Puntoriero & Anor v Water Administration Ministerial Corporation [2002] NSWSC 217 | Case summary

1 HIS HONOUR: This is an appeal from a judgment of Master Malpass delivered on 23 November 2001. I am restricted in relation to the review of findings of fact and exercises of discretion in the same way as any appellate court so that the appeal is by way of rehearing which is not a hearing de novo: GIO v Weekes 1981 1 NSWLR 715: Do Carmo v Ford Excavations 1981 1 NSWLR 409; Martin v Abbott Australasia 1981 2 NSWLR 430. 2 The issues arise out of a trial heard as long ago as 1996. It is a coincidence that I was then the presiding trial judge. Following findings by a jury and entry of judgment for the plaintiffs (Mr and Mrs Puntoriero) on a claim that the defendant supplied contaminated water thus causing damage to agricultural operations, a successful appeal by the defendant to the Court of Appeal was in turn followed by a successful appeal by the plaintiffs to the High Court of Australia. Judgment in the lastmentioned was delivered on 9 September 1999. A consequence was that the plaintiffs received or had restored to them, costs orders in their favour at three levels. 3 On 21 September 1999 the plaintiffs received the amount owing under the judgment and on that day they paid legal costs and disbursements to their solicitors in a stated sum exceeding $1m. 4 As noted by the learned Master, the evidence before him was economical but, as between the parties, the costs of the High Court appeal have been paid but the costs of the hearings in the Common Law Division and the Court of Appeal were referred to a costs assessor who issued a certificate of determination on 5 July 2001 for the sum of $483,562.10. So far as the evidence enables me to ascertain, this appears to be a composite sum representing the plaintiffs' costs at both levels. The Notice of Motion filed on 17 October 2001 refers to review applications identified by separate numbers 91241/00 and 91242/00, the firstmentioned being said to refer specifically to costs in the Court of Appeal. The Notice of Appeal which is presently before me refers twice to review application No 92142/00. I apprehend that one of these may be a typing and proof reading error. It is not the only one as I shall later mention. Application to a review panel pursuant to s208KA (the reference to s280KA(5) in the affidavit in support I also treat as an error) of the Legal Profession Act was instituted by the defendant. I shall later refer to the scope of challenge. At the time of hearing before the Master, the review had not been determined nor, so far as I am aware, is it yet determined. The relief sought by the plaintiffs is an order for interest on costs pursuant to the power vested by s95(4) of the Supreme Court Act (the Act). I have taken the reference to s94(4) in the Notice of Appeal to be intended to read s95(4). In practical terms the plaintiffs seek interest on whatever sum is determined to be payable as party/party costs pursuant to Division 6 of Part 11 of the Legal Profession Act from 21 September 1999 until such amount is actually paid. I have taken the references to 21 September 2000 in the Notice of Appeal to be intended to refer to 21 September 1999 when the plaintiffs paid their solicitors. 5 It was accepted that, whatever the outcome of review, the amount paid on that date will inevitably exceed the assessment of party party costs. 6 The relevant provision of the Act is: "95 (1) Where judgment is given or an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on so much of the money as is from time to time unpaid. ……………………. (3) Notwithstanding subsection (1), where, in proceedings for damages on a common law claim, the Court makes an order for the payment of costs and the costs are paid within twenty-one days after ascertainment of the amount of the costs by assessment under Division 6 of Part 11 of the Legal Profession Act 1987 or otherwise, interest on the costs shall not be payable under subsection (1) unless the Court otherwise orders. (4) If an order is made for the payment of costs, the Court may order that interest is to be paid on the amount so ordered, at the prescribed rate referred to in subsection (1), from the date or dates when the amount in respect of costs was duly paid. " 7 The Master held that the plaintiffs had not discharged the onus of demonstrating their entitlement to an order but he also stated: " The plaintiffs have paid a large amount in respect of costs. It was paid after the costs orders were made. The assessment process is yet to be completed. The review may now be underway. It may be complex and it is uncertain when the determination may be made. In the circumstances of this case, subsections (1) and (3) have application. If the defendant pays the costs within the 21 day period, the plaintiffs can apply for an otherwise order ". (My emphasis). 