Wende v Horwath (No 2)

[2015] NSWCA 416

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Wende v Horwath (No 2) [2015] NSWCA 416

Hearing dates:

8 July 2015

Decision date:

22 December 2015

Before:

Beazley ACJ at [1];
Basten JA at [91];
Adamson J at [142]

Decision:

(1)   Set aside orders (1), (4) and (6) made in the District Court on 23 October 2014.

 

(2)   Set aside orders (1)-(7) made by the District Court on 1 April 2015.

 

(3)   Remit the proceedings to the District Court for that Court to make final orders with respect to the applicants’ appeal, including, if thought appropriate –

 

(a)   orders remitting the assessment of costs to the Manager, Costs Assessment, for determination according to law;
(b)   orders as to the costs of the parties in the District Court in relation to proceedings subsequent to the first judgment of this Court;
(c)   an order specifying the amount of any costs payable in the District Court, including pursuant to order (2) made on 23 October 2014.

 (4)   Order the first respondent to pay 50% of the applicants’ costs in this Court.

Catchwords:

COSTS – costs assessment under the Legal Profession Act 2004 (NSW) – appeal from determination of review panel to District Court pursuant to s 384 – question of law determined by Court of Appeal and remitted to District Court

 

COSTS – costs of costs assessment – whether necessary to give a separate certificate in respect of each costs order subject of a costs assessment – whether parties’ costs of assessment included with certificate of costs or alternatively with certificate of costs of costs

 

COSTS – outcome of proceedings unlikely to alter substantive liability – effect on order as to costs

 

JUDGMENTS AND ORDERS – scope of remitter to District Court

 

COURTS – powers of District Court on appeal as to question of law

STATUTORY INTERPRETATION – Legal Profession Act 2004, s 384(2) – whether power enlivened on remittal to District Court after question of law determined by Court of Appeal

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 133, Form 45
District Court 1973 (NSW), Pt 3
Judiciary Act 1903 (Cth), s 32
Legal Profession Act 2004 (NSW), ss 367A, 368, 369, 378, 384, 385
Supreme Court Act 1970 (NSW), s 75A
Uniform Civil Procedure Rules 2005 (NSW) (UCPR)

Cases Cited:

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27
Allianz Australia Insurance Ltd v BlueScope Steel Ltd [2014] NSWCA 276; 87 NSWLR 332
Avery v Registrar of Births, Deaths and Marriages; Avery v State of New South Wales (Attorney General's Department) [2010] NSWCA 72; 79 NSWLR 354
B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2008) 74 NSWLR 481; [2008] NSWCA 187
Bale v Mills [2011] NSWCA 266; 81 NSWLR 498
Blair v Curran [1939] HCA 23; 62 CLR 464
Building Insurers’ Guarantee Corporation v The Owners Strata Plan 60848 [2012] NSWCA 375
Calandra v Murden [2015] NSWCA 231
Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; 147 CLR
Certain Lloyd’s Underwriters v Cross [2012] HCA 56; 248 CLR 378
Certain Lloyd’s Underwriters v Cross [2012] HCA 56
Connelly v Director of Public Prosecutions [1964] 2 AC 1254
Craig v South Australia [1995] HCA 58; 184 CLR 163
Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421
Edyp v Brazbuild Pty Ltd [2011] NSWCA 218
Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 182
Grassby v The Queen [1989] HCA 45; 168 CLR 1
Haddad v Chief Commissioner of State Revenue [2014] NSWCA 23; 92 ATR 274
Hobart City Council v Triffett [2001] TASSC 139; 10 TasR 471
House v The King [1936] HCA 40; 55 CLR 499
John Fairfax Publications Pty Ltd v Ryde Local Court [2005] NSWCA 101; 62 NSWLR 512
Kirk v Industrial Relations Commission; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales (Inspector Childs) [2010] HCA 1; 239 CLR 531
Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32
Lo v Chief Commissioner of State Revenue [2013] NSWCA 180; 85 NSWLR 86
Minister Administering the Crown Lands Act v Bathurst Local Aboriginal Land Council [2009] NSWCA 138; 166 LGERA 379
Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2009] NSWCA 300; 170 LGERA 162
Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; 198 CLR 435
Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355
Rail Corporation New South Wales v Brown [2012] NSWCA 296
SAS Trustee Corporation v Woollard [2014] NSWCA 75
Skulander v Willoughby City Council [2007] NSWCA 116; 73 NSWLR 44
Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28
Wang v Farkas (No 3) [2014] NSWCA 111
Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181
Wende v Horwath (NSW) Pty Ltd (2014) 86 NSWLR 674; [2014] NSWCA 170
Wende v Horwath (NSW) Pty Ltd (No 2) [2014] NSWDC 202; 19 DCLR 182
Wende v Horwath (NSW) Pty Ltd (No 3) [2015] NSWDC 73
Wollongong City Council v Legal Business Centre Pty Ltd (No 2) [2012] NSWCA 366

Category:

Costs

Parties:

Herbert Wende (First Applicant)
Margaret Wende (Second Applicant)
Mark Lloyd (Third Applicant)
Horwath (NSW) Pty Limited (First Respondent)
District Court of New South Wales (Second Respondent)

Representation:

Counsel:
M Green; G Babe (Applicants)
S Hughes; E James (First Respondent)

    Solicitors:
Clear Lawyers (Applicants)
Diamond Conway Lawyers (First Respondent)

File Number(s):

2015/22371

 Decision under appeal 

Court or tribunal:

District Court

Citation:

Wende v Horwath (NSW) Pty Limited (No 2) [2014] NSWDC 202
Wende v Horwath (NSW) Pty Limited (No 3) [2015] NSWDC 73

Date of Decision:

23 October 2014; 1 April 2015

Before:

P Taylor SC DCJ

File Number(s):

2012/48613

HEADNOTE

[This headnote is not to be read as part of the judgment]

Following the awarding of costs in Local Court, Supreme Court and Court of Appeal proceedings between the parties, a costs assessment was made, purportedly pursuant to s 353 of the Legal Profession Act 2004 (the 2004 Act). That assessment provided, on a single certificate, an assessment of the total costs in all of the proceedings. The assessment was the subject of a review by a review panel, an appeal to the District Court and then a judicial review of the District Court decision by this Court, being Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170 (the 2014 Judicial Review Decision). This Court set aside the certificates of costs assessment and of costs of costs assessment that had been issued on the basis that the 2004 Act did not permit a global costs assessment for multiple costs orders. The matter was remitted to the District Court to make any consequential orders and to take such steps as were necessary in relation to the costs of the costs assessments.

On the remittal, Taylor DCJ made orders with the effect that he:

(i) determined the sums payable under each of the costs orders, pursuant to the 2004 Act, s 384(2)(a), by calculating which of the items recorded in the reasons of the assessor and the review panel related to which costs order;

(ii)   “Note[d]” that the first applicant bore no liability in respect of the costs under the Supreme Court order and that such costs were subject to a partial discharge by reason of a payment by the Legal Aid Commissioner;

(iii)   ordered the applicants to pay the assessor’s and the review panel’s costs of the assessment in aggregate amounts;

(iv)   disaggregated the parties’ costs incurred in the assessment and ordered that they be added to the total sums determined to be payable in respect of each costs order; and

(v)   ordered that the applicants pay 80 per cent of the first respondent’s costs in the District Court prior to the 2014 Judicial Review Decision and all of the first respondent’s costs in the District Court thereafter, and ordered that those costs be paid in a specified gross sum.

