Barry v Coshott

BACKGROUND 2Stephen Barry and Martin Board were partners of a city law firm that acted for Robert and Ljiljana Coshott in proceedings up to 2003. The firm posted to Mr and Mrs Coshott on 15 October 2003 a bill of costs including a claim for interest, and filed an application for assessment on 20 November 2003. 3The costs assessment was delayed several years while professional negligence proceedings were conducted by Mr and Mrs Coshott against Mr Barry. Those proceedings were dismissed with costs on 11 October 2007. 4On 29 October 2008 the costs assessor finalised his determination of the November 2003 application for assessment of costs and issued a Certificate of Determination. Mr Barry received it on 7 November 2008. 5The certificate provided, inter alia: "1. THE APPLICATION IS DETERMINED BY SUBSTITUTING FOR THE DISPUTED COSTS AS A FAIR AND REASONABLE AMOUNT OF COSTS TO BE PAID TO THE PRACTITIONER THE SUM OF FIFTY-TWO THOUSAND, SIX HUNDRED AND SEVENTY DOLLARS AND TWELVE CENTS ($52,670.12). Note 1 The Amount of $52,670.12 includes the sum of $532.08 being the fee paid for the application (Section 208(3) of the Act). Note 2 Interest is payable on the amount of the costs assessed. The rate of interest to apply on the costs to be paid to the applicant is as prescribed by the Supreme Court from time to time (Section 208E(1) of the Act). 2. THE SUM OF FIFTY-TWO THOUSAND, SIX HUNDRED AND SEVENTY DOLLARS AND TWELVE CENTS ($52,670.12) IS TO BE PAID BY THE RESPONDENT TO THE APPLICANT. ... ISSUED ON 29 OCTOBER, 2008 [signed by the costs assessor]" 6On 10 November 2008 Mr Barry filed in the District Court the certificate, a Form 45 Registration Certificate of Costs Assessment, an affidavit and a cheque for the filing fee. The Form 45 Registration Certificate named Mr Barry and Mr Board as plaintiffs and Mr and Mrs Coshott as defendants, and specified the details of the judgment or order as: "The Certificate of the Assessment of Costs is attached Amount of Certificate $52,670.12 Payment made in reduction $0.00 Interest carried since date of Bill of Costs $24,750.58 Filing Fee $72.00 Interest rate $0.00 Total amount to be enforced as at date of (registration or filing) $77,492.70". 7Shortly thereafter, Mr Barry received a sealed copy of the Registration Certificate. 8Unbeknown to Mr Barry, on 7 November 2008 Mr Coshott was declared bankrupt. Mr Coshott remains an undischarged bankrupt. 9Some months later, in about February 2009, Mr Barry became aware of Mr Coshott's bankrupt status. No steps were taken by the firm to enforce the judgment that arose from the filing of the certificate, partly because other proceedings continued between the parties (some involving the status of the certificate) and because the firm held a Certificate of Title to Mr and Mrs Coshott's home as security for the unpaid costs. 10Although the certificate notes that "Interest is payable on the amount of the costs assessed" and the sealed Registration Certificate included an amount for interest, a computer record of the entry of the judgment stated, "Judgment Amount $52,670.12...Interest $0.00". 11Mr Barry became aware of this reference to nil interest on the court's computer record in late 2012. He made inquiries of the Registrar and the costs assessor: the Registrar stated that the entry of the judgment is only for the amount stated on the certificate; the costs assessor asserted that he was authorised to determine whether interest was payable and the rate of interest but not to award interest. 12As entry of a judgment is necessary for its enforcement (see Civil Procedure Act 2005, s 133), Mr Barry and Mr Board filed a notice of motion (bearing the same case numbers as the Registration Certificate) for orders enabling them to enforce their entitlement to interest. 13Mr and Mrs Coshott also filed two applications, one of which was abandoned during the hearing and was dismissed with costs. The other motion was to set aside the registration of the certificate. 14The standing of Mr Coshott as an undischarged bankrupt to make an application in the proceedings was challenged by Mr Barry and Mr Board. Counsel for Mr and Mrs Coshott did not press Mr Coshott's entitlement to maintain the application. The concession appears appropriate in view of authority that a bankrupt has no standing to set aside a judgment (see W R Henry & Son v Hodge [1963] VR 111; Hedwan v Hannouf (1997) 140 FLR 229). 15In the result, the application to set aside the registration of the certificate was continued by Mrs Coshott alone. The basis of this application was the bankruptcy of Mr Coshott prior to the filing of the certificate. The bankruptcy of Mr Coshott was also relevant to the application by Mr Barry and Mr Board seeking orders to enable the enforcement of interest.

