Coshott v Barry

BEAZLEY ACJ: The applicant seeks judicial review of the decision of Balla DCJ given on 17 November 2015 in which her Honour dismissed the applicant’s appeal under the Legal Profession Act 2004 (NSW) (now repealed) against the decision of a costs review panel.

The Costs Review Panel (the Review Panel) had affirmed the assessment of the costs assessor that the respondents, who were solicitors, were entitled to the costs of acting for themselves in litigation in the Supreme Court of New South Wales in circumstances where a costs order had been made in their favour by Adams J (the costs order).

The terms of the costs order were as follows:

The terms of the order had not been opposed nor were they the subject of submission or comment by the applicant in the hearing before Adams J.

So far as is relevant on the summons for judicial review, the issue on the appeal to Balla DCJ from the Review Panel’s determination was whether the Review Panel had erred in applying the “Chorley exception”. This was a reference to the allowance, by the Review Panel, of the professional costs claimed by the respondents for acting for themselves in the litigation in the Supreme Court. The applicant contended before the primary judge that, in accordance with the definition of “legal costs” in the Legal Profession Act, s 4, the professional costs were only allowable if paid to a legal practice. As the respondents had not paid professional costs to a legal practice, the applicant had argued they were not entitled to professional costs.

The primary judge rejected the applicant’s submission for the following reasons.

First, her Honour held that the role of the Assessor, and then the Review Panel, was to carry into effect the costs order made by Adams J: see eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd (2015) 90 NSWLR 451; [2015] NSWCA 284 at [26].

Secondly, following from the first point, that if the Assessor had refused to carry into effect the costs order, she would have effectively been “redetermining the Court’s order”.

Thirdly, if the applicant had been of the view that there was some tension between the Civil Procedure Act 2005 (NSW) under which the costs order was made and the Legal Profession Act, her remedy was to have sought leave to appeal from that order.

Her Honour stated that those reasons were sufficient to determine the matter. Her Honour stated, however, that had it been necessary for her to have done so, she would have concluded that the definition of “legal costs” in the Legal Profession Act was irrelevant, for the following reasons.

First, the costs order was not made under the Legal Profession Act.

Secondly, her Honour observed that there was no definition of “costs” in the Legal Profession Act other than by reference to the definition of “legal costs”. Her Honour observed that the expression “legal costs” was not used in the costs order under consideration in this case.

Thirdly, her Honour considered that there was a legal basis for the making of such an order as was made by Adams J. Her Honour observed that the general rule was that a party was not entitled to costs when acting for himself or herself in litigation. However, that was subject to the Chorley exception, which gives certain professional costs to a litigant in person who is a solicitor.

The Civil Procedure Act, s 3, defines “costs” as follows:

The Civil Procedure Act, s 98 provides, relevantly:

The Legal Profession Act 2004 provided, relevantly:

At the outset of the hearing, the Court raised with counsel for the applicant whether the application for judicial review was maintainable in circumstances where the jurisdictional error for which the applicant contended assumed that the costs order made by Adams J did not include the respondents’ professional costs of representing themselves. If, as the respondents contended, the costs order included their professional costs, the summons for judicial review must be dismissed.

The parties made submissions on that issue, which are discussed below.

Before turning to the submissions of the parties, it is convenient to identify what is meant by the Chorley exception and whether the principle stated in that case applies to costs orders made under the Civil Procedure Act.

The principle takes its name from London Scottish Benefit Society v Chorley (1884) 13 QBD 872. In that case, the respondents, a firm of solicitors, had successfully defended an action brought against them by the appellant. An order for costs was made in their favour. On seeking the taxation of their costs, the solicitors contended they were entitled to costs as if they were acting for a different person, that is, not acting for themselves. The appellants contended that the solicitors were only entitled to costs on the same basis as a self-represented person and thus only entitled to disbursements. Neither argument succeeded in the terms in which it was advanced. Rather, as Brett MR stated, at 875-876:

Bowen LJ stated, at 877:

His Lordship stated that this rule was laid down in similar terms in “Dixon’s Lush’s Practice” as follows:

Questions have been raised about the continued application of the Chorley exception. This question arose in Wilkie v Brown [2016] NSWCA 128. In that case, which involved the provisions of the Legal Profession Uniform Law (NSW) and the Legal Profession Uniform Law Application Act 2014 (NSW), a solicitor sought professional costs for acting for himself in proceedings brought by the applicant. The Court did not determine the matter in circumstances where there was no contradictor before the Court to put any argument against the solicitor’s claim. However, the case law relating to the continued application of the Chorley principle was discussed, as were the relevant statutory provisions, including the definition of “costs … in relation to proceedings” in the Civil Procedure Act. “Costs” are there defined to mean “costs payable in or in relation to the proceedings [including] fees, disbursements, expenses and remuneration” (emphasis added).

In Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57 a majority of the High Court (Gibbs ACJ, Jacobs and Aickin JJ), relying on Chorley, held that a solicitor acting for himself or herself was entitled to recover costs. Subsequent authority has confirmed that as the ratio of the decision. In other words, Guss v Veenhuizen (No 2) has been interpreted as not being confined to the particular costs rules in issue in that case. However, as this Court also stated in Wilkie v Brown, at [28]:

Bechara v Bates [2016] NSWCA 294 concerned the Chorley exception in the context of a barrister who, having retained solicitors, also appeared for himself at the hearing of the proceedings. The Court, after noting, at [28], the criticisms made of the Chorley exception, considered that it was “bound by the decision in Guss, to the extent that current legislative provisions are materially similar to those considered by the High Court in that case”. The Court concluded, at [66], as it had in Wilkie v Brown, that “it [was] not appropriate to finally determine the important questions of construction raised in this case”.

Because I have come to the view that the applicant’s summons for judicial review should be dismissed for reasons unrelated to the question of whether the Chorley exception applies in New South Wales, this is also not an appropriate case to determine that question.

The applicant’s submissions may be summarised as follows.

First, the applicant accepted that the question whether the primary judge had committed jurisdictional error fundamentally depended upon the proper construction of the costs order. She contended that there had been no mention in the proceedings before Adams J of the Chorley exception, either in the written submissions of the parties to his Honour, or in his Honour’s judgment. She also pointed out that there was no reference in the costs order to ‘professional costs’, so that it could not be said that the reference in the order to the “costs of representing themselves” referred to the respondents’ professional costs as well as to disbursements.

The applicant submitted that even if the costs order, on its terms, included the respondents’ professional costs of acting for themselves, her Honour’s decision was affected by jurisdictional error, and thus susceptible to judicial review, in that she affirmed a position that did not reflect the law. The applicant contended that the effect and operation of the Civil Procedure Act, ss 3 and 98, and the Legal Profession Act, s 4, were such that the Chorley exception no longer applies in New South Wales.

The applicant pointed out that costs are the creation of statute and that there is no direct authority binding on this Court as to the proper application of the Civil Procedure Act, ss 3 and 98 and the Legal Profession Act, s 4. The applicant pointed out, however, that there have been intimations in a number of authorities that the Chorley exception may not apply under this legislation: see in particular Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29 at [29] and [43]; Wilkie v Brown at [28]-[29], [39] and [49].

The applicant referred to Cachia v Hanes (1994) 179 CLR 403 at 411, where the Chorley exception was described as “somewhat anomalous” and the justification for it as “somewhat dubious”. The applicant submitted that Cachia was the “best indication we get … as to the meaning of costs”. The applicant pointed to dicta of the High Court, at 414, where the Court stated:

The applicant submitted that this supports the applicant’s position because it “speaks of a concept of indemnity rather than, as it were, compensation, according to the Chorley principle”.

The applicant argued that if this Court determined that the Chorley exception did not apply to costs orders made under the Civil Procedure Act, she was not precluded, absent an estoppel, from attacking the decision of the primary judge by way of judicial review. The applicant contended that she was not estopped from raising the argument in relation to the Chorley exception notwithstanding that no point had been taken before Adams J that the Chorley exception did not apply to costs orders made under the Civil Procedure Act.

According to the applicant, a costs assessor and, in turn, a costs review panel, exercises an independent function so that, despite the terms of any order made by a court if, under the procedural rules of the court, professional costs for a solicitor litigant could not be ordered, those costs should not be included in the costs assessment.

The respondents contended that the question of whether the Chorley exception applied did not arise on this application. The terms of the costs order expressly provided for the respondents’ “costs of representing themselves”. The terms of this order included the respondents’ professional costs and was not by its express terms or by implication confined to disbursements.

The respondents pointed out that a costs order is an order of a court. It is in respect of that order that a party may seek an assessment of costs: Legal Profession Act, s 353(1) and in respect of which a costs assessor has jurisdiction to determine an application: s 367(4). The respondents submitted that to raise in the costs assessment the question of whether the Chorley exception applied constituted a collateral attack on the costs order and was contrary to the statutory costs assessment task, which was to, in the terms of the respondents’ submission:

The respondents further contended that the Court should not, in any event, in the exercise of its discretion, grant relief in circumstances where the applicant did not contest the terms of the order when made, and nor did she appeal from that order.