The applicants sought judicial review of his Honour’s decision.

Held, setting aside the orders of Taylor DCJ in part and remitting the matter to the District Court:

In relation to issues (i) and (ii):

(1)   The determinations made by the costs assessor and the review panel did not cease to have any legal force or effect on the setting aside of the certificate of costs assessment, and it was permissible for the primary judge to take them into account. [35]-[41] (Beazley ACJ); [99]-[100] (Basten JA); [141] (Adamson J)

Blair v Curran [1939] HCA 23; 62 CLR 464; Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 182; Calandra v Murden [2015] NSWCA 231

(2) The primary judge did not err in finding that the District Court’s power to determine or remit the application pursuant to s 384(2) were enlivened after the question the subject of the appeal from the review panel was determined by the Court of Appeal. [44]-[47] (Beazley ACJ); [101]-[103] (Basten JA); [141] (Adamson J)

Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27; Certain Lloyd’s Underwriters v Cross [2012] HCA 56; 248 CLR 378; Rail Corporation New South Wales v Brown [2012] NSWCA 296

(3) There was no power for the District Court, on an appeal as to a matter of law pursuant to s 384(1) of the 2004 Act, to make findings of fact or to exercise a re-hearing function, as it did in disaggregating the sums payable under each of the costs orders. [55]-[65] (Beazley ACJ); [104]-[113] (Basten JA); [141] (Adamson J).

Minister Administering the Crown Lands Act v Bathurst Local Aboriginal Land Council [2009] NSWCA 138; 166 LGERA 379; Edyp v Brazbuild Pty Ltd [2011] NSWCA 218; B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSWLR 481; Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390.

(4)   The form of the orders by which the primary judge determined the sums payable under each of the costs orders, which “noted” factors requiring the adjustment of the sums determined but did not express those sums to be subject to those factors, was such that it was necessary to set them aside in any case. [87] (Beazley ACJ); [130]-[131] (Basten JA); [141] (Adamson J).

(5) There remains a question whether the District Court, in exercising its powers under s 384 of the 2004 Act may enter a judgment for the amount which it determined pursuant to s 384(2)(a), or alternatively is required to remit the matter to the costs assessor to issue the appropriate certificate. [114]-[116] (Basten JA); [143] (Adamson J).

In relation to issue (iii):

(6)   Just as it is necessary to give a separate certificate in respect of each costs order that is the subject of a costs assessment, it is also necessary to give a separate certificate in respect of the costs of each separate certificate. The primary judge erred in making orders for the payment of such costs in aggregate. [67]-[69] (Beazley ACJ); [141] (Adamson J).

In relation to issue (iv):

(7) Amounts for the parties’ costs of a costs assessment should be included in a certificate of the costs of costs assessment issued under s 369 of the 2004 Act, rather than a certificate of costs assessment under s 368. [117]-[128] (Basten JA).

Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181

(8)   No final determination of the question described in (7) need be made as the orders giving effect to the primary judge’s determination of the sums payable must be set aside in any case, and the point was not subject of full submissions raised at the appropriate time. [70]-[76] (Beazley ACJ); [141] (Adamson J).

Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; 147 CLR 246; Wollongong City Council v Legal Business Centre Pty Ltd (No 2) [2012] NSWCA 366; Bale v Mills [2011] NSWCA 266; 81 NSWLR 498; Hobart City Council v Triffett [2001] TASSC 139; 10 TasR 471; Fifteenth Eestin Nominees Pty Ltd v Rosenberg [2009] VSCA 178; 24 VR 155; Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181

In relation to issue (v):

(9)   There was no error of law in the primary judge’s determination that the applicants pay 80 per cent of the first respondent’s costs in the District Court prior to the 2014 Judicial Review Decision. [135]-[136] (Basten JA); [141] (Adamson J); contra [77]-[83] (Beazley ACJ).

(11)   The basis upon which the primary judge made orders with respect to the costs in the District Court after the 2014 Judicial Review Decision was in error such that they must be set aside. [86]-[87] (Beazley ACJ); [137] (Basten JA); [141] (Adamson J).

Costs of the present proceedings:

(12)   As the applicants’ success in this Court is unlikely to vary their financial liabilities as ultimately determined, they should recover only 50 per cent of their costs of the present proceedings. [139] (Basten JA); [147] (Adamson J); contra [90] (Beazley ACJ).

Skulander v Willoughby City Council [2007] NSWCA 116; 73 NSWLR 44

Judgment

1. BEAZLEY ACJ: These proceedings relate to a costs assessment that was made following Local Court, Supreme Court and Court of Appeal proceedings between the parties. The costs assessment was the subject of review by a review panel, an appeal to the District Court and then a judicial review by this Court.

2. On 2 June 2014, this Court: set aside orders made in the District Court on 15 February 2013; set aside the certificate of costs assessment and the certificate of the costs of the costs assessment; and remitted the matter to the District Court to make any consequential orders and to take such steps as were necessary in relation to the costs of the costs assessments: Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170 (the 2014 Judicial Review Decision).

3. On the remittal to the District Court, P Taylor SC DCJ made orders on 23 October 2014 and 1 April 2015, wherein his Honour determined the costs payable by the applicants to the first respondent in respect of each of the three proceedings that had been subject of the costs assessment and made consequential costs orders in the matter, including in respect of the costs of the costs assessment.

4. The applicants sought judicial review of the primary judge’s determination. They contended that his Honour made orders that went beyond the limited scope of the remittal ordered by this Court in the 2014 Judicial Review Decision. They contended that as the Court of Appeal had determined the substantive questions the subject of the original appeal to the District Court, there was no extant issue that remained to be determined by the District Court.

5. Integral to this contention was that his Honour misconstrued or misapplied the power conferred on the District Court by the Legal Profession Act 2004 (NSW) (the 2004 Act), s 384(2)(a) and thus exceeded the jurisdiction of the District Court.

6. The applicants also challenged the exercise of his Honour’s discretion in respect of costs orders he made, being orders 1, 2, 4 and 6 made on 23 October 2015 and orders 5 and 6 made on 1 April 2015. Those orders are set out below.

Background

7. The history of the costs assessment process in respect of the proceedings in the Local Court, District Court and Supreme Court was reviewed by the Court in the 2014 decision. In brief, the applicants had costs orders made against them in each of the three proceedings. Those costs had been the subject of a costs assessment purportedly pursuant to s 353 of the 2004 Act. The costs assessor made a single determination of the fair and reasonable amount of the costs ordered and issued a single certificate of costs assessment and a certificate of the costs of the costs assessment.

8. On review to a review panel pursuant to s 373 of the 2004 Act, the determination of the costs assessor was upheld except with regard to a minor miscalculation. The applicants then appealed to the District Court from the determination of the review panel pursuant to s 384 of the 2004 Act. On 15 February 2013, the District Court affirmed the decision of the review panel.

