Louise Carter v John F Kennedy

[2013] NSWSC 82

Supreme Court

New South Wales

Medium Neutral Citation:	Louise Carter & Ors v John F Kennedy [2013] NSWSC 82
Hearing dates:	1 March 2012
Decision date:	15 February 2013
Jurisdiction:	Common Law
Before:	Hidden J
Decision:	Motions dismissed
Catchwords:	COSTS - proceedings for damages - assessments of costs - registration of assessments as judgments - whether judgments should be set aside for irregularity
Legislation Cited:	Legal Profession Act 2004 Civil Procedure Act 2005
Cases Cited:	- Timms & Ors v Commonwealth Bank of Australia & Ors [No. 3] [2004] NSWCA 25 - Autodesk Inc v Dyason [No. 2] (1992-93) 176 CLR 300
Category:	Principal judgment
Parties:	Louise Carter (1st plaintiff) Annabelle Ivy Carter (2nd plaintiff) Estate of the Late Shirley Watts Carter (3rd plaintiff) John Francis Kennedy (defendant)
Representation:	Counsel: J R Dupree (plaintiffs) C Bolger (defendant) Solicitors: Salvatore Russo - Russo & Partners (plaintiffs) Tim Weissel, Solicitor (defendant)
File Number(s):	2009/294922, 2009/296855, 2010/317126

Judgment

1. HIS HONOUR: The plaintiffs, referred to by counsel as "the Carter interests", brought proceedings in the District Court against the defendant, Mr Kennedy, for an alleged breach of an agistment agreement. In 2006 the plaintiffs obtained judgment against Mr Kennedy and he was ordered to pay the costs of the proceedings. It is the process of assessment of those costs which brings the matter to this court and gives rise to the motions with which I am dealing.

1. The somewhat complex and protracted procedural steps relating to the costs are set out in the affidavit of the plaintiffs' solicitor, Mr Peter Raupach, of 25 June 2011, and affidavits of the defendant's solicitor, Mr Timothy Weissell, of 3 and 12 August 2011. It is not necessary to recount them all.

1. The costs were referred for assessment to Mr CJ Boyd-Boland. On 30 March 2009 he issued a certificate, pursuant to s 368 of the Legal Profession Act 2004, for an interim payment of $100,000 ("the Boyd-Boland assessment"). On the same day that certificate was filed in this court, pursuant to s 368(5), so as to become a judgment for that interim amount ("the Boyd-Boland judgment"). Filing of costs assessors' certificates is dealt with in UCPR Rule 36.10.

1. Subsequently, Mr Boyd-Boland was unable to complete his assessment due to illness, and the matter was referred for assessment to Mr John Sharpe. Mr Sharpe issued a certificate which recorded an assessment of the costs at $275,631.63, but which gave credit for the $100,000 ordered to be paid on an interim basis, and ordered the payment of the balance, $175,631.75 ("the Sharpe assessment"). That certificate was also filed in this court, and on 18 November 2009 judgment was entered for the amount ordered to be paid ("the Sharpe judgment").

1. Mr Sharpe also allowed the sum of $8,322.77 as the costs of the assessment itself, pursuant to s 369 of the Act, and issued a certificate to that effect. By s 369(7), that certificate could also be registered as a judgment. For reasons which do not appear, that was not done. To this I shall return.

1. On 27 November 2009, the defendant sought a review of the Sharpe assessment by the Review Panel, pursuant to s 373 of the Legal Profession Act. The Review Panel set aside Mr Sharpe's certificate and assessed the costs at $240,371.25. Credit was again given for $100,000 said to have been paid on an interim basis, so that the amount ordered to be paid was $140,371.25 ("the Review Panel assessment"). The Review Panel affirmed Mr Sharpe's certificate of determination of the costs of his assessment, that is, the amount of $8,322.77 to which I have referred.

1. The Review Panel also assessed the costs of the review at $3,922.87, and issued a certificate to that effect under s 379 of the Act. Those certificates were filed in this court, judgment being entered on 1 October 2010 for $144,294.12, being the Review Panel's revised estimate of the costs plus the costs of the review, less the $100,000 credit ("the Review Panel judgment").

1. Before me is a motion by the plaintiffs that those three judgments be set aside. The plaintiffs invoke the power of the court under UCPR r 36.15 to set the judgments aside on the basis that they were entered irregularly. It might appear surprising that the plaintiffs would seek to set aside judgments in their favour. It is necessary to sketch briefly the history of the proceedings, and in that process the reason for the course they have taken will appear.

1. On 18 August 2009 the plaintiffs issued a bankruptcy notice against the defendant, founded upon his failure to pay the interim costs of $100,000 the subject of the Boyd-Boland judgment. The defendant responded to this with an application to the Federal Magistrate's Court, dated 6 October 2009, to set the bankruptcy notice aside. A little earlier, on 2 October 2009, he filed a summons in the District Court instituting an appeal, pursuant to s 384 of the Legal Profession Act, against the Boyd-Boland assessment. On 15 September 2009, on application to this court, Kirby J ordered a stay of execution of the Boyd-Boland judgment pending the determination of the appeal, on condition that the defendant make an interim payment of $25,000 towards the costs within 28 days. That payment was made.

