MZWOR v Minister for Immigration
[2005] FMCA 845
•23 June 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MZWOR v MINISTER FOR IMMIGRATION | [2005] FMCA 845 |
| MIGRATION – Costs order sought against a solicitor – misconduct on the part of the solicitor. |
Federal Magistrates Court Rules 2001, r.21.07
Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965
Baik and Hankuk Grocery Proprietary Limited v The Minister for Immigration [2004] FMCA 543
Caboolture Park Shopping Centre Pty Ltd(in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224
Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708
Deputy Commissioner of Taxation v Levick (1999) 43 ATR 621
Dunstan (No. 2) (2000) 112 A Crim R 63
Etna v Arif [1999] 2 VR 353
Flower and Hart v White Industries Queensland Pty Ltd [1999] FCA 773; (1999) 87 FCR 134
Knight v FP Special Assets Ltd (1992)174 CLR 178
Kumar v The Minister [2004] FCA 18; (2004) 133 FCR 582
Levick v Deputy Commissioner of Taxation (2000) 44 ATR 315
Myers v Elman [1940] AC 282
R v Immigration Appeal Tribunal ex parte Gulbamer, Gulsen [1997] COD 430
Re Ansett Australia Holdings Limited (1997) 94 ACR 7 and 12
Re JJT (1998) 23 Fam LR 1
SZABF v The Minister for Immigration (No. 2) [2003] FMCA 178
| Applicant: | MZWOR |
| Respondent: | MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS |
| File No: | MLG 926 of 2004 |
| Delivered on: | 23 June 2005 |
| Delivered at: | Melbourne |
| Hearing date: | 6 May 2005 |
| Judgment of: | Riethmuller FM |
REPRESENTATION
| Counsel for the Applicant: | No appearance |
| Counsel for the Respondent: | Mr Mosby |
| Solicitors for the Respondent: | Clayton Utz |
ORDERS
Pursuant to Rule 21.07 of the Federal Magistrates Court Rules 2001, the applicant's solicitor, Mr Joseph Belbruno, pay the respondent's costs fixed in the amount of $3,797.50 — such sum to be paid within 21 days.
That the Registrar of the Federal Magistrates Court forward the papers in this matter to the Law Institute of Victoria with a request that the Law Institute investigate the conduct of Mr Belbruno.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 926 of 2004
| MZWOR |
Applicant
And
| MINISTER FOR IMMIGRATION & MULTICULTURAL & INDIGENOUS AFFAIRS |
Respondent
REASONS FOR JUDGMENT
In this matter the applicant sought judicial review with respect to a decision not to grant him a protection visa. The applicant advised the respondent on 18 March 2005 that he wished to withdraw the application and that he was leaving the country on 20 March 2005. In the circumstances the application was dismissed.
The respondent seeks costs against the solicitor who was on the record for the applicant. It is appropriate that I give some brief history of the matter.
Background
The proceedings were commenced on 15 July 2004 by Mr Joseph Belbruno, a solicitor of Moonee Ponds, Victoria. The initiating proceedings sought the following:
APPLICATION FOR AN ORDER TO REVIEW
DECISION SOUGHT TO BE REVIEWED
Application to review the decision of the Refugee Review Tribunal (“the Tribunal’) that the Tribunal affirms the decision under review not to grant a Protection Visa to the Applicant and the delegate's decision.
The applicant sought the issue of Constitutional writs in the matter.
The grounds relied upon by the applicant in the initiating proceedings (signed by his solicitor) were:
STATEMENT OF GROUNDS
1.The Respondent failed to observe the proper procedures with regard to the Applicant and to act in accordance with substantial justice.
2.The Respondent exceeded its jurisdiction.
On 27 July 2004, Mr Belbruno filed a document headed "Amended Application for an Order to Review", although the amendments were not marked in accordance with the rules so as to distinguish them from the original application. Nor, it seems, was the amended application ever served upon the respondent.
