Barry v Coshott
[2014] NSWDC 51
•13 March 2014
District Court
New South Wales
Medium Neutral Citation: Barry v Coshott [2014] NSWDC 51 Hearing dates: 7 February; 5, 10, 12 March 2014 Decision date: 13 March 2014 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) Dismiss the notice of motion by Mrs Coshott (filed 19 December 2013) to set aside the registration of the certificate by reason of Mr Coshott's bankruptcy.
(2) Order Mrs Coshott to pay the plaintiffs' costs of that motion.
(3) Order the removal of Mr Coshott as a party to the proceedings.
(4) Direct Mrs Coshott to file and serve any evidence and submissions upon which she relies by 4pm on 25 March 2014 on the question of the amount of any interest up to the date of filing payable to the plaintiffs, on the unpaid costs in the filed certificate, and on the costs of the application by the plaintiffs.
(5) Direct any submissions and evidence in response be filed and served by the plaintiffs by 4pm on 28 March 2014.
(6) Stand the matter over to 1 April 2014 at 10am part head for further hearing before Judge P Taylor SC.
(7) Reserve all questions of costs of the application by the plaintiffs.
Catchwords: PROCEDURE - costs - recovery by solicitor - certificate of assessment - joint clients - one client bankrupt - whether filed certificate valid - effect on other client - interest Legislation Cited: Bankruptcy Act 1966 (Cth), s 58, s 62
Civil Procedure Act 2005, s 56, s 63, s 133
Interpretation Act 1987, s 34, s 35
Legal Profession Act 1987, s 3, s 173, s 190, s 208E, s 208J, s 208V
Legal Profession Act 2004, s 321
Uniform Civil Procedure Rules 2005, r 6.20, r 6.21, r 6.22, r 6.23, r 6.29, r 36.11, r 36.15, r 36.16, r 36.17Cases Cited: ANZ Banking Group Ltd v Computer Plus [1992] 1 VR 607
Bank of Australasia v Whitehead (1898) 24 VLR 308
Coshott v Barry & Anor [2012] NSWSC 850
Coshott v Barry & Anor (No 2) [2012] NSWSC 944
Coshott v Barry (No 3) [2012] NSWSC 1248
Deighton v Cockle [1912] 1 KB 206
Doran v Isaacs (1912) 12 SR (NSW) 699
Doyle v Hall Chadwick [2007] NSWCA 159
Drummond and Rosen Pty Ltd v Easey and Ors (No 2) [2009] NSWCA 331
Ellis v Fisher [2001] VSC 621
Fraser v Commissioner of Taxation (1996) 69 FLR 99
Fraser Property Developments Pty Ltd v Sommerfeld (No 2) [2005] QCA 242
Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172
Gertig v Davies [2003] SASC 86
Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566
Hedwan v Hannouf (1997) 140 FLR 229
Kassem & Secatore (as joint liquidators of Pan Pacific Age Care Services Pty Ltd (in liq)) v Koutavas [2012] NSWSC 236
L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590
Scope Data Systems Pty Ltd v David Goman Rep Partnership Bdo Nelson Parkhill [2008] NSWSC 42
Short v Short (1902) 8 ALRCN 306
Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 WLR 300
W R Henry & Son v Hodge [1963] VR 111Texts Cited: Ritchie's Uniform Civil Procedure NSW Category: Consequential orders Parties: Stephen Michael Barry (first plaintiff)
Martin Pearce Board (second plaintiff)
Robert Coshott (first defendant)
Ljiljana Coshott (second defendant)Representation: Mr K G Oliver (plaintiffs)
Mr O R Jones (defendants)
CKB Partners (plaintiffs)
Martin Place Lawyers (defendants)
File Number(s): 2008/320070 Publication restriction: None
Judgment
INTRODUCTION
These proceedings concern the effect on a costs determination of the bankruptcy of one of two respondents after the costs certificate was issued but before it was registered, and the recovery by solicitors of interest on costs up to the date of determination of the costs assessment.
BACKGROUND
Stephen Barry and Martin Board were partners of a city law firm that acted for Robert and Ljiljana Coshott in proceedings up to 2003. The firm posted to Mr and Mrs Coshott on 15 October 2003 a bill of costs including a claim for interest, and filed an application for assessment on 20 November 2003.
The costs assessment was delayed several years while professional negligence proceedings were conducted by Mr and Mrs Coshott against Mr Barry. Those proceedings were dismissed with costs on 11 October 2007.
