Coshott v Parker

Background

1. There has been a lengthy history of proceedings between the plaintiff and defendants.
2. On 10 May 2011 the plaintiff commenced proceedings against the defendants by way of Summons. On 28 July 2011 the Summons was dismissed by the Supreme Court (Schmidt J). Schmidt J ordered the plaintiff to pay the defendants' costs of the proceedings.
3. Following the costs order made in their favour, the defendants filed an Application for Assessment of Party/Party Costs on 29 March 2012. A costs assessment then took place.
4. On 9 October 2012 the Manager, Costs Assessment, sent a Certificate of Determination of Costs and other documents to the parties.
5. On 7 November 2012 the plaintiff applied for a review of the assessor's determination.
6. The determination was referred to a review panel on 20 November 2012. The defendants state that they were not notified of the Review Application in accordance with s 373(5) of the Legal Profession Act 2004 ("LPA"). The effect of referral to a review panel was that the operation of the original determination on costs was suspended: s 377(1) LPA.
7. On 14 December 2012 the defendants filed a copy of the assessor's certificate dated 5 September 2012 in this Court pursuant to s 368(5) of the LPA.
8. On 23 January 2013 the review panel issued a certificate affirming the decision of the first costs assessor. This terminated the suspension of the costs assessor's decision and made it enforceable.
9. The effect of the filing of the first certificate by the defendants on 14 December 2012 was the subject of the judgment I delivered on 12 March 2015. The plaintiff, by way of Notice of Motion, had sought to have the deemed judgment arising from the entry of the certificate set aside on the basis of a claimed procedural irregularity, because of the suspension in place upon the determination being referred to a review panel. In those proceedings the plaintiff also challenged the constitutional validity of the costs assessment scheme contained in the LPA. They were unsuccessful on both arguments and their Amended Notice of Motion was dismissed.

