Doyle v Hall Chadwick

HEADNOTE [This headnote is not to be read as part of the judgment] In 2003 a member of the first respondent, Hall Chadwick, was appointed as a joint administrator of a company in voluntary administration. A firm of solicitors, of which the applicant was the principal, was engaged to act for the company in administration. A dispute arose as to whether the firm's costs were recoverable pursuant to a conditional costs agreement. The costs assessor found in favour of the applicant. Hall Chadwick successfully appealed to the Common Law Division. The applicant's appeal to the Court of Appeal was dismissed. The applicant was ordered to pay Hall Chadwick's costs in the Common Law Division and Court of Appeal. The applicant had the costs assessed and then sought review of the assessment by a review panel. He sought judicial review of the determination of the review panel in the Common Law Division. Before that application was heard, he paid Hall Chadwick the full amount of the costs as assessed. The Attorney General was joined as a party to the proceedings. The review panel's determination was set aside by consent. The applicant pursued his judicial review proceedings in order to recover the payment he had made. The applicant was unsuccessful in the Common Law Division. The applicant lodged a notice of appeal in this Court. That appeal was struck out as incompetent by Handley AJA. The applicant, by notice of motion, sought to have that decision set aside and also sought leave to appeal. The applicant sought costs, including those incurred during the costs assessment and review process, on an indemnity basis against Hall Chadwick, the review panel and the Attorney General. At the conclusion of the hearing the Court made orders dismissing the notice of motion and the application for leave to appeal. Hall Chadwick and the Attorney General sought orders for costs. The issues for determination were: (i) whether the orders of Handley AJA dismissing the appeal should be discharged or varied, (ii) whether this Court should grant leave to appeal in relation to the decision of the Common Law Division dismissing the application for a repayment order, (iii) whether this Court should make an order in favour of the applicant for the costs of the proceedings below, and (iv) what order should be made in relation to the costs in this Court. The Court held (per Basten JA, Macfarlan JA and Sackville AJA agreeing): In relation to (i)

1. The applicant's submission that the appeal did not involve an appeal "as to costs only" within the terms of Supreme Court Act 1970 (NSW), s 101(2)(c), because there was also a challenge in respect of the failure to make an order for repayment, should be rejected. As the challenge to the substantive order required leave, the need for leave as to costs stands in the way of an appeal until leave is given with respect to the substantive order: [23] Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 applied.
2. The claim for repayment of an amount paid pursuant to the judgments based on the costs assessors' certificates (and the claim for costs) would have resulted in consequential orders and these would have been interlocutory. Leave was therefore required: [25]-[27] Derrawee Pastoral Company Pty Ltd v McConochie [1995] NSWCA 123; Kara Kar Holdings Pty Ltd v Brookton Holdings No 5 Pty Ltd [1997] NSWCA 171 applied. In relation to (ii)
3. The critical condition for a cause of action to merge in a judgment and thereafter have no independent existence is that the judgment is standing at the time that further proceedings are sought to be brought on the cause of action. However, the law is replete with examples of quashing orders which set aside one decision, without unravelling all that preceded it: [40]-[42] Blair v Curran [1939] HCA 23; 62 CLR 464; Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502 distinguished; Wishart v Fraser [1941] HCA 8; 64 CLR 470 referred to.
4. The source of the debt was the certificate of the costs assessor which was not set aside by the review panel, nor affected (except in respect of a suspension of its operation) by the setting aside of the determination of the review panel: [43] Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172 distinguished.
5. The applicant being presently liable to pay costs to Hall Chadwick in accordance with the original determination of the costs assessor, and not actively pursuing a review of that determination, there is no injustice in refusing the applicant leave to appeal: [47] and [81] (Sackville AJA) In relation to (iii)
6. The submissions in this Court did not demonstrate any basis for interfering with the finding of the primary judge that the review panel's conduct did not fall into the category of serious misconduct, nor did it demonstrate a flagrant disregard of the elementary principles of justice, nor that the review panel acted in bad faith: [57]-[59] Magistrates' Court of Victoria at Heidelberg v Robinson [2000] VSCA 198; 2 VR 233 distinguished.
7. There was no evidence to suggest that the Attorney General had acted inappropriately in any respect. It is understandable that the Attorney did not withdraw at an early stage and the order for costs against the applicant in his favour was within the discretion of the primary judge: [61]
8. Hall Chadwick had not misconducted themselves in such a way as to give rise to an adverse order, let alone on an indemnity basis, in respect of costs incurred after the Attorney General's concession that the determinations of the review panel were invalid: [66] In relation to (iv)
9. Hall Chadwick's offer of compromise, prior to the hearing of the appeal, to forego costs already ordered in its favour was sufficient to constitute a real element of compromise: it was not an unqualified demand for capitulation: [71]
10. The amount claimed by the Attorney General was well within a fair range. A lump sum order was appropriate, the cumulative costs of the parties in this Court and in the Common Law Division far exceeding the amount in dispute, which was itself a dispute as to costs: [74]-[75] Scabaw Pty Ltd v Morphett [2011] VSC 489 referred to.

