Sterling Law gets costs order against solicitor

This week, Sterling Law obtained a costs order on the indemnity basis against a solicitor in the Federal Circuit and Family Court of Australia.

Sterling Law acted for the father in a parenting matter. The mother had prior to proceedings relocated from Katoomba NSW to Queensland without notice to our client. Our client the father sought a relocation order so that the child could have a meaningful relationship with both parents.

After the Federal Circuit Court trial, judgment was reserved. The mother then sought to re-open the evidence by filing an Application in a Case instead of complying with the Court’s Orders for the filing of written submissions. Solicitor for the mother said that the Application in a Case was filed on Senior Counsel’s advice.

The Application in a Case was dismissed at the first return date on 16 July 2021. The solicitor for the mother appeared without Counsel and sought an adjournment so that Senior Counsel could argue the Application. Sterling Law also appeared without Counsel and pointed out the ‘new’ evidence was not germane to the child’s best interests, nor was it likely to change the result. Furthermore, the mother was not a credible witness, and this had been demonstrated when she was extensively cross-examined at trial, so a hearing with further cross-examination would be required if the evidence was reopened. The ICL noted the ‘new’ evidence could have been adduced at the trial.

Judge Tonkin dismissed the Application in a Case later that day. Sterling Law then sought indemnity costs on behalf of the father against the mother, her solicitor and Counsel. We submitted that the Application in a Case was bound to fail, had caused undue delay and expense and had been filed for the ulterior purpose of delaying judgment so that the mother could remain in Queensland for longer. Furthermore, an offer of compromise was imprudently not accepted. None of those submissions were challenged on behalf of the mother or her lawyers.

In Suell & Suell (Re-Opening) [2009] FamCA 55, it was held that the factors relevant to the exercise of discretion in Applications to re-open the evidence are as follows:

• “Is the further evidence relevant to issues directly affecting V’s best interests and the ultimate decision about that?;
• Is the further evidence likely to affect, in a substantial way, the ultimate finding or findings that would otherwise have been available on the evidence at the hearing?;
• Could the further evidence have, with due diligence and preparation, been discovered so as to be led at the trial and, associated therewith has there been undue delay on the part of the applicant in bringing the application, particularly in light of s.69ZN(7);
• The nature and extent of any prejudice which is likely to be caused to the respondent in responding to any such evidence within a reasonable time;
• Is V likely to suffer detriment if the evidence is admitted and the trial re-opened, and, if so, the nature and extent of any such detriment;
• Recognition of the principle that it is in V’s best interests (and his parents) that parenting litigation be finalised as soon as possible;
• Recognition of the fact that proceedings for parenting orders are not in the nature of ordinary inter-party proceedings; they may involve a broader inquiry into the best interests of children than that which is circumscribed by the issues identified by the parties;
• The fact that the discretion to admit further evidence “… needs to be exercised with much care in parenting cases”. (See CDJ v VAJ @ Para [117].”

Rule 1.03 of the Federal Circuit Court Rules 2001 relevantly provided as follows:

“(1) The object of these Rules is to assist the just, efficient and economical resolution of proceedings.
(3) The Court will apply the Rules in accordance with their objects.
(4) To assist the Court, the parties must:
• avoid undue delay, expense and technicality
• consider options for primary dispute resolution as early as possible.”

In Aon Risk Services Australia Limited v Australian National University [2009] HCA 27, French CJ observed that:

“The Judicature Acts and associated Rules of Court are reflected in rr 501 and 502 of the ACT Rules. The ACT Rules, like their precursors, confer the discretion to give leave to amend and impose the duty to make amendments for the purpose of deciding the real issues in, and avoiding multiplicity of, proceedings. The discretion is exercised in the context of the common law adversarial system as qualified by changing practice. But that is not a system which today permits disregard of undue delay. Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials either because of non-compliance with court timetables or, as in this case, because of a late and deliberate tactical change by one party in the direction of its conduct of the litigation. These are matters which, even under the Australian versions of the Judicature Act system, unaffected by the sequelae of the civil procedure reforms of 1998 in the United Kingdom, are to be regarded as both relevant and mandatory considerations in the exercise of the discretion conferred by rules such as r 502.”