On 29 October 2008 the costs assessor finalised his determination of the November 2003 application for assessment of costs and issued a Certificate of Determination. Mr Barry received it on 7 November 2008.
The certificate provided, inter alia:
"1. THE APPLICATION IS DETERMINED BY SUBSTITUTING FOR THE DISPUTED COSTS AS A FAIR AND REASONABLE AMOUNT OF COSTS TO BE PAID TO THE PRACTITIONER THE SUM OF FIFTY-TWO THOUSAND, SIX HUNDRED AND SEVENTY DOLLARS AND TWELVE CENTS ($52,670.12).
Note 1 The Amount of $52,670.12 includes the sum of $532.08 being the fee paid for the application (Section 208(3) of the Act).
Note 2 Interest is payable on the amount of the costs assessed. The rate of interest to apply on the costs to be paid to the applicant is as prescribed by the Supreme Court from time to time (Section 208E(1) of the Act).
2. THE SUM OF FIFTY-TWO THOUSAND, SIX HUNDRED AND SEVENTY DOLLARS AND TWELVE CENTS ($52,670.12) IS TO BE PAID BY THE RESPONDENT TO THE APPLICANT.
...
ISSUED ON 29 OCTOBER, 2008 [signed by the costs assessor]"
On 10 November 2008 Mr Barry filed in the District Court the certificate, a Form 45 Registration Certificate of Costs Assessment, an affidavit and a cheque for the filing fee. The Form 45 Registration Certificate named Mr Barry and Mr Board as plaintiffs and Mr and Mrs Coshott as defendants, and specified the details of the judgment or order as:
"The Certificate of the Assessment of Costs is attached
Amount of Certificate $52,670.12
Payment made in reduction $0.00
Interest carried since date of Bill of Costs $24,750.58
Filing Fee $72.00
Interest rate $0.00
Total amount to be enforced as at date of (registration or filing) $77,492.70".
Shortly thereafter, Mr Barry received a sealed copy of the Registration Certificate.
Unbeknown to Mr Barry, on 7 November 2008 Mr Coshott was declared bankrupt. Mr Coshott remains an undischarged bankrupt.
Some months later, in about February 2009, Mr Barry became aware of Mr Coshott's bankrupt status. No steps were taken by the firm to enforce the judgment that arose from the filing of the certificate, partly because other proceedings continued between the parties (some involving the status of the certificate) and because the firm held a Certificate of Title to Mr and Mrs Coshott's home as security for the unpaid costs.
Although the certificate notes that "Interest is payable on the amount of the costs assessed" and the sealed Registration Certificate included an amount for interest, a computer record of the entry of the judgment stated, "Judgment Amount $52,670.12...Interest $0.00".
Mr Barry became aware of this reference to nil interest on the court's computer record in late 2012. He made inquiries of the Registrar and the costs assessor: the Registrar stated that the entry of the judgment is only for the amount stated on the certificate; the costs assessor asserted that he was authorised to determine whether interest was payable and the rate of interest but not to award interest.
As entry of a judgment is necessary for its enforcement (see Civil Procedure Act 2005, s 133), Mr Barry and Mr Board filed a notice of motion (bearing the same case numbers as the Registration Certificate) for orders enabling them to enforce their entitlement to interest.
Mr and Mrs Coshott also filed two applications, one of which was abandoned during the hearing and was dismissed with costs. The other motion was to set aside the registration of the certificate.
The standing of Mr Coshott as an undischarged bankrupt to make an application in the proceedings was challenged by Mr Barry and Mr Board. Counsel for Mr and Mrs Coshott did not press Mr Coshott's entitlement to maintain the application. The concession appears appropriate in view of authority that a bankrupt has no standing to set aside a judgment (see W R Henry & Son v Hodge [1963] VR 111; Hedwan v Hannouf (1997) 140 FLR 229).
In the result, the application to set aside the registration of the certificate was continued by Mrs Coshott alone. The basis of this application was the bankruptcy of Mr Coshott prior to the filing of the certificate. The bankruptcy of Mr Coshott was also relevant to the application by Mr Barry and Mr Board seeking orders to enable the enforcement of interest.
THE CLAIM TO SET ASIDE THE JUDGMENT
It is convenient to deal first with Mrs Coshott's application to set aside, "the registration of certificate of determination".
The costs issues in the proceedings fall under the Legal Profession Act 1987, now replaced by the 2004 Act.
Section 208J of the Legal Profession Act 1987 provided as follows:
"208J Certificate as to determination
(1) On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination.