Judgment 1BASTEN JA: This matter has a long history. In 2003 a member of the first respondent, Hall Chadwick, was appointed as a joint administrator of a building company in voluntary administration. The first respondent engaged a firm of solicitors, of which the applicant was the principal, to act for the company in administration in respect of various debt recovery actions. The applicant and the first respondent entered into a conditional costs agreement, pursuant to which the applicant claimed an entitlement to costs in an amount in excess of $177,000. The first respondent claimed that the condition had not been fulfilled, and thus no costs were recoverable. 2The costs assessor found in favour of the applicant, but an appeal to the Common Law Division by the first respondent succeeded: see Hall Chadwick v Doyle [2006] NSWSC 1195. The applicant's appeal to the Court of Appeal was dismissed: Doyle v Hall Chadwick [2007] NSWCA 159. The applicant was ordered to pay Hall Chadwick's costs in the Common Law Division and the Court of Appeal. Hall Chadwick then set about recovering those costs. It is the amount of those costs which are still in dispute, almost five years after the second of the two costs orders was made. 3The applicant had the costs assessed and then sought review of the assessment by a review panel. Being dissatisfied with the outcome of the review, he sought judicial review of the determination of the review panel in the Common Law Division. Before that application was heard, he paid the first respondent the full amount of the costs as assessed. Some months later, the review panel's determination was set aside by consent. The applicant sought to pursue his judicial review proceedings in order to recover the payment he had made. The Attorney General was joined as a party to the proceedings. The applicant was unsuccessful: Doyle v Hall Chadwick [2011] NSWSC 895 (Harrison AsJ). 4Dissatisfied with the result in the Common Law Division, the applicant lodged a notice of appeal in this Court. That appeal was struck out as incompetent by Handley AJA. The applicant then sought to review that decision and sought leave to appeal. Those applications came before the Court on 6 June 2012, on which day the Court made the following orders: (1) Dismiss the applicant's notice of motion of 25 November 2011 seeking to review the orders of Handley AJA and other decisions. (2) In the summons seeking leave to appeal, grant the applicant an extension of time within which to file the summons, but refuse leave to appeal. (3) Order the applicant to pay the first respondent's costs of the applicant's summons seeking leave to appeal and his motion of 25 November 2011, such costs to be assessed on the ordinary basis up to and including the day of the offer, namely 2 April 2012, and thereafter on the indemnity basis. (4) Order the applicant to pay the Attorney General's costs in this Court in the sum of $25,000, which sum includes the costs ordered by Handley AJA to be paid by the applicant to the Attorney General. 5These are the reasons for the orders set out above.

(1) Background 6The costs payable by the applicant to Hall Chadwick were assessed by a costs assessor in an amount of $66,786.15. On 27 July 2009 the assessor issued a certificate for that amount together with a further certificate for the costs of the assessment in the sum of $1,155. The applicant, being dissatisfied with the determination of the costs assessor, sought a review of the determination pursuant to s 373 of the Legal Profession Act 2004 (NSW). The Manager, Costs Assessment, to whom the application was made, referred the application to a panel, pursuant to s 374. 7On 27 September 2010 the review panel executed a certificate affirming the determinations of the costs assessor. On the same date, they provided reasons for their decision. No appeal was taken from the determination of the panel pursuant to s 382 of the Legal Profession Act. That may have been because, prior to the determination by the panel, the applicant had already commenced proceedings under s 69 of the Supreme Court Act 1970 (NSW) seeking to set aside what was described as an interim decision of the panel. That summons was later amended to seek relief against the final determination of the review panel. 8Whilst the review was underway the original determination could not be enforced, pursuant to Legal Profession Act, s 377, which states: "377 Effect of review on costs assessor's determination (1) If the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review under this Subdivision, the operation of that determination is suspended. (2) The panel may end such a suspension: (a) if it affirms the determination of the costs assessor, or (b) in such other circumstances as it considers appropriate." 9Each of the certificates signed by the review panel on 27 September 2010 contained a statement that "[t]he Panel ends the suspension of the determination of the Costs Assessor". In September 2010, Hall Chadwick took steps to register the original certificates and obtain judgments in the District Court, pursuant to s 368(5). On 7 December 2010 Hall Chadwick issued a bankruptcy notice to the applicant based on the failure to pay the judgment debts. Ten days later, on 17 December 2010, the applicant paid Hall Chadwick the amount of $75,987.99 in full settlement of the judgment debts. 10The initial parties to the summons for judicial review and declarations in respect of the panel's determination were Hall Chadwick (the first defendant) and the members of the panel (the second and third defendants). On 23 March 2011 the Attorney General was added by consent as a fourth defendant. Six days later, a solicitor from the Crown Solicitor's office advised the applicant that the review panel had not inspected the files which had been available to the costs assessor, but which had been returned to Hall Chadwick and not provided to the panel. On that basis, the Attorney consented to the determination of the panel being set aside. That order was made on 11 July 2011. 