y opinion, both of the objections fail, and the appeal must ae v Writtrams

High Court of Australia|1912-07-01|Before: Isaacs JJ, Barton J, By Isaacs J, Hood J

drill. I think this objection is as thin as anything of H.C. or A.

nd that has come before us. ae y opinion, both of the objections fail, and the appeal must ae

olicitor, for the appellant, 2. H. Dillon. icitor, for the respondent, C. Powers, Crown Solicitor for yamonwealth.

ife tenant and remainderman - Corpus and income - Costs paid by H.C. or A. ee under order of High Court - Decision of High Court reversed on appeal 1912, e party to Privy Council - Exject on rights of parties not appealing - = - - ity of truatees - Rights of assignee of life tenant. Mexpourne, Oct. 1, 14

action was brought in the Supreme Court by a life tenant under the

'against the latter trustees in respect of breaches of trust whereby "riiith C.J.,

neome of A.'s estate was diminished, and against the former trustees the Isaacs JJ. ination of the respective rights of himself and the remaindermen,

irt having dismissed the action with costs, the High Court on appeal

ef against both sets of trustees and directed the costs of the plaintiff

\e remaindermen to be provided for out of the corpus of A.'s estate.

only of the order of the High Court as applied to them. The Privy reversed the order of the High Court, directed the judginent of the Su Court to be restored and dismissed the action with costs in both Courts, plaintiff before bringing the action had assigned his interest in A.'s es way of mortgage. Prior to the appeal to the Privy Council the tru A.'s estate, pursuant to the judgment of the High Court, had paid cert costs to the plaintiff, had retained certain of their own costs, and incurred certain other costs in taking accounts in connection with the against the trustees of A.'s estate.

Held, that, notwithstanding the order of the Privy Council, the truste A.'s estate were entitled to be indemnified for such costs, except such of 1 plaintiff's costs as were attributable to the plaintiff's appeal to the High Cou in respect of his claim against the trustees of B.'s estate, out of the cor and not out of the income of A.'s estate :

By Grifith C.J. and Barton J., on the ground that although the orde the High Court must be treated as non-existent, the order of the Council left the rights of the trustees of A.'s estate open to determinati

By Isaacs J., on the ground that the order of the Privy Council, althowy it authorized the trustees of A.'s estate to apply the income to the pay of the costs, did not permit the income to be so applied to the disadi of the plaintif's assignee.

Decision of the Supreme Court: Aitken v. Cock, (1912) V.L.R., 433 A.L.T,, 81, reversed. d

AppEAL from the Supreme Court of Victoria. An originating summons was brought in the Supreme the parties to which were as follows : - The plaintiffs, Wil

estate of Lucy Smith, deceased. The defendants were C! Matthew Germain Cock, the life tenant of the residue of the in

Matthew Vincent Smith, remainderman under the will of Smith in certain events. Lucy Smith, by her will and

income of her estate to C. M. G. Cock for his life, with remainder to his children, or, failing such children, to J. M. V. th. The estate of Lucy Smith consisted in part of an under the will and codicil of her father, John Matthew

deed dated 22nd June 1905, C. M. G. Cock assigned to the tion by way of mortgage his life iterest in the estate of Smith, and, at all material times, the Association was

ed by C. M. G. Cock against - (a) The trustees of the estate John Matthew Smith; (b) the trustees of the estate of Lucy ith; (c) Alice Smith, a beneticiary under the wills of J. M. h and Lucy Smith; and (d) Emily Elizabeth Cock and Lucy n Cock, who were then the only children of C. M. G. Cock. action was heard by Hood J., who on 8th February 1909 ve judgment for the defendants and directed their costs to be id by the plaintiff C. M. G. Cock. On 20th February 1909, Cock, by deed of arrangement under Insolvency Act 1897, assigned his estate to Howden, Against the judgment of Hood J.,C. M. G. Cock appealed to » High Court, Howden being joined as co-appellant by order Justice of the High Court, and on 11th October 1909, the Court reversed the judgment of Hood J., and, after making in declarations and orders in relation to the trustees of the te of J. M. Smith and certain other declarations and orders in relation to the trustees of the estate of Lucy Smith, and ecting certain accounts and inquiries to be taken, directed the taxed costs of action and of the appeal of C. M. G. Cock md Howden, and of Emily Elizabeth Cock and Lucy Lillian , and of the trustees of Lucy Smith's estate, should be or retained out of the capital of the estate of Lucy Smith Cock v. Smith (1)). This order of the High Court was sub- quently on summons amended, and the costs of the summons directed to be taxed and paid or retained out of the capital

directing certain payments to be made, gave the residue of HC. or A.

