Heartwood Architectural Timber & Joinery Pty Ltd v Redchip Lawyers

Heartwood Architectural Timber & Joinery Pty Ltd, the applicant, sought a review of a costs order made against it in relation to an ex parte application for a freezing order. Redchip Lawyers, the respondent, was the solicitor for the applicant in that proceeding. The applicant sought an order that the respondent pay the costs of and incidental to the application filed on 4 November 2008 in Supreme Court Proceeding No 7272/08 on an indemnity basis, and that the payment operate so as to discharge the liability of the applicants to pay the costs referred to in paragraph 2 of the order made by Applegarth J on 7 November 2008 in the same proceeding. The court had to decide whether the respondent's conduct amounted to serious dereliction of duty and whether it was appropriate to make a costs order against the respondent's firm.

The court found that the respondent's conduct amounted to serious dereliction of duty because it deliberately omitted from the draft order the undertaking as to security contained in the pro forma freezing order. The respondent did not disclose this omission to the court before the order was made, and counsel for the applicants erroneously informed the court that the draft order followed the form. The court found that the failure to comply with the duty of disclosure to the court on the ex parte application for a freezing order was a serious breach of the respondent's duty as a solicitor. The court also found that the power to make a supplemental order was appropriate in this case because the order was necessary to prevent an injustice resulting from the respondent's conduct.

The court made an order that the respondent pay the applicants' costs of and incidental to the application filed on 4 November 2008 in Supreme Court Proceeding No 7272/08 on an indemnity basis. The court also made an order that the payment operate so as to discharge the liability of the applicants to pay the costs referred to in paragraph 2 of the order made by Applegarth J on 7 November 2008 in the same proceeding. The court found that it was appropriate to make a costs order against the respondent's firm because the respondent's conduct amounted to serious dereliction of duty and because the applicants were unlikely to be able to pay the costs order.