In Macteldir Pty Limited v Roskov  FCAFC 49, my old firm Middletons convinced a unanimous Full Federal Court to pronounce sternly that advocates’ immunity may not be circumvented by a client seeking to invoke the wasted costs jurisdiction of the Court against its own former lawyers, and to re-emphasise emphatically that the wasted costs jurisdiction is only to be exercised in the case of something akin to abuse of process, and certainly not merely negligent conduct.
The plaintiff sued its former solicitors and counsel, asking for an order that it did not have to pay its lawyers’ fees and that the lawyers pay the client some of the costs the client was ordered to pay the other side in the proceedings. In this post I suggest by way of additional note that the High Court has pronounced emphatically that lawyers are immune from suits which claim ‘wasted costs’, that is, a claim that the client incurred unnecessary expense by taking an unnecessary step, or that a costs order was made against the client in favour of the other side as a result of poor advocacy. Anyone have a contrary view?
The Court delivered a beautifully written joint judgment of their Honours Spender, Kiefel & Emmett JJ, sitting in NSW. If its author was Susan Kiefel, it augurs well for future judgments of the High Court. The facts — a royal mess about federal jurisdiction in relation to matters arising out of, but travelling further than the mere enforcement of, the settlement of a proceeding — are rendered lucidly. That result is aided by referring to the parties by description rather than by name, or as “plaintiff” or “respondent”, without a three letter acronym (‘TLA’) on the horizon. Perhaps its inspiration was a special tenderness of the judiciary for the Bar (with the result that the identity of the barrister is never revealed), or perhaps not. What is of interest to me is this passage hidden away in the judgment:
‘ However, the question before the present Full Court is not whether there was a failure on the part of the Barrister and Solicitor to fulfil or perform their instructions and retainer carefully and competently. The present proceeding is not a claim by the Client against the Barrister and the Solicitor for breach of a duty to give careful and competent advice in connection with the conduct of the Wrongdoers. Nor is it a claim for damages for breach of a term of the retainer by the Client of the Barrister and the Solicitor. If this proceeding were a claim for damages for breach of a duty to advise carefully and competently or for breach of a term of the retainer of the Barrister and Solicitor in the conduct of the proceeding, a question would arise as to whether advocate’s immunity could be called in aid as an answer to such a claim. Such immunity should not be circumvented by a claim under O 62 r 9. To succeed in a claim under O 62 r 9, much more must be established.’
Order 62 r 9 of the Federal Court Rules is reproduced below. It appears that the reasons of the majority in D’Orta-Ekenaike v Victoria Legal Aid were not cited. They say at  that advocates are immune from claims that by their conduct they negligently wasted costs ‘lest a dispute about wasted costs become the vehicle for a dispute about the outcome of the litigation in which it is said that the costs were wasted.’ One of the three species of cases analysed by the majority at  was the claim for wasted costs. They were very specific about what they meant, at :
‘A client may wish to say that the conduct of the advocate was a cause of the client incurring unnecessary expense. That may be because a costs order was made against the client or because unnecessary costs were incurred in taking a step in the litigation.’
I have never seen any discussion of this aspect of the decision, which seems to have been overlooked. Next time I have a wasted costs claim for a lawyer, I will be wheeling it out for sure. To my way of looking at things, the majority’s reasons unambiguously say neither solicitors nor barristers may be sued by their clients for wasted costs.
Order 62 r 9 says:
‘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:
(a) disallow the costs as between the legal practitioner and the legal practitioner’s client;
(b) if the legal practitioner is a barrister — disallow the costs as between the barrister and the barrister’s instructing solicitor;
(c) direct the legal practitioner to repay to the client, costs which the client has been ordered to pay to another party;
(d) direct the legal practitioner to indemnify any party other than the client against costs payable by the party indemnified.
(2) Without limiting subrule (1), a legal practitioner is taken to be responsible for a default under that subrule if a proceeding cannot conveniently proceed, or can proceed only with the incurring of extra costs or with inconvenience to the Court or another party to the proceeding, because of the failure of the legal practitioner:
(a) to attend before the Court in person or by proper representative; or
(b) to file any document that ought to have been filed; or
(c) to deliver for the use of the Court any document that ought to have been so delivered; or
(d) to be prepared with any proper evidence or account; or
(e) to comply with any provision of these Rules or any judgment or order or direction of the Court; or
(f) otherwise to proceed.
(3) Before making an order under subrule (1), the Court may refer the matter to a Registrar for inquiry and report.
(4) The Court may order that notice of any proceeding or order against a legal practitioner be given, as specified in the order, to:
(a) the legal practitioner’s client; or
(b) if the legal practitioner is a barrister — the barrister’s instructing solicitor.
(5) For the purpose of giving effect to a costs order, the Court may give ancillary directions, including a direction to a legal practitioner to provide to the Court or a party to the proceeding a bill of costs in assessable form.’
- Full Federal Court explains its Rules’ wasted costs jurisdiction
- A little case about costs against lawyers personally in NSW
- Federal Court’s scheme for costs against solicitors personally
- Applicant brings case beyond jurisdiction; respondent doesn’t take the point until the last minute; no one gets costs
- Limit on the unrecoverability of unusual expenses principle in Victoria