In the matter of Graham Ross Bendeich

[1994] FCA 890

IN THE MATTER 0F: GRAHAM ROSS BENDEICH
No. ART1 of 1992
FED No. 890/94
Number of pages - 19
Costs
(1994) 126 ALR 643
(1994) 53 FCR 422

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
DRUMMOND J

CATCHWORDS

Costs - order that solicitor pay difference between party and party costs recoverable by opposite party under costs order against solicitor's client and opposite party's solicitor and client costs on principles applicable.

Bankruptcy Act 1966 - s 32
Bankruptcy Rules - r 146
Federal Court of Australia Act 1976 - s 43
Federal Court Rules - O 62 r 9
English Rules of Court - O LXV s 11

Bent v Gough (1992) 36 FCR 204 Applied
Caboolture Park Shopping Centre Pty. Ltd. (in liquidation) v White Industries (Qld.) Pty. Ltd. (1993) 45 FCR 224 Applied
Felix v General Dental Council (1960) AC 704 Referred to
Myers v Elman (1940) AC 282 Followed
Orchard v South Eastern Electricity Board (1987) 1 QB 565 Referred to
Re Garofano; Ex parte American Express International Inc. (1990) 26 FCR 592 Referred to
Ex parte Meehan; Re Medical Practitioners Act (1965) NSWR 30 Referred to

HEARING

BRISBANE, 13 December 1993
#DATE 23:11:1994

Counsel for the Objectors: D. A. Savage

Solicitors for the objectors: Lynch and Co.

Counsel for the respondent: S.S.W. Couper, QC

Solicitors for the respondent: Barker Gosling

ORDER

1. The respondent Mr. Hewlett pay to the objectors the difference between their party and party costs of their application filed 28 October, 1992 and heard on 6 November, 1992 recoverable by them from Mr. Bendeich under the order of 6 November, 1992 and the costs they have reasonably incurred to their own solicitors in connection with their application and its hearing. 2. The respondent Mr. Hewlett pay to the objectors the difference between their party and party costs of the application filed on behalf of Mr. Bendeich on 26 November, 1992 recoverable by them from Mr. Bendeich under the order of 1 December, 1992 and the costs they have reasonably incurred to their own solicitors in connection with these applications up to but not including the hearing of that application on 1 December, 1992. 3. Save as aforesaid, the objectors' application is dismissed.
NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

DRUMMOND J In January 1992, Mr. Bendeich applied for registration as a Trustee in Bankruptcy. This provoked objection by Braegrove Pty. Ltd. and its principal, Mr. Gray. Extensive interlocutory litigation between the objectors and Mr. Bendeich followed.The present application is brought by the objectors against Mr. Bendeich's former solicitor, Mr. Hewlett, seeking orders that Mr. Hewlett in effect pay the difference between their party and party costs of five interlocutory applications which Mr. Bendeich was ordered to pay to them and the costs they have incurred to their own solicitors in respect of those same proceedings. The evidence before me indicates that this gap is substantial in amount. The objectors also seek orders that Mr. Hewlett pay their costs on an indemnity basis of their unsuccessful application for an order that Mr. Bendeich answer certain interrogatories and that he pay their costs with respect to a summons they issued in the proceedings requiring a third party, Messrs. Feez Ruthning, to produce certain documents to the Court.

1. Non-compliance by Mr. Bendeich with a self-executing order made by a Deputy District Registrar on 6 November, 1992 resulted in the dismissal of his original application for registration; this in turn led to an application by Mr. Bendeich to resurrect his original application. It came before me on 1 December, 1992, when I granted the relief he sought. In the reasons I then gave, I reviewed the course of the litigation and the deficiencies in Mr. Hewlett's conduct of it on behalf of Mr. Bendeich, as deposed to in a detailed affidavit by Mr. Bendeich, which the objectors rely on in the present application. I also referred to what Mr. Hewlett had to say when questioned in the proceedings before me on 1 December, 1992, evidence also relied upon by the objectors in the present application. I then said:
   

"Mr. Bendeich's grounds for seeking relief in respect of the order of 6 November last are set out principally in his long affidavit filed on 30 November last. In essence, he says that he was not kept informed of the course of the proceedings by his then solicitor, Mr. Hewlett. On Mr. Bendeich's evidence this was no small default on the part of Mr. Hewlett, but was instead due to a very serious failure on the part of the solicitor to keep his client, Mr. Bendeich, informed. Mr. Bendeich in paragraphs 71 to 73 of this affidavit deposes to not being aware of a number of earlier orders made prior to 6 November which were made by consent and with Mr. Hewlett acting for him, and which included orders that he pay the objectors' costs of those particular applications. He says that, specifically, he was unaware of the orders of 6 November. He says that he became very concerned as a result of a telephone call he received from a solicitor not connected with Mr. Hewlett's firm on 23 November, 1992, when he was told that the solicitors for the objectors had written to that particular solicitor in the course of which they said that Mr. Bendeich's application for registration as a trustee had been dismissed, as was indeed the case, given the operation of the self-executing order of 6 November. Mr. Bendeich says that he immediately sought to contact Mr. Hewlett but was advised that he was out of town. He then went and searched the file in the Federal Court Registry. He says that:

`Upon reading the Court file, I became aware of numerous matters which I had not previously been aware of. Further, it came to my attention that a number of consent orders had been made which I was unaware of and had not given instructions to consent to. I had not previously seen a copy of any of these orders.' He says that he immediately withdrew his instructions from Mr. Hewlett and engaged a new solicitor, a Mr. Pennicott of Messrs. Bowdens, to conduct these proceedings henceforth for him.

...

Mr. Hewlett attended under subpoena and was questioned by counsel for the objectors. His evidence confirms, in essential details, Mr. Bendeich's own evidence that he was not kept informed of what was happening in the proceedings, in important and major respects. Mr. Hewlett's recollection of his contacts with Mr. Bendeich is not particularly good. Mr. Bendeich has deposed at very great length and with great particularity, supported by much documentation, to all his communications with Mr. Hewlett. Mr. Hewlett's poor recollection may possibly in part be explained by the fact that he understood the subpoena that brought him here today directed his attention only to the events of 6 November, 1992 when the guillotine order was made. But it is clear from Mr. Hewlett's own oral evidence that he did not seek instructions from Mr. Bendeich prior to consenting on Mr. Bendeich's behalf to the various orders, including orders for costs, that I have referred to.