1. In the event, these proceedings were resolved by the parties by consent orders of 16 February 2010. Those orders were that the appeal be dismissed, the bankruptcy notice be withdrawn and the bankruptcy proceedings also be dismissed.

1. On 10 December 2010, the plaintiffs issued a second bankruptcy notice founded upon the Boyd-Boland judgment and the Review Panel judgment. After the addition of interest accrued on those judgments and the deduction of the $25,000 interim payment, the total debt claimed was $235,504.15. This also was met by the defendant's application, filed on 31 January 2011, to set the bankruptcy notice aside. However, on that same day the plaintiffs filed a creditor's petition.

1. On 3 March 2011, the defendant filed a second appeal to the District Court, on this occasion against the Boyd-Boland assessment and the Review Panel assessment. On the same day the defendant filed motions in this court seeking that the Boyd-Boland and Review Panel judgments be set aside. However, on 10 May 2011, on the defendant's application, Hoeben J dismissed those motions. This was in the teeth of opposition by the plaintiffs, who consented to the orders sought. That also is a matter to which I shall return. On 31 May 2011, the District Court appeal was dismissed by Curtis DCJ.

1. In the meantime there had been further developments in the bankruptcy proceedings. On 4 March 2011, in the Federal Magistrates Court, the defendant's application to set aside the bankruptcy notice was dismissed. On the same day the creditor's petition was adjourned, subject to a direction that the defendant transfer the amount of the debt claimed, $235,504.15, into the trust account of the plaintiff's solicitors, then to be transferred into a controlled money account in the defendant's name. Those steps were taken, and on 23 June 2011 the court ordered that that amount be released to the plaintiffs.

1. On 2 February 2011, the plaintiffs had filed a motion in the substantive proceedings in the District Court seeking an order for interest on the costs, pursuant to s 101(4) of the Civil Procedure Act 2005. However, it was subsequently realised that such a motion faced the difficulty that, the costs being now the subject of judgments in this court, any claim for interest on them had merged in those judgments and could not be pursued: Timms & Ors v Commonwealth Bank of Australia & Ors [No. 3] [2004] NSWCA 25, per Beazley JA at [9] - [11]. It is apparent from the transcript of the proceedings before Hoeben J that it was for this reason that the plaintiffs consented to the defendant's applications to set the judgments aside and opposed the dismissal of those applications.

1. On 31 May 2011, the day on which the second District Court appeal was dismissed, Judge Curtis also granted leave to the plaintiffs to discontinue their motion for interest on the costs. It is clear from the affidavit of Mr Raupach that the purpose of the motions before me is to enable an application for interest to be pursued.

1. Counsel for the plaintiffs, Mr Dupree, submitted that their motive for bringing these motions was irrelevant. He argued that the judgments were entered irregularly and, if that were established, they should be set aside under r 36.15. Relevantly for present purposes, sub-rule (1) provides:

"36.15(1) A judgment ... in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered ... irregularly ... ."

1. In written submissions, Mr Dupree pointed out that there was only one set of costs referable to the original District Court proceedings, that is, the costs referred to in the Review Panel certificate, and argued that it would be an irregularity for the Boyd-Boland judgment and the Sharpe judgment to remain extant. More importantly, it is common ground that at the time of the Sharpe certificate and the review certificate the interim payment of $100,000 ordered by Mr Boyd-Boland had not been paid. Accordingly, he argued, the Sharpe certificate was in error in allowing credit for that amount and the Review Panel certificate perpetuated that error. In addition, it was submitted, the Review Panel judgment did not accord with the Review Panel certificate in that it did not reflect the costs of the Sharpe assessment, $8,322.77, which the Review Panel affirmed.

1. I shall return to the question of the costs of the Sharpe assessment. The Sharpe assessment itself became ineffective upon its being set aside by the Review Panel, as did the judgment founded upon it. S 378(3) of the Legal Profession Act sets out certain consequences when the Review Panel sets aside the determination of a costs assessor. Relevantly for present purposes, that subsection provides:

"378(3) If the panel sets aside the determination of the costs assessor, the following provisions apply:

(a) ...

(b) ...

(c) if the costs assessor issued a certificate in relation to his or her determination under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment):

(i) the certificate ceases to have effect, and

(ii)any judgment that is taken to have been effected in relation to that certificate also ceases to have effect... ."

1. Accordingly, the Sharpe judgment has ceased to have effect by virtue of s 378(3)(c)(ii), and no purpose would be served by setting it aside. The Boyd-Boland judgment did not become otiose as a result of the Review Panel judgment. Indeed, as I have said, it was relied upon in the second bankruptcy notice. As to the Boyd-Boland and Review Panel certificates, I am not persuaded that there was any irregularity in their being entered as judgments. The scope of the expression "irregularly" in r0 36.15(1) was not examined in argument, but the submission of counsel for the defendant, Mr Bolger, was that both judgments were entered in accordance with the Act and the relevant rule.

