Zepinic v Chateau Constructions (Australia) Ltd (No 2)

Case •

[2013] NSWCA 227

•

18 July 2013

Court of Appeal


Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2013] NSWCA 227
Hearing dates:1 July 2013
Decision date: 18 July 2013
Before: McColl JA
Decision:

1. Dismiss the amended notice of motion.

2. No order for costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords: COSTS - interest on costs - s 101(4) Civil Procedure Act 2005 - whether interest on costs must be sought at time of judgment or within time limited by UCPR 36.16 - UCPR 36.4
Legislation Cited:

Civil Procedure Act 2005
Common Law Procedure Act 1899
Courts Legislation Further Amendment Act 1995
District Court Act 1973
Legal Profession Act 1987
Legal Profession Act 2004
Legal Profession Reform Act 1993
Real Property Act 1900
Supreme Court Act 1970

Judgments Act 1838 (1 & 2 Vic c110)

Supreme Court Rules 1970
Uniform Civil Procedure Rules 2005

New South Wales Government Gazette, No 170, 9 December 1983
Cases Cited: Chateau Constructions (Aust) Ltd v Zepinic [2009] NSWSC 1339
Chateau Constructions (Aust) Ltd v Zepinic [2013] NSWSC 909
Chateau Constructions (Aust) Ltd v Zepinic [No 5] [2010] NSWSC 265
Craine v Colonial Mutual Fire Insurance Co Ltd [1923] VLR 623
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Doyle v Hall Chadwick [2007] NSWCA 159
Drummond & Rosen Pty Ltd v Easey [2009] NSWCA 74
Drummond & Rosen Pty Ltd v Easey [No 2] [2009] NSWCA 331
Evans v European Bank Ltd (No 2) [2009] NSWCA 170
Fischer v David Syme & Co Ltd (1989) 18 NSWLR 606
Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [2001] FCA 370; (2001) 109 FCR 280
Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172
Hunt v R M Douglas (Roofing) Ltd [1990] 1 AC 398
Lahoud v Lahoud [2006] NSWSC 126
Lahoud v Lahoud [2011] NSWSC 994
Leda Pty Ltd v Weerden (No 2) [2007] NSWCA 283
Lucantonio v Kleinert (Costs) [2011] NSWSC 1642
McWilliams Wines Pty Ltd v Liaweena (NSW) Pty Ltd (1993) 32 NSWLR 190
Minister administering the Environmental Planning and Assessment Act 1979 v Carson (1994) 35 NSWLR 342
Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305
Re North Sydney Investment and Tramway Co Ltd (1897) 18 LR (NSW) (Eq) 50
Reis v Carling [1908] HCA 25; (1908) 5 CLR 673
Spedding v Nobles (No 2) [2007] NSWCA 87
T A Field Pty Ltd v Frigmobile of Australia Pty Ltd [1978] 2 NSWLR 488
Thomas v Bunn [1991] 1 AC 362
Timms v Commonwealth Bank of Australia (No 3) [2004] NSWCA 25.
White Industries (Qld) Pty Ltd v Flower & Hart (No 2) (2000) 103 FCR 559; [2000] FCA 1132
Wilmot v Buckley (1984) 2 FCR 540
Van Reesema v Australian Growth Resources Corporation Pty Ltd (1987) 75 ALR 311
Zepinic v Chateau Constructions (Aust) Ltd [2013] NSWCA 214
Zepinic v Chateau Constructions (Australia) Ltd (Court of Appeal, 10 May 2010, unreported)
Texts Cited: Courts Legislation Further Amendment Act Bill, Second Reading Speech, New South Wales Legislative Assembly, Parliamentary Debates, Hansard, 22 November 1995
Category:Interlocutory applications
Parties: Dr Vito Zepinic - first applicant/first respondent on the motion
Milla Zepinic - second applicant/second respondent on the motion
Chateau Constructions (Australia) Ltd - respondent/applicant on the motion
Representation: Counsel:
Applicants/respondents on the motion - no appearance
B Ilkovski - respondent/applicant on the motion
Solicitors:
Applicants/respondents on the motion - no appearance
Toomey Pegg Lawyers - respondent/applicant on the motion
File Number(s):CA 2010/45208
Publication restriction:No
 Decision under appeal 
Citation:
Zepinic v Chateau Constructions (Australia) Ltd
Date of Decision:
2009-11-20 00:00:00
Before:
Colefax DCJ
File Number(s):
DC 2009/2002

Judgment

  1. McCOLL JA: By amended notice of motion filed in Court on 17 June 2013 Chateau Constructions (Aust) Ltd ("Chateau Constructions") seeks an order pursuant to s 101(4) of the Civil Procedure Act 2005 (the "CP Act") that Dr Vito Zepinic pay interest on costs and disbursements allowed on assessment from their date of payment by it, at and subject to the rates prescribed by Uniform Civil Procedure Rules 2005 ("UCPR") 36.7. It also seeks the costs of the motion in a specified gross sum pursuant to s 98(4)(c) of the CP Act.

  1. The relief was originally sought against Dr Zepinic and his wife, Milla Zepinic, however, in the circumstances briefly referred to below (at [22]), Chateau Constructions elected to seek relief against only Dr Zepinic. I will, however, where context demands refer to both Dr and Mrs Zepinic as the respondents.