He did speak in general terms with Mr. Bendeich about some of the orders, generally after they were made, but not in such a fashion as would have conveyed to Mr. Bendeich the seriousness of the defaults which were mounting up, so far as non-compliance by Mr. Bendeich with directions given by the court was concerned. It may be that Mr. Hewlett became more and more embarrassed as time went on at the way he had let the matter get out of hand. In any event, he was, I think, very frank in the evidence he gave, and as I have said, it supports very substantially the evidence of Mr. Bendeich.

...

I generally accept Mr. Bendeich's account of his lack of proper awareness of the way his application was proceeding. I do not think he can reasonably be said to have personally been guilty of any repeated or deliberate breach of the orders of this court designed to get his application to a prompt hearing. Rather, the fault, in the circumstances of this particular case, lies very much with his former solicitor."

1. Mr. Hewlett has not put any evidence before me in relation to the present application. I accept the account given by Mr. Bendeich in his detailed affidavit as an accurate account of what passed between himself and Mr. Hewlett in the period of present relevance, which includes the period of particular importance, viz., June 1992 to December 1992. In my judgment of 1 December, 1992, I gave Mr. Hewlett, who then revealed in oral evidence a poor recollection for the events of earlier that year, the benefit of a doubt that there may have been a reason why he was so unprepared to deal with the matters put to him. There is no room to extend the same charity to him again. Mr. Hewlett had ample opportunity to put before me, in relation to this application, anything that might serve to explain or mitigate his conduct. He elected not to do that. I infer from his silence that he has no explanation for his conduct, as described by Mr. Bendeich, which would require it to be viewed as other than a course of conduct persisted in by Mr. Hewlett over a long period of time and characterised by repeated serious breaches of his duty to his client. These breaches comprised his failure to keep his client informed about significant events in the conduct of the litigation and his consenting, without instructions, to orders, including costs orders and the self-executing order of 6 November, 1992. This last order operated upon continuing failures by Mr. Hewlett to carry out his duty to his client to bring about the dismissal of the application that Mr. Hewlett was retained to institute and prosecute on behalf of Mr. Bendeich.

2. The jurisdiction of the English High Court to order the solicitor for one party to pay the other party's costs of the proceedings is well established. In Myers v Elman (1940) AC 282, the Lord Chancellor rejected the proposition that the Court's power to make such an order was an element of the Court's disciplinary jurisdiction over its solicitors, saying (at 289):
   

"... the jurisdiction as to costs is quite different. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order. The primary object of the Court is not to punish the solicitor, but to protect the client who has suffered and to indemnify the party who has been injured. Order LXV, s. 11, of the Rules of the Supreme Court provides the necessary machinery where the person injured is the client of the solicitor. It is a rule supplementary to the summary jurisdiction of the Court. It is not limited to misconduct or default, but expressly extends to costs incurred improperly or without reasonable cause, or which have proved fruitless by reason of undue delay in proceeding under a judgment or order. The jurisdiction to order the solicitor to pay costs to the opposite party is exercised on similar grounds. The principle will be found clearly stated in Halsbury's Laws of England, 2nd ed., vol. XXXi p. 271, where a number of authorities are cited. It will be found that many of these authorities depend, in cases where the order as to costs has been made, on the negligence or mistake of the solicitor and in that sense only on his misconduct in the proceedings. ... I think they rest on the jurisdiction of the Court over its officers."

1. Order LXV, s. 11 of the English Rules of Court to which his Lordship referred is broadly equivalent to Federal Court O. 62, r. 9. His Lordship made it clear, at 290-291, that the availability of the jurisdiction does not depend upon the solicitor being guilty of disgraceful or dishonourable conduct, which generally involves some element of moral turpitude or fraud or dishonesty or a persistent and reckless disregard of the solicitor's duty - Felix v General Dental Council (1960) AC 704 at 721 - but which can be found in conduct related to the pursuit of the profession which would reasonably incur the strong reprobation of members of that profession of good repute and competence - Ex parte Meehan; Re Medical Practitioners Act (1965) NSWR 30 at 35. It is exercisable where the solicitor is guilty of no more than "mere negligence of a serious character, the result of which (is) to occasion useless costs to the other parties".

2. Lord Russell agreed with the Lord Chancellor's statements of principle, although he took a different view on the facts. (p. 307) Lords Wright and Atkin took a slightly different view from the Lord Chancellor and Lord Russell. The latter two judges saw the object of the jurisdiction as being to indemnify the party who has suffered from the solicitor's actions, rather than to punish the solicitor (p. 289) while Lords Atkin (at p. 303) and Wright (at p. 319) saw the jurisdiction as a punitive one. Lord Wright, however, said that it was not merely punitive but also compensatory. Lord Porter appears to have taken a view similar to that of Lord Wright. In my view, however, there is no practical difference between the various views of the members of the Court in Myers v Elman, so far as concerns the application to a given set of facts of the principles to be applied when the Court is asked to order a solicitor to pay costs. All members of the Court agreed that:
   

(1) the power flows from the Court's jurisdiction over its officers and will be exercisable when the solicitor has failed to fulfil his duty to the Court. This duty resting on the solicitor is "to aid (the Court) in promoting in his own sphere the cause of justice" - per Lord Wright, at 319 - or "to conduct litigation before it with due propriety" - per Lord Atkin, at 302, and Viscount Maugham at 290;

(2) the exercise of the jurisdiction does not depend upon the solicitor being shown to be guilty of professional misconduct in the sense of conduct justifying striking off or suspension from practice: negligence on the part of the solicitor or those for whom he is responsible will suffice, provided it is "of a serious character" (per Viscount Maugham, at 290) or provided it is "gross negligence" (per Lord Atkin, at 304) or amounts to "a gross neglect" (per Lord Wright at 319).

1. Although the Federal Court has no power to strike solicitors (or barristers) off the Roll or to suspend them from practice, the Full Court in Caboolture Park Shopping Centre Pty. Ltd. (In liquidation) v White Industries (Qld.) Pty. Ltd. (1993) 45 FCR 224 held that the Federal Court has power to order the solicitor for one of the parties to pay the costs of the other party. Section 43 the Federal Court of Australia Act 1976 was identified as the source of this power. See 229 and 231. The Court went on to say, at 231:
   

"Where the Court has a statutory power to award costs against non-litigants and it is sought to obtain an order against a solicitor in consequence of his or her conduct in the litigation, it is neither necessary nor appropriate to rely upon the jurisdiction of the Court over its own officers."

1. However, the Court, in an obiter statement at 233, said:
   

"The fact that the Court neither maintains a roll of practitioners nor may strike off the name of a practitioner does not mean to say that persons who practice in this Court owe no duty to the Court, nor that the Court could not in an appropriate case, falling short perhaps of contempt, discipline a legal practitioner who acted in breach of a duty to the Court."

1. Section 32 the Bankruptcy Act 1966 has the same reach as s. 43 the Federal Court of Australia Act: under s. 32 the Court in bankruptcy has power to order a person not a party to the proceedings to pay the costs of one or both of those parties. See Bent v Gough (1992) 36 FCR 204. In Re Garofano; Ex parte American Express International Inc. (1990) 26 FCR 592, Einfeld J, in reliance on s. 32, ordered a solicitor, who did not have a proper retainer from the debtor, to pay part of the petitioning creditor's costs of proceedings on the petition.

2. As the Chief Justice observed in Bent v Gough, supra, at 207, the power to award costs against a solicitor personally involves special considerations. The cases show that this jurisdiction must be exercised with caution. There is good reason for caution. Too ready an exposure of the lawyer for a party to personal liability for the costs of his client or of the other party is likely to inhibit the way the lawyer acts in conducting the litigation. It frequently happens that a lawyer will have to make judgments as to which of a number of courses is the optimum one to follow, bearing in mind his duty to advance his client's interests by all proper means and his duty to the Court to conduct the litigation in proper fashion. The introduction of a third consideration into every day litigation that requires a solicitor to keep in mind the need to minimise the chances of a costs order being made against him personally, would raise a conflict between the lawyer's duties to his client and to the Court, on the one hand, and his own interests, on the other. As is understandable, such a conflict would likely be resolved by the solicitor concentrating on identifying and adopting the course most likely to minimise his own personal exposure at the expense of following courses best fitted to advantage his client and to bring the action to an expeditious end. Moreover, practitioners should not be encouraged to see the threat to seek a costs order against their opposing solicitor as a tactic available to be employed in the course of litigation to put pressure on their opponent: cf. the comments of the Master of the Rolls and of Dillon LJ in Orchard v South Eastern Electricity Board (1987) 1 QB 565 at 577 and 580.

3. Myers v Elman, supra, provides a sound guide to the circumstances in which it will be proper under s. 43 the Federal Court of Australia Act and under s. 32 the Bankruptcy Act to make an order that the solicitor for one party pay the costs of that party or the other party. Lawyers should know that, so long as they are not guilty of either professional misconduct or gross, as opposed to mere, negligence in the way they conduct their client's case, they will not be exposed to any personal liability to pay either the costs of their own client or those of the opposing litigant.

4. That Mr. Hewlett may have been in serious breach of his duty to Mr. Bendeich, as I found in December 1992 to have been the case, does not conclude the question of the objectors' entitlement to the costs claimed from Mr. Hewlett. Before I can properly order Mr. Hewlett to pay any of the objectors' costs the subject of their application, I must be satisfied, firstly, that Mr. Hewlett has committed a breach of his duty to the Court to conduct the litigation on behalf of his client, Mr. Bendeich, with due propriety; secondly, that that breach involves conduct more than mere negligence and amounts, at the very least, to gross negligence; and, finally, I must also be satisfied that the result of any such dereliction of duty by Mr. Hewlett has been to occasion useless costs to the objectors, i.e., costs which they have incurred but which have produced no benefit to them in pursuing their objections to Mr. Bendeich's registration application.

THE HEARING ON 30 JUNE, 1992
13. On this date a consent order was made by the Registrar requiring Mr. Bendeich to file and serve any further witness affidavits and his affidavit of discovery by 7 July, 1992; to provide certain particulars sought by the objectors on 15 June, 1992, also by 7 July and to provide inspection of his documents by 14 July, 1992. Mr. Bendeich was also ordered to pay the objectors' costs of and incidental to that hearing.

1. The first directions hearing in the proceedings had been held on 20 March, 1992; directions were then given for the objectors to give particulars of their objection and for them, and then the applicant, to file their various witness affidavits. The objectors were late in complying with these directions, although the timetable set on 20 March was a tight one designed to enable the matter to be heard at an early date. Mr. Hewlett protested on behalf of Mr. Bendeich at the objectors' dilatoriness. Through April and May, much correspondence was exchanged between Mr. Hewlett and the objectors' solicitors, Lynch and Co.; Mr. Hewlett kept Mr. Bendeich informed and they had a number of conferences to attend to matters raised by Lynch and Co.. From 29 May to 24 June, 1992, Mr. Bendeich was out of Australia; Mr. Hewlett did not contact him or members of his office. During this period, on 15 June, 1992, Lynch and Co. served on Mr. Hewlett a notice requiring Mr. Bendeich to make discovery of his documents, presumably pursuant to Bankruptcy Rule 146. He was thus bound to file and serve his affidavit of discovery by 25 June: see r. 147(1). The next day, 26 June, Lynch and Co. sent a facsimile to Mr. Hewlett advising that Mr. Bendeich was in breach of the directions given on 20 March, 1992 (presumably by having failed to file all his witness affidavits) and in breach of his obligation to file and serve his affidavit of documents by the previous day; they also advised that they were relisting the matter for further directions on 30 June, 1992 and enquired whether Mr. Bendeich would consent to orders in relation to the filing of his further affidavits and the giving of discovery, as well as the provision of certain particulars previously sought by Lynch and Co. in correspondence. Mr. Hewlett told Mr. Bendeich on 29 June, 1992 that Lynch and Co. had served a notice of discovery (but apparently not that that had been done as long ago as 15 June) and that they had requested Mr. Hewlett to submit a new timetable for completing steps in the proceedings. Later that day, Mr. Hewlett told Mr. Bendeich of the proposed timetable which the Court would be asked to fix the next day. There was not, however, any discussion about the costs of the forthcoming directions hearing and, in particular, Mr. Hewlett did not raise with Mr. Bendeich Lynch and Co.'s suggestion that he consent to pay the objectors' costs of that hearing. While Mr. Hewlett had sufficient instructions from his client to authorise him to consent to the procedural directions made on 30 June, he never had any instructions to consent to the costs order which he agreed to.

