Coshott v Barry

Court of Appeal (NSW)|2016-10-14|Before: Beazley ACJ, Meagher JA, Payne JA, Adams J

Solicitors: Comino Prassas Sydney(Applicant) CKB Associates Lawyers (Respondents) File Number(s): 2016/41754 Decision under appeal Court or tribunal: District Court Jurisdiction: Civil Date of Decision: 17 November 2015 Before: Balla DCJ File Number(s): 15/226504; 15/94053

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

In relation to (i): (1) The costs order was clear on its terms and extended to the professional costs of the respondents in addition to their disbursements. [42] (2) Even if the costs order had been ambiguous on its terms, that ambiguity needed to be resolved in accordance with the usual process of construction, including by appropriate reference to extrinsic materials such as the submissions of the parties. [42] Polyaire Pty Ltd v K-aire Pty Ltd (No 4) [2007] SASC 36; Australian Energy Ltd v Lennard Oil NL (No 2) 2 Qd R 230; Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 559; [2003] FCA 629. (3) The submissions of the parties in relation to the costs order made it clear that the respondents were seeking their professional costs. [43]

In relation to (ii) (1) An order of a superior court is valid unless and until set aside, even if the order is made in excess of jurisdiction or affected by legal error. [46] State of New South Wales v Kable (No 2) (2013) 252 CLR 118; [2013] HCA 26. (2) The costs order had not been set aside either on appeal or pursuant to the Uniform Civil Procedure Rules 2005 (UCPR). [46] (3) The task of the costs assessor, and the costs review panel, was to assess the costs order that had been made. The costs order could not be the subject of collateral attack through a challenge to its terms in the course of the statutory costs assessment task. [50]

In relation to (iii) (1) A number of cases have raised the question of the continued application of the Chorley exception in New South Wales given the statutory provisions under which costs orders are made. [23]-[25] Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57; Bechara v Bates [2016] NSWCA 294; Wilkie v Brown [2016] NSWCA 128. (2) Given the findings in respect of (i) and (ii), it was not appropriate to determine whether the Chorley exception continues to apply in New South Wales. [26]

Judgment

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: "(1) The plaintiff is to pay the defendants' costs, including costs reserved and their costs of representing themselves …"
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.

Primary judge's reasons

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.

Legislative provisions

The Civil Procedure Act, s 3, defines "costs" as follows: "costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration."
The Civil Procedure Act, s 98 provides, relevantly: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis."
The Legal Profession Act 2004 provided, relevantly: "4 Definitions legal costs means amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services including disbursements but not including interest. … 353 Application for assessment of party/party costs (1) A person who … is entitled to receive … costs as a result of an order for the payment of an unspecified amount of costs made by a court … may apply to the Manager, Costs Assessment for an assessment of … those costs. … 357 Referral of matters to costs assessors (1) The Manager, Costs Assessment is to refer each application for costs assessment to a costs assessor to be dealt with under this Division. … 363 Criteria for costs assessment (1) In conducting an assessment of legal costs, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the legal costs relate, and (b) whether or not the work was carried out in a reasonable manner, and (c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 361 or 362 applies to any disputed costs. … 364 Assessment of costs - costs ordered by court or tribunal … (3) An assessment must be made in accordance with the operation of the rules of the relevant court or tribunal that made the order for costs and any relevant regulations. … 367A Determinations of costs assessments for party/party costs A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs. … 384 Appeal against decision of costs assessor as to matter of law (1) A party to an application for a costs assessment who is dissatisfied with a decision of a costs assessor as to a matter of law arising in the proceedings to determine the application may, in accordance with the rules of the District Court, appeal to the Court against the decision. (2) After deciding the question the subject of the appeal, the District Court may, unless it affirms the costs assessor's decision: (a) make such determination in relation to the application as, in its opinion, should have been made by the costs assessor, or (b) remit its decision on the question to the costs assessor and order the costs assessor to re-determine the application …"

Whether appropriate matter for judicial review

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.

The Chorley exception

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: "When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket … When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. ... The true rule seems to be that when a solicitor brings or defends an action in person, he is entitled to the same costs as an ordinary litigant appearing in person, subject to this restriction, that no costs which are really unnecessary can be recovered." Included in the category of "unnecessary" costs were "costs of instructions and attendances."
Bowen LJ stated, at 877: "Professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured."
His Lordship stated that this rule was laid down in similar terms in "Dixon's Lush's Practice" as follows: "… an attorney regularly qualified is allowed to make the same charges for business done when he sues or defends in person, as when he acts as attorney for another …"
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]: "The binding effect of Guss v Veenhuizen in respect of the Chorley principle must give way to any statutory provision to the contrary or which is relevantly different: Wang v Farkas and Cachia v Hanes. As Basten JA observed in Wang v Farkas at [29], Guss v Veenhuizen will not be binding "in respect of a materially different statutory provision." (original emphasis)
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.

