Time for application
28The order for costs was made on 28 March 2013. No application for interest was made at that time. No application was made to vary the order of 28 March (by including interest) within the period of 14 days thereafter, prescribed by Uniform Civil Procedure Rules r 36.16. The defendants appealed from the order, by notice of appeal filed on 28 June 2013, and the appeal was dismissed, for want of jurisdiction, on 3 March 2014 [Grace v Grace [2014] NSWCA 86]. The defendants submit that with no application for interest having been made when the relevant costs order was made on 28 March 2013 or within 14 days thereafter, it is not open to make such an order now.
29The defendants rely in that respect on Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2013] NSWCA 227, in which McColl JA held (at [86]-[88]) that an application for an interest on costs order under CPA, s 101(4) had to be made when the relevant costs order was made, or within the 14-day period referred to in UCPR r 36.16 thereafter, and that earlier cases - which had held that an interest on costs order could be made after the relevant costs order, so long as it was made before the costs assessed pursuant to the order were registered as a judgment - failed to recognise the limited effect of registration. The plaintiff invokes Short v Crawley, in which White J explained (at [66]) that McColl JA's decision, not being one of the Court of Appeal in the exercise of appellate jurisdiction, was not binding, and declined to follow it, on the basis that an interest on costs order under CPA, s 101(4) fell within the meaning of an order "as to costs" within CPA, s 98(3) and could be made after the conclusion of proceedings (at [81]-[87]). In Zepinic v Chateau Constructions (Australia) Ltd (No 2) [2014] NSWCA 99, the Court of Appeal noted, but did not need to resolve, the controversy (at [6]).
30CPA, s 101 provides as follows:
101 Interest after judgment (cf Act No 52 1970, section 95; Act No 9 1973, section 85; Act No 11 1970, section 39)
(1) Unless the court orders otherwise, interest is payable on so much of the amount of a judgment (exclusive of any order for costs) as is from time to time unpaid.
(2) Interest under subsection (1) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:
(a) the date on which the judgment takes effect, or
(b) such later date as the court may order.
(3) Despite subsection (1), interest is not payable on the amount of a judgment if the amount is paid in full within 28 days after the date on which the judgment takes effect, unless the court orders to the contrary.
(4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs.
(5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from:
(a) the date or dates on which the costs concerned were paid, or
(b) such later date as the court may order.
(6) This section does not authorise the giving of interest on any interest payable under this section.
(7) In this section, a reference to the prescribed rate of interest is a reference to the rate of interest prescribed by the uniform rules for the purposes of this section.
31The CPA and the UCPR contain no express provision as to when an application for an order under s 101(4) may be made. Much of McColl JA's reasoning in Zepinic is directed to explaining why the date of registering the certificate of assessment as a judgment is not the critical date. For reasons that appear below, I respectfully agree with her Honour that the date of registration of the deemed judgment on the certificate of assessment cannot be the critical date by which an application for an interest on costs order must be made, and that the earlier cases which suggested that that was the critical date [Timms v Commonwealth Bank of Australia (No 3) [2004] NSWCA 25, [11] (Beazley JA); Seiwa Australia Pty Ltd v Seeto Financial Services Pty Ltd (No 2) [2010] NSWSC 118 (Harrison J); Lucantonio v Kleinert (Costs) [2011] NSWSC 1642, [26] (Brereton J)] are, to that extent, incorrect [see also Short v Crawley, [76]]. But it does not follow that the date of the relevant costs order must be the critical date.
32The essence of McColl JA's reasons for holding that the relevant costs order provides the critical date was as follows:
82 However the interest order is made in respect of "an order for the payment for costs": s 101(4). Just as a costs order must be sought at the time of judgment, or within any time limited by UCPR 36.16, so, too, in my view must an interest on costs order. That conclusion which accords Handley AJA's view in Drummond (No 2) and, subject to what I have said, Beazley JA's view in Timms, is consistent with the principle of finality of judgments: see D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 (at [34]) per Gleeson CJ, Gummow, Hayne and Heydon JJ).