11There remained in dispute between Hall Chadwick and the applicant an issue as to whether the judgments entered in the District Court on the basis of the costs assessor's original certificates should be set aside and whether Hall Chadwick should be required to repay to the applicant the amount which it had received on 17 December 2010. There was also a dispute as to the appropriate orders for costs of the proceedings in the Supreme Court. 12Those issues were the subject of a hearing before Harrison AsJ in the Common Law Division on 25 and 26 July 2011. On 18 August 2011 judgment was delivered, her Honour making the following orders: "(1) Paragraphs [5] to [7] of the amended summons filed 13 July 2011 are dismissed. (2) The first defendant is to pay the plaintiff's costs up to and including the 14 April 2011 on a party/party basis, including his costs incurred on 25 February 2011. (3) The plaintiff is to pay the first defendant's costs after 14 April 2011, including the hearing in relation to paragraphs [5] to [7] of the amended summons on a party/party basis. (4) The second and third defendants are to pay their own costs of these proceedings. (5) Dr Doyle is to pay the Attorney General's costs from 14 April 2011 to date. These costs are assessed at $5000." 13The effect of the first order made by the primary judge was to refuse the claim for repayment of the amount of about $76,000, plus unquantified interest. A later calculation assessed accrued interest at less than $7,000. 14On 5 September 2011 the applicant filed a notice of appeal. Both the first respondent (Hall Chadwick) and the fourth respondent (the Attorney) filed notices of motion seeking to have the appeal struck out as incompetent. They said the amount put in issue by the applicant's claim for repayment was under the threshold of $100,000 and the appeal required leave: Supreme Court Act, s 101(2)(r). The other orders related to the costs of the Supreme Court proceedings, a challenge to which also required leave: s 101(2)(c). The applicant maintained his right to appeal but also filed a notice of motion in the appeal proceedings, seeking leave to appeal, if necessary. 15The objections to competency were heard by Handley AJA on 14 November 2011. On each motion, orders were made striking out the appeal and ordering the applicant (the appellant in those proceedings) to pay the costs of the first and fourth respondents. In respect of the first respondent, costs were to be assessed on an indemnity basis from 21 October 2011, being the date on which an offer of compromise had been made. 16On 25 November 2011 the applicant filed a notice of motion in the appeal proceedings seeking to discharge or vary the order made by Handley AJA dismissing the appeal. This Court has power to take such a step pursuant to s 46(4) of the Supreme Court Act. On 6 March 2012, the applicant filed a summons seeking leave to appeal from the judgment of Harrison AsJ.

(2) Whether leave required 17Although the applicant did not put the matter at the front of his oral submissions, the question whether leave was required was logically antecedent to the question of whether leave should be granted. Accordingly, it is convenient to deal first with the challenge to the orders of Handley AJA. 18The first ground of the challenge asserted a procedural irregularity in that Handley AJA had dealt with objections to competency in circumstances where there was an application for leave to appeal on foot. It was accepted that, sitting alone, his Honour could not have dealt with the leave application: Supreme Court Act, s 46B(1)(a). Accordingly, it was submitted, he should have followed what was said to be the usual practice and stood the objections to competency over to a time when they could be addressed together with the leave application, by a Court of at least two judges. It was submitted that the obligation to take such a course derived from the judgment of this Court in Council of the Municipality of Woollahra v Sved [1998] NSWCA 63. 19Sved is not authority for an obligation of the kind asserted. Rather, the Court (Mason P, Sheller JA agreeing), having held that the attempt by the Council to add a ground of appeal raising an issue which had been abandoned below was an abuse of process, found that the amount in dispute was below the threshold and the appeal was therefore incompetent. Upon the Council requesting an opportunity to file papers to seek leave to appeal, which, despite directions from the Registrar, it had not done prior to the listing of the objection to competency, Mason P stated (at 7(45)): "A party faced with a formal objection to the competency of its appeal should, if it wishes to fall back on an application for leave to appeal, ensure that such an application is duly made prior to any contested competency application. The reason is simple. The case for leave may be strong, indeed overwhelming. In such a situation there may be no point in debating a difficult issue of competency. Here the putative appellant failed to follow this practice. What is worse it failed to comply with the Registrar's direction designed to ensure such compliance." 20As the applicant noted, the need for a putative appellant to take such a step is reflected in paragraph 33 of the current Practice Note SC CA 1. However, neither Sved nor the Practice Note states that the Court will necessarily hear the motions concurrently. Often it does, but that course is neither universal nor necessarily appropriate. If the applicant had considered such a course appropriate in the circumstances of his case, he should have invited Handley AJA to stand all the motions over to be heard by a Court constituted to deal with the leave application. If his Honour declined to make such an order, the applicant would then, in theory, have had available the right to seek a variation or discharge of the refusal to take that procedural step. In the event, nothing turns on this procedural challenge because the merits of the ruling on competency are before this Court, as is the leave application. 