8 It was accepted by the parties that an order under s95(4) could be made prior to the crystallization of the actual amount of costs: Hughes Brothers v Trustees of the Roman Catholic Church [1999] NSWSC 1051. The defendant's contention was succinctly expressed in a submission that the Master exercised a discretion and that that exercise is immune from intervention unless there has been some misapplication of principle, a drawing of guidance from irrelevant matters, mistake of fact or omission to take into account some material consideration: House v The King 1936 55 CLR 499. 9 Observation was made of the apparent acceptance of the defendant's submission that the plaintiffs had not continuously made outlays to finance the litigation nor had they at all times been agitating for interest nor had they, as an example, taken out litigation loans. The Master noticed reference to such matters in Grogan v Thiess Constructions [2000] NSWSC 1101 and the adversion to the Minister's Second Reading speech where he had stated that the power (to award interest on costs) was to be exercised only when the special circumstances of the case warranted the making of such an order. 10 The words of the statute are unambiguous and they contain no restriction to special circumstances. As Barr J had observed in Grogan "subsection (4) bears no requirement that interest on costs is not to be awarded in an ordinary case" and "the legislative purpose in providing a judicial discretion in subsection (4) to order interest on amounts actually paid is not to penalise but to recompense a litigant for being out of pocket whilst the other side has had use of the money". I agree with those views. In that case Barr J was vested with first instance discretion. He was however dealing with a claim arising out of alleged unlawful termination of contract which in context is unlikely to be categorized as proceedings for damages on a common law claim as mentioned in s95(3). 11 It is obvious that the plaintiffs could not agitate for payment of costs by the defendant until after 9 September 1999. A bill of costs was prepared and served on 7 March 2000. Application for assessment was filed on 14 July 2000 and a reference to a cost assessor made on 6 September 2000. It was not until 5 July 2001 that the assessment for the amount which I have mentioned was issued. On 20 July 2001 the defendant lodged the application for review. The evidence is that the review sought "touches upon" payments to two individual counsel and an expert witness. 12 In a written submission, counsel for the plaintiffs stated that the defendant has "never tendered payment of the amount of the appellant's costs claimed and not the subject of objection by the (defendant)". Counsel for the defendant neither contradicted nor endorsed that statement. I have assumed that the assertion is correct. 13 It does not seem to me to be a matter of critical significance that the plaintiffs paid the costs out of the judgment moneys rather than funding the litigation from other sources or by instalments during its course. As at 21 September 1999 they became out of pocket for an amount which, on the assumption that I have mentioned, inevitably included the amount which the defendant should pay them for party/party costs. It is an undeniable fact that in respect of the relevant amount (as yet unascertained) the defendant has had the benefit and the plaintiffs have not. 14 The Master made no finding of disentitling conduct, and as the chronology above set out demonstrates, the plaintiffs have not provoked unreasonable delay since they became vested with entitlement to costs following the High Court judgment. 15 There is a jurisdictional issue. No information has been placed before the Court concerning the certification by the assessor or any filing of a certificate or certificates. I have already noted that there is no information enabling separation of costs referrable to the Common Law Division hearing from the Court of Appeal hearing. The defendant expressly objected to the exercise of jurisdiction by either the Master or myself in relation to the costs ordered in the Court of Appeal. 16 The Master did not find it necessary to deal with that contention which he noted but said that he would set to one side "for the moment" but he did not appear later to return to the issue except in the sense that in refusing any relief, there was an exercise of jurisdiction in respect of costs at both levels. 17 The defendant maintains the contention that the Court of Appeal made its order for costs and that any ancillary order for payment of interest under s95(4) must be made there. 