Glen v Union Trustee Company of Australia Ltd [1936] HCA 4; (1936) 54 CLR 463 (13 February 1936)

HIGH COURT OF AUSTRALIA

Glen and Others Defendants, Appellants; and The Union Trustee Company of Australia Limited and Others Plaintiff and Defendants, Respondents.

H C of A

On appeal from the Supreme Court of Victoria.

13 February 1936

Rich, Starke, Dixon and McTiernan JJ.

Clyne, for the appellants.

Herring, for the Union Trustee Co. of Australia Ltd.

Wilbur Ham K.C. (with him T. W. Smith), for the Australian Mutual Provident Society.

Fullagar K.C. (with him Moore), for W. H. Glen, J. Glen and the Union Bank of Australasia Ltd.

The following written judgments were delivered:—

1936, Feb. 13

Rich, Dixon and McTiernan JJ.

We are of opinion that special leave is necessary and that without it this appeal does not lie. But we think the Court should give special leave and then dispose at once of the appeal, which was argued on the merits. We regard the order for costs as a matter of importance because it fails to give effect to what we think is a settled rule of practice. That rule is that, when a beneficial interest has been encumbered, not more than one set of costs should be given to the assignor and assignees in respect of that one interest. Thus, one set of costs should be given to the beneficiary and his encumbrancer (see Remnant v. Hood [No. 2][1]; Greedy v. Lavender[2]; Catton v. Banks[3]; Re Vase; Langrish v. Vase[4]; O'Ferrall v. Attorney-General[5]; Stewart v. Ferrari[6]). The method of taxing and allocating the one set of costs of a beneficiary and his encumbrancers is described in the Annual Practice under the note to Order 65, rule 27 (8).

The costs of the hearing of the originating summons and of the appeal to the Full Court of Victoria, which succeeded, are governed by the same considerations. We think the costs of each interest under the will which was separately represented should be given out of the estate. The severance to that extent was sufficiently justified by the great importance to each interest of the order which Irvine C.J. actually made and by the difficulty of the case.

When parties who have similar interests sever in their appearance the question whether they should receive more than one set of costs is a matter for the discretion of the Court (see Harbin v. Masterman[7]).

It is open to doubt whether the costs should have been thrown against the moiety of the son who died first, John, as well as against the other, but it appears that before Irvine C.J. there was some idea that both moieties were involved and the originating summons was framed on that basis.

We think an order should be made to the effect of that which will be read.

Starke J.

The questions raised in the appeal to this Court. Currie v. Glen[8], were dealt with by the Supreme Court on originating summons. On that summons the Supreme Court directed that the costs of all parties to the application, up to and including the order of the Full Court, be taxed as between solicitor and client, and that when so taxed those of the plaintiff (the trustee) be retained, and those of the defendants be paid out of the properties in Collins Street and Little Collins Street mentioned in the will. The sons of the nephew William Glen had assigned or encumbered the shares or interests which they took in these properties. The assignees and encumbrancers appeared on the originating summons and became entitled under the order to their costs out of the properties mentioned. The sons of the nephew John Glen appeal to this Court against the order of the Supreme Court as to the costs of the originating summons.

An objection was taken to the competence of the appeal. It was contended that the costs of the originating summons were no part of the matter in issue (Judiciary Act 1903-1933, sec. 35; Doorga Doss Chowdry v. Ramanauth Chowdry[9]; Bank of New South Wales v. Owston[10]), and that the appeal could not be supported as a cross appeal under the Appeal Rules, Part II., sec. 3, rule 16 (In re Cavander's Trusts[11]). The contention is well founded, but this Court has power to grant special leave to appeal under the Judiciary Act, sec. 35 (1) (b), and such leave should be granted in the present case.

The order made by the Supreme Court as to costs is unusual, and casts an undue burden upon the sons of the nephew John Glen, who are the appellants. In administration proceedings, whether by way of suit or upon originating summons, the ordinary rule is that where any person entitled to an interest in any estate the subject matter of the proceedings has assigned or encumbered his share or interest, then the assignor and assignee, or encumbrancer, are only entitled to one set of costs between them, viz., the costs of the assignor, which are directed to be paid to the assignee or encumbrancer towards his costs so far as the same may extend. The assignee or encumbrancer takes any deficiency in his costs from the assignor. If one set of costs is more than sufficient to pay an assignee or encumbrancer, the surplus is applied towards payment of the costs of the subsequent encumbrancers and of the assignor or mortgagor (Morgan and Wurtzburg on Costs, 2nd ed. (1882), p. 187; Seton on Decrees, 7th ed. (1912), vol. ii., p. 1455, and cases there cited). There are no special circumstances in this case justifying a departure from the ordinary rule, and the order of the Supreme Court should therefore be discharged.

