Coshott v Parker (No 3)

1. [1]

   In the principal proceedings before me the plaintiff sought a number of orders in respect of a Costs Assessor’s Certificate, by way of Notice of Motion filed on 26 August 2014. An Amended Notice of Motion was filed on 15 October 2014.

2. [2]

   On 12 March 2015 I made an order dismissing the plaintiff’s Amended Notice of Motion (Coshott v Parker [2015] NSWSC 197 at [63]).

3. [3]

   At [64] I stated the following in relation to the costs of the Notice of Motion:

4. [4]

   On 27 March 2015 the defendants filed an Amended Notice of Motion seeking the following orders:

5. [5]

   The defendants also filed on that date an Affidavit of Christopher Gordon Price sworn 26 March 2015.

6. [6]

   On 28 April 2015 the defendants filed the Affidavit of Chloe Mae Ellis sworn on that date.

7. [7]

   On 29 April 2015 the defendants filed a further Affidavit of Ms Ellis sworn 29 April 2015.

8. [8]

   The defendants relied upon written submissions dated 29 April 2015. At [5] of those submissions the orders sought by the defendants were summarised as falling into two categories being:

9. [9]

   The plaintiff relied upon written submissions dated 1 May 2015. Both parties’ written submissions were supplemented with oral submissions at a hearing on 1 May 2015. Mr Jones of counsel appeared for the plaintiff and Ms Castle of counsel appeared for the defendants on that occasion.

Background

1. [10]

   There has been a lengthy history of proceedings between the plaintiff and defendants.

2. [11]

   On 10 May 2011 the plaintiff commenced proceedings against the defendants by way of Summons. On 28 July 2011 the Summons was dismissed by the Supreme Court (Schmidt J). Schmidt J ordered the plaintiff to pay the defendants’ costs of the proceedings.

3. [12]

   Following the costs order made in their favour, the defendants filed an Application for Assessment of Party/Party Costs on 29 March 2012. A costs assessment then took place.

4. [13]

   On 9 October 2012 the Manager, Costs Assessment, sent a Certificate of Determination of Costs and other documents to the parties.

5. [14]

   On 7 November 2012 the plaintiff applied for a review of the assessor’s determination.

6. [15]

   The determination was referred to a review panel on 20 November 2012. The defendants state that they were not notified of the Review Application in accordance with s 373(5) of the Legal Profession Act 2004 (“LPA”). The effect of referral to a review panel was that the operation of the original determination on costs was suspended: s 377(1) LPA.

7. [16]

   On 14 December 2012 the defendants filed a copy of the assessor’s certificate dated 5 September 2012 in this Court pursuant to s 368(5) of the LPA.

8. [17]

   On 23 January 2013 the review panel issued a certificate affirming the decision of the first costs assessor. This terminated the suspension of the costs assessor’s decision and made it enforceable.

9. [18]

   The effect of the filing of the first certificate by the defendants on 14 December 2012 was the subject of the judgment I delivered on 12 March 2015. The plaintiff, by way of Notice of Motion, had sought to have the deemed judgment arising from the entry of the certificate set aside on the basis of a claimed procedural irregularity, because of the suspension in place upon the determination being referred to a review panel. In those proceedings the plaintiff also challenged the constitutional validity of the costs assessment scheme contained in the LPA. They were unsuccessful on both arguments and their Amended Notice of Motion was dismissed.

Restitution: Recovery of Certificate and Determination Fees

1. [19]

   Section 368 of the Legal Profession Act 2004 (now repealed) provided:

2. [20]

   Section 369 LPA was in the following terms:

3. [21]

   The basis of the restitution claim in the present proceedings is that the defendants/applicants paid certain costs associated with the costs assessment and the issue of the certificates arising from both the initial assessment and review which were in fact payable by the plaintiff.

4. [22]

   On 5 September 2012 a letter was sent by the Costs Assessor responsible for the first costs assessment to Hicksons Lawyers, who act on behalf of the defendants, giving notice that the Assessor had forwarded the Certificate of Determination of Costs, Certificate of Determination of Costs of Costs Assessment and Statement of Reasons to the Manager, Costs Assessment. The letter advised that the Manager would send out those documents upon payment of the costs of the Costs Assessor which was stated to be $914.37. A tax invoice for that amount was issued: Affidavit of Christopher Gordon Price at [5].

5. [23]

   It is not disputed that the defendants paid the costs of the costs assessment as set out in that letter. Mr Price in his affidavit states at [7]:

6. [24]

   A copy of the receipt evidencing payment by the defendants was annexed to Mr Price’s Affidavit (Exhibit CGP-2 at p 5). Prior to paying this amount, the defendants had also paid the filing fee for the lodging of their Application for Assessment of Costs in the sum of $398.15: Affidavit of Christopher Gordon Price at [4].