The applicant’s summons is for judicial review pursuant to the Supreme Court Act 1970 (NSW), s 69. The jurisdictional error for which the applicant contended derived from the statement by Basten JA in Wang v Farkas at [43], as follows:

I have come to the conclusion that the summons should be dismissed. Before stating my reasons for that conclusion, some preliminary observations need to be made. The applicant acknowledged that her entitlement to relief on her application for judicial review depended upon the meaning of the costs order. Her initial contention in support of that submission, that there had been no reference to the Chorley exception before Adams J, is not strictly correct. Although the expression ‘Chorley exception’ was not used by the parties, in their written submissions to his Honour, dated 22 November 2013, the respondents sought an order for costs as follows:

In her written submissions dated 26 November 2013 in response to the respondents’ submissions on costs, the applicant stated:

There is nothing in those submissions that indicates that the applicant did not comprehend that the respondents were seeking professional costs and not only their disbursements. Indeed, the tenor of the submissions is that she understood that the costs sought included professional costs.

In my opinion, the costs order was clear in its terms: it extended to the respondents’ professional costs as well as disbursements. This was apparent both on its terms and by reference to the submissions that were made by the parties in respect of the costs order itself. Even if it was arguable that the costs order was ambiguous, any ambiguity must be resolved through the usual process of construction. Extrinsic materials including the submissions of the parties may be taken into account to facilitate that process. In Polyaire Pty Ltd v K-aire Pty Ltd (No 4) [2007] SASC 36 Besanko J, at [28], said that:

As explained above, it was clear on the submissions made by the parties that the respondents’ professional costs were included in the order.

Once it is accepted that the costs order included the respondents’ professional costs, the applicant’s claim for judicial review must fail even if, as she contended, an order that included the professional costs of solicitors acting for themselves is contrary to legal principle. This is so for two reasons.

The first reason flows from the combined effect of the order, being an order of the Supreme Court, which is a superior court of record, and the statutory costs assessment task. The second reason, which was arguably only peripherally before the Court and was not subject to any detailed argument, is the operation of an estoppel upon the applicant now challenging the order.

An order of a superior court of record is valid unless and until set aside. This is so even if the order is made in excess of jurisdiction or is affected by legal error: State of New South Wales v Kable (No 2) (2013) 252 CLR 118; [2013] HCA 26 at [32]-[34]. The order could only be set aside on appeal to the Court of Appeal, or pursuant to the provisions of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The costs order has not been set aside. There was no appeal from his Honour’s order nor was any application made under the UCPR to review or vary it. Accordingly, it remains a valid order of the Court.

That then directs attention to the statutory task that the costs assessor, or on appeal from the costs assessor, a review panel, must perform. The relevant provisions in force as at the date of the costs order and the costs assessment in respect of that order have been set out above. It is not necessary to spell out that process beyond what is clear from the provisions themselves, save for one fundamental matter. Section 367A provides that:

In eInduct Systems v 3D Safety Services Basten JA made the obiter observation, at [26], that:

His Honour’s observation is correct and flows directly from the statutory task required by s 367A.

Thus, the position in this case is that the costs assessment process was required to be carried out in respect of the costs order. As a valid, final order it could not be the subject of any collateral attack, including by a challenge to its terms during the course of the statutory costs assessment task. The Costs Assessor and the Review Panel were required by statute to assess the costs on the basis of the costs order that had been made. They were not entitled to assess costs on the basis of what they might have perceived the law to be. For that reason, on an appeal from the Review Panel, the primary judge, as she correctly recognised, was not entitled to determine that the costs order was not made in accordance with law.

It follows that on the proper construction of the costs order, the respondents were entitled to have their costs, including their professional costs in acting for themselves, assessed by the costs assessor. Accordingly, it is unnecessary for the purposes of this matter to determine whether, having regard to the terms of the Civil Procedure Act, or, for that matter, the terms of the Legal Profession Act 2004 discussed above, the Chorley exception applies in New South Wales.

That conclusion makes it strictly unnecessary to consider the question of estoppel. For that reason, it is sufficient to note that the applicant did not, at the time the terms of the order were proposed by the respondents to Adams J, contend that the order should not be made in those terms as contrary to law or otherwise.

The order I propose is:

MEAGHER JA: I agree with the Acting Chief Justice that this application for judicial review should be dismissed with costs.

PAYNE JA: I agree with Beazley ACJ.