Restitution: Recovery of Certificate and Determination Fees

1. Section 368 of the Legal Profession Act 2004 (now repealed) provided: 368 Certificate as to determination (1) On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination. (2) 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. (3) However, any such certificate may not set out the costs of the costs assessment within the meaning of section 369. Note. Section 369 makes provision for the recovery of the costs of costs assessments relating to costs to which either section 317 (Effect of failure to disclose) or 364 (Assessment of costs - costs ordered by court or tribunal) applies. The section requires a costs assessor to issue a separate certificate setting out the costs of such costs assessments. That section also makes provision for the effect of such a certificate. (4) 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. (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. (5A) The costs assessor must forward the certificate or a copy of the certificate to: (a) the Manager, Costs Assessment, and (b) each party to the assessment, unless subsection (6) applies. (6) If the costs of the costs assessor are payable by a party to the assessment as referred to in section 369, the costs assessor must: (a) forward a copy of the certificate to the Manager, Costs Assessment only, and (b) advise the parties that the certificate has been so forwarded and will be available to the parties on payment of the costs of the costs assessor. (7) Subsection (6) does not apply: (a) in respect of a certificate issued before the completion of the assessment process under subsection (2), or (b) in such circumstances as may be prescribed by the regulations. (Emphasis added)
2. Section 369 LPA was in the following terms: 369 Costs of costs assessment (1) This section applies to the costs of a costs assessment in relation to: (a) costs to which section 317 (Effect of failure to disclose) applies, and (b) costs to which section 364 (Assessment of costs - costs ordered by court or tribunal) applies, and (c) costs that on assessment are reduced by 15% or more. (2) A costs assessor is, subject to this section, to determine the costs of a costs assessment to which this section applies. (2A) Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in section 364 (Assessment of costs - costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment. (3) The costs of a costs assessment to which this section applies are payable: (a) for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applies - by the law practice that provided the legal services concerned, or (b) for a costs assessment in relation to costs to which section 364 (Assessment of costs - costs ordered by court or tribunal) applies - by such persons, and to such extent, as may be determined by the costs assessor, or (c) for a costs assessment in relation to costs that on assessment are reduced by 15% or more - by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor. (4) The costs assessor may refer to the Supreme Court any special circumstances relating to a costs assessment and the Court may make any order it thinks fit concerning the costs of the costs assessment. (5) On making a determination, a costs assessor may issue and forward to each party and the Manager, Costs Assessment a certificate that sets out the costs of the costs assessment. (6) If the application for a costs assessment has been dealt with by more than one costs assessor, a certificate issued can set out the costs of any other costs assessor. (7) 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. (8) The costs of the costs assessor are to be paid to the Manager, Costs Assessment. (9) The Manager, Costs Assessment may take action to recover the costs of a costs assessor or Manager, Costs Assessment. (10) In this section: costs of the costs assessment includes the costs incurred by the costs assessor or the Manager, Costs Assessment in the course of a costs assessment under this Division, and also includes the costs related to the remuneration of the costs assessor.
3. The basis of the restitution claim in the present proceedings is that the defendants/applicants paid certain costs associated with the costs assessment and the issue of the certificates arising from both the initial assessment and review which were in fact payable by the plaintiff.
4. On 5 September 2012 a letter was sent by the Costs Assessor responsible for the first costs assessment to Hicksons Lawyers, who act on behalf of the defendants, giving notice that the Assessor had forwarded the Certificate of Determination of Costs, Certificate of Determination of Costs of Costs Assessment and Statement of Reasons to the Manager, Costs Assessment. The letter advised that the Manager would send out those documents upon payment of the costs of the Costs Assessor which was stated to be $914.37. A tax invoice for that amount was issued: Affidavit of Christopher Gordon Price at [5].
5. It is not disputed that the defendants paid the costs of the costs assessment as set out in that letter. Mr Price in his affidavit states at [7]: "In order to obtain the Certificate of Determination of Costs and Certificate of Determination of Costs of Costs Assessment issued by the Costs Assessor, the Defendants were compelled by the Manager, Costs Assessment and did pay the costs of the costs assessment in the amount of $914.37 inclusive of GST on 19 September 2012."
6. A copy of the receipt evidencing payment by the defendants was annexed to Mr Price's Affidavit (Exhibit CGP-2 at p 5). Prior to paying this amount, the defendants had also paid the filing fee for the lodging of their Application for Assessment of Costs in the sum of $398.15: Affidavit of Christopher Gordon Price at [4].
7. Copies of the Certificate of Determination of Costs and Certificate of Determination of Costs of Costs Assessment issued on 5 September 2012 were also exhibited to the Affidavit of Christopher Gordon Price (Exhibit CGP-2 at pp 6-7). In relation to those Certificates, Mr Price observed in his affidavit at [9]: "When I received those documents, I observed that the Costs Assessor had determined that the costs of the costs assessment, assessed by the Costs Assessor in the amount of $1312.52 (including the filing fee for the application of $398.15 already paid by the defendants) were payable by the plaintiff." (Emphasis added).