In Aon Risk Services Australia Limited v Australian National University, the majority said of rule 21 of the ACT Court Procedures Rules (the analogue to Rule 1.03 of the Federal Circuit Court Rules 2001):

“The objectives of case management are now expressly stated in r 21 of the Court Procedures Rules. It cannot be overlooked that later rules, such as r 21, are likely to have been written with the decision in J L Holdings in mind. The purposes stated in r 21 cannot be ignored. The Court Procedures Rules make plain that the Rules are to be applied having regard to the stated objectives of the timely disposal of the proceedings at an affordable cost. There can be no doubt about the importance of those matters in litigation in the courts of the Australian Capital Territory.”

Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 801 opined of the pre-eminent test for a discretionary award of indemnity costs:

“The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.”

His Honour cited authority while identifying special circumstances previously found by Courts to constitute facts which warrant the making of indemnity costs:

“evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra).”

Rule 21.07 of the Federal Circuit Court Rules 2001 provided that:

Order for costs against lawyer
(1) The Court or a Registrar may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
(a) to be incurred by a party or another person; or
(b) to be thrown away;
because of undue delay, negligence, improper conduct or other misconduct or default.
(2) A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
(a) to attend, or send another person to attend, the hearing; or
(b) to file, lodge or deliver a document as required; or
(c) to prepare any proper evidence or information; or
(d) to do any other act necessary for the hearing to proceed.

The English Court of Appeal in Ridehalgh v Horsefield [1994] Ch 205 said that:

“clients are free to reject advice and insist that cases be litigated. It is rarely if ever safe for a court to assume that a hopeless case is being litigated on the advice of the lawyers involved.”

As was noted in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, Goldberg J, after analysing the relevant authorities on the question at that time, said:

“This analysis of the cases makes it clear that the jurisdiction to order costs against an unsuccessful party’s solicitors is enlivened when they have unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success.”

It was noted in Ridehalgh v Horsefield [1994] Ch. 205 (26 January 1994) at 233 – 234 that:

“It is, however, one thing for a legal representative to present, on instructions, a case which he regards as bound to fail; it is quite another to lend his assistance to proceedings which are an abuse of the process of the court … … It is not entirely easy to distinguish by definition between the hopeless case and the case which amounts to an abuse of the process, but in practice it is not hard to say which is which and if there is doubt the legal representative is entitled to the benefit of it.”

The Australian Solicitors Conduct Rules relevantly provide that:

“3. A solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty.
5.1 A solicitor must not engage in conduct…which is likely to a material degree to:
be prejudicial to, or diminish the public confidence in, the administration of justice; or
bring the profession into disrepute
20.3 A solicitor whose client informs the solicitor that the client intends to disobey a court’s order must:
20.3.1 advise the client against that course and warn the client of its dangers;
20.3.2 not advise the client how to carry out or conceal that course

Judge Amanda Tonkin this week accepted our submissions that the Application in a Case was bound to fail and should not have been pursued. Judge Tonkin also accepted our submissions that the Application in a Case was contrary to modern principles of case management as the High Court found in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 at [24] and that offers of compromise were imprudently not accepted.

Judge Tonkin found that the mother’s solicitor had acted incompetently and recklessly, and ordered he pay our client’s costs on the indemnity basis within 14 days. However, the mother and Senior Counsel were lucky to escape having to pay indemnity costs themselves as Judge Tonkin held that the mother had been poorly advised by her lawyers and was not satisfied Senior Counsel had been briefed in the Application in a Case despite evidence that he was.

We are pleased to have achieved this great result for our client, who was fully compensated for the shabby way in which the other side had conducted themselves.

This case highlights the importance of lawyers ensuring they comply with their ethical obligations to act in accordance with the administration of justice. The solicitor in question, who we have not named because of section 121 of the Family Law Act, displayed a disregard of his and his client’s obligations to avoid undue delay and expense.

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