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.