  1. The amount of interest sought was calculated in the amended notice of motion up to and including 29 May 2013 - the date the original notice of motion was filed. Thereafter a daily rate was set out to be payable up to and including the date on which the assessed costs were paid.

  1. The costs and disbursements the subject of the interest order were incurred by Chateau Constructions in respect of an application by the respondents, seeking leave to appeal from a decision of Colefax DCJ: Zepinic v Chateau Constructions (Australia) Ltd (District Court of New South Wales, Colefax DCJ, 20 November 2009, unreported).

  1. On 10 May 2010 Tobias JA dismissed the summons seeking leave to appeal: Zepinic v Chateau Constructions (Australia) Ltd (Court of Appeal, 10 May 2010, unreported) ("Zepinic No 1"). It is unnecessary to set out the reasons Tobias JA dismissed the summons seeking leave to appeal. There has been no challenge to his Honour's dismissal of the proceedings. I shall refer to the proceedings before his Honour as the Court of Appeal proceedings.

  1. Tobias JA's formal orders were:

"1. Make order in terms of paragraph 1 of the Notice of Motion filed 19/3/10.
2. Order the applicants to pay the costs of the summons for leave to appeal and the Notice of Motion."

  1. In order to have an understanding of the chronology of events after Tobias JA's orders, it is necessary that there be a brief overview of the proceedings. As Mr Loel, Chateau Constructions' solicitor, explained in his affidavit of 29 May 2013 and as is also apparent from Tobias JA's reasons, the Court of Appeal proceedings were related to three other proceedings, respectively in the Consumer, Trader and Tenancy Tribunal (the "CTTT"), the District Court and the Supreme Court.

  1. All the proceedings arise out of a building contract made in February 2006 between Chateau Constructions and the respondents pursuant to which the company performed residential building work at a property the respondents owned. The respondents did not pay Chateau Constructions amounts due to it under two progress claims. Accordingly Chateau Constructions commenced, and was successful in, proceedings against the respondents in the CTTT to recover those amounts.

  1. The respondents sought to appeal from the CTTT decision to the District Court, a step apparently taken because the order of the CTTT, having been registered in the District Court, became an order of that Court: Zepinic No 1 (at [3]).

  1. In circumstances which again it is unnecessary to recount and as I have said, Colefax DCJ dismissed the respondents' District Court appeal on 20 November 2009.

  1. The Supreme Court proceedings arose from Chateau Constructions enforcing a charging provision in the building contract to secure the sum the CTTT found to be due to it. To that end, it lodged a caveat over the respondents' property which, in due course, was the subject of a lapsing notice pursuant to s 74J of the Real Property Act 1900. Chateau Constructions approached the Supreme Court seeking an extension of the caveat pursuant to s 74K(2) of the Real Property Act. On 28 September 2009 Slattery J extended the caveat until further order of the Court: Chateau Constructions (Aust) Ltd v Zepinic [2009] NSWSC 1339.

  1. The matter came back before Slattery J on a number of occasions. Relevantly, on 8 April 2010, his Honour made a declaration that the respondents had charged their property with due payment to Chateau Constructions of $370,847.35 plus interest and ordered that the property be sold, but that the sale order be stayed until further order: Chateau Constructions (Aust) Ltd v Zepinic [No 5] [2010] NSWSC 265.

  1. Mr Loel explained in his affidavit of 29 May 2013 that the purpose of the stay was to enable Chateau Constructions to have its costs of all four matters (the CTTT proceedings, the District Court appeal proceedings, the Supreme Court proceedings and the Court of Appeal proceedings) assessed and then seek to have those costs included in the charge over the property.

  1. Mr Loel's affidavit recounts in detail the steps Chateau Constructions has taken to have its costs of the various proceedings assessed since he says attempts to agree the quantum of their costs orders with the respondents failed in November 2010.

  1. In the course of that process Mr Loel says it has been necessary to engage private investigators to ascertain the whereabouts of the respondents, to arrange for Dr Zepinic to be served personally with documents relating to the costs assessment process at a conference in Vienna (in the course of which the investigator informed Mr Loel that the respondents may be residing in London) and to engage an investigator to serve the costs assessment documents on Mrs Zepinic at the address in London, a step which was finally achieved on 14 June 2011.

  1. On or about 14 July 2011 the Supreme Court referred the applications for assessments of costs in all proceedings to a costs assessor. On or about 14 November 2011 the costs assessor advised that he had completed the assessment of costs in respect of the Court of Appeal proceedings.

  1. On 16 December 2011 Chateau Constructions filed and served an application for a review of the costs assessor's determination of its costs in respect of the Court of Appeal proceedings. On 5 January 2012 the respondents also filed an application for a review of the assessor's determination of the costs of the Court of Appeal proceedings. Both applications for review were referred to a Review Panel on or about 25 January 2012. That Panel issued its certificate of determination of the review and statement of reasons on 2 May 2012. Chateau Constructions was successful on its review but the respondents were unsuccessful.

  1. Neither Chateau Constructions nor the respondents sought to appeal from the Review Panel's determination.

  1. The original costs assessor did not proceed to assess the costs in the CTTT, District Court and Supreme Court proceedings because of a conflict of interest. Those applications for assessment were, accordingly, reassigned to another costs assessor who completed his determinations in late September and early October 2012. None of the parties sought a review of, or appealed against, those determinations.