7. [25]

   Copies of the Certificate of Determination of Costs and Certificate of Determination of Costs of Costs Assessment issued on 5 September 2012 were also exhibited to the Affidavit of Christopher Gordon Price (Exhibit CGP-2 at pp 6-7). In relation to those Certificates, Mr Price observed in his affidavit at [9]:

8. [26]

   Following the review of the determination initiated by the plaintiff, Hicksons received a letter on 1 February 2013 stating that the Review Panel had forwarded their Certificate of Determination of Costs, Certificate of Determination of Costs of Costs Assessment and Statement of Reasons to the Manager, Costs Assessment and that, as with the first determination, the Manager would forward these documents on payment of the panel’s costs, being $1713.24: Affidavit of Christopher Gordon Price at [11].

9. [27]

   At [12] of his Affidavit, Mr Price states:

10. [28]

    In his Affidavit at [13] Mr Price set out a conversation said to have taken place between himself and the Manager, Costs Review on 13 June 2013, that is, prior to the defendants making payment. In essence, in that conversation Mr Price expressed his concern to the Manager, Costs Review, that the plaintiff would not pay the costs of the costs assessment, necessary for the certificates to be issued. The conversation included the following exchange:

11. [29]

    It is not disputed that following this exchange the defendants paid the Review Panel’s costs in the sum of $1713.25.

12. [30]

    The total amount now sought by the defendants in their claim for restitution ($3264.65) comprises the costs of the first costs assessor of $1312.52 plus GST in the amount of $83.13 as well as the sum of $1713.25 attributable to the costs of the Review Panel and GST on the second amount in the sum of $155.75.

13. [31]

    In their Written Submissions, the defendants relied upon the judgment of Ward J (as her Honour then was) in Kassem and Secatore as Joint Liquidators of Pan Pacific Age Care Services Pty Ltd. (in liq) and Anor v Koutavas [2012] NSWSC 236 as providing the legal basis for their claim. It was submitted that:

14. [32]

    These elements were said to be based on the decision in Kassem.

15. [33]

    It was further submitted by the defendants that ‘where a party is entitled to restitution it is entitled to interest on the amount ordered to be paid’. Reliance was placed on Woolworths Limited v Strong (No 2) [2011] NSWCA 72; 80 NSWLR 445 in this regard. It was noted that the Court has power to award interest on either sums ordered to be repaid by a party (pursuant to s 101(1) Civil Procedure Act 2005 and Uniform Civil Procedure Rules rule 36.7(1)) or judgment sums (s 100 Civil Procedure Act 2005): Defendants’ Written Submissions at [12]-[14].

16. [34]

    The plaintiff submitted that the claim for restitution should have been made at or around the time that the costs certificate was filed rather than over two years after ‘as an afterthought to the defendants’ successful defence of the plaintiff’s challenge to the certificate’: Plaintiff’s Written Submissions at [3].

17. [35]

    It was asserted by the plaintiff that the defendant’s approach to restitution and particularly the decision of Kassem was ‘a striking and undue simplification of the legal position’: Plaintiff’s Written Submissions at [7]. The plaintiff identified the decision of Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181 as being a case where Kassem had expressly not been followed by Garling J. It was submitted by the plaintiff that:

18. [36]

    In oral submissions at the hearing on 1 May 2015 Ms Castle for the defendants stated that I would not be required to decide whether Kassem or Weber was the correct approach as contended by the plaintiff because:

19. [37]

    Ms Castle placed emphasis upon certain observations in the judgment of Ward J (as her Honour then was) in Kassem where her Honour sets out the ‘three requirements’ for restitution to arise derived from Goff and Jones, The Law of Restitution (5th ed, 1998). Ms Castle relied upon the following statements made by Ward J (as her Honour then was) in her application of those requirements to the case before her Honour:

20. [38]

    As to the plaintiff’s submission that the Notice of Motion was an inappropriate vehicle for bringing the restitution claim, Ms Castle submitted:

21. [39]

    Mr Jones in oral submissions made on behalf of the plaintiff, maintained that I would be required to decide between the approach taken by Ward J in Kassem and Garling J in Weber: T 12: 40-45.

22. [40]

    Mr Jones described the different approaches as such:

23. [41]

    Mr Jones went on to submit that the defendants’ contention that the question did not require resolution was wrong for two reasons, stating:

24. [42]

    Mr Jones later stated:

25. [43]

    I do not consider it necessary to resolve the dispute between the parties as to whether the approach taken by Ward J in Kassem or Garling J in Weber is correct subject to the following comments.

