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[2026] NSWSC 99
General information, not legal advice.
Supreme Court of NSW
2026-02-19
Kunc J
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Hermes Far Eastern Shining Pty Ltd v Potable Gold Strike Pty Ltd [2026] NSWSC 99
Hearing dates: 14 November 2025
Date of orders: 19 February 2026
Decision date: 19 February 2026
Jurisdiction: Equity
Before: Kunc J
Decision: Motion dismissed with costs
Catchwords: COSTS — Party/Party — Orders against non-parties — Personal costs orders against lawyers
Legislation Cited: Civil Procedure Act 2005 (NSW)
Conveyancing and Law of Property Act 1884 (Tas)
Evidence Act 1995 (NSW)
Legal Profession Act 1987 (NSW)
Cases Cited: B v Pendlebury and Associated Newspapers Limited [2002] Lloyd’s LR 576
Hermes Far Eastern Shining Pty Limited v Potable Gold Strike Pty Limited [2025] NSWSC 263
Gokani v Visvalingam Pty Ltd [2023] NSWCA 80 in Harley v McDonald [2001] 2 AC 678; [2001] UKPC 18
Kalloghlian v Mitry Lawyers Pty Ltd (No 2) [2022] NSWSC 1071)
Kelly v Jowett (2009) 76 NSWLR 405; [2009] NSWCA 278
Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153
Medcalf v Mardell [2003] 1 AC 120; [2002] UKHL 27
Morris v Morris [1982] 1 NSWLR 61
Muriniti v Kalil [2022] NSWCA 109
Muriniti v Mercia Financial Solutions Pty Ltd [2021] NSWCA 180
Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19
Category: Costs
Parties: Hermes Far Eastern Shining Pty Ltd (Plaintiff/Third Respondent)
Jon Derek Cronin (First Respondent)
Stacy Miller (Second Respondent)
Potable Gold Strike Pty Ltd (Defendant/Applicant)
Representation: Counsel: MF Newton (First and Second Respondents)
M Condon SC/D Smith (Defendant/Applicant)
Solicitors: Cronin Miller (First and Second Respondents)
Roberts and Partners Lawyers (Defendant/Applicant)
File Number(s): 2024/280642
By a notice of motion filed on 7 April 2025, the defendant/applicant (Potable Gold) seeks personal cost orders against Mr Jon Cronin and Ms Stacy Miller, the first and second respondent solicitors. The motion relates to Potable Gold’s costs of these proceedings, including on the indemnity basis as from 2 July 2024 to 25 March 2025.
The solicitors are the members of an unincorporated partnership trading as Cronin Miller Litigation and located in Queensland. While I shall refer to them as the “solicitors”, I do so as a matter of convenience because they are both respondents to the motion. There is no suggestion Ms Miller played any part in the conduct of these proceedings.
The solicitors acted for the plaintiff (Hermes Far Eastern Shining Pty Limited) in these proceedings, which were commenced in 2022 in the Supreme Court of Tasmania, were transferred to this Court in 2024 and dismissed by consent on 14 March 2025. In a costs judgment on 25 March 2025, Brereton J held that “[Hermes’] case never had any prospects of success”: Hermes Far Eastern Shining Pty Limited v Potable Gold Strike Pty Limited [2025] NSWSC 263 at [40]. So much had been conceded by Ms M Painter of Senior Counsel, who was then appearing for Hermes.
Brereton J ordered Hermes to pay Potable Gold’s costs of the proceedings, with those costs to be assessed on the indemnity basis from 2 July 2024. Hermes contends Potable Gold is not able to pay those costs. Given the outcome on the motion, it is not necessary for the Court to make a finding about this issue, even assuming it was otherwise relevant to the exercise of the Court’s discretion.
Potable Gold advanced its application against the solicitors on two bases: the Court’s inherent jurisdiction and under s 99(2)(b)(ii) of the Civil Procedure Act 2005 (NSW) (CP Act).
For the reasons which follow, the Court has determined that the motion should be dismissed with costs. Those reasons may be summarised as:
The bar to order costs personally against legal practitioners is a high one, both under the CP Act and the Court’s inherent jurisdiction. While it may be accepted that, in the face of a defence relying on the Statute of Frauds, Hermes’ principal claim in the proceedings of an express oral trust had no prospects of success, something more than continuing to advance such a claim must be demonstrated for the Court to make a personal costs order. Potable Gold has failed to demonstrate that “something more”, especially in circumstances where Hermes was advised by counsel at all times and the solicitors were entitled to the benefit of the doubt because Hermes had continued to assert its legal advice privilege over the instructions given and advice received (see [8] below).
Although not given particular prominence, Hermes was advancing an alternative claim in equity including for damages (including a charge) and it had not been established that claim was hopeless.
Mr M Condon of Senior Counsel appeared with Mr D Smith of Counsel for Potable Gold. Mr M F Newton of Counsel appeared for the solicitors.
Hermes was the third respondent to the motion. It did not appear. However, the day before the hearing, my Associate received this email (privilege objection) from Hermes’ solicitors:
“…We acknowledge receipt of your email below on behalf of the third respondent and advice that the third respondent does not take a position on the Motion as the Motion does not seek any orders against the third respondent and therefore, the third respondent does not intend to appear at tomorrow’s hearing of the Motion.
In addition, we would wish to reiterate the third respondents’ position previously communicated to the first and second respondents that it maintains and has not waived its legal professional privilege over the documents referred to in the affidavit of Alana Ryzner [a solicitor in the employ of the solicitors] of 11 July 2025 including but not limited to the documents referred to at paragraphs 33 and 42 of the affidavit. The third respondent objects to the disclosure of the contents of these documents, including pursuant to section 118 of the Evidence Act 1995 (NSW). …”
Potable Gold owned a property in Tasmania. The sole director and shareholder of Potable Gold is Rosette Communitas. Hermes was connected with a group in northern New South Wales of which Ms Communitas was a member.
Hermes was Potable Gold’s tenant at the property under a residential tenancy agreement. On 13 July 2021, Potable Gold commenced proceedings in the Magistrates Court of Tasmania to evict Hermes.
Hermes’ response was to commence these proceedings by filing a writ in the Supreme Court of Tasmania on 28 February 2022. The solicitors were not acting for Hermes at the time the writ was filed. Hermes claimed a declaration that Potable Gold’s interest in the property was held for Hermes:
“… on trust for [Hermes] pursuant to a resulting trust, or alternatively a constructive trust, to the extent to which the Court determines that the Plaintiff’s monies, or monies contributed or paid on the Plaintiff’s behalf, were applied in the acquisition of that interest, or in the payment of loans secured by mortgage over that interest, or in making improvements to the property…”.
“9. On or about 12 January 2004, Morning Star Financial Services Pty Ltd (ACN 107 585 491) (‘Morning Star'), acting as the trustee for the Morning Star Trust, was incorporated with Ms Communitas, Ms Days and Ms Rains appointed as directors and equal shareholders.