of the estate of Lucy Smith in like manner as above ment with regard to the costs of the action and of the appeal.

Pursuant to the above orders, and before the appeal to) Privy Council hereinafter mentioned, the trustees of the es of Luey Smith paid or retained out of the capital of the es the costs of the appeal to the High Court and of the summ amend the order of the High Court of the appellants, 0, } Cock and Howden, and of the respondents, Emily Elizabeth and Lucy Lillian Cock, and themselves, the trustees. Pui to the above directions of the High Court certain accounts inquiries were commenced to be taken and made before Chief Clerk of the Supreme Court, and were proceeded with unt the reversal, hereinafter referred to, by the Privy Council of judgment of the High Court, when they were discontinued. trustees of the estate of Lucey Smith incurred certain costs i connection with such accounts and inquiries, but no costs of t other parties to such accounts and inquiries had been lait against the estate of Lucy Smith and no order of any Court been made in relation to any of such costs,

The trustees of the estate of J. M. Smith appealed to th Privy Council against so much of the orders of the High Court affected their testator's estate, but neither the trustees of Li Smith's estate nor any other parties to the action so appes The Order in Council, dated 4th February 1911, reversed the order of the High Court, directed the judgment of Hood J. to be restored, and dismissed the action with costs in both the Suprem Court and the High Court. (See Smith v. Cock (1) ).

On 22nd December 1911, the High Court, on appeal from a order made by Madden C.J. on an originating summons, made a order which, in effect, restored that part of the order made by the High Court on the appeal from Hood J., and on the befor mentioned summons to amend, as to which there had been appeal to the Privy Council. (See Cock v. Aitken (2)). Up the basis of the direction contained in such last-mentioned of the High Court, the trustees of the estate of Lucy Smith a C. M. G. Cock and Howden arrived at an adjustment of th accounts of the estate of Lucy Smith as between life tenant and

(1) 12 C.L.R., 30; (1911) A.C., 317. (2) 13 C.L.R., 461.

jion, with the concurrence of C. M. G. Cock and Howden, ain sums on account a the residue of the i income of Talay

oned of costs of the appellate ss issédtob in tion No. 570 07 in the High Court of Australia and of an order amending

uch amended judgment and of settling the transcript on to the Privy Council from such amended judgment all of

reversal of such amended judgment by the Privy Council at is to say :

(2) Of the defendants Emily Elizabeth Cock, Luey Lillian Cock and Charles Linwood Meredith Cock, (3) Of the plaintifts, trustees of the estate of Lucy Smith; b) Costs of order amending judgment of High Court -

(1) Of the defendants C. M. G. Cock and John McAlister Howden (life tenant),

(2) Of the defendants Emily Elizabeth Cock, Lucy Lillian Cock and Charles Linwood Meredith Cock, (3) Of the plaintiffs, trustees of the estate of Lucy ' Smith ;

(d) Costs of settling transcript for Privy Council appeal of the plaintiffs ?

Under that adjustment the trustees paid to the H.C. or 4.

The Supreme Court held that all the costs referred to question should be borne by income: Aitken y. Cock (1). From this decision C. M. G. Cock and Howden and tl Association now appealed to the High Court.

Mitchell K.C. (with him Schatt), for the appellants. Th of the Privy Council should be read as affecting only the to the appeal: Cheyne v. Shire of East Loddon (2); Ta Small (8); Cock v. Aitken (4).