Applicant's submission as to the costs recoverable under the costs order made by Adams J

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: "Taxation on a party and party basis is required to be in accordance with the relevant table in Sch. G and that makes no provision for the reimbursement of a litigant for time lost in the preparation or presentation of his case. It does provide for solicitors' costs which have been incurred. That affords some basis (although insufficient in our respectful view) for an award of costs in favour of a solicitor acting for himself and so performing professional duties, but it affords no basis whatsoever for an award by way of recompense to a litigant for time lost in the preparation or presentation of his case."
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: "… [carry] into effect of an order of a court requiring one party to pay the costs of the other. To assert that the other party has no entitlement to receive such a payment is to contradict the effect of the court order": eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd
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.

Consideration

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: "Accepting that difficulties will arise in drawing a line between jurisdictional and non-jurisdictional errors of law, the respondent's submissions cannot be accepted. Although the power conferred on the Local Court is to award such costs as it thinks to be 'just and reasonable', what is just and reasonable is not to be judged at large. Rather, the exercise is constrained by the defined term, 'professional costs'. If, properly understood, that phrase does not include the value of time spent by a legal practitioner in conducting his or her own litigation, then the inclusion of an amount on that account in the award would be an error of law on the part of the Court. But it is more than that: it involves the award of an amount of money to compensate for that for which the law says compensation is unavailable. In functional terms, it involves the exercise of a power which does not exist. That constitutes jurisdictional error. Accordingly, this Court has power to intervene."
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: "[The respondents] seek an order in the following terms for their professional costs and disbursements of the proceedings including reserved costs and excluding any costs previously ordered in the proceedings: [The applicant] to pay [the respondents'] costs including their costs of representing themselves, on a party party basis as agreed or assessed including costs reserved. That pursuant to section 101(4) of the Civil Procedure Act, 2005 [the applicant] pay interest on the amounts assessed in respect of [the respondents'] counsels' fees from the dates of payment."
In her written submissions dated 26 November 2013 in response to the respondents' submissions on costs, the applicant stated: "Reserved Costs 9. The usual rule that costs should be awarded to a successful party may be departed from in appropriate cases, which may include circumstances in which the otherwise successful party failed on matters that were the dominant issue or separable from the issues upon which it succeeded [Elite Protective Personnel Pty Ltd and Anor v Salmon (No 2) [2007] NSWCA 373 per Beazley, McColl and Basten JJA at [6]-[11]; Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 per Beazley, Ipp and Basten JJA at [38]. 10. In [the applicant's] submission the limitation issue was the central issue before McCallum J; it was also one upon which she was predominantly (albeit not entirely) successful. 11. Consistently with the decision of the Court of Appeal in Bostik Australia Pty Ltd v Liddiard (No 2) [[2009] NSWCA 304 per Beazley, Ipp and Basten JJA at [39]], [the applicant] contends that she should not be ordered to pay more than 40%-50% of [the respondents'] costs of and occasioned by the hearing of the separate question."
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: "If the orders are ambiguous then that ambiguity must be resolved by the usual process of construction, having regard to such extrinsic material as may be relevant. That material would include not only the reasons for judgment, but also the pleadings, the course of the trial and the submissions of the parties prior to the making of the orders." See also Australian Energy Ltd v Lennard Oil NL (No 2) (1988) 2 Qd R 230 at 232, 243; Owston Nominees No 2 Pty Ltd v Branir Pty Ltd (2003) 129 FCR 558; [2003] FCA 629 at [53]-[54].
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: "A costs assessor is to determine an application for an assessment of costs payable as a result of an order made by a court or tribunal by making a determination of the fair and reasonable amount of those costs." (emphasis added).
In eInduct Systems v 3D Safety Services Basten JA made the obiter observation, at [26], that: "… the costs assessment involves the carrying into effect of an order of a court requiring one party to pay the costs of the other. To assert that the other party has no entitlement to receive such a payment is to contradict the effect of the court order. Although the point was not argued, it is difficult to understand any basis in the Legal Profession Acts for a costs assessor to undertake such a course. The assessor would, in effect, be redetermining the very order upon which his or her jurisdiction depends."
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: Summons dismissed with costs.
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.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 December 2016

Legal Profession Act 2004(NSW)

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (18)

Cited By (2)