1. In the course of our reference we have had occasion to consider the recovery of interest on unpaid costs awarded to a party. This is a question affecting all types of proceedings including those for the recovery of debts. It is not a matter strictly within our terms of reference, but in this Appendix we note some problems that may be worthy of further consideration.
2. In the Supreme Court, interest is payable, subject to order of the court to the contrary, "from the date when the judgment or order takes effect"1. This provision is in contrast to the earlier provision, contained in the Common Law Procedure Act, 1899 whereby interest was made payable "from the time of entering up the judgment".2 It has been held,3 upon the proper interpretation of the Supreme Court Act 1970 and the Supreme Court Rules, 19704 that the date on which judgment is given or an order is made for the payment of costs, is the date on which entry of judgment is directed, but that the date upon which such judgment or order takes effect is the date of the certificate of taxation of the costs. The consequence is that interest on costs does not commence to run until the date of the certificate of taxation or the date on which the amount of costs is ascertained. This accords with the rule formerly adopted by the courts of equity,5 and in later times with customary usage of solicitors practising at common law. The rule in the courts of equity has been described as "a sensible view".6
3. A different conclusion has been reached in respect of a judgment for costs given in the Supreme Court of the Australian Capital Territory.7 That decision, however, turned on the ,interpretation of a section8 providing for judgments to carry interest "from the date as of which the judgment is entered". It was held as a matter of interpretation that in the ordinary course interest on costs should run from the date of the pronouncement of the judgment.
4. The relevant provision of the District Court Act, 1973 is in different terms, in that interest payable in respect of a judgment debt is "calculated as from the date when the judgment debt came into being or from such later date as the court in any particular case fixes".9 Neither the Act nor the rules expressly declare or define the time at which a judgment "comes into being”. We think that the expression is likely to be interpreted to mean the day on which a judgment is given or entered.10
5. Provision is made in each of the Acts regarding the Supreme Court and District Court to excuse the payment of interest on costs, subject to order of the court to the contrary, where the costs are paid within twenty-one days after ascertainment of the amount thereof by taxation or otherwise.11 In the case of the Supreme Court this provision is confined to proceedings for damages on a common law claim, while in the District Court it is applicable to proceedings on all claims. We shall not here consider the justification if any for the difference in treatment in the Supreme Court, but we do draw attention to it.
6. In the District Court, therefore, a question arises as to whether the provision saving interest or costs if paid within twenty-one days of ascertainment means, by implication that the date from which interest on costs commences to run is the date of ascertainment rather than the date on which judgment was given. Master Allen has indicated12 that he would not have been disposed to such view in relation to the similar provision13 inserted into the Common Law Procedure Act, 1899 by section 18 of the Law Reform (Miscellaneous Provisions) Act 1965. He did, however, observe that the practical effect of the new section was that it was generally assumed by practitioners that the position that interest ran from the certificate of taxation had been recognised by the legislature. This certainly was true where the costs were paid within twenty-one days of their ascertainment, but was not necessarily the case where they were not paid within such period. Accordingly, in the District Court where a party ordered to pay costs complies with that order within twenty-one days after ascertainment thereof, that party will not in the absence of order to the contrary, have to pay interest thereon. If, however, the costs are not paid within such period, then the question arises as to whether or not they should run from the date the judgment was given or entered, or from the date the amount is ascertained. Having regard to the wording of section 85 of the District Court Act, 1973 and to the history of similar provisions, we incline to the former view. If we are correct in this conclusion, then a difference exists between the Supreme Court and the District Court for which there is no apparent justification.
7. The Courts of Petty Sessions (Civil Claims) Act, 1970 follows yet another form of wording in that it provides for judgment debts to carry interest "from the time when the judgment is given or entered up".14 The position in these courts would therefore appear to be the same as that previously existing at common law, and as held to apply in the Supreme Court of the Australian Capital Territory. The Act does not contain any provision concerning the payment of interest when paid within a prescribed period. In practice, there should be no delay or difficulty in ascertaining costs in Courts of Petty Sessions, since they are fixed by the court at the time of judgment and do not depend on later taxation.15 Having regard to the special position in the Courts of Petty Sessions we do not see any occasion for difficulty or any need for reform in this area.
8. The competing policy considerations were identified in the recent judgment of Mr. Justice Kelly in Tarlinton v. Hall.16
There is much to be said for a rule that the party required to pay taxed costs should not be required to pay interest on those costs until he can calculate it. He cannot do this until the costs are taxed. It may be said that it rests in the hands of the successful party to tax his bill as soon as possible. It may be said too, that it is unjust, in one sense, to require a debtor to pay interest on an amount which he cannot be forced immediately to pay.
On the other hand, it seems unjust that the sum of money represented by the costs should be "fructifying in the wrong pocket” of the unsuccessful party until taxation. Taxation is normally a lengthy process requiring much care and detailed work. True it is that one is aware of some extremely efficient practices in solicitors' offices which minimize to the utmost the time taken to prepare a bill of costs for taxation. That said, it still remains a fact that some time must necessarily elapse before a bill of costs can be taxed even if it is prepared as quickly as possible.