The intention was not to make C. M. G. Cock and Howden the costs of those parties against whom an order for costs been made by the High Court and who did not appeal a; that order. If the order of the Privy Council entitles the pa who did not appeal to recover their costs from ©. M. Cock and Howden, it did not entitle the trustees of Lucy Smith estate to deduct those costs from the income which was payabl to the Association under the assignment to them. The In ve Knapman (7), does not support the contrary content for there the assignment was made during the litigation and notice of it was given to the trustees. [He also refer Lewin on Trusts, 12th ed., p. 893; Stephens v. Venables (No. (8); In ve Harrald ; Wilde vy. Walford (9).] j

Owen Dixon, for the remaindermen. The money in questio has actually been expended by the trustees and the expenditur should fall on income. 'The effect of the order of the P Council is, at least, that the order of the High Court that the e should be paid out of corpus no longer exists. That bei there has been a diminution of the trust estate which should attributed to the interest of the cestui que trust who caused diminution, and the assignee is in no better position than the

ac) (1912) V.L.R., 433; 34 AL.T., (5) 18 Ch. D., 54, at p. 57. (6) 27 W.R., 697. Slo) 28 V.ELR., 503 ; 24 A.L.T., 105. (7) 18 Ch. D., 300)

(3) 1 Coop. temp. Cotten., 61m. (8) 30 Beav., (4) 13 C.L.R., 461. (9) 51 LP. N. S., aah,

i que trust: In re Knapman; Knapman vy. Wreford (1); pen on Ewxecutors, p. 530; In re Jones; Christmas v. Jones

appeal is one that I suppose no Court was ever before called pon to decide. In the original suit between the present appel- nts and the trustees of the estates of John Matthew Smith and y Smith, this Court made an order allowing an appeal from judgment of Hood J. In that suit two entirely different matters were involved, one a complaint of alleged misconduct on he part of the trustees of J. M. Smith's estate, the other a ques- of the several rights inter se of the tenant for life and the aindermen under Lucy Smith's will. The trustees of J. M. mith's estate presented a petition for special leave to appeal to His Majesty in Council, which was granted, and an Order in Council was afterwards made allowing the appeal. In that Order is recited that the petitioners had petitioned for special leave to appeal to His Majesty in Council "except in regard to the first ation and direction contained" in the order of the High , "the direction as to the costs in regard thereto and the accounts and inquiries consequent thereon." Those were matters in which the trustees of Lucy Smith's estate were interested, and with which the trustees of J. M. Smith's estate had no cern whatever. 'The Order in Council further recited that the itioners prayed that, with that exception, the order of this might be reversed. 'Then it went on to recite that the s of the Judicial Committee had taken "the said petition appeal" into consideration, and had agreed to report "that appeal ought to be allowed and the order of the High Court f Australia dated 11th October 1909 reversed, the order of the preme Court of Victoria dated 8th February 1909 restored and the said action ought to be dismissed with costs in both

(1) 18 Ch. D., 300. (4) 28 V.L.R., 622, at p. 628; 24 (1897) 2 Ch., 190, at p. 203. ALT, 14. 1 Mol., 561.

Courts," and that certain consequences should follow as to cos The Order in Council then proceeds : - " His Majesty hay taken the said report into consideration was pleased by and wit the advice of His Privy Council to approve thereof and to orde as it is hereby ordered that this appeal be and the sa hereby allowed." Stopping there, what would anybody sup, that meant? What appeal was allowed? Any ordinary persc would say - The appeal already recited, namely, the appeal of the trustees of J. M. Smith's estate as against the order of the Court so far as it affected them, but expressly excepting the of the judgment of this Court. But, strangely enough, the O1 in Council went on to order "that the said order of the Hi, Court of Australia dated 11th October 1909 be and the same hereby reversed, that the said order of the Supreme Court of Victoria dated 8th February 1909 be and the same is hereby restored and that the said action be and the same is hereby dis missed with costs in both Courts." 'Taken literally, that means that the whole action is dismiss including the claim dealt with in the part of the judgment m appealed from, so as to absolve the parties who were satisfi with the judgment and who had not appealed and did not des to do so. I think that the Order must have been drawn up this form per incuriam. But we have to construe the Order Council as we find it. I think it is only consistent with respect which is due to so august a tribunal to say that, when it

not before the tribunal. I think it is proper to construe the Order in Council in such a way, if possible, as not to affect rights of absent parties. It is not unusual for the Judicial Committee when allowing an appeal to leave an order for undisturbed. Nevertheless, as I have said, the Order in Counci was in form that the order of the High Court should be revel and it must, I suppose, be taken that it was set aside and the parties were, guoad hoc, left - so to say - in the air. I tl on the whole, although probably it was not intended, that must treat the order of the High Court as now non-existent.