33At the core of those reasons, and of the view that the critical date is that of the relevant costs order, is the finality principle, which finds expression in several ways: that the final judgment brings the proceedings to an end, so that there remains on foot no proceeding in which an interest on costs order could thereafter be made; that the court is functus officio, having completed its functions; or that the claim for interest has merged in the judgment on the claim for costs. What I have called "the finality principle" was stated by Barwick CJ in Bailey v Marinoff (1970) 125 CLR 529, in the following terms (at 530):
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed.
34Thus in any event, the rule is conditioned on "final disposal" of the proceedings, and is subject to statutory provision to the contrary. Moreover, Bailey v Marinoff admits that a court can, even after final judgment and absent statutory authority, vary its orders in a manner that does not amount to getting rid of "the operative and substantive part of its judgment" [at 532 (Menzies J); 535 (Walsh J); see also Thynne v Thynne [1955] P 272, 296, 301, 314, 315].
35One element of McColl JA's reasoning is that a relevant costs order must itself be made not later than the final judgment disposing of the proceedings. Generally speaking, unless the question of costs has been dealt with, explicitly or implicitly, in the final judgment, a costs order does not involve any variation of or attack on the final substantive judgment. Accordingly, the finality principle is not offended by subsequently entertaining and dealing with an application for costs because it does not involve impugning "the operative and substantive part" of the judgment. In NSW Insurance Ministerial Corporation v Edkins (1998) 45 NSWLR 8, the Court of Appeal held that a judge was not functus officio after giving judgment and making costs orders if the duties in the case were not otherwise completed (even though the judge was not then aware of it), and that in circumstances where there was a costs argument still to be heard - although it had not until that point been made - he was not functus officio and was entitled to entertain and deal with an application for a special costs order made immediate following the delivery of judgment. While that result could be supported as a variation to the order made on application before it was entered, under the then equivalent of UCPR r 36.16, that is not how the Court of Appeal put it (at 12E):
Also in my opinion there is no merit in the argument concerning the judge being functus officio at the point where he announced his verdicts and costs orders in the two actions. Although he did not know it at that moment, he had not then completed his duties in the cases, there was a costs argument still to be heard. He heard it immediately and acted quite properly and with proper authority in doing so.
36When that case was decided, the relevant predecessor of CPA, s 98 did not contain any provision equivalent to CPA, s 98(3), which was introduced in 2005, and expressly authorises the Court to make an order as to costs after the conclusion of proceedings:
(3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings.
37However, provision to similar effect was made in the Rules [(NSW) Supreme Court Rules 1970, Pt 52, r 5; Pt 52A, r 5]. It may be allowed that s 98(3) is concerned with costs orders after the substantive decision has been given, and must be subject to finality from entry of costs orders already made, so that it would not not authorise re-opening a final costs order that has already been made [Roads and Traffic Authority of New South Wales, Council of the Shire of Evans and Pioneer Road Services Pty Ltd v Palmer (No 2) [2005] NSWCA 140, [17] (considering (former) SCR, Pt 52A r 5)]. But subject to that qualification it is, in the words used by Barwick CJ, a "specific and relevant statutory provision" to the contrary.
38Accordingly, an order for costs can be made after the conclusion of proceedings, so long as it does not impugn or alter a final costs order already made [see also Cotie v Cox [2006] NSWSC 859, [22]-[27] (Latham J)]. And if an order as to costs can be made after the conclusion of proceedings, it must follow that an order for interest on costs can be made after the conclusion of proceedings. This conclusion does not depend on the view, expressed by White J in Short v Crawley (at [81]-[83]), that an order for interest on costs is an order "as to costs" within s 98(3), with which I am inclined, respectfully, to disagree. CPA, Part 7 deals with Costs in Div 2 (which includes s 98), and Interest in Div 3 (which includes s 101). Section 98 appears under the heading, "Courts powers as to costs". It provides that costs are in the discretion of the court, that the court is empowered to determine by whom, and to what extent they are to be paid, and on what basis. Read as a whole, and in the context in which it appears, CPA, s 98 deals with allocation of responsibility for costs. Section 98(3) is concerned with when the Court may exercise those powers. This is confirmed by the opening words of s 98(4), "In particular ...", which then lists specific types of costs orders - and does not include an interest order. As has been explained above, the source of power to order interest on costs is not CPA, s 98, but CPA, s 101. In my view, an order "as to costs", for the purposes of s 98(3), is one allocating responsibility for costs, not one for interest [cf Lucantonio v Kleinert, [28]]. However, that does not mean that s 98(3) is irrelevant: because it authorises an order as to costs after the conclusion of proceedings, it necessarily indicates that an order for interest on costs must also be available after the conclusion of the proceedings.
