New South Wales Court of Appeal CITATION : TIMMS & ORS. v. COMMONWEALTH BANK OF AUSTRALIA & ORS. [NO.3] [2004] NSWCA 25 HEARING DATE(S) : 09/02/2004 JUDGMENT DATE : 19 February 2004 JUDGMENT OF : Beazley JA at 1 DECISION : Motion dismissed with costs. CATCHWORDS : INTEREST on COSTS - Claim for interest on costs - Claim for interest not an independent cause of action - JUDGMENTS - ORDERS - Whether final judgment may be set aside - Application for interest must be made and determined before entry of judgment for costs. LEGISLATION CITED : Legal Profession Act 1987 Supreme Court Act 1970 Bailey v Marinoff (1971) 125 CLR 529 CASES CITED : Texas Co (Australasia) Ltd v Federal Commissioner of Taxation (1940) 63 CLR 382 DJL v Central Authority (2000) 201 CLR 226 Shaddock (L) & Associates Pty Limited [No. 2] (1982) 151 CLR 590 Commonwealth Bank of Australia (1st Claimant) PARTIES : Rosenfeld Kant & Co (2nd Claimant) Anastasia Timms (1st Opponent) Brian Timms (2nd Opponent) FILE NUMBER(S) : CA 40555/01 R.G. Forster SC (1st Claimant) COUNSEL : R. Dubler (2nd Claimant) M. Clarke (Opponents) L. E. Taylor (1st Claimant) SOLICITORS : Phillips Fox (2nd Claimant) Maurice Blackburn Cashman (Opponents) - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40555/01 BEAZLEY JA 19 February 2004 TIMMS & ORS. v. COMMONWEALTH BANK OF AUSTRALIA & ORS. [No. 3] Judgment 1 BEAZLEY JA: The claimants brought proceedings against the Commonwealth Bank (the Bank) alleging negligent misrepresentation by the Bank in relation to the financial viability of a business it was purchasing and in respect of which it borrowed substantial funds from the Bank. They also claimed that their accountants, Rosenfeld Kant & Co. (the accountants), gave them negligent advice relating to the purchase. The Bank cross-claimed against the claimants seeking repayment of the claimants' borrowed funds in respect of which there had been default. The matter was heard by Young CJ in Eq in 2001 who found against the claimants and entered a verdict on the Bank's cross-claim in the sum of $5.2 million. The Bank estimates that its debt, with interest, is now approximately $6.6 million. 2 The claimants successfully appealed against that verdict, judgment of the Court of Appeal being delivered on 23 September 2002. The Court of Appeal ordered a retrial and ordered the Bank and the accountants to pay the claimants' costs of the appeal. 3 Subsequent to the Court of Appeal's orders, the claimants had their costs of the appeal assessed in accordance with the provisions and procedures specified in Part 11 Division 6 of the Legal Profession Act 1987. On 19 November 2003, the Cost Assessor issued his Certificate as to Determination of Costs (the Costs Certificate): see s.208J(1). Costs were assessed in the sum of $126,911.78. 4 On 11 December 2003, the claimants filed the Costs Certificate in the Court in accordance with SCR Pt. 40 r.12. Pursuant to s.208J(3), the effect of filing the Costs Certificate was that the amount of costs thereby assessed became a judgment of the Court for that amount. 5 The claimants now, by Notice of Motion dated 20 January 2004, seek an order that the Bank and the accountants pay interest on the amount of assessed costs at Schedule J rates, as from the dates on which they paid those costs to their solicitors until 11 December 2003, being the date of entry of judgment for the costs. Schedule J specifies the interest rate payable under various provisions of the Supreme Court Rules, and would apply here if an order for interest was made: SCR Pt. 40 r.7(2). 6 The claimants' claim for interest is made under s.95(4) of the Supreme Court Act. That section provides: "…(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." The reference to the prescribed rate is a reference to Schedule J rates: see Pt. 40 r.7. 7 The claimants submitted that an order for interest on the costs ordered by the Supreme Court ought to be made. The costs were substantial and were paid by them over a 12 month period during the course of the appeal proceedings. They borrowed moneys in order to fund a substantial portion of those costs. A significant portion of the borrowed funds appear to have been borrowed through credit card facilities at high rates of interest. 8 Counsel for the claimants addressed only the discretionary considerations as to why an order ought to be made. There is, however, a preliminary question whether the claimants are entitled to the order sought or whether the right to claim interest has merged in the judgment. 9 As already indicated, the effect of filing the Costs Certificate was that the claimants obtained a final judgment in the amount of the assessed costs. A final judgment, regularly entered, conclusively determines the issues raised in the proceedings to which it relates. It cannot ordinarily be set aside except in accordance with powers or rights otherwise conferred by statute or rule of court or in other well recognised circumstances such as fraud: Halsbury's Laws of Australia: para. 325-9125. 10 The principle is well settled. In Bailey v Marinoff (1971) 125 CLR 529 Barwick CJ said 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." See also Texas Co (Australasia) Ltd. v Federal Commissioner of Taxation (1940) 63 CLR 382 at 457; DJL v. Central Authority (2000) 201 CLR 226 at 240-245. The principle is also subject to the operation of the slip rule: Shaddock (L) & Associates Pty. Limited [No. 2] (1982) 151 CLR 590 at 594-5. (The slip rule is itself encompassed in the Supreme Court Rules, Pt. 20 r.10. 11 A claim for interest under s.95(4) is part of the claim that a party has in relation to costs. It is not a separate or independent cause of action. If no application for interest is made and determined before entry of judgment for costs, the claim for interest merges with the judgment for costs. That is what has occurred in this case. The claimants obtained a final judgment for their assessed costs when they filed the Costs Certificate on 11 December 2003. 12 Part 40 r.9 governs the setting aside or varying of a judgment or orders of the Court. The circumstances in which a judgment that has been entered may be set aside are limited and none apply here. There was no application made under the slip rule nor do the circumstances, on the evidence before me, indicate that the rule applies. The claimants' claim under s.95(4) appears to have been made without an appreciation of the effect of the judgment entered on 11 December 2003. In those circumstances, the only course available to the Court is to dismiss the motion with costs. ********** Last Modified: 02/27/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.