Coshott v Parker
[2011] NSWSC 786
•28 July 2011
Supreme Court
New South Wales
Medium Neutral Citation: Coshott v Parker [2011] NSWSC 786 Hearing dates: 12 July 2011 Decision date: 28 July 2011 Jurisdiction: Common Law Before: Schmidt J Decision: Summons dismissed.
Catchwords: PROCEDURE - notice of motion - order seeking summons to be dismissed - declaration that defendants are not able to raise or rely on any objection to the plaintiff's applications for assessment of bills of costs - res judicata - issue estoppel - Anshun estoppel - summons dismissed Legislation Cited: Civil Procedure Act 2005
Conveyancing Act 1919
Legal Practitioners Act 1898
Legal Profession Act 1987
Legal Profession Act 2004
Limitation Act 1969
Uniform Civil Procedure Rules 2005Cases Cited: Coshott v Lenin [2006] NSWDC 139
Coshott v Lenin [2007] NSWCA 153
Baker v Kearney [2002] NSWSC 746
Dey v Victorian Railways Commissioners 1949] HCA 1; (1949) 78 CLR 62
Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440
Federal Commissioner of Taxation v Galland [1986] HCA 83; (1986) 162 CLR 408
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Lenin v Coshott [2007] NSWSC 630
Muriniti v Lyons & Ors [2000] NSWSC 680
Ryan v Hansen (t/as Hansens Solicitors) [2000] NSWSC 354; (2000) 49 NSWLR 184Category: Procedural and other rulings Parties: Ljiljana Coshott (Plaintiff)
Michelle Lena Parker (First Defendant)
Christina Marie Collins (Second Defendant)Representation: Counsel:
Mr I Griscti (Plaintiff)
Ms M Castle (Defendants)
Solicitors:
Martin Place Lawyers (Plaintiff)
Hicksons (Defendants)
File Number(s): 2011/154086
Judgment
These proceedings were commenced by the plaintiff, Mrs Ljiljana Coshott, by summons filed in May 2011. Mrs Coshott seeks declaratory relief in the following terms:
"1. Declaration that the defendants are not able, on the grounds of res judicata, issue estoppels, and/or Anshun estoppel, from raising or relying on any objection to the applications for assessment of bills of costs in the matters of Lenin v Australia Bank; Lenin v Seneca Insurance; and Lenin re: various matters proceeding to assessment by a costs assessor and issue of Certificates of Determination.
2. The hearing of this matter be expedited.
3. Costs."
By notice of motion filed in June 2011, the defendants, the executors of the estate of their father, Michael Lenin, seek orders dismissing the summons pursuant to rule 13.4 of the Uniform Civil Procedure Rules 2005, or in the alternative, an order striking out the summons pursuant to Rule 14.28.
The motion was supported by an affidavit sworn by the defendant's solicitor Mr Price. Mrs Coshott gave no evidence herself. Affidavit evidence was also given by her husband, Robert Coshott. He was required for cross-examination.
It was common ground that the onus falling on the defendants is a high one, namely that discussed by the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, taking the plaintiff's case at its highest (see also Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 at 91).
What is in issue is work performed for Mr Lenin by Mr Coshott many years ago, identified by the parties for convenience as falling into three categories:
1. proceedings concerning the Australian Bank;
2. proceedings concerning Seneca Insurance; and
3. various matters involving (i) the purchase of Matamanoa Island, proceedings brought by (ii) Alex Mildren and (iii) by Johnson, (iv) a matter concerning Newcastle City Council, (v) a matter concerning demolition contracts, (vi) a proposed purchase, (vii) proceedings brought by Wilkinson and (viii) matter concerning New Zealand Insurance (the "Various Lenin Matters")
Mr Coshott ceased acting for Mr Lenin in 1991. In 2005, Mr Coshott began an unsuccessful pursuit of his costs. On 2 November 2006, Neilsen DCJ gave judgment in relation to the costs of the Seneca proceedings, pursued on an 'unjust enrichment' basis (see Coshott v Lenin [2006] NSWDC 139). Mr Coshott's claim was dismissed. An appeal from Neilsen DCJ's decision was dismissed on 20 June 2007; Mason P observing that it was hopeless, given that a restitutionary claim could not sit on top of an effective and continuing contract (see at [10]) and having in mind the provisions of s 14 of the Limitation Act 1969, which meant that however packaged, the claim was within the statutory time bar (see Coshott v Lenin [2007] NSWCA 153 at [12] - [16]).
Mr Coshott also pursued costs assessments in relation to the three matters pursuant to the Legal Profession Act 2004 ('the 2004 Act'), albeit in these proceedings it was common ground that the costs applications were governed by the Legal Profession Act 1987 ('the 1987 Act'). Two of those applications were commenced and the third, in relation to the Australian Bank proceedings, was notified to Mr Lenin, but not pursued. In 2007, Mr Lenin sought orders from this Court restraining Mr Coshott from pursuing those costs, on the basis that the applications involved an abuse of process, or that he was estopped from asserting his claims on various alleged bases.
On 21 June 2007, Bell J dismissed Mr Lenin's application, having in mind Mr Coshott's rights under the 2004 Act, (which her Honour noted was in similar terms to relevant provisions of the 1987 Act, (see Lenin v Coshott [2007] NSWSC 630). Her Honour referred to the statutory appeal rights provided in respect of any costs assessment made and noted Mr Coshott's unsuccessful claim in the District Court in relation to the Seneca proceedings. She refused, however, to restrain Mr Coshott from pursuing any rights which he had under the 2004 Act. In coming to that conclusion, her Honour did not refer to the Court of Appeal's judgment, given the previous day, presumably because she was not aware of it.
Mr Coshott's pursuit of his applications ultimately failed. On 28 September 2007, the costs assessor, Mr Scammel, issued Certificates as to Determination of Costs, which each provided:
"No determination of the fair and reasonable amount of costs claimed by the Practitioner to be payable by the Respondent is made as any claim by the Practitioner for payment of any of the costs claimed is statute barred."
Mr Scammel gave reasons for his decision, in which he referred to both Bell J's decision, as well as to that of the Court of Appeal, concluding that:
"... Mr. Coshott's belated claim for remuneration was within the statutory time bar as it was either contract or quasi contract within the meaning of the Limitation Act."
Mr Scammel determined that the recovery of costs which Mr Coshott pursued was statute barred and that he was bound to follow the decision in Baker v Kearney [2002] NSWSC 746, where it was observed at [14]:
"I have not been referred to any authority on this point. However, for a number of reasons, it seems to me that a Costs Assessor should not proceed with an assessment of costs where there is no liability to pay those costs. As a practical matter, it could be expected that any such assessment would be an exercise in futility throwing away costs. There are provisions in the Act which support the view that a task of the Costs Assessor is to quantify the costs payable under a bill or an order. A determination of an amount payable may place the applicant in a position to file the certificate pursuant to s 208J (3). It is then taken to be a judgment of the court in which it is filed. The applicant is then at liberty to take enforcement action. I do not consider that the legislature intended that such a result should follow in a case where there is no liability to pay the costs."
Mr Coshott pursued his right to have the assessor's determinations reviewed. On 26 November 2007, the Review Panel advised that the review had been completed. The reasons given were not in evidence, but it was common ground that the application for review failed. Mr Coshott did not pursue his appeal rights to this Court in respect of the Review Panel's decisions.
In November 2008, Mr Coshott became a bankrupt. In December 2010, Mrs Coshott made the applications for assessment of costs which gave rise to these proceedings. The defendants objected, amongst other things, disputing Mrs Coshott's right to make the applications, given relevant provisions of the 2004 and 1987 Acts. They asserted that Mrs Coshott was not a legal practitioner; that she had never acted for Mr Lenin; that she had never delivered him any bill of costs; that what was relied on were bills signed by Mr Coshott; that he was an undischarged bankrupt; that his trustee had made no claim in respect of those costs; and that the trustee had not assigned any rights to pursue the claim for costs to Mrs Coshott. It was also claimed that any claim for payment of costs for work performed by Mr Coshott in 1991 and previously was statute barred and that any costs assessor would be bound to refuse to make a determination, in accordance with the conclusions reached in Baker v Kearney.
In Ms Coshott's applications, it was claimed that she was a '49% shareholder in Robert G Coshott & Associates, the firm who did the work claimed ... during the period in which the work was done'.
