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Representation: Counsel I Griscti (Applicant) K Pattenden (Respondents)

Solicitors Gilchrist Connell (Applicant) Aulich Civil Law (Respondents)

File Number(s): ACTCA 17 of 2021

MURRELL CJ

Introduction

1. On 12 May 2021, I dismissed an application by the applicant seeking leave to appeal from an interlocutory decision of McWilliam AsJ: Donohue v Volanne Pty Ltd (No 2) [2021] ACTCA 11 (the Leave Decision).

2. The respondents seek an order that the applicant pay the respondents’ costs on an ordinary basis to 12 April 2021 and:

(a) On an indemnity basis from 13 April 2021; or, in the alternative,

(b) On a solicitor and own client basis from 13 April 2021.

Background

3. In the substantive proceedings, the respondents make a claim in relation to professional negligence and breach of contract by the applicant as their solicitor in litigation where judgment was entered against them: International Consulting and Business Management Pty Ltd v Volanne Pty Ltd [2014] ACTSC 175

4. On 12 February 2021, the applicant filed an application for summary judgment in its favour. On 19 February 2021, the application was heard by McWilliam AsJ.

5. On 31 March 2021, her Honour dismissed the application: Volanne Pty Ltd & Ors v Donohue [2021] ACTSC 48.

6. As I observed in the Leave Decision at [22]:

The crux of her Honour’s reasoning was that the pleaded facts were not so clear as to make it an obvious or inevitable conclusion that advocates’ immunity from suit provided a complete defence to the claim. Her Honour illustrated this proposition by reference to allegations in the pleadings which, on the material facts pleaded, did not identify the negligent conduct with sufficient precision. The point was that, owing to the lack of precision, her Honour could not be satisfied that, once further steps were taken to prepare the respondents’ case, there could be no argument as to why the pleaded conduct did not attract the immunity.

7. On 7 April 2021, Elkaim J granted the applicant an extension of time to 9 April 2021 to apply for leave to appeal: Donohue v Volanne Pty Ltd [2021] ACTCA 7. While his Honour did not have the benefit of a draft notice of appeal, Elkaim J did not consider an application for leave to appeal would be futile. At [12], his Honour stated:

It is clear from her Honour’s decision that she considered the defendant’s submissions to be arguable although ultimately not sustainable. I think that is enough for me to conclude that the application for leave to appeal would not be futile.

8. On 9 April 2021, the applicant filed an application for leave to appeal.

9. On 13 April 2021, the respondents’ solicitors wrote to the applicant’s solicitors. This letter outlines the reasons that the respondents considered that the application would be unsuccessful. This included that: (a) Contrary to the submission of the applicant, the decision being appealed was discretionary and did not determine substantive rights.

(b) That advocates immunity for suit requires an assessment of the evidence that cannot be done at a summary stage

(c) The applicant had failed to identify a House v The King (1936) 55 CLR 483 type error.

(d) That, in accordance with Arrow International Australia Ltd v Group Konstrukt Pty Ltd [2012] ACTCA 37; 7 ACTLR 48, the payment of legal costs alone is not considered to be a prejudice that would warrant reconsideration of an interlocutory decision.

10. The letter stated that, if the application was not withdrawn, the respondent would rely on the letter to seek an order that the applicant pay the costs of the application on an indemnity basis from the date of the letter.

11. On 5 May 2021, I heard the leave application.

12. On 12 May 2021, I dismissed the application. I granted the parties liberty to apply to have the matter relisted for submissions on costs. If no application was made within seven days, the applicant was to pay the respondents’ costs of the application.

13. On 13 May 2021 the respondents’ solicitors wrote to the applicant’s solicitors inviting the applicant to consent to an order that the respondents’ costs be paid on a solicitor and own client basis from 13 April 2021.

14. On 17 May 2021, the applicant’s solicitors wrote to the respondents’ solicitors to decline the offer.

15. The respondents subsequently applied to have the matter relisted for submissions on costs. Written submissions were filed by both parties.

Applicable Principles

16. Rule 1721 of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules) states that:

1721 Costs—general rule (1) The costs of a proceeding or of an application in a proceeding are in the discretion of the court.