21In his judgment of 14 November 2011, Handley AJA noted the submissions that the appeal did not relate to "costs only", within the terms of s 101(2)(c), and that the "matter at issue" exceeded $100,000 when the costs of the proceedings were taken into account. His Honour held: "This process is not permissible in determining whether an appeal is available as of right. It is perhaps arguable that the claim for restitution is not a claim for costs. But even if the restitution claim is treated as an ordinary claim in debt, the appellant does not establish that $100,000 is involved as required by s 101(2)(r) of the Supreme Court Act. The better view is that the appeal is also incompetent under s 101(2)(c) as an appeal as to costs only which are in the discretion of the Court. It has long been understood that costs do not confer any entitlement to appeal as of right. This was accepted by the High Court when appeals lay to that Court as of right: Glen v Union Trustee Co of Australia Ltd (1936) 54 CLR 463, 466-7 ...." 22A similar situation, involving challenges to a matter at issue worth less than $100,000 and orders as to costs, was addressed in a judgment of this Court delivered on the day of the hearing of this application: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164. Other contentions were raised in that matter, but the proposition that costs could be included in valuing the matter at issue on the appeal was rejected as "inconsistent with long standing authority", to which reference was made at [12]. 23There was a suggestion in written submissions, not developed at the hearing, that the appeal did not involve an appeal "as to costs only" within the terms of s 101(2)(c), because there was also a challenge in respect of the failure to make an order for repayment. That submission should be rejected for the reasons given in Be Financial at [7]-[9]. As the challenge to the substantive order required leave, the need for leave as to costs stands in the way of an appeal until leave is given with respect to the substantive order. Both as a matter of construction, and as a matter of the underlying purpose of s 101(2), the suggestion to the contrary must be rejected. 24Finally, it is necessary to note the applicant's challenge to a costs order made by the Registrar on 17 October 2011 in respect of a directions hearing which was adjourned. The basis of the challenge was not articulated in submissions, but an affidavit of Ding Pan of 25 November 2011 claimed that the adjournment was "inevitable and necessary because all three motions were listed for hearing on that day and that there was not a three judge bench available to hear those motions on that day": paragraph 10. These assertions do not demonstrate any basis for reviewing the Registrar's order. First, none of the motions required a three judge bench. Secondly, if the motions were to be heard on that day, there is no evidence that a judge would not have been available to hear at least the objections to competency, as occurred on 14 November 2011. Thirdly, because the challenge to the objection to competency has been dismissed, with consequential costs orders against the applicant, the same result as to costs has followed in any event. 25The applicant needed leave for a separate and additional reason, namely that the judgment below was interlocutory: s 101(2)(e). In Derrawee Pastoral Company Pty Ltd v McConochie [1995] NSWCA 123 a question arose as to whether leave was required to appeal against orders made in oppression proceedings where orders had been made requiring that the defendant purchase the shares of the plaintiffs in the company sought to be wound up. The shares were valued, but the price was not paid within the time specified. The plaintiffs purported to enter judgment for the value of the shares against the defendant, who in turn sought to have the judgment set aside and the valuation declared invalid. The primary judge dismissed the defendant's application. In a challenge to that order, Handley JA stated at 2(33): "In my opinion the final order in these proceedings was the order for the purchase of the plaintiffs' shares .... This was the order which finally determined the rights of the parties in a principal cause pending between them.... Subsequent orders have merely worked out the rights of the parties under that final order. ... However after a period of uncertainty and some confusion in the authorities, it became established in England that judgments of a kind formerly granted in the Court of Chancery were final although further proceedings, even of an elaborate kind, were required for their working out. Thus in Smith v Davies [1886] 31 Ch D 595 an order nisi for foreclosure was held to be final although it directed accounts and inquiries in the Master's Office which would have to be completed before the order absolute could be made foreclosing the mortgagor. In Blakey v Latham [1889] 43 Ch D 23 at 25 Cotton LJ said: 'Any order, in my opinion, which does not deal with the final rights of the parties, but merely directs how the declarations of right already given in the final judgment are to be worked out is interlocutory.' Fry LJ at 26 said: '... where a final judgment has been pronounced in an action, and subsequently an order has been obtained for the purpose of working out the rights given by the final judgment, that order has always been deemed, and rightly deemed, to be interlocutory.'" 26Handley JA followed the English authorities, having found no authority to the contrary in this country. That approach was further followed by a Full Court in Kara Kar Holdings Pty Ltd v Brookton Holdings No 5 Pty Ltd [1997] NSWCA 171 (Sheller, Powell and Beazley JJA). Thus, at 13(5) Beazley JA stated: "... it is clear from the second judgment that his Honour considered the purpose of the hearing before him at that point was to give effect to the Master's determination, which in turn was intended to give effect to the finding in the first judgment that there had been a breach of trust in the payment out of the sum of $115,000. In my opinion, the second judgment is thus properly classified as interlocutory in nature: see Derrawee Pastoral ...." 27In the present case, the principal judgment was the order setting aside the certificates granted by the review panel. The claim for repayment of an amount paid pursuant to the judgments based on the costs assessors' certificates (and the claim for costs) would have resulted in consequential orders and, according to the authorities noted above, these would have been interlocutory. Leave was therefore required for that additional reason.