But the Judicial Committee, having done so much, perhaps per

ties to be determined on general principles applicable to such In the meantime the trustees of Lucy Smith's estate had 1 obedience to the order of the High Court paid certain costs to » plaintiffs and to the infant remaindermen and retained ain of their own costs, and they had also incurred certain s in taking accounts ordered by the High Court. For that nditure they are entitled to be indemnified, and the question on these proceedings is from what source. If this Court had issed the appeal from Hood J. as against the trustees of M. Smith's estate, as the Judicial Committee did, it would ably have apportioned the appellant's costs and have directed n to bear his own costs of the appeal so far as they related to M. Smith's estate. For the rest it would probably have made same order as it actually made.

of the tenant for life and remaindermen under Lucy 's will should be charged to income or corpus was decided Court not only in the original appeal, but also in Cock v. en (1). 'The Court decided that they should be borne by The costs incurred in the first suit were not wasted, hough they were left in the air by the Order in Council. The tion now is - From what source should the trustees be mnified ? In my opinion, the right of recourse for indemnity those costs should be decided on the same principles, and in 'same manner as the right to indemnity for costs of actual Eiotlive litigation. This principle does not, however, cover the intiff's costs of the appeal to the High Court, so far as regards claim against the trustees of J. M. Smith's estate, which, as tter of abstract justice, he ought to bear himself. But it is doub:ful whether there is any rule of law under which costs id under such circumstances can be recovered back in the ace of an express order of some Court. It occurs to me, r those circumstances, to suggest that the assignees of his interest, who have certainly been gainers by the litigation, auld consent to an order for payment of a portion of those out of the life estate. I should think £150 would cover them.

m, went no further, but left the rights of the other H.C. or A.

[Mr. Mitchell having consented to an apportionment b made by the trustees - ]

GrirritH C.J. The order will be varied by declaring that t costs should be taken out of corpus with the exception of su part as the trustees may think reasonably attributable to costs of the appeal to this Court so far as they related to t charge against the trustees of J. M. Smith's estate.

Isaacs J. - The Privy Council order (1) reversed, not mere discharged, the order of this Court, (2) restored the order of the Supreme Court, (3) dismissed the action with costs in both Courts,

not see any escape from the construction that all the defendants in the action were to get their costs from the plaintiffs. Th reasons for judgments, however, say: "The respondents Co and Howden must pay the appellants' costs in the Courts below, and of this appeal." That would limit the costs to the appellants, the trustees of J. M. Smith's will; and leave the costs of the trustees of Lucy's will and the infants unprovided for.

On the whole I think that unlikely. The language is distinet. The whole of the curial part of the order of this Court was versed with the express inclusion of the first part. This is in accordance with the rule exemplified in Wilson v. Bell (1) and thus stated in the headnote : - *If a case wholly destructive the foundation of the plaintiff's title is put forward in the answer of one defendant, and established, the Court will not give effect to it as between the plaintiff and that defendant merely ; but it shall enure to the benefit of the other defendants, though they have not made that case by their answers." ,

The necessary effect of the Privy Council order was to ann the part of the judgment directing costs, it being absurd that successful defendant should pay the costs to the unsuccess!

made, not against a party absent, but against a party present in favour of other parties formally included, even though not ally represented on the hearing, and more particularly if they are infants, who, as recited in the Order in Council "sub- 'mitted their rights and interests in all the matters in the action to the care and protection of the said Supreme Court," and for whom jn common with the other defendants judgment had been entered with costs. Unless otherwise ordered, restitution of all that was lost by a judgment follows when it is reversed. As pointed out in Chitty's Archbold's Practice, 14th ed., at p. 993, before the Judicature Acts a writ of restitution could be had; but under _ the present practice an application to the Court would be the "proper course. There can be no difference between a substantive amount and costs in this respect. Therefore, in my opinion, all that was paid by any party to Cock and Howden by virtue of the order of the Court, Cock and Howden were bound to restore ; and, further, I think they are bound to pay all costs of that action, including the costs of inquiries, to the parties who by their "unsuccessful proceedings were compelled to incur them. But can the trustees of Lucy's will make the deduction from the income payable in respect of Cock's share? If they can, that relieves the corpus.

