Glenwood Homes P/L v Eberhard & Ors

No appearance for the defendants, third and fourth parties

[1] The plaintiff in the action filed an application under r 708 of the Uniform Civil Procedure Rules ("UCPR") seeking a default costs assessment against the second defendant.

[2] On 4 June 2008 Byrne SJA made an order that the defendants and the third party pay the plaintiffs costs of the application before him to be assessed on the standard basis. A cost statement was prepared and served on the three defendants at their address for service on 10 June 2008. Under rule 706 of the UCPR, any objections by the parties liable to pay the costs were required to be filed and served on or before 1 July 2008.

[3] On 24 June 2008 the first and third defendants and the third party filed a notice of change of solicitor and on the following day the plaintiff's solicitor received a notice of objection to the plaintiff's costs statement on behalf of those parties.

[4] No objection has been received from the second defendant whose solicitors on the record remain Holding Redlich. Despite the address for service, the second defendant is now unrepresented.

[5] On 3 July 2008 the application for default assessment pursuant to r 708 of the UCPR was filed. The registrar was concerned as to whether the order could be made in a case where objections had been received from some but not all of a number of parties ordered to pay costs by the court.

[6] Counsel for the plaintiff has submitted that, as the parties against whom the order was made were represented by a single firm of solicitors at the time the order was made, they are jointly and severally liable for those costs.

[7] A consequence of this, it is submitted, is that upon a default assessment being made in relation to the costs for which the second defendant is liable, the first and third defendants will be bound by such default assessment jointly and severally.

[8] It appears to be settled law that liability for payment of a costs order is ordinarily joint and several: see Probiotec Ltd v The University of Melbourne [2008] FCAFC 5. The first submission of counsel for the plaintiff is correct.

[9] I am not satisfied, however, that the consequence of this is that parties who have objected to a bill are bound by an assessment made in relation to a party who has not objected.

(a) a party served with a costs statement does not serve a notice of objection under rule 706; and

(b) the party who served the costs statement files an application for a costs assessment under rule 710.

(2) On the filing of the application, the registrar must appoint a costs assessor to assess costs under this rule.

(3) The costs assessor must, on proof that the costs statement was served on the party liable for the costs -

(a) assess the costs without considering each item and by allowing the costs claimed in the costs statement; and

[11] If the reference to "a party" in subrule 1(a) is treated as a collective reference to all the parties against whom the order was made, the fact that any one or more of those parties filed an objection would be sufficient to deprive the applicant of the right to a default assessment against any of them. An objection by one party would be treated as an objection by all the parties affected.

[12] The other alternative is that "a party" should be treated as a reference to each party separately.

[13] There seems to me to be no reason why a party who chooses not to object to a costs statement should become liable for the costs of a contested assessment. Equally, there is no logical reason why the party in whose favour a costs order has been made should be deprived of the benefit of a default assessment against a party who does not object to the costs statement.

[14] If an assessment of costs against any one of a number of parties liable to pay the same costs bound all of them, it would be a good reason why an objection by any of them would prevent a default assessment against any other.

[15] The better view seems to me to be to construe "a party" in subrule 1(a) as applying to each of however many parties are ordered to pay the costs. If one party chooses not to object to the costs statement, the party in whose favour the order was made is entitled to a default assessment against that party and can recover from that party the amount so assessed.

[16] If other parties against whom the same order was made choose to object and are successful in their objections they become liable only for their own assessed liability.

[17] The practical effect of this is that all the parties liable for the same costs order would be entitled as against the party in whose favour the costs were awarded to credit for the amounts paid by each other party liable on the same order. If the party whose assessment went by default had the highest liability, as would be reasonably likely, that party would be liable for the balance after the liabilities of the other parties had been discharged.

[18] In this respect the position is no different from that in which a plaintiff settles with a defendant who is otherwise jointly and severally liable with another or other defendants. The plaintiff is permitted to continue the proceedings against the remaining defendants: see Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635; Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; (1996) 186 CLR 574 at 604.

[19] Baxter v Obacelo treats an assessment without a judicial determination as equivalent to the position of persons jointly and severally liable in contract. Subject to the prohibition on double indemnity and the consequences of accord and satisfaction where the amount for which the first party is liable is paid, there is no bar to subsequent proceedings.

[20] An election by a party not to object to a costs statement and to accept the amount of the costs as claimed should be treated as akin to the position in contract.

[21] Further, rule 709 of the UCPR, which provides for the setting aside of a default assessment, is couched in terms which are supportive of the conclusion to which I have come.

[22] Even if I am wrong about the effect of a separate default assessment of costs, an attempt to enforce such an order against a party who had objected and whose objection had not been adjudicated upon by a costs assessor would be a good reason to set aside the default assessment under rule 709 of the UCPR.

[23] In the circumstances, I appoint Graham John Robinson as costs assessor to make a default assessment of the costs payable by the second defendant to the plaintiff pursuant to the order of the Honourable Justice Byrne made 4 June 2008.