1. In oral argument, Mr Dupree pointed out that the Boyd-Boland certificate was not accompanied by a statement of reasons in accordance with s 370(1)(a) of the Act. By that provision a costs assessor "must ensure" that a certificate under s 368 is accompanied by a statement of reasons for his or her determination. The absence of a statement of reasons might be explained by the fact that Mr Boyd-Boland's determination was only in respect of an interim payment. However that may be, the lack of a statement of reasons does not, in my view, invalidate the certificate as the foundation of a judgment under the relevant provisions. The judgment was entered on the face of the certificate itself, which is all that was required.

1. By the same approach I am not satisfied that there was a relevant irregularity in the fact that the Review Panel wrongly credited the defendant with that interim amount. Clearly, that was a factual error but one that, presumably, might have been set right by an approach to the Review Panel or by an appeal under the Act. The fact remains that judgment was entered in accordance with the Review Panel's certificates.

1. There remains the question of the costs of the Sharpe assessment, the amount of 8,000 odd dollars, which the Review Panel affirmed. As I have said, this was referred to in Mr Dupree's written submissions but it was not developed in oral argument.

1. An examination of the file relating to the Sharpe judgment (09/296855) reveals that the plaintiffs' solicitor filed an affidavit seeking the entry of judgment for the purpose of issuing a bankruptcy notice. Annexed to the affidavit, and described as "the Certificate of Determination of Costs", were Mr Sharpe's certificates in respect of his assessment of the District Court costs and the costs of the assessment itself. The affidavit stated that the defendant had not paid the interim amount of $100,000 ordered by Mr Boyd-Boland, and asserted that Mr Sharpe's final determination of costs was in the sum of $275,631.73. That, of course, was the total amount of the District Court costs assessed by Mr Sharpe before allowing the $100,000 credit. No reference was made in the body of the affidavit to the costs of the assessment. Moreover, the prescribed form for registration of the certificate showed the total amount to be enforced as $175,631.73, the amount of the assessment after credit for the interim payment. The costs of the assessment were not included. The judgment, of course, was for the amount set out in the registration form.

1. This procedure should be contrasted with the entry of judgment following the Review Panel assessment (10/317126), to which I have referred. On that occasion judgment was sought for the revised amount of costs together with the assessed costs of the review, and was entered accordingly. That, in my view, was the appropriate course. The plaintiffs did not ask for the costs of the Sharpe assessment, which the Review Panel had affirmed, to be incorporated in that judgment. It may be still open to the plaintiffs to register Mr Sharpe's certificate of the costs of his assessment, pursuant to s 369. However, that matter was not argued before me and I would prefer to express no view about it.

1. Mr Dupree also submitted that the defendant's motions to set aside the Boyd-Boland and Review Panel judgments, which were disposed of by Hoeben J, amounted to an admission on his part that there was a basis to set those judgments aside as having been entered irregularly. However, it appears to me that whether there was any relevant irregularity is a question of law, not a matter to be determined by the admission of a party. In any event, it is clear enough that the motions were filed with a view to maintaining the status quo pending the outcome of the second District Court appeal and did not amount to an admission of irregularity. Indeed, the alternative relief sought in each motion was that proceedings upon the judgment be stayed until further of this court.

1. Mr Dupree sought to characterise the irregularities for which he contended as amounting to "a miscarriage in the sense referred to" in Autodesk Inc v Dyason [No. 2] (1992-93) 176 CLR 300, citing the judgments of Mason CJ at 301-3 and Gaudron J at 322. However, the principles in that case have no application here. It was concerned with the discretion of a court which had heard a case on its merits to reopen the matter after judgment had been given: a jurisdiction which Mason CJ said was to be "exercised with great caution" (at 302). The present case is concerned with judgments entered, by virtue of a statutory scheme, to enable the enforcement of the decisions of another tribunal. Moreover, Autodesk was examining a discretion which might be exercised after judgment was pronounced but before it was perfected by entry (also at 302). The judgments in the present case have been entered.

1. This brings me to the question of discretion in this case. I am persuaded by the submission of Mr Bolger that, even if an irregularity were found in a judgment, r 36.15 preserves the discretion of the court to determine whether it should be set aside. So much is apparent from the terms of sub-rule (1), providing that a judgment "may, on sufficient cause being shown, be set aside" on one or other of the bases set out in the sub-rule. Even if irregularity of the kind contended for were established, Mr Bolger argued, the proper exercise of discretion would be to allow the judgments to stand. I agree, for the reasons which he advanced.

1. I have set out the somewhat tortuous procedural history of this matter following the assessment of the costs, finally coming to resolution in June 2011 with the payment to the plaintiffs of the amount claimed in the second bankruptcy proceedings. Those proceedings had been pursued on the basis of the Boyd-Boland judgment and the Review Panel judgment, the very judgments which the plaintiffs now seek to have set aside. This litigation has come to finality and should be laid to rest. It is here that the plaintiffs' motive in bringing these motions does become relevant. It would be plainly unjust to the defendant to set the judgments aside at this very late stage to enable a last ditch attempt on their part to pursue a claim for interest.

1. The motions are dismissed. If necessary, I shall hear the parties on costs.

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Decision last updated: 15 February 2013