Was the judgment entered irregularly?
21Ritchie's Uniform Civil Procedure NSW observes at paragraph [36.15.10] that "The entry of judgment is irregular if it has occurred in contravention of the rules" or "where it has been entered contrary to a material requirement of the rules.... A judgment will also be considered irregular where there is material which strongly suggests that it has been entered for more than is due". The irregularity must be of consequence going to the basic nature of the claim.
22Dr Xabregas relies, in support of this ground of irregularity, upon the decision of Ward J in Kassem & Secatore (as joint liquidators of Pan Pacific Age Care Services Pty Ltd (in liq)) v Koutavas [2012] NSWSC 236. The facts in that case were similar to those in the matter before the court. In Kassem an order for party/party costs was made against Ms Koutavas. An assessment of those costs was made by a Costs Assessor following which two certificates were issued, one being a Certificate of Determination of Costs pursuant to s 368 of the Legal Profession Act and the other being a Certificate of Determination of Costs of Costs Assessment pursuant to s 369 of that Act. Both of the Certificates were filed in the Registry of the Supreme Court and in due course a judgment issued for the aggregate of the two certificates. It will be observed that this is what here. It was argued by Ms Koutavas before Ward J that the entry of the judgment against her for the aggregate sum of the two Certificates was irregular for the reasons that s 369 of the Legal Profession Act entitles only the Manager, Costs Assessment to recover the costs of a costs assessment (and that accordingly, any judgment for those costs could only be in the Manager's favour).
23In Kassem, Ward J also discussed a number of cases dealing with the situation where a filing fee had been inappropriately added to a judgment debt based on costs certificates. Although not directly relevant to the primary question determined in Kassem, this aspect is relevant to an issue that arose before me, it being conceded by Mr Holt that the sum of $84.00 (being the registration/filing fee) had been improperly added to the judgment entered against Dr Xabregas in this court, and that as a consequence judgment had been entered for an amount greater than that due.
24Following a detailed exposition of the law, Ward J concluded that the judgment against Ms Koutavas had been entered irregularly, because it included an amount payable in respect of the costs of the costs assessment, which amount given the provisions of the Legal Profession Act were payable to the Manager, Costs Assessment. Her Honour noted that the irregularity affecting the judgment was one that arose from an application of the court rules and the statutory provisions of the costs assessment scheme itself. Ward J held that while the judgment should be set aside as irregular, basic justice required regard to be had to the amount for which the judgment creditor was out of pocket in respect of the costs of the costs assessment and for which Ms Koutavas was liable, and for those costs to be reimbursed. In coming to this conclusion, her Honour said as follows:
49. The answer to the practical dilemma posed to a party in the position of the plaintiffs in these circumstances (where the party who has been found not to be liable to pay the costs of the costs assessment but has been effectively compelled, in order to obtain the costs certificate, to pay those costs and then is left without the benefit of a judgment debt in its favour for those costs notwithstanding the registration of the costs of costs assessment certificate) seems to me to be found in the restitutionary principles under which a person who has made a payment under compulsion of law that operates to discharge the primary liability of another is entitled to reimbursement by that other.
50. Goff and Jones (The Law of Restitution, 5th ed, 1998) cite a passage from the first edition of Leake on Contracts, as quoted by Cockburn CJ in Moule v Garrett (1872) LR 7 Ex 101 at 104 as the classic statement of this common law principle:
Where the plaintiff has been compelled by law to pay, or being compellable by law, has paid money which the defendant was ultimately liable to pay, so that the latter obtains the benefit of the payment by the discharge of his liability; under such circumstances the defendant is held indebted to the plaintiff in the amount.
51. Goff and Jones note that to found a right to restitution of the moneys paid, three matters must be established: first, that the payer was compelled, or was compellable, by law to make the payment; second, that the payer did not officiously expose himself to the liability; and third, that the payment discharged a liability of the defendant.
52. As to the first of those matters, the learned authors emphasise that the compulsion must be by law and that a moral obligation to make the payment would not suffice (Goff and Jones, 5th ed, at 438). Similarly, a contractual obligation to make payment also would not suffice (The Esso Bernicia [1989] AC 643, where payments made to discharge damages claims on behalf of the parties liable therefore, pursuant to an agreement with those parties, were characterised as voluntary or gratuitous). However, a statutory obligation amounts to compulsion by law (Brook's Wharf & Bull's Wharf Ltd v Goodman Bros [1937] 1 KB 534), as does payment made pursuant to the execution of a judgment debt (Edmunds v Wallingford (1885) 14 QBD 811) and in the present case the statute recognises that costs certificates may be withheld until payment of the relevant costs (thus tantamount to statutory compulsion for payment of those amounts).