…
- In or about early 2005, the plaintiff and Morning Star entered into an agreement whereby:
a. the plaintiff agreed to provide funds to enable Morning Star to purchase the property known as 850 Cygnet Coast Road, Wattle Grove, Tasmania ('the Property'); and
b. Morning Star agreed to become the registered proprietor of the Property, and to hold its legal interest in the Property on trust for the plaintiff.
- In about April 2005:
a. Veriest Ferrari, a member of the Hermes Community, provided funds of $160,000.00 to Morning Star, such funds to be applied towards the purchase by Morning Star of the Property to be held on trust for the plaintiff; and
b. Morning Star purchased the Property for $617,500, and became the registered proprietor of the Property.
…
- In the period between April 2005 and March 2014, the plaintiff:
a. occupied the Property;
b. paid weekly amounts in reduction of the loan secured by mortgage over the Property; and
c. carried out permanent and lasting works at the Property.
Particulars
i. Fencing of the entire Property;
ii. Maintaining the gardens;
iii. Repainting the Property regularly;
iv. Maintaining the exterior woods such as decking and window ledges including varnishing and painting;
v. Replacing and maintaining the water pumps and installing a new water pump in the conservatory;
vi. Installing air-conditioning units;
vii. Repairing/refurbishing the oven, wood heater, main bathroom.
viii. Maintaining lawn and trees.
ix. Further particulars will be provided in the evidence to be relied upon by the plaintiff at the hearing of this dispute.
…
- In and around July 2013, Ms Communitas, Ms Porter, Gyrin Gyrfalcon and Salsa Junior met at Ms Communitas' apartment located in Kingscliff, New South Wales to discuss the plaintiff's finances.
- During the meeting referred to in the previous paragraph, Ms Communitas, Ms Porter, Mr Gyrfalcon and Ms Junior made express declarations that they acknowledged that the Property holds significant cultural and spiritual value to the plaintiff and it is to remain held on trust for the benefit of the plaintiff until such time as it could be transferred to the plaintiff.
…
- On or about 6 March 2015, the Property and Land were transferred from Morning Star to the defendant.
…
- On 9 August 2015, Ms Communitas, acting in her personal capacity, and in her capacity as a director of the defendant, informed the plaintiff that the defendant would hold the Property on trust for the plaintiff "until such time as it could be 'transferred back' to" the plaintiff.
- In August 2015, the plaintiff and the defendant agreed that:
a. they would enter into a lease agreement in respect of the Property;
b. rental payments made by the plaintiff under the lease would be applied in reduction of the loan secured by mortgage over the Property; and
c. the plaintiff would hold beneficial interests in the Property to the extent of any rental payments made by it in accordance with the agreement referred to in (b).
- Since October 2015, the plaintiff has:
a. occupied the Property;
b. paid weekly amounts in reduction of the loan secured by mortgage over the Property; and
c. carried out permanent and lasting works at the Property.
AND the plaintiff claims against the defendant:
a. A declaration that the property at 850 Cygnet Coast Road, Wattle Grove, Tasmania is held by the defendant upon trust for the plaintiff.
b. An order that the defendant do all things necessary to transfer the Property to the plaintiff.
c. Alternatively, damages or compensation and an order that the Property is charged to the extent of the amount ordered.”
In these reasons I shall refer to prayer (a) for relief as the trust claim. I shall refer to prayer (c) for “damages or compensation and an order that the Property is charged to the extent of the amount ordered” as the damages claim. The significance of the damages claim was in contest on the hearing of the motion before me.
On 14 July 2022, Potable Gold filed its defence.
On 2 November 2022, the first respondent, Mr Cronin, went on the record as the solicitor for Hermes.
By further and better particulars dated 14 November 2022, Hermes particularised payments referred to in paragraph 25(b) of the claim as totalling $82,595 (mortgage payments claim), and the expenditure on works referred to in paragraph 25(c) of the claim as $891.03 (improvements claim).
From about January 2023, Ms Ryzner had the day-to-day conduct of the proceedings for Hermes. She became aware that Hermes’ previous solicitors had briefed Mr D Hand of Counsel, of the New South Wales bar. Shortly after Mr Cronin went on the record for Hermes, the solicitors briefed Mr B McTaggart of Senior Counsel and Ms C Sluiter of Counsel, both of the Tasmanian bar, in connection with the proceedings.
On 5 June 2023, the solicitors also briefed Mr M Cobb-Clark of Counsel, of the New South Wales bar, in connection with these proceedings.
On 14 December 2023, a registrar of the Supreme Court of Tasmania listed the proceedings for a trial to commence on 5 August 2024. No orders had then been made for service of affidavits or witness statements to be relied on at a trial of the proceedings, the Tasmanian practice being for evidence to be given orally.
On 21 February 2024, Hermes filed an interlocutory application by which it applied to have the proceedings cross-vested to this Court.
By letter dated 24 April 2024 and addressed to the Supreme Court of Tasmania, Potable Gold’s solicitors attached a proposed amended defence. This included a new plea relying on s 60(2)(b) of the Conveyancing and Law of Property Act 1884 (Tas), the Tasmanian enactment of the Statute of Frauds (special defence). This was not a defence which had been previously raised by Potable Gold and it was the first occasion that it had communicated any intention to amend its defence. The letter was treated as an application to amend the defence.
Section 60 of the Tasmanian enactment includes:
“(1) All conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed; but this provision does not apply to –
(a) assents by a personal representative;
(b) disclaimers made in accordance with the law relating to bankruptcy, or not required to be evidenced in writing;
(c) surrenders by operation of law, including surrenders which may by law be effected without writing;
(d) leases or tenancies or other assurances not required by law to be made in writing;
(e) receipts not required by law to be under seal;
(f) vesting orders of the Court or other competent authority; or
(g) conveyances taking effect by operation of law.
(2) Except as hereinafter provided –
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust, or by his will; and
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing, or by will –
but this provision does not affect the creation or operation of resulting, implied, or constructive trusts. (Emphasis added)”
Ms Ryzner received oral advice from Mr McTaggart SC and Mr Cobb-Clark relating to the proposed amended defence and concerning the position should leave be granted to Potable Gold to file that document.
The respective parties’ applications did not come on for hearing until 24 June 2024, when they were heard by Porter AJ. Mr McTaggart SC appeared for Hermes. Porter AJ reserved his decision at the conclusion of the argument. During the argument, Mr McTaggart SC submitted “There will need to be a substantial reply. It raises further issues as to discovery and the need for additional witnesses”.
On 2 July 2024, the Supreme Court of Tasmania granted Potable Gold leave to file its amended defence (which included the special defence) and transferred the proceedings to this Court.
Also on 2 July 2024, Potable Gold’s Tasmanian solicitors wrote to the solicitors making a Calderbank offer and contending that Hermes’ entire claim was untenable, among other things, by reason of the special defence. The letter expressly traverses the claim for improvements but does not expressly refer to the mortgage payments claim.
