Re Maclurkin, Iver Douglas Macarthur Brodie Ex Parte Harris, Ernest George
[1984] FCA 477
•22 NOVEMBER 1984
Re: IVER DOUGLAS MACARTHUR BRODIE MACLURKIN
Ex Parte: ERNEST GEORGE HARRIS and DONALD ROBIN WALKER
No. E145 of 1981
Practice and Procedure
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN
DISTRICT OF THE STATE OF QUEENSLAND
Spender J.
CATCHWORDS
Practice and Procedure - proper award of costs - application for declaration by Trustee in Bankruptcy that bill of mortgage granted by bankrupt allegedly securing advance of $105,000 be void against Trustee - issue joined on full amount - approximately two weeks before trial applicant advised by respondent only relying on mortgage as security for $10,000 - order that applicant have three-quarters of his taxed costs.
Bankruptcy Act 1966 s.122
HEARING
BRISBANE
#DATE 22:11:1984
ORDER
1. Declare that a bill of mortgage entered into between the bankrupt and DONALD ROBIN WALKER securing an alleged advance of ONE HUNDRED AND FIVE THOUSAND DOLLARS ($105,000) from the bankrupt to the said Walker and registered on 23rd February 1981 over property described as Portion 472 and Resubdivisions 56 to 58 of Subdivision 2 of Eastern Suburban Allotment 27 in the County of Stanley Parish of North Brisbane containing an area of 1 rood 24.8 perches and being the whole of the land contained in Certificate of Title Volume 3806 Folio 39 is void as against the Trustee in Bankruptcy pursuant to s.122 of the "Bankruptcy Act 1966" except in relation to an advance of $10,000 made thereunder on or about 20th December 1980.
2. Order respondent pay three quarters of applicant's taxed costs including reserved costs unless otherwise agreed.
JUDGE1
What I propose to do in relation to this matter is to order that the applicant have three-quarters of his taxed costs. I will give reasons and will give fuller reasons later, if that be necessary.
This is an application for a declaration that a bill of mortgage entered into between the bankrupt, Dr MacLurkin, and Donald Robin Walker securing an alleged advance of $105,000 from the bankrupt to Walker, which mortgage was registered on 23 February 1981, is void as against the Trustee in Bankruptcy pursuant to s.122 of the Bankruptcy Act 1966.
By proof of debt dated 30 May 1981, which is exhibit E to the affidavit of Mr Harris filed on 1 June 1984, the respondent asserted that he was secured by virtue of a mortgage for the full amount of $105,000. On 17 February of this year, he confirmed by amended proof of debt his assertion he had security for the whole of the $105,000.
The declaration being sought by the trustee, the respondent sought to defend the claim with respect to the whole of $105,000. It was not until 12 November 1984 that the solicitors for the respondent, Mr Walker, wrote on an open basis and indicated that it was sought only to rely on the mortgage as valid security to the extent of $10,000 which, the material shows, had been advanced contemporaneously with the execution of the security. Reference was made to the intention of the respondent to rely on personal covenants contained in the mortgage document, but those communications are not relevant to these present proceedings.
Prior to 12 November, there are costs naturally enough, and also reserved costs, and I am informed that briefs in respect of the matter were delivered to counsel prior to the communication by solicitors for Mr Walker on 12 November.
The parties are agreed that I ought to declare that the mortgage is void as against the trustee in bankruptcy except in relation to the advance of $10,000 made thereunder on or about 20 December 1980. It is a fact then that the application has been substantially successful and that the mortgage should not be relied upon in respect of past indebtedness of some $95,000 for sums that had been advanced considerably well before the execution of the security.
On the other hand, Mr Walker has succeeded with respect to the amount of $10,000 which is properly secured by the mortgage for an advance contemporaneous with its execution.
In those circumstances, the only issue is one as to costs and the facts on which the discretion is to be exercised are shortly put, that the applicant has substantially succeeded in its application, but there is a significant amount which is properly secured by the mortgage.
I do not think this is a case to be compared, by way of analogy, with the situation in respect of a successful claim, reduced by virtue of a finding of contributory negligence. The litigation between the parties has resulted substantially in favour of the trustee with respect to the claim as to the past indebtedness but the applicant trustee has failed in his claim that the security did not apply to the advance of $10,000 made contemporaneously with the execution of the morgtage.
Those issues are quite separate, but this is one application, and, until 12 November, the issues joined were in respect of the total sum of $105,000.
I have been referred to Re Curotta; ex parte The Official Receiver; Anthony Hordern and Sons Ltd, Respondent (1934) 7 ABC 115. In that case Lukin J. held that in respect of costs the proper order was that both the Official Receiver and the respondent company should be allowed the costs attributable to the issue on which they respectively succeeded, and that such costs be set off one against the other and the balance ascertained. That matter, however, concerned two applications for declarations: the first, that certain payments made to the respondent more than six months before the presentation of the petition, were to the knowledge of the respondent fraudulent; and secondly for a declaration that certain other payments made to the respondent in that period were preferential payments. At the hearing, and without previous notice to the respondent, the applicant abandoned the claim for the first declaration, and the second declaration, though resisted, was granted.
There were in that case then, two quite separate applications in respect of the first of which one party won by default, so to speak, and as to the second the other party, after opposition, succeeded, and it is, with respect, clear in those circumstances that the order that Lukin J. made would be the appropriate one.
The situation is not the same here. The only possible doubt as to the order I have indicated I ought to make is as to whether I should properly order the whole of the costs be the applicant's; but, having taken into account the separation of the issues and the different bases upon which the parties came to this court to seek its consent to the order that they wished made, I think that substantial justice will be done between the parties in the way this litigation has been conducted, and the way in which it has been resolved, if I order, as I do, that the respondent pay three-quarters of the applicant's costs to be taxed, if not otherwise agreed.
The orders I make then are these: first, in terms of the draft minutes of order handed up to me, which I initial and date and place with the papers; and secondly, that the respondent pay three-quarters of the applicant's costs, to be taxed, if not otherwise agreed, including reserved costs.
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