17. This discretion must be exercised judicially, in accordance with established principle and factors directly connected with the litigation: Northern Territory v Sangare [2019] HCA 25; 265 CLR 164 at [24].

18. Its purpose is to reach a fair and just result between the parties: Gray v Richards (No 2) [2014] HCA 47; 89 ALJR 113 at [2].

19. It is settled practice that, absent any special circumstances, a successful litigant is entitled to recover their costs from the opposing party: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 (Oshlack).

20. Costs awarded in accordance with this practice are ordinarily assessed on a party and party basis: Hulanicki v Walton (No 2) [2015] ACTCA 45 at [11]. This position is reflected in the r 1751 of the Court Procedures Rules, that states: 1751 Costs—assessed on party and party basis (1) Unless a territory law or an order of the court otherwise provides, the registrar must assess costs on a party and party basis.

21. Rule 1752 provides the Court with a source of jurisdiction to make an alternative order:

1752 Costs—assessed on solicitor and client etc basis (1) The Court may order costs to be assessed— (a) On a solicitor and client basis; or (b) On an indemnity basis; or (c) On any other basis it considers appropriate.

22. Usually, there must be some special or unusual feature in the case that justifies the Court in departing from the usual position that costs should be assessed on a party and party basis: Lewis v Australian Capital Territory (No 2) [2015] ACTSC 343.

23. Special circumstances may exist where a party is guilty of a “relevant delinquency”: Oshlack at [44]. This is not a reference to ethical or moral delinquency, but a delinquency bearing a relevant relation to the conduct of the case: Ingot Capital Investment v Macquarie Equity Capital Markets Ltd (No 7) [2008] NSWSC 199; 65 ACSR 324 at [24].

24. As stated in Fountain Select Meats (Sales) Pty Ltd v International Produced Merchants Pty Ltd (1988) 81 ALR 397 at 401, this may occur where it appears to the court that:

an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.

25. However, there is a distinction between an action that is “hopeless” or “has no chance of success” and one which is marginal or tenuous but still arguable. Commencing or continuing the latter does not ordinarily merit the making of a special costs order.

Consideration

26. Contrary to the submissions of the respondents, I do not consider that the applicant’s conduct (in filing the application, subsequently failing to withdraw it, and refusing to accept the respondents’ offers to withdraw the application or consent to a special costs order) amount to a relevant delinquency warranting a special costs order.

27. Nor do I consider that the case was hopeless or had no chance of success.

28. The application was not made in wilful disregard to known facts or the law. The Applicant cited authority for the proposition that, where possible, it is desirable to determine whether the defence of advocates’ immunity is available at an early time on the basis of the pleadings, particularly where the application of the doctrine is “clear cut”: Donnellan v Woodland [2012] NSWCA 433 at [7], [263], [276] and Bott v Carter [2012] NSWCA 89.

29. The applicant then sought to demonstrate, by reference to the alleged errors in the examples proffered by McWilliam AsJ in the interlocutory decision, that the present case was in fact “clear cut”.

30. While the application faced difficulties, some of which were identified in the 13 April 2021 letter, it was not so devoid of merit to lead to a special costs order. The applicant put forward arguable, though ultimately unsuccessful, submissions as to why McWilliam AsJ had erred in her Honour’s discussion of the examples. These submissions were made by reference to relevant authorities. Reasoned submissions were also put forward seeking to distinguish the authorities relied upon by her Honour.

31. The respondents submitted that the Court could have regard to r 1152(1) of the Court Procedures Rules. Rule 1152(1) provides that:

1152 Summary judgment applications—costs (1) If it appears to the court that a party who applied for judgment under this division was or ought reasonably to have been aware that a respondent to the application relied on a point that would entitle that party to have the application dismissed, the court may dismiss the application and order costs to be paid on an indemnity basis. Note: Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.

32. Rule 1152(1) does not assist the respondents. It applies to applications for summary judgment. It does not apply to applications for leave in relation to a decision concerning summary judgment.

Order

33. The order of the Court is:

(1) The applicant is to pay the respondents’ costs of the leave application on a party and party basis.

I certify that the preceding thirty-three [33] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell

Associate:

Date: