Federal Court’s scheme for costs against solicitors personally

In Tran v Minister for Immigration Multicultural and Indigenous Affairs (No. 2) [2006] FCA 199, Justice Weinberg ordered a solicitor to pay costs personally. Justice Weinberg said:

“I am in no doubt that the applicant’s solicitor had no idea what he was talking about when he foreshadowed with me, at a directions hearing … that the applicant would be challenging the constitutional validity of certain provisions of the Migration Act.”

His Honour had warned him that if it turned out to be without merit, personal costs liability might follow. When notice of a constitutional issue (“all but incoherent”) was given, the Minister retained the Australian Government Solicitor in place of Clayton Utz, occasioning costs thrown away. The way his Honour described the constitutional argument, which the solicitor struggled to articulate for only a brief moment, suggests that it was reminiscent of Denis Denuto’s “it’s the vibe” speech in The Castle.

Order 62 r 9(1)(c) of the Federal Court Rules, 1979 (Cth) provides:

9 Liability of legal practitioner

(1) Without limiting the Court’s discretion to award costs in a proceeding, if costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Court that a legal practitioner is responsible (whether personally or through a servant or agent), the Court may, after giving the legal practitioner a reasonable opportunity to be heard, do any of the following:

(c) direct the legal practitioner to repay to the client, costs which the client has been ordered to pay to another party”.

The Court has mainly used s. 43 of the Federal Court Act, 1976 as the vehicle for awarding costs against solicitors personally. That is the provision which gives the Court discretion in relation to costs. Levick v DCT (2000) 102 FCR 155; [2000] FCA 674 is the authority for the proposition that that provision gives the Court jurisdiction to make such an order. It is also authority for the proposition that before the jurisdiction should be exercised in allegedly hopeless cases, or parts of cases, there must be something akin to an abuse of process by the solicitor: “that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success.” Other authorities of a similar tenor include:

Justice Weinberg acknowledged a conflict between these restrictive authorities and the Queensland Court of Appeal’s decision in Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683; [2003] CA 157, where Davies JA (with whom Williams JA and Philippides J
agreed) rejected the proposition that it was not improper for a legal representative
to present a case which that legal representative knew, or ought to know, was
hopeless.

But Justice Weinberg held that there were no such restrictions on the specific power in the rules to order that the solicitor repay to his or her client costs the client has been ordered to pay the counterparty. He said at [15]:

“Order 62 r 9(1) seems to me not to be similarly constrained. The question whether costs have been unreasonably incurred because of the manner in which legal practitioner has conducted a case should not require consideration of whether this was done for an ulterior purpose. If a client instructs a legal representative to take points that are manifestly without merit, the legal representative has a duty to the court to refuse to act on those instructions. In that regard, there is a distinction between points that are barely arguable, but most likely to fail which can and sometimes must be taken, and points that are simply unarguable. If a point is plainly unarguable, it is improper to argue it. If a client insists upon it being argued, the legal representative should decline to do so and, if necessary, withdraw from the proceeding.”

In justifying the costs order, Justice Weinberg identified some facts he thought relevant and then said simply:

“I consider that it would be unfair to require the applicant to pay the additional costs incurred by reason of the introduction of an entirely hopeless legal point, and one that would have been beyond the applicant’s comprehension. It was her legal representative who pursued this point, even when he knew that he was in no position to say anything sensible in support of it.”

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