Coshott v Barry & Anor

Defendants' claims governed by the Legal Profession Act 1987 8There was a dispute at the hearing as to which Legal Profession Act governs the defendants' claims. The defendants directed most of their submissions to the provisions of the Legal Profession Act 2004. However, after the hearing, the parties agreed that all aspects of costs disclosure, costs assessment and rights of review and appeal for the six matters in dispute are governed by the Legal Profession Act 1987. That Act was repealed by the Legal Profession Act 2004. However, the savings provisions in schedule 9 to the later Act preserve the application of part 11 of the old Act (dealing with legal costs) to matters in which the client first instructed the law practice before the commencement of the new Act (clause 18(1) of schedule 9). The new Act commenced on 1 October 2005.

Plaintiff's contentions 9Mrs Coshott contends that both the certificates and the judgments are ultra vires on the basis that the defendants' cause of action in respect of each set of costs is statute-barred. Mr Bliim, who appeared for Mrs Coshott, relied upon the combination of sections 14(1)(a) and 63 of the Limitation Act 1969. Those sections provide: 14 General (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed... 63 Debt, damages etc (1) Subject to subsection (2), on the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, the right and title of the person formerly having the cause of action to the debt damages or other money is, as against the person against whom the cause of action formerly lay and as against the person's successors, extinguished. (2) Where, before the expiration of a limitation period fixed by or under this Act for a cause of action to recover any debt damages or other money, an action is brought on the cause of action, the expiration of the limitation period does not affect the right or title of the plaintiff to the debt damages or other money: (a) for the purposes of the action, or (b) so far as the right or title is established in the action.

Date of accrual of the causes of action 10It was common ground that the defendants' right to recover fees for their services gave rise to a cause of action founded on contract. The parties did not agree as to when that cause of action first accrued to the defendants. Mr Bliim submitted that time would run from when the client received the benefit that gave rise to the obligation to pay the fees incurred. Mr Turner, who appeared for the defendants, submitted that time would run from the day 30 days after a bill was sent. 11On the conclusions I have reached, it is not necessary to resolve that dispute, since its resolution makes no difference to my decision. It was common ground that, on any analysis, the two certificates were filed (so as to take effect as judgments) within six years of the date on which the defendants' cause of action first accrued. As to the four certificates, it was common ground that no legal proceedings were commenced, and no judgment obtained, within six years of the date on which the causes of action in contract first accrued. For the reasons explained below, the application may be determined on those premises. 12In case I am wrong (as to whether it matters whose contention as to the date of the accrual of the causes of action is right), I should record that, having regard to the terms of the defendants' costs disclosure statements, I think Mr Turner's submission is correct, at least as to those matters in which Mr and Mrs Coshott accepted the costs disclosure statement as the terms of the retainer. The costs disclosure statements provided that any bill sent by CKB Partners was "payable within 30 days". In my view, the entitlement to sue accrued upon failure to meet that obligation. Separately, Mr Turner submitted that time would not run unless the bill sent complied with the requirements of the applicable Legal Profession Act but I see no basis for construing the costs disclosure statements in that way. In my view, a cause of action in contract accrued in each case after the expiration of 30 days from the date on which an account or bill in any form was sent.

Defendants' contentions 13The mechanism for limiting actions provided for in s 63 of the Limitation Act is to extinguish a person's right and title to the subject matter of the cause of action unless "an action is brought on the cause of action" before the expiration of the relevant limitation period. 14It was common ground that the defendants did not commence legal proceedings within six years to recover their costs in any of the matters the subject of the assessments. On that basis, Mr Bliim submitted that the defendants' right and title to each debt is extinguished and that none of the certificates is enforceable. 15The defendants submitted that the Limitation Act does not apply to the recovery of legal costs under the costs assessment provisions of the Legal Profession Act 1987. 16The defendants' written submissions traced the history of the costs assessment system. It was noted that the system was introduced as part of the package of reforms effected by the Legal Profession Reform Act 1993. Before then, legal costs were regulated by the prescription of maximum scale costs and were subject to "taxation" by the court. That system was viewed as being overly formal, legalistic and complex: Ryan v Hansen [2000] NSWSC 354; 48 NSWLR 184 at [23] (quoting the second reading speech for the Legal Profession Reform Act). The reforms were intended to provide a "faster, easier and cheaper system of review of bills of costs", largely removing caps on the quantum of legal costs that could be charged whilst introducing new measures for the protection of clients, including stricter disclosure obligations and the costs assessment system. 17The provisions that gave effect to those reforms appear in part 11 of the Legal Profession Act 1987. Division 6 of part 11 allowed applications for the assessment of costs to be made to the "Manager, Costs Assessment". That is an administrative office: see the definition in s 3 of the Act. The Manager, Costs Assessment was required to refer applications for assessment to a costs assessor to be dealt with in accordance with the Act: s 206. 18Upon making a determination, the costs assessor was required to issue a certificate setting out the determination: s 208J. Sub-division 4(A) made provision for review of the determination by a panel of two costs assessors. Sub-division 4(B) made provision for appeals to this Court as of right as to a matter of law (s 208L) and otherwise with leave (s 208M). 19Section 208J(3) provided: (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. 20Mr Turner submitted that the effect of the Legal Profession Reform Act was to provide, by the costs assessment system, an alternative means of recovering unpaid costs. He noted that it was still open to a solicitor under the Legal Profession Act 1987 to commence proceedings in court to recover his or her legal fees as a debt, provided that a bill of costs had been given in accordance with the Act and at least 30 days had passed since the giving of the bill: s 191(1). 21Curiously, the making of an application for a costs assessment under the 2004 Act purportedly precludes a solicitor from commencing or maintaining proceedings to recover those legal costs "pending the completion of the costs assessment": s 355 of the Legal Profession Act 2004. The proper construction of that section and the application of the Limitation Act in that context is an exciting question for another day.