9. The applicants sought judicial review of the District Court decision by this Court, which, by its 2014 Judicial Review Decision, made the following orders:

“(1)   Set aside the orders made in the District Court on 15 February 2013 dismissing the appeal from the determination of the Review Panel dated 6 January 2012.

(2)   In place of the orders made in the District Court:

(a)   set aside the certificates as to determination of costs issued by the Review Panel on 6 January 2012;

(b)   set aside the certificates as to determination of costs issued by Ms Dulhunty, Costs Assessor, on 11 January 2011.

(3)   Remit the matter to the District Court to make any consequential orders with respect to the appeal to that Court and to take such steps as it considers necessary with respect to the costs of the assessments undertaken by Ms Dulhunty and the Review Panel.

(4)   Order the respondent to pay the applicants’ costs in this Court.”

10. On the remittal of the matter to the District Court, the primary judge determined the costs payable pursuant to the three costs orders that had been made against the applicants. On 23 October 2014, his Honour made the following orders:

“1.   Order that [the applicants] pay [the first respondent’s] costs of the District Court proceedings occurring after the Court of Appeal proceedings, up to the date of this judgment.

2.   Order that [the applicants] pay 80% of [the first respondent’s] costs of the District Court proceedings occurring before the Court of Appeal proceedings.

3.   Stand over to a date to be notified by my associate the question of whether the amount of costs in orders 1 and 2 should be the subject of a lump sum order.

4. Order that the assessed costs of the Local Court, Supreme Court and Court of Appeal be determined by the District Court, under s 384(2)(a) of the Legal Profession Act 2004 in accordance with the reasons of the assessor, Ms Dulhunty, and the Review Panel.

5.   Stand over to a date to be notified by my associate the question of the quanta of those three determinations, in the absence of prior notification by the parties of agreement as to quanta.

6.   Order [the applicants] to pay the costs of the assessment in the sum of $13,128.76 and the costs of the Review Panel in the sum of $5,818.

7.   Stand over any other residual matters to a date to be notified by my associate.”

11. On 1 April 2015, the primary judge made the following further orders:

“1. Determine the costs payable pursuant to s 384(2)(a) of the Legal Profession Act 2004:

(a)   under the Local Court order to be $107,719.70;

(b)   under the Supreme Court order to be $39,078.38; and

(c)   under the Court of Appeal order to be $28,254.70.

2.   In order to give effect to order (1) above, order [the applicants] to pay to [the first respondent] the amounts of costs determined in order (1)(a), (b) and (c) above.

3.   Note that [the first applicant] Herbert Wende, was granted Legal Aid in respect of the costs of the Supreme Court proceedings and bears no further liability in respect of the costs specified in order (1)(b) above.

4.   Note that the Legal Aid Commissioner has paid the sum of $15,000 in partial discharge of the costs specified in order (1)(b) above.

5.   [The applicants] to pay [the first respondent’s] costs in the proceedings from 23/10/14 until today.

6.   Order that [the first respondent] be entitled to a specified gross sum in respect of:

(a)   the costs the subject of orders (1) and (2) made on 23/10/14; and

(b)   the costs referred to in order (5) above.

7.   Determine that the specified gross sum referred to in order (6) be the total sum of $84,496.70, representing $64,496.70 in respect of order 6(a) and $20,000 in respect of order (6)(b).

8.   Stay the entry of these orders for 14 days.

9.   Grant liberty to [the applicants] to make any application in respect of the $20,000 referred to in order (7) within 14 days hereof.”

Legislative scheme

12. The costs assessment process, including the review by the review panel and the appeal to the District Court, was conducted under the 2004 Act. That Act was repealed on 1 July 2015 and the Legal Profession Uniform Law Application Act 2014 (NSW) commenced on the same date. However, it was common ground that the Uniform Law did not apply in this case.

12. Part 3.2, Div 11 of the 2004 Act made provision for costs assessment. Subdivision 5 provided for a review of a costs assessor’s determination by a review panel. Subdivision 6 provided for appeals against decisions of a costs assessor to the District Court. Pursuant to s 382, subdiv 6 applied to determinations of a review panel under subdiv 5 as if references to a costs assessor in subdiv 6 were references to the review panel. The effect of s 382 was that an appeal lay from the decision of a review panel to the District Court pursuant to s 384.

13. Section 384, which was the provision under which Taylor DCJ proceeded when the matter was remitted pursuant to the Court’s orders made on 2 June 2014, provided:

“384   Appeal against decision of costs assessor as to matter of law

(1)   A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision.

(2)   After deciding the question the subject of the appeal, the District Court may, unless it affirms the costs assessor’s decision:

(a)   make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or

(b)   remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application.

(3)   On a re-determination of an application, fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given.”

Exercise of the Court’s supervisory jurisdiction

15. It is useful at the outset to keep two matters at the forefront of this Court’s consideration. First, as the proceedings before the Court were brought pursuant to the Supreme Court Act 1970 (NSW), s 69 by way of judicial review, the Court is concerned with error of law on the face of the record and/or jurisdictional error. The record, for the purpose of such an application includes the reasons of the inferior court for its ultimate determination: s 69(4).

16. Secondly, the orders the Court may make in the exercise of its jurisdiction under s 69 are not unlimited. Section 69 continues the Supreme Court’s former jurisdiction to issue prerogative writs. Subsection (1)(e) provides the Supreme Court the power, by way of judgment or order, to grant the relief that would have formerly been available in that jurisdiction.

17. A superior court’s supervisory jurisdiction, not being an appellate process, does not permit the superior court to substitute its own orders for those that it considers the inferior court ought to have made: Craig v South Australia [1995] HCA 58; 184 CLR 163. Rather, where the writ ran, the appropriate order was the quashing of the impugned order or decision upon one or more of a number of established distinct grounds, including error of law on the face of the record. The effect of the decision in Kirk v Industrial Relations Commission; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales (Inspector Childs) [2010] HCA 1; 239 CLR 531 was that the same position pertained when this Court was exercising its s 69 jurisdiction: see at [110].

18. The High Court has taken a different position in relation to its own jurisdiction on the basis that it was empowered to make the order for costs that should have been made by the Court whose decision was being judicially reviewed pursuant to the Judiciary Act 1903 (Cth), s 32: Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421. In this Court, a question has been raised, but not decided, as to whether this Court on a s 69 application, could make substantive orders, including in respect of costs where only one result was open as a matter of law: see SAS Trustee Corporation v Woollard [2014] NSWCA 75 per Basten JA, at [108]; Wang v Farkas (No 3) [2014] NSWCA 111 per Basten JA at [10].

19. It should be noted that in the 2014 Judicial Review Decision where Basten JA determined that the Court could and should itself make orders where such orders were necessary in law, I agreed with the orders proposed by his Honour. I should state that on reflection, not only does that question remain open, I consider the better view is that this Court does not have power to make substantive orders on an application brought pursuant to s 69. There is no exact legislative equivalent to the Judiciary Act, s 32 that governs the relief this Court may give. There must be a question whether the Supreme Court Act, s 23, which provides that the Court “shall have all jurisdiction necessary for the administration of justice in New South Wales”, confers power on the Court to make orders of a kind which hitherto had not been within its power to make: see Craig v South Australia.