The amended application was in the following terms:
DECISION SOUGHT TO BE REVIEWED
Application to review the decision of the Respondent to refuse the Applicant a protection visa.
...
STATEMENT OF GROUNDS
1.The Respondent failed to observe the proper procedures with regard to the Applicant and to act in accordance with substantial justice because it failed to notify the Applicant of its decision to refuse him a protection visa at his last known address for service in that the Applicant had notified the Respondent of its change of address before the decision was made.
2.The Respondent exceeded its jurisdiction.
On 17 November 2004, the matter came before Musset R, who made procedural orders in the following terms –
1.The respondent file and serve a court book by 15 December 2004.
2.The applicant file and serve an amended application containing proper particulars of the grounds relied upon, if any, by 2 February 2005.
3.The applicant file and serve a supplementary court book, if any, by 2 February 2005.
4.
The applicant file and serve contentions of fact and law by
2 February 2005.
5.The respondent file and serve contentions of fact and law by 16 February 2005.
6.The matter is listed for hearing on 4 May 2005 at 10.15 am before Riethmuller FM.
7.Costs be reserved.
On 9 December 2004, the Minister's solicitors, Clayton Utz, contacted Mr Belbruno by telephone on his mobile phone to advise him that it appeared to them that the application was misconceived as the applicant had never sought to have the Minister's delegate’s refusal to grant a protection visa reviewed by the Refugee Review Tribunal. Mr Belbruno then advised the solicitor acting for the Minister that he would be advising his client to withdraw the application.
The applicant sought judicial review of a decision of the RRT when no application (nor decision) had even been made by the RRT.
On 13 December 2004, the solicitors again contacted Mr Belbruno seeking information as to what steps were to be taken in the matter. They received a handwritten response on Mr Belbruno's letterhead dated 14/12/04 by fax which was in the following terms:
As discussed on telephone, I have not been able to get instructions from this client re continuation of proceedings.
I shall be overseas between December 16 and January 17. Please hold off until then. Thanks. Seasons Greetings, Joe Belbruno.
Mr Belbruno was contacted again on 20 January 2005 both by telephone and letter seeking urgent advice as to whether or not his client intended to proceed with the application.
The response to this was a facsimile of 21 January 2005 providing a Notice of Withdrawal as Practitioner. This notice does not make clear whether or not Mr Belbruno complied with the rules with respect to giving notice to his client prior to withdrawing in the matter.
On 28 January 2005, the solicitors for the respondent wrote to the applicant (at the address given in the Notice of Withdrawal as solicitor and at the address held by the Minister for Immigration) asking whether he intended to proceed with the matter. On 31 January 2005, a further address was obtained and the applicant written to at that address.
On 14 February 2005, a man telephoned the solicitors for the applicant purporting to be the applicant's pastor and advised that he would call back if the applicant was proceeding.
On 15 March 2005, the applicant telephoned the solicitors for the Minister advising that he wished to withdraw and that he had bought tickets and was intending to leave the country.
The application was discontinued on 18 March 2005.
The solicitor for the Minister advises in his affidavit that he has been advised by the department that the applicant left the country on 20 March 2005 by aeroplane.
There is no question as to the entitlement of the respondent to a costs order against the applicant, this being a wholly unsuccessful application which was not pursued. The real issue in this case is whether or not a costs order ought to be made against the applicant's former solicitor, Mr Belbruno.
Despite being served, Mr Belbruno did not appear to answer or oppose the application and I proceeded to hear the matter in his absence.
Solicitor’s conduct
It is apparent that the judicial review application was entirely misconceived. It must have been lodged without full instructions as there was no decision of the Refugee Review Tribunal to be judicially reviewed. It also appears on the face of the application that Mr Belbruno was not aware of any particulars specific to this case that would found the application that was filed.
The Court Book sets out the documents on the department's file, showing that:
a)The protection visa application was made in 1996 and ultimately refused in 1997.
b)In January 1999, a solicitor acting on behalf of the applicant (not Mr Belbruno) wrote to the respondent seeking a copy of the delegate's decision for the purpose of allowing a review to the Refugee Review Tribunal.
c)The department wrote back to this solicitor on 27 January 1999 enclosing a copy of the delegate's decision and providing advice with respect to the address held by the Minister and the effect of s 53 and regulation 5.03 of the Act.
It is apparent from this material that the application was filed around five and a half years after the last action was taken by the applicant with respect to the matter. There is nothing before me to indicate that there was any pressing urgency that required Mr Belbruno to file proceedings (for example, to avoid an impending time limit or deportation, etc) nor any material to indicate that Mr Belbruno had taken any reasonable steps after filing the application to obtain the appropriate documents or instructions to ensure that the proceedings were not an abuse of the process of the Court.
Whilst special considerations may be necessary in cases where clients attend upon a solicitor only shortly before a time limit is about to expire, this is not such a case and my reasons in this case should not be taken as being applicable to those more unusual and difficult circumstances that confront all solicitors from time to time.
The Law
The power to make a costs order directly against a solicitor is an inherent power of the Court, and it is not necessary to rely upon the Court's discretion with respect to costs under the Act: see Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965; Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185 per Mason CJ and Deane J and at 203 per Dawson J; Caboolture Park Shopping Centre Pty Ltd(in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224; Re JJT (1998) 23 Fam LR 1 at 4 per Gaudron J, at 5 per Gummow J and at 34 per Callinan J; Deputy Commissioner of Taxation v Levick (1999) 43 ATR 621 at 627 per Hill J; and Re Ansett Australia Holdings Limited (1997) 94 ACR 7 and 12.
Rule 21.07 of the Federal Magistrates Court Rules 2001 provides an independent source of power to make costs orders against solicitors as follows:
21.07 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.
(3) An order for costs against a lawyer may be made on the motion of the Court or Registrar, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
(4) The order may provide:
(a) that the costs, or part of the costs, as between the lawyer and party be disallowed; or
(b) that the lawyer pay the costs, or part of the costs incurred by the other person; or
(c) that the lawyer pay to the party or other person the costs, or part of the costs, that the party has been ordered to pay to the other person.
(5) Before making an order for costs, the Court or Registrar:
(a) must give the lawyer, and any other person who may be affected by the decision, a reasonable opportunity to be heard; and
(b) may order that notice of the order, or of any proceeding against the lawyer be given to a party for whom the lawyer may be acting or any other person.
Whilst the solicitor for the respondent advised that he was not aware of any cases on the issue, I have located a number of authorities.
To the extent that other rules have referred to negligence, this has been interpreted as being professional impropriety or gross negligence: see Etna v Arif [1999] 2 VR 353 at 383 to 384, and Dunstan (No. 2) (2000) 112 A Crim R 63 at 68 to 69. As French J stated in Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708 at 212:
9. There is no doubt in my opinion that the Federal Court has the power to make an order of the kind sought in this case. I accept the proposition that the jurisdiction is to be exercised with care and discretion and only in clear cases. The mere fact that litigation fails is plainly no ground for its exercise. There has to be something which amounts to a serious dereliction of duty - Edwards v. Edwards (1958) P 235 at 248. It is not necessary to ground the power to order costs against a solicitor in the existence of any duty to the opposing party and whether it can be so grounded is open to doubt - Orchard v. South Eastern Electricity Board (1987) 1 QB 565 at 571 but cf. Lord Denning MR in Kelly v. London Transport Executive (1982) 1 WLR 1055 at 1064-1065. It is debatable whether the traditional immunity of counsel would extend to limit the statutory power of the Court in this respect, but it is not necessary to decide that question in this case. Although practising in a fused profession the applicant's solicitor was acting in his capacity as a solicitor when he lodged the application for the permits and as a solicitor or solicitor and barrister when he instituted these proceedings. I note that Sir John Donaldson MR observed in Orchard v. South Eastern Electricity Board (supra) that he could "find no basis in logic or authority for holding that the essential public interest immunity affirmed in Rondel v. Worsley (1969) AC 191 protects the bar in relation to claims by their own lay clients, leaving them unprotected in respect of the far greater risk of claims by disgruntled litigants on the other side". It may be that one answer to that contention is that the power to award costs against counsel, if it is an element of the statutory power, would arise in the case of a breach of a duty to the court and not to counsel's client or any other party.
