Barry v Coshott (No 2)
[2014] NSWDC 57
•02 April 2014
District Court
New South Wales
Medium Neutral Citation: Barry v Coshott (No 2) [2014] NSWDC 57 Hearing dates: 1 April 2014 Decision date: 02 April 2014 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) Judgment for the plaintiffs against the second defendant in the sum of $37,528.84; and
(2) The second defendant pay 90 per cent of the plaintiffs' costs of the notice of motion.
Catchwords: PROCEDURE - interest - costs certificate provided for interest - certificate filed - no interest recorded on court computer record Legislation Cited: Civil Procedure Act 2005, s 14, s 100, s 101
Interpretation Act 1987, s 76
Legal Profession Act 1987, s 190, s 208E, s 208J
Legal Profession Regulation 2002, reg 45
Uniform Civil Procedure Rules 2005, r 6.12, r 42.35Cases Cited: Barry v Coshott [2014] NSWDC 51
CSR Timber Products Pty Ltd v Weathertex Pty Ltd (2013) 83 NSWLR 433
Kuligowski v Metrobus (2004) 220 CLR 363 Oliveri v P M Sulcs and Associates Pty Ltd [2012] NSWSC 1198
Oliveri v P M Sulcs and Associates Pty Ltd (in liq) [2013] NSWCA 84
Papua New Guinea, Administration of the Territory of v Daera Guba (1973) 130 CLR 353Texts Cited: Ritchie's Uniform Civil Procedure New South Wales Category: Costs Parties: Stephen Michael Barry (first plaintiff)
Martin Pearce Board (second plaintiff)
Ljiljana Coshott (defendant)Representation: Mr K G Oliver (plaintiffs)
Mr O R Jones (defendant)
CKB Partners (plaintiffs)
Martin Place Lawyers (defendant)
File Number(s): 2008/320070 Publication restriction: None
Judgment
INTRODUCTION
This matter concerns the interest and costs to be awarded in connection with a judgment obtained in 2008 by the registration of a costs assessor's certificate. The cost assessment dealt with solicitor/client costs between the parties up to 15 October 2003 in a matter. In accordance with orders made in the earlier judgment and for the reasons therein, the proceedings continue only against the second defendant, Ljiljana Coshott.
The background facts in this matter are set out in an earlier judgment of mine dated 13 March 2014 and I repeat the relevant paragraphs from that judgment for convenience.
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.
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.
INTEREST
In the previous judgment dated 13 March 2014, I determined that the registration of the certificate did not constitute a judgment for an amount of interest. This conclusion follows from the terms of s 208J(3), which provided for the filed certificate to be a judgment "for the amount of the unpaid costs", not the interest, and also from the absence of any amount of interest on the certificate: see Barry v Coshott [2014] NSWDC 51.
I also ruled that the filing of the form for registration of the certificate, together with an accompanying affidavit, was sufficient to commence a claim for interest, albeit it in an unconventional manner. The purpose of yesterday's hearing, which is with regard to interest, was to enable Mrs Coshott to put any further matters she wished against the plaintiffs' claim for interest. Mr Barry and Mr Board claim an entitlement to $24,132.52, being the interest from 21 November 2003, 30 days after the deemed date of service of the bill of costs, until 29 October 2008, the date of the costs assessor's certificate.
The commencement date for interest is calculated in accordance with s 76 of the Interpretation Act 1987, bearing in mind the evidence of provision of the letter to the postal service on 15 October 2003. The 30 days from the deemed date of service is derived from s 190 of the Legal Profession Act 1987. To the extent that Mr Barry and Mr Board could claim interest from a date earlier than that claimed, the additional interest was abandoned.
Mr Barry and Mr Board also abandoned any interest entitlement from 29 October 2008 until the date of judgment, subject to one matter I deal with below. However, they seek that the entry of judgment be backdated to the date of the filing of the certificate, 10 November 2008. The result of such a backdating is that post-judgment interest on the sum of $24,132.52 would then accrue.
The one caveat I foreshadowed in the previous paragraph is that Mr Barry and Mr Board sought as an alternative to backdating entry of the judgment interest on the sum of $24,132.52 from 11 November or thereabouts to the date of judgment. This sum is $10,726.90.
THE DEFENDANT'S POSITION
Mrs Coshott does not dispute the quantum of interest claimed in the period from November 2003 to October 2008 of $24,132.52. However, she asserts two reasons why this amount is not payable. Both of her arguments depend on s 190 of the Legal Profession Act 1987 which provided:
"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."