20. However, as the orders made in the 2014 Judicial Review Decision have not been challenged as being beyond power, they constitute the regular orders of the Court.

Proper construction of s 384

Submissions

21. The applicants, by way of preliminary submission, pointed out that s 384 contained two distinct parts or steps. First, a party could appeal to the District Court as to a matter of law from a decision of a costs assessor, or, by virtue of s 382, from a decision of a review panel: subs (1). Secondly, the appeal mechanism having been engaged, the District Court’s power was confined to affirming the decision of the costs assessor or, if it did not affirm the decision, to take one or other of the steps specified in subs (2). Subsection (3) was a procedural provision permitting additional evidence if there was to be a re-determination of an application. However, on the applicants’ construction of the provision, the power to adduce fresh or additional evidence only arose on a remittal to a costs assessor.

22. The applicants contended that the primary judge erred, at [23], in his construction of s 384(2), where his Honour stated:

“In my view, the opening words of s 384(2) should be read as meaning ‘After the question the subject of the appeal is decided’ to take account of the possibility that the decision of the District Court might ultimately be made by the Court of Appeal in the manner adopted by Basten JA at [95] and [101]. Thus, the powers under s 384(2) are enlivened.”

23. The applicants contended that, in so construing s 384(2), his Honour failed to have regard to the text of the statutory provision, before having regard to the purpose of the statute. In effect, they submitted, his Honour had “reversed the process of construction and worked backwards”: see Certain Lloyd’s Underwriters v Cross [2012] HCA 56; 248 CLR 378, at [23]-[25]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27.

24. In Alcan (NT) Alumina, the plurality, at [51], observed in relation to a revenue statute, that fixing upon the general legislative purpose of raising revenue carried the danger of failing to give proper attention to the text of the particular provision in question. The applicants contended that his Honour had committed this error.

25. The applicants also contended that s 384(2), properly construed, required there to be an extant decision of a costs assessor or review panel in order for the District Court to exercise one or other of the powers conferred by the subsection. This argument involved consideration of the effect of the issue of a certificate of costs assessment and, in turn, of the effect of the Court of Appeal’s orders which set aside the costs certificates that had been issued.

26. The applicants contended that the effect of issuing a certificate of costs assessment was to cause the determination of costs assessment to merge in the certificate. Thus, on the applicants’ contention, once a certificate of costs assessment was set aside, the determination of the costs assessor or review panel ceased to have any effect. The purport of this submission was that when this Court set aside the certificates, the underlying determinations were thereby set at large.

27. The applicants contended that, as was made apparent by Basten JA at [101] of the 2014 Judicial Review Decision, the orders made by the Court on that occasion were intended to be final. The consequence of this, according to the applicants, was that the costs certificate issued in respect of the costs assessment and the costs certificate issued in respect of the costs of the costs assessment having been set aside, nothing remained to be done by the District Court. Rather, the costs assessment process provided for by Pt 3.2, Div 11 of the 2004 Act was required to be recommenced.

28. It followed, on this argument, that the effect of the Court of Appeal setting aside the certificates was that there was no extant determination of costs assessment and, therefore, on the remittal to the District Court, there was nothing to engage s 384. The only outstanding matter for the District Court to determine was the costs of the proceedings before it, as those costs could not be the subject of an order by the Court of Appeal exercising its supervisory jurisdiction: see Kirk v Industrial Relations Commission v WorkCover Authority of New South Wales (Inspector Childs).

29. The result, according to the applicants, was that they still had not had a determination of the application for a costs assessment by a costs assessor to which they were entitled pursuant to s 367. The applicants contended that this followed from my reasons at [12] and Basten JA’s reasons at [95]-[101] of the Court’s 2014 decision and, in particular, [95] and [101].

30. At [12], I said:

“The matter can also be tested by the circumstance that a party seeking a costs assessment is not required to provide a bill of costs. If that had occurred in this case, the ability to ‘sort out’ what the determination was in respect of each costs order may not have been even a possibility. However, the important and indeed only relevant matter is that it is not for parties or a review panel or the court to ‘sort out’ what the costs assessor did. The statute prescribes what must be done. I have concluded that the statute requires a determination in respect of each costs order that is made and for which an application for assessment is made.”

31. At [95], Basten JA said:

“The final question is whether this Court can set aside the certificates issued by the review panel and Ms Dulhunty, or whether the matter must be remitted to the District Court for it to take that step. Where the conclusion follows as a matter of law, and no alternative order is available, the just, quick and cheap resolution of the real issues would appear to require that orders be made by this Court: Civil Procedure Act, s 56(1). On one view, it would be open to this Court, having set aside the judgment of the District Court, to grant declaratory relief with respect to the invalidity of the certificates. Such a power derives from the conferral of ‘all jurisdiction which may be necessary for the administration of justice’ in the State, and the obligation to grant ‘all such remedies as any party may appear to be entitled to in respect of any legal or equitable claim brought forward in the proceedings so that, as far as possible, all matters in controversy between the parties may be completely and finally determined, and all multiplicity of legal proceedings concerning any of those matters avoided’: Supreme Court Act, ss 23 and 63. (See also s 75 with respect to the grant of declaratory relief.)”

32. At [101], his Honour stated:

“Both Kirk and Edwards were concerned with orders as to costs. In each case, the setting aside of the decision below constituted final substantive relief. In the present case, setting aside the judgment of the District Court will not give effect to the legal conclusion upon which this judgment is based, namely that the certificates of assessment were invalid. Without suggesting that this Court has power to make orders in substitution for those made in the District Court otherwise than in circumstances where the orders to be made are necessary in law, that qualification is satisfied in the present case. Accordingly, this Court can and therefore should make the orders which should have been made in the District Court, in exercise of the statutory powers referred to above.” (emphasis added)

(The applicants placed particular reliance on the emphasised sentence in this paragraph.)

33. The applicants also contended that if s 384 was engaged, so that there was a discretion as to whether to proceed under s 384(2)(a) or s 384(2)(b), the exercise of the primary judge’s discretion had miscarried.

34. The applicants’ submissions on s 384, in effect, raised four issues: first, the effect of the issue of the costs certificates, with respect to the underlying determinations; secondly, the effect of the setting aside of the costs certificates in the 2014 Judicial Review Decision; thirdly, whether his Honour was correct in his interpretation of the phrase “after deciding the question the subject of the appeal” in s 384(2); and fourthly, the nature of the powers that were available to his Honour pursuant to s 384(2)(a).

Effect of the issue of the costs certificates

35. The applicants’ submission, that the determination made by the costs assessor, as varied by the review panel, “merged in the certificate”, was presumably a reference to the legal principle that a cause of action merges in a judgment so as to create a res judicata: see Blair v Curran [1939] HCA 23; 62 CLR 464 at 532; Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28. In my opinion, this submission involves a misapprehension both of the principle of res judicata and the doctrine of merger and of the effect of the issue of a costs certificate.