Dal Pont in Lawyers' Professional Responsibility (LBC, Sydney, 2001) says:
Importantly, the jurisdiction to order costs against a lawyer personally is one to be exercised sparingly, “with care and discretion and only in clear cases”, especially where the order sought is one for indemnity costs.[244] This is because, inter alia, it will often be difficult for a court to know all the details and circumstances of the lawyer’s instructions.[245] There is no cause for the jurisdiction to be exercised merely because the litigation is decided adversely to the litigant,[246] for otherwise “those seeking to advance legitimate claims, or pursue legitimate defences might well be deprived of legal representation and access to justice, in consequence, would be impeded”.[247] Nor should the jurisdiction be attracted merely because of the lawyer’s bona fide mistake or error of judgment,[248] or where the client has misled the lawyer as to the facts which would otherwise not have justified the action.[249]
The court’s task is to draw the line between an argument which does not succeed and one that justifies a third party costs order. That this line is found in the concept of abuse of the court’s process highlights the fact that the jurisdiction to order costs against lawyers is based on the ability of the court to enforce duties owed by practitioners to the court, as well as to the client.[250] So a case which is advanced, not to vindicate the applicant’s legal rights, but for an ulterior purpose such as the production of gross delay, or a defence which is advanced when none is really available for the purpose of delaying the enforcement of a claim which legitimately exists, clearly enlivens the jurisdiction of the court to make an order against the lawyer.[251] To attract this jurisdiction, the lawyer’s conduct must have involved a serious dereliction of duty or gross negligence.[252] Such orders have been made where a lawyer has made unsupported allegations to the court[253] or has thrown away costs by failing to know and observe the rules of court.[254] A lawyer who commences proceedings without authority, knowing this to be so, will also generally be required to personally meet the costs of those proceedings.[255]
The issue has assumed some topicality of late particularly in the context of lawyers pursuing hopeless cases in order to achieve some collateral advantage. The courts have emphasised in this regard that the lawyer must give sufficient consideration to whether there is any realistic chance of success. This does not mean that it is necessary for the lawyer to be satisfied that each point would succeed, but he or she must be satisfied that the points are at least seriously arguable in that there is a rational basis upon which they might succeed.[256]
[244] Deputy commissioner of Taxation v Levick (1999) 43 ATR 621 at 627 per Hill J; McKewins Hairdressing and Beauty Supplies Pty Ltd (in liq) v Deputy Commissioner of Taxation (2000) 34 ACSR 92 at 133 per Gummow J. Cf Re Yunghanns (2000)26 Fam LR 331 at 339-340 per Iindenmayer and Holden J.
[245] Levick v Deputy commissioner of Taxation (2000)44 ATR 315 at 324 (FC Fed Ct).
[246] Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708 at 712 per French J.
[247] Deputy Commissioner of Taxation v Levick (1999)43 ATR 621 at 627 per Hill J.
[248] Myers v Elman [1840] AC 282 at 319 per Lord Wright; Mauroux v Sociedade Commercial Abel Pereira Da Fonesca SARL [1972] 1 WLR 962; Cassidy v Murray (1995)124 FLR 267 at 281 (FC Fam Ct); Harley v McDonald [1999] 3 NZLR 545 at 564-565 per Tipping J.
[249] Nelson v Nelson [1997] 1 All ER 970.