8. Following the review of the determination initiated by the plaintiff, Hicksons received a letter on 1 February 2013 stating that the Review Panel had forwarded their Certificate of Determination of Costs, Certificate of Determination of Costs of Costs Assessment and Statement of Reasons to the Manager, Costs Assessment and that, as with the first determination, the Manager would forward these documents on payment of the panel's costs, being $1713.24: Affidavit of Christopher Gordon Price at [11].
9. At [12] of his Affidavit, Mr Price states: "In order to obtain the issue of the Review Panellists Certificate of Determination of Costs, the Defendants were compelled by the Manager, Costs Assessment and did pay the costs of the costs review on or about 23 July 2013."
10. In his Affidavit at [13] Mr Price set out a conversation said to have taken place between himself and the Manager, Costs Review on 13 June 2013, that is, prior to the defendants making payment. In essence, in that conversation Mr Price expressed his concern to the Manager, Costs Review, that the plaintiff would not pay the costs of the costs assessment, necessary for the certificates to be issued. The conversation included the following exchange: "Mr Price: …It's in (the plaintiff's) interests not to have the Certificates sent out because the costs assessment is suspended and my clients cannot enforce the costs order against her until that happens. However, it is extremely unfair that my clients, who succeeded in having Mrs Coshott's proceedings struck out and in obtaining a costs order against her and then having applied for and obtained an assessment of those costs, without which they cannot enforce the costs order against Mrs Coshott, are not forced to pay for Mrs Coshott's unsuccessful Costs Review before they can enforce the Court's costs order against her. Manager: Unfortunately, I cannot waive the requirement that the Costs Review Panel's costs are to be paid. Mr Price: But only you can compel Mrs Coshott to pay those costs before the Certificates are issued. My clients can't. Manager: Your clients will have to pay the costs if Mrs Coshott does not. I am not willing to send the certificates to you unless someone, be it them or Mrs Coshott, first pays the Costs Review Panel's costs."
11. It is not disputed that following this exchange the defendants paid the Review Panel's costs in the sum of $1713.25.
12. The total amount now sought by the defendants in their claim for restitution ($3264.65) comprises the costs of the first costs assessor of $1312.52 plus GST in the amount of $83.13 as well as the sum of $1713.25 attributable to the costs of the Review Panel and GST on the second amount in the sum of $155.75.
13. In their Written Submissions, the defendants relied upon the judgment of Ward J (as her Honour then was) in Kassem and Secatore as Joint Liquidators of Pan Pacific Age Care Services Pty Ltd. (in liq) and Anor v Koutavas [2012] NSWSC 236 as providing the legal basis for their claim. It was submitted that: "10 The legal basis upon which the claim rests is payment under a compulsion of law, which requires three elements to be satisfied: a. First, that the payer was compelled, or compellable, by law to make the payment; b. Second, that the payer did not officiously expose himself to the liability; c. Third, that the payment discharged a liability of the plaintiff"
14. These elements were said to be based on the decision in Kassem.
15. It was further submitted by the defendants that 'where a party is entitled to restitution it is entitled to interest on the amount ordered to be paid'. Reliance was placed on Woolworths Limited v Strong (No 2) [2011] NSWCA 72; 80 NSWLR 445 in this regard. It was noted that the Court has power to award interest on either sums ordered to be repaid by a party (pursuant to s 101(1) Civil Procedure Act 2005 and Uniform Civil Procedure Rules rule 36.7(1)) or judgment sums (s 100 Civil Procedure Act 2005): Defendants' Written Submissions at [12]-[14].
16. The plaintiff submitted that the claim for restitution should have been made at or around the time that the costs certificate was filed rather than over two years after 'as an afterthought to the defendants' successful defence of the plaintiff's challenge to the certificate': Plaintiff's Written Submissions at [3].
17. It was asserted by the plaintiff that the defendant's approach to restitution and particularly the decision of Kassem was 'a striking and undue simplification of the legal position': Plaintiff's Written Submissions at [7]. The plaintiff identified the decision of Weber v Aquaqueen International Pty Ltd [2013] NSWSC 1181 as being a case where Kassem had expressly not been followed by Garling J. It was submitted by the plaintiff that: "This Court would be required to decide whether either Ward J or Garling J was erroneous and the significance to that question of the decision of the Court of Appeal (refusing leave to appeal in Weber). Such a complex question of construction should be left to another occasion, where the Court has the benefit of the filing of any certificates of the costs of the costs assessment and review, a properly brought or pleaded claim in the alternative for restitution and detailed submissions on whether Kassem or Weber is correct."
18. In oral submissions at the hearing on 1 May 2015 Ms Castle for the defendants stated that I would not be required to decide whether Kassem or Weber was the correct approach as contended by the plaintiff because: "In both of those cases the applicant sought to set aside judgments which had been obtained by the filing of certificates, which in part at least included a certificate dealing with the costs of assessment which directed one party to pay but which the other party paid. That is the common substratum of fact in both of those cases. They arise slightly differently… … The application before you today does not involve any application to set aside any judgment. There is no judgment in relation to those certificates. Garling J was not asked to consider the issue of restitution or any form of repayment of an amount that had been paid by the party not directed to pay it. The defendants rely on the case of Kassem not on the point at which their Honours differed, that is whether UCPR 36.15 allows the Court to set aside such judgments as an irregularity because only of applications of restitution, which Ward J in Kassem ruled accordingly. It is my submission, whilst there are differences in the cases of Ward J and Garling J, and that those differences are part of the ratios of those cases such as they apply to UCPR 36.15, they are not part of any part of what the defendants rely on. What the defendants rely on is Ward J exercising her discretion to restitution or restitutionary repayment of an amount paid by the party who wasn't obliged to pay them but did." (T 1 May 2015 pp 2-3).