On 8 July 2024, Ms Ryzner wrote to Potable Gold’s solicitors stating that Hermes intended to file a reply to the amended defence once the proceedings had been transferred to this Court.
On 15 August 2024, Potable Gold’s newly appointed NSW solicitors wrote to the solicitors again stating that Hermes’ claim was certain to fail because of the special defence. It also referred to the improvements claim as an “additional claim … [providing] no basis for equitable intervention”, but made no specific reference to the mortgage payments claim.
On 21 August 2024, an employee of the solicitors’ firm wrote to Potable Gold’s solicitors that the matters raised by their letter of 15 August 2024 were being considered with Hermes and its counsel. No substantive reply was ever sent on behalf of Hermes to Potable Gold’s solicitors’ letter of 15 August 2024.
On 27 August 2024, Ms Ryzner obtained oral advice from Mr Cobb-Clark.
On 29 August 2024, Potable Gold filed a notice of motion seeking the summary dismissal or striking out of Hermes’ claim, or security for costs in the alternative (dismissal motion). That application was resisted. Notices to produce were issued by Potable Gold. Hermes applied to set these aside, which resulted in a contested hearing before me on 22 November 2024.
As of 4 September 2024, Ms Ryzner expected that Hermes would be filing a reply to the amended defence. On that day, Hermes proposed that when the proceedings came before the Court on 11 September 2024, there be an order for the filing of a reply.
On 5 September 2024, the solicitors briefed Ms Painter SC to provide advice regarding the proceedings.
On 11 September 2024, directions were made which included under the heading “Plaintiff’s Proposed Motion”:
- By 7 October 2024, the Plaintiff file and serve a notice of motion seeking leave to file and serve any reply to the amended defence…returnable for Directions…on 14 October 2024.”
No motion for leave to file and serve a reply was ever filed. Nor was a draft form of reply ever provided to Potable Gold’s legal representatives.
On 3 October 2024, Ms Ryzner received a memorandum of advice from Ms Painter SC and Mr Cobb-Clark. She read and reviewed that memorandum on or about that day. The memorandum was expressly identified by Hermes as part of its privilege objection (see [8] above).
On 4 October 2024, Mr Cronin and Ms Ryzner had a video-conference with Ms Painter SC and Mr Cobb-Clark and obtained further oral advice from them.
On 9 October 2024, the memorandum of advice of Ms Painter SC and Mr Cobb-Clark was sent to Hermes.
On 11 October 2024, Ms Ryzner had a conference with two representatives of Hermes (Ms Salsa Junior and Ms Haniel Medinet) and received instructions on behalf of Hermes.
On 16 October and 17 October 2024, Ms Ryzner was copied into emails between an employed solicitor and Ms Junior regarding the proceedings.
On 22 October 2024, Ms Ryzner had a telephone call with Ms Junior regarding the proceedings.
On 25 October 2024, Ms Ryzner affirmed an affidavit in these proceedings in answer to the dismissal motion. Among other things in that affidavit, Ms Ryzner set out her instructions as to various factual matters relied on by Hermes for its claims.
On 20 November 2024, Ms Ryzner received an email from Ms Junior regarding the proceedings. This email was expressly identified by Hermes as part of its privilege objection (see [8] above).
On 25 November 2024, Ms Ryzner attended a conference regarding the proceedings with Ms Drew Porter, a director of Hermes, and Ms Junior. She also had a conference with Mr Cobb-Clark.
On 6 December 2024, Ms Ryzner wrote a without prejudice letter to Potable Gold’s solicitors in relation to the proceedings. No response was ever received.
On 14 February 2025, I listed the dismissal motion for hearing on 14 March 2025.
On 17 February 2025, Ms Ryzner obtained further oral advice from Ms Painter SC and Mr Cobb-Clark.
Between 21 February 2025 and 3 March 2025, further without prejudice correspondence was exchanged between the parties’ solicitors about the proceedings.
On 3 March 2025, Ms Ryzner wrote to Hermes’ solicitors enclosing short minutes of order “that our client will be seeking be made at the hearing of your client’s motion on 14 March 2025”:
“1 The claim is dismissed.
2 The Plaintiff is to deliver vacant possession of the property formally known as Tasmanian Recorder of Titles Volume 47314 Folio 2, commonly known as 850 Cygnet Coast Road, Wattle Grove, Tasmania by 17 March 2025.
3 The amount of $23,530 held in the trust account of Cronin Miller litigation pending further order of the Court or agreement between the parties is to be released to the Defendant's nominated bank account within 7 days of these orders.
4 The counterclaim set out in the Defence filed on 3 July 2024 is otherwise dismissed.
5 The Plaintiff pay the Defendant's costs on the ordinary basis, to be agreed or assessed.”
The parties were unable to agree upon the precise form of orders for disposal of the proceedings, including costs, and the matter came before Brereton J on 14 March 2025. The hearing on that day was devoted to resolving issues about the appropriate form of final orders, and to hear Potable Gold’s application that Hermes should pay costs on the indemnity basis.
The argument before Brereton J on 14 March 2025 took place with solicitors from the solicitors’ firm observing proceedings by audio-visual link. No evidence was read or tendered for Hermes. Ms Painter SC appeared with Mr Cobb-Clark of Counsel for Hermes. Potable Gold was represented by Mr Condon SC with Mr Smith of Counsel.
The submissions put to Brereton J for Potable Gold included that the special defence was a “complete defence” and was “dispositive”. Ms Painter SC submitted that the special defence raised complex issues that required careful analysis. When asked by Brereton J about the special defence, she said (Tcpt, 14 March 2025, p 21(49)):
“I accept that’s a reasonably self-contained argument and it relates to the nature of the ownership but, in the context of the whole thing--”.
The transcript (Tcpt, 14 March 2025, p 22(1)) indicates that Brereton J said in response, “I understand there’s a broader dispute, but Mr Condon’s obviously focused today on the power, as he submitted, of the statute of frauds defence and said his submission is that it should’ve been obvious from no later than April or July 2024 that this presented a complete defence”. Later in the argument, Ms Painter SC described the “case” as “poorly conceived” and otherwise submitted that Hermes’ agreement to a dismissal of the proceedings had been a “commercial decision” and a “pragmatic decision” (Tcpt, 14 March 2025, p 24(19)). It was submitted that “…my client ought not be penalised by properly abandoning what it came to accept was an unwinnable point” (Tcpt, 14 March 2025, p 26(42)) and “I think in fairness I have to concede that the Statute of Frauds point is a good one” (Tcpt, 14 March 2025, p 27(39)). Finally, Ms Painter SC also referred to the possibility of Hermes re-pleading its case had the proceedings continued (Tcpt, 14 March 2025, p 27(38)).
On 25 March 2025, Brereton J ordered Hermes to pay Potable Gold’s costs of the proceedings, with costs to be assessed on the indemnity basis from 2 July 2024, and published the costs judgment.
