Supreme Court New South Wales Medium Neutral Citation: Aquaqueen International Pty Ltd v Gilles [2014] NSWSC 804 Hearing dates: 13 June 2014 Decision date: 13 June 2014 Jurisdiction: Common Law Before: Beech-Jones J Decision: The Court orders that: 1. The costs determination and certificates of the Review Panel dated 24 March 2013 be set aside. 2. The Plaintiffs' Amended Summons be otherwise dismissed. 3. The First and Second Defendants pay half of the Plaintiffs' costs of the proceedings. Catchwords: COSTS ASSESSMENT - Review Panel - error conceded - declaratory relief - judgment based on certificate - whether judgment unenforceable if assessment giving rise to certificate suspended. Legislation Cited: - Legal Profession Act 2004 (NSW), Pt 3.2, Div 11 Subdiv 6, s 367, s 368, s 375, s 378 Cases Cited: - Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 757 - Doyle v Chadwick [2011] NSWSC 895 - Doyle v Hall Chadwick [2012] NSWCA 175 - Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172 - Griffith v Australian Broadcasting Corporation [2013] NSWSC 750 Category: Principal judgment Parties: Aquaqueen International Pty Ltd (First Plaintiff) Shirley Penson (Second Plaintiff) Joseph John Gilles (First Defendant) Gregory George Eliades (Second Defendant) Francis A. Hutley (Third Defendant) John McIntyre (Fourth Defendant) Representation: Counsel: M. Castle (Plaintiffs) E.N. Gramelis (1st and 2nd Defendants) Submitting appearances (3rd and 4th Defendants) Solicitors: Plaintiffs (self represented) Giles Payne & Co (1st and 2nd Defendants) I.V. Knight, Crown Solicitor (3rd and 4th Defendants - submitting appearances filed 27 June 2013) File Number(s): 2013/110893 EX TEMPORE Judgment 1The second plaintiff in these proceedings, Shirley Penson, is a director of the first plaintiff, Aquaqueen International Pty Ltd ("Aquaqueen"). 2In 2009 Aquaqueen retained the first and second defendants, being the partners of the firm Giles Payne & Co ("Giles Payne"), to act for it in a lease dispute that became litigious. There is a controversy as to whether Ms Penson also retained Giles Payne, or at least whether she became liable to pay their fees. 3In circumstances that I will explain, Giles Payne applied to have their costs assessed pursuant to the machinery provided for in Div 11 of Pt 3.2 of the Legal Profession Act 2004 (NSW) (the "LPA 2004").This ultimately resulted in an assessment by a Review Panel. The third and fourth defendants constituted that panel. They have filed submitting appearances in these proceedings. 4The plaintiffs filed a summons and then an amended summons seeking to invoke the supervisory jurisdiction of this Court to seek an order in the nature of certiorari quashing the decision of the Review Panel, as well as various forms of declaratory relief. 5One significant problem with that course is that there is already an established regime for appeals to the District Court on questions of law and, with leave, on a wider basis in respect of costs assessments and decisions of Review Panels provided for in Subdiv 6 of Div 11 of the LPA 2004. However, in the end it was not necessary to consider whether to refuse any relief on discretionary grounds by reason of the existence of that appeal regime. Giles Payne consented to the granting of relief in the nature of certiorari. Otherwise, insofar as certain forms of declaratory relief were sought, there is a significant question as to whether any relief to any possible like effect could be given by the District Court. Further, as I will explain, there was ultimately not much difference between the parties as to the underlying dispute said to warrant the declarations. Background 6To explain the issue it is first necessary to set out some events concerning the costs assessment. In 2011 Giles Payne applied for a costs assessment. On 15 March 2012 the costs assessor provided to the parties a certificate of determination together with a statement of reasons supporting the determination. The certificate recorded that the assessor had determined that a fair and reasonable amount of costs to be paid to the costs applicant, namely Giles Payne, was $57,190.62. The respondents to the assessment were Ms Penson and Aquaqueen. The certificate also stated that they were to pay the costs applicant the sum of $47,205.42, which was calculated having regard to certain adjustments. 7On 28 March 2012 Giles Payne filed an application in the Local Court to have the certificate of the assessor registered as a judgment. The next day they received a notification from Aquaqueen that it would be applying to review the assessor's determination. On 23 April 2012 the Local Court entered a judgment in favour of Giles Payne against Aquaqueen and Ms Penson. 8On 3 May 2012 an application for review of the costs assessment was filed, although it was out of time. The only named applicant for review was apparently Aquaqueen. There is a controversy as to Ms Penson's status in relation to that review, although it is not necessary for me to resolve that issue. 