The controversy was considered by the Manager Costs Assessment, who gave the parties the opportunity to make submissions on the question of whether the applications should be referred to a costs assessor.
On 20 January 2011, Mrs Coshott advised the Manager Costs Assessment that she was a partner in Mr Coshott's firm and that 'the partnership agreement was registered and approved by the Law Society'. She also advised that Mr Coshott's trustee had:
"... previously advised in writing and confirmed this to the Federal Court that I should bring the costs assessment applications as partner in the firm. 49% of the firm was assigned to me by the partnership agreement referred to above. Prior to his sequestration, Robert Coshott lodged cost assessment applications on behalf of the partnership; and"
In February 2011, the trustee advised that the costs claimed by Mrs Coshott in the costs application had been claimed by Mr Coshott as assets in his bankruptcy; he claiming that they were due to him from Mr Lenin, even though he had been unsuccessful in his earlier applications to recover such costs.
Mrs Coshott was asked in March to produce the partnership agreement and the trustee's advice, to which she had referred. There was no response. What she provided to the Manager Costs Assessment, was a copy of an extract from the minutes of a meeting of the Council of the Law Society which it held on 6 October 1983, which provided:
" REGULATION 25 COMMITTEE : 22.9.83
APPLICATION TO SHARE RECEIPTS WITH UNQUALIFIED PERSON :
5488(4)
RESOLVED that consent be granted under Regulation 25(4) of the Solicitors' (General) Regulations to the application by Robert Gilbert Coshott to share the receipts of his practice with his wife, Ljiljana Coshott."
Regulation 25 provided:
"Solicitor's Practice
25. A solicitor may share receipts from a business of a nature usually performed by a practising solicitor with an unqualified person in the cases following, that is to say: -
(1) He may pay an annuity or other sum out of profits to a retired partner or the dependants or legal personal representatives of a deceased partner.
(2) He may pay an annuity or other sum out of profits to a retired solicitor, or the dependants or legal personal representatives of a deceased solicitor, from whom he has purchased the goodwill or the practice formerly carried on by such retired or deceased solicitor, provided that the contract of purchase is in writing and the provisions of such contract relating to payments of an annuity or other sum as aforesaid have been approved by the Council.
(3) In a case where at the request of the dependants or legal personal representatives of a deceased solicitor he conducts the practice formerly carried on by such deceased solicitor pending the sale of the good will thereof, he may pay to such dependants or legal personal representatives a sum out of the profits of such practice provided that the period for which he so conducts such practice shall not exceed one year, or such longer period as the Council may approve.
(4) Where the Council has approved of his doing so and he complied with any conditions subject to which the approval was given."
Further submissions were made to the Manager, with the eventual result that he advised the parties on 11 May that he intended to proceed to determine the question of whether Mrs Coshott's applications should be referred to a costs assessor.
Thereupon, Mrs Coshott commenced these proceedings, as advised to the Manager, to dispose of the defendants' 'jurisdictional objections to this and the further assessments yet to be lodged'.
The summons must fail
Candidly, it was accepted for Mrs Coshott at the hearing of the motion, that what was intended to be achieved by this application, was to preclude the defendants from relying on the arguments which had succeeded before the costs assessor and the Review Tribunal in respect of Mr Coshott's earlier costs applications. Those arguments rested on the Court of Appeal's conclusion that any application in respect of the costs in question were statute barred. The effect of the orders here sought would also preclude the defendants raising the arguments which they have advanced in these proceedings, in relation to Mrs Coshott's standing to bring the costs application, given her claimed interest in Mr Coshott's practice and the effect of his bankruptcy.
So understood, it readily becomes apparent that the high onus falling on the defendants has been met; the relief sought in the motion must be granted; and the summons dismissed.
It was argued for Mrs Coshott that her summons relied on three principles, in combination or alone, in seeking to deny the defendants the right to challenge her applications for the assessment of costs for the work Mr Coshott had performed for Mr Lenin, in and before 1991.
Those principles were res judicata, issue estoppel and Anshun estoppel. Each was said to apply because of the decision given by Bell J in 2007. The insuperable difficulties with the approach urged, are the following.