Brereton J held that Hermes’ case had no prospect of success. His Honour observed:
“[10]… [re the orders proposed by Hermes – see [50] above] This was a capitulation by the Plaintiff.
…
[28] ….But [Ms Painter SC] submitted that the Court should not assume that the proceedings would have been dismissed without first giving her client an opportunity to replead. She did not, however, provide any indication of how the Plaintiff could have overcome the Statute of Frauds defence in any repleaded case. She submitted that a party should not be discouraged from abandoning a bad case for fear of an order for indemnity costs.
…
[33] Although one needs to be wary of the benefits of hindsight, in the present case, the Plaintiff’s claim always suffered from the fundamental problem that the alleged trust would fail by reason of the Statute of Frauds. Nothing has been put by the Plaintiff that could conceivably overcome this problem. The Plaintiff accepts that it is a good point. It is not one that got better over time.
…
[38] The Plaintiff’s case was poorly conceived. By the terms of the Amended Defence and the letter of 2 July 2024, the Plaintiff was put squarely on notice of the fundamental problem with its case, namely the Statute of Frauds. I do not think the Plaintiff has proferred an adequate explanation for the timing of the abandonment of their case.
…
[40] The Plaintiff’s case never had any prospects of success…
[41] While there was no hearing on the merits, it is clear that the Plaintiff’s pleaded case was without merit. I can come to that view with no difficulty in this case because it is common ground. …”
“1 An order pursuant to section 99(2)(b)(ii) of the Civil Procedure Act 2005 (NSW), and/or the Court's inherent jurisdiction, that the first and second respondents trading as Cronin Miller Litigation pay the plaintiff the costs which the plaintiff has been ordered to pay to the defendant by the Order dated 25 March 2025 in these proceedings.
2 An order in the Court's inherent jurisdiction that payment by the first and second respondents in accordance with paragraph 1 above be effected by payment to the defendant.
3 Further or in the alternative to paragraph 2 above, an order in the Court's inherent jurisdiction that any amount paid by the first and second respondents to the plaintiff in respect of the costs the plaintiff has been ordered to pay to the defendant by the Order dated 25 March 2025:
a. be held on trust for the defendant until it is paid to the defendant;
b. alternatively, charged and secured to the defendant until it is paid to the defendant.
4 Further or in the alternative to paragraph 1 above, an order pursuant to s 98 of the Civil Procedure Act that the first and second respondents pay the defendant's costs of the proceedings from 2 July 2024, including in respect of the defendant's notice of motion filed on 29 August 2024, with all such costs to be assessed on the indemnity basis…”
“99 Liability of legal practitioner for unnecessary costs
(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—
(a) it may, by order, disallow the whole or any part of the costs in the proceedings—
(i) in the case of a barrister, as between the barrister and the instructing solicitor, or as between the barrister and the client, as the case requires, or
(ii) in the case of a solicitor, as between the solicitor and the client,
(b) it may, by order, direct the legal practitioner—
(i) in the case of a barrister, to pay to the instructing solicitor or client, or both, the whole or any part of any costs that the instructing solicitor or client, or both, have been ordered to pay to any other person, whether or not the solicitor or client has paid those costs, or
(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.”
“85 The summary jurisdiction to order a solicitor to pay costs was an aspect of the court’s disciplinary jurisdiction. It was based on the court’s right and duty to supervise the conduct of its solicitors: Myers v Elman (at 302) per Lord Atkin, (at 318 – 319) per Lord Wright, (at 334 – 336) per Lord Porter. Lord Wright pointed out (Myers v Elman at 318 - 319):
“… [A]longside the jurisdiction to strike off the Roll or to suspend there existed in the Court the jurisdiction to punish a solicitor or attorney by ordering him to pay costs, sometimes the costs of his own client, sometimes those of the opposite party, sometimes, it may be, of both. The ground of such an order was that the solicitor had been guilty of professional misconduct, (as it is generally called) not, however, of so serious a character as to justify striking him off the roll or suspending him. This was a summary jurisdiction exercised by the Court which had tried the case in the course of which the misconduct was committed. It was a summary jurisdiction, in which the intervention of the judge was invoked at the conclusion of the case either by motion in the Chancery Court or by a motion or application for a rule in the Courts of Common Law. Though the proceedings were penal, no stereotyped forms were followed. Hence now the complaint is not treated like a charge in an indictment or even as requiring the particularity of a pleading in a civil action. All that is necessary is that the judge should see that the solicitor has full and sufficient notice of what is the complaint made against him and full and sufficient opportunity of answering it. Thus, formal amendments of the complaint are not necessary, so long as variations of the charge are sufficiently defined and the solicitor is given sufficient liberty to make his answer. The summary jurisdiction thus involves a discretion both as to procedure and as to substantive relief, though there was and is an appeal.
The cases of the exercise of this jurisdiction to be found in the reports are numerous and show how the Courts were guided by their opinion as to the character of the conduct complained of. 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 C.B. in Stephens v. Hill . … 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. … It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve personal obliquity. The term professional misconduct has often been used to describe the ground on which the Court acts. It would perhaps be more accurate to describe it as conduct which involves a failure on the part of a solicitor to fulfil his duty to the Court and to realize his duty to aid in promoting in his own sphere the cause of justice. This summary procedure may often be invoked to save the expense of an action. Thus it may in proper cases take the place of an action for negligence, or an action for breach of warranty of authority brought by the person named as defendant in the writ. The jurisdiction is not merely punitive but compensatory. The order is for payment of costs thrown away or lost because of the conduct complained of. It is frequently, as in this case, exercised in order to compensate the opposite party in the action.”
92 The new Division 5C should be construed against the background of the following principles which can be gleaned from the English and Australian authorities which have considered the power to order legal practitioners to pay the costs of proceedings in which they have represented parties:
(a) The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised “with care and discretion and only in clear cases”: Ridehalgh (at 229), Re Bendeich (1994) 53 FCR 422; Deputy Commissioner of Taxation v Levick [1999] FCA 1580; (1999) 168 ALR 383 per Hill J at [11]; Levick v Deputy Commissioner of Taxation [2000] FCA 674; (2000) 102 FCR 155 at [44]; Gitsham v Suncorp Metway Insurance Ltd [2002] QCA 416 at [8] per White J (with whom Davies and Williams JJA agreed); De Sousa v Minister for Immigration (1993) 41 FCR 544; *Money Tree Management Service Pty Ltd v Deputy Commissioner of Taxation (*No 3) [2000] SASC 286;
(b) A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail: Ridehalgh (at 233); Medcalf v Mardell [2002] UKHL 27; [2003] 1 AC 120 at [56] per Lord Hobhouse; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169 (affirmed on appeal, Flower & Hart (a firm) v White Industries (Qld) Pty Ltd [1999] FCA 773; (1999) 87 FCR 134); Levick v Deputy Commissioner of Taxation ; cf Steindl Nominees P/L v Laghaifar [2003] QCA 157; [2003] 2 Qd R 683;
(c) the legal practitioner is not “the judge of the credibility of the witnesses or the validity of the argument”: Tombling v Universal Bulb Co Ltd [1951] 2 TLR 289 at 297; the legal practitioner is not “the ultimate judge, and if he reasonably decides to believe his client, criticism cannot be directed to him”: Myers v Elman (at 304, per Lord Atkin); Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; (2001) 47 ATR 1 at [34] per Callinan J;
(d) A judge considering making a wasted costs order arising out of an advocate’s conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, a legal practitioner’s conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order: Ridehalgh (at 236, 237);
(e) A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it: Myers v Elman (at 318); Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229);
(f) Where a legal practitioner’s ability to rebut the complaint is hampered by the duty of confidentiality to the client he or she should be given the benefit of the doubt: Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229); in such circumstances “[t]he court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so”: Medcalf (at [23] per Lord Bingham);
(g) The procedure to be followed in determining applications for wasted costs must be fair and “as simple and summary as fairness permits…[h]earings should be measured in hours, and not in days or weeks… Judges … must be astute to control what threatens to become a new and costly form of satellite litigation”: Ridehalgh (at 238 – 239); Harley v McDonald [2001] UKPC 18; [2001] 2 AC 678 at 703 [50]; Medcalf (at [24]).
