FEDERAL COURT OF AUSTRALIA Coshott v Burke [2017] FCAFC 230 Appeal from: Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 File numbers: NSD 1137 of 2017 Judges: LOGAN, KERR & FARRELL JJ Date of judgment: 22 November 2017 Catchwords: COSTS – appeal against lump sum costs orders – application for leave to amend Notice of Appeal to raise grounds not raised before the primary judge – whether interests of justice require application to be granted – whether prejudice to the respondent – application for leave to amend Notice of Appeal refused Legislation: Federal Court of Australia Act 1976 (Cth) s 43 Cases cited: Coshott v Crouch [2017] FCAFC 135 Coulton v Holcombe (1986) 162 CLR 1 Date of hearing: 22 November 2017 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 22 Solicitor for the First Appellant: Murphy Lyons Solicitors Counsel for the Second Appellant: The Second Appellant appeared in person Counsel for the First Respondent: Mr JT Johnson Solicitor for the First Respondent: JP Miskell & Associates Counsel for the Second and Fourth Respondents: Mr MJ Heath Solicitor for the Second and Fourth Respondents: Australian Government Solicitor Counsel for the Third Respondent: Ms M Castle Solicitor for the Third Respondent: Gillis Delany Lawyers Counsel for the Fifth Respondent: The Fifth Respondent filed a submitting notice Counsel for the Sixth Respondent: The Sixth Respondent filed a submitting notice ORDERS NSD 1137 of 2017 BETWEEN: RONALD MICHAEL COSHOTT First Appellant ROBERT GILBERT COSHOTT Second Appellant AND: CHRISTOPHER JOHN BURKE First Respondent OFFICIAL TRUSTEE IN BANKRUPTCY Second Respondent MAXWELL WILLIAM PRENTICE (and others named in the Schedule) Third Respondent JUDGES: LOGAN, KERR & FARRELL JJ DATE OF ORDER: 22 NOVEMBER 2017 THE COURT ORDERS THAT: 1. Leave, in respect to the grounds identified as the grounds in the notice of appeal, be refused. 2. Leave to amend the notice of appeal, so as to raise the issue identified in paragraphs 16 to 25 of the appellant's outline of submissions, be refused. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (EX TEMPORE – REVISED FROM TRANSCRIPT) LOGAN J: 1 It emerged from the written submissions made on behalf of the respondent parties and, responsive to that, from questions put by the Court and oral submissions thereby received, both from the appellants and the respective respondents, that there were particular points raised in the notice of appeal which were not taken before the primary judge. There is, further, apart from grounds identified in the notice of appeal, another issue which is raised in the written submissions, but which is neither identified as a ground of appeal, nor one which was raised below. It is necessary, also, to deal with what is to become of that issue. That has become the subject of an application by the appellants for leave to amend its notice of appeal. 2 The jurisdiction being exercised by the Court at present is appellate, not original. As a matter of general principle, it is a perversion of an exercise of appellate jurisdiction to seek to convert a court of appeal into a court of original jurisdiction, see Coulton v Holcombe (1986) 162 CLR 1 at 7, and notably and, recently, Coshott v Crouch [2017] FCAFC 135 at [51] - [54]. 3 Of course, there may be cases where the interests of justice require, exceptionally, that a court exercising appellate jurisdiction nonetheless permit a point not taken below to be raised on appeal. Even so, the application of that particular exception is necessarily informed by procedural fairness questions, particularly if there is the prospect of evidentiary unfairness to a respondent party. That does not delimit the question of prejudice which might flow to a respondent in respect of any such permission, but it is a noteworthy and relevant example insofar as a number of the appeal grounds are concerned. 4 Against the background of that general principle, I deal seriatim with particular grounds as against particular respondents. 5 The grounds of appeal as pleaded are: In respect of the First Respondent 1. Her Honour erred in fixing lump sum costs in the amount of $84,280.21 inclusive of GST in favour of the first respondent which amount included GST, when the first respondent had not proven that he was not entitled to a tax input credit. 2. The amount was made up solely of counsel's fees which included work done by counsel in breach of the NSW Barrister's Rules. 3. The amount included court filing fees paid by that counsel in breach of the NSW Barrister's Rules. 4. Her Honour relied upon an affidavit sworn by that Counsel which was sworn and adduced in breach of the NSW Barrister's Rules. 5. Her Honour erred in not discounting the amount claimed to take into account that some of the amount claimed may have been solicitor and client costs. 