9Ultimately, at some time in July 2012 an extension of time to file the application for review was granted. Around this time the parties consented to a stay of the Local Court judgment and the Manager, Costs Assessment, notified the parties of the persons constituting the Review Panel. It seems that Ms Penson had a concern about one of those persons being involved in the assessment, apparently based on them having some connection to either Giles Payne or the subject matter of the proceedings. In any event, on 31 October 2012 the Manager, Costs Assessment advised that the Panel had been reconstituted by the third and fourth defendants. 10On or about 24 March 2013 the Review Panel issued two certificates. In one of those certificates they recorded that they had set aside the certificate of the determination of the costs assessor and had instead determined that a fair and reasonable amount of costs was $41,505.77. There seems to be an error in that certificate in that it records that amount was to be paid to the "review applicant". However, the review applicant was Aquaqueen, whereas of course it was Giles Payne who were seeking payment. The Review Panel also issued a certificate for the costs of the costs assessment which were said to be paid by the review applicant in the amount of $3,993.87. The Review Panel provided a statement of reasons. The Review Panel's Determination 11I described some aspects of the statutory scheme of costs assessments in Griffith v Australian Broadcasting Corporation [2013] NSWSC 750 at [16]ff, and Bobb v Wombat Securities Pty Ltd (No 2) [2013] NSWSC 757 at [10]ff. I will not repeat those descriptions. 12As noted, one of the plaintiffs' claims for relief in this proceedings was for an order in the nature of certiorari setting aside the determination of the Review Panel. Although not specifically sought, I assume that application for relief extends to the certificate setting out the determination of the Review Panel (see LPA 2004 s 368 (1)). Although the relevant order is consented to, for the benefit of any Review Panel that needs to reconsider the matter it is appropriate to identify what the conceded error was. 13The parties were in agreement that the evidence established that two boxes of documents said to constitute at least part of Giles Payne's file were provided to the costs assessor but were not provided to the members of the Review Panel who ultimately determined the review, i.e. the third and fourth defendants. 14Section 375 (3) of the LPA 2004 provides: "(3) However, the assessment is to be conducted on the evidence that was received by the costs assessor who made the determination that is the subject of the assessment and, unless the panel determines otherwise, the panel is not: (a) to receive submissions from the parties to the assessment, or (b) to receive any fresh evidence or evidence in addition to or in substitution for the evidence received by the costs assessor." (emphasis added) 15The plaintiffs' contention was that the circumstance that material constituting at least part of Giles Payne's file was not provided to the Review Panel had the consequence that the Review Panel could not have performed its function of reviewing the costs assessor's determination, and in particular it could not have made its assessment "on the evidence that was received by the costs assessor". 16The fact that the Court will be granting relief on the basis of the concession by Giles Payne should not be taken as a final determination on the merits of the plaintiffs' contention. It suffices for me to state that the contention, that either s 375(3) founds an obligation of the kind that is assumed by the plaintiffs' argument or that it is otherwise implicit in Subdiv 5 of Div 11 that a Review Panel must have the material provided to the assessor, appears to at least have some strength. 17Otherwise I note that there was the error that I have described in the Review Panel's certificate. It is not clear whether that was subsequently corrected by the Review Panel. In any event, I will make an order setting aside the Review Panel's certificates and determination. Declaratory relief 18Counsel for the plaintiffs, Ms Castle, also sought two declarations on behalf of her clients. Ms Castle was only retained very late in the proceedings. Having regard to what transpired in relation to the determination of the Review Panel, this meant that ultimately the form of declaratory relief that she sought was different to that which was sought in the amended summons. 19Prayers 1 and 2 of the amended summons sought declarations concerning the effect of the costs assessor's certificate during the period from 3 May 2012 to 3 June 2013, and a declaration that the judgment that was taken out on the strength of the costs assessor's certificate had "no effect as a judgment" and was unenforceable. 