Play the ball and not the player: Considerations for legal practitioners seeking personal costs orders
BY DANIELA FAGGIONATO AND LUCY WILLIAMS – AUG 04, 2023 8:25 AM AEST
Snapshot
- The Court has jurisdiction to make a personal costs order against a legal practitioner, but the threshold of conduct enlivening this jurisdiction is high. The Court will only make such orders in clear cases.
- Courts may require legal practitioners who make submissions against an opposing lawyer to explain or justify the basis on which those submissions are made.
- Personal costs orders against legal practitioners should not be sought gratuitously or prematurely, and such conduct will be taken seriously by courts.
A costs order may be made directly against a legal practitioner pursuant to section 99 of the Civil Procedure Act 2005 (NSW) (‘CPA’). For the Court’s jurisdiction to be enlivened, either s 99(1)(a) or s 99(1)(b) must apply and the Court must be satisfied that costs have been incurred:
- ‘by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
- improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
- be made with proper notice to the legal practitioner, in order to allow the practitioner a full and sufficient opportunity to answer it (Myers v Elman [1940] AC 282 at 318; Orchard v South Eastern Electricity Board [1987] 1 QB 565 at 572; Ridehalgh v Horsefield [1994] Ch 205 at 229 cited in Lemoto v Able Technical Pty Ltd [2005] NSWCA 153  (‘Lemoto’) at [92]); and
- be supported by complete particulars akin to the degree of particularity required in a disciplinary complaint (Lemoto at [146]; Mitry Lawyers v Barnden [2014] FCA 918 at [59]–[65]).
Judicial approach to personal costs orders
Allegations that a legal practitioner has engaged in the conduct described in s 99 are taken seriously by the Court and should not be made lightly. It is well established that the Court’s jurisdiction to make a personal costs order against a legal practitioner must be exercised sparingly and only in clear cases (see Lemoto at [92]; Treadwell v Hickey [2010] NSWSC 1119 (Barrett J) at [34]; Muriniti v Mercia Financial Solutions Pty Ltd [2021] NSWCA 180 at [73]).
The threshold is extremely high and courts have been reluctant to make such orders. The NSW Court of Appeal recently overturned a personal costs order made against a solicitor, which was based on an allegation the solicitor filed a defence when he did not believe it had reasonable prospects of success (see Gokani v Visvalingam Pty Ltd [2023] NSWCA 80).
Further, allegations in connection with s 99 can have the serious consequence of placing the impugned solicitor in a position of conflict with his or her client. This can stall proceedings and disadvantage the parties who will be subject to the delay and expense of responding to the application or even engaging new solicitors.
In Deighton v Dewit [2022] NSWSC 1390, the NSW Supreme Court was ‘disinclined’ to make an order that costs be borne personally by the plaintiff ’s solicitor. The reasoning included that it may adversely affect the relationship between the plaintiff and his solicitors, causing further delay and expense (at [17]). In those circumstances, the defendant’s motion was dismissed.
Gratuitous suggestions of professional misconduct
Practitioners should also be aware that gratuitous assertions of professional misconduct are not taken lightly by courts and should be avoided. An indication of the Court’s approach to unsupported allegations of professional misconduct against legal practitioners can be found in BCEG International (Australia) Pty Ltd v Xiao (No 3) [2022] NSWSC 1221.
In that matter, the defendants served submissions which appeared on their face to have been settled by senior counsel. The submissions suggested that certain claims made by the plaintiffs could not be maintained and should be withdrawn, otherwise the first and second defendants ‘reserve their rights against BCEG and its legal representatives’ (at [20]).
Her Honour Justice Rees expressed concern at this assertion and noted that legal representatives should ‘play the ball and not the man’ (at [55]). Senior counsel was ordered to provide an affidavit containing an explanation of the basis for the submission.
Conclusion
Although the Court has broad jurisdiction under s 99 of the CPA to order against a legal practitioner for incurring unnecessary costs, there is a high threshold for making such an order. Practitioners should ensure there is sufficient evidence before seeking such an order. Allegations of misconduct against other practitioners should not be made frivolously and there may be consequences for legal practitioners who make unmeritorious allegations. Premature or tactical personal costs applications should be avoided.
This article originally appeared on lsj.com.au