Calandra v Murden

Judgment

1. THE COURT: The applicants seek leave to appeal from a decision allowing an appeal from orders made by Local Court Magistrate Pierce: John Murden v Emilio Calandra [2015] NSWSC 424. The issue in the proposed appeal is whether the learned magistrate had power to set aside a Local Court judgment entered on the filing of two costs assessor's certificates issued under Ch 3, Pt 3.2, Div 11 of the Legal Profession Act 2004 (NSW). Leave to appeal is required because the amount involved is slightly less than $17,000. For the reasons which follow leave to appeal should be granted and the appeal allowed.
2. The two certificates were attached to a form headed "Filing of Certificate of Order" which named the respondent as plaintiff and the applicants as defendants in proceedings commenced in the Local Court. One certificate determined the respondent's application for the assessment of party/party costs payable pursuant to an order made in the Equity Division of this Court on 7 July 2010. The other determined the costs of the costs assessment itself and the person by whom those costs were to be paid. The form to which the certificates were attached was in the approved Form 45 as required by the Civil Procedure Act 2005 (NSW), s 17(3). That form was filed in the Registry of the Local Court on 15 January 2013. All of this took place in accordance with s 133 of the Civil Procedure Act and Uniform Civil Procedure Rules 2005, rr 36.10, 36.11.
3. The respondent relied upon the filing of the certificates as resulting in a judgment against the applicants for the amount of the costs as assessed. That was said to be the consequence of s 368(5) of the Legal Profession Act 2004 which provides: (5) 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. [Emphasis added]
4. The subject matter of a costs assessment under Ch 3, Pt 3.2, Div 11 of the Legal Profession Act 2004 is either the costs that a person has been or may be charged by a law practice for the provision of legal services or party/party costs that are the subject of an order made by a court or tribunal for the payment of an unspecified amount of costs. The present case is concerned with the latter. In relation to such costs s 353(1) provides that an application for assessment may be made by a person "who has paid or is liable to pay, or who is entitled to receive or who has received" costs as a result of such an order. By s 367A the task of the costs assessor is to make a determination of the fair and reasonable amount of those costs. In the context of an application under s 353, the reference in s 368(5) to the "amount of costs that has not been paid" is a reference to the amount of the assessed party/party costs which have not been paid to the person entitled to receive payment.
5. Section 368(5) is a deeming provision. Where its premise is satisfied and a certificate assessing costs is filed there is deemed "with no further action" to be a judgment of the court whose jurisdiction has been invoked: see Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 at [8] (per Giles JA), [42] (per Handley AJA, Macfarlan JA agreeing). Section 133 of the Civil Procedure Act and provisions of the UCPR give effect to that deeming. Subsection 133(1) provides that a judgment of the court, here the Local Court, may not be enforced until it has been entered in accordance with the UCPR. As there used, "judgment" includes a determination of a costs assessor as an "adjudication or award of a person having authority to make an adjudication or award" (s 133(2)). UCPR, r 36.10 provides that the costs assessor's certificate may be filed in the proceedings to which it relates, or in "fresh proceedings", whether in the same or another court. The approved form, Form 45, requires the filing party to provide details of any payments made or credits accrued since the relevant assessment and to state the total amount "to be enforced as at date of filing". UCPR, r 36.11, which makes clear by r 36.11(3) that a judgment includes a determination that has been filed in the court, provides that a judgment is taken to have been entered when it is recorded in the court's computerised court record system.
6. On 15 January 2013 judgment was recorded as having been made and entered in the Local Court in favour of the respondent against the applicants for $16,752.50, which was described in the Filing of Certificate of Order form as the "amount to be enforced". The entry of that judgment appears from the sealed copy of that judgment issued by the registrar of the Local Court and dated 25 January 2013: UCPR, r 36.12(1), (1A).
7. We note in passing that a separate deeming provision (s 369(7)) applied to the filing of the certificate determining the costs of the costs assessment. In the course of argument in this Court, and in the courts below, no attention was directed to its separate application. The appeal proceedings have been conducted on the basis that the relevant question is whether the Local Court had power to set aside or vary the judgment entered following the filing of the certificate determining the party/party costs. It was not contended, if that question was answered in favour of the applicants, that only that part of the judgment, in the amount of the assessed party/party costs, should have been set aside or that the learned magistrate erred in setting aside the whole of the judgment.
