Fowler v Toro Constructions Pty Ltd

The appeal concerned an application by Toro Constructions Pty Ltd (Toro) in the District Court for an order that the former solicitors for Brian Fox pay Toro's costs of certain proceedings on an indemnity basis. The primary dispute revolved around whether the solicitors had acted without reasonable prospects of success in joining Toro as a party to the original proceedings.

The Court of Appeal was required to determine whether the District Court had erred in ordering the solicitors to pay Toro's costs on an indemnity basis. This involved considering the proper interpretation of sections 345 and 348 of the *Legal Profession Act 2004* (NSW), specifically the meaning of "without reasonable prospects of success" and whether the material available at the time supported the joinder of Toro as a party. The court also had to assess whether the solicitors' conduct in investigating Toro's involvement was reasonable in the circumstances.

The Court of Appeal found that the District Court had erred in its assessment. It reasoned that the solicitors had acted reasonably in investigating Toro's potential involvement, given the uncertainty surrounding the party's role in the litigation. The court emphasised that the threshold for ordering costs against a legal practitioner personally, particularly on an indemnity basis, is high and requires a clear demonstration that the proceedings were brought or continued without reasonable prospects of success. The investigations undertaken by the solicitors were considered a necessary step to ascertain Toro's involvement, rather than an action taken without a proper basis.

Consequently, the Court of Appeal granted leave to appeal, set aside the District Court's orders requiring the solicitors to pay Toro's costs, and dismissed Toro's motion for those costs. The court ordered Toro to pay the costs of its unsuccessful motion in the District Court and the costs of the application and appeal in the Court of Appeal.