(3) Leave to appeal - repayment order 28Although the amount in issue was below the threshold, the margin was relatively small and the Court might have granted leave to appeal had it been demonstrated that there was error on the part of the primary judge in failing to make an order for repayment and that an injustice had been suffered by the applicant as a result. Neither of these elements was made good. 29The consent judgment on 11 July 2011 set aside the two certificates issued by the review panel. The right of the applicant to repayment of the moneys paid on 17 December 2010 depended upon the effect of that order. The certificates of the review panel, it may be recalled, did not purport to set aside the determinations of the costs assessor but merely "affirmed" his determinations. The certificates granted by him had not been varied or discharged. On one view, the effect of the quashing order made in the Common Law Division was to leave unresolved the applicant's application to the Manager, Costs Assessment, for a review of the costs assessor's determinations. On that view, subject to one qualification, the liability of the applicant to make the payment remained unaffected by the quashing order, that liability being derived from the determination of the costs assessor. 30The qualification arises from the statutory provision for "the operation of that determination" to be suspended, which occurs when the Manager, Costs Assessment, refers the original determination to a panel for review: s 377(1). If the effect of the order quashing the determinations of the review panel left the referral on foot, the operation of the original determination remained suspended. If the effect of the quashing order were to set aside the referral, the original assessment would remain operative until a further referral was made. 31The applicant's position in respect of these alternatives was obscure. However, in the course of oral argument he submitted that a referral having once been made, no further referral was possible. That was a startling proposition, which appeared to contradict the usual understanding of the operation of s 48 of the Interpretation Act 1987 (NSW), which provides that a statutory function may be exercised "from time to time as occasion requires": s 48(1). However, the submission appeared to assume that the referral to the review panel had not itself been set aside, although there might be justification for a direction reconstituting the panel. That result might have been an outcome for which the applicant would contend, given the applicant's views as to the manner in which the first review panel had misconducted themselves. 32The effect of a quashing order will generally be to allow the body responsible for the impugned decision to reconsider the unresolved application before it. In most circumstances, the constitution of the body for the purpose of the further consideration will be a matter for the body itself to determine, sometimes after considering the views of the parties as to whether the body should be reconstituted to avoid an apprehension of bias, or for practical reasons arising from the lapse of time since the original hearing. 33At the time the payment was made, the suspension on the operation of the costs assessor's certificate had been lifted by the review panel's order. Once the order was set aside, there was a separate issue as to the effect of acts done in reliance on the order prior to it being set aside. Thus, although at the time he made the payment the applicant already had proceedings on foot challenging the validity of the order, he did not seek to protect his position by obtaining a stay from the Court. A stay might well have been available on the basis that, if successful in his appeal, his liability to pay would continue to be suspended. 34Rather, the applicant took a different line in the hearing in this Court. He relied on four arguments which may be summarised as follows: (1) according to the principle of merger, the original assessments were incorporated into the review panel's determination and no longer provided any basis for his liability to pay costs once the review panel's determinations were set aside; (2) the bankruptcy notice issued by the first respondent, which caused the payment, was an abuse of process because Hall Chadwick knew it had no entitlement to claim the debt at that time; (3) by extension of the decision of this Court in Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172, once the certificates were set aside, the judgments based upon them had no further operation and no debt was payable, and (4) for Hall Chadwick to benefit from the payment in circumstances where it was obtained through its own wrongdoing would be inequitable and accordingly it was not entitled to retain the payment. 35As the applicant accepted, the first ground was not relied upon before the primary judge, was not identified in the notice of appeal and was not articulated in written submissions. Apart from those procedural flaws, for the reasons briefly noted below, it lacked substance. It could not provide a basis for a grant of leave to appeal. 36The second ground faced the same procedural flaws as the first. The fourth ground was not put in those terms before the primary judge, but did appear in the notice of appeal (as ground 7). However, both relied upon a finding of wrongdoing on the part of the first respondent, an issue which will be addressed in respect of the challenge to the costs orders. 37The third ground formed the basis of the order sought before the primary judge and is an available basis for seeking leave to appeal. 38It is sufficient to deal in this part with the first and third grounds upon which leave was sought and the question whether, if there were arguable error on the part of the primary judge, any injustice has resulted to the applicant. 39Dealing with the substance of the first ground, the applicant submitted that according to the "doctrine of merger" the original costs assessor's determination no longer existed, having been subsumed into the later (but invalid) determination of the review panel. Accordingly, the submission implied, there was simply no outstanding liability in any specified amount as at the date of the payment. 40This argument was not developed by reference to authority, but may have derived by analogy from the established doctrine that a cause of action merges in a judgment and thereafter no longer has an independent existence: Blair v Curran [1939] HCA 23; 62 CLR 464 at 532 (Dixon J) applied in many subsequent authorities, including Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; 164 CLR 502 at 507. However, the critical condition for that result is that the cause of action has passed into judgment, which judgment is standing at the time that further proceedings are sought to be brought on the cause of action: Chamberlain at 507 and 508 (Deane, Toohey and Gaudron JJ, Brennan and Dawson JJ agreeing). 