Coshott v Commonwealth Bank of Australia

1. [1]

   GLEESON JA: Application is made by Ljiljana Coshott and Robert Coshott for leave to appeal against a judgment of Kunc J delivered on 6 May 2020 (Coshott v Commonwealth Bank of Australia [2020] NSWSC 503) summarily dismissing the proceeding below against the Commonwealth Bank of Australia (the Bank), in which the only relief sought was a declaration in the following terms:

2. [2]

   On 30 July 2020, Ms Coshott and Mr Coshott filed a notice of appeal.

3. [3]

   On 4 September 2020, Ms Coshott filed a summons seeking leave to appeal.

4. [4]

   On 9 October 2020, the respondent Bank filed a motion seeking summary dismissal of both the summons and the appeal pursuant to Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 13.4, and dismissal of the appeal on the ground that it is incompetent: UCPR, r 51.41.

5. [5]

   In their written submissions filed 29 October 2020 the Coshotts sought leave to file an amended summons joining Mr Coshott as the second applicant. The Bank did not consent or oppose such an order being made.

6. [6]

   The Coshotts require leave to appeal under s 101(2)(e) of the Supreme Court Act 1970 (NSW) because the decision below is “an interlocutory judgment or order in the proceedings in the Court”. It is well-established that an order for the summary dismissal made under UCPR, r 13.4 is an interlocutory order: Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [11] (Allsop P, Tobias JA and Handley AJA). They also require an extension of time for filing of the summons seeking leave to appeal.

7. [7]

   At the hearing on 3 November 2020, Mr Coshott appeared by telephone link and briefly addressed the Court, speaking also on behalf of Ms Coshott. At the conclusion of the hearing the Court made the following orders and reserved its reasons:

   1. (1)

      Extend the time for filing of the summons seeking leave to appeal to 4 September 2020.

   2. (2)

      That Robert Gilbert Coshott be joined as the second applicant to the summons seeking leave to appeal.

   3. (3)

      Grant leave to the applicants to file an amended summons seeking leave to appeal, in the form of the draft annexed to the applicants’ submissions filed 29 October 2020.

   4. (4)

      The amended summons seeking leave to appeal be dismissed with costs.

8. [8]

   My reasons for joining in those orders follow.

Background

1. [9]

   In 2003, Sorby DCJ dismissed certain District Court proceedings brought by the Coshotts against the Bank, with costs, and later gave judgment on a claim in favour of the Bank for a debt on a MasterCard account, plus costs. In 2004, this Court dismissed an appeal by the Coshotts with costs: Coshott v Commonwealth Bank of Australia [2004] NSWCA 189.

2. [10]

   On 7 November 2008, Mr Coshott was made a bankrupt. The primary judge summarised the position with respect to that administration at J [14]-[19], which it is convenient to reproduce in full:

3. [11]

   On 31 August 2017, the Bank’s solicitors gave a written undertaking to the Coshotts’ then solicitors as follows:

4. [12]

   On 9 October 2019, the Coshotts filed their summons below seeking declaratory relief as indicated. In contending that the Bank is not entitled to indemnity under the costs orders in respect of work performed by its in-house lawyers and staff, the Coshotts relied upon what they said was the effect of the High Court’s recent decision in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 93 ALJR 1007 (Bell).

5. [13]

   In Bell the majority held that the Chorley exception (London Scottish Benefit Society v Chorley (1884) 13 QBD 872) is an anomaly and should not be extended to the benefit of barristers undertaking legal work for themselves and making a claim for their costs of doing so. The joint judgment (Kiefel CJ, Bell, Keane and Gordon JJ) said that Chorley cannot be justified by the considerations of policy said to support it, and accordingly it should not be recognised as part of the common law of Australia: at [3]. Gageler J agreed at [63], Edelman J agreed at [93], whilst Nettle J dissented on this question at [70].

6. [14]

   The joint judgment said at [50]:

7. [15]

   Gageler J was to similar effect as the plurality, explaining at [68]:

8. [16]

   On 11 November 2019, the Banks’ solicitors sent a letter to the applicants’ solicitor which confirmed the Bank’s undertaking given in August 2017: see [11] above.

