Full Federal Court explains its Rules’ wasted costs jurisdiction

In Macteldir Pty Limited v Roskov [2007] FCAFC 49, the subject of the last post but one, the Full Federal Court explained the ambit of Order 62 rule 9 of the Federal Court Rules (which is reproduced in the previous post):

The Relevant Principles
[56] The parties generally accepted as correct the statements of principle found in Levick v Commissioner of Taxation (2000) 102 FCR 155 at [43] and [44]. Thus, in a claim under O 62 r 9, it is necessary for a client to demonstrate a serious dereliction of duty by the legal practitioner or a failure on the part of the legal practitioner to fulfil a duty owed to the Court to aid in promoting, in the practitioner’s own sphere, the cause of justice. It will often be difficult for a court to know all of the details and circumstances of a legal practitioner’s instructions. Further, the Court must be concerned about the risk of a practice developing whereby legal practitioners endeavour to brow beat their opponents into aban-doning clients, or particular issues or arguments, for fear of a personal costs order being made.

[57] Nevertheless, it is equally important to uphold the right of the Court to order a legal practitioner to pay costs wasted by the practitioner’s unreasonable conduct of a case. What constitutes unreasonable conduct will depend upon the circumstances of the particular case. However, unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to an abuse of process. Using a proceeding for an ulterior purpose or conducting a proceeding without any, or any proper, consideration of the prospects of success in the proceeding would be sufficient to justify an order against a legal practitioner who was responsible for that conduct.

[73] 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 proceed-ing, 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.

[74] To succeed in a claim under O 62 r 9, the legal practitioner must be responsible for costs being incurred improperly or without reasonable cause or for costs being wasted by misconduct or default. That requires conduct much more serious than would give rise to a claim for damages. The question is whether the conduct of the Barrister and the Solicitor constitutes a serious dereliction, or failure to fulfil, their duty to the Court. Putting it another way, the question is whether they advised the adoption of a procedure without any proper consideration of the prospects of success of that procedure, such that their conduct can be characterised as being akin to an abuse of process.

[75] It is hardly possible to conclude that the Barrister and the Solicitor advised the procedure in question without any proper consideration of the prospects of success. It is clear that the Barrister and the Solicitor believed that the procedure that was adopted was open and was appropriate. Even if they were wrong in that belief, it was a genuinely held belief. In so far as the primary judge held that their belief was correct, it must be regarded as a reasonable belief.

[76] While the Barrister, and the Solicitor in so far as he adopted the Barrister’s advice, hardly served the Client well in the procedural advice they gave and the decisions they made in the performance of their retainer, it cannot be said that their actions constitute a serious dereliction of a duty owed to the Court to aid in promoting the cause of justice. There has been nothing akin to an abuse of process. There has been no suggestion that the Barrister and Solicitor were doing anything more than attempting to enforce the Client’s rights. The Barrister and Solicitor were not responsible for costs being incurred improperly or without reasonable cause or for costs being wasted by misconduct or default, within O 62 r 9.’

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