26. [44]

    As demonstrated above at [40], the difference in approach relates to whether a deemed judgment arising as a result of the filing of a certificate of costs assessment is a deemed judgment between the parties to the costs assessment or the party required to pay the costs and the Manager, Costs Assessment.

27. [45]

    The law of restitution, and what the defendants in this case are required to prove to succeed on their Notice of Motion insofar as it relates to restitution, is uncontroversial. The way in which it relates to a deemed judgment with respect to costs assessments should not be material to the way it applies in this case. I am not satisfied that, if Garling J’s interpretation is accepted restitution would be unavailable as a remedy because of the statutory regime.

28. [46]

    As both parties rightly acknowledged, and as was discussed in the principal judgment of 12 March 2015, it is the act of filing the Certificates of the Cost Assessor, the Certificates of the Costs of Cost Assessment and in this case any further certificates issued by a review panel which gives rise to the deemed judgment between the parties. That is the effect of s 368(5) LPA in relation to Certificates of the Cost Assessor and s 369(7) in relation to Certificates of the Costs of Cost Assessment. Parties entitled to recover money owed following a costs assessment cannot enforce that right until they have filed the certificates. They cannot file the certificates until they are released to them by either the Manager, Costs Assessment or Manager, Costs Review. The certificates cannot be released to them until they, or the other party to the assessment, have paid the costs of the costs assessment. Apart from the statutory provisions, including s 369(7)-(9) which contemplate the enforcement of a deemed judgment with respect to unpaid costs by the Manager, Costs Assessment after a Certificate of the Costs of Costs Assessment has been filed (and thus imply that the certificate can be filed while the costs remain outstanding), Mr Price’s evidence establishes in this case that the defendants found themselves in a position where they were expressly told by the Manager, Costs Assessment that the certificates would not be released to them unless they paid outstanding costs which were in fact payable by the plaintiff who had refused or failed to pay them.

29. [47]

    If the defendants were able to file the certificates, and bring a deemed judgment against the plaintiffs into existence as a result, without incurring any costs themselves, restitution would not be the appropriate remedy to recover the costs owed, since the deemed judgment would be sufficient. However, the practical effect of the regime is that the defendants could not file the certificates without paying the costs first. At the preliminary point at which the defendants paid the outstanding costs for the release of the certificates, no deemed judgment was, or could have been, in existence. The defendants were subsequently out of pocket. Restitution should be available as a result.

30. [48]

    In addition I note the decision of Campbell AJA in Penson v Titan National (No 2) [2015] NSWCA 120 which was handed down on 1 May 2015, that is, the same day as these proceedings were heard. His Honour referred to the decision of Ward J in Kassem and endorsed it, stating:

31. [49]

    I note that his Honour Campbell AJA did not address the decision of Weber. However, his acceptance of the availability of restitution as a remedy, as discussed in Kassem, remains.

32. [50]

    That being established, it is necessary to consider the law of restitution and its application to the facts. As previously stated, the defendants relied upon the elements set out in Kassem. I consider that the three elements identified by the defendants as necessary to prove an entitlement to restitution are uncontroversial. Accordingly, I adopt the following statements her Honour made in Kassem:

33. [51]

    I am satisfied that the three elements discussed by her Honour in Kassem apply to the facts of this case. The plaintiff, in disputing the claim, failed to establish any matters that indicated the contrary proposition. I consider that the defendants are entitled to recover the amount they seek in restitution.

Gross Sum Costs Orders

1. [52]

   The remaining orders sought in the defendants’ Amended Notice of Motion were gross sum costs orders under s 98(4) Civil Procedure Act 2005 (“CPA”) for the costs of the proceedings commenced by the plaintiff by Notice of Motion on 26 August 2014 and determined by me on 12 March 2015 and the costs of these proceedings commenced by the defendants by way of Notice of Motion filed 27 March 2015.

2. [53]

   Section 98 CPA provides:

3. [54]

   The defendants relied on the judgment of the Court of Appeal in Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 for the proposition that the power to make a gross sum costs order ‘is appropriately exercised wherever the circumstances warrant its exercise’: Defendants’ Written Submissions at [23].

4. [55]

   The defendants submitted at [28] of their Written Submissions that:

5. [56]

   In that regard reliance was placed by the defendants on the decision of Beech-Jones J in Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863. Principles from Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 and In the matter of Palladium Consulting Pty Limited [2013] NSWSC 92 were also relied upon by the defendants in their Written Submissions.

