Their Honours then set out the provisions of Part 76C of the SCA and Part 42A rules 4 and 43 of the SCR. They said that an order could not be made against the solicitor because they did not regard his conduct as amounting to "serious neglect, serious incompetence or serious misconduct". In relation to the possibility of making an order under Part 32 rule 43 they said:
"The Court should not make an order for costs against Mr Pike for the purpose of punishing him or to demonstrate its disfavour of the way he or his employer has acted in this matter. The grounds for making an order against him must be that his action or inaction led to the incurring of costs which would not otherwise have been incurred or the wasting of costs which would not otherwise have been wasted. Mr Pike, so far as appears, was entitled to advise his client that he would no longer act for him. Had Mr Pike complied with Pt 66 r 7 and, after due notice, filed a notice of ceasing to act, it is difficult to see how an adjournment of the appeal could have been avoided. It is unlikely that in the few extra days Dr Leicester would have been able to obtain other representation. He would have been compelled to make the application for adjournment that he did and the application would have been successful with the consequence of wasted costs that follows. Earlier notice to the Court may have resulted in the Court's being able to hear another matter on the day vacated. We do not think in this case that costs could be said to have been insured [sic] improperly or without reasonable cause or wasted as the result of any misconduct or default of Mr Pike.
In our opinion the facts do not warrant an order that Mr Pike indemnify any of the parties for the costs of the application before Sheller JA or the costs thrown away as a result of the adjournment of the appeal. The Court has no power to make any order against United Medical Defence."
16 It seems clear that the Court of Appeal took the view that s 76 of itself gave this Court power to make orders for costs against non parties but that that power was restricted by the provisions of Part 52A r 4. However, by reason of the exception of r 43 contained in Part 52A r 4(5)(a) an order can be made in appropriate circumstances against a non party solicitor. The central reason given for not making an order against the solicitor in that case was that there was no causal connexion between the waste of costs and the solicitor's conduct; the solicitor would not have acted improperly if he had filed notice of ceasing to act after giving seven days notice and the abortion of the hearing of the appeal, which was what caused the waste of costs, would have occurred in any event; it could not be said to have been caused by the solicitor's inappropriate conduct. It may be that the Court of Appeal also took the view that the nature of the conduct was not sufficient to justify a costs order. Certainly the Court took the view that there was no longer an inherent power to order costs against practitioners: see also Wentworth v Rogers [25]. It also emphasised that, whatever the source of power, the order should always be compensatory, not punitive.
17 The basis on which a compensatory order may be made within a supervisory jurisdiction over practitioners was expounded by Goldberg J in White Industries supra 156 ALR at 229-230. In my opinion, the Court could in this case act in the exercise of that power as preserved by Part 52A r 4(5)(e) of the SCR with the same result as come to below. However, I am content to proceed under the provisions of r 43A.
18 However, r 43A does raise the question of an anomaly in the Rules. Already, in the case of a solicitor there is a tension in the relationship between the exception to Part 52A r 4 specified in terms of r 43 and the exception specified in terms of the supervisory jurisdiction of the Court over its officers, or at least a question of the respective ambits of those powers. The additional problem in relation to barristers arises from the fact that r 43A, unlike r 43, receives no mention whatever in r 4 including it in the list of exceptions. On the one hand r 4 prohibits the power in s 76 being used to make orders against non parties. On the other hand, r 43A, generally similar to r 43, provides for the making of costs orders against barristers in circumstances where they are clearly not parties to the proceedings. Nor would there seem to be any reason for providing for making costs orders against barristers if they were parties, since in those circumstances, the ordinary rules relating to parties and the generality of the discretion in s 76 would apply.
19 In my view the omission of r 43A from the exceptions in r 4 must be taken to be simply a drafting anomaly. The regulation of the circumstances in which orders may be made against barristers in r 43A (which is later in promulgation than r 4) must be taken as creating an exception to r 4 to permit s 76 to operate in its full ambit in respect of barristers, at least in the circumstances provided for in r 43A, and this despite the lack of provision of a specific exception in r 4.