THE CLAIM TO SET ASIDE THE JUDGMENT 16It is convenient to deal first with Mrs Coshott's application to set aside, "the registration of certificate of determination". 17The costs issues in the proceedings fall under the Legal Profession Act 1987, now replaced by the 2004 Act. 18Section 208J of the Legal Profession Act 1987 provided as follows: "208J Certificate as to determination (1) On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination. (1A) A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process. (2) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction. (3) 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. (4) For this purpose, the amount of unpaid costs does not include the costs incurred by a costs assessor in the course of a costs assessment. (4A) To avoid any doubt, this section applies to or in respect of both the assessment of costs referred to in Subdivision 2 of this Division (practitioner/client costs) and the assessment of costs referred to in Subdivision 3 of this Division (party/party costs). ..." 19In accordance with s 208J(3), when a certificate is filed, it is taken to be a judgment of the court. Its enforcement as a judgment, however, requires compliance with s 133 of the Civil Procedure Act 2005, which provides: "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." 20The approved form for filing of the certificate is Uniform Civil Procedure Rules 2005 Form 45, which in this case is labelled, "Registration Certificate of Costs Assessment". It may perhaps more appropriately be labelled as "Filing of Certificate of Costs Assessment Judgment". 21In any event, the amount of costs determined in the certificate was recorded on the court's computerised court record system, and thus, was entered in accordance with Uniform Civil Procedure Rule 36.11. 22Mrs Coshott submits that the filing of the certificate or "registration", should be set aside because it offends s 58(3) of the Bankruptcy Act 1966 (Cth). Section 58(3) provides: "(3) Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor: (a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or (b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding." 23Mrs Coshott relied upon both paragraphs (a) and (b) of s 58(3). Section 58(3)(a) is concerned with the enforcement of a remedy not the obtaining of one. A judgment, order or certificate cannot be enforced until it is entered under s 133 of the Civil Procedure Act 2005. Thus, s 53(a) is not concerned with the institution of proceedings and their maintenance up to the point of judgment (see Fraser v Commissioner of Taxation (1996) 69 FLR 99 at 111G). 24However, s 58(3)(b) appears to have application. The filing of the certificate is simultaneously both the commencement and conclusion of the proceedings, obtaining a file number and a judgment in the one action. Entering judgment was traditionally a step taken by a party and constitutes a fresh step (see Doran v Isaacs (1912) 12 SR (NSW) 699, ANZ Banking Group Ltd v Computer Plus [1992] 1 VR 607 at 608). 25In my view, the filing of the certificate was "to commence [a] legal proceeding". I did not understand Mr Barry and Mr Broad to contend otherwise. The same view was reached in Coshott v Barry & Anor [2012] NSWSC 850 at [47], a decision between the parties. 26Although Mr Barry and Mr Broad accept that because of Mr Coshott's bankruptcy, it was not competent for them to commence and maintain proceedings against him, nevertheless they submit that setting aside the judgment (i.e. the filing of the certificate) against Mrs Coshott is not the appropriate remedy. They submit Mr Coshott should be removed as a party and seek an order in their motion to this effect. 27Section 62 of the Bankruptcy Act 1966 (Cth) provides some support for the contention of Mr Barry and Mr Broad. It states: "Where a bankrupt is a contractor in respect of a contract jointly with another person or other persons, that person or those persons may sue or be sued in respect of the contract without the joinder of the bankrupt." 