8. On 15 May 2013 the applicants, as the defendants named in the Local Court proceedings in which that judgment had been entered, filed a notice of motion seeking the following substantive orders: 1. That the certificate of order filed on 15 January 2013 in case number 2013/13352 be set aside; 2. In the alternative, that the enforcement of certificate of order filed on 15 January 2013 in case number 2013/13352 be permanently stayed;
9. On the hearing of that application before Pierce LCM on 22 October 2013 it was made clear that the applicants did not seek to set aside either of the determinations of the costs assessor or the certificates setting out those determinations (tcpt 22/10/13, p 33): HIS HONOUR: I know, you are asking me to set aside a judgment of this Court which was achieved by registering … the assessor's cost certificate. TZOUGANATOS: Correct. … TZOUGANATOS: I am not asking you to set aside the certificate of the costs assessor.
10. The applicants claimed that, as at 15 January 2013, there was no amount of the assessed party/party costs which had not been paid. The basis for that claim may be stated briefly. The respondent alleged that he was assaulted by the first applicant, Mr Calandra. That claim was pursued in proceedings in the Common Law Division. At some stage security was sought for the damages which might have been recoverable from Mr Calandra. That security was provided over a property owned by third parties. They later sought, in separate proceedings commenced in the Equity Division, to have that security released and a caveat lodged in support of it removed. Those proceedings were resolved, except for the question of costs which was decided by Ward J (as her Honour then was) in the respondent's favour. On 7 July 2010 an order was made that the applicants pay the respondent's costs of those proceedings.
11. The respondent's claim against Mr Calandra was subsequently settled and a Deed of Release and Indemnity dated 14 February 2012 was executed to record the terms of that settlement. The release given by cl 2.8 included that "the Releasor releases the Releasee from any claim for costs in any other proceedings including the security proceedings in the Supreme Court of New South Wales". The learned magistrate found that the subject matter of that release included the costs ordered to be paid on 7 July 2010. In the appeal to the primary judge and in this Court that conclusion was not contested. That release, although only given in favour of Mr Calandra, also operated to release Mrs Calandra as a joint obligor. The relevant principles are referred to in Carr and Purves v Thomas [2009] NSWCA 208 at [14].
12. The applicants were advised of the respondent's application for an assessment of the party/party costs. They objected to that assessment on the basis that his entitlement to those costs had been released. The costs assessor considered that objection but rejected it on the basis that her jurisdiction was limited to determining the fair and reasonable amount of the costs. On 3 December 2012 the assessor issued the two certificates later attached to the Filing of Certificate of Order form. That form did not disclose that the liability to pay the assessed party/party costs had been, or was claimed to have been, released.
13. In argument before the magistrate the applicants submitted that the Local Court had power under UCPR, r 36.15, as well as implied power, to set aside the judgment entered on 15 January 2013 and to correct its record by setting aside the form by which the certificates were filed. UCPR, r 36.15(1) provides: A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.
14. Although the transcript of the proceedings before the learned magistrate records his orders as announced, no sealed copy of those orders as entered was taken out. However it was common ground that the learned magistrate made an order setting aside the judgment entered in favour of the respondent and an order setting aside the Filing of Certificate of Order form. The brief reasons for those orders included that the judgment had not been entered in good faith because the respondent's entitlement to payment of any costs had been released and that fact had not been disclosed.
15. The respondent appealed from that decision. Under the Local Court Act 2007 (NSW) a "party to proceedings before the Court sitting in its General Division" has an appeal as of right to the Supreme Court on a question of law and otherwise an appeal by leave: ss 39, 40. The relevant "proceedings" were the applicants' motion to set aside the Local Court judgment. Although that motion was filed in the Small Claims Division of the Local Court, it is apparent, because the amount involved was greater than $10,000, that it was disposed of by the Court sitting in its General Division. The respondent's appeal was commenced by summons in accordance with UCPR, r 50.3. The original summons included grounds challenging the Local Court's conclusion that the liability for the costs order had been released. However, by an amended summons filed at the commencement of the hearing of that appeal, the challenge to the magistrate's decision was confined to the question of power. As it was put by Mr Toomey QC, when opening before the primary judge (tcpt 12/11/14, p 1): The effect of that amended summons is to confine the case to the question of whether or not the learned Magistrate had jurisdiction to set aside what was called a certificate or order and judgment relating to a cost assessor's certificate of order filed in the Local Court to have effect as a judgment.