39That, however, does not completely answer the proposition that a claim for interest on costs cannot be made after the relevant costs order because it merges in the relevant costs order, to which I now turn.
40Since the introduction of the costs assessment regime with effect from 1 July 1994, interest has been excluded from the scope of the assessment process and must be the subject of a separate judgment: in (NSW) Legal Profession Act 2005 ("LPA"), the concept of "costs" expressly excludes interest (s 4); and, by s 395, Division 11 (Costs Assessment) does not apply to an amount of interest ordered on an order for the payment of costs under CPA, s 101(4). This means that in order to recover under an interest on costs order, the party entitled must first obtain an assessment of the costs under the relevant costs order and register the certificate as a deemed judgment, which cannot include interest; and then separately obtain an enforceable judgment of the court for payment of the interest, which cannot be quantified until the costs under the relevant costs order have been assessed. Thus some application to the court - to quantify the interest - is inevitable, after the assessment process is complete. Although an "in principle" interest on costs order can be, and often is, made earlier, it is impossible to quantify the interest order so as to found an enforceable judgment for a sum of money until the assessment process is complete. In those circumstances, it is difficult to see why a preliminary application for an "in-principle" interest on costs order must be made at the same time as the relevant costs order.
41Moreover, because interest is excluded from the assessable costs, it can never be included in the certificate of assessment and consequent deemed judgment; it must always be the subject of a separate judgment. I therefore respectfully agree with White J, in Short v Crawley (at [73]) that a claim for interest on costs does not merge in the relevant costs order - not only because, as his Honour explained (at [72]), the former derives from CPA, s 101 while the latter derives from CPA, s 98, so that the claim for interest on costs is not "the very right or cause of action claimed or put in suit" as is determined by the relevant costs order - but also because, as explained above, the interest cannot be included in the certificate of assessment and subsequent deemed judgment, but must be the subject of a separate judgment. It is for those same reasons that I agree, with McColl JA, that the date of registration of a certificate of assessment of costs as a judgment cannot be the critical date for an interest on costs order. But the further consequence, as it seems to me, is that as the claim for interest results in a separate judgment from the relevant costs order, it cannot merge in the relevant costs order so as to come to an end when it is made.
42Prior to the replacement, with effect from 1 July 1994, of the former system of taxation with current system of assessment of costs, SCR, Pt 52 r 54A provided (in respect of proceedings commenced after 1 January 1984) as follows:
54A. Where the Court makes an order for the payment of the costs of a party and his costs are taxed, the taxing officer may exercise the powers of the Court under section 95(1) of the Act to make orders for interest to be payable:
(a) at the rate prescribed by Part 40 rule 7(2) or ordered, otherwise than by the taxing officer, under section 95(1) of the Act,
(b) on any amount paid before the conclusion of the taxation by the successful party to his solicitor for or on account of the costs to be payable,
(c) as of the date on which the amount was paid.
43Under this rule, a taxing officer, exercising the delegated power of the court, could make an interest on costs order in the course of the taxation, which would typically be long after the relevant costs order was made. The rule treated an interest on costs order not as part of the exercise of the power of the court to make an order as to costs, but as a subsequent and separate exercise of a power to allow interest.
44This approach was not limited to the exercise by taxing officers of their delegated power under SCR, Pt 52 r 54A. Prior to 1 July 1994, it had become established (in the context of SCA, s 95 and LECA, s 69A, before the substantial re-enactment of SCA, s 95 as CPA, s 101), that an order for interest on costs could be made long after the relevant costs order, and that the Court did not become functus officio in that respect on the making of the relevant costs order. Thus in Fischer v David Syme, where the relevant costs order had been made on 11 May 1987, the interest on costs order was ultimately made on 21 December 1989, on a bill of costs filed on 6 October 1988, which was referred by the taxing officer to the Court on 15 August 1999. The question was specifically addressed by Bignold J in the Land and Environment Court in Carson v Minister Administering the Environmental Planning and Assessment Act 1979 (1994) 82 LGERA 179. His Honour held that the power conferred by s 69A was capable of being invoked, notwithstanding that the matter was not raised when the question of costs was debated and decided, for the following reasons:
The Respondent submits that it is not now open to the Applicant to seek the Court to exercise the power because the time for seeking such relief was when the question of costs was debated and determined in 1990. On that occasion Hemmings J was not asked to exercise the power conferred by s69A. In deciding the question of costs in favour of the Applicant his Honour made, what the Respondent described, as "the normal costs order". The Respondent argued that if the Applicant sought (as he now seeks) a "special order" reflecting his claim to interest on costs and fees pre-paid by the Applicant to his Solicitor, he should have sought the special order from Hemmings J and not the normal order.
