Fordyce v Leung as executor of the estate of the late Robert Ho; Fordyce v Leung as executrix of the estate of the late Robert Ho

Interpretation of s 368(2)

1. Is there a need to cure an ambiguity by reference to extraneous materials? Mr Fordyce maintains that this provision cannot be read literally to mean what it says. Mr Corbett says that the provision is clear and unambiguous. Against the contingency that there is doubt about the correct meaning of the sub-section, the following materials were drawn to my attention as a possible aid to interpretation.
2. The power to issue "separate or interim" certificates for costs has existed in New South Wales since at least 1916. Rule 46 of the Rules of the Supreme Court (Costs), which came into effect on 1 January 1916, was as follows: "Powers of Taxing Officers 46. The taxing officers of the Court, in any of its jurisdictions, shall, for the purpose of any proceeding before them, have power and authority to summon and examine witnesses either orally or upon affidavit, to administer oaths, and to require the production of books, papers and documents, and for such purposes to issue subpoenas, and to make separate and interim certificates or allocaturs…".
3. The power to "make separate and interim certificates" was also set out in the Supreme Court Rules 1970, Part 52, Division 7, rule 59, which was in the following relevant terms: 59 Certificate (1) A taxing officer may make separate and interim certificates. (2) Where, in the course of the taxation of a solicitor's bill to the solicitor's own client, it appears to the taxing officer that in any event the solicitor will be liable in connection with the bill to pay money to the client, he may make an interim certificate specifying an amount which in his opinion is payable by the solicitor to the client. (3) … (7) A taxing officer may make a separate or interim certificate in respect of any item in a bill notwithstanding an objection under rule 60 to his decision on any other item in the bill, or any reconsideration or review consequent on such an objection.
4. This rule distinguished between "interim" and "final" certificates, and confirmed that the taxing officer "may make a separate or interim certificate in respect of any item of a bill."
5. In 1993, amendments were made to the Legal Profession Act 1987 with the introduction of the Legal Profession Reform Act 1993. These reforms replaced the system of taxation under the 1970 Rules with a system of "costs assessment", intended to reduce complexity and time, and to introduce a faster, easier and cheaper system": The Hon. J.P. Hannaford, NSW Legislative Council Parliamentary Debates, Hansard, NSW Legislative Council, 16 September 1993, 3269ff. The new s 208J headed "Certificate as to determination" provided that "On making a determination, a costs assessor is to issue to each party a certificate that sets out the determination." Any doubt that may have existed about the power of the costs assessor to make interim determinations would appear to have been dispelled by the introduction of s 208J(1A) by the Legal Profession Amendment Act 1996 which said: (1A) 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.
6. The Explanatory Memorandum to the Bill that introduced s 208J(1A) said this: "Certificates of determination. Section 208J provides for the issue of a certificate of determination, setting out the determination of a costs assessor. That section is amended to make it clear that the costs incurred by a costs assessor are not included in a Certificate of determination (See Schedule 2 [14]) and that no further action is required for the enforcement of the amount of costs (See Schedule 2 [13]). Also, the section is amended to provide for the issue of more than one certificate in relation to a costs assessment. This would permit a certificate to be issued in respect of that part of the costs that are agreed to, allowing the costs assessor to continue the assessment in respect of the disputed costs only. A further certificate could be issued in respect of such costs. (See Schedule 2 [12])"
7. Mr Fordyce embraces this explanation as indicating that the reference to "costs that are agreed to" constrains the power to issue more than one certificate. Mr Corbett submitted that the reference to agreed costs was no more than an example of one situation in which an interim certificate might issue.
8. Section 368(2) was the successor to s 208J(1A). It remains in the Legal Profession Uniform Law Application Act 2014 in s 70(2).
9. The Costs Assessors Rules Committee, of which by way of complete disclosure I note I was an original member, was established under the 1987 Act to make rules of procedure for costs assessment. It produced a bulletin containing guidelines for assessors: see Ryan v Hansen t/as Hansens Solicitors (2000) 49 NSWLR 184; [2000] NSWSC 354 at [27]. That bulletin referred to the practice of interim certificates being issued. The Committee also later produced in 1997 the "Costs Rule - Certificates of Determination", which provided standard forms, including Form 6, which was to be used when the assessor "has determined part of the costs…shall be paid as an interim payment". Form 6 described the interim payment as "an interim payment…pending the final assessment".
10. The defendants submitted that the power conferred by s 368(2) of the 2004 Act should be understood against the background of the legislative and regulatory history authorising, and the practice of issuing, interim certificates pending a final assessment.