Firstly, under the 1987 Act, applications for costs assessments are to be determined in accordance with the scheme established under the Act. The role of this Court is to hear appeals in respect of certain assessments. Declaratory relief sought of this Court is not an available alternative mechanism for the disposition of applications for the assessment of costs (see Ryan v Hansen (t/as Hansens Solicitors) [2000] NSWSC 354; (2000) 49 NSWLR 184 and Muriniti v Lyons & Ors [2000] NSWSC 680 at [12] - [13]).
Secondly, Mrs Coshott was not a party to the proceedings before Bell J. In so far as she is entitled to rely on what Bell J decided, that right can only flow from her claimed interest in Mr Coshott's practice. That was not an interest raised or given any consideration by Bell J. That Mrs Coshott has such an interest is not a matter which has ever been adjudicated between the parties and in the circumstances which have arisen, is clearly not a matter in respect of which res judicata, issue estoppel or Anshun estoppel can have arisen. Her claimed interest was neither apparent, nor sought to be raised at the time of those proceedings.
Thirdly, Mr Coshott is a bankrupt who has claimed the costs in question as assets in his subsequent bankruptcy. The impact of that situation is also not a matter which has ever been adjudicated between the parties and is not a matter in respect of which res judicata, issue estoppel or Anshun estoppel can arise.
Fourthly, accepting for the sake of argument that Mrs Coshott could establish a relevant interest in the costs which she wishes to pursue, which would permit her to rely on matters already adjudicated by Bell J, as between Mr Lenin and Mr Coshott, questions of res judicata, issue estoppel and Anshun estoppel do not arise only in respect of Bell J's decision. They also arise in respect of the matters the subject of the decisions given by Neilsen DCJ and the Court of Appeal. There is also no reason for thinking if she was Mr Coshott's partner, that Mrs Coshott is not bound by the decisions which the costs assessor and the Review Panel came to, in respect of the earlier claims which Mr Coshott brought in respect of the same work which Mrs Coshott now seeks to pursue.
In so far as Bell J's decision conflicts with that given by the Court of Appeal, its decision prevails. In so far as its observations were obiter, they were successfully relied on by Mr Lenin before the costs assessor and the Review Panel, which found them persuasive. Mr Coshott had a right to appeal the Review Panel's decision under s 208L of the 1987 Act in relation to a matter of law and with leave, under s 208M. Similar rights were provided by the 2004 Act. He decided not to pursue those rights. Given the nature of the interest which Mrs Coshott claims in his practice, if it exists, she too, is bound by that decision.
Furthermore, it appears to be strongly arguable, that Mrs Coshott has no standing to bring the costs assessment applications. These are also questions which have never before been adjudicated.
Under s 201 of the 1987, relevantly, only a solicitor 'who has given a bill of costs' has the right to seek a costs assessment. The only bill of costs given to Mr Lenin were those sent and later unsuccessfully pursued by Mr Coshott. It was argued for Mrs Coshott that she fell within the definition of 'solicitor' appearing in s 173(2)(b), on the basis that she was 'the assignee of a barrister or solicitor'. On the evidence, it is questionable that she is such an assignee, indeed, she claims to be Mr Coshott's partner.
In evidence was the resolution of the Council of the Law Society, permitting Mr Coshott to 'share the receipts of his practice'. That resolution does not evidence any assignment of Mr Coshott's interest in the fees which he claims Mr Lenin owed him. Certainly, he later acted inconsistently with such an assignment, given his own unsuccessful pursuit of those fees and his claim in his bankruptcy, that those costs were his assets. Under the 1987 Act, Mr Coshott's trustee has a right to pursue such assets, the trustee falling within the definition of solicitor appearing in s 173(2)(d). On the evidence, it is apparent that the trustee does not seek to pursue those costs and has not authorised Mrs Coshott to do so.
In his affidavit evidence, Mr Coshott deposed that in 1983, the Law Society had approved Mrs Coshott sharing in 49% of the receipts of his practice and that 'from that time my wife held her 49% share in the practice'. That evidence is inconsistent with the documentary evidence. Annexed to the affidavit was a letter from the Law Society advising of the Council's resolution and that the approval was 'confined to the sharing of receipts in the manner set out in the application and that no consideration has been given to the underlying validity of the arrangements or to their fiscal consequences'.