20 In these circumstances, in my opinion the relationship among ss 76 and 76C of the SCA and Part 52A rr 4, 43 and 43A of the SCR merit the further attention of the rule making body, and perhaps the legislature.
21 The only other question is whether r 43A should be taken to be limited in its ambit to conduct of barristers in the very proceedings in which costs are sought. Mr Abdul-Karim played no actual part as a barrister in the proceedings in which an order for costs is sought against him, namely, these proceedings. He never held any retainer in these proceedings. However, the two sets of proceedings are closely related. I note that the claim for the removal of the second caveat could have been made, as well as by separate summons initiating fresh proceedings, by cross claim in proceedings 3422/97, as the claim to remove the first caveat was made. Although judgments had been delivered in those proceedings, the proceedings were still pending at the time and the Court's function in relation to them was not spent. Indeed, subsequently, in November 1998, an order was made consolidating these proceedings and 3422/97.
22 In my opinion a limitation of r 43A so as to permit an order only in proceedings in which the barrister has actually been retained would be a limitation akin to that which, after long prevailing in England, was rejected by the House of Lords in Aiden Shipping. It is true that in that and other cases the courts were not considering a rule in terms of the NSW Part 52A r 43A. The terms of that rule may be said to suggest in the use of expressions such as "other party" that the barrister concerned must be acting in the very suit for a party. However, one of the cases in which the rule provides for the making of an order is where costs are "… wasted by undue delay or by any other misconduct … and … a barrister is responsible …" This is a provision in terms of generality, and bearing in mind the width of the discretion conferred by s 76 and the modern interpretation of that provision, I am of the view that the generality of the ambit of the power conferred by the words set out above ought not to be read down. The cases make it plain that one of the circumstances in which an order may be made against a non party is where that person caused the proceedings. In my view, there is no reason to limit the generality of the proposition that an order under r 43A(1) may be made where costs are "… wasted by undue delay or by any other misconduct … and … a barrister is responsible …"
23 I am of the view in the light of the foregoing authorities and, as I have said, it is not controverted on Mr Abdul-Karim's behalf in these proceedings that the Court has power to make an order for costs against Mr Abdul-Karim in these proceedings under r 43A.
Findings of fact
24 The facts as I find them are that in the dying days, or perhaps more accurately on the dying day, of his retainer as a barrister in proceedings 3422/97 Mr Abdul-Karim took the unusual step of going, at Mr Rukavina's request, to the Land Titles Office with him. After some equivocation in his evidence, his position was that he believed himself still retained by the solicitor at the time of assisting with the caveat, and I find that he held that belief. If, in fact, his retainer by Mr Fallins was at an end, then I find that he was retained by Pinebelt through Mr Rukavina by direct client access to advise concerning the second caveat. There is no doubt that in the Land Titles Office he assisted Mr Rukavina to formulate the terms of a caveat (indeed, wrote it on the form in his own hand) and witnessed Mr Rukavina's signature on it. I also find that he was acting as a barrister rather than a "tour guide" when he lent that assistance, despite his repeated use of the latter expression in evidence. In the manners stated he assisted the client in lodging the caveat and encouraged the client to do so. It is clear that he did not advise the client in any way not to do so or discourage it from so doing. He claims to have acted in haste, but recommended a caveat in virtually identical terms in a letter written to his instructing solicitor on the same day. He acknowledges having read the relevant earlier judgments of the Court.
Whether order should be made
25 Once it is established that there is power to make an order and the facts are found, it falls to be decided whether an order should be made. Mr Hilbery of counsel earnestly entreated the Court not to make an order for costs against Mr Abdul-Karim. He submitted that this would be unfair to or harsh upon him in the circumstances, and would also be undesirable in signalling the imposition of too hard a test on barristers or legal practitioners generally. Whether or not an order should be made raises questions in the present case of the quality of the misconduct necessary to meet the terms of r 43A; whether Mr Abdul-Karim's conduct was of that quality; whether the conduct was causative of the incurring of the costs sought to be ordered; and whether an order ought in all the circumstances, in the exercise of the Court's discretion, be made.