6. [57]

   It was submitted by the defendants that a gross sum costs order is appropriate in this case because of factors set out at [32] of their Written Submissions which included the relative simplicity of the case, the fact that there was no cross-examination, the existence of evidence casting doubt on the plaintiff’s ability to pay costs in any event and the fact that the plaintiff had not paid, as at the date of the hearing, an outstanding amount payable by her as well as what was said by the defendants to be her willingness to ‘pursue relatively expensive court proceedings in ventilation of her dissatisfaction over relatively small amounts or technical legal issues.’

7. [58]

   The defendants also pointed to the history of the dispute which they said suggests that ‘if the parties are required to re-engage with the costs assessment system a similarly drawn-out process may occur.’ The defendants also relied upon what was asserted to be the unnecessary expense and delay in payment of costs following costs assessments involving the parties in relation to which it was submitted that ‘the defendants have been put to unnecessary expense, have paid costs and been kept out of their money.’

8. [59]

   The final matter relied upon by the defendants as warranting the making of a gross sum costs order was the potential for satellite litigation, in relation to which it was submitted:

9. [60]

   Ms Castle’s oral submissions at the hearing on 1 May 2015 made it clear that the potential for ongoing costs disputes was the principal factor relied upon by the defendants to warrant the making of a gross sum order. Ms Castle submitted:

10. [61]

    In relation to the quantum of any gross sum order to be made, the defendants quoted the following in their Written Submissions from Harrison v Schipp, supra at [22]:

11. [62]

    It was submitted that the ‘broad brush’ approach contemplated in that passage should be adopted, subject to the making of a discount for the contingencies of the assessment process. The defendants submitted that such discounts ‘tend to be in line with the reduction which would be expected on costs assessment or taxation’: Defendants’ Written Submissions at [35].

12. [63]

    The quantum of costs sought by the defendants was 80% of the costs they were said to have incurred. In terms of the costs incurred reliance was placed on the affidavit evidence of Christopher Price and Chloe Ellis. The former affidavit was concerned with the costs of the plaintiff’s Notice of Motion decided by me on 12 March 2015. The latter was concerned with the present Notice of Motion filed 27 March 2015. The evidence establishes that the total amount of costs incurred by the defendants is $49 050.32: Defendants’ Written Submissions at [36]-[38]. Applying the 20% discount, the amount sought by the defendants was $39 240.26, plus interest on that amount.

13. [64]

    The plaintiff submitted that this case could not be described as ‘relatively straightforward’ in the sense contemplated by Bobb v Wombat Securities, supra: Plaintiff’s Written Submissions at [16]. The plaintiff observed that:

14. [65]

    The plaintiff submitted that the defendants’ argument that satellite litigation would ensue if a further referral to costs assessment was made was speculative and casts ‘in a pejorative light any exercise of rights and enjoyment of protections under the costs assessment process’: Plaintiff’s Written Submissions at [18].

15. [66]

    In relation to the evidence of the defendants as to quantum, the plaintiff submitted that the total amount sought by the defendants is greater than the amounts considered in Bobb and Simone Starr Diamond v Talus Diamond and that ‘the larger the amount of costs, the more this Court should hesitate to depart from the ordinary processes of assessment’: Plaintiff’s Written Submissions at [19].

16. [67]

    In terms of the discount that should be made to the total costs incurred by the defendants if a gross sum costs order was to be made, the plaintiff disagreed with the defendants’ characterisation of the range of discounts in cases where such orders have been made as being ‘15-20%’. This figure was said by the plaintiff to have been arrived at by the defendant in reliance on an incorrect interpretation of the discount in Palladium as being 15% where, according to the plaintiff, the discount actually applied in that case was 33.3%: Plaintiff’s Written Submissions at [20]-[21]. The effect of the varied interpretations of Palladium was said in oral submissions by Mr Jones to mean that ‘if the plaintiff is correct…the spectrum erected in my learned friend’s submissions of between 15 and 30 per cent is actually not the case and we are talking more of a spectrum from 20 to 33 and a third per cent’: T 23: 15-25.

17. [68]

    Accordingly it was submitted by the plaintiff that if a gross sum costs order is to be made a discount of approximately 30% would be more consistent with the authorities (with reliance placed upon Palladium, supra and Dubow v Fitness First Australia Pty Ltd (No 2) [2012] NSWSC 961): Plaintiff’s Written Submissions at [21].

18. [69]

    Ms Castle for the defendants addressed this contention in her oral submissions, stating that the figure of 20% was arrived at as a midpoint between the discounts given in various authorities. Mr Price, in his affidavit at [49], had given evidence that a discount of 10% might be the result if costs were referred for assessment. Ms Castle submitted that:

19. [70]

    The plaintiff’s final submission in relation to the making of a gross sum costs order was that such an order should not be made in relation to the second proceedings, arising from the Notice of Motion filed 27 March 2015, because the defendants did not seek the order at the time judgment was delivered: Plaintiff’s Written Submissions at [22].