53. The second requirement prevents those who, by their own act, place themselves in a position where they are compelled to make the payment from claiming a right to restitution. Goff and Jones say at 445:
The plaintiff's payment will not be officious if he has exposed himself to liability at the request, express or tacit, of the defendant, or if he has been forced to place himself in the position which rendered him liable to make the payment, or, perhaps, if he has intervened as a matter of necessity. In such cases if, in consequence of his intervention, he finds himself compelled to make the payment, he should be entitled to reimbursement. But if, in other circumstances, he freely and without request undertakes the risk of liability, he generally has no right to any direct reimbursement, even though he is compelled to make the payment. (my emphasis)
54. Finally, with respect to the third requirement, this will usually be satisfied where the payer and other party are subject to a common demand. An example is where the owners of a warehouse were subject to the statutory obligation to pay customs duties owed by their customers (Brooks Wharf). However, there are cases where there is no common demand and the payment still operates to discharge the liability of another party (Exall v Partridge (1799) 8 TR 308). That said, the liability of the other person must be discharged. If the liability remains even after payment is made, then the payer does not have a right to reimbursement of the moneys paid.
55. Here, the compulsion to make payment of the costs of the costs assessor arises by virtue of the statutory requirement that the costs assessor forward the s 369 Certificate to the Manager, Costs Assessment and notify the parties that the certificate will be available (by inference, only) on payment of the costs of the costs assessor. The Costs Assessor has no discretion in this regard. There is, in my opinion, an implicit requirement imposed by the statutory regime that in order to obtain the costs certificates payment of the costs of the costs assessment must be made.
56. The plaintiffs did not place themselves in a position to make payment officiously, but were required to do so by the practical effect of the procedure set out in the statutory regime for costs assessments. By paying the costs of the cost assessor, the plaintiffs have met the claim for costs by the costs assessor and have thus discharged the liability of the cost respondent to pay those costs as assessed under the s 369 certificate (if the costs respondent sought to contend otherwise then it would be difficult to see how she could resist a claim by the Manager, Costs Assessment directly to enforce the costs judgment arising on the filing of the costs certificate). Therefore, it seems to me that the plaintiffs have a right of reimbursement against the defendant for the payment of the costs of the cost assessor as determined under the s 369 Certificate. Any alternative scenario would postulate either the need in every case for the Manager, Costs Assessment to commence enforcement proceedings or the recipient of the costs order to commence those proceedings and join the Manager, Costs Assessment as a party to compel the recovery through that officer of the costs payable by the party against whom the costs order was made. This surely cannot have been the intention of the legislature as it is inconsistent with the statutory mandate for the just, quick and cheap resolution of the real issues in dispute (s 56 of the Civil Procedure Act 2005).
57. In the present case (where there has been nothing to suggest that there is any dispute as to the payment of the costs assessor's costs by the liquidators and any dispute as to the liability for those costs would have been dealt with by way of a review in the ordinary course) it seems to me that an order for reimbursement by Mrs Koutavas of the costs of the costs assessment as borne by the liquidators would be appropriate in order to remove the unjust enrichment of Mrs Koutavas that would otherwise occur were she to retain the benefit of the discharge by the liquidators of her costs liability to the Manager, Costs Assessment.
58. The present issue would not arise as a practical matter if the legislation made clear that the costs assessor had power to determine that the party liable under the assessment to pay the costs of the costs assessment should indemnify the party found not to be liable for those costs in respect of any amounts paid by that party in order to obtain the issue of the costs certificate (that being at present cast in doubt by subss (8) and (9)) or, alternatively, if the legislation made clear that the judgment arising on the filing of a costs certificate issued under s 369 was not simply a judgment for the "unpaid costs" but was a judgment obliging the party found liable to pay the costs of that costs assessment to indemnify any other party to the costs assessment for costs already paid by that other party to obtain the issue of the costs certificate. Amendment to the statutory regime for the assessment of costs would remove room for doubt in this regard.