The present case

1. In Harper v Firbank [1918] 2 KB 509, the Court of Appeal expressly endorsed the power of a Taxing Master, in certain circumstances, to issue an "interim certificate" and to vary an "interim" determination by a further certificate. The Court of Appeal concluded that, if a certificate was expressed to be "interim" or "on account of" a liability, that would not preclude variation by a later certificate. Provided a later decision to disallow a particular cost allowed on an interim determination was made on account of the assessment of remaining items in the bill on a final basis, an interim determination could be revisited. Pickford LJ at 516-518 said this: "The question is whether the interim certificate was such a certificate or allocatur that any objection to the disallowance of the items in question should have been carried in before it was signed and could not be carried in afterwards. The answer depends upon Order LXV., r. 27, regs. 17(b) and 39, and upon the terms of the interim certificate which was issued by the taxing Master under these regulations. Reg. 17(b) provides that 'The taxing officers … shall have power and authority to make one or more interim certificate or certificates, allocatur or allocaturs, in any taxation for any portion or portions of the taxed costs … without waiting until a certificate for the full amount can be made.' Reg. 39 provides that 'Any party who may be dissatisfied with the allowance or disallowance by the taxing officer, in any bill of costs taxed by him, of the whole or any part of any items, may, at any time before the certificate or allocatur is signed … carry in before the taxing officer, an objection in writing to such allowance or disallowance … and may thereupon apply to the taxing officer to review the taxation in respect of the same. The taxing Master may, if he shall think fit, issue, pending the consideration of such objections, a certificate of taxation or allocatur for or on account of the remainder of the bill of costs, and such further certificate or allocatur as may be necessary shall be issued by the taxing Master after his decision upon such objections.' The interim certificate issued by the taxing Master was as follows: 'Objections to my taxation have been lodged by the plaintiff, and pending my consideration thereof I certify that the defendants are entitled to the sum of 280l. on account of the items of the defendants' said costs which are not the subject of objections, and I make this my interim certificate at the request of the defendants.' The argument on behalf of the plaintiff is that the taxing Master by signing that interim certificate has signed a certificate which under reg. 39 has concluded the taxation of the bill of costs except of items which formed the subject of the then pending objections; and that he has irrevocably disallowed all such items including those now in question as then appeared disallowed in the bill of costs, that certificate thus being equivalent to a certificate specifically certifying the disallowance of those items. Whether the signing of the certificate had that effect depends entirely upon the terms of the certificate. Though the conclusion does not, perhaps, appear so clear to me as to my brothers, I think, looking at the terms of the certificate, that it is not such a certificate as prevents a subsequent objection from being taken in respect of an item previously disallowed on the bill without objection. I do not say that under reg. 39 an interim certificate might not be made which dealt with certain items allowed or disallowed up to that time without objection in such a way that it would be a certificate or allocatur the signing of which would preclude the taking of any other objection to those items. The certificate may be made wither in the form of allowing a sum 'for', or allowing I 'on account of', the remaining items in the bill which have not been objected to by either party. If the certificate were made in the form which allows a certain sum 'for' the remaining items which were not the subject of objections, I am inclined to think that it would preclude the taking of any subsequent objections as to these items. In this case, however, the interim certificate has not been made in that form, but in the form allowing a sum 'on account of' the remaining items in the bill which were not the subject of objections. The sum for which it has been issued, namely, 280l., is much less than the sum payable in respect of all the items in the bill which were not then the subject of objection and which were eventually allowed by the taxing Master. It, therefore, seems clear that that certificate cannot have been issued in respect of all these items. The taxing Master might no doubt have issued a certificate certifying the allowance or disallowance of all the items which were not the subject of objections up to the time when the certificate was signed, and if he had done so I might have agreed with counsel for the plaintiff. I do not, however, think that the certificate which the taxing Master has issued is a certificate of that kind either in form or effect. That being so, I think that the certificate which the taxing Master has signed is not a certificate which prevents the carrying in of objections at any time after it has been signed, but that it is open to the parties to carry in objections up to the time of the signing of the final certificate." [Emphasis added]
2. Warrington LJ was of the same opinion. Scrutton LJ also agreed and said this at 521-522: "I agree that in certain events the issuing of a certificate would prevent the taxing Master from changing his mind. If he issues a certificate dealing specifically with certain items for a specified amount covering these items, I can understand that it is not open to him to reconsider the question whether or not these items should be allowed. It may also be, if the taxing Master has under reg. 39 fixed a time for the carrying in of objections to particular items by the parties and they have not brought in objections within that time, that he would be prevented from considering subsequent objections in regard to these items. Here, however, the taxing Master did not issue a certificate dealing specifically with particular items, or fix a time for the bringing in of objections to particular items. He merely issued a certificate which allowed a round sum of 280l. 'on account of' the items in the defendants' bill of costs which were not the subject of objections. As I understand the argument, it is that a certificate for 280l. on account of items not the subject of objection is the same as a certificate for 280l. and no more in respect of these items. I cannot take that view. It seems to me that this certificate did not prevent the defendants from raising the objection to the disallowance of the items in question, or the taxing Master from entertaining the objection and allowing the items, but that the objection could be taken and considered at any time before the final certificate or allocatur was made. The provision in this interim certificate that the defendants are entitled to the sum mentioned on account of their costs is a provision in the defendants' favour, and why an interim certificate which is in the defendants' favour should prevent them from taking an objection to other items, or the taxing Master from considering the objection, I cannot understand." [Emphasis added]