36. It needs to be observed at the outset that the principle of res judicata relates to the exercise of judicial power. The effect of a judgment or order made or given by a judicial officer is that the rights asserted by a party in a cause cease to have effect and merge in the final judgment: see Tomlinson v Ramsey Food Processing at [20]. A costs assessor is not a judicial officer. Nor is there any proceeding or judicial process involved in a costs assessment unless and until there is an appeal to the District Court. Rather, so far as is relevant to this matter, the costs assessment process is a non-judicial process whereby there is a determination of the fair and reasonable costs of a proceeding in a court, or an aspect of a proceeding in a court, in respect of which a costs order has been made. At the costs assessment or review stage, therefore, there was no ‘merger’, as that doctrine properly operates. That then raises the question as to the effect accorded by statute to the issue of a costs certificate.

37. Pursuant to s 367 of the 2004 Act, a costs assessor was required to determine an application for costs assessment. Of its own, that determination created no enforceable right. Section 368 directed the costs assessor to issue a costs certificate. The certificate was a statement of the costs assessor’s determination, relevantly in this case, of the fair and reasonable amount of the party/party costs of the proceedings subject of the costs order. The issue of the certificate was thus a statutory act, which again, of itself is of no force and effect beyond being a statement of the determination.

38. Operative effect was given to the certificate, and thus to the underlying determination by s 368(5), which provided:

“368   Certificate as to determination

…

(5)   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.”

39. The statutory effect of registration of the certificate was recognised in Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 182 at [8] per Giles JA. Handley AJA, at [42], considered that entry of judgment on a filed certificate was a ministerial act. In Calandra v Murden [2015] NSWCA 231, at [5], this Court, in considering the process of costs assessment for which the 2004 Act provided, explained the operation of s 368(5) in the following terms:

“Section 368(5) is a deeming provision. Where its premise is satisfied and a certificate assessing costs is filed there is deemed ‘with no further action’ to be a judgment of the court whose jurisdiction has been invoked: see Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 at [8] (per Giles JA), [42] (per Handley AJA, Macfarlan JA agreeing). Section 133 of the Civil Procedure Act and provisions of the UCPR give effect to that deeming. Subsection 133(1) provides that a judgment of the court, here the Local Court, may not be enforced until it has been entered in accordance with the UCPR. As there used, ‘judgment’ includes a determination of a costs assessor as an ‘adjudication or award of a person having authority to make an adjudication or award’ (s 133(2)). UCPR, r 36.10 provides that the costs assessor’s certificate may be filed in the proceedings to which it relates, or in ‘fresh proceedings’, whether in the same or another court. The approved form, Form 45, requires the filing party to provide details of any payments made or credits accrued since the relevant assessment and to state the total amount ‘to be enforced as at date of filing’. UCPR, r 36.11, which makes clear by r 36.11(3) that a judgment includes a determination that has been filed in the court, provides that a judgment is taken to have been entered when it is recorded in the court’s computerised court record system.”

40. As is apparent from this passage, nothing ‘merged’ in the costs certificate. The certificate was a statement of the fair and reasonable costs ordered to be paid by one party to another. It did not, of itself, determine the amount that one party presently owed to another pursuant to a costs order. At the time of filing, the enforcing party was required, in accordance with District Court Form 45, to state any amounts paid or credits accrued in respect of such costs. Upon filing, there was a deemed judgment for the amount that was thereby due. That may or may not have been the amount of the determination specified in the costs certificate. It was only upon the entry of judgment, following the filing of the certificate and Form 45, that there could be said to be a merger of the amount of costs that was owing pursuant to this process in the deemed judgment of the court.

41. It follows, in my opinion, that even after this Court ordered that the certificates of costs assessment be set aside, there remained extant the determination of the review panel. That then raised the question of the effect of this Court’s orders in the 2014 Judicial Review Decision.

The 2014 Judicial Review Decision and the effect of the setting aside of the costs certificates

42. This Court, in the 2014 Judicial Review Decision, by majority, held that the costs determination undertaken by the costs assessor was impermissible under the statute. According to the view I took at [11], although it was permissible for a single application to be made for multiple costs orders, the legislation did not permit a global costs assessment as had been undertaken by the costs assessor. Basten JA, at [43] ff, considered that a separate application was required in respect of each order for costs that was subject of the assessment. His Honour also considered, at [47], that at least in the circumstances of this case, a global certificate was legally inappropriate. Barrett JA held that the certificates were validly issued as the assessor’s reasons disclosed the amounts assessed in respect of each costs order: see [201].

42. Further, as I have indicated, this Court, in the 2014 Judicial Review Decision, ordered that the costs certificate be set aside as invalid. Had that order not been made, this Court’s reasons would have required the District Court to do so. Once the costs certificates were set aside, there was no statement of the costs determination that had been made by the costs assessor and no mechanism upon which the provisions of the legislation to which I have referred could operate. There was thus no means by which the first respondent could enforce the orders for costs that had been made in its favour in the proceedings in the Local, District and Supreme Courts.

Was s 384(2) enlivened “after the question the subject of the appeal was decided”?

44. Section 384(1) made provision for any appeal to the District Court “as to a matter of law arising in the proceedings”. Upon deciding the question subject of the appeal, unless the Court affirmed the costs assessor’s decision, the District Court, pursuant to s 384(2)(a) “may make such determination in relation to the application as … should have been made by the costs assessor”. The effect of the majority reasons in the 2014 Judicial Review Decision was that the costs assessor’s determination was not made according to law. Upon remittal, the District Court was required to determine the applicants’ appeal pursuant to s 384 of the 2004 Act, in accordance with this Court’s determination.

45. As noted above, the applicants contended that the powers conferred by s 384(2) were only enlivened after the District Court itself decided the question the subject of appeal from the costs assessor, and were therefore not available in a case such as this where there had been a remittal back to the District Court following judicial review. In support of that contention, the applicants submitted that statutory construction proceeded by way of a strict two-stage process, in which the purpose of a provision may not be considered unless doubt remained after the consideration of the meaning of the text of the provision itself.

46. That submission does not accurately reflect the principles of statutory construction as stated by the High Court. See Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue at [47]; CertainLloyd’s Underwriters v Cross [2012] HCA 56 at [23]-[25] per French CJ and Hayne J. The principles stated in those authorities were neatly encapsulated by Bathurst CJ in Rail Corporation New South Wales v Brown [2012] NSWCA 296 at [39], as follows:

“… the process of construction begins with the construction of the ordinary and grammatical meaning of the words in question, having regard to their context and legislative purpose …”

47. Nor does the applicants’ construction give effect to the process that occurs upon remittal. The effect of this Court setting aside the orders originally made by the District Court was that there remained for determination the applicant’s appeal to that Court. That appeal had to be determined in accordance with the law as this Court held it to be. There was no error by the primary judge in determining, at [23], that the powers of the District Court under s 384 were enlivened “after the question the subject of the appeal is decided”. This Court determined that the costs assessment process had proceeded before the assessor and the review panel in a way that was impermissible. The consequence of that determination was that the District Court, as a matter of law, could not affirm the determination of the costs assessor. That being so, the powers conferred on the Court by s 384(2) fell to be exercised.