18 Counsel for the plaintiffs pointed to the grant of power to a Master in Schedule D of Part 3.16 of the Rules of Court which is in terms: "Order under section 95 of the Act (which section relates to interest on money payable on a judgment)." 19 Paragraph 16 was inserted in 1981 and amended in 1983, both occasions antedating the legislation of subsection (4) of s95. 20 Sections 117A and 118 of the Act make references to a Master in the Court of Appeal and a Divisional Master but current appointments consist only of Divisional Masters. 21 It is instructive to note that after referring to s38 of the Act, Spigelman CJ recently observed: "25. There is no provision in the Supreme Court Act that creates a court separate from the Supreme Court of New South Wales. The Supreme Court of New South Wales is the superior court of record in this state. The existence of the Court of Appeal is a product of the Supreme Court being "divided" for the "convenient despatch of business". The Court of Appeal exists within the Supreme Court. It is not a separate entity from it. 26. Section 26(1) of the Act empowers the Government, by commission, to appoint a Judge. Section 31 empowers the Government, by commission to appoint a Judge to be a Judge of Appeal. There is no such thing as a "Judge of the Court of Appeal". Orders made by the Court of Appeal only have force and effect because they are orders of the Supreme Court, made by the Court of Appeal. They are not orders of the Court of Appeal" : Smith v Yusen Daly Smith International (In Liq) [2001] NSWCA 458. 22 I consider that the parenthetical observation to Schedule D Part 3.16 is descriptive (as at the time of its insertion) and not limiting. I would observe that there is no apparent reason why a Master should have vested power to order interest on judgments but not upon costs. I would construe the provision in the Schedule to operate to vest power in respect of s95 as it is amended from time to time. 23 Having regard to the argument of the defendant I considered removal to the Court of Appeal pursuant to Pt 12 r2. Neither party sought this and, given the absence of information separating the elements of costs, I have not done so. If I were to make such an order the entire proceedings would need to be removed, including the Common Law Division costs. For the reasons expressed I am of the view that the Master had jurisdiction in respect of interest upon costs at both levels. 24 The learned Master referred to the outlay by the plaintiffs and balanced that against the loss of an opportunity of the defendant to pay costs within twenty one days of assessment and thus avoid payment of interest unless it was ordered otherwise. S.95(3) evinces an apparent legislative intent that in claims for common law damages, the prima facie situation will be that interest will not run if payment is made within twenty-one days of ascertainment of the amount. In distinction from cases such as Grogan (supra) the plaintiffs' action, whilst emerging out of a contract for water supply, was a claim for damages for negligence: Puntoriero & Anor v Water Corporation 2000 199 CLR 575 and precisely met the description in s95(3).

25 Given the limited items "touched upon" for review there must be a considerable indebtedness of the defendant to the plaintiffs unpaid since the issue of the costs assessor's certificate on 5 July 2001 and in respect of which there can be no dispute as to its indebtedness. In my view it would be a plain injustice were the plaintiffs not to receive interest upon the ascertained amount of indebtedness at least from 5 July 2001 until payment, and I would infer that that is what the learned Master had in mind when he observed that the plaintiffs could apply for an "otherwise order". The power vested by s95(4) is to order interest from the date or dates when the amount in respect of costs was duly paid and does not vest power to order interest from some other date such as, in this instance, 5 July 2001 a date which has become relevant in the assessment process. 26 It follows from what I have said that I would order interest from 5 July 2001 but that is a power to be exercised pursuant to s95(3) and the Master expressly left open the "otherwise order" avenue provided therein and the matter is not something with which I can deal within the confines of this appeal. 27 At the outset of this judgment I referred to the limitations on my jurisdiction. The issue is whether the Master erred in declining to order interest on costs from the date of payment by the plaintiffs to their solicitors (21 September 1999). Such an error is not demonstrated. Whether interest should run from some other date (as I have suggested) is a different issue. 28 The summons is dismissed with costs.

Puntoriero & Anor v Water Administration Ministerial Corporation

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