26 As to the first of these questions, the barrister's acts or omissions, to justify an order under r 43A in the present case, must come under the rubric "misconduct". Although this term does not form part of the statutory pattern in others of the jurisdictions in respect of which the cited authorities were decided, I think its use produces the same conclusions as were there reached, that mere negligence or an error of judgment will not justify an order for costs. The necessary conduct must be able to be characterised as "gross negligence" or "gross incompetence" which amounts "to a serious dereliction of duty". The quality of the necessary conduct was expounded as follows in the judgment of the New Zealand Court of Appeal (on appeal from Giles J) delivered by Tipping J in Harley v McDonald supra [55] - [57]:
"[55] Having established that jurisdiction exists to make an order for costs against a barrister, it is necessary to consider the criteria for its exercise. The logical starting point is the basis upon which solicitors are personally liable for costs in comparable circumstances. It is well established that such liability arises upon a serious dereliction of duty to the Court. That was the test applied in England before the wasted costs legislation came into effect. The phrase 'serious dereliction of duty' was used by Viscount Maugham at p 292 in Myers v Elman [[1940] AC 282]: for a later application of the jurisdiction see Edwards v Edwards [1958] P 235 per Sachs J. The same test applies in Australia: see White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 (FCA) and da Sousa v Minister of State . It has been suggested that Giles J's references to the wasted costs regime in England represented the adoption of a lower threshold in New Zealand than serious dereliction of duty to the Court: see Webb [Duncan Webb, "Hopeless Cases: In Defence of Compensating Litigants at the Advocate's Expense" (1999) 30 VUWLR 295] at p 314. We doubt Giles J was proposing a lower threshold (see his reference to serious dereliction at p 593) but if he was, we consider we should adhere to the serious dereliction of duty test for both barristers and solicitors. At least so far as solicitors are concerned this has been the test at common law for many years and there is, in our view, no reason to change it. If Parliament were to consider the common law threshold too high, legislation such as that in England can always be enacted.
[56] In principle the liability of barristers for costs should rest on the same basis. There is no logical reason to distinguish between barristers and solicitors in this respect. The more is this so, since the fact that in New Zealand both are officers of the Court is a significant factor supporting the existence of the jurisdiction to award costs. When, as here, the default is said to lie in negligence or incompetence, it is necessary to consider whether such failings can ever amount to a serious dereliction of duty to the Court, and if so, at what level. Essentially what is said against Mrs Harley is that through gross incompetence she failed to identify that the claim against FAI was hopeless, and persuaded herself that it stood a reasonable prospect of success, when in fact it had none.
[57] Negligence or incompetence on the part of a barrister or solicitor at an appropriately high level is capable of amounting to a serious dereliction of duty to the Court. While simple negligence or errors of judgment have generally never sufficed for a serious dereliction of duty, neither has it been necessary to go as far as demonstrating bad faith or other moral wrongdoing. The speeches in Myers v Elman demonstrate these points. At p 291 Viscount Maugham made it clear that negligence at a sufficiently high level could amount to a serious dereliction of duty. At p 304 Lord Atkin said that 'gross negligence' could lead to the exercise of the jurisdiction. And at p 319 Lord Wright said:
'The underlying principle is that the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, as was said by Abinger CB in Stephens v Hill [(1842) 10 M & W 28]. The matter complained of need not be criminal. It need not involve peculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice.'
In R & T Thew Ltd v Reeves (No 2) [1982] 3 All ER 1086 (CA), the Court of Appeal affirmed that a solicitor could be made subject to costs personally if guilty of negligence or incompetence of a sufficiently serious kind. Myers v Elman was cited by Lord Denning MR at p 1089 in the course of indicating that errors of judgment or 'mere negligence' were not enough. The conduct in question was described by His Lordship as being 'at most a mere slip'. Hence the jurisdiction was not invoked. O'Connor LJ, with whom Dunn LJ agreed, viewed the case as being one of incompetence (p 1091) but not at a level capable of amounting to a serious dereliction of duty."