[250] Myers v Elman [1940] AC 282 at 319 per Lord Wright; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 229 per Goldberg J; Levick v Deputy Commissioner of Taxation (2000) 44 ATR 315 at 324-325 (FC Fed Ct).
[251] White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 239 per Goldberg J; Deputy Commissioner of Taxation v Levick (1999) 43 ATR 621 at 628 per Hill J. See also Practice Note No 108 (2000) 47 NSWLR 629 (“Costs Orders Against Practitioners”).
[252] Edwards v Edwards [ 1958] P 235 at 248 per Sachs J; R & T Thew Ltd v Reeves (No 2) [1982] QB 1283 at 1285-1286 per Lord Denning MR; Copini and Sons v Skopaij (1985) 42 SASR 100 at 104 per Lunn AJ; Ridehalgh v Horsefield [1994] 3 WLR 462 at 482 per Sir Thomas Bingham MR; Re A Company (No 006798 of 1995) [ 1996] 2 All ER 417 at 429-432 per Chadwick J; Count Tolstoy-Miloslavsky v Lord Aldington [1996] 2 All ER 556 at 563-567 per Rose LJ; Harley v McDonald [1999] 3 NZLR 545 at 564-566 per Tipping J (who remarked that incompetence or negligence falling short of a disciplinary level will not ordinarily amount to a serious dereliction of duty to the court: at 566).
[253] Y v M [1994] 3 NZLR 581 at 589 per Temm J; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 at 242 per Goldberg J.
[254] Riv-Oland Marble Co (Vic) Pty Ltd v Settef Spa (1989) 63 ALJR 519
[255] Nelson v Nelson [1997] 1 All ER 970 at 976-978 per Waller LJ.
[256] Levick v Deputy Commissioner of Taxation (2000) 44 ATR 315 at325 (FC Fed Ct).
The matter has been the subject of academic interest in the United Kingdom. Evans, in Lawyers' Liabilities (Sweet and Maxwell, 2002, London) devotes an entire chapter to the wasted costs jurisdiction. In England, the jurisdiction to order costs against a lawyer was considered in the context of a migration matter in R v Immigration Appeal Tribunal ex parte Gulbamer, Gulsen [1997] COD 430, although in circumstances so dissimilar it is not helpful here.
The issue, in the context of the Migration Act 1958, has been specifically considered by Mansfield J in Kumar v The Minister [2004] FCA 18; (2004) 133 FCR 582 and has been twice considered by Federal Magistrates in Sydney in SZABF v The Minister for Immigration (No. 2) [2003] FMCA 178 and Baik and Hankuk Grocery Proprietary Limited v The Minister for Immigration [2004] FMCA 543.
The Full Court of the Federal Court has also considered the issue in the context of commercial proceedings in some detail in the case of Flower and Hart v White Industries Queensland Pty Ltd [1999] FCA 773; (1999) 87 FCR 134 saying:
The authorities do not support the proposition that simply instituting or maintaining a proceeding on behalf of a client which has no or substantially no prospect of success will invoke the jurisdiction. There must be something more namely, carrying on that conduct unreasonably. It is not clear what is encompassed by ‘unreasonably’ initiating or continuing proceedings if they have no or substantially no chance of success. It seems to me that it involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success with either a recognition that there is no chance of success but an intention to use the proceeding for an ulterior purpose or with disregard of any proper consideration of the prospects of success.
…[T]he 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.
In Kumar v The Minister [2004] FCA 18; (2004) 133 FCR 582 Mansfield J said:
14. Consequently, I proceed on the basis that simply by instituting or maintaining on instructions proceedings which have no real prospect of success is not a dereliction of duty by a solicitor which warrants an order for costs.