59. The practical difficulty so identified in the present case would also be resolved if it is recognised that the formal entry of orders to give effect to the import of the judgment constituted by the filing of a s 369 certificate (and the determination contained therein that, as between the parties to the costs assessment, one identified party should pay the costs thereof), in circumstances where the s 369 certificate on its face discloses that the costs of the cost assessment have already been paid to the Manager, Costs Assessment by the party in whose favour judgment is to be entered, would be for orders to be entered first, that the party liable on the s 368 certificate pay the costs so assessed therein to the party in whose favour the determination is made; second, that the party liable on the s 369 certificate pay to the Manager, Costs Assessment the costs therein assessed as payable for the costs assessment, and, third, that if the s 369 certificate itself discloses that the costs therein have already been paid to the Manager, Costs Assessment (or there is other evidence to that effect filed at the time of filing of the certificate) then the party determined to be liable for the costs of the costs assessment reimburse the party who has paid those costs in order to obtain the release of the costs certificates.
60. In the present case, there is no dispute that the costs of the costs assessment (for which the costs assessor determined that Mrs Koutavas was liable) have been paid by the liquidators. Although, for the reasons above, I consider that the judgment entered on 9 November 2011 and amended on 10 February 2012 was entered irregularly (in that it included in the judgment debt payable to the plaintiffs an amount in respect of the costs of the costs assessment), the power to set aside judgments entered irregularly is discretionary and one that must be exercised having regard to all the circumstances of the case.
61. While it has been said that where a judgment has been obtained as a result of the plaintiff's irregular conduct or breach of good faith the defendant is generally entitled to set it aside as a matter of basic fairness (Anlaby v Praetorius (1888) 20 QBD 764, cited in Ritchie's at [36.15.10]), here the irregularity affecting the judgment is one that arises from an application made in accordance with the court rules (and in circumstances where the only suggestion that this might be irregular that can be found in the authorities was dismissed as inconsistent with the perceived intent of the statutory provisions in relation to cost assessment).
62. It seems to me that basic justice requires that account be taken of the fact that the liquidators remain out-of-pocket for moneys paid in respect of costs for which Mrs Koutavas has been determined to be liable. Hence, in the exercise of the discretion to set aside the costs judgment for irregularity it is necessary in my view for orders to be made that appropriately recognise and give effect to the cost determinations that have been made.
63. I am not satisfied that, absent consent from the defendant, there is power pursuant to r 36.16 to vary the judgment in the manner that I consider would be appropriate in this case. However, having regard to the fact that the discretion to set aside an irregularly entered judgment can be made on terms and having regard to: the acknowledged technicality of the irregularity, the desirability of avoiding the incurring of unnecessary costs in further litigation by the liquidators to recover an amount already determined to be payable by Mrs Koutavas and the small amount of money in issue (that has probably already been exceeded by the costs of the present application), I consider that the appropriate course is to set aside the judgment entered on 9 November 2011 and amended on 10 February 2012 and in its place to enter judgment as follows:
1. Kanella Koutavas is to pay to the plaintiffs the sum of $17,131.22 in respect of the costs determined under the Certificate of Determination of Costs issued pursuant to s 368 of the Legal Profession Act 2004 (NSW) on 20 October 2011.
2. Kanella Koutavas is to pay to the plaintiffs the sum of $962.14 by way of reimbursement to the plaintiffs of the costs of the costs assessor determined under the Certificate of Determination of Costs issued pursuant to s 369 of the Legal Profession Act 2004 (NSW) on 20 October 2011 and paid by the plaintiffs (or any one or more of them) in order to obtain the release of the respective costs certificates issued on that date in proceedings 2011/264774.
3. Pursuant to Pt 36 r 36.4(3) of the Uniform Civil Procedure Rules 2005 (NSW), I order that Order 1 take effect as of 9 November 2011.
25As is clear from the above, the judgment the subject of dispute in Kassem was set aside and new judgments were entered for each of the sums identified in the costs certificates, those judgments to take effect from the date that the initial judgment (that had subsequently been set aside) had been entered. In doing so, her Honour had regard to the common law principles of restitution, the technicality of the irregularity, the desirability of avoiding the incurring of further unnecessary costs and the small amount of money in issue.
26Given Kassem, its close factual similarity to the position in this matter, and its binding authority, it seems to me that the judgment entered against Dr Xabregas on 29 January 2014 should be set aside as irregular. I would however propose to do so on terms identical with those adopted by Ward J. Basic justice and common law restitutionary principles require that I do so. I have also had regard to the technical nature of the irregularity, the fact that Dr Xabregas does not in any real sense contest her eventual liability for the costs as ordered or the costs of the costs assessment, the fact that no application for a review of the costs assessed was ever lodged, and the overriding purpose of the Civil Procedure Act as set out in section 56, being the facilitation of "the just, quick and cheap resolution of the real issues in the proceedings". In making the Order that I propose in this regard I will exclude the $84.00 registration/filing fee that Mr Holt concedes was not properly claimed.