28Of course, the filing of the certificate was not done against only Mrs Coshott, but Mr Coshott also. He was listed as a defendant on the Form 45. That error is not fatal. Part 6 of the Uniform Civil Procedure Rules 2005 applies. The relevant rules are as follows: "6.20 Proceedings affecting persons having joint entitlement (cf SCR Part 8, rules 3 and 4; DCR Part 7, rules 3 and 4; LCR Part 6, rules 3 and 4) (1) Unless the court orders otherwise, all persons jointly entitled to the same relief must be joined as parties in any claim for that relief that is made by any one or more of them. (2) Unless the court orders otherwise, any other such person is to be joined: (a) as a plaintiff, if he or she consents to being a plaintiff, or (b) as a defendant, if he or she does not consent to being a plaintiff. (3) Despite subrule (1), a person may not be joined as a party to proceedings in contravention of any other Act or law. Note. See, for example, section 62 of the Bankruptcy Act 1966 of the Commonwealth." "6.21 Proceedings affecting persons having joint or several liability (cf SCR Part 8, rule 5; DCR Part 7, rule 5; LCR Part 6, rule 5) (1) A person who is jointly and severally liable with some other person in relation to any act, matter or thing need not be a defendant in proceedings with respect to that act, matter or thing merely because the other person is a defendant in those proceedings. (2) In any proceedings in which a defendant is one of a number of persons who are jointly, but not severally, liable in contract or tort, or under an Act or statutory instrument, the court may order that the other persons be joined as defendants and that the proceedings be stayed until those other persons have been so joined." "6.22 Court may order separate trials if joinder of party or cause of action inconvenient (cf SCR Part 8, rule 6; DCR Part 7, rule 6; LCR Part 6, rule 6) If the court considers that the joinder of parties or causes of action in any proceedings may embarrass, inconvenience or delay the conduct of the proceedings, the court: (a) may order separate trials, or (b) may make such other order as it thinks fit." "6.23 Effect of misjoinder or non-joinder of parties (cf SCR Part 8, rule 7 (1); DCR Part 7, rule 7 (1); LCR Part 6, rule 7 (1)) Proceedings are not defeated merely because of the misjoinder or non-joinder of any person as a party to the proceedings." "6.29 Removal of parties by order (cf SCR Part 8, rule 9; DCR Part 7, rule 9; LCR Part 6, rule 9) The court may order that a person: (a) who has been improperly or unnecessarily joined, or (b) who has ceased to be a proper or necessary party, be removed as a party." 29Rules 6.20 and 6.21 contemplate that whilst jointly entitled or jointly liable parties should ordinarily be joined to proceedings, nevertheless, that rule is subject to exceptions such as those in s 62 of the Bankruptcy Act 1966 (Cth) (see r 6.20(3)), and the discretion of the court (see r 6.21(2)). 30Thus, the court can strike out parties who have been inconveniently joined or whose joinder "may embarrass...the conduct of the proceedings" (see Ritchie's Uniform Civil Procedure NSW at [6.22.10]). Proceedings are not defeated because Mr Coshott has been wrongly joined (see r 6.23); the court may order that he be removed as a party (under r 6.29) especially where action was taken without cognisance of the bankruptcy of Mr Coshott (cf Ellis v Fisher [2001] VSC 621 at [29]). 31Two issues arise in relation to the removal of Mr Coshott as a party. The first is whether it is contrary to s 58(3) of the Bankruptcy Act 1966 (Cth) as being "a fresh step" in the proceedings. 32One possible answer to that is that the court's powers in Part 6 of the Uniform Civil Procedure Rules 2005 to remove Mr Coshott as a party are not dependent on an application by the creditor. Even if it were not competent for a creditor, in this case Mr Barry and Mr Board, to seek the removal of Mr Coshott, nevertheless the court acting of its own motion might not offend the provision of s 58(3)(b) by so doing (cf Fraser Property Developments Pty Ltd v Sommerfeld (No 2) [2005] QCA 242 and Gertig v Davies [2003] SASC 86). 33In any event, an application by a creditor to remove a party from a proceeding is not a "fresh step". The expression "fresh step" includes any step that advances the proceedings towards judgment (ANZ Banking Group Ltd at 608, 610) or "a step taken towards the satisfaction of [a] debt" (see Fraser at 115). Removal of Mr Coshott as a party does not advance the proceedings against him. Further, steps taken after the entry of the final judgment are probably not fresh steps in a proceeding: Bank of Australasia v Whitehead (1898) 24 VLR 308, Deighton v Cockle [1912] 1 KB 206, 209 - 214. 34The possibility of an order removing Mr Coshott being a "fresh step" was not the focus of Mrs Coshott's opposition to this course. The second, and primary issue, concerning the removal of Mr Coshott as a party is that Mrs Coshott submits it is ineffective to remedy the contravention of s 58(3) of the Bankruptcy Act 1966 (Cth) because the certificate upon filing, although enforceable as a judgment, is not a judgment of the court: Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172. 