15. Of course that does not excuse the solicitor from the obligation to conduct such investigations, and to give such advice, as is appropriate in the circumstances before the institution of the proceedings. It is for the client whether to take that advice. If the client does not do so, it may well be in the public interest for the client to be represented, as the solicitor then has the duty to the Court not to incur costs improperly or without reasonable cause: see e.g. O 62 r 9 Federal Court Rules. The so-called ‘wasted costs jurisdiction’ gives rise to its own problems: see Evans ‘The Wasted Costs Jurisdiction’ (2001) 64 MLR 51. The advocate also of course has duties of independence and frankness to the Court: see e.g. survey of relevant professional conduct rules in Australian Law Reform Commission, Report No 89 ‘Managing Justice’, January 2000 at pars 3.84 to 3.92. Proceedings, even hopeless proceedings, are likely to be conducted more efficiently by a solicitor for a party than by a litigant in person: see e.g. Australian Law Reform Commission, ‘The Unrepresented Party’, Adversarial Background paper 4, December 1996; ‘Managing Justice’; Law Foundation of New South Wales, Unrepresented Parties and the Equal Opportunity Tribunal: ‘A Survey of Tribunals and Recommendations for Change’, Access to Justice Series; Law Reform Commission of Western Australia ‘Review of Civil and Criminal Justice System, Consultation paper; Litigants in Person, ‘Unreasonable and Vexatious Litigants;, March 1999; Law Reform Commission of Western Australia, Review of the Criminal and Civil Justice System in Western Australia: Final Report, September 1999. The High Court in Cachia v Hanes (1993) 179 CLR 403 at 415 recognised the problems commonly experienced in the efficient conduct of litigation by litigants in person. The fact that instructions are given to pursue an apparently hopeless claim may demonstrate that, had the solicitor not acted in the matter, the litigant would have pursued the claim unrepresented. In such cases it may be difficult to discern that the conduct of the solicitor has in fact led to the other party incurring costs which otherwise would not have been incurred; generally the costs incurred are likely to have been less by reason of the representation.
16. Moreover, such an approach does not permit a solicitor to institute, or maintain, proceedings which are being conducted for an ulterior purpose. It does not entitle the solicitor to propose arguments, and then to obtain instructions to propound claims, which are clearly untenable (as occurred in Levick). If advice ought to have been given that the proposed proceedings had no real prospect of success and if, upon the material before the Court, such advice would have been accepted by the client so that the proceedings would not have been instituted, then also the solicitor may be ordered to pay the costs of the proceedings (as occurred in De Sousa).
17.Lord Bingham of Corkhill in Medcalf at [23], 135 reinforced however two points. In addressing a claim that a solicitor pay the costs of instituting and maintaining proceedings, client legal privilege precludes the solicitor (in the absence of waiver by the client) from giving any account of communications with the client. Secondly, and consequently, the Court will often be in the position where the solicitor will not have had a fair opportunity to have been heard because it will not be able to know what might have been put in opposition to the costs order sought. Such matters reflect the cautious approach urged by Drummond J in Re Bendeich cited in [4] above.
In the case of Kumar, there was an impending time limit and the Court found that the solicitor failed in a serious and significant way to give reasonable attention to the relevant law. It was alleged that in that case the solicitor had not set out in the application the material facts upon which it was based, but simply annexed a copy of the decision of the RRT.
In Kumar, the solicitor had issued proceedings to quash a Tribunal decision due to the Tribunal's failure to adjourn to allow the applicant to locate and advise a business sponsor, which was subsequently done and deposed to in an affidavit in support of the application.
Raphael FM in SZABF relied upon the tests set out by Drummond J in Bendiech, his Honour concluding:
7.Drummond J considered the circumstances in which an order for costs should be made against a legal practitioner In the matter of Bendiech FCA, Unreported 23 November 1994. His Honour considered the authorities including Myers v Elman [1940] AC 282, Felix v General Dental Council [1960] AC 704 and Caboolture Park Shopping Centre Pty Ltd v White Industries (QLD) Pty Ltd (1993) 45 FCR 224. His Honour referred to the caution expressed by the Chief Justice in Bent v Gough (1992) 36 FCR 204. His Honour required three tests to be made out. The first being that the practitioner had committed a breach of his duty to the court to conduct the litigation on behalf of his client with due propriety. The second that the breach involved conduct more than mere negligence and amounted, at the very least, to gross negligence; and finally that the result of any such dereliction of duty by the solicitor had been to occasion useless costs of the objectors ie costs which they had incurred but which had produced no benefit to them in pursuing their objections.
