Donnelly v Maxwell-Smith

In the case of Donnelly v Maxwell-Smith, the primary dispute involved the costs and expenses of the administration of two bankrupt estates. The Full Court had previously set aside an order that the trustee's costs of proceedings were to be costs in the administration of the estate, substituting instead an order that there be "no order as to costs." The trustee, Mr. Donnelly, sought to appeal against the Full Court's decision, arguing that the order did not intend to deprive him of his costs and should be construed differently. The legal issues before the court included whether the Full Court's order intended to deprive the trustee of his right to indemnity for his costs from the former bankrupts' estates, and whether leave to appeal was required and should be granted.

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.