They can do so, unless the assignment to the National Mutual prevents it. Notice of this was given two years before the action was begun, and the point is raised whether the trustees' costs or the mortgagee's debt takes priority.

_ The Supreme Court determined in favour of the trustees on the authority of Knapman's Cuse (1), and thought that In re Jones; Christmas v. Jones (2) bore in the same direction. Mr. Dixon rightly placed great reliance on the words of Hall V.C., _ which certainly, if correct, establish his position. And soit comes tothis: Is the statement of the law correct on p. 307 ? The learned Vice-Chancellor says first (3), "that every person taking an _ assignment from a cestui que trust of a portion of the testator's e, at all events takes it subject to the liability to make good

(I) 18 Ch. D., 300, at p. 304, (2) (1897) 2 Ch., 190 P() 18 Ch. D., 300, at p. 307.

plaintiffs ; and there is no reason why a just order should not be H.C. or A.

all breaches of trust on the part of the assignor if he fill fiduciary position of a trustee, even though the breaches of be subsequent to the assignment, as in Morris v. Livie (1) a cases of that class. They take subject to all those risks." is the first statement of the Vice-Chancellor. Then he proe to the second. He says (2): - "I think they must, upon analogous principle, take subject to the risk of the lega assigned not being properly payable to the extent to which the legatee is liable to make good to the estate expenses incurre@ in an administration of the estate, that is, the loss occasioned to the estate by reason of expenses incurred in the administration of the estate by the residuary legatee." ' With the greatest respect to the very learned Vice-Chancellor, the principle to which he refers in his second case - the material

The essence of the first is wanting. The case of Morris v. Livie (1) to which he refers shows that where a legacy is given to a trustee there is a condition implied by law and attaching to the legacy until due, that he shall fulfil his fiduciary obliga- - tions.

That condition, as Knight-Bruce V.C. says, accompanies the - legacy until its discharge, and applies as much to it after before assignment. That is the risk the assignee runs.

But an ordinary legatee has no fiduciary obligation, and there-_ fore there is no such condition, and consequently there is wanting the analogy of principle on which Hall V.C. relied.

The Master of the Rolls in the Court of Appeal placed the case on a totally different ground - namely, the pendency of the suit, subject to which, the assignee took.

And the position is shown by Stephens v. Venables (No. 1) 8) 4 where the language of Sir John Romilly is direct upon the point under consideration.

The result so far is, that assuming the Privy Council order enables Cock's income to be applied to payment and recoupment - of costs, yet it does not enable that to be done to the disadvantage of the National Mutual Company's mortgage. ,

(1) 1. & C.0.C,, 380. (2) 18 Ch. D, 300, at p. 307. (3) 30 Beav., 625, at p. 627.

ground failing, the matter falls within the decision in H. C. or A. v. Aitken (1). 1912.

In the complicated state of affairs I think the proposals made - Cocx he learned Chief Justice are fair and should be followed. foe

Appeal allowed. Order varied by declaring that all the costs should be charged on corpus except such part of the plaintiff's costs of the wppeal to the High Court in Cock v. Smith (No. 570 of 1907) as the = trustees may in their discretion think were attributuble to the plaintiff's charge against the trustees of the estate of J. M. Smith, which latter costs are to be recouped from income. Costs of all parties in the Supreme Court and the High Court to be paid out of corpus, those of the trustees as between solicitor and client.

itor, for the appellants, J. W. Dizon. icitors, for the respondents, Madden & Butler, J. E. Diwon.

At a glance

Court

Decision date

Before

Source

Judgment (76 paragraphs)

Parties

Cited By (1)