Jurisdiction and discretion 22As a preliminary point, the defendants submitted that the plaintiff was not entitled to declaratory relief from this Court in light of a "privative clause" in the Legal Profession Act 1987. Separately, it was submitted that, as a matter of discretion, the Court would not grant the relief sought in any event. 23Those submissions were based on s 208K of the Legal Profession Act 1987, which provided: A costs assessor's determination of an application is binding on all parties to the application and no appeal or other review lies in respect of the determination, except as provided by this division. There is ample authority for the proposition that such a provision does not oust the jurisdiction of a superior court to review a decision for jurisdictional error. Probably the most fertile source of jurisprudence on that issue has been in the field of privative clauses in migration legislation. As explained by the High Court in that context, such a clause simply has no application where a decision-maker exceeds his jurisdiction, since there is no "decision" to which the clause applies: Plaintiff S157/2002 v Commonwealth [2003] HCA 2; 211 CLR 476 at [38] per Gleeson CJ; at [83] per Gaudron, McHugh, Gummow, Kirby and Hayne JJ. 24Mr Turner sought to derive support for his submission as to jurisdiction from the decision of Einstein J in Currabubula & Paola v State Bank of New South Wales [2000] NSWSC 232 at [61]. With great respect to Mr Turner, I think his reliance on that decision was misconceived. Currabubula Holdings Pty Ltd was one of two plaintiffs in those proceedings. The State Bank was ordered to pay 90% of Currabubula's costs. During the course of an assessment of those costs under the Legal Profession Act 1987, the assessor indicated that he proposed to award only 45% of any costs incurred jointly for the benefit of both plaintiffs. 25Currabubula asserted that the assessor had misconstrued the costs order. It approached the Court during the assessment process and sought, inter alia, declaratory relief under s 75 of the Supreme Court Act 1970 as to the proper interpretation of the costs order. It was submitted by counsel for the defendant (as it happens, me) that the Court had no jurisdiction at that stage of the assessment process to examine the correctness of the view adopted by the costs assessor because s 208L(1) of the Act did not permit a party to appeal from a decision during the assessment process but only from the assessor's determination upon completion of the process (at [33]). Separately, it was submitted that the Court should not, in its discretion, grant relief under s 75 because to do so would interrupt the assessment process and pre-empt the cost assessor's task (at [32]). 26In the passage of the judgment relied upon by Mr Turner, Einstein J expressed the view that s 208K of the Legal Profession Act 1987 had the effect of depriving this Court of its declaratory jurisdiction: at [61]. However, his Honour concluded that the costs assessor's construction of the underlying costs order amounted to a decision that was amenable to appeal under s 208L(1) of the Act (at [84]). 27The error complained of by Currabubula was an error within power. The decision has nothing to say on the subject of this Court's power to review the determination of a costs assessor for jurisdictional error. In my view, it is beyond argument that, to the extent that a costs assessor purported to determine matters beyond his or her power, s 208K would not preclude this Court from granting relief under s 69 of the Supreme Court Act. 28Separately, Mr Turner submitted that the Court would not grant declaratory relief for the reasons stated by Einstein J in Currabubula at [65]. His Honour said: Nevertheless, there is a further factor of great importance in these proceedings, and that is that the Legal Profession Act 1978 provides a distinct mechanism of pursuing an appeal from a decision or determination of a costs assessor. To my mind, it is undesirable to circumvent that appeal mechanism by the making of declaratory orders within the areas through which an appeal may be pursued under the Act. 29Plainly, different considerations prevail in the case of jurisdictional error. Without having looked at the issue recently, I apprehend that there are different views as to whether the Court has a residual discretion to decline to intervene in the case of established jurisdictional error. However any such discretion would be exercised sparingly.