2. While Mr. Bendeich did not comply with the direction of 20 March, 1992 to file his witness affidavits within the time then fixed, counsel for the objectors did not suggest that this default was due to conduct on the part of Mr. Hewlett sufficient to enliven the jurisdiction to make him personally liable for any part of the objectors' costs of the hearing of 30 June. Nor did counsel suggest that Mr. Bendeich's default in failing to file his affidavit of documents by 25 June was due to any such conduct on the part of Mr. Hewlett. Importantly, the order of 30 June resulted in the delivery of Mr. Bendeich's outstanding witness affidavits (albeit on 8 July, one day after the time allowed by that order) and of both the particulars the objectors had previously asked for and Mr. Bendeich's affidavit of documents (albeit only on 13 July, six days after the time fixed by this order).

3. There is no basis for finding that Mr. Hewlett's conduct in the period between 20 March and 30 June amounted in any respect to a breach of his duty to the Court sufficient to expose him to liability to pay the objectors' costs connected with the hearing on that day. Mr. Hewlett's only default was to consent, on behalf of his client, to the latter paying the objectors' costs of that day's hearing when he had no instructions to do that. On the material before me, it is likely, but not certain, that, if the question of costs had been argued on 30 June, Mr. Bendeich would have been ordered to pay the objectors' costs of and incidental to the hearing on that day. But that default by Mr. Hewlett did not result in the objectors being occasioned useless costs: they have had the benefit of that costs order and it matters not to the objectors whether it is Mr. Bendeich or Mr. Hewlett who is the ultimate source of payment of those costs.

4. The objectors have failed to show any entitlement to a costs order against Mr. Hewlett in respect of the hearing on 30 June, 1992.

THE APPLICATION FILED ON 10 JULY, 1992 AND HEARD ON 27 JULY, 1992
18. On 27 July, 1992 the Registrar, by consent, made orders in effect extending the time earlier fixed for the applicant to file his affidavit of discovery and to provide the particulars sought by the objectors on 15 June, 1992 from 7 July to 10 August, 1992; he also ordered the applicant to give inspection of his documents by 18 August, 1992 and an order that "the applicant pay the objectors' costs of and incidental to this application to be taxed". (Another order, also then made by consent, was that "costs be reserved in respect of all aspects of the matter before the Court today". I was told by counsel for the objectors that the second costs order erroneously recorded what was intended and that it should have expressly referred to the summons - apparently a summons to a stranger to the litigation to produce documents - referred to in another of the orders then made. Counsel for Mr. Hewlett did not dispute this.)

1. In the period between the order of 30 June, 1992 and the order of 27 July, 1992, specifically 8 July, Mr. Hewlett filed and served his client's affidavit material. This resolved the matter of Mr. Bendeich's evidence. After discussions between Mr. Hewlett and Mr. Bendeich on 9 and 10 July, Mr. Hewlett, on 13 July, 1992, delivered to Lynch and Co. the particulars which should, in accordance with the order of 30 June, have been delivered by 7 July. He also delivered, at the same time, Mr. Bendeich's affidavit of documents, which should have been served by 7 July also. It is not possible from the material before me to identify what action Mr. Hewlett took in relation to the preparation of the affidavit of documents. Mr. Bendeich, in his affidavit, refers only to conversations with Mr. Hewlett on 29 June and then on 13 July, 1992 concerning the provision of this affidavit. But Mr. Hewlett must have done a deal of work on the affidavit between these two dates to have been able to serve it on 13 July. In the meantime, on 10 July, Lynch and Co. filed and served the application that led to the hearing on 27 July.

2. Neither the particulars nor the affidavit of documents, which they got on 13 July, i.e., three days after filing this application, satisfied Lynch and Co.. On 14 July, 1992 Lynch and Co. wrote to Mr. Hewlett setting out what they said were a number of deficiencies in the form of the affidavit of documents. They called on Mr. Hewlett to file a fresh affidavit of discovery which met the objections they raised. By a second letter of the same date, they also complained about the inadequacy of the particulars and requested the supply of further particulars. Despite complaint by Lynch and Co., Mr. Hewlett ignored the direction of 30 June that Mr. Bendeich give inspection of his documents by 14 July. It may be that Lynch and Co.'s ongoing complaints about deficiencies in the affidavit of discovery and the fact that, as early as 10 July, they had filed their application returnable on 27 July, when they proposed to raise this matter, coupled with Mr. Hewlett's acceptance, evidenced by his conduct on 27 July, that a fresh affidavit of documents should be filed, caused Mr. Hewlett not to take any action in that particular regard.

3. Apart from telling Mr. Bendeich on 13 July that Lynch and Co. were making an application to the Court on 27 July for further directions relating to the affidavit of documents, Mr. Hewlett did not mention anything to Mr. Bendeich about Lynch and Co.'s complaints, although it appears from paragraph 54 of Mr. Bendeich's affidavit filed 1 September, 1993 that there must have been some discussion concerning additional discovery since Mr. Bendeich says that, without any intervening discussion with Mr. Hewlett about the matter, on 7 August he provided Mr. Hewlett with, among other things, material relating to discovery. Nor did Mr. Hewlett inform Mr. Bendeich prior to the hearing on 27 July (or after it, either) of the orders made that day by consent, including the order that Mr. Bendeich pay the objectors' costs of that hearing. This is so even though Mr. Hewlett and Mr. Bendeich conferred on Sunday, 2 August, about the case and had, on 17 July, spoken about other matters associated with the case.

4. On 24 July, Lynch and Co. referred to the forthcoming hearing on 27 July and proposed a consent order to Mr. Hewlett. He responded the same day, agreeing to Lynch and Co.'s proposals, although he made some suggestions which were agreed to by Lynch and Co. and incorporated in the consent order made on 27 July. Mr. Hewlett, however, accepted that a new affidavit of documents was required and that further particulars should also be provided.