20The ultimate form of declaratory relief sought by Ms Castle did not concern historical events but instead was directed to the future. The first declaration Ms Castle sought was that the operation of the costs assessor's assessment and certificate be declared to be suspended for the duration of the review process. The second declaration sought was to the effect that the Local Court judgment is "unenforceable". 21To address this it is necessary to say something about the enforcement mechanisms in respect of costs assessments made under Div 11. At the conclusion of a costs assessment a costs assessor is "... to determine an application for a costs assessment relating to a bill by confirming the bill, or if the assessor is satisfied that the disputed costs are unfair or unreasonable, by substituting for the amount of the costs an amount that, in the assessor's opinion, is a fair and reasonable amount," (s 367(1)). Having made this "determination" the costs assessor is then required to "issue a certificate that sets out the determination" (s 368 (1)). 22Sections 368(4) and (5) provide: "(4) In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction. (5) In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed." 23Section 369 deals with the costs of the costs assessment. It is unnecessary to describe its operation in detail. For these purposes, its relevant provisions are not different to s 368. 24Section 373 enables a party to a costs assessment who is dissatisfied with the determination of a costs assessor to apply within thirty days after the certificate has been forwarded to the parties to the "Manager, Costs Assessment" for a review of the determination. The "Manager, Costs Assessment" may extend that time. 25Section 373(5) provides that a party who is applying for such review must ensure that notice of the application is given to the other parties to the assessment "not less than 7 days before the application is made or as prescribed by the regulations". 26Section 374(1)(a) enables the Manager Costs Assessment to refer an application "duly made under section 373" to refer the application to a "panel", being a Review Panel. The reference to an application "duly made under section 373" includes the circumstance in which the "Manager, Costs Assessment" allows a party to apply at a time beyond the thirty day time period. That power was exercised in this case. 27Sections 377 and 378 relevantly provide: "377 Effect of review on costs assessor's determination (1) If the Manager, Costs Assessment refers a determination of a costs assessor to a panel for review under this Subdivision, the operation of that determination is suspended. (2) The panel may end such a suspension: (a) if it affirms the determination of the costs assessor, or (b) in such other circumstances as it considers appropriate. 378 Certificate as to determination of panel (1) On making a determination in relation to an application for review of a costs assessment under this Subdivision, a panel is to issue each party and the Manager, Costs Assessment with a certificate that sets out the determination. (2) However, any such certificate may not set out the costs of the review within the meaning of section 379. (3) If the panel sets aside the determination of the costs assessor, the following provisions apply: (a) if the amount of costs has already been paid, the amount (if any) by which the amount paid exceeds the amount specified in the determination of the panel may be recovered as a debt in a court of competent jurisdiction, (b) if the amount of the costs has not been paid, a certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed, (c) if the costs assessor issued a certificate in relation to his or her determination under section 368 (Certificate as to determination) or 369 (Recovery of costs of costs assessment): (i) the certificate ceases to have effect, and (ii) any judgment that is taken to have been effected in relation to that certificate also ceases to have effect, and (iii) any enforcement action taken in respect of that judgment is to be reversed. ..." 28Thus the scheme of these provisions is that a certificate setting out a determination following a costs estimate can be filed with a court of competent jurisdiction and, on filing, is "taken to be a judgment" of that court. If an application for review is filed and referred, then the "determination" that underlies that certificate is suspended by operation of s 377(1) subject to the powers of the Review Panel to lift that suspension under s 377(2). If the outcome of the review is that the Review Panel sets aside the determination of the costs assessor, then the certificate issued under s 368(1) ceases to have effect (s 378(3)(c)(i)) and the judgment that is "taken to have been effected in relation to that certificate" also ceases to have effect (s 378(c)(ii)). 29Implicit in s 378(c)(ii) is that if the Panel does not set aside the determination of the costs assessor then, in accordance with s 377(2)(a), the decision of the Panel thereby ends the suspension of the determination. In that case no action need be taken in respect of any judgment that has been obtained on the strength of the costs assessor's certificate that gave effect to that determination. 