(1A) A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process.
(2) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction.
(3) In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed.
(4) For this purpose, the amount of unpaid costs does not include the costs incurred by a costs assessor in the course of a costs assessment.
(4A) To avoid any doubt, this section applies to or in respect of both the assessment of costs referred to in Subdivision 2 of this Division (practitioner/client costs) and the assessment of costs referred to in Subdivision 3 of this Division (party/party costs).
..."
In accordance with s 208J(3), when a certificate is filed, it is taken to be a judgment of the court. Its enforcement as a judgment, however, requires compliance with s 133 of the Civil Procedure Act 2005, which provides:
"133 Judgments and orders unenforceable until entered
(1) A judgment or order of the court may not be enforced until it has been entered in accordance with the uniform rules.
(2) This section extends to:
(a) any judgment, order, determination or decree of a court, and
(b) any adjudication or award of a person having authority to make an adjudication or award,
that may be filed or registered in the court, or of which a certificate may be filed or registered in the court, under any other Act or law.
(3) In subsection (2), law includes:
(a) a law of the Commonwealth, and
(b) a law of another State or Territory, and
(c) in relation to the Supreme Court, a law of a foreign country."
The approved form for filing of the certificate is Uniform Civil Procedure Rules 2005 Form 45, which in this case is labelled, "Registration Certificate of Costs Assessment". It may perhaps more appropriately be labelled as "Filing of Certificate of Costs Assessment Judgment".
In any event, the amount of costs determined in the certificate was recorded on the court's computerised court record system, and thus, was entered in accordance with Uniform Civil Procedure Rule 36.11.
Mrs Coshott submits that the filing of the certificate or "registration", should be set aside because it offends s 58(3) of the Bankruptcy Act 1966 (Cth). Section 58(3) provides:
"(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding."
Mrs Coshott relied upon both paragraphs (a) and (b) of s 58(3). Section 58(3)(a) is concerned with the enforcement of a remedy not the obtaining of one. A judgment, order or certificate cannot be enforced until it is entered under s 133 of the Civil Procedure Act 2005. Thus, s 53(a) is not concerned with the institution of proceedings and their maintenance up to the point of judgment (see Fraser v Commissioner of Taxation (1996) 69 FLR 99 at 111G).
However, s 58(3)(b) appears to have application. The filing of the certificate is simultaneously both the commencement and conclusion of the proceedings, obtaining a file number and a judgment in the one action. Entering judgment was traditionally a step taken by a party and constitutes a fresh step (see Doran v Isaacs (1912) 12 SR (NSW) 699, ANZ Banking Group Ltd v Computer Plus [1992] 1 VR 607 at 608).
In my view, the filing of the certificate was "to commence [a] legal proceeding". I did not understand Mr Barry and Mr Broad to contend otherwise. The same view was reached in Coshott v Barry & Anor [2012] NSWSC 850 at [47], a decision between the parties.
Although Mr Barry and Mr Broad accept that because of Mr Coshott's bankruptcy, it was not competent for them to commence and maintain proceedings against him, nevertheless they submit that setting aside the judgment (i.e. the filing of the certificate) against Mrs Coshott is not the appropriate remedy. They submit Mr Coshott should be removed as a party and seek an order in their motion to this effect.
Section 62 of the Bankruptcy Act 1966 (Cth) provides some support for the contention of Mr Barry and Mr Broad. It states:
"Where a bankrupt is a contractor in respect of a contract jointly with another person or other persons, that person or those persons may sue or be sued in respect of the contract without the joinder of the bankrupt."
Of course, the filing of the certificate was not done against only Mrs Coshott, but Mr Coshott also. He was listed as a defendant on the Form 45. That error is not fatal. Part 6 of the Uniform Civil Procedure Rules 2005 applies. The relevant rules are as follows:
"6.20 Proceedings affecting persons having joint entitlement
(cf SCR Part 8, rules 3 and 4; DCR Part 7, rules 3 and 4; LCR Part 6, rules 3 and 4)
(1) Unless the court orders otherwise, all persons jointly entitled to the same relief must be joined as parties in any claim for that relief that is made by any one or more of them.
(2) Unless the court orders otherwise, any other such person is to be joined:
(a) as a plaintiff, if he or she consents to being a plaintiff, or
(b) as a defendant, if he or she does not consent to being a plaintiff.
(3) Despite subrule (1), a person may not be joined as a party to proceedings in contravention of any other Act or law.
