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: MAX CHRISTOPHER DONNELLY
AppellantAND: INGE AND EUGENE MAXWELL-SMITH
Respondent
JUDGES:
BENNETT, RARES AND MCKERRACHER JJ
DATE OF ORDER:
16 DECEMBER 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be dismissed as incompetent.
2.Leave to appeal be refused.
3.The applicant pay the respondents’ costs of the appeal and application for leave to appeal including, by consent, their costs of travelling to and attending at the hearing in Sydney.
4.It be declared that the applicant is not entitled to any indemnity from the former bankrupt estates of the respondents in respect of the appeal and application for leave to appeal.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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CaseChat Overview and Summary
The court found that the Full Court's order did indeed intend to deprive Mr. Donnelly of his right to indemnity for his costs from the estates. The expression "no order as to costs" has a well-established meaning in legal contexts, signifying that each party must pay their own costs and negating any right of the trustee to take their costs out of the estate. The court held that the Full Court intended to make it clear that Mr. Donnelly was not to be reimbursed out of the estate for his costs of participating in the proceedings. The judicial formulation has remained unchanged for over a century, and its effect is that each party must pay their own costs. This interpretation was supported by various judicial precedents that recognized the meaning of the expression.
Accordingly, the appeal was dismissed as incompetent, and leave to appeal was refused. The court further ordered that Mr. Donnelly pay the respondents' costs of the appeal and application for leave to appeal, including their costs of travelling to and attending at the hearing in Sydney. It was declared that Mr. Donnelly was not entitled to any indemnity from the former bankrupt estates of the respondents in respect of the appeal and application for leave to appeal.
Orders
Orders of the court
1. The appeal be dismissed as incompetent.
2. Leave to appeal be refused.
3. The applicant pay the respondents’ costs of the appeal and application for leave to appeal including, by consent, their costs of travelling to and attending at the hearing in Sydney.
4. It be declared that the applicant is not entitled to any indemnity from the former bankrupt estates of the respondents in respect of the appeal and application for leave to appeal.
Note:
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Mr Donnelly submits that the order made by the Full Court cannot have been meant to apply to deprive him of his costs merely by the order that was made. He submits that much greater detail would need to have been given and a more explicit order made if a course so unusual as to deprive him of his costs had been intended. Accordingly, he submits, in the context of [65] of the Full Court’s reasons, it cannot have been intended so to deprive him and the order should be construed accordingly.CONSIDERATION We do not agree. Rather we agree with the reasoning of the primary judge as set out in [12] of these reasons. Mr Donnelly accepted in argument that the costs order made by Wilcox J (and set aside by the 2006 no costs order) was an order that expressly recognised his right to indemnity out of the former bankrupt estate. That concession was correct. By making the order that it did in setting aside the order of Wilcox J, the Full Court, in our view, intended that Mr Donnelly not be reimbursed out of the estate for his costs of participating in the two proceedings. Having set aside Wilcox J’s order, it is unlikely that the Full Court intended the trustee to be able to recover his solicitor/client costs as part of his costs and expenses of the administration when it substituted the 2006 no costs order. The judicial formulation “no order as to costs” has a well-known meaning that has remained unchanged for over a century: Re Hodgkinson [1895] 2 Ch at 194. The expression is recognised in the same way in other contexts such as in Wentworth v Wentworth [2000] NSWCA 350 at [246] per Heydon JA (with whom Fitzgerald JA at [1] and Davies AJA at [271] agreed); Trikas v Rheem (Australia) Pty Ltd [1964-5] NSWR 645 at 646 per Taylor J; see too Oshlack v Richmond River Council (1998) 193 CLR 72 at 90-91 [48] per Gaudron and Gummow JJ. As Lindley LJ said in Re Hodgkinson [1895] 2 Ch at 194:It seems to me that this is a common form of order perfectly familiar to all of us, and it means that the judge, having had his attention called to the matter, and being asked to make an order for payment of the costs, declines to do so. It is not the same as if he said nothing: the effect is that each party must pay his own costs. If so, how is that consistent with the retainer by the trustee of his costs out of the estate? I cannot think it is. We must remember that this was an action between a trustee and his cestui que trust, and if the judge says, “I make no order as to costs,” that negatives the primâ facie right of the trustee to take his costs out of the estate. Moreover, the judge has himself said he meant that to be the effect of the order. Whether the order disallowing costs was in itself right or wrong we cannot now inquire;…[emphasis added]And as Lopes LJ added ([1895] 2 Ch at 194):The judge says he does not think fit to make any order as to costs, and that can only mean one thing - namely, that each party is to pay his own costs. The form is well known, and has been constantly used by all of us to mean what I have said. The appellant's counsel says that that is not the true meaning, and that it is just the same as if the words were not in the order, and that he may retain his costs out of the estate notwithstanding. It seems to me that that cannot be so; it must have been intended that the words should have some effect; and that contention cannot for a moment be maintained. [emphasis added]