Powers available under s 384(2)(a)

48. The applicants raised a further question as to whether, having determined to proceed under s 384(2)(a), the primary judge had the power to make an order in a money sum or whether, having determined the fair and reasonable costs in respect of each proceeding the subject of a costs order, his Honour was required to issue a costs certificate, or alternatively was required to remit the matter to the costs assessor to issue the costs certificates. For the purposes of dealing with this question, it is convenient to leave the assessment of the costs of the costs assessment to one side.

49. The District Court, as an inferior court of record, has such jurisdiction, and within jurisdiction may exercise such powers as are conferred on it by statute. In this case, the District Court had the jurisdiction conferred on it by s 384(1) and, in the exercise of that jurisdiction, had the powers given to it under s 384(2). The District Court also had, by necessary implication, everything necessary for the exercise of its powers. In Grassby v The Queen [1989] HCA 45; 168 CLR 1 at 16-17 Dawson J stated, in respect of a magistrate’s court:

“… It is in that way that the Supreme Court of New South Wales exercises an inherent jurisdiction. Although conferred by statute, its powers are identified by reference to the unlimited powers of the courts at Westminster. On the other hand, a magistrate's court is an inferior court with a limited jurisdiction which does not involve any general responsibility for the administration of justice beyond the confines of its constitution. It is unable to draw upon the well of undefined powers which is available to the Supreme Court. However, notwithstanding that its powers may be defined, every court undoubtedly possesses jurisdiction arising by implication upon the principle that a grant of power carries with it everything necessary for its exercise … Those implied powers may in many instances serve a function similar to that served by the inherent powers exercised by a superior court but they are derived from a different source and are limited in their extent. The distinction between inherent jurisdiction and jurisdiction by implication is not always made explicit, but it is, as Menzies J. points out [Reg. v. Forbes; Ex parte Bevan [1972] HCA 34; (1972) 127 CLR 1, at p 7], fundamental.”

50. In Pelechowski v Registrar, Court of Appeal (NSW) [1999] HCA 19; 198 CLR 435, Gaudron, Gummow and Callinan JJ stated, at 452:

“The term ‘necessary’ in such a setting as this is to be understood in the sense given it by Pollock CB in The Attorney-General v Walker, namely as identifying a power to make orders which are reasonably required or legally ancillary to the accomplishment of the specific remedies for enforcement provided in Div 4 of Pt 3 of the District Court Act. In this setting, the term ‘necessary’ does not have the meaning of ‘essential’; rather it is to be ‘subjected to the touchstone of reasonableness’.” (citations omitted)

51. The test of necessity has been expressed variously in different authorities but to the same effect. Thus, in Connelly v Director of Public Prosecutions [1964] 2 AC 1254 Lord Morris of Borth-y-Gest stated, at 1301:

“There can be no doubt that a court which is endowed with a particular jurisdiction has powers which are necessary to enable it to act effectively within such jurisdiction.”

52. However, as Spigelman CJ observed in John Fairfax Publications Pty Ltd v Ryde Local Court [2005] NSWCA 101; 62 NSWLR 512 at [45]:

“… what is reasonably necessary cannot be stretched to encompass what is merely desirable or useful. It remains a test of necessity.”

53. Spigelman CJ further observed, at [46], that in Pelechowski, the High Court applied the test of reasonable necessity to give effect to the express powers of the District Court.

54. As described above, the legislative mechanism for the enforcement of the costs assessor’s determination was by way of a deemed judgment upon the filing of a certificate of costs assessment in the Registry of the Court with jurisdiction to order payment in the sum assessed. The amount of the costs liability so enforceable is the assessment carried out by a non-judicial officer of the costs reasonably incurred, with credit given for amounts already paid. Enforcement action can then be taken in the usual course as on a judgment debt: see the Civil Procedure Act 2005 (NSW), s 133 and Form 45. Without such legislative mechanism, it would be necessary for a party who had had costs assessed to bring proceedings for debt in a court of competent jurisdiction so as to obtain a judgment which would then be capable of enforcement.

55. It is at this point necessary to return to the jurisdiction that was conferred on the District Court by s 384. That section provided for an appeal to the District Court on a question of law: s 384(1).

56. Section 384(2) specifies the power the Court may exercise when it does not affirm the decision of the costs assessor. The power so conferred is either to make such determination as the Court considered the costs assessor should have made: subs (2)(a); or to remit to the costs assessor “to re-determine the application”: subs (2)(b). For the reasons I will explain, the language of subs (2)(b) is of particular importance.

57. Section 384(3) then provides that on a “re-determination of an application” fresh or additional evidence may be received. A “re-determination of an application” is the process that occurs when the District Court exercised the power under subs (2)(b). Section 384(3) had no application to a determination made under subs (2)(a). That then raises the question as to the extent of the power of the court when it exercised the power under that provision.

58. There is a long line of authority that where an appeal is limited to a question of law, the appellate body is limited to a determination of the question of law and is not permitted to engage in a fact finding process or to otherwise engage in a merits review of the decision of the lower court or tribunal.

59. Minister Administering the Crown Lands Act v Bathurst Local Aboriginal Land Council [2009] NSWCA 138; 166 LGERA 379 involved a claim by an Aboriginal Land Council in which the relevant dispute related to whether the land was lawfully used and occupied by the Crown at the time of the claim. An appeal was brought by the Minister under s 57 of the Land and Environment Court Act 1979 (NSW), which provides, relevantly:

“(1)   A party to proceedings in Class 1, 2, 3 or 8 of the Court’s jurisdiction may appeal to the Supreme Court against an order or decision (including an interlocutory order or decision) of the Court on a question of law.

(2)   On the hearing of an appeal under subsection (1), the Supreme Court shall:

(a)   remit the matter to the Court for determination by the Court in accordance with the decision of the Supreme Court, or

(b)   make such other order in relation to the appeal as seems fit.”

60. At [63], having found that the land was lawfully used and occupied, Ipp JA held:

“In coming to this conclusion I am not making any factual findings. The exercise is akin to that described by Spigelman CJ in Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council [2007] NSWCA 300; (2007) 71 NSWLR 230 at [89] ‘What is involved is the formulation of a judgment on the basis of agreed facts’. The only difference is that this case modifies the formulation of a judgment on the basis of facts found by the primary judge and facts that are not in dispute.”

61. At [195], Basten JA held:

“It is a matter of some significance in the present case that the Minister’s right, and the jurisdiction of this Court, require the identification of an order or decision of the L&E Court on a question of law. As has been explained in respect of both this provision and others in similar form:

(1) identification of a decision on a question of law in the Court below is not merely a precondition to the right of appeal, but identifies the subject matter of the appeal;

(2) to obtain the intervention of this Court, the question of law must have been decided erroneously;

(3) the power of this Court is limited to the correction of the legal error and this Court will not be able to make final orders disposing of the proceedings unless, on the findings made by the L&E Court and unaffected by legal error, only one conclusion is open, and

(4) this Court may exercise a discretionary power with respect to costs, based on the primary findings of fact made in the L&E Court.