3. In the present case, the costs assessor wrote to the parties on 19 August 2020 indicating that the assessment of costs had been assigned to him. He made some preliminary and general comments and observations to which it is unnecessary to refer. However, the costs assessor referred specifically to Mr Fordyce's concern about separately assessing expenses and fees and to the "severe prejudice" to the Fordyce parties claimed by Mr Fordyce if this were to occur. The costs assessor went on to outline what he proposed, and later under the heading SUMMARY indicated that he was inclined to do certain things, including the following: "13.4 I will issue probably two interim determinations, each relating to expenses claimed pursuant to the first and second costs orders respectively, so that if need be, adjustments can be made later to the total amount, in the event that either the Ho parties or the Fordyce parties seek assessment of fees. Any such interim certificates would be enforceable in the same way as a final certificate."
4. On 15 September 2020, Mr Fordyce wrote to the costs assessor in terms that included the following: "My understanding of your present position is that you propose to issue an interim certificate for the disbursements to which no objection has presently been made. The Costs Respondents' position is that they may have objections to make to those disbursements that are not presently challenged but they may have objections when they see the Costs Applicant's response to the New Costs Assessment. If objections are then lodged by the Costs Respondents in the New Costs Assessment that would require a reduction of the disbursements that you are going to rule on now without any further delay, then you will adjust the disbursements that have been the subject of your interim order in the New Costs Assessment."
5. The Costs Assessor replied to that (and other) letters on 22 September 2020, and under the heading "Pre-completion Certificate" he included the following: "6.2 & 3 The certificate will be a pre-completion certificate. The completion of the assessment of expenses and the assessment of fees sought by the new application will be assigned to me. Thus is [sic, if] any adjustment needs to be made, I can make that adjustment in the final assessment of fees and expenses in this and the new matter. There is no reason to further delay the issue of a pre-completion certificate in this matter. I do not require agreement from the Ho parties or anyone else to waive 'any such legal entitlement…to challenge…taking that step".
6. Shortly thereafter, the Costs Assessor dealt with the disbursements in his first pre-completion certificate. He made it clear in his reasons, in terms redolent of the views expressed by the English Court of Appeal, that his pre-completion certificate was not to operate in a way that precluded variation of the assessed amount at a later time: the costs assessor's certificate was, in the words of the Court of Appeal, on account of the remaining items in the bill, and did not deal specifically with certain items. His Pre-Completion Costs Assessment Reasons dated 28 October 2020 made this clear: "9.14 The Fordyce parties submit that there would be severe prejudice to them allowing assessment of expenses only, because if it was subsequently found when assessing fees that an expense item ought to have been disallowed or reduced, the opportunity to do that would have passed. The assessment could not then be altered. In addition, the submission is that assessment of fees can depend on assessment expenses and vice versa. As an example, an issue may arise as to whether a solicitor's rate is reasonable (which objection relates to fees), but the approach taken to expenses (such as barrister's charges) may affect the reasonable rate for fees - if a solicitor does little of the legal work and engages barristers to do most of it, it may be that the appropriate rate for the solicitor is lower than it would otherwise have been. 9.15 I accept that there can be an interrelationship between assessment of fees and assessment of expenses, as in the example given immediately above. 9.16 In answer to the objection that the opportunity to allow or reduce costs would have passed if I assess expenses, I will issue a pre-completion certificate in relation to expenses. That certificate is enforceable, but the amount could be either increased or decreased when I complete the assessment of expenses. I can complete the assessment of expenses and issue a final certificate after I complete assessment of fees. In the unlikely event that assessment of fees is assigned to a different assessor, I can take the result of that assessment into account when I issue a final certificate."
7. As if to re-emphasise this point, the Costs Assessor said the following in his Pre-Completion Costs Assessment Reasons dated 21 May 2021: "5.18 I note my pre-completion costs assessment reasons in the 2019/236020 assessment dated 28 October 2020 dealt at length with the submissions of Mr Fordyce for the Fordyce parties about the criteria for assessment, the court orders, interest, whether expenses only could be assessed, travel, hourly rates, details, verification of time, the charges of Klein & Co, the charges of Mr Parker SC, the charges of Digital Forensics and the charges of Brian Knox SC. The expenses that I allowed on a pre-completion basis only came to ($273,194.64 +$4,950.00 =) $278,142.64. 5.19 Given the nature of the proceedings, recited in those pre-completion reasons, the claim for expenses in the 020 assessment, and the claim for fees in this assessment, it is extraordinarily unlikely that the total amount I will allow for expenses in the related assessment 020 on a pre-completion basis, and fees and expenses in this assessment will be less than the total of the pre-completion certificates. As I have indicated I have deliberately set the amounts on a pre-completion basis low, to try to ensure that does not happen." [Emphasis in the original]
8. There is in the circumstances an informative symmetry between the English Court of Appeal decision and the actual result in the assessments under consideration here, particularly in light of the correspondence between the Costs Assessor and the parties and his Pre-Completion Costs Assessment Reasons.

