Cook v Pasminco Ltd (No 2)

In Cook v Pasminco Ltd (No 2), the respondents, Pasminco, sought orders for indemnity costs against the applicants’ solicitors, Coleman & Greig, in relation to a dismissed proceeding. The applicants had initiated a representative action against Pasminco for negligence, nuisance, and breaches of the Trade Practices Act 1974 (Cth), alleging health damage from noxious emissions from Pasminco’s plants. The Federal Court found the federal claims to be untenable and dismissed the proceeding as incompetent.

The legal issues centred on the circumstances under which a solicitor may be ordered to pay costs on an indemnity basis, and whether the solicitors acted recklessly by proceeding with the case despite the clear lack of merit in the federal claims. The Court noted that while the jurisdiction to order such costs is to be exercised sparingly, it was open to the primary Judge to do so in cases of serious dereliction of duty by the solicitor.

The Court held that the conduct of the solicitors warranted an order for indemnity costs. The Court inferred that the solicitors commenced the proceeding without proper consideration of the prospects of success for the federal claims, which had no chance of succeeding. This reckless approach, in the absence of any explanation or evidence to the contrary, led to the conclusion that the solicitors had acted in serious dereliction of their duty.

The Court ordered that Coleman & Greig pay Pasminco’s costs on an indemnity basis, subject to certain conditions, and also ordered that Coleman & Greig pay Pasminco’s costs of the motion on a party and party basis. Additionally, the Court restricted Pasminco's ability to tax the costs without leave and set a deadline for submissions on costs relating to another motion.