9. We mention two further considerations. First, in some cases the successful party may not pay to his or her solicitors the whole or part of the costs and disbursements incurred, until well after judgment is given. In other cases, some of the costs eventually taxed might not have been incurred at the time of judgment. To the extent that interest is made payable on these costs and disbursements, there may be injustice in requiring the unsuccessful party to pay interest from the date of judgment on costs or disbursements not then actually incurred or paid out by the successful party. Secondly, if interest is payable from the date of judgment injustice may occur when the successful party is dilatory in taxing the costs or in attempting to reach agreement as to the amount payable.
10. In answer to the second point, it could be said that the unsuccessful party can help himself or herself by tendering an appropriate amount or following the procedures permitting the costs of the successful party to be certified.17 it might also be said in relation to both points in paragraph 9 that the party liable to pay the costs has had the use of the moneys in the meantime and the opportunity to earn interest to meet the future payment.
11. We turn to consider a possible injustice to the successful party if interest is payable only from the time the costs are ascertained. Where an unsuccessful party appeals against the judgment carrying with it the costs order, there is likely to be substantial delay in the finalisation of the proceedings and in the taxation or ascertainment of the costs. One such case has been drawn to our attention where, by reason of an appeal to the Privy Council, costs could not be taxed until almost two years after there had been a verdict for the defendant with costs. The consequence was that the successful defendant not only had to bear the difference between party and party and solicitor and client costs, but also lost the use of a very substantial sum of money paid out in costs for almost two years.
12. We do not make any recommendation in this report concerning the question of interest on costs, for it is a question extending beyond proceedings for debt recovery and hence is beyond the terms of our reference. We do, however, believe that important questions are raised for consideration which we have endeavoured to outline. In passing we note that ad hoc solutions to the problem can be supplied by the courts in exercising their statutory power in any case to declare the time from which interest should run on costs, and to specify the portions of the costs on which interest should run. As we have mentioned both the Supreme Court Act 1970 and the District Court Act, 1973 confer some measure of discretion in these respects, and even allow the provisions excusing the payment of interest where paid within twenty-one days of ascertainment to be overridden.18 Further, as Mr. Justice Kelly has suggested, cost orders can be framed, declaring that interest
... is not to be payable on any profit costs not actually incurred or disbursements not actually made until such time as they are respectively incurred or made.19
It may well be that the problems we have identified can be overcome by greater exercise of judicial discretion in framing costs orders to suit the needs of any given case, without any need for further legislative intervention.
FOOTNOTES
1. Supreme Court Act 1970, s.95(1).
2. Common Law Procedure Act 1899, s.143(1). It maybe noted that this expression has been held to mean the date of pronouncement of the judgment and not the time of the formal entry in the judgment roll: Erven Warnink BV v. J. Townend & Sons (Hull) Ltd. (No.2) [19821 3 All E. R. 312.
3. TA Field Pty Ltd. v. Frigmobile of Australia Pty. Ltd. ~19781 2 N.S.W.L.R. 488.
4. Supreme Court Rules, Pt 40 r.3.
5. Attorney- General v. Lord Carrington (1843) 6 Beav. 454, at p.460; 49 E.R. 901, atp.904; Kv. K[19771 2 W.L.R. 55. at p.60, per Lord Denning, M. R.
6. Ibid.; his Lordship also said, at p.61:
Interest should be payable whenever money is "wrongly withheld" from the one who is entitled to it: see Jefford v Gee [[197011 AII E.R. 202, at 1205,1206]; [19701 2Q.B. 130, at 140-146. When the sum is unascertained, the debtor cannot be expected to pay it until it is quantified. He cannot make a tender until he knows how much it is. He cannot be said to be "wrongfully with holding the money until it is fixed. So in all fairness interest should only run from the date of quantification
7. Tarlinton v. Hall (1981) 38 A.C.T.R. 1.
8. Australian Capital Territory Supreme Court Act 1933, s.54.
9. District Court Act 1973, s.85(2)(a).
10. Cf. District Court Rules, Pt 31 r.13A(2).
11. Supreme Court Act 1970, s.95(3); District Court Act- 1973, s.85(3).
12. TA Field Pty Ltd. v. Frigmobile of Australia Pty. Ltd. [197812 N.S.W.L.R- 488, at p.490.
13. Common Law Procedure Act 1899. s.143.
14. Courts of Petty Sessions (Civil Claims) Act 1970, s.39(1).
15. Courts of Petty Sessions (Civil Claims) Act 1970, ss.33-38.
16. (1981) 38 A.C.T.R. 1, at pp.7-8.
17. Supreme Court Rules, Pt 52 r.55; District Court Act 1973, s.85.
18. Tarlinton v. Hall (1981) 38 A.C.T.R. 1, at p.S.
19. Ibid., at p.9.