  1. Thereafter, it appears, Chateau Constructions commenced the process of seeking interest on the costs of the various proceedings. It obtained such an order in respect of the District Court proceedings on 12 April 2013 (as evidenced by a minute of the Court's order attached to Mr Loel's 29 May 2013 affidavit) and, in the Supreme Court, on 5 July 2013: Chateau Constructions (Aust) Ltd v Zepinic [2013] NSWSC 909.

  1. Mr Loel says in his affidavit of 29 May 2013, in substance, that throughout the costs assessment process before both costs assessors and the Review Panel, the respondents engaged in conduct which, in his opinion, had the effect of delaying the determination of the assessments and the determination of the reviews.

  1. The amended notice of motion came before me for hearing on 1 July 2013. Neither respondent appeared. I ordered, pursuant to UCPR 10.6(2), that the evidence was sufficient to establish that the forwarding of the original notice of motion and the amended notice of motion to an address in Little Thames Walk, London should be taken to constitute sufficient service for the purposes of the amended notice of motion on Dr Zepinic. On that basis, Chateau Constructions sought to proceed only against Dr Zepinic in relation to the amended notice of motion: Zepinic v Chateau Constructions (Aust) Ltd [2013] NSWCA 214.

Competence of the application

  1. Prior to the matter being called on, the Registrar of the Court of Appeal forwarded to the email addresses of Chateau Constructions' legal representatives and the respondents a reference to Drummond & Rosen Pty Ltd v Easey [No 2] [2009] NSWCA 331 ("Drummond (No 2)") with the request that that authority be addressed on the hearing of the amended notice of motion.

  1. The critical issue which emerges from Drummond (No 2) is whether I have jurisdiction to make the orders sought, having regard to the fact that Tobias JA's orders were made on 10 May 2010.

  1. Drummond (No 2) relevantly concerned an application for interest on costs prior to assessment pursuant to s 101(4) of the CP Act. The matter came before the Court (Tobias and Macfarlan JJA, Handley AJA) pursuant to an application seeking a variation of the costs orders made in the principal judgment: Drummond & Rosen Pty Ltd v Easey [2009] NSWCA 74. The application was made pursuant to leave granted in the principal judgment and within the time limited by UCPR 36.16(3A): Drummond (No 2) (at [10]).

  1. Handley AJA considered the nature of the power to award interest on costs conferred on the Court pursuant to s 101(4) and s 101(5) of the CP Act in light of the fact that there was no evidence in the affidavit supporting the application of the date or dates when the relevant costs had been paid and no other evidence which would enable the Court to fix a later date: Drummond (No 2) (at [35]).

  1. Critically his Honour held (at [49]) "that the power in s 101(4) must be exercised by the Court and under UCPR Pt 36 r 16 it must be exercised in the substantive judgment, or on a motion filed within 14 days thereafter" and that "the power should not be exercised without evidence of the amounts paid and the dates of payment".

  1. Handley AJA was prepared to assume (at [51]), contrary to his inclination, that the s 101(4) power was wide enough to permit the Court to make an order without evidence of the amounts paid and the dates of payment, but declined to make such an order, saying:

"52 The general rule is that interest on costs only runs from the certificate of assessment and is only payable if the assessed costs are not paid within 28 days. I see no reason for exercising the power when the party seeking the order does not provide the Court with evidence and invites the Court to make an order without knowing what its practical effect will be. In my opinion an order for interest on costs should not be made in the present case."

  1. Macfarlan JA agreed with Handley AJA's reasoning and proposed orders subject to one matter, that being the order for payment of interest on costs. In his Honour's view (at [3]), it was unnecessary for there to be evidence of the nature of that to which Handley AJA referred to make a s 101(4) order for the payment of interest on costs. Accordingly, absent any countervailing discretionary factor, it was appropriate that an order for interest on costs be made to compensate the party having the benefit of a costs order for being out of pocket in respect of relevant costs it had paid: (at [4]). Accordingly, his Honour added orders providing for interest on costs to the orders Handley AJA proposed. The orders his Honour added were "along the lines" of those approved in Leda Pty Ltd v Weerden (No 2) .[2007] NSWCA 283 and Evans v European Bank Ltd (No 2) [2009] NSWCA 170. That form of order requires a calculation to be made of interest on payments of costs and disbursements by reference to the proportion allowed on assessment, or by agreement, of the costs and disbursements as a whole and is modelled on orders Campbell J (as his Honour then was) made in Lahoud v Lahoud [2006] NSWSC 126 (at [85], [91]); Evans v European Bank Ltd (No 2) (at [27]) per Basten JA (Campbell JA agreeing).

  1. Tobias JA agreed with Handley AJA's reasons and orders, but also agreed with Macfarlan JA's proposed orders dealing with interest on costs for the reasons Macfarlan JA had given.

  1. As will be apparent from the chronology, the reason Drummond (No 2) was drawn to the parties' attention was because of Handley AJA's statement (at [49]) "that the power in s 101(4) must be exercised by the Court and under UCPR Pt 36 r 16 ... in the substantive judgment, or on a motion filed within 14 days thereafter."

  1. Mr B Ilkovski, who appeared for Chateau Constructions, did not cavil with the proposition that Tobias JA's orders were entered on 10 May 2010, the day they were made. He argued, however, that despite UCPR 36.16 the Court could exercise the power in s 101(4) notwithstanding that the notice of motion seeking that relief was not filed until 29 May 2013.