Note. See, for example, section 62 of the Bankruptcy Act 1966 of the Commonwealth."
"6.21 Proceedings affecting persons having joint or several liability
(cf SCR Part 8, rule 5; DCR Part 7, rule 5; LCR Part 6, rule 5)
(1) A person who is jointly and severally liable with some other person in relation to any act, matter or thing need not be a defendant in proceedings with respect to that act, matter or thing merely because the other person is a defendant in those proceedings.
(2) In any proceedings in which a defendant is one of a number of persons who are jointly, but not severally, liable in contract or tort, or under an Act or statutory instrument, the court may order that the other persons be joined as defendants and that the proceedings be stayed until those other persons have been so joined."
"6.22 Court may order separate trials if joinder of party or cause of action inconvenient
(cf SCR Part 8, rule 6; DCR Part 7, rule 6; LCR Part 6, rule 6)
If the court considers that the joinder of parties or causes of action in any proceedings may embarrass, inconvenience or delay the conduct of the proceedings, the court:
(a) may order separate trials, or
(b) may make such other order as it thinks fit."
"6.23 Effect of misjoinder or non-joinder of parties
(cf SCR Part 8, rule 7 (1); DCR Part 7, rule 7 (1); LCR Part 6, rule 7 (1))
Proceedings are not defeated merely because of the misjoinder or non-joinder of any person as a party to the proceedings."
"6.29 Removal of parties by order
(cf SCR Part 8, rule 9; DCR Part 7, rule 9; LCR Part 6, rule 9)
The court may order that a person:
(a) who has been improperly or unnecessarily joined, or
(b) who has ceased to be a proper or necessary party,
be removed as a party."
Rules 6.20 and 6.21 contemplate that whilst jointly entitled or jointly liable parties should ordinarily be joined to proceedings, nevertheless, that rule is subject to exceptions such as those in s 62 of the Bankruptcy Act 1966 (Cth) (see r 6.20(3)), and the discretion of the court (see r 6.21(2)).
Thus, the court can strike out parties who have been inconveniently joined or whose joinder "may embarrass...the conduct of the proceedings" (see Ritchie's Uniform Civil Procedure NSW at [6.22.10]). Proceedings are not defeated because Mr Coshott has been wrongly joined (see r 6.23); the court may order that he be removed as a party (under r 6.29) especially where action was taken without cognisance of the bankruptcy of Mr Coshott (cf Ellis v Fisher [2001] VSC 621 at [29]).
Two issues arise in relation to the removal of Mr Coshott as a party. The first is whether it is contrary to s 58(3) of the Bankruptcy Act 1966 (Cth) as being "a fresh step" in the proceedings.
One possible answer to that is that the court's powers in Part 6 of the Uniform Civil Procedure Rules 2005 to remove Mr Coshott as a party are not dependent on an application by the creditor. Even if it were not competent for a creditor, in this case Mr Barry and Mr Board, to seek the removal of Mr Coshott, nevertheless the court acting of its own motion might not offend the provision of s 58(3)(b) by so doing (cf Fraser Property Developments Pty Ltd v Sommerfeld (No 2) [2005] QCA 242 and Gertig v Davies [2003] SASC 86).
In any event, an application by a creditor to remove a party from a proceeding is not a "fresh step". The expression "fresh step" includes any step that advances the proceedings towards judgment (ANZ Banking Group Ltd at 608, 610) or "a step taken towards the satisfaction of [a] debt" (see Fraser at 115). Removal of Mr Coshott as a party does not advance the proceedings against him. Further, steps taken after the entry of the final judgment are probably not fresh steps in a proceeding: Bank of Australasia v Whitehead (1898) 24 VLR 308, Deighton v Cockle [1912] 1 KB 206, 209 - 214.
The possibility of an order removing Mr Coshott being a "fresh step" was not the focus of Mrs Coshott's opposition to this course. The second, and primary issue, concerning the removal of Mr Coshott as a party is that Mrs Coshott submits it is ineffective to remedy the contravention of s 58(3) of the Bankruptcy Act 1966 (Cth) because the certificate upon filing, although enforceable as a judgment, is not a judgment of the court: Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172.
Mrs Coshott submits as follows:
"11.In Frumar, the NSW Court of Appeal considered the effect of a costs certificate enforceable in a court 'with no further action' under a provision equivalent to s 208J of the LPA. Handley A-JA said, for the Court (at [38], [40]):
'[The provision] provides that a filed certificate with no further action' is taken to be a judgment. A filed certificate is not a judgment but is deemed to be one for enforcement purposes.'"
