Sammy Russo Meat Supplies Pty Ltd v Australian Safeway Stores Pty Ltd

REASONS FOR JUDGMENT 1 On 21 July 1999, with a consent given on behalf of the applicants by their solicitors, I made, inter alia, the following orders: "1. The applicants file and serve on the third respondent further and better particulars in response to the third respondent's request for further and better particulars dated 18 December 1998 on or by 4.30 p.m. on 12 August 1999, failing which the proceeding against the third respondent be dismissed. 2. The applicants file and serve on the third respondent further and better particulars of the conversations alleged in paragraphs 20, 21 and 22 of the further amended statement of claim on or by 4.30 p.m. on 12 August 1999 failing which the proceeding against the third respondent be dismissed. 3. Pursuant to Order 15 Rule 11(1), the applicants serve on the third respondent a copy of the documents numbered 3 to 32 referred to in Part 1 Schedule 1 of the List of Documents dated 19 May 1999 on or by 4.30 p.m. on 12 August 1999, failing which the proceeding against the third respondent be dismissed. 4. The applicants provide to the first and second respondents by 4.30 p.m. on 12 August 1999: (a) copies of each of the documents listed in Part 1 of the Schedule 1 of the applicants' List of Documents dated 19 May 1999; and (b) either: (i) copies of the documents referred to in category No. 34 of Part 2 of Schedule 1 of the applicant's List of Documents; or (ii) an Affidavit setting out the basis of the claim for privilege for the documents referred to in category No. 34 of Part 2 of Schedule 1 of the applicant's List of Documents. 5 The applicants make file and serve a supplementary Affidavit of Documents of all audio and visual tape recordings in the possession custody or control of the applicants on or by 12 August 1999." I also ordered, not by consent, that: "8. The applicants pay the first, second and third respondents' costs of and incidental to their respective motions filed 14 July 1999 and 22 June 1999 on a solicitor and own client basis and that such costs be paid forthwith notwithstanding that the proceeding is not concluded pursuant to O 62 r3(2) of the Federal Court Rules." On 11 August 1999 the third respondent's solicitors received a letter from the applicants' solicitors enclosing the applicants' supplementary list of documents and the applicants' further and better particulars of their amended statement of claim in response to the request of the third respondent, thereby complying with pars 1 and 5 of the orders made on 21 July 1999. That letter did not include, and the third respondent and its solicitors did not receive by 4.30 pm on 12 August 1999, the applicants' further and better particulars of the conversations alleged in pars 20, 21 and 22 of the further amended of the statement of claim or copies of the documents numbered 3 to 32 referred to in Pt 1 Sch 1 of the applicants' lists of documents dated 19 May 1999. The consequence was that pars 2 and 3 of the orders made on 21 July 1999 were not complied with. 2 On 23 August 1999 the third respondent filed a notice of motion seeking a declaration that the proceeding against the third respondent stands dismissed, that judgment be entered for the third respondent and that the applicants pay the third respondent's costs of the proceeding. That notice of motion was supported by an affidavit of the third respondent's solicitor verifying that as at the time of swearing the affidavit (23 August 1999) she had not received a copy of the documents requested or the applicants' further and better particulars of the conversations alleged in pars 20, 21 and 22 of the further amended statement of claim. That notice of motion was returnable on 2 September 1999 which date was subsequently changed to 3 September 1999. 3 On 2 September 1999 a notice of motion was filed on behalf of the applicants returnable on 3 September 1999, in which they sought orders that the time for compliance with pars 1, 2 and 3 of the orders made on 21 July 1999 be extended to 4.00 pm on 26 August 1999. That notice of motion was supported by an affidavit of the applicants' then solicitor Mr Peter Pryles, sworn 31 August 1999. That affidavit disclosed the following facts. On 11 August 1999 Mr Pryles caused to be served upon the solicitors for the first and second respondents: (a) the applicants' further and better particulars of pars 20, 21 and 22 of the amended statement of claim in response to the request of the third respondent which was incorrectly headed "In Response to the first and second respondents' request". (b) the affidavit of Peter Don Pryles sworn 10 August 1999; (c) copies of the applicants' discovered documents including the documents numbered 3‑32 referred to in Pt 1 of Sch 1 of the applicants' lists of documents dated 19 May 1999. These documents were served under cover of a letter dated 11 August 1999. In his haste to ensure compliance with the orders of 21 July 1999 Mr Pryles served the first and second respondents' solicitors in error with the further and better particulars of pars 20, 21 and 22 of the further amended statement of claim and the copy documents referred to in par 3 of the said orders. 