“104 In White Industries (Qld) Pty Ltd v Flower & Hart (a firm), Goldberg J considered the authorities supporting the proposition that it is not improper to act for a party with a hopeless case and concluded (at 237; 89) that:
“Those principles are, put shortly, that a solicitor does not act improperly or in breach of his or her duty to the court by acting for a party with a hopeless case. In order to affix liability for costs to a solicitor there must be something further added in the nature of acting unreasonably or for reasons unconnected with success in the litigation or for an otherwise ulterior purpose resulting in an abuse of process or in circumstances resulting in a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice.”
…
108 In Steindl Nominees P/L v Laghaifar (at [24] Davies JA (with whom Williams JA and Philippides J agreed) accepted Goldberg J’s conclusion that the jurisdiction to order costs against an unsuccessful party’s solicitors was enlivened when they had unreasonably initiated or continued an action which had no or substantially no prospects of success. He also accepted the reasoning of Goldberg J generally and that of the Full Court of the Federal Court in Levick v Deputy Commissioner of Taxation subject to the qualification that he rejected “statements [in them which] state or imply that it is not improper for a legal representative to present a case which he or she knows to be bound to fail.” He said (at 689[24]):
“I would prefer to say that it is one thing to present a case which is barely arguable (but arguable nevertheless) but most likely to fail; it is quite another to present a case which is plainly unarguable and ought to be so to the lawyer who presents it. In my opinion, with respect, it is improper for counsel to present, even on instructions, a case which he or she regards as bound to fail because, if he or she so regards it, he or she must also regard it as unarguable.”
109 After referring to the passage in Mason CJ’s statement in Giannarelli & Shulkes v Wraith (at 556) concerning the importance to the administration of justice of the “exercise by barristers of [an] independent judgment in the conduct and management of the case”, Davies JA observed (at 690[27]):
“[27] If it is counsel's duty to exercise his or her own independent judgment upon which points will be argued it must also be his or her duty, in the exercise of that judgment, to decide whether there is any point which can be argued. Greater care must be taken, in judging the conduct of a lawyer for a party in litigation, where the arguability of that party's case depends on a question of fact than where it depends on a question of law, for it is not for counsel or solicitor to sit in judgment on the reliability of his or her client's witnesses. Nevertheless the question, in my opinion, is the same whether it depends on fact or law. If the case is plainly unarguable it is improper to argue it.”
…
111 It is plain, as Goldberg J accepted in White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (at 231), that the proposition that “commencing or maintaining proceedings with no or no substantial prospects of success enlivens the jurisdiction to order a solicitor to pay the costs of a party” is expressed at a dangerous level of generality. Something more is required as both Goldberg J and Davies JA accepted. Sheller JA in Carson characterised it as improper for a solicitor to commence proceedings which were “futile or foredoomed to fail”. This accords with Davies JA’s proposition.
112 It is not necessary for the purpose of this judgment to resolve the tension between these decisions. Suffice it to say that Sheller JA’s observation in Carson and Davies JA’s qualification in Steindl appear to presage the philosophy underpinning Division 5C.”
In Ridehalgh v Horsefield [1994] Ch 205 the Court of Appeal addressed the issue of legal professional privilege which may arise where an applicant seeks a wasted costs order against lawyers acting for an opposing party and at page 237B-D of its judgment it said:
"The respondent lawyers are in a different position. The privilege is not theirs to waive. In the usual case where a waiver would not benefit their client they will be slow to advise the client to waive his privilege, and they may well feel bound to advise that the client should take independent advice before doing so. The client may be unwilling to do that, and may be unwilling to waive if he does. So the respondent lawyers may find themselves at a grave disadvantage in defending their conduct of proceedings, unable to reveal what advice and warnings they gave, what instructions they received. In some cases this potential source of injustice may be mitigated by reference to the taxing master, where different rules apply, but only in a small minority of cases can this procedure be appropriate. Judges who are invited to make or contemplate making a wasted costs order must make full allowance for the inability of the respondent lawyers to tell the whole story. Where there is room for doubt, the respondent lawyers are entitled to the benefit of it. It is again only when, with all allowances made, a lawyer's conduct of proceedings is quite plainly unjustifiable that it can be appropriate to make a wasted costs order."
I do not for my part consider this passage to be inaccurate or misleading, and counsel did not criticise it. Read literally and applied with extreme care, it ought to offer appropriate protection to a practitioner against whom a wasted costs order is sought in these circumstances. But with the benefit of experience over the intervening years it seems clear that the passage should be strengthened by emphasising two matters in particular. First, in a situation in which the practitioner is of necessity precluded (in the absence of a waiver by the client) from giving his account of the instructions he received and the material before him at the time of settling the impugned document, the court must be very slow to conclude that a practitioner could have had no sufficient material. Speculation is one thing, the drawing of inferences sufficiently strong to support orders potentially very damaging to the practitioner concerned is another. The point was well put by Mr George Laurence QC sitting as a deputy High Court judge in Drums and Packaging Ltd v Freeman (unreported, 6 August 1999) when he said, at paragraph 43:
"As it happens, privilege having been waived, the whole story has been told. I cannot help wondering whether I would have arrived at the same conclusion had privilege not been waived. It would not have been particularly easy, in that event, to make the necessary full allowance for the firm's inability to tell the whole story. On the facts known to D3 at the time it launched this application, D3 might very well have concluded that the firm would not be able to avoid a wasted costs order, even on the 'every allowance' basis recommended by: [Sir Thomas Bingham MR] ."