5. He was, in relation to the application heard on 27 July, in breach of his duty to his own client by failing to keep him informed of what was happening and by consenting, without instructions, to the costs order then made. He was also in breach of his duty to the Court in that he failed to move with the expedition required by the order of 30 June: he was six days late in having the particulars and the affidavit of documents prepared, completed by Mr. Bendeich and served and he achieved that only after Lynch and Co., acting reasonably, filed the application that was ultimately heard on 27 July. But however his breaches of duty are characterised, they did not cause the objectors to incur any useless costs. Although Lynch and Co. filed their application on 10 July, once they received on 13 July the outstanding particulars and affidavit of documents, they raised new issues, viz., the alleged insufficiency of those particulars and of that affidavit. They used their now-pending application to obtain orders designed to resolve those new issues (and the issue of inspection to which I have already referred). The objectors' counsel did not submit to me that Lynch and Co.'s criticisms of the affidavit of documents and the particulars were so plainly well- founded that it would have been hopeless for Mr. Bendeich to have resisted the making of further orders in those respects. He would not have done that, at any event in relation to the particulars, given Lynch and Co.'s later abandonment of their demand for that information. The making of this application on behalf of the objectors and its hearing on 27 July did not therefore cause them to incur useless costs: rather did they achieve, as a result, a new position in the litigation to their advantage. Moreover, they got their costs of that application from Mr. Bendeich and it is irrelevant, so far as the objectors' position is concerned, out of whose pocket - Mr. Hewlett's or Mr. Bendeich's - those costs were paid. They therefore have no entitlement to the order for further costs which they seek against Mr. Hewlett in respect of this application.

THE APPLICATION FILED ON 2 SEPTEMBER AND HEARD ON 14 SEPTEMBER, 1992
24. Having agreed, without reference to Mr. Bendeich, that the latter's affidavit of documents was so deficient that a fresh affidavit was required, Mr. Hewlett for a time did nothing to comply with the order of 27 July. Although the evidence is incomplete, it appears from Lynch and Co.'s letter of 1 September that Mr. Bendeich's fresh affidavit of documents which the order of 27 July required to be served by 10 August was still outstanding and that on 10 August Mr. Hewlett began to assert that, despite the order of 27 July to which he had consented on behalf of Mr. Bendeich, Mr. Bendeich's original affidavit served on 13 July was sufficient compliance with his client's discovery obligations. Lynch and Co. understandably would have none of this. On 1 September, 1992, they complained about the failure of Mr. Bendeich to provide the fresh affidavit of discovery required by that order and said they would file an application seeking enforcement of the order if that affidavit was not received by close of business that day. The affidavit was not received and on 2 September, Lynch and Co. filed the application that came before the Court on 14 September. On 9 September, Lynch and Co. wrote to record that the affidavit still had not been received notwithstanding the filing of the application and (having apparently inspected some of Bendeich's documents) reiterated their demand for an affidavit properly identifying various of the documents and rejected Mr. Hewlett's suggestion that they should interrogate to ascertain that information as a step which would be wasteful and inappropriate. On 10 September, Lynch and Co. wrote to advise Mr. Hewlett that they were abandoning their entitlement under the order of 27 July for the further particulars, but were persisting with their claim for a further affidavit of discovery. Mr. Hewlett replied the same day, enclosing Mr. Bendeich's new affidavit of documents (a month after the time fixed by the order of 27 July); he repeated his earlier assertion that adequate discovery had already been made and that if Lynch and Co. wanted to know the identity of the author of any document already discovered, Mr. Hewlett had Mr. Bendeich's instructions to inform Lynch and Co. of Mr. Bendeich's preparedness to do that. (This was false: Mr. Bendeich gave no such instructions, although Mr. Hewlett probably expected to have no difficulty in persuading Mr. Bendeich to do this, if the need arose.) He also suggested that the application brought by Lynch and Co. and due to come before the Court on 14 September should be adjourned to the Registry. Lynch and Co.'s response of 11 September was to maintain the complaint first made on 14 July as to the inadequacy of Mr. Bendeich's fresh affidavit of documents in failing properly to describe the documents in respect of which privilege was claimed; they said that unless this deficiency was remedied, "our client intends to persist with its notice of motion (filed 2 September) in this regard." There apparently was a discussion between Mr. Lynch and Mr. Hewlett on 11 September which led to Mr. Lynch, under cover of his facsimile of that same date, forwarding to Mr. Hewlett a proposed consent order to be put before the Court on 14 September. Lynch and Co. took up Mr. Hewlett's suggestions and included in this an order that the objectors have leave to interrogate Mr. Bendeich. It appears that Mr. Hewlett advised Lynch and Co. that Mr. Bendeich was agreeable to the proposed order. Mr. Bendeich, however, had no knowledge that Lynch and Co. were dissatisfied with his new affidavit of documents served on 10 September or that they had filed an application on 2 September. Nor did he know that an application had come before the Court on 14 September until the next day, when Mr. Hewlett telephoned him to advise him that the matter had been mentioned the previous day.

1. On 14 September, the District Registrar ordered by consent that the objectors have leave to deliver interrogatories for the examination of Mr. Bendeich and that Mr. Bendeich file and serve an affidavit of discovery identifying the documents contained in Schedule 1 Part 2 of his affidavit of discovery filed on 10 September, 1992 sufficiently to enable the objectors to evaluate any claim for privilege asserted by Mr. Bendeich, by 28 September, 1992. It was also ordered by consent that Mr. Bendeich pay the objectors' costs of and incidental to the application that was heard that day.

2. Mr. Bendeich knew nothing of the events leading up to this consent order being made by Mr. Hewlett on his behalf and he did not give any instructions to Mr. Hewlett to consent to any of the orders then made. At no time did Mr. Hewlett tell Mr. Bendeich that he had to file a further affidavit of documents as required by the consent order of 14 September.

3. When the objectors' application came before the Court on 14 September, they had previously abandoned their right to the particulars that Mr. Bendeich was ordered, on 27 July, to provide by 10 August. They had had Mr. Bendeich's fresh affidavit of documents from 10 September which met some of Lynch and Co.'s objections to his first affidavit of documents. Inspection of Mr. Bendeich's documents had taken place. The only matters dealt with at the hearing on 14 September were thus the objectors' complaint about the continuing deficiency in Mr. Bendeich's fresh affidavit of documents which Lynch and Co. had raised for the first time on 14 July and which Mr. Hewlett conceded, by consenting to the order of 27 July, was well-founded but which he failed to attend to thereafter; the question of interrogation of Mr. Bendeich, suggested by Mr. Hewlett in early September and discussed further between him and Mr. Lynch on 11 September, and the costs of that particular application.