41Somewhat closer to the present circumstances is the principle in Wishart v Fraser [1941] HCA 8; 64 CLR 470. That case involved an application for prohibition against an order of a magistrate convicting an offender in circumstances where he had appealed the conviction to a Court of Quarter Sessions, which had confirmed the magistrate's order. As explained by Starke J at 478: "If the Court of Quarter Sessions had reversed the decision of the stipendiary magistrate, its judgment would have held 'the field to the exclusion' of the conviction by the stipendiary magistrate. And when Quarter Sessions affirmed the conviction, its judgment was equally conclusive, for it operated as a judicial determination by a competent and higher authority that the conviction was right. ... That judgment therefore holds the field so long as it stands unreversed, and precludes this court making any judicial determination to the contrary." 42How these principles should apply in respect of a determination by a panel which is clearly not a court need not presently be considered. To speak of a doctrine of "merger" is to conjure physical images of irreversible fusion. However, that image is inapt. The law is replete with examples of quashing orders which set aside one decision, without unravelling all that preceded it. The submission was untenable. 43Secondly, the applicant relied before the primary judge upon the decision of this Court in Frumar as authority for the proposition that once the certificates had been set aside, the judgments registered in the District Court could not be relied upon as a basis for asserting an enforceable debt: Frumar at [47] (Handley AJA). However, Frumar had no direct application in the present case, as the primary judge correctly held. The certificate relied upon as the basis of the judgment in the District Court in that case was the certificate of the review panel, which was set aside leaving the respondent in those proceedings without an enforceable debt. In this case the source of the debt was the certificate of the costs assessor which was not set aside by the review panel, nor affected (except in respect of the suspension of its operation) by the setting aside of the determination of the review panel. This argument may be seen to depend on acceptance of the submission as to merger (rejected above), without which it is untenable. 44The primary judge acted on the basis that the suspension of the operation of the assessor's determination was still in existence: at [42]. However, because the determination was still on foot, the liability was extant, even though not enforceable. Her Honour proceeded on the basis that the applicant would be entitled to restitution from Hall Chadwick only if the costs assessor's decision were to be set aside. 45An order for repayment was not a necessary consequence of the quashing order, but there may have been a question as to whether repayment may have been available if the payment had been made under a mistake as to the enforceability of the debt, based on the validity of the review panel's order ending the suspension. However, there was no evidence before either the primary judge or this Court as to the reason for the payment, other than an inference that it was a response to the threat implicit in the service of the bankruptcy notice. 46Thirdly, even if the applicant had an arguable case that the primary judge failed to consider factors relevant to an order for repayment, there were a number of steps necessary before leave would be granted in such a case. To the extent that the matter was argued before the primary judge (and in this Court) on the basis of some equitable entitlement to repayment or restitution, that approach was not open given the nature of the relief sought as consequential upon the quashing order. There was no pleading of any equitable basis for relief, nor was there any evidence relied upon other than an inference that Hall Chadwick was, in some sense, acting abusively in retaining the payment. That contention will be addressed (and rejected) below. 47Fourthly, the applicant failed to demonstrate that he suffered an injustice by the refusal of the order for repayment. The applicant has a current and unchallenged liability to pay an amount on account of costs. The amount has not been agreed, but it has been assessed. Until the assessment is varied, that liability stands, although it may not be presently enforceable. However, the lack of enforceability is, in one sense, irrelevant once the payment has been made. In addition, the liability will only be varied if a review panel so determines. The determination of the first review panel was set aside on 11 July 2011. There is no evidence before this Court as to why a further determination has not yet been made. Not only did the applicant not complain of the delay, but his submissions to this Court suggested that he did not wish the review to proceed. Nor did he suggest in this Court that there was any egregious error on the part of the costs assessor making it likely that his assessment would be reduced by a significant amount. Finally, the applicant did not suggest that he had any concerns as to the ability of Hall Chadwick to repay the amount of any overpayment if the assessment were significantly reduced. 48In these circumstances, the applicant failed to demonstrate any reasonable doubt attending the judgment below in respect of the repayment claim, nor any practical injustice from the failure to make such an order. For these reasons the Court declined to grant leave to appeal from the refusal of the primary judge to order repayment.

(4) Leave to appeal - costs orders 49In his notice of appeal, the applicant sought an order in the following terms: "That the First, Second, Third and Fourth respondents jointly and severally pay, on an indemnity basis, all costs of the Appellant in all of the proceedings including the abortive costs assessments before the Costs Assessor ... and the Review Panel." 50The summons filed in the Common Law Division merely sought "costs". It did not seek costs of the costs assessment or of the proceedings before the review panel. No submission was made as to the basis upon which such costs could have been awarded. The application, so far as it extends beyond the costs in the Common Law Division, must be rejected. 51The orders made in the Common Law Division suggested that the applicant might be entitled to an order for costs of the proceedings up to the date on which he was successful in obtaining a quashing order. The applicant obtained an order for his initial costs against Hall Chadwick. Thereafter, the applicant pursued further relief, with respect to which he was unsuccessful. It was unsurprising that he was required to pay the costs of both Hall Chadwick and the Attorney from 14 April 2011. (The Attorney's costs were assessed at $5,000.) No order was made as to the costs of the second and third defendants below, who were the members of the review panel. 52The date, 14 April 2011, was chosen on the basis that a letter was sent by the Crown Solicitor's office to the parties on that day conceding that the determinations of the review panel were invalid: at [70]. Hall Chadwick sought to divert blame from itself to the review panel for the error which had occurred. However, the primary judge rejected that submission and concluded that Hall Chadwick should pay the applicant's costs up until 14 April 2011 on a party and party basis: at [110]. There is no challenge to that order so far as it goes.

