Re Maclurkin, Iver Douglas Macarthur Brodie Ex Parte Harris, Ernest George & Anor [1984] FCA 477

Ki JUDGMENT No. wud d Donal wm ade

~-ATCHWORD

}RKACTICE AND PROCELIPE proper award of cost: - iwop iil tray ¢ yeclaration by Trustee ain Bankruptcy that oll oof qranted by banrrucr allegedly securing adyines _t yoda against Trustee - issue Joined rer Suh approximately two weeks before trial applicant aiasited Ey respondent only reayiny on mortgage ag seme rte fer sry - wyder that applicant hace three-quarters cio tect taxed oa-k

pu

Wankruptey Ach late 2 sae

PE: IVER DOUGLAS MACAFLHJR BRODTE MACLUPKIN

EX PARTE: ERNEST GCORGE -APRIS (Applicant)

DOWALD FOBIN_ WALKER (Respondsent, NG, E145 OF 1981

PENDER J. "1 SHANE 3= NMVEMBER 1984

IN THE FEDERAL CCURT OF AUSTRALIA )

GENERAL DIVISION —— a ) Ma, P14 af apt BANKRUPTCY DISTRICT OF [HF SOUTHERN )

DISTRICT OF THE STATE OL QURENSLAND

RE: ZISER DOUGLAS MACARTHUR ES tT; MAtLUsP wy

EX PAPTE: ERNEST GEORGE HARPIS 'Aoplicant)

and DONALD ROBIN PALTRY \keepondent ;

SPENDEP J. Zo URMETP cone

EMITEMPOPE REASONS FOR JUDGMEVD

What IT mravase ta do in relation tc this walter 1- 9

order that the aprflicant have three-quarters 7! his taxzed csets,

Lwill give reasons and will give fuller reasens Inter, it thar

2h

be necessary.

This if an apr. cation for a declaratisr Fiat a hiliic mortgage entered ints w:tween the bankrur', Cr Ma_lurlin, +2 Ponald Robin Waiker 43e6curing an alleged advarcre i the bankrupt to Walker, which mortgage was véegi terei cn 23 February 1981, :5 veii as against the Trvetee in Barhyurtey

sursuant to s.122 55 the Bankruptcy Act 19hb6.

IN THE FEDERAL COURT OF AUSTRALTA )

BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OY QUEENSLAND )

PE: TVEP TWUGLAS MACARTHUR PRODTE MACS RK }

EZ FARTE: ERNEST GEORGE HARRIS Applicant, a

DONALD ROBIN WALKER (Respondent)

ORDER JUDGE MAKING OPDEE: SPENDER J. CATE OF GPDEP : of NOVEMBES 1 ind WHERE MADE; BRISBANE THE COURT ORDERS THA?: 1. Declare that a bill of mortgazye entercn

unto between the bankrupt and voINALL ROHIN WALFER securing an alleged advanes of ONE HUNDRED AND FIVE THOUSAND DOLLAFE ($105,000) from the bankrupt ta the sail Walker and registered on 23rd February 1981 over property described #6 Yoartlor 472 and Fes3ubdivisions 56 te S38 ar Subdivision Z of Eastern Suburban Allotment 27 1n the County of 'Stanley Parish of North Brisbane cortaining an area of 1 rood 24.8 perches and cerng che

whole af the land contained an Certificate of Title Volume 389" Folic 3°: ic void as against the Tren hee oun bkantkrupte . pursuant to s-lf. 35 tye 'Rankernrrc? Act 1966" excert se o- stahrur cv oanm advance of $10,000 made triercurcer

on or abour tfth December i98",

ti

Order vrespondent pay three quarters uf 1rlant''s taxed costs rye Liepares

veo mets tinlees other vice atyzed

wd

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 A.B.C.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 firat, 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, 30 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 he

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. Poortu'y beet. moe, an i pres (| . Judomonti, on Mr. Jus 5

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Ag® Jurcin

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