4. Once again, Mr. Hewlett committed numerous breaches of his duty to his own client in connection with the events that led to the filing on 2 September and disposal on 14 September of this application. He was also in breach of his duty to the Court in this same regard since he delayed until 10 September, i.e., until after the application was filed, in having Mr. Bendeich comply with the order of 27 July requiring the filing of a fresh affidavit of documents by 10 August. Mr. Hewlett's delay did not result in the objectors' incurring costs uselessly in respect of the application filed 2 September and heard on 14 September. No attempt was made by counsel for the objectors to suggest that by overseeing preparation of and by filing this second affidavit of documents, Mr. Hewlett was in breach of his duty to the Court because it was manifestly defective and so he was liable, for that reason, to compensate the objectors in respect of their costs of this application. But they were put to the trouble of applying for a further order with respect to Mr. Bendeich's affidavit of documents because Mr. Hewlett did nothing in the period between 27 July and 14 September to remedy one of the defects he conceded existed in Mr. Bendeich's original affidavit of documents when he consented to the order of 27 July.

5. However, in addition to a further order that Mr. Bendeich do what he had been required by the order of 27 July to do with respect to further discovery, the objectors also sought and got, as a result of their application that was heard on 14 September, the forensic advantage of an order allowing them to interrogate Mr. Bendeich. Some of their solicitor and own client costs of this application would have been incurred in relation to their objection to the adequacy of Mr. Bendeich's particulars, an objection abandoned on 10 September. They did not seek an order against Mr. Hewlett limited to so much of their costs of this application as were attributable to their complaint about the continuing defect in Mr. Bendeich's affidavit of documents. In these circumstances, I am not prepared to find that Mr. Hewlett's default in this particular regard caused the objectors to needlessly incur costs in respect of this application to any significant extent. They are not entitled to relief against Mr. Hewlett in respect of this application.

THE APPLICATION FILED ON 28 OCTOBER AND HEARD ON 6 NOVEMBER, 1992
30. On 15 September, Mr. Hewlett telephoned Mr. Bendeich to tell him that the matter had been mentioned the previous day and that the objectors would be delivering interrogatories and he would have to identify the author of particular documents. Mr. Hewlett did not, however, mention that he had consented on Mr. Bendeich's behalf to Mr. Bendeich paying the objectors' costs of this application, the third time that such an order had been made. The same day, Lynch and Co. forwarded to Mr. Hewlett the objectors' interrogatories. They were voluminous: they run to 124 pages. They appear to owe more to the capacity of the word processing equipment of the objectors' solicitors than to any professional judgment by them about the information the objectors truly needed to run their case. They went well beyond seeking identification of the authors of certain documents produced by Mr. Bendeich on inspection, the matter in respect of which Mr. Hewlett suggested it was appropriate to interrogate earlier on. Mr. Lynch appears to have sought to justify this by saying in his covering letter: "Our decision to interrogate your client is, in part, based upon the vigorous submissions made by you, on behalf of the Applicant, in your recent correspondence that it was entirely appropriate to interrogate your client with respect to this matter." Rule 143(1) required Mr. Bendeich to answer these interrogatories by 29 September, 1992. Mr. Hewlett never gave them to Mr. Bendeich; he did not see them until after he had terminated Mr. Hewlett's retainer and was shown them by his new solicitor on 25 November, 1992. It may be that, once he received these very extensive interrogatories, Mr. Hewlett was too embarrassed to inform Mr. Bendeich of the burden he had created for Mr. Bendeich by proposing that the objectors interrogate and then by consenting to them having unrestricted leave to interrogate. He made no attempt to obtain instructions from Mr. Bendeich to answer them. He just ignored the matter. He also long ignored his obligation to ensure that Mr. Bendeich complied with the order of 14 September insofar as it required Mr. Bendeich to file and serve a third affidavit of documents by 28 September, 1992.

1. On 24 September, 1992, Mr. Lynch apparently proposed to Mr. Hewlett a meeting with Mr. Bendeich with a view to resolving the dispute between the objectors and Mr. Bendeich in the Federal Court, and also certain Supreme Court proceedings. Mr. Hewlett promptly relayed this approach to Mr. Bendeich and a meeting was held on 30 September between Messrs. Hewlett, Lynch and Bendeich to discuss the objectors' settlement proposal. The proposal came to nothing. This cannot excuse Mr. Hewlett's inaction.

2. On 8 October, 1992, Lynch and Co. wrote to Mr. Hewlett demanding that Mr. Bendeich comply with his obligations in relation to discovery - he should have filed a further affidavit as required by the consent order of 14 September by 28 September - and, with respect to interrogatories - he should have filed his answers by 29 September, 1992. Lynch and Co. gave Mr. Hewlett only until the following day to attend to these matters and threatened to file an application if this was not done. Mr. Hewlett did nothing. Lynch and Co. filed the application with respect to Mr. Bendeich's affidavit of documents on 28 October, returnable on 6 November. Further complaints by Lynch and Co. on 28 October and on 30 October about the absence of any answers by Mr. Bendeich to their interrogatories produced no response on the part of Mr. Hewlett and, on 2 November, Lynch and Co., as they foreshadowed in their letter of 30 October to Mr. Hewlett, filed the application for an order that Mr. Bendeich answer the interrogatories. It was returnable on 1 December, 1992.

3. Mr. Bendeich spoke with Mr. Hewlett on 12 October and again on 28 October about briefing counsel and about pressing on with his application for registration. On the latter occasion, Mr. Hewlett told Mr. Bendeich that he had spoken with Mr. Lynch and that Mr. Bendeich was outside the period of time allowed to him to answer the interrogatories; when he expressed concern, Mr. Hewlett told him that he was looking after the matter for him. Mr. Bendeich said that, until then, Mr. Hewlett had not told him that the objectors had, in fact, already delivered interrogatories.