30In Frumar v Owners of Strata Plan 36957 [2010] NSWCA 172 at [8], Giles JA noted that judgments that are obtained following the filing of a certificate pursuant to s 368(5) have their own distinct nature and "take their force from the statute and are not judgments of the relevant Court". However, the balance of Giles JA's judgment from [9]ff also suggest that if a Court was to interfere with the assessment and the certificate that recorded the assessment, that would not of itself automatically invalidate any judgment obtained on the basis of such certificate. If it were otherwise, s 378(3)(c)(iii) would be irrelevant. 31It is not necessary to consider that issue any further because this case is concerned with the effect of the suspension of a determination rather than the consequences of setting one aside. In my view, it is clear that the mere suspension of a determination does not automatically invalidate a judgment of a court that has been obtained by the registration of a certificate that gave effect to that determination. Moreover, I think it is clear that the effect of suspending a determination does not in and of itself automatically render any such judgment unenforceable (Doyle v Chadwick [2011] NSWSC 895 at [39] per Harrison AsJ, and see Doyle v Hall Chadwick [2012] NSWCA 175). The scheme of Div 11 recognises a distinction between "determinations", "certificates" and the effect of s 368(5) upon the registration of a certificate. That said, in cases where a costs assessment is suspended under s 377(1), in my view it would have to automatically follow that the relevant court, which in this case is the Local Court, would stay any enforcement action based upon a judgment that gave effect to a certificate that reflected the suspended assessment. 32If the review process leads to the costs assessment being affirmed, then it is to be expected that any stay that may have been granted by a court would also be lifted. If the review process led to the Review Panel setting aside the determination of a costs assessor, then by operation of s 378(c)(ii), the relevant judgment "cease[s] to have effect" and thus loses any force. 33In this case, there was, at some point in the past, a dispute as to whether there was something per se wrong in Giles Payne seeking a judgment from the Local Court when they had notice of Aquaqueen's intention to seek review of the costs assessment. Ultimately I do not consider that anything turns on this because, as events transpired, a judgment was not entered by the Local Court until a period well after the thirty day time period for seeking review from the costs assessment had expired, and even at that point, Aquaqueen had not yet filed for an extension of time to seek review. 34There was also a disagreement between the parties as to from what date the suspension effected by s 377(1) came into operation. Four possibilities were raised, namely, the date that the Manager first referred the review application to a Review Panel, the date that the Manager first referred the application for review to the Review Panel that ultimately determined the review application, or a retrospective date being either the date when review was sought or the date of the costs assessment. 35However, that disagreement is no more than that. It has passed into history because there is no doubt that a suspension came into force some time in late 2012. None of the parties were able to indicate to the Court any matter of legal significance attaching to whether it came into force at an earlier time. 36There is also no doubt that the suspension effected by s 377(1) will now continue in light of the quashing of the Review Panel's determination, subject to any lifting or interference with that suspension by the Review Panel acting under s 377(2). Otherwise, I note that, consistent with the reasons I have already given, it is to be expected that if the parties cannot reach agreement, then the Local Court should stay enforcement of the judgment that was entered on 23 April 2012 for at least the period the costs assessor's determination is suspended. 37All that being said, I do not propose to make declaration 1 as contended for by Ms Castle. The difficulty with a declaration that refers to a suspension of the determination for the duration of the review process, is that it has the potential to cut across the Review Panel's powers under s 377(2) Otherwise, in circumstances where there is in fact no dispute between the parties as to whether the costs assessor's determination is now currently suspended, I cannot see the utility in making any declaration which simply reflects the uncontroversial application of s 377. 