In that case, there was evidence from the solicitor that he had only acted upon instructions. He had failed to withdraw an allegation of bad faith when it appears there was little or no evidence to support the allegations.
In Baik, Driver FM referred to the comments of Lord Wright in Myers v Elman [1940] AC 282 at 319, where his Lordship said:
In considering the application I have borne in mind that the jurisdiction must be exercised with caution (Bent v Gough (1992) 36 FCR 204 and Re Bendeich) and that the authorities in relation to the general discretion of a Court to award such costs suggest that the power should only be exercised in cases of gross neglect or substantial departure from proper professional standards (see White Industries (Qld) Pty Ltd v Flower and Hart (a Firm) (1998) 156 ALR 169 and Flower and Hart (a Firm) v White Industries (Qld) Pty Ltd (1999) 163 ALR 744). As Lord Wright stated in Myers v Elman (1940) AC 282 at 319:
A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which is a solicitor's duty to ascertain with accuracy may suffice.
It is also important to have regard to the effects of the laws relating to privilege. Hill J in Deputy Commissioner of Taxation v Levick (1999) 43 ATR 621 at 627 said:
11. The jurisdiction is, I think, one that must be exercised sparingly, having regard to all the circumstances of the particular case. It is clear enough that a litigant is entitled to representation to vindicate a particular legal right, or to maintain a legal defence. Should it turn out that the litigation is decided adversely to the litigant it does not follow that costs should, in consequence, be ordered against the legal adviser, be he or she a solicitor or a barrister. Were that the case those seeking to advance legitimate claims, or to pursue legitimate defences might well be deprived of legal representation and access to justice, in consequence, would be impeded.
12. What is submitted in the present case on behalf of the Commissioner is that a cost order should be made against a solicitor where the case advanced is one which has substantially no chance of success: cf per Goldberg J at first instance in White Industries (QLD) Pty Ltd v Flower & Hart (No 2) (1998) 156 ALR 169 at 236 and per French J in De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544 at 548, where his Honour ordered costs against a solicitor where there was a failure to give reasonable attention to the relevant law and fact, such as to amount to a serious dereliction of duty.
These sentiments were restated by the Full Court of the Federal Court in Levick v Deputy Commissioner of Taxation (2000) 44 ATR 315:
35. Dillon LJ noted the difficulty, caused by the doctrine of legal professional privilege, in knowing what advice the solicitors and counsel had given their client. He saw that difficulty as "part of the price which has to be accepted from rules designed to ensure that a litigant has freedom to consult with his lawyers before his case comes before the court". He went on (at 580-581):
"This public policy aspect does, however, have further implications. The power of the court to order a solicitor to pay the costs personally where litigation has been initiated or continued unreasonably when it had no or substantially no chance of success is, in an appropriate case, a very salutary power. I do not, however, regard it as at all salutary that a practice should develop whereby solicitors for defendants endeavour to browbeat solicitors for legally-aided plaintiffs into dropping their clients' cases - or into procuring revocation of the relevant legal aid certificates - by threats that the defendants will seek to hold the plaintiffs' solicitors personally liable for the costs of the litigation. In Carl Zeiss Stiftung v. Herbert Smith & Co. (No.2) [1968] 2 All E.R. 1233, 1236, Pennycuick J. said in relation to an attempt by a plaintiff to harass the solicitors for the defendant (by a claim that all funds in the solicitors' hands were subject to a constructive trust):
`The prospect of this personal liability would be a grave deterrent to a responsible solicitor undertaking the conduct of such an action at all, for ... the conduct of the action would represent a gamble on his client's success, a highly undesirable state of affairs. If he did undertake the defence, the fact that he was at risk in regard to this liability might, and in many circumstances almost inevitably would tend to influence and hamper him at various stages in the action ... He might even find that his interest was in conflict with his duty to his client, for example, in connexion with some suggested compromise. There can I think be no doubt that such a claim would represent a very serious obstruction in the course of justice.'
