Russell Cocks, a man with a keen interest in legal ethics, and a penchant for cartoon ties, wrote an article in the Law Institute’s Litigation Section Newsletter on costs orders against solicitors in Victoria. It is always difficult to maintain an understanding in this area because the cases seem inconsistent, and are all based on different legislative regimes which themselves keep changing. So an up to the minute analysis is a handy thing.
Cocks makes the following points:
- there is a wide divergence between NSW and Victoria in relation to the statutory provisions;
- NSW’s are in (i) Part 3.2 of Division 10 of the Legal Profession Act, 2004 (NSW) (see below), and are discussed by Bill Pincus and Linda Haller in “Wasted Costs Orders Against Lawyers In Australia” (2005) 79 ALJ 497 and in Lemoto v Able Technical Pty Ltd (2005) NSWCA 153 and (ii) in s. 99 Civil Procedure Act, 2005 (NSW);
- Victoria’s are in r. 63.23 of the Supreme Court Rules and have changed in 2000 such that authorities based on the old rules need to be read with care;
- the old Supreme Court Rules, 1996 in Victoria spoke of “undue delay or negligence or by any other misconduct or default”;
- since then, the Rules have spoken of a liability for costs caused “by failure to act with reasonable competence and expedition”;
- s. 172 of the Legal Practice Act, 1996 said “Nothing in this Part affects or takes away from the inherent power of the Supreme Court to discipline legal practitioners”;
- whereas s. 4.4.39 of the Legal Profession Act, 2004 says “The inherent jurisdiction and powers of the Supreme Court with respect to the control and discipline of local lawyers are not affected by anything in this Part”.
Cocks points out that conduct such as that in UTSA Pty Ltd v Ultra Tune Australia Pty Ltd (2004) VSC 1005 and Flower & Hart v White Industries Pty Ltd (1999) FCA 773 — the deliberate and positive conduct of making allegations of fraud and similar conduct without an adequate factual foundation — might not fit within the language of the post-2000 rules, which deal only with failures to act.
He also points out that the excision of “misconduct” from the new rule may mean that the proposition in Etna v Arif (1999) VSCA 99 that only gross and not simple negligence will enliven the jurisdiciton might no longer hold true, a proposition which apparently seems to have been accepted in passing by Ashley J in Guss v Geelong Building Society (2001) VSC 288 at [13].
Finally, he ponders whether the introduction of the words “control and” before “discipline” in s. 4.4.39 when compared with the old provision under the Legal Practice Act, 1966 preserving the Supreme Court’s inherent jurisdiction might provide another reason for the Court to move beyond the traditional sphere of discipline, gross negligence, towards simple negligence.
The NSW provisions say, in part:
“345 Law practice not to act unless there are reasonable prospects of success
(1) A law practice must not provide legal services on a claim or defence of a claim for damages unless a legal practitioner associate responsible for the provision of the services concerned reasonably believes on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.
(2) A fact is provable only if the associate reasonably believes that the material then available to him or her provides a proper basis for alleging that fact.
(3) This Division applies despite any obligation that a law practice or a legal practitioner associate of the practice may have to act in accordance with the instructions or wishes of the client.
(4) A claim has reasonable prospects of success if there are reasonable prospects of damages being recovered on the claim. A defence has reasonable prospects of success if there are reasonable prospects of the defence defeating the claim or leading to a reduction in the damages recovered on the claim.
(5) Provision of legal services in contravention of this section constitutes for the purposes of this Division the provision of legal services without reasonable prospects of success.
…
347 Restrictions on commencing proceedings without reasonable prospects of success
(1) The provision of legal services by a law practice without reasonable prospects of success does not constitute an offence but is capable of being unsatisfactory professional conduct or professional misconduct by a legal practitioner associate of the practice who is responsible for the provision of the service or by a principal of the practice.
(2) A law practice cannot file court documentation on a claim or defence of a claim for damages unless a principal of the practice, or a legal practitioner associate responsible for the provision of the legal service concerned, certifies that there are reasonable grounds for believing on the basis of provable facts and a reasonably arguable view of the law that the claim or the defence (as appropriate) has reasonable prospects of success.
(3) Court documentation on a claim or defence of a claim for damages is not to be accepted for lodgment unless accompanied by the certification required by this section. Rules of court may make provision for or with respect to the form of that certification.
(4) In this section:
“court documentation” means:(a) an originating process (including for example, a statement of claim, summons or cross-claim), defence or further pleading, or
(b) an amended originating process, defence or further pleading, or
(c) a document amending an originating process, defence or further pleading, or
(d) any other document of a kind prescribed by the regulations.
“cross-claim” includes counter-claim and cross-action.
348 Costs order against law practice acting without reasonable prospects of success
(1) If it appears to a court in which proceedings are taken on a claim for damages that a law practice has provided legal services to a party without reasonable prospects of success, the court may of its own motion or on the application of any party to the proceedings make either or both of the following orders in respect of the practice or of a legal practitioner associate of the practice responsible for providing the services:
(a) an order directing the practice or associate to repay to the party to whom the services were provided the whole or any part of the costs that the party has been ordered to pay to any other party,
(b) an order directing the practice or associate to indemnify any party other than the party to whom the services were provided against the whole or any part of the costs payable by the party indemnified.
(2) The Supreme Court may on the application of any party to proceedings on a claim for damages make any order that the court in which proceedings on the claim are taken could make under this section.
(3) An application for an order under this section cannot be made after a final determination has been made under this Part by a costs assessor of the costs payable as a result of an order made by the court in which the proceedings on the claim concerned were taken.
(4) A law practice or legal practitioner associate of the practice is not entitled to demand, recover or accept from a client any part of the amount for which the practice or associate is directed to indemnify a party pursuant to an order under this section.
349 Onus of showing facts provided reasonable prospects of success
(1) If the court (the “trial court”) hearing proceedings on a claim for damages finds that the facts established by the evidence before the court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Division that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.
(2) If the Supreme Court (when the Supreme Court is not the trial court) is satisfied, either as a result of a finding of the trial court or otherwise on the basis of the judgment of the trial court, that the facts established by the evidence before the trial court do not form a basis for a reasonable belief that the claim or the defence had reasonable prospects of success, there is a presumption for the purposes of this Division that legal services provided on the claim or the defence (as appropriate) were provided without reasonable prospects of success.
(3) A presumption arising under this section is rebuttable and a person seeking to rebut it bears the onus of establishing that at the time legal services were provided there were provable facts (as provided by section 345 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success.
(4) A law practice or legal practitioner associate of the practice may, for the purpose of establishing that at the time legal services were provided there were provable facts (as provided by section 345 (Law practice not to act unless there are reasonable prospects of success)) that provided a basis for a reasonable belief that the claim or the defence on which they were provided had reasonable prospects of success, produce information or a document despite any duty of confidentiality in respect of a communication between the law practice or a legal practitioner associate of the practice and a client, but only if:
(a) the client is the client to whom the legal services were provided or consents to its disclosure, or
(b) the court is satisfied that it is necessary for the law practice or associate to do so in order to rebut a presumption arising under this section.”