"14.In Kassem, Ward J drew upon Frumar to reach a conclusion as to equivalent provisions of the Legal Profession Act 2004 (NSW) that a deemed judgment under a costs certificate could not be varied. Her Honour said:
...
[21] The operation of both sub-ss 368(5) and 369(7) of the Legal Profession Act is that, on the filing of a costs certificate in the office or registry of a Court with jurisdiction to order payment of the amount of money the subject of that costs assessment, that certificate is taken to be a judgment of the Court with no further action. Such a judgment is recognised as taking its force from the statute; it is not a judgment of the Court in the sense that there has been an adjudication of the claim (Doyle v Hall Chadwick [2007] NSWCA 159 at [47]-[54]; Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172 at [8])."
"15.Kassem was not followed by Garling J in Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181 at [114]. However, Garling J was concerned with other conclusions reached in Kassem, which are not presently material.
'No further action' by court
Taken together, these observations in Frumar and Kassem indicate that the role of a court receiving registration of a costs certificate is purely administrative. Once the certificate is accepted for registration, it must 'with no further action' be entered and enforced according to its terms. The receiving court has no discretion to alter its legal effect, being against the persons, and for the amount, identified in the costs certificate.
All the receiving court can do is set aside registration if the costs certificate is shown to be defective. This conclusion is reinforced by s 208K of the LPA, which renders the costs certificate 'binding' and prohibits any 'appeal or other review' except in accordance with the LPA. It is also consistent with s 133 of the CPA and r 36.11 of the UCPR, which require the costs certificate to be entered for the purposes of enforcement."
Insofar as I follow this argument, there are two aspects that I find unpersuasive.
First, the submission seeks to give the words in s 208J(3), "with no further action", a wider meaning than they bear. It was submitted that these words preclude any further action being taken rather than merely remove the necessity for further action. I do not think these words have this effect.
Section 208J(3) does not, in my view, preclude the exercise of the powers in r 36.11 to enter a judgment obtained by the filing of a certificate, or to correct errors in a certificate under the slip rule as provided by r 36.17. Nor does it preclude orders under r 36.15, which is necessary for Mrs Coshott to obtain the relief she seeks. In my view, the words "with no further action" confirm that s 208J(3) precludes there being a contest about whether a judgment should be granted on the certificate. Mere filing is sufficient.
The second reason why I find this argument unpersuasive is that s 208J(3) only operates to make a filed certificate a judgment "for the amount of unpaid costs". The date of the certificate, for example, does not become the date of the judgment (see Kassem & Secatore (as joint liquidators of Pan Pacific Age Care Services Pty Ltd (in liq)) v Koutavas [2012] NSWSC 236 at [23], Scope Data Systems Pty Ltd v David Goman Rep Partnership Bdo Nelson Parkhill [2008] NSWSC 42 at [15], [53] - [55]).
As s 208J(3) states, only "the amount of unpaid costs" in the certificate has, upon filing, the force of a judgment, the other aspects of the certificate - the date, the parties, notations or determinations about whether interest is payable, are unaffected by the deeming provision.
It follows that the date of the "deemed" judgment, the parties to it, and all matters other than "the amount of unpaid costs" are to be found on the filed Form 45. The sealed Form 45 determines the date of the deemed judgment and the parties to it.
Thus, by removing Mr Coshott as a party to the filed Form 45, called "Registration Certificate of Costs Assessment", Mr Coshott is no longer subject to a judgment in the form of a certificate. The certificate remains in its original form containing the determinations made by the assessor before Mr Coshott's bankruptcy, but once Mr Coshott is removed as a party from the sealed Form 45, he is not a party to the deemed judgment and the contravention of s 58(3)(b) of the Bankruptcy Act 1966 (Cth) has been remedied.
In reaching this conclusion, I take into account that there is no precedent cited or principle or policy called in aide to support a rule that a judgment against one joint debtor is invalidated by the bankruptcy of the other. I note that in the transcript of the hearing between the parties before Adams J in the Supreme Court the matter was raised. His Honour was recorded as commenting (20 November 2013, at p 6 line 16-24):
"You have got some authority, have you, that a judgment against two where the judgment against one is irregular. Let me give a more brutal example. Let us suppose you issue a summons for a debt against two debtors and that you only serves one better. Let us suppose you get judgment against both debtors and one debtor comes along and says: You didn't serve me, you have to set aside the judgment. The other debtor says: she didn't serve him but she did serve me so you have to set aside the judgment and to be brutal, I think the judge would say: Go away. What is the difference in substance between that and this?"
