Coshott v Vardas

The issue of competency

1. The respondent first raised the issue of the competency of the appeal in a letter dated 26 May 2017. In this letter the respondent's solicitors asked the appellants' solicitors how it was proposed to verify that the appeal involved a matter to the value of $100,000 or more. This was intended to be a reference to s 101(2)(r) of the Supreme Court Act 1970 (NSW) (Supreme Court Act) [4] which provides that an appeal does not lie to the Court of Appeal, except by leave, from: "(r) a final judgment or order in proceedings of the Court, other than an appeal: (i) that involves a matter at issue amounting to or of the value of $100,000 or more, or (ii) that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more." No substantive response was received to the letter.
2. The issue of the competency of the appeal was raised again with the appellants at directions hearings before the Registrar on 21 June 2017 and 26 July 2017. At the second of these hearings, the appellants were directed to file and serve an affidavit in compliance with Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.22. The rule relevantly provides as follows: "(1) This rule applies to an appeal or cross-appeal as of right that is restricted by any Act by reference to a specified amount or value. (2) If an amount in issue in an appeal or cross-appeal to which this rule applies exceeds the specified amount or value, the notice of appeal or cross-appeal must include a certificate to the effect that the amount in issue exceeds the specified amount or value, signed by: (a) a legal practitioner, … (3) The Registrar may direct a party in an appeal or cross-appeal to which this rule applies to file and serve on each necessary party an affidavit which sets out the material facts on which the appellant or cross-appellant relies to show that the restriction does not apply."
3. On 4 August 2017, the solicitor for the appellants swore an affidavit. Omitting the formal parts, the affidavit in its entirety reads as follows: "The amount in question in the proceedings below was $210,000.00 founded upon a claim for costs pursuant to a costs assessment application made by the appellants in respect to a favourable 2004 cost order which by order of the court below has restrained the appellants (as costs applicants) to take steps to prosecute the costs assessment application."
4. In subsequent correspondence between the solicitors, the appellants asserted that they did not require leave to appeal and implied that they did not intend to seek leave to appeal.

The respondent's motion

1. On 15 September 2017, the respondent filed a notice of motion seeking an order that the appeal be struck out or dismissed as incompetent on the basis that the appellants required leave to appeal but had declined to apply for leave.
2. On 22 September 2017 the respondent filed written submissions in support of his motion objecting to the competency of the appeal. The submissions drew attention to UCPR r 51.22 and the unsatisfactory nature of the affidavit filed on behalf of the appellants. The submissions contended that the affidavit did not establish that the amount at issue in the appeal exceeded $100,000.
3. This Court heard argument on the respondent's competency motion at the outset of the hearing. Mr Sahade, who appeared for the appellants, submitted that despite the form of the affidavit there was sufficient evidence to establish that the matter at issue in the appeal amounted to the value of at least $100,000. Mr Sahade was specifically asked whether the appellants intended to apply for leave to appeal if the Court determined that the appeal was incompetent. He answered in the negative.
4. In Ozpinar v Assaily, [5] the Court pointed out that: [6] "The object sought to be achieved … [by] s.101(2)(r) of the Supreme Court Act 1970, is to discourage small appeals where the amount in issue does not justify the cost delay and inconvenience of the appeal process and to ensure that the Court is not burdened by appeals which do not warrant the Court's time".
5. The Court in that case quoted the terms of Supreme Court Rules Pt 51, r 8 (the forerunner to UCPR r 51.22) and said: [7] "As is apparent, the [a]ffidavit must disclose facts which show that an appeal lies as of right. It is not a sufficient compliance with the rule if the deponent merely states a belief that the relevant amount is involved … If the affidavit does not comply then it is open for the other side to apply to strike out the appeal as incompetent."
6. The principles stated in Ozpinar v Assaily have been consistently applied by this Court. Thus in Bracks v Smyth-Kirk, [8] the Court emphasised that the affidavit relied on by an appellant must provide proper evidence to support the claim that the amount at issue involves more than $100,000 and that it is not enough merely to pay lip service to the obligation. [9]
7. It is difficult to see, at least in the absence of detailed evidence, how the recoverable costs of a motion for leave to amend a statement of claim could amount to $100,000 or anywhere close to that figure. As the respondent submitted, the affidavit filed on behalf of the appellants did no more than restate the amount claimed by the appellants in the costs assessment and thus plainly failed to comply with the requirements of UCPR r 51.22. Despite being alerted by the respondent to the deficiencies in the affidavit well in advance of the hearing, the appellants made no attempt to rectify the problem by filing a fresh affidavit addressing the question of quantum.
8. The evidence identified by Mr Sahade in his oral submissions did not advance the matter further. He referred to an incomplete itemised account of fees and disbursements reproduced in the appeal books. However, this document included only a few items that clearly related to the appellants' motion seeking leave to amend the statement of claim in the Equity Division Proceedings as distinct from other interlocutory questions. The order made by Bergin J did not enable the appellants to recover the costs of all interlocutory motions dealt with at the hearing; the order was limited to the appellants' costs of their motion for leave to amend the statement of claim.
9. The evidence indicates that there were other matters of substance dealt with at the hearing on 3 August 2004, such as the appellants' motion seeking freezing orders against the respondent. While this application was not pressed at the hearing, presumably the appellants' legal representatives devoted considerable time to it in advance of the hearing in respect of which the appellants incurred costs. As Mr Sahade acknowledged, there was no evidence explaining how counsel's fees and other disbursements apparently referable to the interlocutory hearing could properly be apportioned between the application to amend the statement of claim and the other applications before the Court. [10]
10. For these reasons the Court concluded that the appeal was incompetent and thus had to be dismissed.