The documents put before the Council for its consideration were not in evidence. What was tendered was an unsigned document purporting to be a partnership agreement dated 1 July 1984. Clearly that was not an agreement which the Law Society could have considered, as Mr Coshott conceded in cross-examination. Mrs Coshott had earlier been asked by the defendants, to provide a copy of the partnership agreement she claimed she had entered, but had not responded. She gave no evidence that the document in evidence was one that she had ever signed.
The claimed partnership agreement contains only two terms:
"1. That the abovenamed shall be partners in the following shares:-
ROBERT GILBERT COSHOTT 51%
LJILJANA COSHOTT 49%
2. The provisions of the Partnership Act apply except as are inconsistent with the control of the practice remaining solely with ROBERT GILBERT COSHOTT."
In cross-examination, Mr Coshott explained that he had never provided a copy of this agreement to his trustee; that his wife had recently located the document in her tax files, together with correspondence sent to the Australian Tax Office ('ATO'), which was not in evidence; that a signed copy of the agreement could not be found, but that he assumed that it had gone to the Law Society for approval, or to the ATO.
Clearly the partnership agreement, if executed only in 1984, cannot have been before the Law Society for approval in 1983. It appears to have post-dated the Law Society's 1983 resolution approving a profit sharing arrangement. That any statutory mechanism then existed for approval of an agreement, whereby an unqualified person entered into partnership with a solicitor, was not established.
Whether the effect of such an agreement, if valid, was to bring Mrs Coshott within the definition of 'solicitor' in s 173(2)(b) is a live question. Whether the purported partnership was valid, given the provisions of the Legal Practitioners Act 1898 , which were in operation in 1983, when Mr Coshott claims he entered into the partnership with his wife, is also a live question. Certainly during the time that Mr Coshott performed work for Mr Lenin, while the 1987 Act applied, it does not appear to have permitted solicitors to practice in partnership with non-qualified persons such as Mrs Coshott. It was only in 1993 that the 1987 Act was amended to permit a solicitor to be in partnership with a person who is not a barrister or solicitor (see s 48G).
In a supplementary note, it was argued for Mrs Coshott that there had been an 'Everett' assignment in which Mr and Mrs Coshott had participated in, which permitted a 49% assignment of the practice. The provisions of s 12 of the Conveyancing Act 1919 , which deals with written assignments of debts, which are made binding on debtors given notice of them, on which the defendants seek to rely to resist Mrs Coshott's claims, were argued to be of no relevance. Reliance for this submission was placed on Federal Commissioner of Taxation v Galland [1986] HCA 83; (1986) 162 CLR 408.
That authority does not, it seems to me, have the effect contended for by Mrs Coshott. There the High Court was concerned with the assignment by a partner of a two partner law firm of a 49% of his share of partnership capital and profits, to a trust to be set up in favour of his family, not with a purported partnership between a solicitor and an unqualified person. In Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440, the High Court had to consider a four man partnership where one partner had a 13% interest 'in the capital and income of the Firm', a part of which was conveyed and assigned to his wife, who was also a solicitor, by deed. Again, the wife was not claimed to be a partner in the firm.
By way of contrast, the agreement here relied on appears to be a partnership agreement, not an Everett assignment of a part of a partner's equitable interest in the partnership.
It is apparent that these are all also matters over which the parties have never previously joined issue and which the defendants are entitled to rely on in their resistance of Mrs Coshott's costs applications. It follows, in the circumstances, that the principles which it was explained she seeks to rely on to pursue the relief sought in the summons, can provide no basis for the relief sought.
The Civil Procedure Act 2005 requires that in the management of proceedings before it, the Court follow the dictates of justice, having in mind the overriding purpose established in s 56, facilitating the 'just, quick and cheap resolution of the real issues in the dispute or proceedings' and having in mind the efficient disposal of the business of the court, the efficient use of available judicial and administrative resources, the timely disposal of the proceedings, and other proceedings in the Court, at a cost affordable by the respective parties.
These considerations also support the conclusion that in this case, the defendants have met the high onus falling upon them, in respect of the relief sought in their motion.
Orders
The usual order as to costs is that they follow the event. Unless the parties wish to be heard on costs, in which event they should approach within 7 days, the costs order will be that Mrs Coshott bear the defendants' costs. For the reasons given, the summons is dismissed.
**********
Decision last updated: 28 July 2011
0