BACKGROUND
7 The trial of the principle proceedings was originally set down to commence on 2 April 2012. On that day, the respondents appeared as self-represented litigants. They sought and obtained an adjournment of the trial by reason of Legalese having ceased to act for them and by reason of their default in filing affidavits. On 3 April 2012, Mansfield J vacated the hearing and relisted the matter to 14 May 2012. His Honour made the following orders as to costs (the 3 April 2012 orders):
…
3. The Applicants [sic] are entitled to costs thrown away, by reason of the adjournment fixed at $6,000 in any event.
4. The costs so payable be paid:
(a) by the Respondents jointly and several and that some of the costs be paid within 14 days of today's date; and that
(b) the question of whether those costs be paid by the respondents' former solicitors be adjourned for hearing and determination on Thursday 5 April 2012 at 3:30 pm.
…
8 The trial of the principle proceedings then proceeded on 14 May 2012 and judgment was delivered in August of that year.
9 On 10 May 2013, Mansfield J made orders in the following terms (the 10 May 2013 orders):
l. Legalese Pty Ltd trading as Scragg & Associates (Legalese) pay to the first respondent the sum of $6000 being the sum of $6000 ordered to be paid by the respondents to the applicant for costs incurred by the applicant by the adjournment of the hearing of the application, by order made on 5 April 2012.
2. Legalese satisfy the obligation to the first respondent by Order 1 hereof by:
(a) if the first respondent within 21 days produces evidence to Legalese of the payment of the said sum of $6000 to the applicant, payment to the first respondent; or
(b) if the first respondent does not produce such evidence within the period specified, payment to the solicitors for the applicant on account of the applicant;
and such payment by Legalese shall in any event discharge any liability to the respondents in respect of the adjournment of the hearing.
3. Legalese and any party have leave to apply within 21 days by written notice to the Court for an order to vary or discharge Order 2 hereof.
10 The order in paragraph 1 was made pursuant to r 40.07(1)(c) of the Federal Court Rules 2011 (Cth). It entitles a party who has reasonable cause to believe that additional costs have been incurred because of his or her lawyer's misconduct to apply to the Court for an order that the lawyer pay to the party the costs that the party has been ordered to pay to another party (Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako (No 4) [2013] FCA 418 at [47], [52]).
11 His Honour held (at [49], [54]):
49 … it is plainly a case where the conduct of the matter by the solicitors in a substantial degree caused the adjournment of the trial, and incurred the costs thrown away which the respondents were ordered to pay. …
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54 Given the purpose of those costs, unless there is some supervening event of which I am unaware, I consider that that liability should be met either by paying that sum to the solicitors for the applicants direct if they have not been paid that sum, or alternatively by paying the sum to Mr Poumako if he is able to produce to the solicitors evidence (such as the receipt of the applicant's solicitors) of the payment of that sum. I will give the solicitors and the respondents and the applicant's solicitors leave to apply within 21 days to vary the order made by this paragraph of my reasons in the event that, for some reason of which I am presently unaware, it is not appropriate to make an order in those terms. The orders also ensure that the solicitors cannot be liable to any other respondent for the costs thrown away by the adjournment if the solicitors comply with the orders made.
12 On 20 September 2013, Legalese filed an interlocutory application in the primary action (quantum application).
13 On the quantum application, Legalese sought an order varying the 10 May 2013 orders under the so-called "slip rule" on the basis that the orders did not reflect the intention of the Court. In short, Legalese complained that the sum of $6,000 was in excess of the costs in fact thrown away by Mr Ambrose and so the orders did not reflect the Court's intention to have Mr Ambrose indemnified only insofar as he incurred a liability to pay legal costs referable to the adjournment. The only variation sought to the orders was a reduction in the amount specified in the 10 May 2013 orders from $6,000 to $3,500, being an amount that had been paid by Legalese to Mr Ambrose's solicitors on 23 August 2013.
14 Argument on the quantum application was heard on 8 October 2013. On 29 November 2013, Mansfield J made an order that the application be dismissed. His Honour further ordered Legalese to pay Mr Ambrose's costs of that application. The costs were assessed at $5,302.03, and that sum has since been paid by Legalese to Mr Ambrose. Legalese paid the amount of $2,500 to Mr Ambrose's solicitors in February 2014 and thereby discharged its obligation under the 10 May 2013 orders (which obligation is now disputed).
15 Following the dismissal of the quantum application, Mr Scragg obtained a creditor's report prepared by Mr Ambrose in connection with the administration of Mr Poumako's bankrupt estate. The report stated that Mr Ambrose had received $25,000 towards his legal costs in satisfaction of a costs order and that he expected to receive a further $6,000 pursuant to a separate costs order.
16 Mr Scragg subsequently obtained a copy of a settlement deed made on 18 June 2013 by Mr Ambrose on the one hand and the Poumako interests on the other. He asserts that he obtained the deed by making a request for it. The word "request" does not accurately describe the circumstances in which the deed was procured by Mr Scragg. More will be said about that later in these reasons.
17 The settlement deed provided for the payment by the Poumako interests to Mr Ambrose of a settlement sum in the amount of $25,000 in consideration for Mr Ambrose releasing the Poumako interests from certain liabilities. On the available evidence, I find that the settlement sum was paid on 2 July 2013 (that is, after the 10 May 2013 orders, but before Legalese brought its application to have those orders varied and before it paid the ordered sum in two instalments).
18 Mr Scragg submits that by virtue of the payment of the settlement sum "all costs claims between [Mr Ambrose and the respondents] were extinguished and resolved". He submits the subsequent payment by Legalese to Mr Ambrose of $6,000 in two instalments resulted in Mr Ambrose receiving $31,000, being a sum greater than that to which he was entitled pursuant to the settlement deed. He further submits that the existence of the settlement deed and the circumstance that the settlement sum had been paid were material facts that should have been but were not disclosed to this Court at the hearing of the quantum application on 8 October 2013 and that, had those matters been disclosed, the orders of 29 November 2013 would not have been made.