Only rarely will the court be able to make "full allowance" for the inability of the practitioner to tell the whole story or to conclude that there is no room for doubt in a situation in which, of necessity, the court is deprived of access to the full facts on which, in the ordinary way, any sound judicial decision must be based. The second qualification is no less important. The court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so. This reflects the old rule, applicable in civil and criminal proceedings alike, that a party should not be condemned without an adequate opportunity to be heard. Even if the court were able properly to be sure that the practitioner could have no answer to the substantive complaint, it could not fairly make an order unless satisfied that nothing could be said to influence the exercise of its discretion. Only exceptionally could these exacting conditions be satisfied. Where a wasted costs order is sought against a practitioner precluded by legal professional privilege from giving his full answer to the application, the court should not make an order unless, proceeding with extreme care, it is (a*) satisfied that there is nothing the practitioner could say, if unconstrained, to resist the order and (b) that it is in all the circumstances fair to make the order.* (Emphasis added)
45 The jurisdiction to make such orders is to be exercised “with care and discretion and only in clear cases”. It is to be observed that the section speaks of “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”. This indicates that it is only engaged by egregious conduct: mere (as distinct from serious) neglect, incompetence or misconduct does not attract it. In considering whether to make such an order, courts apply a three‐stage approach, asking first, is the practitioner’s conduct such as to satisfy the test; secondly, if so, did that conduct cause the applicant to incur unnecessary costs; and thirdly, if so, is it in all the circumstances just to order the legal practitioner to compensate the applicant for the whole or any part of the relevant costs.
81 Mr Gokani briefed Mr Newton of counsel to appear for Vitarag at the trial. Evidence was presented at the hearing of the costs application to demonstrate that Mr Newton was an experienced commercial barrister. The judge did not find otherwise. However, he gave no weight to that fact in relying on the absence of evidence from Mr Newton.
82 With respect, that approach is not tenable. A solicitor may not necessarily escape liability for the improper pursuit of litigation by briefing counsel; however, where counsel is briefed and runs the trial, the appropriate inference is that he did not accept the brief in the belief that the case was hopeless. For reasons already explained, the defendant’s case was not hopeless. In those circumstances, the appropriate inference was that Mr Gokani obtained and acted upon Mr Newton’s advice that the matter could properly run. Mr Selvakumaran’s affidavit filed for Mr Gokani on the costs application, demonstrated that Mr Newton was counsel briefed by Mr Gokani for Vitarag who appeared at a pretrial conference before the Judicial Registrar in the District Court on 30 May 2018 (six weeks after the defence was filed), and who appeared before Russell DCJ on the security for costs application. The inference is that at all relevant stages, Mr Gokani briefed counsel and that counsel saw no basis to refuse to act. The point may not have been dispositive of the case, but the trial judge gave insufficient weight to that circumstance; indeed, he did not refer to that evidence. (Emphasis added
The following additional principles were referred to:
The Court has power to make a wasted costs order against the principals of a firm irrespective of whether or not they had personal knowledge of the manner in which an employed solicitor was neglecting the conduct of the proceedings: Kelly v Jowett (2009) 76 NSWLR 405; [2009] NSWCA 278 (per McColl JA; Beazley JA and Barrett J agreeing).
A solicitor’s failure to comply with his or her obligations under s 56 of the CP Act is relevant to the Court’s exercise of its jurisdiction under s 99 of the CP Act: Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19 at [22]-[23] per Basten JA; Ward and Emmett JJA agreeing; Lemoto at [96] per McColl JA; Hodgson and Ipp JJA agreeing).
Judges are astute to the fact that costs orders against legal practitioners should not be used in a way that discourages acceptance of instructions in cases which are fairly arguable, even if not strong or even weak: Muriniti v Mercia Financial Solutions Pty Ltd [2021] NSWCA 180 at [85] per Bell P (as the Chief Justice then was), Gleeson JA agreeing.
The Court should be even more resistant to exercising the wasted costs jurisdiction where the Court has not made a final decision on the merits between the parties: B v Pendlebury and Associated Newspapers Limited [2002] Lloyd’s LR 576 (QBD).
Mr Newton also sought to rely on these passages from the decision of the Privy Council in the New Zealand case of Harley v McDonald [2001] 2 AC 678; [2001] UKPC 18 (a case applied by Peden J in Kalloghlian v Mitry Lawyers Pty Ltd (No 2) [2022] NSWSC 1071):
49. A costs order against one of its officers is a sanction imposed by the court. The inherent jurisdiction enables the court to design its sanction for breach of duty in a way that will enable it to provide compensation for the disadvantaged litigant. But a costs order is also punitive. Although it may be expressed in terms which are compensatory, its purpose is to punish the offending practitioner for a failure to fulfil his duty to the court. In Myers v. Elman [1940] AC 282 Lord Wright described the court's inherent jurisdiction as to costs in this way at p 319:
"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…The jurisdiction is not merely punitive but compensatory. The order is for payment of costs thrown away or lost because of the conduct complained of. It is frequently, as in this case, exercised in order to compensate the opposite party in the action."
The jurisdiction is compensatory in that the court directs its attention to costs that would not have been incurred but for the failure in duty. It is punitive in that the order is directed against the practitioner personally, not the party to the litigation who would otherwise have had to pay the costs.
50. As a general rule allegations of breach of duty relating to the conduct of the case by a barrister or solicitor with a view to the making of a costs order should be confined strictly to questions which are apt for summary disposal by the court. Failures to appear, conduct which leads to an otherwise avoidable step in the proceedings or the prolongation of a hearing by gross repetition or extreme slowness in the presentation of evidence or argument are typical examples. The factual basis for the exercise of the jurisdiction in such circumstances is likely to be found in facts which are within judicial knowledge because the relevant events took place in court or are facts that can easily be verified. Wasting the time of the court or an abuse of its processes which results in excessive or unnecessary cost to litigants can thus be dealt with summarily on agreed facts or after a brief inquiry if the facts are not all agreed. Scope for the making of a costs order that will compensate as well as penalise is then likely to be found in making an order against the practitioner that will indemnify the opposing litigant against costs incurred as a result of the breach of duty that would otherwise not be recoverable. …
…
53. Their Lordships do not say that the court has no jurisdiction to make a costs order in favour of the client against his own barrister or solicitor. But in cases where an order to that effect is contemplated the court must take great care to confine its attention to the facts which are clearly before it or to facts relating to the conduct of the case that are immediately and easily verifiable. Allegations that may raise questions about duties owed to the client by the barrister or solicitor and the conduct of the case outside the courtroom are unlikely to be of that character. They are likely therefore to fall outside the proper scope of that inquiry. The court must bear in mind that it is not its function, in the exercise of this jurisdiction, to adjudicate on the position as between the client and his barrister or solicitor.