It is common ground that there was no provision in the costs agreement for interest on unpaid costs. It was also common ground that Mr Barry and Mr Board made the claim for interest under s 190(1) subject to the terms of s 190(2), rather than a claim under s 190(3).
The first argument of Mrs Coshott is that s 190(1) can only be relied upon if there was a provision for interest in the costs agreement. The written submissions dealing with this were in the following terms:
"Section 190(1) of the LPA does not enable a legal practitioner to charge interest for costs in the absence of a contract for the payment of legal services, such as a costs agreement. Rather, it enables enforcement of provision for interest in such an agreement where those costs have been unpaid for 30 days."
In the course of submissions Mrs Coshott accepted that interest for costs could be awarded in the absence of a valid costs agreement. Oliveri v P M Sulcs and Associates Pty Ltd (in liq) [2013] NSWCA 84 appears to support such an entitlement.
In Oliveri, Mr Oliveri's only entitlement to fees was on a quantum meruit basis because there was no binding costs agreement (see Oliveri at [3]). Mr Oliveri failed in his claim for interest, not because of the absence of a costs agreement but because the provisions of s 190(2) were not satisfied. The reference to interest in the invalid costs agreement could not be regarded as part of the bill of costs as it was not to be regarded as part of a "combined identity" and it did not "complement the bill of costs or constitute it": see Oliveri at [21]. Further, even if the invalid costs agreement were to be regarded as part of the bill of costs the provisions relating to interest did not satisfy the terms of s 190(2): see Oliveri at [22], [23].
Thus, Mrs Coshott's argument became not that there needed to be an interest provision in a costs agreement but if there were a costs agreement it would need to have an interest provision in it to found an entitlement under s 190(1).
In my view, such a complicated implication in the legislation was unsupported by any principle, policy, or precedent. It is contradicted in the Oliveri decision. The text of s 190 gives no support for the implication. The arrangement of s 190, with s 190(3) following subsections (1) and (2) and providing that a legal practitioner "may also charge interest...in accordance with a costs agreement", indicates clearly that s 190(3) provides an alternative basis for a claim for interest. Section 190(4), which provides for interest being charged "under this section or under a costs agreement", reinforces this construction.
But, of course, the strongest textual feature is the absence of any reference in either s 190(1) or (2) to the need for a provision for interest in the costs agreement. Indeed, there is no reference to a costs agreement in those provisions at all. In my view, to include a requirement in addition to the express matters mentioned in s 190(1) and (2) that the legal practitioner must also satisfy a further matter - a provision for interest in a costs agreement, if a valid costs agreement exists (see Oliveri) - is to re-write the legislation, not to construe it. This is especially so when the provision for interest in a costs agreement is expressly mentioned as an alternative in the following subsection (3): expressio unius est exclusio alterius.
This conclusion is also supported by Gzell J in the Oliveri matter at first instance ([2012] NSWSC 1198 at [19]), the decision upheld by the Court of Appeal, and the recognition in the later provision of s 208E(2) of the Act of the alternative claims for interest under the Act and under a costs agreement.
For these reasons, I do not accept that there was any implied requirement under s 190(1) that a legal practitioner's entitlement to interest requires a provision for interest in a costs agreement, or alternatively (and even more unlikely) requires a provision for interest in a costs agreement if a costs agreement exists. In my view, the argument is devoid of any legal merit.
The second argument advanced by Mrs Coshott, not in written submissions but orally, against the claim for interest is that there was no provision for interest in the bill of costs. As is plain from s 190(2), proof of such a provision is necessary for a claim under s 190(1). The bill of costs was in evidence headed, "BILL OF COSTS", on p 1 of the bill. At paragraph 3 it stated, "Pursuant to Section 190 of the Act the solicitor intends to claim interest at the rates prescribed under section 95 of the Supreme Court Act 1970." It is apparent that the bill was prepared with one eye on the requirements of reg 45 of the Legal Profession Regulation 2002 which, pursuant to s 190(3) of the Act, sets out the particulars to be included in a bill of costs. The items in the bill of costs deal with these paragraphs in reg 45(1) in the same order as they appear in the sub-regulation.