The transcript, no doubt, has some errors in the recording but the sentiment is clear and I agree with it. A judgment is not bad against one party merely because it is bad against another.
One final matter that arises in respect of Mrs Coshott's application is that Mr Barry and Mr Board say that Mrs Coshott is estopped from maintaining a claim to set aside the registration of the certificate. The nature of the estoppel is estoppel by judgment either by reason of a res judicata or Anshun estoppel.
The basis of this submission comes from the hearing between the parties in the Supreme Court.
In Coshott v Barry & Anor [2012] NSWSC 850, Mrs Coshott sought to set aside costs certificates and the judgments entered on them. That application was heard by McCallum J. Her Honour concluded that the two judgments with which she was dealing were properly obtained and not liable to be set aside so the application was refused. Her Honour later declined an application to reconsider her conclusions (see Coshott v Barry & Anor (No 2) [2012] NSWSC 944). Mrs Coshott sought on another basis to restrain enforcement of the certificates in Coshott v Barry (No 3) [2012] NSWSC 1248. Schmidt J referred to the decision of McCallum J and stated at [8] - [9]:
"That Mrs Coshott is now entitled to pursue another basis upon which order 5 of her second further amended summons might rest in respect of these judgments was disputed, it appears for good reason. Mrs Coshott has been heard. That she is now entitled to advance yet another basis for relief under order 5, is not readily apparent.
Mrs Coshott's second further amended summons was recently filed by consent and raises in order 2A another judgment not dealt with by McCallum J. That Mrs Coshott has a prima facie case in relation to the irregularity which she now wishes to pursue in relation to the certificates on which that judgment and the other judgments already dealt with by McCallum J is debatable, it seems to me..."
Order 2A was Mrs Coshott's application to set aside the filed certificate on the additional ground of Mr Coshott's bankruptcy. In due course order 2A in that matter returned for final hearing. The application was dismissed by consent without a hearing on the merits.
Whilst criticisms of Mrs Coshott's repeated attempts to set aside the filed certificate judgments are understandable, I am not inclined to hold that she is estopped from maintaining the claim before me. The basis of the claim, the bankruptcy of Mr Coshott, has not been ventilated and in my view that is sufficient to dispose of the argument of res judicata. The Anshun estoppel assertion, that she should have raised this argument before, might be met with the contention that she did raise it before, in the proceedings before Schmidt J, albeit belatedly, and it was dismissed by consent rather than determined on the merits.
In my view, a dismissal without a hearing on the merits does not give rise to any estoppel by judgment.
Thus, I do not uphold the claim for an Anshun estoppel or a res judicata. Whether there is any abuse of process in the repeated proceedings is not a matter I am asked to decide.
However, I have found that the claim of Mrs Coshott to set aside the filing of the certificate fails when considered on the merits, as recorded above.
THE CLAIM FOR INTEREST
The proper treatment of interest on the unpaid costs of the firm was affected by ss 190 and 208E of the Legal Profession Act 1987, which provided as follows:
"190 Interest on outstanding costs
(1) A barrister or solicitor may charge interest on the unpaid costs for legal services provided by the barrister or solicitor, if the costs are unpaid 30 days or more after the barrister or solicitor has given a bill of costs for those services in accordance with this Division.
(2) A barrister or solicitor may not charge interest on the unpaid costs for legal services unless the bill of costs for those services contains a statement that interest is payable and of the rate of interest.
(3) A barrister or solicitor may also charge interest on the unpaid costs for legal services in accordance with a costs agreement.
(4) A barrister or solicitor may not charge interest under this section or under a costs agreement at a rate that exceeds:
(a) except as provided by paragraph (b)-the rate prescribed under the Supreme Court Act 1970 in respect of unpaid judgments of the Supreme Court, or
(b) the rate prescribed by the regulations."
"208E Interest on amount outstanding
(1) A costs assessor may, in an assessment, determine that interest is not payable on the amount of costs assessed or on any part of that amount and determine the rate of interest (not exceeding the rate referred to in section 190 (4)).
(2) This section applies despite any costs agreement or section 190.
(3) This section does not authorise the giving of interest on interest.
(4) This section does not apply to or in respect of the assessment of costs referred to in Subdivision 3 (party/party costs)."