54. The court must have particular regard in cases of this kind to the factual basis upon which the jurisdiction is to be exercised*. It cannot rely on its own knowledge when it is faced with issues about the nature or scope of the instructions which the client has given about the conduct of the litigation or the advice that may or may not have been tendered to the client by his barrister or solicitor.* Fairness to the barrister or solicitor requires that notice should be given of allegations about breaches of duty which raise these issues and that an opportunity should be given to them to challenge the allegations, if so advised, by cross-examining witnesses and leading evidence. These procedures are inconsistent with the summary nature of the jurisdiction. Bearing in mind the extra cost which an investigation of that kind may involve, and the overriding requirement of fairness to those who are at risk of being penalised, the court may well conclude that further investigation under this procedure is not appropriate. This need not be seen as a surrender by the court of its responsibility. The client may have other remedies. A complaint may be made to the Law Society leading to disciplinary sanctions against the barrister or solicitor, or a claim may be made by the client against the solicitor in damages for negligence. (Emphasis added.)
Mr Condon SC’s submissions may be summarised as focussing on two things:
The objective proposition that the solicitors acted unreasonably by persisting in the trust claim which, from the moment the special defence was raised, it was obvious (as was ultimately conceded) was doomed to fail. The solicitors’ inability to rely on privileged material was no answer to what was a clear, legal proposition. The trust claim was what the case was really about because no one, until the present argument, had ever suggested that the alternative claim had an independent life of its own; and
There had been no attempt by the solicitors (either themselves or through Ms Ryzner) to put on any evidence as to their thought processes as to how they might have thought the trust claim was properly maintainable in the face of the special defence, which could have been done without recourse to privileged material.
Mr Condon SC’s basal submission is encapsulated in this exchange:
HIS HONOUR: Just pause for a moment, please, Mr Condon. Just going back to what Goldberg J said in Flower & Hart at 104, "There must be something further added in the nature of acting unreasonably" et cetera, so presumably you would say here the answer was so obvious that it would be acting unreasonably.
CONDON: Indeed, and what we'd also say of course, I think on a further reading of her Honour's judgment [McColl JA in Lemoto], if your Honour takes a different view from Goldberg J we fully accept that the solicitors can't deploy before your Honour any of the privileged material, and so to put it crudely, if there's a benefit of a doubt on a matter which that material could shed light on, then they have the benefit of the doubt, but this is not an issue about instructions, about factual matters. It's an issue about an issue of law simpliciter.
Nothing which the deployed material could have possibly shed light on, can deal with the fundamental problem that the case was untenable, and presumably when Ms Painter addressed, she did so on instructions. When your Honour goes back to the evidence of the solicitor in the note that was tendered before your Honour, the revised note, your Honour will see that what she says …” Tcpt, 14 Nov 2025, p 29(49) (Emphasis added.)
Mr Newton’s submissions may be summarised as:
It was accepted that, as the solicitor on the record, Mr Cronin, could be held liable in costs for Ms Ryzner’s conduct to the extent he was not personally involved in the day-to-day carriage of the proceedings. However, s 99 was directed to the conduct of a specific “legal practitioner”. There was no suggestion that Ms Miller had had anything to do with the conduct of the proceedings. Therefore, there was no basis either under the CP Act or the inherent jurisdiction for any liability to be visited on her. Whether, as a matter of the law of partnership, Mr Cronin could seek contribution from Ms Miller for any liability he may have was not a matter to be resolved in these proceedings.
As against Mr Cronin, the high threshold for a liability in costs had not been made out for the following reasons:
(a) While the trust claim may have been hopeless, the damages claim was not and no one, including Ms Painter SC, had ever made any concession in relation to the viability of the damages claim. Potable Gold was wrong to contend that the alternative claim was no part of the proceedings. The claim was for damages in equity arising from a resulting or constructive trust, including a claim for expenditure enforced by an equitable charge over land of the kind awarded in Morris v Morris [1982] 1 NSWLR 61. It plainly had been part of Hermes’ case from the initial writ (see [12] above) and in the claim (see [13] above). The particulars had been given (see [17] above), and it did not depend upon the success of the trust claim but was a true, alternative claim. The maintenance of the proceedings after the introduction of the special defence therefore could not be completely impugned, to the extent it could be at all.
The simplicity of Potable Gold’s approach was initially attractive. However, it is insufficient both as a matter of fact and law, to visit the serious consequences of a costs order on the solicitors. For the reasons which follow, the Court accepts Mr Newton’s submissions as to why the motion should be dismissed.
I interpolate by way of preamble that I accept Mr Newton’s submissions (see [69(1)] above) as to why, on no view, can Potable Gold obtain an order against Ms Miller.
As against Mr Cronin, the starting point must be the caution with which the wasted costs jurisdiction against solicitors must be exercised, whether in the inherent jurisdiction or under s 99. The statutory preconditions under s 99 are serious, requiring egregious conduct, of which the Court must be satisfied to the Briginshaw standard (now s 140(2) of the Evidence Act 1995 (NSW)).
Before turning to examine what conduct has been proven in this case, it should be emphasised that the references to caution in the authorities, and s 99 requiring egregious conduct, is not the product of either a legislative or judicial tenderness to the legal profession. There are at least two substantial policy reasons which support this approach.
First, citizens are entitled to have their “day in court”, which day will almost always be more efficiently conducted if the citizen is legally represented. Lawyers are not be discouraged from acting in what may appear to be even very weak cases out of concern that that they may be met with a personal costs order.
Second, the efficient administration of justice requires “satellite litigation” – disputes born out of disputes – to be discouraged. The setting of a high bar for a personal costs order against a legal practitioner is an example of that policy.
The issue of the solicitors’ conduct invites close attention to the facts.
Potable Gold articulated its case by reference to amended points of claim (APC). The APC was drawn solely by reference to the trust claim, a point traversed by the defendants in their points of defence by referring also to the damages claim. The central allegations were:
15 On 2 July 2024, upon the Supreme Court of Tasmania granting the Applicant leave to file and serve the Amended Defence and Counterclaim and upon receipt of the letter of that date from the Applicant, the Solicitors were required to (Solicitors' Duties):
a. advise Hermes that its claim had no prospect of success unless the alleged oral declaration of trust was evidenced in writing;
b. take instructions from Hermes as to whether the alleged oral declaration of trust was evidenced in writing;
c. advise Hermes to accept the Applicant's offer dated 2 July 2024, or otherwise advise Hermes to abandon the proceedings, if Hermes' instructions were that the alleged oral declaration of trust was not evidenced in writing;
d. to consider whether to draft a Reply taking issue with the Statute of Frauds Defence, which was an affirmative defence; and
e. advise Hermes that, if there was no writing recording the alleged oral declaration of trust within the meaning of 60(2)(b) of the Conveyancing and Law of Property Act 1884 (Tas) or any other defence to Hermes' reliance on the section, then:
i. Hermes could not continue to prosecute the proceedings, and/or
ii. the Solicitors could not continue to act in the proceedings.
16 The Solicitors failed to fulfil one or more of the Solicitors' Duties, and it is to be inferred that the Solicitors did not give proper advice to Hermes because, had such advice been given, the Applicant's offer dated 2 July 2024 would have been accepted or the proceedings otherwise abandoned.
Particulars
i. The Applicant does not presently know further details of the Solicitors' conduct, but a failure to comply with one or more of the Solicitors' Duties is to be inferred from the continuation of the proceedings after 2 July 2024.
ii. The Applicant will give further particulars following production in answer to notices to produce and subpoenas.