38In relation to the second declaration, it follows from the reasons that I have already given that I will decline to make that as well. At present, the judgment that was entered in the Local Court is not enforceable but that is only because of the stay that had been previously granted having been extended. Theoretically, upon the expiry of the agreed period of that stay, that judgment will, in my view, be enforceable notwithstanding the operation of s 377(1). However, it also follows from what I have said earlier, that I cannot presently envisage any circumstance in which the Local Court could, if the parties do not agree, do anything other than continue to stay its enforcement having regard to the terms of s 377(1), and given the fact that the judgment only takes its force from a certificate which gives effect to a determination whose operation is suspended. 39Accordingly, the Court orders that: (1)The costs determination and certificates of the Review Panel dated 24 March 2013 be set aside. (2)The Plaintiffs' Amended Summons be otherwise dismissed. [Counsel addressed on costs.] 40Following the judgment I have just given, counsel for the plaintiffs, Ms Castle, sought an order that the first and second defendants pay her clients' costs of the proceedings. It was submitted that the concession that an order in the nature of certiorari should be granted quashing the Review Panel's decision represented success for the plaintiffs and that was a matter they had been agitating for some period. 41Counsel for the defendants, Mr Gramelis, made a number of points in response. First he noted that in respect of the matters that were debated today, his clients were largely successful. Second, he submitted that throughout his clients have been placed in something of a difficult position in responding to the plaintiffs' case, especially having regard to the fact that the plaintiffs were unrepresented for a significant period. He submitted that they were faced with the forensic difficulty that, if the Review Panel's determination was upheld, then by the operation of s 378(3)(c)(ii) the Local Court judgment automatically ceased to have effect, but if the Review Panel's determination was not upheld, then that judgment survived. Thus he submitted that his clients were faced with a choice of taking inconsistent positions in that they could not both uphold the Review Panel's determination and seek to maintain the Local Court judgment. 42In reply, Ms Castle also contended that the first and second defendants were in part the authors of their own misfortune because they had the opportunity to provide the boxes of material to the Review Panel that I referred to earlier, but they did not. For my part, I do not propose to pay any regard to that circumstance. I think the question of who pays the costs requires me to consider the conduct of the parties in the proceedings in this Court rather than the events or circumstances that gave rise to the reviewable error. 43I cannot really see the first and second defendants truly faced the forensic difficulty that Mr Gramelis suggested. The true position was that from a point in the litigation they were cognisant that at least one point raised by the plaintiffs was there had been a jurisdictional error in that the Review Panel had not been able to review the material that was before the costs assessor. They had sufficient time to consider that ground on its merits. 44It is quite common in judicial review proceedings for the defendant, who is not the decision-maker, to find themselves in a difficult position because they have to deal with an allegation of error by the decision-maker which is not of their own making. However at some point during the course of litigation they have to make a forensic choice to either stand their ground and defend the decision-maker's approach or abandon it. I think that is the position in this case. 45There are, however, two factors that I consider warrant a reduction in the costs payable to the plaintiff. The first is the matter noted by Mr Gramelis that some of the debate today was, by my judgment, resolved adversely to the plaintiffs. The second and more significant matter is that it is apparent from the material on the file that, as a result of the plaintiffs being unrepresented, they prepared very large affidavits traversing the merits of the dispute between themselves and Giles Payne. This necessitated Giles Payne incurring a significant amount of time and costs in responding, even though the material was clearly irrelevant to judicial review proceedings. 46I considered attempting to apply these discounts by carving out from a costs order in favour of the plaintiffs such costs as were spent on these affidavits. However, it is apparent to me that the more vague any form of costs order is drafted, the greater potential that the dispute between the parties about costs assessments will be prolonged. 47Instead, and at the risk of it being a rough approximation, I will do my best to apply a mathematical discount to the costs otherwise payable to the plaintiffs. Accordingly, I order that the first and second defendants pay half of the plaintiffs' costs of the proceedings. I so order. ********** 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. Decision last updated: 17 June 2014