9. [17]

   On 15 November 2019, the Bank made application by notice of motion for orders which included an order pursuant to UCPR r 13.4 that the proceedings be dismissed on the basis that the summons failed to disclose a reasonable cause of action, alternatively the proceedings are frivolous or vexatious, alternatively the proceedings are an abuse of process of the Court.

Primary judge’s reasons

1. [18]

   The primary judge gave two independent reasons for summarily dismissing the proceedings exercising his discretion pursuant to UCPR, r 13.4 on the grounds that the summons did not disclose a reasonable cause of action and was doomed to fail. First, the declaration sought was contrary to the common law of Australia, referring to Bell. Second, the declaration only raised a hypothetical or academic question such that the Court would never exercise its discretion to grant declaratory relief.

2. [19]

   As to the first reason, the dispositive reasoning is summarised at J [37]:

3. [20]

   His Honour said of (1) and (2), at J [40]-[43]:

4. [21]

   As to (3), his Honour said at [45]-[47]:

5. [22]

   As to the second reason, the dispositive reasoning is contained at J [55] – [58]:

6. [23]

   His Honour then addressed and rejected various arguments advanced by the Coshotts as to why there is nothing hypothetical about the “resolution of the legal dispute between the parties in this case”. As the Coshotts repeat these arguments on the present application, it is convenient to reproduce his Honour’s reasons at J [60]-[61] and [64]-[67]:

Leave to appeal

1. [24]

   Only if the decision is attended with sufficient doubt to warrant its reconsideration on appeal will leave be granted. Ordinarily, it is only appropriate to grant leave where there is an issue of principle, a question of general public importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. It is not sufficient merely to show that the trial judge was arguably wrong: Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28], citing among others, Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46]; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32].

2. [25]

   In the present case, the proposed appeal raises no issue of principle or question of general public importance. The question determined by Kunc J was whether he should exercise his discretion to dismiss the proceedings under UCPR, r 13.4. The order of Kunc J was interlocutory, and as explained in Macatangay v State of New South Wales (No 2) at [11]:

3. [26]

   The sole ground of appeal challenging that order is:

4. [27]

   That ground as expressed does not identify any error.

5. [28]

   The Coshotts’ written submissions asserted that the primary judge made three errors: first, that his Honour incorrectly interpreted the declaration sought; second, that his Honour erred in finding that the decision in Bell entitled a corporation to recover under a party / party costs order for work done by in-house lawyers and staff in the conduct of litigation; third, that his Honour erred in finding that the question sought to be determined by the declaration was hypothetical.

6. [29]

   The first asserted error involves a misreading by the Coshotts of the declaration sought. As the Coshotts submitted in writing (par 6), the declaration seeks an answer to the question as to whether the Bank “is entitled under the party / party costs orders to recover professional legal costs for work performed by its in-house (employed) lawyers and staff” [emphasis added]. His Honour did not misinterpret the declaration.

7. [30]

   In oral argument, Mr Coshott complained that his Honour had misunderstood the declaration as also raising an argument about how employed solicitor costs are to be assessed or calculated, which his Honour addressed at J [45]-[47] (see [21] above). I do not agree. The assessment or calculation argument was directly raised by the Coshotts’ submissions below at pars 15 and 18, where it was argued that Bell has changed the way in which self-represented parties can claim costs for work done by lawyers employed by them.

8. [31]

   As to the second asserted error, whether or not the remarks in the joint judgment in Bell at [50] and Gageler J at [68] (see [14] and [15] above) are properly read as part of the ratio or constituted seriously considered dicta of the High Court binding on his Honour and any intermediate appeal court, the primary judge was not arguably wrong in finding that the terms of the declaration sought were contrary to law. Nothing in Bell casts doubt on the entitlement of a party using an employed solicitor to recover costs under a party / party costs order.

9. [32]

   As to the third asserted error that the declaration sought is hypothetical, the Coshotts have not established any injustice. As indicated this was an independent reason for his Honour’s decision.

10. [33]

    Counsel for the Bank emphasised that there was no challenge to his Honour’s factual finding at J [57] that there is no actual extant controversy, or even a foreseeable prospect of such a controversy, relating to either of the Coshotts that is required to be quelled by the making of the declaration. Given that unchallenged finding, there is no injustice to the Coshotts in dismissing the proceedings on the basis that the declaration is hypothetical: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581-582; [1992] HCA 10; JN Taylor Holdings Ltd (in liq) v Bond (1993) 59 SASR 432 at 466 (King CJ).