4. On the morning of 6 November, Lynch and Co. forwarded to Mr. Hewlett a draft order and invited his consent to its being made. Mr. Hewlett gave consent on behalf of Mr. Bendeich and an order was then made which, in effect, extended the time fixed by the order of 14 September, 1992 for Mr. Bendeich to file a third affidavit of documents from 28 September, 1992 to 13 November, 1992 and which went on to order that, in default, Mr. Bendeich's originating application for registration as a trustee was to be dismissed and he was to pay the objectors' costs of and incidental to that originating application, including all reserved costs. The only other order made, again by consent, on 6 November was an order that Mr. Bendeich pay the objectors' costs of and incidental to that particular application.

5. Quite apart from the serious breaches of duty to his own client committed by Mr. Hewlett in the period between 14 September and 6 November, he was also in serious breach of his duty to the Court in that period: throughout the whole of that period he simply did nothing to have Mr. Bendeich comply with the order made on 14 September, 1992 for the filing and service of a third affidavit of documents, an order to which he consented on behalf of Mr. Bendeich. His breach of duty to the Court in this regard is probably explained, but not of course justified, by his breach of duty to his own client constituted by his failure to mention that he had consented to such an order on 14 September and that Mr. Bendeich was under an obligation imposed by order of the Court to file yet another affidavit of documents. Nor did he do anything with respect to the order which he also consented to on behalf of Mr. Bendeich on 14 September which resulted in Mr. Bendeich coming under an obligation under the Bankruptcy Rules to file and serve answers to the objectors' interrogatories delivered on 15 September by 29 September. His duty was clear: either he was bound, following receipt of the interrogatories, to take instructions from his client and attend to the preparation of Mr. Bendeich's answers or he was bound, after advising and taking instructions from Mr. Bendeich, to object to answering the interrogatories because of their oppressiveness. His breach of duty to the Court here is also explained, but not justified, by the fact that, in breach of duty to his own client, he failed to let his client know just what he had committed him to in relation to interrogatories.

6. As a result of these breaches by Mr. Hewlett of his duty to the Court in this period, the proceedings simply languished. The objectors, acting reasonably, were left with no option but to bring matters to a head by making their application relating to discovery which was heard on 6 November. They achieved nothing by taking those steps other than a reiteration by the Court of the obligation which the Court imposed by consent on Mr. Bendeich back on 14 September. Mr. Hewlett's breach of duty to the Court in the period now in question thus directly resulted in the objectors' incurring the costs of filing the application of 28 October and the costs associated with the disposal of that application, on 6 November. The objectors, of course, obtained, by Mr. Hewlett's actions on behalf of Mr. Bendeich, an order that Mr. Bendeich pay the objectors' costs of and incidental to that application. That order stands, notwithstanding that Mr. Hewlett had no authority from his client to consent to the making of that order. But whether Mr. Bendeich pays these costs to the objectors out of his own pocket or extracts the money from Mr. Hewlett is irrelevant for present purposes. For the reasons I have given, in addition to being entitled to look to Mr. Bendeich for their party and party costs of and incidental to the application heard on 6 November, 1992, the objectors are entitled to an order that Mr. Hewlett pay to them the difference between their party and party costs of that hearing recoverable from Mr. Bendeich and the costs they have reasonably incurred to their own solicitors in connection with that matter.

THE APPLICATION FILED ON 2 NOVEMBER AND HEARD ON 1 DECEMBER, 1992 37. As I have mentioned, the objectors made this application to obtain, for the first time, an order that Mr. Bendeich answer their voluminous interrogatories.

1. On 1 December, 1992 I dismissed this application and made no order as to the costs associated with it. I did this because, as appears from what took place in argument on that day, I took the view that the interrogatories were generally oppressive and because Mr. Bendeich undertook to provide the limited information which was all that the objectors were legitimately entitled to obtain under the leave they got on 14 September to interrogate him.

2. While a small part of the costs the objectors have incurred to their solicitors in respect of this application was due to Mr. Hewlett ignoring his obligation flowing from the order of 14 September which he consented to on behalf of his client, by far the bulk of these costs here are due to the action of their own solicitors in preparing and pressing for answers to unjustifiably wide ranging interrogatories.

3. The objectors are not entitled to the costs order against Mr. Hewlett which they seek here.

THE APPLICATION OF 26 NOVEMBER, 1992
41. The sixth application in respect of which the objectors seek a costs order against Mr. Hewlett is the application filed by Mr. Bendeich on 26 November, 1992 for relief against the self-executing order of 6 November, 1992. This order had operated to bring about the dismissal on 14 November, 1992 of Mr. Bendeich's originating application for registration as a trustee because of Mr. Hewlett's failure to attend to the preparation and filing and service of the requisite affidavit of documents. On 1 December, I heard this application by Mr. Bendeich and set aside the orders of 6 November, 1992; I also ordered Mr. Bendeich to file and serve on or before 8 December, 1992 the third affidavit of documents the subject of the orders of 14 September and 6 November. I reserved my decision on what should be done about the costs of this application. In a judgment reported at 41 FCR 237, I ordered that the objectors' should have their costs of Mr. Bendeich's application up to, but not including the hearing of that application and that otherwise, there should be no order as to the costs of the application. I deprived the objectors of their costs of the hearing itself because they unsuccessfully opposed the argument advanced at the start of the hearing on behalf of Mr. Bendeich that the Registrar's self-executing order of 6 November, 1992 was beyond power and had to be set aside for that reason alone, quite apart from the discretionary reasons which I held Mr. Bendeich made out and which also justified the setting aside of the orders.

1. That I considered that the appropriate order as between the objectors and Mr. Bendeich was one which denied the objectors their costs of the hearing of 1 December does not necessarily mean that they are also to be denied those costs as against Mr. Hewlett. Quite different considerations govern the latter question from those which governed their entitlement to costs against Mr. Bendeich.

2. Mr. Hewlett was in serious breach of his duty to the Court with respect to his former client's application of 26 November, 1992: he did nothing at all between 11 September and 14 November when the self-executing order operated to bring about the dismissal of Mr. Bendeich's originating application to meet the objectors' specific complaint as to Mr. Bendeich's affidavit of documents, which was the subject of the orders of 14 September and 6 November, a complaint that they had first raised as long ago as 14 July. Mr. Hewlett's activities on 18 November, which he acknowledged as panic-stricken, in procuring Mr. Bendeich to execute a further affidavit of documents, which he falsely told Mr. Bendeich had to be filed by 4.00 p.m. that same afternoon was pointless.