(a) costs against the review panel 53The applicant submitted that he should have had a costs order against the review panel, because they must have known that they did not have before them all of the material that was before the costs assessor, but nevertheless stated in their reasons that they did. (It seems likely that the review panel misapprehended its function in carrying out the review.) The applicant relied on the complicity of the other parties in what he alleged was the deliberate misconduct of the review panel to justify indemnity costs orders against them all. 54The underlying facts were that, on completion of his initial assessment, the costs assessor had returned two boxes of documents to the solicitors for Hall Chadwick. The boxes were sent with a covering letter indicating that they should be kept for a period of 12 months in case there was an application for review of his determination. A copy of the letter was contained in the file which remained with the Manager, Costs Assessment, together with the assessor's working sheets. The review panel failed to obtain from the solicitors for Hall Chadwick the two boxes of material which had been before the assessor. The primary judge found that Hall Chadwick had been made aware of the proposed review on about 23 October 2009 (some two months after the boxes were returned to its solicitors) and should have been aware that it was required to return the material for the review panel to carry out its function. Its failure to take that step was held to warrant an order that it pay the applicant's costs up to 14 April 2011. 55With respect to the review panel, s 391 of the Legal Profession Act states: "391 Protection from liability A matter or thing done or omitted to be done by ... a costs assessor (including a costs assessor acting as a member of a panel constituted under this Division) does not, if the matter or thing was done or omitted to be done in good faith for the purpose of the administration of this Part, subject ... any costs assessor personally to any action, liability, claim or demand." 56The primary judge held that this provision did not extend to cover a costs order: at [82]. She did so on the basis that there were cases which demonstrated that costs could be awarded against magistrates and statutory decision-makers "despite them having statutory protection from liability". However, whether they have immunity or not depends upon the proper construction of the relevant provision, not on the general law. The basis on which the applicant submitted the review panel should be liable for costs personally was that they had acted improperly in conducting the review. A claim for costs formulated on that basis falls squarely within the scope of the protection provided by s 391. Whether or not the protection was available depended upon whether the review was conducted "in good faith for the purpose of the administration of" Part 3.2 of the Legal Profession Act. 57The applicant did not submit that the review panel carried out its consideration for any ulterior purpose. So far as the test of good faith was concerned, the applicant accepted that the primary judge had correctly directed herself in that respect. The primary judge held at [107]: "While the review panel made an error, it is my view that its conduct does not fall into the category of serious misconduct nor can it be said that it demonstrated a flagrant disregard of elementary principles of justice. Nor is it my view that the review panel acted in bad faith." 58The applicant submitted that, even in the absence of conscious wrongdoing on the part of the panel, sufficiently egregious error could demonstrate a lack of good faith. Reference was made to the discussion of circumstances in which a magistrate could be ordered to pay costs, set out in the judgment of Brooking JA (Charles and Buchanan JJA agreeing) in Magistrates' Court of Victoria at Heidelberg v Robinson [2000] VSCA 198; 2 VR 233. That case did not turn upon any statutory immunity. The Court held that a magistrate could be the subject of a costs order if the conduct giving rise to the costs was "a flagrant instance of improper conduct" or "a clear case of serious misconduct": at [9]. (As the magistrate had by statute, "the same protection and immunity as Judge of the Supreme Court" it must be assumed that a similar test would apply in respect of costs sought against a judge of the Supreme Court in Victoria.) In any event, the discussion was not directed to the test of good faith. Nor does the case provide authority for the fact that serious misconduct can equate with lack of good faith where the wrongdoing was not conscious, as opposed to providing an evidentiary basis for a finding of conscious wrongdoing. 59The applicant, perhaps implicitly recognizing that the evidence before the primary judge went no further than to demonstrate a failure on the part of the review panel correctly to identify the nature of the review process and a high degree of carelessness in failing to identify the materials required for the purpose of the review which were not before them, sought to call in aid the principles in Jones v Dunkel [1959] HCA 8; 101 CLR 298 to invite this Court to infer misfeasance from a failure to file evidence explaining why inferences of bad faith should not be drawn. There is no need to consider the circumstances in which such an inference can properly be drawn against a decision-maker in judicial review proceedings. The submissions in this Court did not demonstrate any basis for interfering with the finding of the primary judge set out above. Accordingly, leave to review her Honour's refusal to award costs against the review panel should be refused.

(b) costs against the Attorney 60The case with respect to the Attorney was, if anything, weaker than the challenge with respect to the review panel. The Attorney originally sought to be joined as a party to the proceedings following the issue by the applicant of a notice to produce directed to the review panel and its proposed active resistance to the notice. The joinder occurred on 23 March 2011. As already noted, the inquiries made by solicitors for the Attorney with respect to the production of documents led him to the view that the review panel had not conducted a proper review, a fact of which the active parties were advised within a week of his joinder. 61The notice of appeal alleged that the Attorney should have been found to have engaged in "misconduct" and to have been "grossly negligent" in his conduct of the proceedings: at par 10(ix). The primary basis for that allegation appears to have been some form of vicarious liability for the gross misconduct of the review panel. Once the allegations against the panel failed, any responsibility of the Attorney based on that premise fell away. There was no shred of evidence to suggest that the Attorney, or his solicitors or counsel, had thereafter acted inappropriately in any respect: to the contrary, they had made significant efforts to have proceedings which, following the concession of invalidity had become futile, expeditiously terminated. That they failed was not due to any lack of diligence, let alone misconduct, on their part. The only argument open (which was not put) was that, after obtaining the consent order, there was no reason for the Attorney to play an active role in the proceedings between the applicant and Hall Chadwick. However, in the context of the procedural exchanges which followed, it is understandable that he did not withdraw at an early stage and the order for costs against the applicant in his favour was within the discretion of the primary judge. The suggestion that he was to be made responsible for the applicant's costs on an indemnity basis was fanciful.

(c) costs against Hall Chadwick 62There remains the question of the order sought against the first respondent, Hall Chadwick. 63At the outset it should be noted that in support of his case against Hall Chadwick, the applicant sought to tender on the leave application a copy of a letter of 13 January 2012 from Hall Chadwick's solicitors to the Manager, Cost Assessment, enclosing the two boxes of material which had been provided to the original costs assessor. The letter listed the material contained in the boxes and included an item entitled "Costs Agreements". 64The letter was apparently tendered in support of an inference that, at the time when the review panel was conducting its review in 2010, Hall Chadwick had, and were aware that they had, the relevant costs agreements and that those agreements had not been provided to the review panel. The letter, however, provides no tangible support for such an inference; for that reason it should be rejected. 65The primary judge thought that Hall Chadwick's involvement in the failure of the review panel to obtain the two boxes of documents which had been before the assessor warranted a costs order against them in respect of the first part of the proceedings (until the concession that a quashing order was appropriate). In the course of her judgment the primary judge stated that this was not a case on all fours with Kumar v Mitchell (1991) 32 FCR 190 in which Spender J had described both parties as being "innocent" in respect of the error made below: at [100]. By way of comparison, the primary judge stated that Hall Chadwick could not be said to be "an innocent party": at [110]. She explained with some precision the manner in which she thought that Hall Chadwick had been responsible for the failure to produce the boxes. She made no finding that, in the words of the applicant, it had "guilty knowledge". Nor did the material to which she was referred admit of any such inference. 66Nothing was said in this Court which demonstrated any real prospect of success in establishing that Hall Chadwick misconducted themselves in such a way as to give rise to an adverse costs order after 14 April 2011, let alone on an indemnity basis. 67For these reasons, the Court declined to grant leave to the applicant to appeal against the costs orders made by the primary judge.