There is some discomfort between s 190(2) and s 190(3). The former seems to preclude interest unless the bill of costs claims interest (whether or not there is a provision for interest in the costs agreement) but that construction may leave s 190(3) with little or no utility. I note that in the current legislation this anomaly is removed (see Legal Profession Act 2004, s 321(1) and s 321(2)).
In any event, the costs assessor determined that interest is payable and also determined the rate of interest, apparently under s 208E. Whether s 208E empowered the former finding expressly or by implication does not arise because neither party takes this point. Mr Barry and Mr Board say that the assessor was authorised to determine whether interest was payable. Mrs Coshott goes further and says the assessor was also empowered to determine the amount of interest and in accordance with s 208J(1) of the Legal Profession Act 1987, identify that determination on the certificate. Section 208J(1) directed the costs assessor to issue a certificate setting out a determination.
Mrs Coshott submits that the power to determine the amount of interest was to be implied from s 208E(1) of the Legal Profession Act 1987. But the provision only expressly empowers the assessor to disallow a claim for interest (in whole or in part) and determine the rate. If the assessor was also empowered to determine the amount of interest, it would seem to have been a straightforward matter for the legislature to say so, rather than leave it to be implied.
There are two other matters that militate against this power. The first relates to the consequences of determining interest. Mrs Coshott says that if the assessor had determined the amount of interest and recorded it on the certificate the filing of the certificate would create a judgment allowing interest to be enforced as a judgment debt. But in my view this is contrary to the terms of 208J(3). The certificate is only taken to be a judgment "for the amount of unpaid costs", not the interest, or any other matter specified in the certificate, as I have found above. The specification of interest on those costs in the final part of s 208J(3) is a textual consideration that also suggests that "unpaid costs" do not include interest.
The definition of costs in the Legal Profession Act 1987 supports this approach, although not categorically. Costs is defined in s 3 to include "fees, charges, disbursements, expenses and remuneration". The definition does not appear to embrace interest, although it is only an inclusive definition (see also as authority that this definition does not include interest on costs, Drummond and Rosen Pty Ltd v Easey and Ors (No 2) [2009] NSWCA 331at [41]).
In respect of legal fees and other costs in Part 11 of the Legal Profession Act 1987, s 173 adopts this definition. Unhelpfully there is a note that states:
"Note.
Costs include barristers' and solicitors' fees as well as other items that may be charged by barristers and solicitors (such as expenses and disbursements)."
Interest, although not "expenses", "disbursements" or "fees", is another item "that may be charged by barristers and solicitors". Pursuant to the Interpretation Act 1987, notes are not part of the Act (see s 35(2)(c) of the Interpretation Act 1987) although they are part of the extrinsic material that may be considered in interpreting the Act (see s 34 and s 35(2) of the Interpretation Act 1987).
The second matter that militates against the assessor determining the amount of interest and specifying it on the certificate is that it is impossible for the assessor to determine the amount of interest up to the filing of the certificate. The filing of the certificate is necessarily a later date than the issue of the certificate. I have already found in accordance with Kassem at [23] and Scope Data at [15] and [54] that the date of the judgment under s 208J(3) is the date of filing, not the date of the certificate. Thus, the assessor is unable to determine the amount of interest up to the date of judgment since this date is unknown at the date of the certificate. Post-judgment interest on costs is allowed under s 208J(3) of the Legal Profession Act 1987 (compare Drummond at [47] and s 208V of the Legal Profession Act 1987).
Mrs Coshott submitted that the consequence that the interest between the date of the certificate and the date of judgment might be lost is likely to be de minimis and immaterial but of course that depends on the period between these two events. I do not think it is irrelevant.
If I am wrong and the assessor does have the power to award interest, the question arises as to how that failure by the assessor might be remedied. Mrs Coshott appeared to indicate that the matter should return to the assessor and if he resisted awarding interest (as he has in this case) the court should compel him by orders in the nature of prerogative relief in the Supreme Court.
Bearing in mind the amount of interest, the time spent on hearing this application already and the overriding purpose of the court's procedure in s 56 of the Civil Procedure Act 2005, I would be reluctant to adopt this course unless compelled so to do.
Part 36 of the Uniform Civil Procedure Rules 2005 grants to the Court various powers to amend judgments and those powers sometimes expressly include certificates within the meaning of judgments. The slip rule, r 36.17, allows the Court to amend judgments including "a certificate", if there is a "clerical mistake" or an "error arising from accidental slip or omission".
