Fordyce v Leung as executor of the estate of the late Robert Ho; Fordyce v Leung as executrix of the estate of the late Robert Ho

1. [1]

   HIS HONOUR: Paul Mervyn Fordyce once acted as the solicitor for the defendants. In 2014, a dispute arose between them concerning his bill for legal costs and disbursements. On 17 June 2014, the defendants applied for assessment of approximately $760,000 worth of those costs. Despite their antiquity, those assessments have not been finalised, and Mr Fordyce has appealed from some of the determinations that have been made. Those assessments are not the subject of these reasons.

2. [2]

   However, also in 2014, the defendants commenced proceedings in this Court in relation to disputed costs disclosures and retainers relied upon by Mr Fordyce in the assessments. Those proceedings were heard by Kunc J: Claudia Leung in her capacity as Executrix of the Estate of the late Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading [2019] NSWSC 18. Following that decision, on 1 March 2019, his Honour ordered Mr Fordyce to pay the defendants’ costs: Claudia Leung in her capacity as Executrix of the Estate of the late Robert Ho v Paul Mervyn Fordyce t/as Pmf Legal Trading (No 2) [2019] NSWSC 175. No appeal was taken from either of his Honour’s judgments. These proceedings are concerned with assessments of the costs that Kunc J ordered Mr Fordyce to pay to the defendants.

3. [3]

   There are two separate costs assessments in relation to the 1 March 2019 costs order. The first is assessment number 2019/236020, which relates to disbursements. The second is assessment number 2012/313928 and relates to professional fees. The Costs Assessor issued what he described as a “pre-completion certificate” and statement of reasons in 2019/239020 on 28 October 2020. Mr Fordyce commenced an appeal from that decision in the District Court on 29 March 2021. The Costs Assessor later issued another “pre-completion certificate” in 2020/313928 on 21 May 2021. Mr Fordyce commenced an appeal from that decision in the District Court on 25 May 2021.

4. [4]

   On 30 September 2022, almost 2 years after the first pre-completion certificate was issued and 18 months after the second was issued, Mr Fordyce commenced the present proceedings by summons in each case seeking leave to appeal under s 385(2) of the Legal Profession Act 2004. The entire provision is as follows:

5. [5]

   The appeals commenced by Mr Fordyce in the District Court in accordance with s 384(1) of the Act relate to the same pre-completion certificates. Those proceedings remain on foot. They are confined by s 384(1) to questions of law. A judicial review application by Mr Fordyce to the Court of Appeal in relation to these issues was dismissed upon the basis that the decision appealed from did not decide the issue on a final basis and that the review procedures in the 2004 Act are a more appropriate process: Fordyce v Leung [2022] NSWCA 55.

6. [6]

   The Amended Summons in each case filed by Mr Fordyce on 4 November 2022 in this Court seeks the following orders or relief:

7. [7]

   Mr Fordyce’s principal complaint relates to the interpretation and operation of s 368(2) of the Act. Section 368 is in these relevant terms:

8. [8]

   Mr Fordyce maintains that, despite the wording of s 368(2), a Costs Assessor may not “issue more than one certificate in relation to an application for costs assessment”, whether at the same time or at different stages of the assessment process or, on Mr Fordyce’s case, at any time at all, if the certificates arguably deal with the same items. The parties agree that s 368(2) has not been the subject of any judicial consideration on the questions raised by Mr Fordyce.

9. [9]

   Mr Fordyce’s submissions outlined his contentions in the following ways. The wording of s 368(2) of the Act has been the same since an amendment made introducing a provision to like effect was inserted into the Legal Profession Act 1987. The terms “pre-completion” or “pre-completion certificate” are not defined. Apart from making what he referred to as a pre-completion determination, Mr Fordyce submitted that the Cost Assessor, in December 2021, purported to make a second and final determination of all of the same costs that he had made in his pre-completion determination. Mr Fordyce further submitted in writing in these terms:

10. [10]

    Mr Fordyce’s submissions continued in these terms:

11. [11]

    Mr Fordyce contended that despite the otherwise clear and unambiguous words of s 368(2), the only power to vary or amend a costs determination was in the case of inadvertent error for which s 371 of the Act provided and which, on this submission, covered the field. Mr Fordyce said that such a conclusion was reinforced by s 372, which provides as follows:

12. [12]

    It is convenient to deal with these propositions now. Section 371 in terms deals with the separate and distinct issue of inadvertent error. It does so in words that make it clear that an assessor should have the ability in the case of an inadvertent error to correct it. So much is hardly controversial. However, the section does not expressly, and in my view does not by implication, say or suggest anything by way of limitation upon the interaction between or among two or more certificates issued by a costs assessor in accordance with the power given by s 368(2). Section 371 in fact has nothing to say about the relationship between or among such certificates at all. It is to my mind a stand-alone section in the nature of a slip rule provision dealing with the power to correct errors. I cannot accept that s 371 operates to constrain the issue of certificates at the same time or at different stages of the assessment process which are then accommodated according to their terms in the final determination.

