Coshott v Parker

Case [2019] FCAFC 14

FEDERAL COURT OF AUSTRALIA

Coshott v Parker [2019] FCAFC 14

Appeal from: Coshott v Parker [2018] FCA 596
File number: NSD 763 of 2018
Judges: GLEESON, THOMAS AND THAWLEY JJ
Date of judgment: 8 February 2019
Catchwords: STATUTORY INTERPRETATION – whether leave to appeal necessary – whether, where general retaining lien maintained, statute-barred debts nevertheless payable in deceased estate administration under Limitation Act 1969 (NSW) s 68 – whether holder of general retaining lien a “creditor” within meaning of Probate and Administration Act 1898 (NSW) s 82(1)
Legislation:

Bankruptcy Act 1966 (Cth) s 122(1)

Federal Court of Australia Act1976 (Cth) s 24(1A)

Limitation Act 1969 (NSW) ss 14, 63, 68

Probate and Administration Act 1898 (NSW) ss 82, 92

Cases cited:

Computer Edge Pty Ltd v Apple Computer Inc [1984] HCA 47; (1984) 54 ALR 767

Coshott v Barry [2016] FCAFC 173; (2016) 248 FCR 534

Coshott v Parker [2017] NSWSC 1098; (2017) 323 FLR 212

Gertig v Davies [2003] SASC 86; (2003) 85 SASR 226

Hogan v Australian Crime Commission [2009] FCAFC 71; (2009) 177 FCR 205

Marketing Advisory Services (MAS) v Football Tasmania Ltd [2002] FCAFC 165

McGrath v Troy [2010] NSWSC 1470

Midgley v Midgley [1893] 3 Ch 282

Motor Terms Co Pty Ltd v Liberty Insurance Ltd [1967] HCA 9; (1967) 116 CLR 177

Re Cancol Ltd [1996] 1 All ER 37

Re Mayes [2015] VSC 708; (2015) 15 ASTLR 376

Re Oygevault International BV (in liq) (1994) 14 ACSR 245

Re Rownson; Field v White (1885) 29 Ch D 358

Re Greaves; Bray v Tofield (1881) 18 Ch D 551

SNF (Australia) Pty Ltd v Ciba Specialty Chemicals Water Treatments Ltd [2015] FCA 787; (2015) 114 IPR 231

Spedley Securities Ltd (in liq) v Western United Ltd (in liq) (1992) 27 NSWLR 111 at 115

Weatherall v Satellite Receiving Systems (Australia) Pty Ltd [1999] FCA 741; (1999) 92 FCR 101
Date of hearing: 28 November 2018
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 64
Counsel for the Appellant: Mr AP Cheshire SC with Mr JD Cook
Solicitor for the Appellant: Murphy Lyons Lawyers
Counsel for the Respondent: Ms M Castle with Mr HD Morrison and Dr KA Luck
Solicitor for the Respondent: Hicksons Lawyers

ORDERS

NSD 763 of 2018
BETWEEN:

LJILJANA COSHOTT AND ROBERT COSHOTT FORMERLY TRADING AS ROBERT G COSHOTT & ASSOCIATES

Appellant
AND:

MICHELLE LENA PARKER

First Respondent

CHRISTINA MAREE COLLINS
Second Respondent

JUDGES:

GLEESON, THOMAS AND THAWLEY JJ

DATE OF ORDER:

8 FEBRUARY 2019

THE COURT ORDERS THAT:

1.To the extent necessary, the appellant be granted leave to appeal.

2.The appeal be dismissed.

3.The appellant pay the respondents’ costs of the appeal.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

THE COURT:

  1. The appellant appeals from a judgment of a single judge of this Court…

Continue reading Coshott v Parker

Sign in free to access the full text

Details
AGLC
Coshott v Parker [2019] FCAFC 14
Case
[2019] FCAFC 14
Decision Date

CaseChat Overview and Summary

In the case of Coshott v Parker, the appellant, Robert G Coshott & Associates, sought to recover unpaid legal fees from the respondents, the executrices of the deceased's estate, arguing that the debts were not statute-barred and thus payable under the Limitation Act 1969 (NSW) s 68. The primary issue before the court was whether the executrices, as administrators of the estate, were obligated to pay debts that were statute-barred under the Limitation Act but preserved by a general retaining lien held by the appellant. The court had to determine if the appellant, holding a general retaining lien, was a "creditor" within the meaning of the Probate and Administration Act 1898 (NSW) s 82(1), and if the statute-barred debts were payable despite the limitation periods having expired.

The court examined the statutory interpretation of "creditor" under the Probate and Administration Act and the effect of the Limitation Act on the enforceability of the debts. The appellant argued that the general retaining lien preserved the right to the debts, which remained valid despite the limitation periods. The respondents contended that the debts were extinguished by the Limitation Act and that the appellant's status as a creditor did not extend to debts that were statute-barred. The court considered the distinction between the existence of a debt and its enforceability by action, as well as the purpose of the general retaining lien.

The court concluded that the rights arising from the general retaining lien did not bring the appellant within the definition of "creditor" under the Probate and Administration Act. It held that if a debt is statute-barred, it cannot be enforced by the holder of the lien, and the executrices were not legally obligated to pay such debts. The court found that the appellant's argument that the lien preserved the right to the debts was not sufficient to recharacterize the nature of the debt in the context of estate administration.

The appeal was dismissed, and the appellant was ordered to pay the respondents' costs of the appeal. The court's decision reinforced the principle that a general retaining lien does not extend the enforceability of statute-barred debts beyond what is necessary to support the lien.