3. The critical question is whether this misconduct on Mr. Hewlett's part caused the objectors to incur costs that have produced no benefit in the advancement of their case in opposition to Mr. Bendeich's application for registration. In a sense, the objectors incurred the costs they did up to the commencement of the hearing on 1 December only because they chose to try to hold on to the advantage they had obtained as a result of Mr. Hewlett's misconduct which allowed the self-executing order to operate to bring about the dismissal on Mr. Bendeich's original application. But in seeking relief against that, Mr. Bendeich deposed to a story of misconduct on the part of Mr. Hewlett that had such an element of improbability about it, although it turned out to be quite true, that the objectors were, in my opinion, entitled to try to hold the position they had achieved on 14 November. It was Mr. Hewlett's misconduct that, in a real sense, caused the objectors to incur the costs of trying to retain this advantage that ultimately turned out to be productive of no benefit to them.

4. In my opinion, the objectors are entitled to an order that Mr. Hewlett pays the difference between the amount of the party and party costs up to but not including the hearing on 1 December, which they are entitled to recover from Mr. Bendeich, and the costs they have reasonably incurred to their own solicitor in respect of Mr. Bendeich's application of 26 November, 1992, up to that same point.

5. It remains to consider whether they are entitled to any of the costs they have incurred in relation to Mr. Bendeich's application from that point. At an early stage of the hearing, counsel for Mr. Bendeich raised the argument that the self-executing order was beyond power and had to be set aside for that reason, an argument which I ultimately found to be correct. The objectors elected to oppose that proposition. That Mr. Hewlett, in breach of duty to both his client and the Court, gave his consent to the making of the self-executing order which I held to have been beyond power does not mean that it was his misconduct that caused the objectors to incur the costs of the hearing on 1 December. Their own solicitors acting on their instructions proposed that order. It seems to me that because the objectors elected to try to hold the advantage they obtained on 14 November from the order of 6 November which was sought and obtained by their own solicitors and opposed the setting aside of that order on the ground that it was made beyond power, they incurred their own costs of the hearing because of a decision of their own, even though it was a decision made against the general background of breaches of duty by Mr. Hewlett.

6. I am not prepared to make any further order in favour of the objectors against Mr. Hewlett in respect of these costs.

THE COSTS OF THE OBJECTORS' SUMMONS TO MESSRS. FEEZ RUTHNING
48. Prior to the self-executing order of 6 November operating to bring about the dismissal of Mr. Bendeich's original application, the objectors issued a summons in the action requiring Messrs. Feez Ruthning to produce certain documents to the Court and it was set down by the Court for hearing on 1 December, 1992, Messrs. Feez Ruthning having indicated that they objected to produce the documents. Mr. Bendeich's application of 26 November, 1992 was also set down by the Court to be heard on 1 December, without any prior notification to the objectors.

1. When the objectors' summons came before me on that day, it was apparent that Mr. Bendeich's application to have his originating proceeding reinstated should be heard first and that it was unlikely that there would be time left to deal with the objectors' summons, should Mr. Bendeich be successful. It was therefore agreed between the objectors and Messrs. Feez Ruthning that the summons should be adjourned to a date to be fixed and that the objectors would pay Messrs. Feez Ruthning's costs.

2. It was said that the adjournment of the objectors' summons was occasioned solely by the filing of Mr. Bendeich's application for reinstatement and the listing of it for hearing on the same day that Messrs. Feez Ruthning's objections to the objectors' summons were also to be heard. The objectors accordingly claim both their own costs of the summons to Messrs. Feez Ruthning thrown away because of the adjournment on 1 December and an indemnity in respect of the costs payable by them to Messrs. Feez Ruthning pursuant to the order to which they consented on that same date which adjourned the summons to a date to be fixed and which also ordered that the objectors pay Messrs. Feez Ruthning's costs of and incidental to the summons to witness to be taxed, including reserved costs if any.

3. There is no possible basis that I can see upon which the objectors are entitled to the order for indemnification in respect of Messrs. Feez Ruthning's costs: on its face, the order to which both the objectors and Messrs. Feez Ruthning consented goes well beyond an order obliging the objectors to pay Messrs. Feez Ruthning's costs in connection with the hearing involving the summons on 1 December, 1992 thrown away because of the adjournment. Nothing that Mr. Hewlett did could be said to justify throwing onto him the whole of the wide liability in costs voluntarily assumed by the objectors under that order. Nor is there any basis, in my opinion, for requiring Mr. Hewlett to pay the objectors' own costs of the adjournment of their summons on 1 December, 1992: Mr. Hewlett had nothing to do with the objectors' summons being set down on the same day as Mr. Bendeich's application in circumstances in which there was not sufficient time available for the Court to embark upon the hearing of the summons. It is true that it was his breach of duty to both the Court and to Mr. Bendeich that was the occasion for Mr. Bendeich filing his own application which the Court made returnable for 1 December, but such connection as there is between Mr. Hewlett's breach of duty to the Court and to the objectors' incurring costs when their summons to Messrs. Feez Ruthning was adjourned is too remote to justify a conclusion that the breach of duty was the cause of the wasted costs.

THE RESULT OF THE CASE
52. I will therefore order that:

(1) Mr. Hewlett pay to the objectors the difference between their party and party costs of their application filed 28 October, 1992 and heard on 6 November, 1992 recoverable by them from Mr. Bendeich under the order of 6 November, 1992 and the costs they have reasonably incurred to their own solicitors in connection with their application and its hearing.

(2) Mr. Hewlett pay to the objectors the difference between their party and party costs of the application filed on behalf of Mr. Bendeich on 26 November, 1992 recoverable by them from Mr. Bendeich under the order of 1 December, 1992 and the costs they have reasonably incurred to their own solicitors in connection with these applications up to but not including the hearing of that application on 1 December, 1992.

(3) Save as aforesaid, the objectors' application is dismissed.

1. The objectors have had some success on their application. However, the extent to which they have failed is substantial. Their failure is a little less than that which appears from a mere comparison of the orders they sought with the orders they obtained: as to two of the matters in relation to which I declined to make the orders they sought, I found that Mr. Hewlett was a cause of a small part of useless costs incurred by them.

2. In these circumstances, I will make no order in relation to the costs of this application of either the objectors or Mr. Hewlett.