13. [13]

    Nor does s 372 have any similar effect. That provision does not in express language, and does not by implication, say or suggest that section 368(2) can have no operation unless the certificates that are issued deal with discrete matters. Indeed, the fact that they are binding on all parties and that no appeal or other assessment lies in respect of the determination “except as provided” elsewhere in the Act, is a clear indication that the reference in the chapeau to the section to the determination being final, is itself a qualified reference. Mr Fordyce’s contention that this must mean that every certificate issued as a pre-completion certificate could then be the subject of an appeal, with potentially multiple proceedings in the same assessment process, is no more than a statement made in terrorem. The prospect that the legislature could not have intended, or possibly did not anticipate, such a cumbersome outcome is not a reason to conclude that the words of s 369(2) should be read down or ignored.

14. [14]

    Reduced to simple terms, the real and only issue is whether a costs assessor has the power to issue an interim certificate that is, or may be, later qualified by a final certificate. Put another way, can a costs assessor legitimately issue a certificate for payment of an amount that is to be treated as issued on account of the final liability for all costs ultimately assessed to be payable?

15. [15]

    The defendants submitted that the answer to these questions is “yes”, that the practice of making interim assessments is one of very long standing in Australia and that there are very good reasons why this is so. I was referred to the following matters by Mr Corbett of counsel, who appeared for the defendants, in support of those general submissions. First, Mr Corbett submitted that s 368(2) is clear and unambiguous, but that if resort to extraneous materials were necessary, such material does not support Mr Fordyce’s contentions. Secondly, Mr Corbett submitted that the particular facts in these cases show that the pre-completion certificates issued by the Costs Assessor do not establish or demonstrate the existence of the harm that Mr Fordyce maintains a literal interpretation of s 368(2) would produce. These are dealt with in turn.

Interpretation of s 368(2)

1. [16]

   Is there a need to cure an ambiguity by reference to extraneous materials? Mr Fordyce maintains that this provision cannot be read literally to mean what it says. Mr Corbett says that the provision is clear and unambiguous. Against the contingency that there is doubt about the correct meaning of the sub-section, the following materials were drawn to my attention as a possible aid to interpretation.

2. [17]

   The power to issue “separate or interim” certificates for costs has existed in New South Wales since at least 1916. Rule 46 of the Rules of the Supreme Court (Costs), which came into effect on 1 January 1916, was as follows:

3. [18]

   The power to “make separate and interim certificates” was also set out in the Supreme Court Rules 1970, Part 52, Division 7, rule 59, which was in the following relevant terms:

4. [19]

   This rule distinguished between “interim” and “final” certificates, and confirmed that the taxing officer “may make a separate or interim certificate in respect of any item of a bill.”

5. [20]

   In 1993, amendments were made to the Legal Profession Act 1987 with the introduction of the Legal Profession Reform Act 1993. These reforms replaced the system of taxation under the 1970 Rules with a system of “costs assessment”, intended to reduce complexity and time, and to introduce a faster, easier and cheaper system”: The Hon. J.P. Hannaford, NSW Legislative Council Parliamentary Debates, Hansard, NSW Legislative Council, 16 September 1993, 3269ff. The new s 208J headed “Certificate as to determination” provided that “On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination.” Any doubt that may have existed about the power of the costs assessor to make interim determinations would appear to have been dispelled by the introduction of s 208J(1A) by the Legal Profession Amendment Act 1996 which said:

6. [21]

   The Explanatory Memorandum to the Bill that introduced s 208J(1A) said this:

7. [22]

   Mr Fordyce embraces this explanation as indicating that the reference to “costs that are agreed to” constrains the power to issue more than one certificate. Mr Corbett submitted that the reference to agreed costs was no more than an example of one situation in which an interim certificate might issue.

8. [23]

   Section 368(2) was the successor to s 208J(1A). It remains in the Legal Profession Uniform Law Application Act 2014 in s 70(2).