19. Ms Castle placed emphasis upon certain observations in the judgment of Ward J (as her Honour then was) in Kassem where her Honour sets out the 'three requirements' for restitution to arise derived from Goff and Jones, The Law of Restitution (5th ed, 1998). Ms Castle relied upon the following statements made by Ward J (as her Honour then was) in her application of those requirements to the case before her Honour: "55 Here, the compulsion to make payment of the costs of the costs assessor arises by virtue of the statutory requirement that the costs assessor forward the s 369 Certificate to the Manager, Costs Assessment and notify the parties that the certificate will be available (by inference, only) on payment of the costs of the costs assessor. The Costs Assessor has no discretion in this regard. There is, in my opinion, an implicit requirement imposed by the statutory regime that in order to obtain the costs certificates payment of the costs of the costs assessment must be made. 56 The plaintiffs did not place themselves in a position to make payment officiously, but were required to do so by the practical effect of the procedure set out in the statutory regime for costs assessments. By paying the costs of the costs assessor, the plaintiffs have met the claim for costs by the costs assessor and have thus discharged the liability of the cost respondent to pay those costs as assessed under the s 369 certificate (if the costs respondent sought to contend otherwise then it would be difficult to see how she could resist a claim by the Manager, Costs Assessment directly to enforce the costs judgment arising on the filing of the costs certificate.) Therefore, it seems to me that the plaintiffs have a right of reimbursement against the defendant for the payment of the costs of the costs assessor as determined under the s 369 Certificate…"
20. As to the plaintiff's submission that the Notice of Motion was an inappropriate vehicle for bringing the restitution claim, Ms Castle submitted: "There is no prejudice in these circumstances to the claim being brought in a summary fashion and it is similar to a court ordering restitution of the amount of an overturned judgment. That is, it would be foolish to think that if for example the Court of Appeal allowed an appeal and then ordered, as they frequently and typically do, restitution of the amount of any judgment paid that the court might make orders for a separate trial of that matter."
21. Mr Jones in oral submissions made on behalf of the plaintiff, maintained that I would be required to decide between the approach taken by Ward J in Kassem and Garling J in Weber: T 12: 40-45.
22. Mr Jones described the different approaches as such: "Ward J (in Kassem) says that a deemed judgment based on the costs of the costs assessment operates between the person who files the judgment and the Manager, Costs Assessment. … Garling J says that the certificate of the costs of the costs assessment gives rise to a judgment between the party filing the certificate and the person required to pay the costs. In the same way as the costs of the determination." (T 13).
23. Mr Jones went on to submit that the defendants' contention that the question did not require resolution was wrong for two reasons, stating: "The first reason is that in Kassem Ward J did not find a freestanding entitlement to restitution. What her Honour found was that the presence of restitution as a solution to the fact that there was no deemed judgment between the parties to the costs assessment for the costs of that assessment. So the entire context of Kassem apparent even in [49] of her Honour's judgment to which my learned friend took you, was to apply the law of restitution as a solution to the practical dilemma that flows from her Honour's construction of the Legal Profession Act. And it is that construction with which Garling J disagrees… What my learned friend says is that Ward J's judgment was either intended to or should now be taken even further. It was intended to go further than that or it should be taken to go even further than that. So even where there is no filing of the certificate and no purported deemed judgment of the kind that Ward J didn't want to give effect to in Kassem there should still be scope to seek restitution. In other words, the only way my learned friend reaches the point whereby your Honour does not have to resolve the difference between Kassem and Weber is by submitting that restitution is available regardless of whether a deemed judgment is available or not between the parties to the assessment process." (T 15: 1-20).
24. Mr Jones later stated: "Your Honour has no choice but to rule on this conflict of authority. This is because in finding scope for restitution, Ward J was propelled to consider restitution by the fact that she thought the deemed judgment procedure under s 369 (LPA) wasn't available between the private parties to the costs assessment… So what my learned friend is saying is that regardless of whether the deemed judgment procedure is not available in accordance with Kassem or is available in accordance with Weber there is still scope for restitution in accordance with Ward J's judgment. So either the defendants are saying that Ward J was creating a freestanding entitlement to restitution regardless of the availability of a deemed judgment under s 369, which in my submission she plainly wasn't, or they are inviting your Honour to extend the law of restitution to a situation where the deemed judgment procedure might be available in accordance with Garling J's judgment in Weber but it doesn't matter because it is an entitlement which the defendants at their election can pursue…"