20. [71]

    In Bobb v Wombat Securities, Beech-Jones J stated:

21. [72]

    Though it is true that these proceedings were not particularly straightforward, the defendants, who are entitled to their costs, have nonetheless been able to quantify and evidence the costs incurred by them in a straightforward and, in my opinion, reasonable manner. I consider that the evidence provides me with the material necessary to make a fair order between the parties as contemplated in Palladium at [11].

22. [73]

    I consider that the same risk of further litigation exists in this case as was present in Bobb. Moreover, as in Bobb there is real doubt as to the plaintiff’s ability to pay a costs order in any event. In such circumstances, referring the matter to costs assessment would mean further expenses incurred by both parties in circumstances where the defendants may ultimately be unlikely to recover fully the costs owed to them by the plaintiff. The considerations of Giles JA in Harrison v Schipp, supra at [28]-[30] are analogous in this regard.

23. [74]

    I accept the defendants’ submission that making a gross sum costs order in this case would provide some finality and that such an outcome would be desirable and in the interests of justice.

24. [75]

    Accordingly I propose to make the gross sum costs orders sought by the defendants in relation to the two sets of proceedings for which they are sought. I accept the affidavit evidence as to the totality of the costs incurred by the defendants as being in the sum of $49 050.32.

25. [76]

    The question remains as to what discount should be applied to that figure. I have noted the dispute between the parties with respect to the range of discounts generally applied in cases of this type. In Bobb v Wombat a discount of 30% was made to the total costs incurred. I consider that a discount of 30% is more satisfactory in terms of covering the contingencies of costs assessment than the 20% argued for by the plaintiffs.

26. [77]

    Accordingly I do not consider it necessary to decide definitively whether the discount in Palladium was 15% or 33% though I note that the amount ordered in that case ($16 672) represents 85% of the figure arrived at by adding the costs taken into account by Black J at [13] of his judgment ($19 732). With respect to Mr Jones’ submission to the contrary, it thus appears that the discount in Palladium was indeed 15%.

27. [78]

    I propose to make a gross sum costs order representing 70% of the costs incurred by the defendants.

Interest

1. [79]

   The defendants in their Amended Notice of Motion sought interest on both the amount awarded to them by way of restitution and any gross sum costs order made in their favour. In respect of the first amount (restitution) the defendants were out of pocket in relation to the specific items of expenditure the subject of the same. Similarly, the defendants incurred expenditure in respect of their liability for legal costs. Accordingly I consider that they are entitled to the interest sought and propose to make orders in relation to each amount. I note that interest on the restitutionary amount is sought pursuant to s 100 CPA and interest on the gross sum costs order made is sought pursuant to s 101(4) CPA.

2. [80]

   Section 100 provides:

3. [81]

   Practice Note SC Gen 16 prescribes the rate of pre-judgment interest that may be awarded under s 100 of the Civil Procedure Act as being:

4. [82]

   Section 101 CPA provides:

5. [83]

   The prescribed rate in relation to s 101 is that contained in UCPR rule 36.7 which states:

6. [84]

   In the defendants’ Written Submissions at [39] it is stated that the defendants will prepare a calculation of interest based on the amount awarded. The defendants are to provide to my Associate and to the plaintiff a Schedule setting out their interest calculations in relation to both amounts awarded (restitution and costs) before 4pm Wednesday 2 September 2015 and I grant leave to the plaintiff to reply, if necessary, by 4pm Tuesday 8 September 2015. In the interests of avoiding further costs arising I propose to make orders as to interest in chambers after that date.

Orders

1. [85]

   Accordingly I make the following orders:

   1. (1)

      The plaintiff is to pay the defendants the sum of $3264.65.

   2. (2)

      The plaintiff is to pay the defendants $34 335.30 as a gross sum costs order under s 98(4) Civil Procedure Act in relation the proceedings specified in orders 3-4 of the defendants’ Amended Notice of Motion filed 27 March 2015.

   3. (3)

      The plaintiff is to pay interest on the sums awarded in orders (1) and (2) above. The defendants are to provide to my Associate calculations as to the amount of interest payable in relation to each sum by 4pm Wednesday 2 September 2015. I grant leave to the plaintiff to reply to the calculations if necessary by 4pm Tuesday 8 September 2015. As noted above, orders as to interest are to be made in chambers following receipt of final calculations as to interest made by the parties, or as may be agreed by them.