  1. First, Mr Ilkovski submitted that neither Tobias JA nor Macfarlan JA agreed with Handley AJA's reasons insofar as they concerned the payment of interest on costs. Accordingly, he argued Handley AJA's view concerning UCPR 36.16 was a minority one. Mr Ilkovski also submitted that even if, properly understood, Tobias JA or Macfarlan JA agreed with Handley AJA's observation as to UCPR 36.16, nevertheless that observation was obiter because the application for interest on costs in Drummond (No 2) was made within the time contemplated by Order 9 of the principal judgment.

  1. Secondly, Mr Ilkovski submitted that the orders sought in the amended notice of motion were not a variation of a judgment or order within the meaning of UCPR 36.16, but, rather, an additional order which would not affect the existing orders. While he accepted that the interest order Chateau Constructions sought depended upon Tobias JA's costs order, he argued that it was an additional order which was contemplated by s 101(4). He submitted that this contention was supported by other cases, such as Leda Pty Ltd v Weerden (No 2) in which, relevantly, an order in respect of interest on costs was expressed to be "additional".

  1. Thirdly, Mr Ilkovski submitted that because neither of the certificates for determination issued by the Review Panel in respect of the costs of the Court of Appeal Proceedings had been registered with any court, there had been no final judgment for the assessed costs and, accordingly, the principle of finality was not offended by the proposed orders. He relied in this respect upon Timms v Commonwealth Bank of Australia (No 3) [2004] NSWCA 25.

Legislative framework

  1. A number of provisions of the CP Act and the UCPR deal with interest on costs. In addition, some provisions of the Legal Profession Act 2004 (the "LP Act 2004") are relevant.

  1. The CP Act relevantly provides:

"101 Interest after judgment
(cf Act No 52 1970, section 95; Act No 9 1973, section 85; Act No 11 1970, section 39)
(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.
...
(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs.
(5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:
(a) the date or dates on which the costs concerned were paid, or
(b) such later date as the court may order...." (emphasis added)
"133 Judgments and orders unenforceable until entered
(1) A judgment or order of the court may not be enforced until it has been entered in accordance with the uniform rules.
(2) This section extends to:
(a) any judgment, order, determination or decree of a court, and
(b) any adjudication or award of a person having authority to make an adjudication or award,
that may be filed or registered in the court, or of which a certificate may be filed or registered in the court, under any other Act or law.
(3) In subsection (2),
'law' includes:
(a) a law of the Commonwealth, and
(b) a law of another State or Territory, and
(c) in relation to the Supreme Court, a law of a foreign country."

  1. The following provisions of Part 36 of the UCPR ("Judgments and Orders") are relevant:

"36.4 Date of effect of judgments and orders
(cf SCR Part 40, rule 3; DCR Part 31, rule 13A (2))
(1) A judgment or order takes effect:
(a) as of the date on which it is given or made, or
(b) if the court orders that it not take effect until it is entered, as of the date on which it is entered.
(2) Despite subrule (1), if an order of the court directs the payment of costs, and the costs are to be assessed, the order takes effect as of the date when the relevant cost assessor's certificate is filed.
(3) Despite subrules (1) and (2), the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those subrules."
"36.16 Further power to set aside or vary judgment or order
(cf SCR Part 40, rule 9)
(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.
(2) The court may set aside or vary a judgment or order after it has been entered if:
(a) it is a default judgment (other than a default judgment given in open court), or
(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or
(c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.
(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.
(3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.
(3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.
(3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).
(4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order."
"36.10 Filing of cost assessors' certificates
(cf SCR Part 40, rule 12)
(1) A cost assessor's certificate:
(a) may be filed in the proceedings to which it relates, or
(b) may be filed in fresh proceedings, whether in the same court or another court..."

  1. Division 11 of Part 3.2 of the LP Act 2004 deals with costs assessment. A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs: s 367A. On making a determination of the costs referred to in Subdivision 2 or 3 of Division 11, a costs assessor is to issue a certificate that sets out the determination: s 368. "Costs" for the purposes of the LP Act are defined by reference to the definition of "legal costs" in s 4, which expressly excludes interest.

  1. Section 368(5) of the LP Act 2004 provides:

"(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." (emphasis added)

  1. Section 395 of the LP Act 2004 provides that Division 11 "does not apply to an amount of interest ordered on a judgment debt (being an order for the payment of costs) under section 85 (4) of the District Court Act 1973 or section 95 (4) of the Supreme Court Act 1970." By virtue of s 68(3) of the Interpretation Act 1987 the references to s 85(4) of the District Court Act 1973 and s 95 (4) of the Supreme Court Act (being the provisions in force in each court enabling interest on costs orders to be made at the time the LP Act 2004 was enacted) should now be read as a reference to s 101(4) of the CP Act: cf Drummond (No 2) (at [45] - [46).

Consideration

  1. As is apparent from its text, s 101 of the CP Act establishes a particular regime in relation to interest on costs. Pursuant to s 101(1), unless the court orders otherwise, interest is payable on so much of the amount of a judgment as is from time to time unpaid. However s 101(1) expressly excludes "any order for costs" from its operation. Interest on costs orders have to be the subject of an order made pursuant to s 101(4).