Consideration

1. I do not consider it necessary to resolve the dispute between the parties as to whether the approach taken by Ward J in Kassem or Garling J in Weber is correct subject to the following comments.
2. As demonstrated above at [40], the difference in approach relates to whether a deemed judgment arising as a result of the filing of a certificate of costs assessment is a deemed judgment between the parties to the costs assessment or the party required to pay the costs and the Manager, Costs Assessment.
3. The law of restitution, and what the defendants in this case are required to prove to succeed on their Notice of Motion insofar as it relates to restitution, is uncontroversial. The way in which it relates to a deemed judgment with respect to costs assessments should not be material to the way it applies in this case. I am not satisfied that, if Garling J's interpretation is accepted restitution would be unavailable as a remedy because of the statutory regime.
4. As both parties rightly acknowledged, and as was discussed in the principal judgment of 12 March 2015, it is the act of filing the Certificates of the Cost Assessor, the Certificates of the Costs of Cost Assessment and in this case any further certificates issued by a review panel which gives rise to the deemed judgment between the parties. That is the effect of s 368(5) LPA in relation to Certificates of the Cost Assessor and s 369(7) in relation to Certificates of the Costs of Cost Assessment. Parties entitled to recover money owed following a costs assessment cannot enforce that right until they have filed the certificates. They cannot file the certificates until they are released to them by either the Manager, Costs Assessment or Manager, Costs Review. The certificates cannot be released to them until they, or the other party to the assessment, have paid the costs of the costs assessment. Apart from the statutory provisions, including s 369(7)-(9) which contemplate the enforcement of a deemed judgment with respect to unpaid costs by the Manager, Costs Assessment after a Certificate of the Costs of Costs Assessment has been filed (and thus imply that the certificate can be filed while the costs remain outstanding), Mr Price's evidence establishes in this case that the defendants found themselves in a position where they were expressly told by the Manager, Costs Assessment that the certificates would not be released to them unless they paid outstanding costs which were in fact payable by the plaintiff who had refused or failed to pay them.
5. If the defendants were able to file the certificates, and bring a deemed judgment against the plaintiffs into existence as a result, without incurring any costs themselves, restitution would not be the appropriate remedy to recover the costs owed, since the deemed judgment would be sufficient. However, the practical effect of the regime is that the defendants could not file the certificates without paying the costs first. At the preliminary point at which the defendants paid the outstanding costs for the release of the certificates, no deemed judgment was, or could have been, in existence. The defendants were subsequently out of pocket. Restitution should be available as a result.
6. In addition I note the decision of Campbell AJA in Penson v Titan National (No 2) [2015] NSWCA 120 which was handed down on 1 May 2015, that is, the same day as these proceedings were heard. His Honour referred to the decision of Ward J in Kassem and endorsed it, stating: "[68] Her Honour held - in my respectful opinion, clearly correctly - that in circumstances where one party to a costs assessment procedure had been held liable to pay the costs of the assessment procedure and the other party had paid the costs of the costs assessment, the party who had paid the costs assessment costs had a restitutionary right to recover the amount of the costs. This restitutionary right arose from the practice that is enshrined in the provisions of the Legal Profession Act governing assessment of costs, whereby the costs of costs assessment proceedings are payable to the manager, costs assessment, and the manager, costs assessment, refuses to issue a costs assessment certificate until such time as the costs of the costs assessment have been paid. [69] The party who has been successful in a costs assessment, is, thereby, placed under a practical compulsion to pay the costs of the costs assessment procedure if it is to obtain the costs assessment certificate. It is the practical compulsion to pay the costs of the costs assessment certificate that gives rise to the restitutionary right to recover the amount so paid from the unsuccessful party who has been held to be liable to pay it." (Emphasis added)
7. I note that his Honour Campbell AJA did not address the decision of Weber. However, his acceptance of the availability of restitution as a remedy, as discussed in Kassem, remains.
8. That being established, it is necessary to consider the law of restitution and its application to the facts. As previously stated, the defendants relied upon the elements set out in Kassem. I consider that the three elements identified by the defendants as necessary to prove an entitlement to restitution are uncontroversial. Accordingly, I adopt the following statements her Honour made in Kassem: "[50] Goff and Jones (The Law of Restitution, 5 th ed, 1998) cite a passage from the first edition of Leake on Contracts, as quoted by Cockburn CJ in Moule v Garrett (1872) LR 7 Ex 101 at 104 as the classic statement of this common law principle: Where the plaintiff has been compelled by law to pay, or being compellable by law, has paid money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability; under such circumstances the defendant is held indebted to the plaintiff in the amount. [51] Goff and Jones note that to found a right to restitution of the moneys paid, three matters must be established: first, that the payer was compelled, or was compellable, by law to make the payment; second, that the payer did not officiously expose himself to the liability; and third, that the payment discharged a liability of the defendant. [52] As to the first of those matters, the learned authors emphasise that the compulsion must be by law and that a moral obligation to make the payment would not suffice (Goff and Jones, 5 th ed, at 438). Similarly, a contractual obligation to make payment also would not suffice (The Esso Bernicia [1989] AC 643, where payments made to discharge damages claims on behalf of the parties liable therefore, pursuant to an agreement with those parties, were characterised as voluntary or gratuitous). However, a statutory obligation amounts to compulsion by law (Brook's Wharf & Bull's Wharf Ltd v Goodman Bros [1937] 1 KB 534), as does payment made pursuant to the execution of a judgment debt (Edmunds v Wallingford (1885) 14 QBD 811) and in the present case the statute recognises that costs certificates may be withheld until payment of the relevant costs (thus tantamount to statutory compulsion for payment of those amounts). [53] The second requirement prevents those who, by their own act, place themselves in a position where they are compelled to make the payment from claiming a right to restitution. Goff and Jones say at 445: The plaintiff's payment will not be officious if he has exposed himself to liability at the request, express or tacit, of the defendant, or if he has been forced to place himself in the position which rendered him liable to make the payment, or, perhaps, if he has intervened as a matter of necessity. In such cases if, in consequence of his intervention, he finds himself compelled to make the payment, he should be entitled to reimbursement. But if, in other circumstances, he freely and without request undertakes the risk of liability, he generally has no right to any direct reimbursement, even though he is compelled to make the payment. (my emphasis) [54] Finally, with respect to the third requirement, this will usually be satisfied where the payer and other party are subject to a common demand. An example is where the owners of a warehouse were subject to the statutory obligation to pay customs duties owed by their customers (Brooks Wharf). However, there are cases where there is no common demand and the payment still operates to discharge the liability of another party (Exall v Partridge (1799) 8 TR 308). That said, the liability of the other person must be discharged. If the liability remains even after payment is made, then the payer does not have a right to reimbursement of the moneys paid."
9. I am satisfied that the three elements discussed by her Honour in Kassem apply to the facts of this case. The plaintiff, in disputing the claim, failed to establish any matters that indicated the contrary proposition. I consider that the defendants are entitled to recover the amount they seek in restitution.