These principles may be derived from judgments of this Court in Thaina Town (On Goulburn) Pty Ltd v City of Sydney Council …; B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187 and Director-General, Department of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102 at [57]-[70], and cases referred to therein.”

62. Basten JA further noted:

“208   If the Court identifies a material error of law, it will be necessary for the matter to be remitted to the L&E Court for further hearing. It is not open to this Court to draw necessary inferences, any more than it is open to the Court to make primary findings of fact. That well-established principle is not contradicted by Thaina Town, a case in respect of which the Court held that it was able to exercise a discretionary power with respect to costs on the basis of facts fully found.

209   As discussed in B & L Linings Pty Ltd v Chief Commissioner of State Revenue … at [132], principles of judicial review would permit the Court to remit the matter with a direction that the Tribunal exercise its power in a particular way where all relevant factual preconditions have been satisfied: see, eg, Chen Shi Hai v Minister for Immigration and Multicultural Affairs [2000] HCA 19; 201 CLR 293 at [39]-[42]. Whether it is open to this Court to determine, on an appeal limited to a question of law, matters not determined in the Court below is a question which need not be answered on the view I have taken below. It raises a question, not decided in B & L Linings, as to the extent to which the approach adopted by this Court in Thaina Town (On Goulburn) Pty Ltd v Sydney City Council …, can properly be taken beyond the exercise of a discretion as to costs.”

63. In Edyp v Brazbuild Pty Ltd [2011] NSWCA 218, a case concerning an appeal from the Consumer Trader and Tenancy Tribunal, Allsop P, after holding that the primary judge’s findings were sufficient to grant the orders made, commented as follows:

“52   The primary judge … added the following paragraph:

‘I am persuaded in these proceedings it is appropriate to make such an Order rather than remitting the matter back to the Tribunal for redetermination. I find that the first and second defendants were parties to the contract. They are named as two of the three owners in the signed building contract. As I have found, as parties to the contract, they were jointly and severally liable with the third defendant. In any event, counsel for the defendants did not suggest in his submissions in this Court that any different considerations would apply to the assessment of damages as against those two defendants.’

53   If these findings were to be seen to be necessary before any orders were made, the primary judge did not have authority to make them to the extent that they depended on additional findings of fact. It was not the primary judge's task to make findings about who were the parties to the contract, unless such a conclusion could be reached solely by reference to a matter of law, for example, by construing a document or by concluding, as she did, that it had been effectively an agreed position before the Tribunal. The decisions in The Craftsmen Restoration & Renovations Pty Ltd v Boland [2011] NSWCA 147 and B & L Linings Pty Ltd v Chief Commissioner of State Revenue … are contrary to provisions such as s 67(3) being construed to contain authorisation to find facts once the legal error is revealed, for reasons of perceived convenience in making orders under s 67(3).”

64. See also Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2009] NSWCA 300; 170 LGERA 162 at [70] per Basten JA (Macfarlan JA agreeing); Avery v Registrar of Births, Deaths and Marriages; Avery v State of New South Wales (Attorney General's Department) [2010] NSWCA 72; 79 NSWLR 354 at [23] per Campbell JA (Tobias JA agreeing); Building Insurers’ Guarantee Corporation v The Owners Strata Plan 60848 [2012] NSWCA 375; Lo v Chief Commissioner of State Revenue [2013] NSWCA 180; 85 NSWLR 86; Haddad v Chief Commissioner of State Revenue [2014] NSWCA 23; 92 ATR 274; Allianz Australia Insurance Ltd v BlueScope Steel Ltd [2014] NSWCA 276; 87 NSWLR 332.

65. In my opinion, not only was the entitlement to adduce fresh or additional evidence confined to the case where a matter was remitted to the costs assessor under s 384(2)(b), the law is plain that on an appeal on a question of law, there is no power for the appellate body to make findings of fact, let alone to itself embark upon a hearing of the subject matter of the dispute as occurred here. There is, therefore, no basis for the implication of a power for the appellate court to exercise a re-hearing function as it did in this case. Indeed for the court to have done so was inconsistent with the statute itself and with the authorities to which I have referred. It follows that his Honour’s determination of the costs must be set aside. This will require the setting aside of order 4 made by his Honour on 23 October 2014. Orders 1 and 2 made by his Honour on 1 April 2015 must also be set aside.

Costs of the costs assessment (order 6 made 23 October 2014)

66. The primary judge, by order 6 made on 23 October 2014, ordered that the costs of the costs assessment, which had been determined by the costs assessor in the sum of $13,128.76 and the costs of the review panel in the sum of $5,818, be paid by the applicants.

67. In my opinion, his Honour erred in making this order. Just as it is necessary to give a separate certificate in respect of each costs order that is the subject of a costs assessment, it is also necessary to give a separate certificate in respect of the costs of each separate costs assessment. This in turn requires the separate determination of the costs of the costs assessment in respect of each such assessment, a course which his Honour did not take.

68. There is also a further difficulty in that the costs of the costs assessment were to be paid to the Manager, Costs Assessment: see the 2004 Act, s 369(8). It might be that his Honour implicitly ordered that those costs be paid to the Manager. However, as the Manager was not a party to the proceedings, the power of his Honour to make any such order is doubtful.

69. It follows that, as the determination his Honour made in order 6 of 23 October 2014 was not in accordance with law, it must be set aside.

70. A further question arises in respect of the parties’ costs in respect of the costs assessment process. In his judgment of 1 April 2015, the primary judge dealt with those costs, which had been determined by the costs assessor in aggregate, by disaggregating them and adding them to the total costs payable in respect of each set of proceedings. His Honour reasoned as follows:

“15   The only other matter of potential dispute, although it was not raised by the plaintiffs, concerns the [first respondent’s] cost of assessment in the amount of $8,927.50. This disbursement related to costs pertaining to each of the costs orders and must be divided between them. Although Ms Vallejo [the expert from whom the first respondent led evidence] divided these costs evenly between the three costs orders, I am of the view that an even division is not appropriate. A more appropriate division was to divide these costs approximately in accordance with the number of items of the bill corresponding to each of the three proceedings, namely five‑eighths to the Local Court, one‑quarter to the Supreme Court and one‑eighth to the Court of Appeal. This adjustment results in $2,063.84 being added to the Local Court costs determined by Ms Vallejo, $743.95 being deducted from her Supreme Court costs figure and $1,859.89 being deducted from her Court of Appeal costs.

16   That results in the amount of costs found by the review panel and the assessor in the sum of $175,052.78 being apportioned between the three sets of proceedings as follows: Local Court, $107,719.70; Supreme Court, $39,078.38 and Court of Appeal, $28,254.70.”

130. The following orders were made on 23 October 2014:[19]

     19. Wende (No 2) at [57].

“(1)   Order that the plaintiffs pay the defendant's costs of the District Court proceedings occurring after the Court of Appeal proceedings, up to the date of this judgment.

(2)   Order that the plaintiffs pay 80% of the defendant's costs of the District Court proceedings occurring before the Court of Appeal proceedings.