16. The primary judge allowed the appeal, reasoning as follows. The effect of the magistrate's orders was to set aside the costs assessor's determinations: [2015] NSWSC 424 at [3]. The Local Court had no power to set aside those determinations: [10]. The decisions of this Court in Doyle v Hall Chadwick [2007] NSWCA 159 and Frumar confirmed that a judgment entered on the filing of a costs assessor's certificate could only be set aside if the determination of the assessor had been set aside in accordance with one of the procedures provided by Ch 3, Pt 3.2, Div 11 of the Legal Profession Act 2004: [10]-[16].
17. We respectfully disagree with this analysis for two reasons.
18. First, Pierce LCM was not asked to and did not set aside the determinations of the costs assessor as to the fair and reasonable amount of the party/party costs. Nor was that the effect of the orders made. Those orders set aside the judgment entered on 15 January 2013 and the Filing of Certificate of Order form filed in the registry on that day. The intent and effect of the latter order was to set aside the filing of that form. Neither order affected the binding nature of the assessor's determination as to the fair and reasonable amount of the relevant costs. For example, had the position been that the applicants as parties who were liable to pay the assessed costs had already paid an amount which exceeded the amount as determined and certified, the applicants, in accordance with s 368(4), could have recovered the difference as a debt in a court of competent jurisdiction. The primary judge erred in proceeding on the basis that the orders in terms or in their effect set aside the costs assessor's determinations.
19. Secondly, neither of the decisions of this Court in Doyle or Frumar addressed the circumstance that, at the time of the filing of the relevant costs certificates, there were no unpaid costs with respect to which there could be deemed to be a judgment. In its terms s 368(5) provides that there is taken to be a judgment for "the amount of unpaid costs" as distinct from the amount of the costs as assessed. Having regard to the language of s 353(1), the references in subs 368(5) to "an amount of costs that has not been paid" and to "the amount of unpaid costs" are, in the context of an assessment of party/party costs, to an amount that one party is entitled to be paid and the other party is entitled to receive at the time the certificate is filed. In Doyle the only basis upon which it was contended that the judgment should be set aside was that the costs assessor's certificate was also to be set aside. Similarly, in Frumar the review panel's certificate of determination had been set aside on an appeal to this Court. That being the position Handley AJA (with whom Macfarlan JA agreed) observed at [44]: The decision of this Court … which set aside the certificate of the panel, deprived the "judgment" … of its only legal foundation. The District Court was bound, on a proper application, to set the "judgment" aside. UCPR Pt 36.16(2)(a), (3), and (4) confer the necessary power for this purpose, but in any event the District Court had implied power to correct its records: Doyle v Hall Chadwick [2007] NSWCA 159 at [49]-[52]. (This citation to Doyle probably should include [53].)
20. The learned magistrate plainly had power to set aside the "judgment" and the filing of the form attaching the costs certificates. The judgment of the Court in the proceedings constituted by the filing of that form (see r 36.10) was, in the language of UCPR, r 36.15, entered "against good faith". That judgment was also entered "irregularly" because there was no amount of unpaid costs in respect of which the respondent was entitled to judgment as provided by s 368(5). In Hughes v Justin [1894] 1 QB 667 at 670 Lopes LJ described as "irregular" a default judgment signed for an amount to which the plaintiff was not entitled.
21. The Local Court has such implied powers as are necessary to enable it properly to exercise its jurisdiction: see Grassby v The Queen [1989] HCA 45; 168 CLR 1. Those powers extend to correcting its record, which in this case required setting aside the judgment entered and the Filing of Certificate of Order form. Authority supporting the existence of that power is to be found in the decisions of this Court in Doyle at [53] and Frumar at [44]. The form should not have been filed and ought not to have been accepted, had the respondent disclosed at the time of its filing that there was no amount of unpaid costs due.
22. Leave to appeal should be granted because the questions raised are of general application and because it is in the interests of justice that the error of the primary judge be corrected. The appeal should be allowed and the respondent must pay the applicants' costs of both appeals. The effect of dismissing the appeal from the Local Court to the Supreme Court is to leave in place the orders obtained by the applicants on 22 October 2013.
23. The orders of the Court are:
24. Grant leave to appeal.
25. Appeal allowed with costs.
26. Set aside the orders made in the Common Law Division on 17 April 2015, and in lieu thereof, dismiss the appeal with costs.

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