Consideration

1. Mr Fordyce maintains that while a certificate could be issued under s 368(2) or s 208J(1A) in relation to an item of costs before completion of the whole assessment, it must be a final "determination" in relation to that item, which item cannot be revisited by a later certificate. Mr Fordyce seeks to draw support for this conclusion by maintaining that the issue of a certificate by a costs assessor has the result that the costs assessor is then functus officio with respect to the items considered and assessed in the certificate. He submitted that the doctrine of finality supported his position.
2. As the defendants point out, there is nothing in the text of the Act that limits the power in the way Mr Fordyce suggests. Any such limitation on the power must therefore be implied. However, such a suggested limitation does not avail Mr Fordyce in this case, having regard to the way in which the costs assessor dealt with the items, which was in accordance with the long-established practice considered in Harper v Firbank and the express provision to be found in rule 59.7 of the 1970 rules.
3. With respect to Mr Fordyce, the conclusion he asks me to draw is not one that in my opinion flows from a consideration of the relevant provision in this case. Moreover, his purported reliance on the proposition that a costs assessor becomes functus once a certificate is issued is a tautological conclusion: it would only flow, if at all, if his argument were correct. It is, however, not a reason or factor that informs or supports his submission that his argument is correct.
4. Finally, the consequences that Mr Fordyce suggests would flow if his arguments are not accepted are illusory. So much is apparent from the dearth of judicial decisions that have considered the allegedly inconvenient or unjust results that Mr Fordyce warns a literal interpretation of s 368(2) would produce. On the contrary, provided that a full account may be taken of the competing claims in the final costs assessment process, the convenience of interim or pre-completion certificates is obvious. For example, if the party liable is required, in an appropriate case, to make an early payment of some money on account of their liability, that is a better approximation of justice than the alternative: Mars UK Limited v Teknowledge Limited [2000] FSR 138; Brereton J (writing extra-judicially) in his Report of the Chief Justice's Review of the Costs Assessment Scheme (Supreme Court of New South Wales, 12 March 2013), [3.8.1] - [3.8.2].
5. In the present case, the costs assessor's reasons make it perfectly clear that all parties to the assessment process would be entitled to a full accounting by way of reconciliation between certificates produced by him in the event that either party wished that to occur.
6. Mr Fordyce also raises a ground of appeal contending that the assessor contravened the requirement in s 359(1) of the 2004 Act that he give each party a reasonable opportunity to be heard and to make submissions. The assessor's reasons, however, make it abundantly clear that he was exceedingly forbearing in his approach to his task. I am unable to discern any basis that is apparent from those reasons, or the material that is otherwise before me, including Mr Fordyce's submissions, that could faintly support a conclusion that Mr Fordyce was not given the reasonable opportunity to which the section refers.
7. In my opinion, s 368(2) is not subject to the limitations or restrictions that Mr Fordyce describes. The terms of the sub-section are clear. A costs assessor has the power to issue more than one certificate in relation to an application for costs assessment and such certificates may be issued at the same time or at different stages of the assessment process. That includes the power to issue an interim certificate that is, or may be, later qualified by a final certificate. I consider that a costs assessor may legitimately issue a certificate for payment of an amount that is to be treated, in effect, as issued on account of the final liability for all costs ultimately assessed to be payable.