6. Her Honour erred in reversing the onus of proof from the first respondent to the appellants. In respect of the Second Respondent 1. Her Honour erred in fixing lump sum costs in the amount of $63,865.00 in favour of the second respondent as the Second Respondent was not liable to pay costs to the Australian Government Solicitor and the indemnity principles was not satisfied. 2. Her Honour erred in fixing lump sum costs in favour of the second respondent without off-setting costs ordered against the second respondent. 3. Her Honour erred in reversing the onus of proof from the second respondent to the appellants. 4. Her Honour erred in entertaining an application by the Second Respondent for lump sum costs contrary to consent orders/an agreement reached between the appellants and the Second Respondent. In respect of the Fourth Respondent 1. Her Honour erred in fixing lump sum costs in the amount of $189,888.00 in favour of the third respondent as the indemnity principle was not satisfied. All invoices were issued by Gillis Delaney and Sally Nash & Co. to Anteres Managing Agency Limited which paid same. Anteres Managing Agency Limited was not the third respondent's insurer and had no legal obligation to pay same. 6 As against the first respondent, ground 1 is not a point which was taken below with any precision. It is necessary to add the qualification, "with any precision", because there was a general question raised in relation to practice in respect of lump sum costs applications. The absence, though, of precision, is, in my view, telling, both as to the procedural fairness aspect in terms of evidence which the respondent might have led, as well as whether there is a question of law entailed in this ground. 7 As I see it, ground 1 raises or seeks to raise a mixed question of fact and law, not taken with precision below. Having regard to the general principles enunciated at the outset of my reasons, I am of the view that the appellants should not be granted leave to raise ground 1 as against the first respondent. 8 Grounds 2 and 3, as against the first respondent, might conveniently be considered together. It is conceded on behalf of the appellants that those points were not precisely taken below. There was a general question about whether or not there was barrister's work, but that conceals more than it reveals in terms of whether there was a breach of Barrister's Rules, and, if so, which Rules. The grounds do not identify which Rules. In turn, there may be, in my view, an evidentiary issue in terms of the scope of a brief. It appears to be the case that the brief was a direct one. That is quite apart from any general issue of law as to the extent to which the point is academic insofar as the cost discretion exercised under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) is concerned. Again, having regard to the general principles enunciated at the outset of my reasons, in my view no grant of leave should be given in respect of grounds 2 and 3 as against the first respondent. 9 That also informs, in part, why I would not grant leave in respect of ground 4 as against the first respondent. The other reason I would not grant leave in respect of that ground is that there was no objection taken below to the reading of the affidavit of the barrister concerned. 10 Other grounds as against the first respondent are not the subject of controversy as to whether leave is required. 11 As against the second respondent, grounds 1 and 2 were not points which were taken below. In my view, each is a mixed question of fact and law. Further, as to ground 2 against the second respondent, it is necessary to be precise as to why that particular point was not at large below. The point that was taken before the primary judge was that the existence of costs orders against the second respondent provided a reason why, insofar as the second respondent had an entitlement to costs, the discretion to fix those costs by way of a lump sum order should not be exercised. The point that was not taken is the point that is present in the second ground. In other words, what was not put to the primary judge was that the discretion should not be exercised, but if it were to be exercised, that there should be an offsetting. As a matter of fairness to the appellants, it should be observed that it was conceded, quite properly by Mr Heath on behalf of the second respondent, that, insofar as there were subsisting orders for costs in favour of the appellants as against the second respondent, they were not dealt with by the judgment which is subject to appeal. In other words, it remains lawfully possible, as was conceded by was the second respondent, for the appellants, if so disposed, to seek to tax out or alternatively apply for a lump sum order in respect of such costs orders as are in favour of the appellants as against the second respondent. 