Gross Sum Costs Orders

1. The remaining orders sought in the defendants' Amended Notice of Motion were gross sum costs orders under s 98(4) Civil Procedure Act 2005 ("CPA") for the costs of the proceedings commenced by the plaintiff by Notice of Motion on 26 August 2014 and determined by me on 12 March 2015 and the costs of these proceedings commenced by the defendants by way of Notice of Motion filed 27 March 2015.
2. Section 98 CPA provides: 98 Courts powers as to costs (cf Act No 52 1970, section 76; SCR Part 52A, rules 5, 6, 7 and 8; Act No 9 1973, section 148B; Act No 11 1970, section 34) (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. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. (5) The powers of the court under this section apply in relation to a married woman, whether as party, tutor, relator or otherwise, and this section has effect in addition to, and despite anything in, the Married Persons (Equality of Status) Act 1996. (6) In this section, costs include: (a) the costs of the administration of any estate or trust, and (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, and (c) in the case of proceedings transferred or removed into the court, the costs of the proceedings before they were transferred or removed. (Emphasis added).
3. The defendants relied on the judgment of the Court of Appeal in Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 for the proposition that the power to make a gross sum costs order 'is appropriately exercised wherever the circumstances warrant its exercise': Defendants' Written Submissions at [23].
4. The defendants submitted at [28] of their Written Submissions that: "The power under s 98(4)(c) may be exercised by the Court in a wide variety of circumstances. Whereas the power once tended to be exercised in very large complex cases, more recent cases demonstrate the appropriateness of exercising the power in simpler cases."
5. In that regard reliance was placed by the defendants on the decision of Beech-Jones J in Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 863. Principles from Simone Starr-Diamond v Talus Diamond (No 4) [2013] NSWSC 811 and In the matter of Palladium Consulting Pty Limited [2013] NSWSC 92 were also relied upon by the defendants in their Written Submissions.
6. It was submitted by the defendants that a gross sum costs order is appropriate in this case because of factors set out at [32] of their Written Submissions which included the relative simplicity of the case, the fact that there was no cross-examination, the existence of evidence casting doubt on the plaintiff's ability to pay costs in any event and the fact that the plaintiff had not paid, as at the date of the hearing, an outstanding amount payable by her as well as what was said by the defendants to be her willingness to 'pursue relatively expensive court proceedings in ventilation of her dissatisfaction over relatively small amounts or technical legal issues.'
7. The defendants also pointed to the history of the dispute which they said suggests that 'if the parties are required to re-engage with the costs assessment system a similarly drawn-out process may occur.' The defendants also relied upon what was asserted to be the unnecessary expense and delay in payment of costs following costs assessments involving the parties in relation to which it was submitted that 'the defendants have been put to unnecessary expense, have paid costs and been kept out of their money.'
8. The final matter relied upon by the defendants as warranting the making of a gross sum costs order was the potential for satellite litigation, in relation to which it was submitted: "The subject matter of the Notice of Motion relates to the costs of litigation, ie, the regularity of the filing of a Certificate of Determination issued by a review panel. A further order requiring the re-engagement with the costs assessment process has the potential to lead to another round of assessment, review of assessment and appeal to the District Court. This sort of "satellite litigation" is to be discouraged, particularly in view of ss 56-60 of the Civil Procedure Act 2005."
9. Ms Castle's oral submissions at the hearing on 1 May 2015 made it clear that the potential for ongoing costs disputes was the principal factor relied upon by the defendants to warrant the making of a gross sum order. Ms Castle submitted: "If your Honour were to order that the costs go to costs assessment on this occasion rather than ordering a gross sum it would be entirely foreseeable that the process might commence again. And if I may point out there is a right of appeal. So a party can seek costs assessment then by right seek review and then by right again seek to appeal. One does not need leave to appeal. So in a sense there is an endless loop in terms of a court ordering the matter to costs assessment. The Court of Appeal in the matter of Bobb remarked on satellite litigation being an undesirable feature. In my submission your Honour ordering a gross sum for costs would put an end to another round of costs assessments and reviews and rights that may be available in court." (T 1 May 2015 at p 10: 29-50).
10. In relation to the quantum of any gross sum order to be made, the defendants quoted the following in their Written Submissions from Harrison v Schipp, supra at [22]: "Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson at 124, the gross sum "can only be fixed broadly having regard to the information before the Court"; in Hadid v Lenfest Communications Inc at [35] it was said that the evidence enabled fixing a gross sum "only if I apply a much broader brush than would be applied on taxation, but that…is what the rule contemplates."
11. It was submitted that the 'broad brush' approach contemplated in that passage should be adopted, subject to the making of a discount for the contingencies of the assessment process. The defendants submitted that such discounts 'tend to be in line with the reduction which would be expected on costs assessment or taxation': Defendants' Written Submissions at [35].
12. The quantum of costs sought by the defendants was 80% of the costs they were said to have incurred. In terms of the costs incurred reliance was placed on the affidavit evidence of Christopher Price and Chloe Ellis. The former affidavit was concerned with the costs of the plaintiff's Notice of Motion decided by me on 12 March 2015. The latter was concerned with the present Notice of Motion filed 27 March 2015. The evidence establishes that the total amount of costs incurred by the defendants is $49 050.32: Defendants' Written Submissions at [36]-[38]. Applying the 20% discount, the amount sought by the defendants was $39 240.26, plus interest on that amount.
13. The plaintiff submitted that this case could not be described as 'relatively straightforward' in the sense contemplated by Bobb v Wombat Securities, supra: Plaintiff's Written Submissions at [16]. The plaintiff observed that: "17. The present case has involved, after judgment in the substantive dispute before Schmidt J, four filings of notices of motion, an original and amended notice of motion by the Plaintiff and an original and amended notice of motion with respect to costs by the Defendants. There was constitutional argument raised by the Plaintiff, requiring the drafting of notices under s 78B of the Judiciary Act 1903 (Cth) and correspondence with the various Attorneys-General. The Attorney for this State intervened and the matter was heard over an entire day."
14. The plaintiff submitted that the defendants' argument that satellite litigation would ensue if a further referral to costs assessment was made was speculative and casts 'in a pejorative light any exercise of rights and enjoyment of protections under the costs assessment process': Plaintiff's Written Submissions at [18].
15. In relation to the evidence of the defendants as to quantum, the plaintiff submitted that the total amount sought by the defendants is greater than the amounts considered in Bobb and Simone Starr Diamond v Talus Diamond and that 'the larger the amount of costs, the more this Court should hesitate to depart from the ordinary processes of assessment': Plaintiff's Written Submissions at [19].
16. In terms of the discount that should be made to the total costs incurred by the defendants if a gross sum costs order was to be made, the plaintiff disagreed with the defendants' characterisation of the range of discounts in cases where such orders have been made as being '15-20%'. This figure was said by the plaintiff to have been arrived at by the defendant in reliance on an incorrect interpretation of the discount in Palladium as being 15% where, according to the plaintiff, the discount actually applied in that case was 33.3%: Plaintiff's Written Submissions at [20]-[21]. The effect of the varied interpretations of Palladium was said in oral submissions by Mr Jones to mean that 'if the plaintiff is correct…the spectrum erected in my learned friend's submissions of between 15 and 30 per cent is actually not the case and we are talking more of a spectrum from 20 to 33 and a third per cent': T 23: 15-25.
17. Accordingly it was submitted by the plaintiff that if a gross sum costs order is to be made a discount of approximately 30% would be more consistent with the authorities (with reliance placed upon Palladium, supra and Dubow v Fitness First Australia Pty Ltd (No 2) [2012] NSWSC 961): Plaintiff's Written Submissions at [21].
18. Ms Castle for the defendants addressed this contention in her oral submissions, stating that the figure of 20% was arrived at as a midpoint between the discounts given in various authorities. Mr Price, in his affidavit at [49], had given evidence that a discount of 10% might be the result if costs were referred for assessment. Ms Castle submitted that: "Even if your Honour accepts the uncontroverted evidence of Mr Price that 10% is what might happen on assessment, I am mindful that this is not assessment and that your Honour is taking a broad brush approach which needs to take into account the contingency that a wide range of outcomes may be possible on assessment and that your Honour would be, in my submission, safe in making a reduction of 20%." (T 11: 40-45).
19. The plaintiff's final submission in relation to the making of a gross sum costs order was that such an order should not be made in relation to the second proceedings, arising from the Notice of Motion filed 27 March 2015, because the defendants did not seek the order at the time judgment was delivered: Plaintiff's Written Submissions at [22].