(3)   Stand over to a date to be notified by my associate the question of whether the amount of costs in orders 1 and 2 should be the subject of a lump sum order.

(4) Order that the assessed costs of the Local Court, Supreme Court and Court of Appeal be determined by the District Court under s 384(2)(a) of the Legal Profession Act in accordance with the reasons of the assessor, Ms Dulhunty, and the Review Panel.

(5)   Stand over to a date to be notified by my associate the question of the quanta of those three determinations, in the absence of prior notification by the parties of agreement as to quanta.

(6)   Order the plaintiffs to pay the costs of the assessment in sum of $13,128.76 and the costs of the Review Panel in the sum of $5,818.

(7)   Stand over any other residual matters to a date to be notified by my associate.

(8)   List the matter for directions on Friday, 31 October 2014 at 10am before P Taylor SC DCJ.”

133. Orders (1) and (2) purported to be final orders, but were rendered contingent by order (3). As they concerned costs in the District Court they will be dealt with below. Order (4) should be set aside, given the limited operation of s 384(2)(a) identified above. Order (6) was also superseded by order (1) made on 1 April 2015, although it was in terms uncertain and unenforceable because it did not indicate to whom the plaintiffs were required to pay the costs of the assessment. The better course is to set aside the orders made on 23 October 2014, other than (1) and (2) (as to which see below) and orders (3), (5), (7) and (8), which were interlocutory and are now spent.

(5)   Costs in District Court

134. There remains the question of the orders for costs made in the District Court.

135. The first relevant period in respect of costs in the District Court involved proceedings prior to the first judgment in this Court. The District Court held that Horwath should be awarded 80% of its costs of the District Court appeal for that period.

136. In reaching that conclusion, the judge rejected my view that the applicants should have their costs of the proceedings in the District Court[20] on the basis that the applicants had been entitled to succeed on a number of grounds not accepted by other members of the Court. That was a sound reason for rejecting that opinion. Further, the judge, who had a closer understanding of the proceedings before him than did I, took the view that the issue on which the applicants succeeded had not been clearly raised in the District Court. He also concluded, reasonably, that the overall outcome was likely to remain substantially that which had obtained pursuant to the invalid certificates of the costs assessor. These were appropriate considerations to be taken into account in exercising the discretionary power to award costs. No error of law has been demonstrated in relation to order (2) made on 23 October 2014: accordingly, that order should stand.

     20. Wende (CA) at [93].

137. With respect to the orders regarding the subsequent stages of proceedings in the District Court, legal errors have again been identified and, primarily, on the basis of matters which were raised before the District Court judge. Order (1) made on 23 October 2014 must be set aside. Similarly, order (5) made on 1 April 2015 must also be set aside, as must, consequentially orders (6) and (7) made on 1 April 2015.

(6)   Conclusions

138. The reasoning set out above makes explicit a matter not resolved on the first review by this Court, namely that the relevant exercise in disaggregating the determinations as to the amount of costs payable under the separate costs orders must be undertaken by the costs assessor. That followed from the fact that to undertake the exercise the District Court relied upon expert evidence which, in turn, required a degree of evaluative judgment, not permitted on an appeal limited to determining a question of law, under s 384(2).

139. There is a question as to the proper order for costs of the application in this Court. On one view the applicants have been largely, though not entirely successful. Although the applicants have succeeded on the substantial issue raised on the appeal, the amended summons raised six grounds which, with sub-grounds, contained 16 allegations of error, some in very general terms. They were unsuccessful in challenging the primary judge’s understanding of the scope of the remittal order, and in challenging the order for costs in the District Court prior to the first appeal.

140. Further, as the ultimate result is unlikely to vary their financial liabilities, because there is no challenge to the substance of the assessments, they should not be rewarded for a largely legal success, increasing the overall legal expenses of all parties. I would propose they recover 50% of their costs in this Court.

141. To give effect to these reasons, I would make the following orders:

1. Set aside orders (1), (4) and (6) made in the District Court on 23 October 2014.

2. Set aside orders (1)-(7) made by the District Court on 1 April 2015.

3. Remit the proceedings to the District Court for that Court to make final orders with respect to the applicants’ appeal, including, if thought appropriate –

1. orders remitting the assessment of costs to the Manager, Costs Assessment, for determination according to law;

2. orders as to the costs of the parties in the District Court in relation to proceedings subsequent to the first judgment of this Court;

3. an order specifying the amount of any costs payable in the District Court, including pursuant to order (2) made on 23 October 2014.

4. Order the first respondent to pay 50% of the applicants’ costs in this Court.

142. ADAMSON J: I have had the benefit of reading the draft reasons of Beazley ACJ and Basten JA. I agree with the reasons of Beazley ACJ, save as to two matters: the reasons with respect to order (2) made on 23 October 2014 and the order proposed as to the costs of the proceedings in this Court. I agree with the orders proposed by Basten JA, for the reasons given, save as to the following two matters. First, like Beazley ACJ, I would prefer to leave for further consideration the issue relating to the parties’ costs of the costs assessment. Secondly, I have come to a different view as to the appropriate order for the costs of the proceedings in this Court, for the reasons set out below.

143. In respect of order (2) made on 23 October 2014, I agree with Basten JA that the order should stand, for the reasons given by his Honour.

144. As to the costs of the proceedings in this Court, I consider the appropriate order to be that there be no order as to costs.

145. Section 98 of the Civil Procedure Act 2005 (NSW) (the Act) confers a discretion as to costs. The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides that costs are generally to follow the event. UCPR 42.1 provides:

“42.1 General rule that costs follow the event

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.”

146. The overriding purpose of the Act is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 56(1). This Court is obliged, by s 56(2) of the Act, to seek to give effect to the overriding purpose when it exercises a power under the Act, including the power under s 98.

147. The applicants’ conduct has been, in my view, inimical to the just, quick and cheap resolution of the real issues in the proceedings. The points they have raised have been at the expense of speed and cost and conform only to the narrowest, most technical, view of “justice”. Whatever victory the applicants have had can only be regarded as a Pyrrhic one. In the circumstances of the present matter, this factor ought, in my view, displace the general rule that costs ought follow the event. Otherwise, there is a substantial risk that this Court will unwittingly reward, and thereby condone, the taking of technical points for their own sake.

148. My view as to costs is a minority one. Beazley ACJ considers that the respondents ought pay the applicants’ costs of the proceedings in this Court. Justice Basten considers the appropriate order to be that the respondents pay 50% of the applicants’ costs in this Court. The situation that presents itself is not unlike that considered by Mason P in Skulander v Willoughby City Council [2007] NSWCA 116; 73 NSWLR 44 at [42]-[76]. It is appropriate that I reconsider my view so as to create a majority in favour of an order for costs of the proceedings in this Court. In these circumstances, I agree with the costs order proposed by Basten JA, since it accords more closely with my view than does the order proposed by Beazley ACJ.

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Endnotes

Amendments

10 October 2016 - Minor typographical errors corrected at [18], [23], [47], [50], [76], [87] and [90]

02 February 2016 - Typographical errors corrected at [19], [69], [75] and [101]

Decision last updated: 10 October 2016