Mrs Coshott relied upon [21] of Oliveri which is mentioned above and which stated in respect of the costs agreement, relevantly, "[it] did not form a combined identity and [it] did not complement the bill of costs or constitute it." I do not see this passage as offering any assistance to Mrs Coshott. Even if I regarded the first two pages of the bill of costs as separate from the itemised part, it is clear that the two sections did form a "combined identity" in accordance with the passage in Oliveri at [22].
I note that the first two pages of the document headed "BILL OF COSTS" refer to "Attached is an itemised Bill of Costs" and "the attached Bill of Costs." These phrases were not referred to by Mrs Coshott as indicating that the first two pages were not part of the bill of costs and, in any event, in my opinion they are insufficient to take the claim for interest made on the first page of the document to be outside of, and separate from, the bill of costs so as to leave s 190(2) unsatisfied.
No argument is made by Mrs Coshott about the wording in the bill of costs. It included, as I have quoted earlier, "3. Pursuant to Section 190 of the Act the solicitor intends to claim interest at the rates prescribed". That raises the question of whether this is a "statement, speaking at the date of the bill and in accordance with s 190(2), that 'interest is payable' in respect of the bill" (see Oliveri at [22]). However, both for the reason that the matter was not raised by Mrs Coshott and, in any event, because of the express reference to s 190 in paragraph 3, I am persuaded that the requirement of s 190(2) is satisfied by these terms in paragraph 3. The circumstances were different in Oliveri where the relevant statement was contained in a document of a different date and thus, was not "speaking at the date of the bill" (see Oliveri at [22]).
Mr Barry and Mr Board also raised the matter of a res judicata, that the question of interest being payable has been determined by the costs assessor in the certificate and therefore cannot be re-litigated by Mrs Coshott in these proceedings.
The terms of the certificate are set out earlier in this judgment. Reference was made to CSR Timber Products Pty Ltd v Weathertex Pty Ltd (2013) 83 NSWLR 433 at [14] and [15], to Kuligowski v Metrobus (2004) 220 CLR 363, and to Papua New Guinea, Administration of the Territory of v Daera Guba (1973) 130 CLR 353 at 453 to establish the proposition that the doctrine of issue estoppel extends to any tribunal giving a final decision on a matter even if it is not a court. In view of my earlier findings, I do not need to finally determine this point, although I am satisfied that Mrs Coshott is bound by the finding of the assessor in respect of interest being payable and the rate.
THE ADDITIONAL INTEREST
When questions were raised about the power and appropriateness of the Court backdating the entry of judgment by six years, a time well before my commission as a judge, Mr Barry and Mr Board cited no authority that backdating was an appropriate course and only faintly pressed that aspect of the claim. Rather, they adopted an alternative that interest be payable on the sum of $24,132.52 from November 2008 until today.
A provision for interest in these terms amounts to the awarding of interest on interest. Is this appropriate even if it was necessary to fairly compensate Mr Barry and Mr Board for being out of their costs, not merely for the five-year period from 2003 to 2008 but until 2014? I note that the costs awarded of $52,670.12 contained on the certificate of assessment carries post-judgment interest from 2008 in accordance with s 101 of the Civil Procedure Act 2005.
The provision precluding interest on interest is found in s 100 of the Civil Procedure Act 2005 which provides:
"100 Interest up to judgment
(cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A)
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
(2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money paid, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid.
(3) This section:
(a) does not authorise the giving of interest on any interest awarded under this section, and
(b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and
(c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and
(d) does not affect the damages recoverable for the dishonour of a bill of exchange.
(4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order.
(5) For the purposes of subsection (4), appropriate settlement sum means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent."
It can be seen that section 100(3)(a) precludes the provision of interest under section 100 being awarded on interest under section 100. Paragraph (b) precludes interest for a period being awarded under section 100 and under an agreement or otherwise. The reference to "or otherwise" would include interest under section 190(1).
But the provision does not preclude interest being awarded under s 100 for the period November 2008 to 2014 on interest awarded for the period 2003 to October 2008 under s 190(1).
In my view, interest under s 100 is available on the amount of s 190(1) interest of $24,132.52 to which Mr Barry and Mr Board were entitled in 2008. In Ritchie's Uniform Civil Procedure New South Wales (Hardcopy Service 84 - March 2014) at [s 100.65], the commentary refers to the subject of interest on interest and also states:
"But that restriction does not apply where the judgment amount is really an award of damages, even if those damages have been calculated by reference to interest that plaintiffs may have either paid or, alternatively, forgone...Neither does the prohibition apply to interest awarded as equitable compensation".