35Mrs Coshott submits as follows: "11.In Frumar, the NSW Court of Appeal considered the effect of a costs certificate enforceable in a court 'with no further action' under a provision equivalent to s 208J of the LPA. Handley A-JA said, for the Court (at [38], [40]): '[The provision] provides that a filed certificate with no further action' is taken to be a judgment. A filed certificate is not a judgment but is deemed to be one for enforcement purposes.'" "14.In Kassem, Ward J drew upon Frumar to reach a conclusion as to equivalent provisions of the Legal Profession Act 2004 (NSW) that a deemed judgment under a costs certificate could not be varied. Her Honour said: ... [21] The operation of both sub-ss 368(5) and 369(7) of the Legal Profession Act is that, on the filing of a costs certificate in the office or registry of a Court with jurisdiction to order payment of the amount of money the subject of that costs assessment, that certificate is taken to be a judgment of the Court with no further action. Such a judgment is recognised as taking its force from the statute; it is not a judgment of the Court in the sense that there has been an adjudication of the claim (Doyle v Hall Chadwick [2007] NSWCA 159 at [47]-[54]; Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172 at [8])." "15.Kassem was not followed by Garling J in Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181 at [114]. However, Garling J was concerned with other conclusions reached in Kassem, which are not presently material. 'No further action' by court Taken together, these observations in Frumar and Kassem indicate that the role of a court receiving registration of a costs certificate is purely administrative. Once the certificate is accepted for registration, it must 'with no further action' be entered and enforced according to its terms. The receiving court has no discretion to alter its legal effect, being against the persons, and for the amount, identified in the costs certificate. All the receiving court can do is set aside registration if the costs certificate is shown to be defective. This conclusion is reinforced by s 208K of the LPA, which renders the costs certificate 'binding' and prohibits any 'appeal or other review' except in accordance with the LPA. It is also consistent with s 133 of the CPA and r 36.11 of the UCPR, which require the costs certificate to be entered for the purposes of enforcement." 36Insofar as I follow this argument, there are two aspects that I find unpersuasive. 37First, the submission seeks to give the words in s 208J(3), "with no further action", a wider meaning than they bear. It was submitted that these words preclude any further action being taken rather than merely remove the necessity for further action. I do not think these words have this effect. 38Section 208J(3) does not, in my view, preclude the exercise of the powers in r 36.11 to enter a judgment obtained by the filing of a certificate, or to correct errors in a certificate under the slip rule as provided by r 36.17. Nor does it preclude orders under r 36.15, which is necessary for Mrs Coshott to obtain the relief she seeks. In my view, the words "with no further action" confirm that s 208J(3) precludes there being a contest about whether a judgment should be granted on the certificate. Mere filing is sufficient. 39The second reason why I find this argument unpersuasive is that s 208J(3) only operates to make a filed certificate a judgment "for the amount of unpaid costs". The date of the certificate, for example, does not become the date of the judgment (see Kassem & Secatore (as joint liquidators of Pan Pacific Age Care Services Pty Ltd (in liq)) v Koutavas [2012] NSWSC 236 at [23], Scope Data Systems Pty Ltd v David Goman Rep Partnership Bdo Nelson Parkhill [2008] NSWSC 42 at [15], [53] - [55]). 40As s 208J(3) states, only "the amount of unpaid costs" in the certificate has, upon filing, the force of a judgment, the other aspects of the certificate - the date, the parties, notations or determinations about whether interest is payable, are unaffected by the deeming provision. 41It follows that the date of the "deemed" judgment, the parties to it, and all matters other than "the amount of unpaid costs" are to be found on the filed Form 45. The sealed Form 45 determines the date of the deemed judgment and the parties to it. 42Thus, by removing Mr Coshott as a party to the filed Form 45, called "Registration Certificate of Costs Assessment", Mr Coshott is no longer subject to a judgment in the form of a certificate. The certificate remains in its original form containing the determinations made by the assessor before Mr Coshott's bankruptcy, but once Mr Coshott is removed as a party from the sealed Form 45, he is not a party to the deemed judgment and the contravention of s 58(3)(b) of the Bankruptcy Act 1966 (Cth) has been remedied. 