Conclusions
In this case the solicitor filed proceedings seeking judicial review of a decision of the RRT, yet the applicant had never made application to the RRT and the RRT had never considered the case. The applicant had no basis whatsoever in fact or law.
In my view, in a case such as this, where there was no impending time limit (any potential or arguable time limit having expired for some years) or other urgency, there was a duty upon the solicitor to ascertain that there was some basis in fact or law for a case to be put to the Court. The failure to do so indicates that the solicitor has acted with a flagrant disregard of his obligations to the court. It could not be said that this case was even arguably not an abuse of process. Nor was this a case where the solicitor has brought proceedings against the wrong respondent or erroneously seeking the wrong remedy in circumstances where the client has a genuine grievance to pursue: it is not mere negligence or inadvertence.
There is no material from the solicitor, who practices regularly in this jurisdiction, that this was an ‘error of judgment’ or even considered by him to be an application with some proper basis, at the time of filing.
In the absence of any evidence from the solicitor, or even an appearance before the Court, to provide any explanation for conduct which, on its face, appears to be without any basis in fact or law, I find that this is a breach of the solicitor's duty to the Court.
If there is not an impending time limit or other basis for urgency then it is incumbent upon a solicitor to ensure that proceedings are not filed in a case entirely without basis in fact or law.
Just as a solicitor can not continue to act if aware that a client is not fulfilling his obligations of discovery (see Myers v Elman [1940] AC 252) so too a solicitor must not commence proceedings that are entirely without basis in fact or law.
The only reasonable conclusion to be drawn in this case is that the proceedings were for an ulterior purpose.
I am satisfied that the solicitor’s conduct in this case fell so far short of that of a reasonable practitioner that it amounted to misconduct. The misconduct has caused the Minister to incur significant costs.
I am satisfied it is appropriate to make an order for the solicitor to pay the Minister’s costs both under Rule 21.07 and in the exercise of the Court’s inherent jurisdiction.
It also appears to me to be a case where it is appropriate to direct the Registrar to forward the papers in this matter to the Law Institute of Victoria to enable them to investigate the conduct of the solicitor in this matter, as Raphael FM did in SZABF with respect to the solicitor in that case.
I must now turn to determine the appropriate order for costs in this matter. The Minister seeks costs in the sum of $1,900.00, being calculated on the Federal Magistrates Court scale rules as follows:
Stage 1, initiating application up to completion of the first Court date
$1,800.00
Disbursements
$120.00
The Minister says that indemnity costs incurred up to the date of discontinuance are $2,300.00, including disbursements of $120.00.
I find that it is appropriate to order costs on the basis of the scale in the Federal Magistrates Court Rules.
The scale fees would be: Stage 1 at $1,820.00 plus the solicitor advocate fee for an appearance on dismissal of the application, being $285.00 on a short mention. I therefore find the costs claimed, at $1,920.00 reasonable and fix the costs in that amount.
The Minister should also have her costs of the application against the solicitor today, which, on the scale for a half day matter, are as follows: Stage 2 at $1,135.00 together with a half day hearing fee at $1,027.50, less the fee to appear in the matter, taken into account above. This comes to a total of $1,877.50.
I therefore order that the solicitor pay the respondent’s costs fixed at $3,797.50.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Riethmuller FM.
Associate:
Date:
[243] Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708 at 712 per French J.
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