17 Had the Solicitors fulfilled the Solicitors' Duties, on or shortly after 2 July 2024, Hermes would have accepted the Applicant's offer dated 2 July 2024, or otherwise abandoned the proceedings. (Emphasis added.)
The particulars to paragraph 16 of the APC make clear that Potable Gold’s case requires the Court to reason in this way:
Potable Gold raised the special defence in its amended defence provided to the solicitors on 2 July 2024. That fact has been proven.
The special defence meant that the trust claim had no prospect of success in the absence of a defence to the special defence. The Court accepts that conclusion of law.
The pleading of the special defence gave rise to the Solicitors’ Duties. For the purposes of this analysis, the Court will assume that mixed conclusion of fact and law in Potable Gold’s favour.
The proceedings continued after 2 July 2024. That fact has been proven.
Therefore, and it is to be inferred as a matter of fact from (4), there was a failure to comply with the Solicitors’ Duties.
Even on the balance of probabilities without the Briginshaw standard, the step from [78(4)] to [78(5)] is a bridge too far. That conclusion is even clearer where the relevant defaulting conduct must be established to the Briginshaw standard. The fact that the litigation continued gives the Court no, or no sufficient, basis to conclude that any of the Solicitor’s Duties was not fulfilled.
Putting it another way, at its highest, what Potable Gold has proven is that between 2 July 2024 and 3 March 2025, Hermes persisted, and the solicitors continued to act, in the unwinnable trust claim. That, on the authorities and in my respectful opinion, is insufficient to engage either s 99 or the inherent wasted costs jurisdiction. Potable Gold has failed to prove the “something more” in the solicitors’ conduct that is required to engage that jurisdiction. Continuing to act on the unwinnable trust claim, without more, is not egregious conduct of the kind which engages the wasted costs jurisdiction.
The facts that have been proven do not permit an inference of the kind which Potable Gold requires the Court to draw to satisfy any of the serious prerequisites under s 99 or the inherent jurisdiction. In terms of s 99, the first stage of the three-part inquiry is therefore answered in the negative.
The Court also accepts, given the involvement of senior and junior counsel, that the solicitors are entitled to the benefit of the doubt. In doing so, the Court draws an inference of the kind referred to in Gokani, being that at no point did counsel see a basis to refuse to act. That inference is consistent with, and fortified by, the fact that experienced senior counsel (Ms Painter SC) dealt with the indemnity costs application on the basis of the concession in relation to the viability of the trust claim. Counsel would presumably have refused to act if instructed to argue for the viability of a claim which counsel was of the view was hopeless.
Mindful of what was said in Medcalf, this being a case where the solicitors were unable to deploy privileged material, I am also not satisfied either that there is nothing the solicitors could have said, if unconstrained, to resist the order or that there is any other circumstance (including any proven conduct) which would make it fair to find the solicitors in this case to be liable notwithstanding that inability. For example, as to the first, given the number of conferences with counsel, experience of litigation suggests that a full exploration of the facts and possible defences (such as part performance) may well have occurred, together with advice on strategies to bring the proceedings to an end as advantageously as possible for Hermes in the circumstances. As to the second element, a relevant circumstance may be egregious conduct directly known to the Court in the conduct of the proceedings. There is no such, or any other, conduct in this case.
However, it is important to note that the Court’s conclusions in this case do not mean that the threshold to engage either s 99 or the inherent jurisdiction can never be met when a solicitor is unable to deploy privileged material in their defence. The relevant degree of delinquency may be inferred from other matters or be apparent from, for example, conduct which the judge has seen for herself or himself in court. In relation to this last possibility, there is much force in the observation in Harley (see [67] above) referring to the wasted costs jurisdiction as a summary one which depends on facts known to the judge from observation or are otherwise incontrovertible. While accepting that such cases will provide straightforward examples, the jurisdiction is nevertheless not so confined.
The Court would have reached the conclusion which it has even if it was clear that the only claim in the proceedings was the trust claim. However, that conclusion is easier for the Court to draw where, as the Court finds, the damages claim was a part of the proceedings. While the improvements claim may be dismissed as de minimis because of the quantum particularised ($891.03), the mortgage payments claim was not. Without expressing any view as to whether it would ultimately have succeeded, the mortgage payments claim, at least prima facie, could engage the principles in Morris for the ordering of an equitable charge over the property.
It is not uncommon for an alternative claim in damages or other relief to be little mentioned until a hearing on the merits (and, even then, only towards the end of such a hearing). In this case, the mortgage payments claim had been particularised. No attempt was made by Potable Gold on the hearing of the motion before me to demonstrate why it was hopeless. The special defence was no answer to it. The mortgage payments claim was alleged to involve $82,595 contended to be the possible object of a charge over the property. Given the acknowledged deficiency of the trust claim, and faced with the dismissal motion, it is entirely plausible that, as was put to Brereton J, a “commercial decision” was taken not to press the damages claim given its quantum, thereby prompting Hermes to propound the orders that its proceedings be dismissed.
In coming to the view expressed in the previous paragraph, I accept Mr Newton’s submission that Ms Painter SC’s concession about the trust claim could not, when fairly considered, be understood as extending to the damages claim. The special defence could not be a defence to such a claim. I understand Brereton J’s reference (at [28] of the costs judgment) to no attempt being made to demonstrate how the case could be repleaded to be a reference to the trust claim, his Honour having acknowledged in the course of argument that there were broader matters in dispute (see [54] above). The fact that the damages claim was not referred to expressly before Brereton J does not mean it was not there. That lack of reference may be explained by recalling that the focus of argument before his Honour was both a Calderbank letter (see [27] above) and Mr Condon SC’s argument (see [54] above) which understandably concentrated on the effect of the Statute of Frauds defence.
I have also taken into account Ms Ryzner’s evidence that she considered there were reasonable grounds to advance the damages claim. I have not overlooked that she proffers no specific evidence as to why she held that view. I consider it very likely that she could have given evidence of the reasons for her view without disclosing privileged material. However, her evidence was admitted without objection and she was not cross-examined. It was not suggested (by reference to the facts alleged in the claim or otherwise) that her view was inherently unsustainable. I have therefore accepted her evidence and find, by inference from her evidence and the fact of the particulars having been provided, and insofar as it may be necessary, that the mortgage payments claim was not hopeless.
The orders of the Court are:
The defendant’s motion filed 7 April 2025 is dismissed; and
The defendant is to pay the respondent solicitors’ costs of that motion.
**********
Hermes Far Eastern Shining Pty Ltd
Potable Gold Strike Pty Ltd [2026] NSWSC 99
(2009) 76 NSWLR 405
(2005) 63 NSWLR 300
(1994) 53 FCR 422
(1999) 168 ALR 383
(2000) 102 FCR 155
(1993) 41 FCR 544
(1998) 156 ALR 169
(1999) 87 FCR 134