Does the costs assessment system sit outside the reach of the Limitation Act? 30As already noted, it was submitted by the defendants that the effect of the Legal Profession Reform Act was to provide solicitors with a choice as to the means of recovering unpaid legal costs. They could either sue or seek an assessment and have the certificate of determination filed in the Registry. In that context, the defendants submitted: It is significant as a matter of statutory interpretation that Parliament made no reference to any limitation issue as to the right of a legal practitioner to seek assessment of costs. In fact the only limitation provision relating to the costs assessment system is that contained in s 199 which limits the time in which a client who has paid some or all of the costs, may seek an assessment. 31Mr Turner noted the terms of s 68A of the Limitation Act, which provides: (1) Where in proceedings before a judicial tribunal a question arises as to extinction under this Division of a right or title, a party to the proceedings shall not have the benefit in those proceedings of any such extinction of that right or title unless, as part of the proceedings, the party has pleaded or otherwise appropriately claimed in accordance with the procedures of the tribunal that the right or title has been so extinguished. (2) In subsection (1), a reference to proceedings before a judicial tribunal is a reference to proceedings before a court or person authorised by law or by agreement to bind the parties to the proceedings by a decision on a question arising in the proceedings as to whether or not a right or title has been extinguished under this Division. [emphasis added] 32Mr Turner submitted that, since the costs assessment system introduced by the Legal Profession Reform Act did not make provision for the Limitation Act to be raised as a defence or plea in bar to the registration of an assessment certificate as a judgment, it must have been intended to provide a new procedure for recovery of costs which would not be subject to the Limitation Act. 33It is certainly difficult to articulate a coherent analysis of the operation of the costs assessment system without giving some oxygen to that argument. Section 68A of the Limitation Act presupposes the existence of a procedure, in the relevant judicial tribunal, for determining the issue whether the right or title underlying the cause of action sought to be pursued has been extinguished. Yet s 208J(3) of the Legal Profession Act 1987 operates as a deeming provision (upon the filing of a certificate in the Registry) and so affords no practical opportunity to invoke any such procedure. The logic of the legislation is unsatisfactory to that extent. 34However, the conclusion that the recovery of legal costs by means of the costs assessment system attracts no statutory time bar is even more problematic, in my view. In the first instance, it does not sit very comfortably with the decision of the Court of Appeal in Coshott v Lenin [2007] NSWCA 153, considered below. 35Mr Turner placed reliance on a different judgment involving the same parties: Lenin v Coshott [2007] NSWSC 630. That was a decision of Bell J published on 21 June 2007 (when her Honour was a puisne judge of this Court). It may be acknowledged that, at first blush, the decision appears to provide some support for the position of the defendants in the present case. However, that impression does not survive a careful reading of her Honour's judgment. In that case, it was Mr Coshott who was in the position of being a solicitor pursuing unpaid legal costs. Mr Lenin had been his client. Mr Lenin sought to restrain Mr Coshott from proceeding with applications for the assessment of legal costs incurred some 14 years earlier. 36It was submitted on behalf of Mr Lenin that "the costs assessment proceedings" were statute barred by operation of the Limitation Act and that any right entitling Mr Coshott to bring the applications for costs assessment was extinguished before the applications were filed: see [16]. However, the judgment records (at [17]) that counsel appearing for Mr Lenin advanced no submissions in support of that contention. Counsel referred to the decision of Kirby J in Ryan (cited above), which he acknowledged was against the contention that the costs assessments were time barred. 37It is difficult to judge whether that concession was properly made in the circumstances. The reference to the decision in Ryan suggests that the concession was directed to the question of the costs assessor's powers. It may have been intended to acknowledge that a costs assessor has no power (and therefore no occasion) to determine whether the relevant right has been extinguished by the statute. However, the decision in Ryan did not establish that the costs assessment system allows a claim in contract to be pursued after the expiration of six years. In Ryan, the solicitors had commenced proceedings in the Local Court (well within the limitation period) to recover the legal costs which Mr Ryan had refused to pay. The decision does not otherwise appear to have any bearing on the limitation issue. 38In any event, apparently in light of the concession made, Bell J did not consider the Limitation Act argument in Lenin v Coshott. Her Honour made reference to the existence of separate proceedings commenced by Mr Coshott against Mr Lenin in the District Court seeking to recover his costs from Mr Lenin on the basis of a claim in quantum meruit. In those proceedings, Neilson DCJ dismissed Mr Coshott's claim: Coshott v Lenin [2006] NSWDC 139. His Honour stated at [53]: Accordingly, if I may succinctly state what my reasoning process is. Firstly, that the cause of action alleged by the plaintiff does not exist. Secondly, if it did exist it is only still the remedy that was formerly called quantum meruit. Thirdly, that even if it did exist it would still be caught be s 14(1)(a) of the Limitation Act 1969. 39In disposing of Mr Lenin's application regarding the costs assessment proceedings, Bell J noted that Mr Coshott had appealed against the decision of Neilson DCJ. In fact, the appeal had been determined on 20 June 2007, the day before Bell J published her decision. The Court of Appeal dismissed the appeal: Coshott v Lenin [2007] NSWCA 153. That is the decision relied upon by the plaintiff in the present case. The Court held that Mr Coshott's belated claim for remuneration, "however packaged", was barred by the Limitation Act: at [14] per Mason P; Spigelman CJ and Campbell JA agreeing at [1] and [19] respectively. 40The decision of the Court of Appeal ought to have been brought to the attention of Bell J before her Honour published her decision the following day. Ironically, the result appears to be that, whilst Mr Coshott succeeded in defeating Mr Lenin's application to restrain the costs assessments process as being based on extinguished debts, Mrs Coshott's present application to restrain a like process is not defeated by that line of jurisprudence. 41In my view, the defendants' submissions in the present case misconceive the juridical foundation of the costs assessment system. A solicitor's entitlement to lodge an application for a costs assessment is not a source of right or title in itself. It is an aspect of the regulation of the legal profession under the Legal Profession Act 1987. The Act creates an administrative mechanism for quantifying legal costs in a variety of circumstances, some of which raise no limitation issue (such as costs ordered by a court). To the extent that it provides for the assessment of costs payable under contract, I do not think it alters the fundamental nature of the right and title to those costs. 42Support for that view may be found in the decision of the English Court of Appeal in Coburn v Colledge [1897] 1 QB 702 at 705-706, where Lord Esher MR said: Before any enactment existed with regard to actions by solicitors for their costs, a solicitor stood in the same position as any other person who has done work for another at his request, and could sue as soon as the work which he was retained to do was finished, without having delivered any signed bill of costs or waiting for any time after the deliver of such a bill. Then to what extent does the statute alter the right of the solicitor in such a case, and does the alteration made by it affect or alter the cause of action? It takes away, no doubt, the right of the solicitor to bring an action directly the word is done, but it does not take away his right to payment for it, which is the cause of action. The Statute of Limitations itself does not does not affect the right to payment, but only affects the procedure for enforcing it in the event of dispute or refusal to pay. Similarly, I think s 37 of the Solicitors Act, 1843, deals, not with the right of the solicitor, but with the procedure to enforce that right. 43I have concluded that, subject to s 208J(3), the making of an application for a costs assessment under the Legal Profession Act 1987 does not immunise the right and title of a solicitor to bring a claim in contract for unpaid legal fees from the application of the Limitation Act.