43In reaching this conclusion, I take into account that there is no precedent cited or principle or policy called in aide to support a rule that a judgment against one joint debtor is invalidated by the bankruptcy of the other. I note that in the transcript of the hearing between the parties before Adams J in the Supreme Court the matter was raised. His Honour was recorded as commenting (20 November 2013, at p 6 line 16-24): "You have got some authority, have you, that a judgment against two where the judgment against one is irregular. Let me give a more brutal example. Let us suppose you issue a summons for a debt against two debtors and that you only serves one better. Let us suppose you get judgment against both debtors and one debtor comes along and says: You didn't serve me, you have to set aside the judgment. The other debtor says: she didn't serve him but she did serve me so you have to set aside the judgment and to be brutal, I think the judge would say: Go away. What is the difference in substance between that and this?" 44The transcript, no doubt, has some errors in the recording but the sentiment is clear and I agree with it. A judgment is not bad against one party merely because it is bad against another. 45One final matter that arises in respect of Mrs Coshott's application is that Mr Barry and Mr Board say that Mrs Coshott is estopped from maintaining a claim to set aside the registration of the certificate. The nature of the estoppel is estoppel by judgment either by reason of a res judicata or Anshun estoppel. 46The basis of this submission comes from the hearing between the parties in the Supreme Court. 47In Coshott v Barry & Anor [2012] NSWSC 850, Mrs Coshott sought to set aside costs certificates and the judgments entered on them. That application was heard by McCallum J. Her Honour concluded that the two judgments with which she was dealing were properly obtained and not liable to be set aside so the application was refused. Her Honour later declined an application to reconsider her conclusions (see Coshott v Barry & Anor (No 2) [2012] NSWSC 944). Mrs Coshott sought on another basis to restrain enforcement of the certificates in Coshott v Barry (No 3) [2012] NSWSC 1248. Schmidt J referred to the decision of McCallum J and stated at [8] - [9]: "That Mrs Coshott is now entitled to pursue another basis upon which order 5 of her second further amended summons might rest in respect of these judgments was disputed, it appears for good reason. Mrs Coshott has been heard. That she is now entitled to advance yet another basis for relief under order 5, is not readily apparent. Mrs Coshott's second further amended summons was recently filed by consent and raises in order 2A another judgment not dealt with by McCallum J. That Mrs Coshott has a prima facie case in relation to the irregularity which she now wishes to pursue in relation to the certificates on which that judgment and the other judgments already dealt with by McCallum J is debatable, it seems to me..." 48Order 2A was Mrs Coshott's application to set aside the filed certificate on the additional ground of Mr Coshott's bankruptcy. In due course order 2A in that matter returned for final hearing. The application was dismissed by consent without a hearing on the merits. 49Whilst criticisms of Mrs Coshott's repeated attempts to set aside the filed certificate judgments are understandable, I am not inclined to hold that she is estopped from maintaining the claim before me. The basis of the claim, the bankruptcy of Mr Coshott, has not been ventilated and in my view that is sufficient to dispose of the argument of res judicata. The Anshun estoppel assertion, that she should have raised this argument before, might be met with the contention that she did raise it before, in the proceedings before Schmidt J, albeit belatedly, and it was dismissed by consent rather than determined on the merits. 50In my view, a dismissal without a hearing on the merits does not give rise to any estoppel by judgment. 51Thus, I do not uphold the claim for an Anshun estoppel or a res judicata. Whether there is any abuse of process in the repeated proceedings is not a matter I am asked to decide. 52However, I have found that the claim of Mrs Coshott to set aside the filing of the certificate fails when considered on the merits, as recorded above.

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