9. [24]

   The Costs Assessors Rules Committee, of which by way of complete disclosure I note I was an original member, was established under the 1987 Act to make rules of procedure for costs assessment. It produced a bulletin containing guidelines for assessors: see Ryan v Hansen t/as Hansens Solicitors (2000) 49 NSWLR 184; [2000] NSWSC 354 at [27]. That bulletin referred to the practice of interim certificates being issued. The Committee also later produced in 1997 the “Costs Rule – Certificates of Determination”, which provided standard forms, including Form 6, which was to be used when the assessor “has determined part of the costs…shall be paid as an interim payment”. Form 6 described the interim payment as “an interim payment…pending the final assessment”.

10. [25]

    The defendants submitted that the power conferred by s 368(2) of the 2004 Act should be understood against the background of the legislative and regulatory history authorising, and the practice of issuing, interim certificates pending a final assessment.

The present case

1. [26]

   In Harper v Firbank [1918] 2 KB 509, the Court of Appeal expressly endorsed the power of a Taxing Master, in certain circumstances, to issue an “interim certificate” and to vary an “interim” determination by a further certificate. The Court of Appeal concluded that, if a certificate was expressed to be “interim” or “on account of” a liability, that would not preclude variation by a later certificate. Provided a later decision to disallow a particular cost allowed on an interim determination was made on account of the assessment of remaining items in the bill on a final basis, an interim determination could be revisited. Pickford LJ at 516-518 said this:

2. [27]

   Warrington LJ was of the same opinion. Scrutton LJ also agreed and said this at 521-522:

3. [28]

   In the present case, the costs assessor wrote to the parties on 19 August 2020 indicating that the assessment of costs had been assigned to him. He made some preliminary and general comments and observations to which it is unnecessary to refer. However, the costs assessor referred specifically to Mr Fordyce’s concern about separately assessing expenses and fees and to the “severe prejudice” to the Fordyce parties claimed by Mr Fordyce if this were to occur. The costs assessor went on to outline what he proposed, and later under the heading SUMMARY indicated that he was inclined to do certain things, including the following:

4. [29]

   On 15 September 2020, Mr Fordyce wrote to the costs assessor in terms that included the following:

5. [30]

   The Costs Assessor replied to that (and other) letters on 22 September 2020, and under the heading “Pre-completion Certificate” he included the following:

6. [31]

   Shortly thereafter, the Costs Assessor dealt with the disbursements in his first pre-completion certificate. He made it clear in his reasons, in terms redolent of the views expressed by the English Court of Appeal, that his pre-completion certificate was not to operate in a way that precluded variation of the assessed amount at a later time: the costs assessor’s certificate was, in the words of the Court of Appeal, on account of the remaining items in the bill, and did not deal specifically with certain items. His Pre-Completion Costs Assessment Reasons dated 28 October 2020 made this clear:

7. [32]

   As if to re-emphasise this point, the Costs Assessor said the following in his Pre-Completion Costs Assessment Reasons dated 21 May 2021:

8. [33]

   There is in the circumstances an informative symmetry between the English Court of Appeal decision and the actual result in the assessments under consideration here, particularly in light of the correspondence between the Costs Assessor and the parties and his Pre-Completion Costs Assessment Reasons.

Consideration

1. [34]

   Mr Fordyce maintains that while a certificate could be issued under s 368(2) or s 208J(1A) in relation to an item of costs before completion of the whole assessment, it must be a final “determination” in relation to that item, which item cannot be revisited by a later certificate. Mr Fordyce seeks to draw support for this conclusion by maintaining that the issue of a certificate by a costs assessor has the result that the costs assessor is then functus officio with respect to the items considered and assessed in the certificate. He submitted that the doctrine of finality supported his position.

2. [35]

   As the defendants point out, there is nothing in the text of the Act that limits the power in the way Mr Fordyce suggests. Any such limitation on the power must therefore be implied. However, such a suggested limitation does not avail Mr Fordyce in this case, having regard to the way in which the costs assessor dealt with the items, which was in accordance with the long-established practice considered in Harper v Firbank and the express provision to be found in rule 59.7 of the 1970 rules.

3. [36]

   With respect to Mr Fordyce, the conclusion he asks me to draw is not one that in my opinion flows from a consideration of the relevant provision in this case. Moreover, his purported reliance on the proposition that a costs assessor becomes functus once a certificate is issued is a tautological conclusion: it would only flow, if at all, if his argument were correct. It is, however, not a reason or factor that informs or supports his submission that his argument is correct.