11. [34]

    In their written submissions (pars 16-23), the Coshotts repeated their submissions advanced below that the declaration sought is not hypothetical. Each of those matters was answered by his Honour’s reasons at J [60]-[61] and [64]-[67], which are set out above at [23]. None of the reasons given by his Honour for rejecting the Coshotts’ submissions have been shown to be arguably wrong.

12. [35]

    I would add the following observations in relation to the individual positions of Ms Coshott and Mr Coshott.

13. [36]

    As to Ms Coshott, the declaration sought did not challenge the basis for liability or the costs orders made by the District Court and this Court. What was sought to be impugned was the quantum of that liability, which is contingent on an assessment of the costs orders. Given that the Bank has not taken any step with respect to assessment of the costs orders and has also given an undertaking not to enforce the costs orders against Ms Coshott, the declaration is hypothetical.

14. [37]

    As to Mr Coshott, there is no challenge to his Honour’s finding concerning the combined effect of the discharge from his bankruptcy by operation of law under the Bankruptcy Act 1966 (Cth), ss 149 and 149A, and the costs orders being provable debts in his bankruptcy (with no revocation of the trustee’s decision or appeal from the decision of Rares J): J [51(5)], [55]. Given that Mr Coshott was released from the debts created by the costs order by operation of s 153 of the Bankruptcy Act again the declaration is hypothetical.

15. [38]

    One further matter should be mentioned relating to Mr Coshott’s position. The primary judge did not find it necessary to address the Bank’s additional submission that there is an issue estoppel or an Anshun estoppel arising from the dismissal by the Federal Court of Mr Coshott’s challenge to the trustee’s decision to admit the Bank’s proof of debt for costs in the sum of $201,529.19.

16. [39]

    As to issue estoppel, the judicial decision of Rares J dismissing Mr Coshott’s challenge to the decision of his trustee-in-bankruptcy to partially admit the Bank’s proof of debt based on the costs orders was final and the parties to that decision, Mr Coshott and the Bank, are the same persons as the parties to the declaratory proceedings in which the estoppel is raised: Ekes v Commonwealth Bank of Australia [2014] NSWCA 336 at [110] (Bathurst CJ).

17. [40]

    Prima facie, there is no injustice in not permitting Mr Coshott to make a collateral attack in the Supreme Court on the final decision of Rares J in the Federal Court. Not having appealed against the decision of Rares J, the quantum of Mr Coshott’s liability to the Bank under the costs orders is established for the purposes of the administration of his bankrupt estate. The declaration sought below would directly conflict with the decision of Rares J. However, it is not necessary to express any concluded view on the question of issue estoppel as this point was not relied upon by the Bank in this Court by way of a foreshadowed notice of contention.

18. [41]

    I conclude that leave to appeal should be refused.

19. [42]

    As to costs, the Bank did not seek any order for costs of the summons for leave to appeal. The position taken by the Bank reflects a generous attitude in dealing with the Coshotts as litigants in person; it was also consistent with the approach of the Bank in giving Ms Coshott the undertaking referred to above not to enforce the costs orders.

Notice of appeal

1. [43]

   UCPR, r 51.41 provides:

2. [44]

   Given that leave to appeal is required and should be refused, the purported appeal is incompetent and should be dismissed on that basis.

3. [45]

   As to costs of the appeal, the Bank’s objection to the competency of the appeal by notice of motion filed 9 October 2020 was not made within 28 days after service on the Bank of the notice of appeal. In these circumstances the Bank is not entitled to costs of the appeal unless the Court orders otherwise: UCPR, r 51.41(2)(a). It is not necessary to address whether a different order should be made, because the Bank did not seek an order for costs of the appeal or the motion filed 9 October 2020.

4. [46]

   Accordingly, no order should be made as to the costs of the appeal or the Bank’s notice of motion filed 9 October 2020.

5. [47]

   SIMPSON AJA: The reasons given by Gleeson JA also express my reasons for joining in the orders of 3 November 2020.