The power to now make a special order, some four years after the costs order was made, is, according to the Respondent's argument, spent and exhausted. The Respondent submits that the Court is functus officio. It argues that there is no power to make a supplemental order because to do so would effectively set aside the normal costs order made by Hemmings J in circumstances where there is no enabling power so to do. The Respondent further submits that the express power to set aside or vary an order conferred by Pt13 r7 of the Rules is not relevantly attracted by the circumstances of the present case.
In my judgment, none of these arguments should prevail. They are all self evidently highly technical and are lacking entirely in merit in the circumstances of this case, where it has been plain at all material times (ie before, during and after the taxation process) that the Applicant has been claiming (and the Respondent has been resisting) interest on costs. (I do not think it matters that the Applicant's claim was, until recent times, based upon SCR Pt52 r 54A rather than upon s 69A since, as I have already held, the power conferred by the section is sufficiently wide and flexible to encompass an order for interest to be payable from a date anterior to the date when the order for costs was made. Nor does it matter that the Applicant has been seeking relief from the Registrar in circumstances where the power is vested in the Court and is only exercisable by a Judge of the Court.)
The only material time that the Applicant's claim to interest has apparently not been plain was when the question of costs was argued before Hemmings J leading to his costs order in favour of the Applicant on 25 July 1990. In my judgment it is not necessary for a party seeking an order under s 69A to apply for such relief at the same time when the question of costs is debated. An order under s69A is not a costs order. It is a separate order that may be made only where a costs order has been made. Whereas, it would be open to a party to seek relief under s 69A contingently upon a costs order being made it is also open (and I would have thought more usual) for a party who has obtained a costs order, to thereafter seek relief under s 69A.
Accordingly, there is simply no question of an order under s69A (if made in the present case) having the effect of "setting aside or varying" the costs order made in the present case. However, even if an order under s69A had the effect that the Respondent suggests, the express power to vary conferred by Pt13 r 7(f) would be made available simply by the consent of the Applicant (in whose favour the costs order was made).
45His Honour's conclusion was not doubted in the Court of Appeal. Kirby P noted that the power of the court to make an interest on costs order years after the relevant costs order was made, was no longer in contest (Minister v Carson, 346):
In answer to the argument that the Land and Environment Court's power to make a special order four years after the principal costs order was made, was "spent and exhausted", Bignold J determined that the power "to otherwise order", conferred by s 69A, did not need to be exercised at the time the initial order for costs was made. He held that s 69A was "sufficiently wide and flexible to encompass an order for interest to be payable from a date anterior to the date when the order for costs was made". In support of this interpretation, he referred to Fischer v David Syme & Co Ltd (1989) 18 NSWLR 606 at 616 and Government Insurance Office of New South Wales v Healy (No 2) (1991) 22 NSWLR 380 at 387.
In this Court, the Minister accepted that determination. The power of the Land and Environment Court to award interest on costs, and of a judge of the court to do so years after the initial cost order was made, were not in contest in this appeal.
46Young AJA also noted, without demur, that the functus officio question was no longer in issue (at 355A).