  1. Handley AJA briefly considered the legislative history leading to s 101(4) (and its predecessor, s 95(4) of the Supreme Court Act) in Drummond (No 2) (at [37]ff). As his Honour explained, the Legal Profession Reform Act 1993 (which relevantly amended the Legal Profession Act 1987 (the "LP Act 1987")) introduced the costs assessment system to replace the system of taxation of costs by an officer of the Court. However, whereas taxing officers, who had performed their functions pursuant to the Rules of Court had been empowered to make interest on costs orders in terms of those now found in s 101(4), that power was not given to costs assessors: Drummond (No 2) (at [38] - [40]). Indeed as is apparent from the legislative scheme I have outline (at [39], [41]) that power was expressly excluded from Division 11: definition of "legal costs", and s 395, LP Act 2004.

Interest on costs orders

  1. Understanding the interrelationship between s 101(4) and UCPR 36.4(2) requires a somewhat lengthier exploration of the history of interest on costs orders.

  1. At common law, a judgment debt did not carry interest and, accordingly, the only way of recovering interest on that debt was by action on the judgment: Reis v Carling [1908] HCA 25; (1908) 5 CLR 673 per O'Connor J (at (684); see also Griffith CJ (at 676 ff). That position, as O'Connor J explained (at 684) was remedied in England by the enactment of s 17 of the Judgments Act 1838 (1 & 2 Vic c110). Section 17 relevantly provided that "[e]very judgment debt shall carry interest ... from the time of entering up the judgment ... until the same shall be satisfied". A costs order was regarded as part of the judgment debt: Craine v Colonial Mutual Fire Insurance Co Ltd [1923] VLR 623 (at 628) per Schutt J.

  1. However, the words "from the time of entering up the judgment" in s 17 of the Judgments Act led to different approaches in the Courts of Common Law and in the Court of Chancery because of the different forms of writ each adopted to give effect to the provision. The Courts of Common Law issued a writ directing levy of all interest recoverable on the judgment debt, including interest on costs, from date of entry of judgment (the incipitur), whereas the Court of Chancery, also acting under s 17, issued a writ in the form of a writ of fieri facias directing that the interest on costs should run from the date of the Taxing Master's certificate (the allocatur): see Reis v Carling (at 676 - 677) per Griffith CJ; (at 684 - 685) per O'Connor J.

  1. Act 24 Vic. No 8, s 2 which followed the wording of s 17 of the Judgments Act , was enacted in New South Wales. Without descending into too great detail, the effect of the adoption in this State of the practice and orders of the High Court of Chancery in force on 15 February 1860 was that the allocatur rule came to govern the practice concerning interest on costs: see Re North Sydney Investment and Tramway Co Ltd (1897) 18 LR (NSW) (Eq) 50 (at 53) per Owen CJ in Eq; (at 57 - 58) per Darley CJ (Stephen J agreeing); (at 59 - 60) per Manning CJ in Eq.

  1. The Courts of Common Law gave effect to the incipitur rule by leaving "a blank ... in the form of incipitur, in which the amount of the costs when ascertained [was] written, the costs being due from the date of the incipitur"; in equity, "the date of the Master's certificate [was treated] as equivalent to the entering up of judgment at Common Law": Re North Sydney Investment and Tramway Co Ltd (at 57 - 58) per Darley CJ.

  1. In T A Field Pty Ltd v Frigmobile of Australia Pty Ltd [1978] 2 NSWLR 488 ("Field") Master Allen (as his Honour then was) considered the question of the date from which interest should be payable on costs.

  1. In Field, terms of settlement were filed in an action for damages which provided, amongst other things, for a verdict for the plaintiff for a sum of stated money "together with costs to be assessed or taxed". A Master directed entry of judgment in accordance with the terms. After the taxing officer gave his certificate of taxation, the plaintiff sought a direction that judgment be entered for the amount of the costs so certified, together with interest thereon from the date on which the Master directed entry of judgment pursuant to the terms of settlement. The defendant disputed the plaintiff's entitlement to interest from that date, submitting that, unless the court otherwise ordered, interest on the costs would run from the date the court directed entry of judgment for the amount of costs as taxed and certified or, if the court was disposed to order that interest ran from an earlier date, the appropriate date would be that of the certificate of taxation: Field (at 488 - 489).

  1. Master Allen looked at the history of the divergent practices in law and equity concerning the date from which interest ran on costs observing (at 490) that the different approaches to which I have referred continued in New South Wales at least until the enactment of the Law Reform (Miscellaneous Provisions) Act 1965. However he also concluded (at 490) that by at least 1965 solicitors had come to conduct their practices on the basis that interest on taxed costs in the Supreme Court, both at law and in equity, ran from the date of the certificate of taxation.

  1. In 1965 the Common Law Procedure Act 1899 was amended by the insertion of s 143A which relevantly provided that:

" ... interest shall not be payable on costs payable to the plaintiff if the amount of such costs is paid within twenty-one days after assessment or after taxation".

  1. Master Allen concluded that the effect of s 143A was that "[f]or all practical purposes the position thereafter at law was the same as it was in equity, namely, that interest on taxed costs did not commence to run until costs were taxed": Field (at 491). He then turned to consider the position under the Supreme Court Act and the Supreme Court Rules 1970 ("SCR").

  1. Section 95 of the Supreme Court Act provided:

"(1) Where judgment is given, or an order is made, for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment takes effect on so much of the money as is from time to time unpaid.
...
(3) Notwithstanding subsection one of this section, where, in proceedings for damages on a common law claim, the Court makes an order for the payment of costs and the costs are paid within twenty-one days after ascertainment of the amount of the costs by taxation or otherwise, interest on the costs shall not be payable under subsection one of this section unless the Court otherwise orders."