4. [37]

   Finally, the consequences that Mr Fordyce suggests would flow if his arguments are not accepted are illusory. So much is apparent from the dearth of judicial decisions that have considered the allegedly inconvenient or unjust results that Mr Fordyce warns a literal interpretation of s 368(2) would produce. On the contrary, provided that a full account may be taken of the competing claims in the final costs assessment process, the convenience of interim or pre-completion certificates is obvious. For example, if the party liable is required, in an appropriate case, to make an early payment of some money on account of their liability, that is a better approximation of justice than the alternative: Mars UK Limited v Teknowledge Limited [2000] FSR 138; Brereton J (writing extra-judicially) in his Report of the Chief Justice’s Review of the Costs Assessment Scheme (Supreme Court of New South Wales, 12 March 2013), [3.8.1] – [3.8.2].

5. [38]

   In the present case, the costs assessor’s reasons make it perfectly clear that all parties to the assessment process would be entitled to a full accounting by way of reconciliation between certificates produced by him in the event that either party wished that to occur.

6. [39]

   Mr Fordyce also raises a ground of appeal contending that the assessor contravened the requirement in s 359(1) of the 2004 Act that he give each party a reasonable opportunity to be heard and to make submissions. The assessor’s reasons, however, make it abundantly clear that he was exceedingly forbearing in his approach to his task. I am unable to discern any basis that is apparent from those reasons, or the material that is otherwise before me, including Mr Fordyce’s submissions, that could faintly support a conclusion that Mr Fordyce was not given the reasonable opportunity to which the section refers.

7. [40]

   In my opinion, s 368(2) is not subject to the limitations or restrictions that Mr Fordyce describes. The terms of the sub-section are clear. A costs assessor has the power to issue more than one certificate in relation to an application for costs assessment and such certificates may be issued at the same time or at different stages of the assessment process. That includes the power to issue an interim certificate that is, or may be, later qualified by a final certificate. I consider that a costs assessor may legitimately issue a certificate for payment of an amount that is to be treated, in effect, as issued on account of the final liability for all costs ultimately assessed to be payable.

Should leave be granted?

1. [41]

   Mr Fordyce requires leave pursuant to s 385(2) of the Act. The considerations that inform the question of whether leave should be granted in a case such as this were helpfully considered by Walton J in Ackerman v Morgan [2019] NSWSC 1250 at [49]-[53].

2. [42]

   The defendants submitted that the following matters weighed in favour of a refusal of leave.

3. [43]

   First, Mr Fordyce has commenced appeals in the District Court pursuant to s 384 of the Act. Those appeal proceedings are still current.

4. [44]

   Secondly, Mr Fordyce’s appeals to this Court were not commenced in a timely manner. Even though the District Court appeals were commenced within time, Mr Fordyce has not sought to transfer those proceedings into this Court.

5. [45]

   Thirdly, the assessor has now completed his determinations on a final basis. Significantly in my opinion, Mr Fordyce has not demonstrated that the theoretical or hypothetical iniquities that he has maintained might flow from the issue of multiple certificates in a costs assessment process have come to fruition in his case. As I have already observed, the detailed reasons provided by the costs assessor make it plain that any disadvantage that might possibly flow from the combination of certificates that he has issued would be accommodated or taken into account by him if required. Mr Fordyce has not satisfied me that he is the beneficiary of any unfairness or misfortune in the events that have occurred.

6. [46]

   Finally, Mr Fordyce has previously relied upon one of the judgments based on a pre-completion certificate that he now attacks: see Fordyce v Leung [2022] NSWCA 55 at [113]:

7. [47]

   To that limited extent at least, Mr Fordyce appears to be approbating and reprobating.

Conclusion

1. [48]

   Mr Fordyce’s arguments concerning s 368(2) are in my view not even superficially attractive. However, as all parties accept, there has been no judicial consideration of his contentions previously. Having regard to the view I have formed, that may not be terribly surprising.

2. [49]

   In these circumstances I consider that the following orders should be made:

   1. (1)

      Grant leave to Mr Fordyce for the limited purpose of arguing what I shall describe as the s 368(2) grounds notified in the Amended Summons in each case.

   2. (2)

      Dismiss the appeals relying on those grounds.

   3. (3)

      Otherwise refuse leave to rely upon the balance of grounds notified in the Amended Summons in each case.