Procedure for filing a certificate of assessment 44In my view, however, the position of the solicitor is plainly protected upon the filing of a certificate of assessment in accordance with s 208J(3). I have concluded that the two judgments were properly obtained and are not liable to be set aside. The procedure allowed for is to file the certificate "in the office or registry of a court having jurisdiction to order the payment of that amount of money". The effect of filing is that, without further action, the certificate is taken to be a judgment of that court for the amount of unpaid costs determined by the costs assessor. 45It is necessary also to consider the provisions of the Civil Procedure Act and the Uniform Civil Procedure Rules. Section 133 of the Civil Procedure Act provides that a judgment may not be enforced until it has been entered in accordance with the rules. The section expressly extends to any award of which a certificate may be filed or registered in the court under any other Act or law. Accordingly, the combined effect of s 208J(3) of the Legal Profession Act 1987 and s 133 of the Civil Procedure Act is that a certificate, upon filing in the registry of a court, is taken to be a judgment of the court but is not enforceable until it has been entered in accordance with the rules. 46Rule 36.10(1) of the Uniform Civil Procedure Rules provides: A costs assessor's certificate: (a)may be filed in the proceedings to which it relates, or (b)may be filed in fresh proceedings, whether in the same court or another court. 47In my view, the sensible reading of those provisions, taken together, is that in a case where there is no existing proceeding to which the certificate relates, the filing of the certificate is taken to be or to commence a fresh proceeding (in which the only step required to render the judgment enforceable is for it to be entered in accordance with the rules). 48As already noted, the problem remains that there is no occasion for the client to plead the limitation defence, and that is an anomaly. It may be noted, however, that s 208J(3) applies "in the case of an amount of costs that has not been paid". In my view, an implicit premise of its application is the existence of a binding obligation to pay (which would not include a debt that had been extinguished under the Limitation Act due to the passage of time). 49The practical solution is that the client has the opportunity to raise the limitation point during the assessment and, if it is not accepted by the assessor, to seek review or appeal.