12 There is no question in respect of ground 3 or ground 4 as against the second respondent as to whether leave is necessary. 13 As against the fourth respondent, there is but one ground specified in the notice of appeal. It is accepted that the point is not one taken below. In my view, there is a mixed question of fact and law entailed in that ground. It may be that, principally, its resolution is one of law flowing from the particular roles of the Inspector-General under statute and in these proceedings. As a matter of general principle, the Court has power under s 43 of the FCA Act to make a costs order in favour of a non-party. Whether or not that general power should have been exercised in this particular case is a point which should, in my view, have been taken below so that it could be answered both in law and fact by the fourth respondent. For these reasons I would not grant leave in respect of the only ground as against the fourth respondent. 14 As against the third respondent, ground 1 is in truth a rolled-up pleading which entails at least two grounds. As to the first two sentences in ground 1 against the third respondent, it is accepted by the third respondent that the point is one which was at large below. What is controversial is what is truly, in my view, a separate ground, which is contained in the third sentence of what is said to be ground 1 against the third respondent. That, in my view, entails a mixed question of fact and law. It would be procedurally unfair, in my view, to permit that to be raised on appeal. It was not raised below. 15 That deals with the pleaded grounds insofar as leave is necessary. 16 There is a further issue concerning counsels' fees which is more particularly described in [16] to [25] of the appellants' written outline. In my view, that particular issue entails a mixed question of fact and law not raised below. Because of that, I would not grant leave to amend the notice of appeal so as to raise a ground which specified that issue. It is noteworthy that the application for leave did not descend to particularity in respect of the ground, but it is sufficiently described nonetheless as an issue in the paragraphs of the outline mentioned. 17 Finally, although it is at the margin, I have also taken into account in respect of the refusal of leave that the appellants were represented below and, further, that, of the appellants, the second appellant, Mr Robert Coshott is not without legal training and experience, although it must be said that he has not practiced for something approaching two decades. 18 Further, it should be noted, insofar as the same is necessary, that in relation to Mr Ronald Coshott, who is represented on the appeal by a solicitor, that the solicitor concerned, though offered the opportunity to make separate submissions, chose to adopt such submissions as were advanced personally by Mr Robert Coshott. 19 For these reasons, then, and in respect of the grounds identified as well as the fee issue identified I would refuse leave to advance those on the appeal or, as the case may be, to amend the notice of appeal to advance the same. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate: Dated: 22 December 2017 REASONS FOR JUDGMENT kerr J: 20 I agree with the reasons that have been given by Logan J. I merely add that in the matter before her Honour the appellants were represented by senior counsel. They were aware of the several affidavits that had been filed in relation to the claims for costs that had been made and the basis upon which those claims had been advanced. Earlier in the proceedings there had been three pages of written submissions put forward to resist the making of a lump sum costs order, and the premise upon which those submissions were advanced were in opposition to that particular course being taken. 21 There was opportunity for the additional contentions now sought to be pressed to have been raised in the proceedings before the primary judge. Given that the appellants were represented by senior counsel, yet did not do so, grounds of appeal based on propositions not canvassed in the proceedings below should not be permitted. I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kerr. Associate: Dated: 22 December 2017 REASONS FOR JUDGMENT FARRELL J: 22 I concur in the conclusion that the grounds identified by Justice Logan should not be permitted to be raised on this appeal and that the notice of appeal not be granted leave for amendment for the reasons given by Justice Logan. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell. Associate: Dated: 22 December 2017 SCHEDULE OF PARTIES NSD 1137 of 2017 Respondents Fourth Respondent: THE INSPECTOR-GENERAL IN BANKRUPTCY Fifth Respondent: FEWIN PTY LIMITED Sixth Respondent: LJILJANA COSHOTT