Orders

Orders of the court

1. To the extent necessary, the appellant be granted leave to appeal.

2. The appeal be dismissed.

3. The appellant pay the respondents’ costs of the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

In circumstances where we have concluded the appeal should be dismissed, the expedient course is to make an order granting leave to appeal if necessary.BACKGROUND FACTS The parties agreed that between 1988 and 1991, Robert G Coshott & Associates carried out legal work for the deceased, who died on 21 May 2010. Robert G Coshott & Associates issued invoices for the work, but those invoices were not paid. Robert G Coshott & Associates holds a general retaining lien over some of the deceased’s documents. On 20 October 2010, probate was granted to the respondents as executrices appointed under the deceased’s will dated 1 February 2006. The respondents did not make any payments in respect of the unpaid invoices. Instead, they made distributions to beneficiaries (without giving notices of intended distribution pursuant to s 92 of the Probate Act). The deceased’s estate is now being administered by the Official Trustee in Bankruptcy. In 2016, the appellant brought an action in the Supreme Court of New South Wales against the respondents to recover monies. Although not obvious on the face of the pleading, it became the appellant’s ultimate position that the action was brought in devastavit against the executrices, ie, that in not paying the debts the executrices had breached their duties to creditors and had wasted the estate. On 18 August 2017, Adamson J ordered that the proceedings be transferred to the Federal Court: Coshott v Parker [2017] NSWSC 1098; (2017) 323 FLR 212.PRIMARY JUDGE’S REASONS At [5(e)] of his Honour’s reasons, the primary judge noted the parties’ agreement that, if the respondents, as executrices of the deceased’s estate, were liable to Mr Coshott for any of the relevant debts, the respondents would be liable to Mr Coshott to the extent the debts are established as owing after determination of defences pleaded but yet to be determined.Nature of the general retaining lien At [8] of his Honour’s reasons, the primary judge identified the “essentially defensive” nature of the solicitor’s possessory or general retaining lien as relevant. At [9], his Honour contrasted the possessory lien with a “chose in action, that is, a right enforceable by action”, noting that a solicitor has “no right to enforce actively” a possessory lien and that such a lien “does not have the character of an encumbrance or equitable charge”.Interpretation of Limitation Act The primary judge identified the relevant provisions of the Limitation Act as ss 14, 63 and 68. At [14] of his Honour’s reasons, the primary judge noted that it was common ground that any cause of action in relation to the relevant debts would have been a cause of action founded on contract. By s 14 of the Limitation Act, an action founded on contract is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

It is necessary to consider whether s 68 operates to affect the natural meaning of “creditors” in the context of s 82. We accept Ms Castle’s submission that there is no reason to conclude that the rights of the appellant arising under s 68 bring it within the meaning of “creditor” in that context. To the contrary, if it were otherwise, the debts would be saved from extinction to a degree that exceeds what is “necessary to support and give effect to the lien”. CONCLUSION The appeal must be dismissed. The appellant should pay the respondent’s costs of the appeal.

Ratio Decidendi

Legal Principle Established

At [29], the primary judge concluded:I was not referred to any authority in relation to s 82 of the Probate Act, nor was the argument developed in written submissions. From first principles, however, it seems to me that ‘creditors’, as that term is used in s 82, means persons to whom the estate has a subsisting legal liability: that is, a person to whom a debt is actually owing. Although a debt may continue to exist, it is unable to be maintained or enforced and it is inconsistent with the duty of an executor to waste the estate which is being administered, by extending an obligation to pay to those debts which are statute-barred. It follows from the above that if the Retainer Debts were statute-barred before the death of the Deceased, as is common ground, the respondents were never obliged at law to pay those debts, and nothing about s 68 of the Act, properly construed, changes this conclusion.CONSIDERATION The appellant contended that the holding of the lien effectively preserved the debts, so that the appellant’s status as creditors was maintained and the executrices were therefore obliged to pay the debts. Senior counsel for the respondents, Ms Castle, argued that the resolution of the appeal depends upon the construction of s 68 of the Limitation Act and whether it has the effect that the appellant is a “creditor” within the meaning of s 82 of the Probate Act. It is convenient to address the appellant’s case by reference to its two principal propositions:(1)the right and title to the debts continued past the expiry of the relevant limitation periods; and (2)the debts ought to have been paid by the executrices.Appellant’s first proposition: Right and title to the debts continued The appellant submitted, non-controversially, that, although a solicitor’s general retaining lien is “merely passive and possessory”, it must support a “valid” debt. This proposition is consistent with the primary judge’s observation (at [24] of his Honour’s reasons) that a lien is only able to be maintained when the debt, underlying it, exists. The appellant next observed that whether there is a “valid” debt is different from (and not affected by) the question of whether that debt is enforceable by action. They contended that this analysis is reinforced by the relevant provisions of the Limitation Act. This would appear to be the distinction drawn by s 14 (which bars the remedy) and s 63 (which bars the right). Next, the appellant referred to the observation in Coshott v Barry [2016] FCAFC 173; (2016) 248 FCR 534 at [19] that s 68 operates notwithstanding s 63 so that, in that case, a finding that the relevant debts had been extinguished by the operation of s 63 was immaterial. The primary judge considered that decision at [10] and [11] of his Honour’s reasons: the appellants did not take issue with anything recorded in those paragraphs. Next, the appellant contended that “[t]he rider at the end of s 68 that the saving is ‘only so far as is necessary to support and give effect to the lien’ prevents any suggestion that the section has the effect of preserving a cause of action to enforce the debt but it does not alter the fact that the debt remains due” and that “[s]ection 68 preserves the debt and not the lien”.