Have the defendants brought an action on the cause of action? 50The defendants submitted, in the alternative, that if costs assessments are subject to the Limitation Act, it is sufficient compliance that the application for assessment is lodged within six years of the cause of action occurring to the solicitor. It was noted in that context that the definition of "action" in the Limitation Act is an inclusive definition: s 11(1). 51Separately, Mr Turner submitted that s 68A(2) of the Limitation Act assists, since it refers to a judicial tribunal as including a court or person authorised to bind the parties to proceedings by a decision on a question arising in the proceedings. That submission overlooks the remaining words of s 68A(2). A "judicial tribunal" within the meaning of that section must be authorised to bind the parties by a decision as to whether or not a right or title has been extinguished under division 1 of Part 4 of the Limitation Act. Mr Turner did not submit that a costs assessor has power to bind the parties by a decision as to that issue. I do not find any support for Mr Turner's submission in s 68A. 52The short answer to that contention is that it is the underlying right and title to the debt, and not the cost assessment process, which is subject to the Limitation Act. Mr Turner acknowledged that a costs assessment is a non-curial proceeding. I am not satisfied that the lodging of an application for a costs assessment amounts to bringing an action on a cause of action within the meaning of the Limitation Act.

Conclusion 53It follows, in my view, that the defendants' right and title to the debts quantified in the four certificates that have not been filed is extinguished. However, it does not follow that the certificates issued by the costs assessors are ultra vires and that the costs assessors had no jurisdiction to issue them, as contended by the plaintiff. A costs assessor has power to determine an application properly brought (by confirming the bill or substituting a fair and reasonable amount: s 208A(2)). The certificates stand as a quantification of the costs billed, which may serve broader purposes than the enforcement of a debt. In the present case, the defendants noted that the quantification of those costs is relevant to the enforcement of a lien claimed by them over the plaintiff's goods. For that reason alone, the certificates have utility: see s 68 of the Limitation Act. 54I should note that, in some instances, the reasons for decision provided in respect of the certificates record the rejection of an argument by the plaintiff that the "assessments" were time barred (Exhibit A, pages 14, 68 and 148). The conclusion that the assessments were not time barred is correct, as far as it goes. The process undertaken by a costs assessor is administrative and is not subject to any limitation period (except that the application may not be made until after 30 days have passed since the bill was given: s 201(2)). 55It follows that an assessment of old (by which I mean time-barred) costs will not necessarily be beyond the power of the costs assessor. The question is one of utility. If the only purpose of the assessment was to obtain judgment for an extinguished debt, a costs assessor could properly decline to undertake the assessment, in my view. 56Paragraph 5 of the further amended summons seeks an interim order restraining the defendants from seeking to enforce any of the certificates or judgments. For the reasons explained above, I have concluded that the two judgments already obtained are enforceable. As to the four certificates, to the extent that they are relied upon as the foundation for the enforcement of a debt, that debt is extinguished. It follows, in my view, that the defendants are not entitled to the entry of judgment in respect of the four certificates that have not been filed. A judgment entered upon the filing of a certificate in such circumstances would, depending on the circumstances, be liable to be set aside under rule 36.15 of the Uniform Civil Procedure Rules. 57However, I do not think it is necessary to make an order restraining the defendants from filing the certificates or otherwise seeking to enforce them as debts. Having regard to the defendants' very proper agreement not to enforce the certificates pending the determination of the present application, there is no reason to apprehend that the defendants will seek to file those four certificates in defiance of these reasons. 58Accordingly, I have concluded that the prayers for relief in paragraphs 1 and 2 of the further amended summons should be refused on the basis that the plaintiff is not entitled to the relief sought. I have further concluded that, although the four certificates that have not been filed relate to extinguished debts and should not be filed in the Registry, it is not necessary to make an order in terms of paragraph 5.

I certify that this and the 17 preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice McCallum. Dated: 27 July 2012 Associate: N Sinclair 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: 17 August 2012