  1. SCR Part 40, rr (1) - (3) provided that a judgment should take effect relevantly as at the date of the direction for judgment (r 1), the date of entry (r 2) or subject to those rules "as of the date on which it is made" (r 3). SCR Part 40, r (4) gave the Court power to order "that a judgment or order take effect as of a date earlier or later than the date fixed by those subrules."

  1. Master Allen concluded (at 491) that judgment was "given" in respect of costs within the meaning of s 95 of the Supreme Court Act when entry of judgment was directed in accordance with the terms of settlement. However, he also held (at 492) that it was "implicit in an order that a party pay costs (in the amount thereafter ascertained by taxation) that the order is to take effect from the date when the costs are taxed". It would appear he thought that conclusion followed from SCR 40 r (4).

  1. SCR Pt 40 r 3(4) was amended in 1983 (Amendment 141, New South Wales Government Gazette, No 170, 9 December 1983 at 5565) to read:

"3 (1) A judgment shall take effect -
...
(4) Notwithstanding subrules (1) and (3), where an order of the Court directs the payment of costs and the costs are, pursuant to any Act or the rules, to be taxed, the order shall take effect as of the date of the certificate of taxation.
(5) Notwithstanding subrules (1), (2), (3) and (4), the Court may order that a judgment or order take effect as of a date earlier or later than the date fixed by those subrules."

  1. Amendment 141 also inserted Pt 52, r 54A a rule which, in short, enabled the taxing officer to exercise the powers of the court under s 95(1) of the Supreme Court Act to make orders for interest to be payable at prescribed rates on amounts paid before the conclusion of the taxation by the successful party to his or her solicitor for or on account of the costs to be payable and as at the date on which the amount was paid.

  1. In Fischer v David Syme & Co Ltd (1989) 18 NSWLR 606 (at 617) ("Fischer"), Smart J suggested that the new Pt 40 r 3(4) reflected Master Allen's view of s 95(1) in Field.

  1. Smart J disagreed with the views Master Allen expressed in Field as to the operation of s 95(3). In his view (at 616) "an order for costs to be taxed fell within 'every judgment debt within s 17 [of the Judgments Act ]" and, at law, took effect "when the judgment is entered in the master's book in the form of an incipitur": Fischer (at 616). In his Honour's view, the words "otherwise orders" in s 95(3) allowed "the Court to avoid rigidity and to accommodate the position recognised in the English cases that neither the incipitur rule nor the allocatur rule will operate justly in all circumstances."

  1. Smart J also considered (Fischer, at 617 - 618) the effect of SCR Pt 40 r 3(4). He doubted that that rule fitted comfortably with s 95. However in his view it did not matter whether his approach to s 95 rendered SCR Pt 40 r 3(4) otiose, or whether that rule should be applied, because both s 95(3) and SCR Pt 40 r 3(5) empowered the court to order that a costs order take effect from a date other than that of the certificate of taxation. He regarded SCR 52.54A as a rider to SCR 40 r 3(4), albeit that he thought the reference in SCR 52.54A to s 95(1) should be supplemented by a reference to s 95(3) of the Supreme Court Act.

Introduction of s 95(4)

  1. In 1995, subsection (4) was added to s 95 of the SupremeCourt Act: Courts Legislation Further Amendment Act 1995. Section 101(4) while "in slightly different language" to s 95(4) has "the same effect": Drummond (No 2) at [43].

  1. The amendment was made in response to a proposal by Rogers CJ Comm D in McWilliams Wines Pty Ltd v Liaweena (NSW) Pty Ltd (1993) 32 NSWLR 190 ("McWilliams Wines"). In that case the successful plaintiff sought an order pursuant to s 95(1) (the judgment (at 191) says s 91(1), but this appears to be a typographical error) or s 95(3) of the Supreme Court Act for interest on the amount of taxed costs to be paid by the defendant from the dates on which the plaintiff made payment to its solicitors. The defendant had contended, relevantly, that the court did not have power to make such an order from a date prior to the date of the judgment.

  1. Rogers CJ Comm D accepted (McWilliams Wines, at 191) that "the position is by no means clear and certainly not satisfactory." His Honour concluded (at 193) that he could accede to the plaintiff's application by exercising the power conferred by s 76 of the Supreme Court Act (the predecessor of s 98 of the CP Act) and the wide definition of the expression "costs" in s 76(2). His Honour also encouraged legislative intervention, saying (at 193):

"... [I]t seems to me that, in fairness and justice both the parliament and the rule committee revisit this problem in order to ensure that if, contrary to my present conclusion, the Court does not have power to do what needs to be done the power is conferred and if, conformably to what I hold, there is such power, its existence and the circumstances for its exercise are more clearly defined."

  1. Rogers CJ Comm D's reasoning in McWilliams Wines has been described as "elusive": White Industries (Qld) Pty Ltd v Flower & Hart (No 2) (2000) 103 FCR 559; [2000] FCA 1132 (at [9]) per Goldberg J. His Honour is said to have "assumed the power rather than demonstrated it by reference to principle or authority": Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [2001] FCA 370; (2001) 109 FCR 280 (at [39] - [45]) per Drummond, Dowsett and Hely JJ. In the latter case, the Full Court observed (at [40]) that Rogers CJ Comm D's conclusion failed to recognise that courts have no inherent power to award interest on costs.