Consideration

1. In Bobb v Wombat Securities, Beech-Jones J stated: "4 In his judgment, In the matter of Palladium Consulting Pty Ltd [2013] NSWSC 92, Black J noted that the power to make a lump sum costs order has been most commonly exercised when costs have been incurred in lengthy or complex cases (at [11]). His Honour also noted that it is not a power routinely exercised in place of the costs assessment process. His Honour stated: "The power to make a gross sum costs order should only be exercised where the Court considers it can do so fairly between the parties, including achieving an appropriate sum on the materials available to it, and the Courts have typically applied a discount in assessing costs on a gross sum basis: Ritchie's Uniform Civil Procedure NSW [s 98.65]; Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23." 5 Ultimately in Palladium Black J made a lump sum costs order having regard to the following factors (at [14]): "On balance, it seems to me that I should nonetheless make a gross sum costs order having regard to the relatively modest amount of the costs claimed; the delay which is likely to occur on a further assessment; the history of existing disputes between the parties as to the previous assessment; the uncertainty as to whether Palladium will ultimately meet a costs order, given that it has not met the previous costs order from the original proceedings; and the Court's experience as to the level of costs likely to be allowed in more complex applications of this kind." 6 Thus, in addition to complex cases, another common category in which lump costs will be awarded is the very short and relatively straightforward case. In such cases it can be expected that costs will be modest so that the pursuit of the costs assessment process might lead to unnecessary expense. This is particularly so where there is doubt about the payer's financial capacity. Further, in such cases the court will often be in a good position to make a reasonably well-informed assessment as to how much of the costs were reasonably incurred, because in a straightforward case it may often be apparent what out of court work was necessary for the case as presented. 7 Against the above is, of course, the broad proposition that the detailed scheme for costs assessment which affords protections to the parties should not be undermined by too quick a resort to the power conferred by s 98. Counsel for Mr Bobb, Mr Raphael, urges that consideration upon me. He also submits the amount claimed in this case is such that it cannot be characterised as a small matter. 8 I disagree. I consider that the circumstances of this case clearly warrant the making of a lump sum costs order. In the scheme of cases in this Court, the costs claimed are relatively modest. There are significant doubts about the plaintiff's capacity to pay such that there is a real risk that the costs of any assessment process undertaken by the first defendant may be thrown away. The issues in the case were straightforward and the Court is in a position to make a reasonably well-informed assessment as to the appropriate level of costs. Further, it must be borne in mind that the substantive issue of the proceedings was a dispute over the costs assessment process. A further order requiring the re-engagement of that process has the risk that the substantive dispute between the parties will become wider rather than narrower."
2. Though it is true that these proceedings were not particularly straightforward, the defendants, who are entitled to their costs, have nonetheless been able to quantify and evidence the costs incurred by them in a straightforward and, in my opinion, reasonable manner. I consider that the evidence provides me with the material necessary to make a fair order between the parties as contemplated in Palladium at [11].
3. I consider that the same risk of further litigation exists in this case as was present in Bobb. Moreover, as in Bobb there is real doubt as to the plaintiff's ability to pay a costs order in any event. In such circumstances, referring the matter to costs assessment would mean further expenses incurred by both parties in circumstances where the defendants may ultimately be unlikely to recover fully the costs owed to them by the plaintiff. The considerations of Giles JA in Harrison v Schipp, supra at [28]-[30] are analogous in this regard.
4. I accept the defendants' submission that making a gross sum costs order in this case would provide some finality and that such an outcome would be desirable and in the interests of justice.
5. Accordingly I propose to make the gross sum costs orders sought by the defendants in relation to the two sets of proceedings for which they are sought. I accept the affidavit evidence as to the totality of the costs incurred by the defendants as being in the sum of $49 050.32.
6. The question remains as to what discount should be applied to that figure. I have noted the dispute between the parties with respect to the range of discounts generally applied in cases of this type. In Bobb v Wombat a discount of 30% was made to the total costs incurred. I consider that a discount of 30% is more satisfactory in terms of covering the contingencies of costs assessment than the 20% argued for by the plaintiffs.
7. Accordingly I do not consider it necessary to decide definitively whether the discount in Palladium was 15% or 33% though I note that the amount ordered in that case ($16 672) represents 85% of the figure arrived at by adding the costs taken into account by Black J at [13] of his judgment ($19 732). With respect to Mr Jones' submission to the contrary, it thus appears that the discount in Palladium was indeed 15%.
8. I propose to make a gross sum costs order representing 70% of the costs incurred by the defendants.