(5) Costs of the applications in this court 68Upon the Court making orders declining to vary the order dismissing the appeal and refusing leave to appeal, Hall Chadwick and the Attorney sought orders for payment by the applicant of their costs.

(a) Hall Chadwick's costs 69Hall Chadwick sought an order for costs, to be assessed on an indemnity basis from 2 April 2012. On that day, it made an offer of compromise under the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), pursuant to which it - (a) sought an order that the applicant's motion to review the orders made by Handley AJA on 14 November 2011 be dismissed as against it with no order as to costs, (b) offered to forego the order made by Handley AJA as to its costs, and (c) sought to have the application for leave to appeal dismissed, with the applicant and first respondent to pay their own costs. It is arguable that (c), like (a), should have expressly invited dismissal 'as against the first respondent'. Read in context, including the specific reference to the applicant and the first respondent paying their own costs, it should be so understood. 70For the purposes of UCPR Part 20, Division 4 (dealing with offers of compromise) the first respondent was to be treated as a "defendant": r 51.47. Accordingly it was not necessary that the offer be exclusive of costs, where it invited a judgment in favour of the first respondent with each party to bear his or its own costs: r 20.26(2). 71The offer to forego costs already ordered in its favour was sufficient to constitute a real element of compromise: it was not an unqualified demand for capitulation. Accordingly the offer fell within the provisions of r 20.26 and, unless the Court should otherwise order, Hall Chadwick were entitled to their costs, to be assessed on an indemnity basis from the day following the making of the offer: r 42.15A. The applicant demonstrated no basis upon which the Court should otherwise order; accordingly the Court made an order in the terms sought.

(b) Attorney's costs 72With respect to the Attorney's costs, evidence was presented setting out the costs incurred by the Attorney and seeking a lump sum order. The Court has power to make such an order: Civil Procedure Act 2005 (NSW), s 98(4)(c). The Attorney put before the Court detailed information as to the basis on which the costs were calculated. This was not for the purpose of the Court carrying out an informal costs assessment, but in order to demonstrate, in broad terms, the basis of the calculations and the nature of the work undertaken. 73The applicant did not oppose in principle the making of such an order, but submitted that the material demonstrated that the amount claimed ($25,000) was clearly excessive because it involved communications on numerous occasions between the representatives of the Attorney and the representatives of the first respondent. He submitted that the amount should be discounted by 20%. 74Given the interlocking nature of the complaints about the misconduct of the various respondents, there was no reason to think that communications between the respondents would not have been allowed on an assessment. Further, the amount of the costs sought was in fact a little under 60% of the total costs incurred. This had been achieved by discounting and rounding down. The amount claimed was well within a fair range. 75The appropriateness of making a lump sum order in the present case depended not upon any great complexity or length of the proceedings, but rather on the fact that the cumulative costs of the parties in this Court and in the Common Law Division must have far exceeded the amount in dispute which was itself a dispute as to costs. There was therefore good reason to prevent any further disputation as to quantification of costs: see Scabaw Pty Ltd v Morphett [2011] VSC 489 at [23] (Hargrave J); Civil Procedure Act, ss 56-60. 76Accordingly, the Court made an order in the amount sought by the Attorney. 77MACFARLAN JA: I agree with Basten JA. 78SACKVILLE AJA: I agree generally with Basten JA. I add the following comments. 79Of the four arguments relied on by the applicant on the issue of repayment (identified at [34] above), the first and second were not referred to in the draft notice of appeal and were not addressed in the applicant's written submissions to the Court. Despite these omissions being drawn to the applicant's attention, no application was made by him to amend the draft notice of appeal. In my view, it is not open to the applicant to rely on these arguments in support of his application for leave to appeal. 80The fourth argument was referred to in the draft notice of appeal, but was not put to the primary Judge. As framed in the draft notice of appeal, the ground requires a finding that Hall Chadwick had "guilty knowledge". The primary Judge was not asked to make any such finding. It is not open to the applicant to ask this Court to make such a finding, which was never sought at the trial. 81The remaining argument rests on the legal effect of setting aside the certificates issued by the review panel. The difficulty facing the applicant is that in oral argument in this Court he disavowed any intention of taking further steps to review the costs assessor's original determination and indeed asserted that no such review could take place. In these circumstances, the applicant appears to accept that he is liable to pay costs to Hall Chadwick in accordance with the original determination of the costs assessor. There is therefore no injustice in refusing the applicant leave to appeal on the issue of whether he is entitled to repayment of the amounts paid by him to Hall Chadwick.

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: 14 June 2012