Solicitors who are parties to litigation and don’t hire other solicitors to represent them are the only people who are generally entitled to claim legal costs from the losing party even though they don’t have to pay lawyers anything. Engaging in litigation involving themselves is therefore a profitable activity if they win. The principle dates back to London Scottish Benefit Society v Chorley (1884) 13 QBD 872. The Supreme Courts of the land are grumbling about the anamlous nature of the exception, but reluctantly applying it. The most recent case is Freehills, in the matter of New Tel Limited (in liq) (No 4) [2008] FCA 1085.
The leading Australian case is Guss v Veenhuizen (No 2) (1976) 136 CLR 47. The most recent High Court authority to touch on the question is Cachia v Hanes (1994) 179 CLR 403, though that was a case about a claim for costs of a self-represented consulting engineer who was successful in litigation, and the Court there doubted, in dicta, the cogency of the Guss Case‘s reasoning. A judge of the The Full Court of the Supreme Court of Western Australia refused to apply the exception in Dobree v Hoffman (1996) 18 WAR 36, but in the Freehills Case, McKerracher J of the Federal Court sitting in Perth decided to refer it directly to the Full Court of the Federal Court, without formally determining the case, commenting only that he would consider himself bound by Guss’s Case. Other cases to apply the exception include:
- Brott v Almatrah [1998] 2 VR 83 (Batt J);
- Atlas Corporation Pty Ltd v Kalyk [2001] NSWCA 10;
- A & D Douglas Pty Ltd v Lawyers Private Mortgages Pty Ltd [2006] FCA 690 at [10] per Dowsett J;
- Khera v Jones [2006] NSWCA 85 (Mason P and Ipp JA);
- McIlraith v Ilkin [2007] NSWSC 1052 (Brereton J);
- Winn v Garland Hawthorn Brahe (A Firm) (No. 1) [2007] VSC 360 (Kaye J); and
- Worchild v Petersen [2008] QCA 26.