The circumstances of the case, however, require some special order. One suggestion was that the whole costs of the proceedings should be thrown on the undivided moiety of the property mentioned in the will the subject of the gift to the nephew William Glen and his sons. But that, I think, goes somewhat far, for the originating summons raised questions affecting the properties as a whole. An assignment by way of mortgage was made by both the sons of the nephew William to the Australian Mutual Provident Society. And later, each of these sons gave charges of his several share in the properties to different encumbrancers. The costs of all parties of the originating summons and of the appeal to the Full Court should be taxed as between solicitor and client, but in taxing such costs only one set of costs should be allowed to the defendants John Glen and William Henderson Glen, sons of the testator's nephew William Glen, and their interests, and the taxing officer should not allow any additional costs incurred by reason of the shares or interests of the said defendants having been assigned or encumbered. The amount of the costs so allowed should be paid, in so far as the same extends to the Australian Mutual Provident Society, in or towards the payment of its costs. If such amount be in excess of its costs, the other assignees or encumbrancers should have liberty to apply to the Supreme Court for the purpose of determining their priorities in the excess. The assignees and encumbrancers should have liberty to tax any costs properly incurred by them, including therein any costs, charges and expenses properly payable to such assignees or encumbrancers by virtue of their mortgage securities, and the taxing officer should certify out of whose share such additional costs are payable.

Grant special leave to appeal against so much of the order of the Full Court of the Supreme Court of Victoria as deals with the costs of the originating summons and of the appeal to the Full Court. Order that the notice of appeal and subsequent proceedings in the appeal instituted as of right stand as the notice of appeal and proceedings pursuant to such special leave. The matter having been fully heard, order that the appeal pursuant to leave be disposed of forthwith. Appeal allowed. So much of the order of the Full Court as deals with the costs of the originating summons and of the appeal to the Full Court discharged. In lieu thereof order that the costs of all parties of and incidental to the originating summons and of the appeal to the Full Court be taxed as between solicitor and client and paid out of the properties referred to in the originating summons, but that in taxing the said costs only one set of costs is to be allowed in respect of the interests of the defendants John Glen and William Henderson Glen. Let the costs allowed in respect of such interests be applied in the first place in or towards payment of the costs of the assignees or mortgagees of such interest according to their priorities, and, if there be any excess, then towards payment of the costs of the said defendants John Glen and William Henderson Glen respectively. And let such costs when taxed be paid to the Australian Mutual Provident Society or its solicitor the first encumbrancer of the said interests. Let such assignees and mortgagees and such defendants be at liberty to apply to the Supreme Court for the purpose of determining their priorities or any other question which may arise in relation to such costs. And let the assignees and mortgagees be at liberty to tax any costs, charges and expenses beyond those already provided for and let the Taxing Officer certify, if so required, out of which interest such additional costs are payable. And let the assignees and mortgagees add such costs to their securities accordingly. Let the appellants and the respondent, the trustee's, costs of this appeal to this Court be taxed, those of the trustee as between solicitor and client, and be paid out of the properties referred to in the originating summons. Let the respondents other than the trustee abide their own costs of this appeal.

Solicitors for the appellants, E. P. Johnson & Davies.

Solicitors for the respondents, Gair & Brahe; W. E. C. Treyvaud; Nunn, Smith, Crocker & Purves; O'Donohue & Brew; Arthur Phillips & Just; Blake & Riggall; William S. Cook & McCallum and H. U. Best.

[1] [1860] EngR 309; (1860) 27 Beav. 613; 54 E.R. 243.

[2] [1848] EngR 1062; (1848) 11 Beav. 417; 50 E.R. 878.

[3] (1893) 2 Ch. 221.

[4] (1901) 84 L.T. 761.

[5] (1866) 5 S.C.R. (N.S.W.) Eq. 101.

[6] (1879) 5 V.L.R. (Eq.) 200.

[7] (1896) 1 Ch. 351, at pp. 362-364.

[8] Ante. p. 445.

[9] [1860] EngR 1236; (1860) 8 Moo. Ind. App. 262; 19 E.R. 530.

[10] (1879) 4 App. Cas. 270.

[11] (1881) 16 Ch. D. 270.