  1. In particular, absent express statutory power, a court does not have power to order the payment of interest on costs from a date earlier than the date on which the court gave judgment: Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1998] 1 All ER 305 (at 313) per Lord Nicholls of Birkenhead (Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Slynn of Hadley and Lord Hoffmann agreeing).

  1. As much is reflected in the Second Reading Speech of Mr Paul Whelan MP, who, when introducing the Courts Legislation Further Amendment Bill said that s 95 of Supreme Court Act did not empower the court to compensate a litigant who had paid money on account of costs to his or her solicitor "at a time distant to an order for costs being made and the eventual receipt of a taxed bill", acknowledging that "in such circumstances, that litigant will be out of pocket for what may be a matter of years": Second Reading Speech of the Hon Paul Whelan, New South Wales Legislative Assembly, Parliamentary Debates, Hansard, 22 November 1995 (at 3769).

  1. As enacted, s 95(4) provided:

"If an order is made for the payment of costs, the Court may order that interest is to be paid on the amount so ordered, at the prescribed rate, from the date or dates when the amount in respect of costs was duly paid."

  1. Section 95(4) conferred a power similar to that previously given to taxing officers by SCR Pt 52, r 54A; following the 1995 amendment, the question of interest on costs "before assessment" became a matter for the Court and not a costs assessor: (Drummond (No 2) (at [39], [42])).

Conclusion

  1. In the light of that analysis, I return to Mr Ilkovski's submissions. It is convenient to deal first with his submissions concerning Timms v Commonwealth Bank of Australia [No 3].

  1. In that case, the Court of Appeal ordered a retrial and that the Commonwealth Bank and a firm of accountants pay the appellants' (the "claimants") costs of the appeal. The claimants had their costs of the appeal assessed in accordance with the relevant provisions of the LP Act 1987. The Cost Assessor issued the Certificate as to Determination of Costs (the "Costs Certificate") pursuant to s 208J(1) of the LP Act 1987. The claimants filed the Costs Certificate in the court on 11 December 2003 in accordance with SCR Pt 40 r 12. Beazley JA concluded (at [4]), that pursuant to s 208J(3) of the LP Act 1987, the effect of filing the Costs Certificate was that the amount of costs thereby assessed became a judgment of the Court.

  1. On 20 January 2004 the claimants filed a motion seeking an order pursuant to s 95(4) of the Supreme Court Act that the Bank and the accountants pay interest on the amount of assessed costs at the prescribed rates, from the dates on which they had paid those costs to their solicitors until 11 December 2003, being the date of entry of judgment for the costs: Timms (at [5]).

  1. Beazley JA held that the principle of finality precluded the claimants from obtaining that order, saying:

"9 As already indicated, the effect of filing the Costs Certificate was that the claimants obtained a final judgment in the amount of the assessed costs. A final judgment, regularly entered, conclusively determines the issues raised in the proceedings to which it relates. It cannot ordinarily be set aside except in accordance with powers or rights otherwise conferred by statute or rule of court or in other well recognised circumstances such as fraud: Halsbury's Laws of Australia: para. 325-9125.
[Her Honour set out the relevant principle from Bailey v Marinoff (1971) 125 CLR 529 (at 530) per Barwick CJ, then continued]
11 A claim for interest under s 95(4) is part of the claim that a party has in relation to costs. It is not a separate or independent cause of action. If no application for interest is made and determined before entry of judgment for costs, the claim for interest merges with the judgment for costs. That is what has occurred in this case. The claimants obtained a final judgment for their assessed costs when they filed the Costs Certificate on 11 December 2003.
12 Part 40 r 9 governs the setting aside or varying of a judgment or orders of the Court. The circumstances in which a judgment that has been entered may be set aside are limited and none apply here. There was no application made under the slip rule nor do the circumstances, on the evidence before me, indicate that the rule applies. The claimants' claim under s 95(4) appears to have been made without an appreciation of the effect of the judgment entered on 11 December 2003." (emphasis added)

  1. As is apparent from Timms (at [11]), Beazley JA was of the view that an order for interest on costs should be sought before entry of judgment for costs, albeit that the critical date in her view was that of the filing of the costs assessors certificate.

  1. I agree with her Honour that interest on costs should be sought before entry of judgment for costs however I disagree, with respect, with her Honour's view about what the critical date for that application was.

  1. The entry of judgment on a filed certificate of a costs assessor or a review panel is a ministerial act, which makes the certificate enforceable as a judgment but otherwise does not alter its legal effect and does not make it a judgment of the Court: Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 ("Frumar ") (at [40]) per Handley AJA (Macfarlan JA agreeing); see also Doyle v Hall Chadwick [2007] NSWCA 159 (at [49], [52]) per Hodgson JA (Mason P and Campbell JA agreeing). As Giles JA said in Frumar (at [8]) (in this respect agreeing with Handley AJA, albeit dissenting in the result), "[s]o-called judgments under s 208J(3) of the 1987 [LP] Act, which is relevantly replicated in s 208KF(2), ... take their force from the statute and are not judgments of the court".

  1. Handley AJA also doubted (Frumar at [42]) the "validity of that part of [UCPR 36.10] which authorises the entry of judgment ... in view of s 208KF(2)(b) of the Legal Profession Act 1987 (and its successor s 368(5) of the 2004 Act) dealing with the effect of filing 'with no further action'", but, on the assumption the rule was valid, reiterated that "the entry of judgment on a filed certificate is a ministerial act [which] makes the certificate enforceable as a judgment but otherwise does not alter its legal effect."