Interest

1. The defendants in their Amended Notice of Motion sought interest on both the amount awarded to them by way of restitution and any gross sum costs order made in their favour. In respect of the first amount (restitution) the defendants were out of pocket in relation to the specific items of expenditure the subject of the same. Similarly, the defendants incurred expenditure in respect of their liability for legal costs. Accordingly I consider that they are entitled to the interest sought and propose to make orders in relation to each amount. I note that interest on the restitutionary amount is sought pursuant to s 100 CPA and interest on the gross sum costs order made is sought pursuant to s 101(4) CPA.
2. Section 100 provides: (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. (2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money paid, and (b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid. (3) This section: (a) does not authorise the giving of interest on any interest awarded under this section, and (b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and (c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and (d) does not affect the damages recoverable for the dishonour of a bill of exchange. (4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order. (5) For the purposes of subsection (4), appropriate settlement sum means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.
3. Practice Note SC Gen 16 prescribes the rate of pre-judgment interest that may be awarded under s 100 of the Civil Procedure Act as being: "In respect of the period from 1 January to 30 June in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and In respect of the period from 1 July to 31 December in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced."
4. Section 101 CPA provides: 100 Interest up to judgment (cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A) (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. (2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money paid, and (b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid. (3) This section: (a) does not authorise the giving of interest on any interest awarded under this section, and (b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and (c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and (d) does not affect the damages recoverable for the dishonour of a bill of exchange. (4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order. (5) For the purposes of subsection (4), appropriate settlement sum means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.
5. The prescribed rate in relation to s 101 is that contained in UCPR rule 36.7 which states: (1) The prescribed rate at which interest is payable under section 101 of the Civil Procedure Act 2005 is: (a) in respect of the period from 1 January to 30 June in any year-the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and (b) in respect of the period from 1 July to 31 December in any year-the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced. (2) The Local Court may not order the payment of interest up to judgment in any proceedings in which the amount claimed is less than $1,000.
6. In the defendants' Written Submissions at [39] it is stated that the defendants will prepare a calculation of interest based on the amount awarded. The defendants are to provide to my Associate and to the plaintiff a Schedule setting out their interest calculations in relation to both amounts awarded (restitution and costs) before 4pm Wednesday 2 September 2015 and I grant leave to the plaintiff to reply, if necessary, by 4pm Tuesday 8 September 2015. In the interests of avoiding further costs arising I propose to make orders as to interest in chambers after that date.

Orders

1. Accordingly I make the following orders: 1. The plaintiff is to pay the defendants the sum of $3264.65. 2. The plaintiff is to pay the defendants $34 335.30 as a gross sum costs order under s 98(4) Civil Procedure Act in relation the proceedings specified in orders 3-4 of the defendants' Amended Notice of Motion filed 27 March 2015. 3. The plaintiff is to pay interest on the sums awarded in orders (1) and (2) above. The defendants are to provide to my Associate calculations as to the amount of interest payable in relation to each sum by 4pm Wednesday 2 September 2015. I grant leave to the plaintiff to reply to the calculations if necessary by 4pm Tuesday 8 September 2015. As noted above, orders as to interest are to be made in chambers following receipt of final calculations as to interest made by the parties, or as may be agreed by them.

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: 28 August 2015