This provision allows amendment to permit a claim for interest to be added to the amount of a judgment (see L Shaddock & Associates Pty Ltd v Parramatta City Council (No 2) (1982) 151 CLR 590 at 595, Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 WLR 300 at p 306F - 307B, compare Hanave Pty Ltd v LFOT Pty Ltd (2004) 136 FCR 566 at p 568, 576).
Similarly, there is an inherent power to vary any order or judgment that does not reflect the intention of the Court's decision. Thus, if the error was made by the assessor in not calculating interest, I could amend the certificate to award the amount of interest, since it is clear, by the note in the certificate, that the award of interest was intended.
However, in the present case a decision of the assessor not to calculate or award a specific amount of interest was deliberate. Ritchie's Uniform Civil Procedure NSW at [36.17.5] indicates that "the scope of the rule...has been said to preclude its operation to mistakes that are the consequence of deliberate decision".
The slip rule also allows the correction of incorrect references in the computer record that do not reflect the certificate (Short v Short (1902) 8 ALRCN 306). In these circumstances, I propose to order the deletion of the reference to nil interest in the minute, as this does not fairly reflect the contents of the certificate.
Rule 36.11 concerning the entry of judgments also extends to filed certificates of costs assessments. It applies to a "determination...of which a certificate has been filed or registered in the court". And as in the power to set aside in r 36.15, if the certificate is liable to be set aside, so also is the "judgment" that results from its filing (see Doyle v Hall Chadwick [2007] NSWCA 159).
In my opinion, these provisions support the ability of the Court to vary the judgment upon filing under r 36.16(3), which provides:
"(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief."
As the filed certificate has not determined the interest and has not dismissed it but has recognised and accepted it as a valid entitlement, it seems open to the Court to vary the judgment to include the amount of interest.
Paragraphs 63 to 72 (except [69]) of this judgment are based on the assumption that the assessor had the power to award interest.
But I have determined that the assessor has no power to award interest.
The assessor's power to determine whether interest is payable and determine the rate of interest applicable leaves the date from which interest is payable as the only relevant variable in the interest calculation. That date was the subject of evidence upon the filing of the certificate in November 2008 (see the affidavit of Stephen Michael Barry sworn 25 October 2013 at p 22) and also before me.
Despite being invited to do so, Mrs Coshott did not raise any issue about the amount of interest claimed or the date from which interest is to run. In these circumstances, I have doubts as to whether a genuine dispute exists in respect of interest including the date from which it is to run. Rather, Mrs Coshott submits that the Form 45 should not be treated as a claim for interest and new proceedings are required.
I accept that the filed Form 45 might not be the conventional way to commence proceedings to claim the interest. However, there is little doubt that the filing did commence proceedings (the parties accepted that in respect of the Bankruptcy Act 1966 (Cth) s 58(3) arguments) and also that it contained a claim for interest.
The filed Form 45 evidences a specific amount of interest claimed, and the accompanying affidavit evidenced the basis for that amount. Mr Barry and Mr Board have provided their calculation of interest being $24,132.52 from 21 November 2003 to 21 October 2008. Interest on that sum of $24,132.52 calculates to be $10,716.29 up to yesterday. In those circumstances, and in view of the absence of any claim for prejudice, I propose to treat the filing of the Form 45 as a claim for interest noting that any procedural irregularity in its formal content does not, by s 63 of the Civil Procedure Act 2005, invalidate the proceedings.
However, I also propose to allow Mrs Coshott an opportunity to put on evidence and make further submissions as to why the amount specified should not be awarded by me as interest on the costs judgment, since at least in a formal sense she has not had an opportunity to respond to that claim in these proceedings.
The orders of the Court are:
(1) Dismiss the notice of motion by Mrs Coshott (filed 19 December 2013) to set aside the registration of the certificate by reason of Mr Coshott's bankruptcy.
(2) Order Mrs Coshott to pay the plaintiffs' costs of that motion.
(3) Order the removal of Mr Coshott as a party to the proceedings.
(4) Direct Mrs Coshott to file and serve any evidence and submissions upon which she relies by 4pm on 25 March 2014 on the question of the amount of any interest up to the date of filing payable to the plaintiffs, on the unpaid costs in the filed certificate, and on the costs of the application by the plaintiffs.
(5) Direct any submissions and evidence in response be filed and served by the plaintiffs by 4pm on 28 March 2014.
(6) Stand the matter over to 1 April 2014 at 10am part head for further hearing before Judge P Taylor SC.
(7) Reserve all questions of costs of the application by the plaintiffs.
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Decision last updated: 14 May 2014
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