  1. The consequence is that the effective costs judgment is that of the Court, not that embodied on the costs assessor's certificate, even when filed: Field, Doyle, Frumar; see also Wilmot v Buckley (1984) 2 FCR 540 (at 543, 544) per Beaumont J; Van Reesema v Australian Growth Resources Corporation Pty Ltd (1987) 75 ALR 311 (at 318) per Morling, Sepnder and Gummow JJ). That conclusion reflects the practice at law, of entering up the amount of the taxed costs in the incipitur.

  1. The consequence of that analysis is that the only costs judgment that is an order of the court is that given by Tobias JA which took effect on 10 May 2010: UCPR 36.4(1).

  1. As to Mr Ilkovski's submissions concerning Drummond (No 2), in my view, properly understood, Macfarlan and Tobias JJA departed from Handley AJA's reasoning only insofar as his Honour expressed the view that the s 101(4) power should not be exercised without evidence of the amounts paid and the dates of payment.

  1. It matters not that his Honour's view concerning when a s 101(4) application should be made as obiter, the application in that case having been made within the time permitted by UCPR 36.16. His Honour's view was clearly correct. As the foregoing analysis has made apparent, the power to award interest is found only in statute, now, relevantly, s 101(4) of the CP Act. Section 101(4) (more strictly, its predecessor, s 95(4)) was introduced to give the Court a discretion as to the date or dates from which an interest on costs order would run. Insofar as it empowered the Court to award interest on costs paid before the entry of judgment and any taxation or assessment of costs, it created a regime which differed from the incipitur and allocatur rules.

  1. However the interest order is made in respect of "an order for the payment for costs": s 101(4). Just as a costs order must be sought at the time of judgment, or within any time limited by UCPR 36.16, so, too, in my view must an interest on costs order. That conclusion which accords Handley AJA's view in Drummond (No 2) and, subject to what I have said, Beazley JA's view in Timms, is consistent with the principle of finality of judgments: see D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 (at [34]) per Gleeson CJ, Gummow, Hayne and Heydon JJ.

  1. I have, however, given anxious consideration to the effect of UCPR 36.4(2), albeit that Mr Ilkovski did not seek to invoke it. As will be apparent, that rule substantially replicates SCR Pt 40, r 3(4) - a rule it is tolerably apparent was intended to give express effect to Master Allen's views in Field. On its face it applies only to an order for costs to be assessed which is not how Tobias JA's costs order was expressed.

  1. Campbell JA explained the effect of UCPR 36.4(2) in Lahoud v Lahoud [2011] NSWSC 994 (at [38] - [39]) as follows. A costs order is a binding determination of rights from the time it is made, even though it cannot result in a judgment for a specific sum of money, nor be enforced, until the costs assessment is complete. Its meaning is also to be ascertained as at the date it is made. His Honour's analysis is consistent with that in Doyle and Frumar as to the effect of a cost assessor's certificate, even when filed. It also emphasises that the critical date for seeking an interest on costs order is when the costs order itself is made.

  1. Mr Ilkovski's submission that the interest order is an additional order, rather than one within the meaning of UCPR 36.16, is simply semantic. An application for an order not made in the Court's original orders is an application for a variation of a judgment or orders of the Court, albeit that it would add an order, rather than amend an existing order. Although it is not determinative, that was how the Court described the orders made in Drummond (No 2); see also Spedding v Nobles (No 2) [2007] NSWCA 87 (at [18]). The fact that the order was described as "additional in Leda Pty Ltd v Weerden (No 2) emphasises the semantic nature of the argument.

  1. Finally, I appreciate that there are first instance decisions of this court in which the view has been taken that an interest order under s 101(4) can be made after the costs order has been made, so long as it is made before there is a judgment for costs effected by registration of the certificate of assessment: Lucantonio v Kleinert (Costs) [2011] NSWSC 1642 (at [26]) per Brereton J. Those decisions do not, with respect, appear to have recognised the effect of such registration as explained in Doyle and Frumar.

  1. The effect of Doyle and Frumar in my view, is that in order to determine whether an application for an interest on costs order is competent, the Court is required to have regard to the date of the costs order. The fact that the cost assessors certificate has not been filed is not relevant.

  1. The costs order was made on 10 May 2010. No application for an interest on costs order was made at that time or within the time limited to vary those orders permitted by UCPR 36.16. The application for the interest on costs order is incompetent.

  1. I dismiss the amended notice of motion. As there has been no appearance by the respondent, I make no order for costs.

**********

Amendments

22 July 2013 - after instance insert "decisions"


Amended paragraphs: [86]

Decision last updated: 25 July 2013

Most Recent Citation
Cases Citing This Decision

22

Hutley v Cosco (No 2) [2021] NSWCA 335
Boateng v Dharamdas [2019] NSWCA 233
Zepinic v Chateau Constructions (Aust) Limited [2018] NSWCA 317
Cases Cited

21

Statutory Material Cited

13

Chateau Constructions (Aust) Ltd v Zepinic [2009] NSWSC 1339
Chateau Constructions (Aust) Ltd v Zepinic (No 5) [2010] NSWSC 265
Chateau Constructions (Aust) Ltd v Zepinic [2013] NSWSC 909