Re Felicity (No. 2)
[2012] NSWSC 1561
•14 December 2012
Supreme Court
New South Wales
Medium Neutral Citation: Re Felicity (No. 2) [2012] NSWSC 1561 Hearing dates: Submissions from plaintiff 22 May 2012 Decision date: 14 December 2012 Jurisdiction: Equity Division - Protective List Before: White J Decision: No further orders made.
Catchwords: COSTS - costs orders against legal practitioners pursuant to s 99 of Civil Procedure Act 2005 - no such order made in the circumstances because arguments advanced by solicitor were not obviously untenable - solicitor's conduct of Children's Court proceedings not relevant to wasted costs order in present proceedings Legislation Cited: Civil Procedure Act 2005 (NSW)
Legal Profession Act 1987 (NSW)
Family Law Act 1975 (Cth)
Commonwealth Powers (Family Law - Children) Act 1986 (NSW)
Children & Young Persons (Care and Protection) Act 1998 (NSW)Cases Cited: Re Felicity [2012] NSWSC 494
Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300
Steindl Nominees Pty Ltd v Laghaifar [2003] QCA 157; [2003] 2 Qd R 683
Levick v Deputy Commissioner of Taxation [2000] FCA 674; (2000) 102 FCR 155
Fay v Turner [2008] FMCA Fam 1508
Louise v Director General of Community Services [2011] NSWSC 1646Category: Costs Parties: Mother of Felicity (Plaintiff)
Director General, Department of Family & Community Services (1st Defendant)
Father of Felicity (2nd Defendant)
Felicity (4th Defendant)Representation: Counsel:
G Potkonyak, solicitor (Plaintiff)
K Richardson (1st Defendant)
In Person (2nd Defendant)
K Shea, solicitor (4th Defendant)
Solicitors:
Capellia Legal (Plaintiff)
Crown Solicitor's Office (1st Defendant)
N/a (2nd Defendant)
Legal Aid NSW (4th Defendant)
File Number(s): 2011/407161
Judgment
HIS HONOUR: In these proceedings I ordered that the plaintiff pay the first and second defendants' costs, but directed that the plaintiff's solicitor provide a written submission in relation to the question whether I ought to make an order under s 99 of the Civil Procedure Act 2005 (NSW) directing payment of costs by the plaintiff's solicitor (Re Felicity [2012] NSWSC 494 at [75] and [76]). This judgment concerns that question. Section 99 of the Civil Procedure Act relevantly provides:
"99 Liability of legal practitioner for unnecessary costs
(cf Act No 52 1970, section 76C; SCR Part 52A, rules 43 and 43A)
(1) This section applies if it appears to the court that costs have been incurred:
(a) by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
(b) improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
(2) After giving the legal practitioner a reasonable opportunity to be heard, the court may do any one or more of the following:
...
(b) it may, by order, direct the legal practitioner:
...
(ii) in the case of a solicitor, to pay to the client the whole or any part of any costs that the client has been ordered to pay to any other person, whether or not the client has paid those costs,
(c) it may, by order, direct the legal practitioner to indemnify any party (other than the client) against costs payable by that party."
In this case there is no question of the plaintiff's solicitor having misconducted the proceedings. It is not a case in which the solicitor has increased costs by failing to comply with court orders or presented evidence he knew to be false. Rather, the question is whether the legal arguments advanced by Mr Potkonyak for the plaintiff, which were clearly arguments for which he, and not his client, was responsible, were so untenable that I should conclude that the costs were incurred "without reasonable cause, in circumstances for which [he] is responsible" (s 99(1)(b)).
In Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300, McColl JA, with whom Hodgson and Ipp JJA agreed, discussed the exercise of the jurisdiction to make a wasted costs order (in that case, under s 198M of the Legal Profession Act 1987 (NSW)) and confirmed that it is not enough that a legal practitioner commence or maintain proceedings with no or no substantial prospects of success (at [111]). The proceedings must be "plainly unarguable", not barely arguable, or "untenable and obviously so" (Steindl Nominees Pty Ltd v Laghaifar [2003] QCA 157; [2003] 2 Qd R 683 at 689; Lemoto v Able Technical at [113]). In Levick v Deputy Commissioner of Taxation [2000] FCA 674; (2000) 102 FCR 155, the Full Court of the Federal Court said in a case such as the present which involves no unresolved question of fact and where the unsuccessful argument clearly originated with the lawyer, as distinct from the lawyer taking on a difficult argument that the client was determined to pursue, it is necessary for the lawyer to be satisfied that there is a rational basis upon which the argument might succeed (at [45]).
The jurisdiction to make a wasted costs order in circumstances such as the present is to be exercised with caution having regard to the undesirability of deterring a lawyer from advancing an argument which, although novel, might have some merit. The jurisdiction must also be exercised cautiously and only in clear cases to avoid threats of wasted costs orders being used as a weapon in litigation.
In the course of my reasons for rejecting the arguments advanced by Mr Potkonyak for the plaintiff, I characterised some of the arguments as being "clearly incorrect" (at [44]) or "misconceived" (at [53]). I concluded that "none of the arguments advanced for the mother has substance" (at [72]).
Nonetheless, I have concluded that the arguments advanced by Mr Potkonyak were not so obviously untenable that I should find that the costs incurred as a result of his advancing the arguments were incurred improperly or without reasonable cause, or were incurred as a result of serious incompetence. In particular, the arguments based upon the construction of s 69ZK of the Family Law Act 1975 (Cth) were arguable. There was some support for part of the argument from Fay v Turner [2008] FMCA Fam 1508, referred to at [67] of my reasons. The arguments based upon the Commonwealth Powers (Family Law - Children) Act 1986 (NSW) were more problematic, but I think they should be characterised as barely arguable rather than unarguable.
I was referred by the Director-General to the decision on costs of his Honour Judge Marien SC in the proceedings in the Children's Court from which the application arose. It appears from his Honour's reasons that had there been power to make a wasted costs order under s 88 of the Children & Young Persons (Care and Protection) Act 1998 (NSW) his Honour would have been minded to make such an order against Mr Potkonyak in those proceedings. However, different issues arose in those proceedings. The circumstance that attracted consideration of the jurisdiction in that case was that Mr Potkonyak had appeared for the plaintiff on the application under s 90 of the Children and Young Persons (Care and Protection) Act for leave to rescind earlier care orders by reason of there being significant changes in relevant circumstances, but abandoned reliance upon matters which would be relevant to that question and relied only upon his "jurisdictional" argument that was advanced in this court. In the end he invited dismissal of the plaintiff's application. His Honour Judge Marien concluded that the application was doomed to fail, not by reason of any lack of prospects of success of a proper application brought under s 90, but by reason of the fact that the Children's Court could not have jurisdiction to determine the issues sought to be raised. As his Honour said, the Children's Court could not have jurisdiction to rescind a care order on the ground that the Children's Court lacked jurisdiction to make the original order.
That was a different question from the arguability of the issues raised before me. I do not consider that the criticism of Mr Potkonyak's conduct of the Children's Court proceedings made by his Honour Judge Marien and by Slattery J (Louise v Director General of Community Services [2011] NSWSC 1646 at [17], [34]), and by me in my previous reasons (at [73]), can be a justification for making a wasted costs order against Mr Potkonyak in these proceedings.
For these reasons I have concluded that I should not make an order under s 99 of the Civil Procedure Act directing payment of costs by Mr Potkonyak. I think it is highly regrettable that the plaintiff should have been exposed to a liability for costs because Mr Potkonyak decided to maintain his argument based on constitutional grounds. It would be even more unfortunate if the plaintiff has not been able to have her application determined on its merits in the Children's Court. But I do not consider that an order under s 99 is justified.
For these reasons I make no further order in this matter.
Decision last updated: 14 December 2012
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