47Thus, as it seems to me, prior to the commencement of the costs assessment scheme, it was established - both by the provisions of SCR, Pt 52 r 54A, and by the course of the judicial decisions to which I have referred - that the power to make orders in respect of interest on costs under SCA, s 95 did not have to be exercised at the time of making the relevant costs order; that neither an order finally disposing of the substance of the proceedings, nor the making of the relevant costs order, rendered a judge functus officio so as to preclude the later making of an order for interest on costs; and that the claim for interest on costs did not merge in the relevant costs order. While the amendments associated with the introduction of the costs assessment scheme with effect from 1 July 1994 had the consequence that thereafter only the Court itself could make an interest on costs order (because the power formerly delegated to taxing officers was not given to costs assessors), there is no basis for supposing that those amendments were intended to confine the ability of the court to make an order for interest on costs to the time of the relevant costs order, when it had not previously been so confined. Moreover, the amendments made it clearer than before that there could be no merger, because whereas, while a taxing officer had power to award interest, the interest could be included in the same certificate as the costs; under the assessment scheme, where assessors have no such power, there must be separate judgments for costs and for interest. CPA, s 101 should be regarded as having assumed the settled position that, under its predecessor (and its equivalent in LECA, s 69A), orders for interest on costs did not have to be made at the time of the relevant costs order, but could be sought and made subsequently.
48There are additional reasons supporting the conclusion that an order for interest on costs can be made after the costs order to which it relates.
49First, contextually and historically, the power to order interest on costs is sourced in the statutory provision for the (automatic) accrual of interest in respect of judgment debts, and the power to "otherwise order". It is difficult to see why the power to "otherwise order" under CLPA, s 143A, SCA, s 95(1) and (3), and CPA, s 101(1) and (3), should be exercisable only when the judgment is given, and not subsequently.
50Secondly, there is a significant distinction between s 101(4) and s 100(1), which authorises the inclusion in a judgment of pre-judgment interest in the following terms:
100 Interest up to judgment (cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A)
(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
51Unlike s 100(1), s 101(4) contains no requirement that the interest be "included" in the costs order. The former provision contains a requirement that the interest be part of the original judgment [Owston v Bank of New South Wales (1877) Knox 90; Bank of New South Wales v Owston (1879) 4 App Cas 270], whereas the latter does not.
52Finally, in addition to Fischer v David Syme and Minister v Carson, which predate the 1994 amendments, the clear predominance of later judicial authority since is to like effect: see Roads and Traffic Authority v Cremona [No 3] [2005] NSWCA 13, [20] (Sheller JA); Simmons v Colley Cotton Marketing Pty Ltd [2007] NSWSC 1092, [13] (Bergin J: s 101(4) contemplates that an order for interest may be made after entry of orders for costs); Siewa Australia Pty Ltd v Seeto Financial Services Pty Ltd (No 2) (Harrison J: judge does not become functus officio in this respect by making final costs order); Lucantonio v Kleinert, [26]; Short v Crawley; Wardy v Wardy, [6]. The contrary position was expressed, obiter, by Handley JA, in a dissenting judgment, in Drummond & Rosen Pty Ltd v Easey (No 2) [2009] NSWSC 331, [49] (the majority did not consider this point); and by McColl JA in Zepinic.
53The foregoing analysis results in the following conclusions. As an order for interest on costs derives from a different statutory source than the costs order, does not impugn the operative and substantive costs order, and results in a separate judgment from the judgment under the costs order, a claim for interest on costs does not merge in the relevant costs order, and a judge does not become functus officio in that respect on making the relevant costs order. Prior to the commencement of the costs assessment regime in 1994, it was accepted that an order for interest on costs did not have to be sought when the relevant costs order was made, but could be made subsequently; the introduction of the costs assessment scheme, while removing the power from taxing officers, was not intended to affect this; and the substantial re-enactment of SCA, s 95 as CPA, s 101 assumed the established position. The predominance of judicial authority also favours that view.
54In my judgment, therefore, if there is a time limit for seeking an order under CPA, s 101(4), it is not the making of the relevant costs order (or 14 days thereafter), and no viable alternative has been identified, let alone suggested to be applicable in this case. (Arguably, the (NSW) Limitation Act 1969 may provide one, by s 14(1)(d) or s 17, and the Court might decline as a matter of discretion to entertain an unduly belated application [cf Cotie v Cox, [25]-[26]], but it is unnecessary to explore those possibilities further).
55Moreover, in the circumstances of the present case, it cannot even be said that the court has made orders finally disposing of the proceedings, as it remains seized of the inquiries and accounts ordered pursuant to the substantive proceedings.
56Accordingly, the plaintiff's application for an interest on costs order is not out of time.