That passage is not particularly analogous to the circumstance faced in this case but recognises that there are limitations on the prohibition of interest on interest in s 100. In my view, for the reasons I have given, s 100 does not preclude an award of interest on the s 190 interest from 2008.
Mrs Coshott also raised arguments of delay and other discretionary matters, including recent amendments to the motion by Mr Barry and Mr Board as reasons why interest should not be awarded.
As to the matter of delay, I adopt what is said in Ritchie's at [s 100.35]:
"Interest should not be refused merely for the purpose of penalising delay...And even late amendments may be permitted to raise an interest claim".
As to the need to claim interest, Uniform Civil Procedure Rule 6.12(6) provides that an order for interest after judgment must be specifically claimed. Section 14 of the Civil Procedure Act 2005 allows the court by order to dispense with any requirement of the rules of court if satisfied it is appropriate to do so in the circumstances of this case. Although I would be prepared to make an order under s 14 if it were necessary, in my view, r 6.12(6) has been satisfied in that although not contained on a document, interest has been specifically claimed in the course of the argument before me. I do not see r 6.12(6) as precluding me from dealing with an issue between the parties first raised before the commencement of the hearing.
I also note in Ritchie's at [s 100.35] the following passage which states:
"Generally, the compensatory purpose of the discretion to award interest suggests that mere delay in bringing or prosecuting the proceedings will not usually provide a sufficient basis for refusing to award interest. However, the general principle is subject to considerations of overall reasonableness. In an appropriate case the award of interest may be confined to the period after the claim for interest has been specifically made... if the effects of delay have been principally related to the incurring of additional or unnecessary costs in conducting the proceedings, the more appropriate course is to take those matters into account in the exercise of the costs discretion than in the exercise of the discretion to award interest under the present section".
I also note the comments at [s 100.10] of Ritchie's:
"The purpose of the discretion is to permit a successful party to be properly compensated for the practical loss it has suffered...Accordingly, successful plaintiffs who obtain a money judgment will generally be entitled to an award of interest...Because the award of interest is essentially compensatory, the defendant's conduct in contesting the proceedings (whether or not reasonable and diligent) does not ordinarily provide a proper basis for either making or refusing an award of interest".
In my view, Mr Barry and Mr Board, in order to be properly compensated for the delay in the payment of an award of interest, which was recognised in the certificate in 2008, ought to be awarded s 100 interest on that sum. I propose to calculate the interest from 1 January 2009. It seems to me reasonable that some period ought to have been allowed after November 2008 for the claim to be finalised. Accordingly, the amount of $10,396.32 interest is allowed and thus I propose to give judgment for the sum of $37,528.84.
COSTS
Mr Barry and Mr Board have been successful in obtaining an award of interest and seek the costs of the notice of motion whereas Mrs Coshott seeks that there be no order as to costs. The plaintiffs have been largely successful on their application, removing Mr Coshott from the proceedings and obtaining a judgment that gives them their s 190(1) entitlement to interest together with interest on that amount.
I also take into account my view that the arguments of Mrs Coshott that the claim failed because there was no reference to interest in the bill of costs and, alternatively, that there needed to be a provision in the costs agreement in order to make a claim under s 190 were very weak. However, the plaintiffs' claim was complicated by the form in which it was brought and I am satisfied that additional time was taken because of the difference in form of the notice of motion and the orders obtained even if, as the plaintiffs contend, those orders fit within the "further and other orders" sought in the notice of motion.
I also note that the amount I am awarding is less than the amount referred to in r 42.35. In that event, the ordinary rule is that judgment for a sum less than $40,000 would impact upon whether the plaintiffs should receive their costs. Mrs Coshott did not advance r 42.35 as a reason why costs should not be awarded. In any event, this matter also concerned the impact of a judgment exceeding the sum of $40,000. Further, proceedings in this Court were warranted as the matter concerned a deemed judgment of this Court arising from the filing of the certificate.
In all the circumstances, I propose to order that the defendant pay 90 per cent of the plaintiffs' costs of the notice of motion and therefore the orders of the Court are:
(1) Judgment for the plaintiffs against the second defendant in the sum of $37,528.84; and
(2) The second defendant pay 90 per cent of the plaintiffs' costs of the notice of motion.
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Decision last updated: 27 May 2014
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