Should leave be granted?

1. Mr Fordyce requires leave pursuant to s 385(2) of the Act. The considerations that inform the question of whether leave should be granted in a case such as this were helpfully considered by Walton J in Ackerman v Morgan [2019] NSWSC 1250 at [49]-[53].
2. The defendants submitted that the following matters weighed in favour of a refusal of leave.
3. First, Mr Fordyce has commenced appeals in the District Court pursuant to s 384 of the Act. Those appeal proceedings are still current.
4. Secondly, Mr Fordyce's appeals to this Court were not commenced in a timely manner. Even though the District Court appeals were commenced within time, Mr Fordyce has not sought to transfer those proceedings into this Court.
5. Thirdly, the assessor has now completed his determinations on a final basis. Significantly in my opinion, Mr Fordyce has not demonstrated that the theoretical or hypothetical iniquities that he has maintained might flow from the issue of multiple certificates in a costs assessment process have come to fruition in his case. As I have already observed, the detailed reasons provided by the costs assessor make it plain that any disadvantage that might possibly flow from the combination of certificates that he has issued would be accommodated or taken into account by him if required. Mr Fordyce has not satisfied me that he is the beneficiary of any unfairness or misfortune in the events that have occurred.
6. Finally, Mr Fordyce has previously relied upon one of the judgments based on a pre-completion certificate that he now attacks: see Fordyce v Leung [2022] NSWCA 55 at [113]: "[113] An additional matter supporting the dismissal of the judicial review proceedings in this Court on a discretionary basis is the approach he has taken to the garnishee order. After the primary judge refused to set aside the judgment of 21 January 2021, Mr Fordyce submitted to his Honour that the funds paid by Mrs Slattery in response to the garnishee order should be paid out to his wife. In so submitting he sought to rely on, and not attack, the judgment of 21 January 2021 that was in turn based on the costs assessment issued on 28 October 2020. In his judicial review proceedings in this Court, Mr Fordyce now seeks to set aside the judgment of 21 January 2021 without seeking to undo the payment of funds to his wife out of the funds paid into Court by Mrs Slattery."
7. To that limited extent at least, Mr Fordyce appears to be approbating and reprobating.

Conclusion

1. Mr Fordyce's arguments concerning s 368(2) are in my view not even superficially attractive. However, as all parties accept, there has been no judicial consideration of his contentions previously. Having regard to the view I have formed, that may not be terribly surprising.
2. In these circumstances I consider that the following orders should be made: 1. Grant leave to Mr Fordyce for the limited purpose of arguing what I shall describe as the s 368(2) grounds notified in the Amended Summons in each case. 2. Dismiss the appeals relying on those grounds. 3. Otherwise refuse leave to rely upon the balance of grounds notified in the Amended Summons in each case.

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: 10 July 2023