Costs

1. UCPR r 51.41 provides as follows: "(1) A respondent who objects to the competency of an appeal must, by notice of motion filed and served on all other parties to the appeal within 28 days after service on the respondent of the notice of appeal, apply to the Court for an order dismissing the appeal as incompetent. (2) If the respondent fails to comply with subrule (1) and the appeal is nevertheless dismissed as incompetent: (a) the respondent is not entitled to costs of the appeal unless the Court otherwise orders, and (b) the Court may order the respondent to pay the appellant any costs of the appeal proving useless or unnecessary."
2. The respondent did not file a motion objecting to competency until 15 September 2017, some five months after the notice of appeal was filed. The respondent's solicitor drew the attention of the appellants to the need to demonstrate that the appeal involved an issue to the value of $100,000 or more within the 28 day period referred to in UCPR r 51.41(1). The appellants gave no meaningful response to the communication by the respondent's solicitor prior to the first directions hearing on 21 June 2017 or indeed prior to the two subsequent directions hearings at which the issue was raised. However, despite the appellants' failure to explain why the appeal was competent, the respondent refrained from filing the competency motion for the lengthy period already referred to.
3. The authorities recognise that there is an obligation not only upon an appellant to comply with the rules, but on a respondent to be "vigilant in taking all proper steps if it appears that an appeal is or may be incompetent". [11] This exhortation does not simply rest on the desirability of the parties complying with the rules. The point of UCPR r 51.41 is to ensure that incompetent appeals are identified and either dismissed or regularised by an application for leave to appeal as soon as practicable. A breach of the rule is apt to lead to delay and to unnecessary costs in preparing for an appeal that is incompetent. It also involves a failure to give effect to the "overriding purpose" of facilitating the just, quick and cheap resolution of the real issues in the proceedings. [12]
4. The respondent in the present case appears to have delayed filing a motion objecting to competency in part because it was unclear whether the appellants would seek leave to appeal. Nonetheless, the issue of competency would have been brought to a head much earlier and quite possibly without the need for a series of directions hearings had the motion been filed in a timely fashion. Presumably the respondent was well able to assess the amount that was genuinely in dispute in consequence of the Costs Order. There is nothing to indicate that the respondent or his solicitor delayed filing the motion because they were misled. [13]
5. The respondent's motion recognised that as it had not been filed within the 28 day period for which r 51.41(1) provides, he is not entitled to the costs of the appeal unless the Court "otherwise orders" pursuant to r 51.41(2)(a). The lengthy affidavit filed on behalf of the respondent on the question of costs does not proffer a cogent explanation as to why the motion was not filed within time or even why it was not filed promptly once it became apparent that the appellants were not addressing the issue that had been raised.
6. This Court should not "otherwise order" where the effect is to condone delay by a respondent who apparently has full knowledge of the circumstances that render an appeal incompetent. In these circumstances the respondent is not entitled to the costs of the appeal. There should therefore be no order as to the costs of the appeal.

Endnotes

1. There are three respondents to the appeal. The second and third respondents filed submitting appearances. We refer to the first respondent simply as the "respondent".
2. If the appeal was competent, the precise form and effect of the costs order might have been significant as a sequestration order was subsequently made against one of the appellants: see Bankruptcy Act 1966 (Cth), s 58(1)(a).
3. Vardas v Coshott [2017] NSWSC 29.
4. The letter in fact mistakenly referred to s 100 of the Supreme Court Act.
5. [2001] NSWCA 23 (Powell JA, Sheller JA and Rolfe AJA agreeing).
6. Ozpinar v Assaily at [13].
7. Ibid at [14].
8. [2009] NSWCA 401; 263 ALR 522 at [40] (McColl JA, Allsop P and Young JA agreeing).
9. See also Lorrimar v Serco Sodexo Defence Services Pty Ltd [2014] NSWCA 371 at [71]-[74] (McColl JA, Macfarlan JA and Tobias AJA agreeing) and cased cited there.
10. The disbursements, excluding a "Costs consultant fee", amounted in total only to about $32,000.
11. Kassem v Colonial Mutual General Insurance Co Ltd [2001] NSWCA 38 at [80] (Rolfe AJA, Powell JA and Ipp AJA agreeing).
12. Civil Procedure Act 2005 (NSW), s 56(1).
13. Compare Goulding v Kirby [2003] NSWCA 214 at [19] (Santow JA, Hodgson JA agreeing). 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: 16 October 2017