4 On the same day, 11 August 1999, Mr Pryles caused to be served upon the third respondent's solicitors: (a) the applicants' supplementary list of documents; (b) the applicants' further and better particulars of the amended statement of claim in response to the request of the third respondent. Mr Pryles said in his affidavit that in his haste to comply with the orders he should also have served the third respondent's solicitors with the further and better particulars and the copy documents which he "inexplicably" served on the first and second respondents' solicitors. As at 11 August 1999 Mr Pryles believed (as he now knows mistakenly) that he had complied with the self‑executing orders contained in pars 1, 2 and 3 of the orders made on 21 July 1999. He only became aware of his inadvertent error of failing to serve the applicants' further and better particulars and copy documents on the third respondent after being served with the third respondent's notice of motion and supporting affidavit filed and sworn 23 August 1999. 5 On 26 August 1999 Mr Pryles caused to be served upon the third respondent's solicitors the documents which he served in error on the first and second respondents' solicitors. He did so under cover of a letter which stated, inter alia: "We advise that an error was made in that the enclosed Further and Better Particulars were filed and served on the solicitors for the First and Second Respondents. Furthermore, copies of the Applicants' documents were also delivered to the solicitors for the First and Second Respondents and we, in error, omitted to forward copies of the enclosed documents to you. In view of these circumstances would you kindly advise whether you would be willing to withdraw your Notice of Motion on the condition now undertaken to pay your clients' reasonable legal costs thereof. Alternatively, we note our photocopy fees to be $710 and we are willing to waive those fees." The third respondent's solicitors informed the applicants' solicitors that they had instructions to proceed with the notice of motion. But for Mr Pryles' error on 11 August 1999 in serving on the first and second respondents' solicitors the documents that should have been served on the third respondent's solicitors, the self‑executing orders made on 21 July 1999 would have been complied with in time. 6 The motions came on for hearing before me on 3 September 1999. Mr Newman, the solicitor for the third respondent, announced his appearance for the third respondent. Ms Hannon, the solicitor for the first and second respondents appeared for the first and second respondents. Mr Murdoch QC announced his appearance with Mr Herskope but refrained from announcing an appearance for the applicants. He indicated that such appearance was amicus curiae in the circumstances which he then proceeded to explain. He had received the papers in the matter the previous day and after speaking that evening to Mr Pryles ascertained that neither the first applicant nor the second applicant were aware that the proceeding against the third respondent stood dismissed or that the third respondent's application was before the Court. Neither of the applicants knew of the notice of motion filed on their behalf on 2 September 1999 for an order that the Court extend the time for compliance with the orders of 21 July 1999. They were not aware of the third respondent's motion for a declaration that the proceeding against the third respondent stood dismissed and that judgment be entered for the third respondent with costs. 7 Mr Murdoch took the view that he could not announce an appearance on behalf of parties who did not know that he had been briefed on their behalf, who did not know anything about the matter in respect of which he had been briefed and that the reason for non‑compliance with the orders of 21 July 1999 lay solely with their solicitors. Mr Murdoch said that the solicitors for the applicants were in a position of conflict in that the first and second applicants ought to have been told of the non‑compliance with the orders of 21 July 1999, ought to have been told that as a result of the effect of the self‑executing orders their proceeding stood dismissed, ought to have been told that application for judgment and costs was being made, ought to have been given advice that they should proceed to make an application to the Court that the time for compliance with the orders be extended and ought to have been told that it would be in their interests to seek independent legal advice about the making of that application. 8 Mr Murdoch said that there were two reasons for the applicants to distance themselves from their solicitors. The first reason was that the failure to comply with the orders appeared to be a failure on the part of the solicitors and secondly, that it may emerge that failures to comply with orders in the past, which had been identified by the third respondent in an outline of submissions in support of its motion, were the fault of the solicitors and not the fault of the clients. Mr Murdoch said that these matters were relevant to the power given to the Court under O 3 r3 of the Federal Court Rules to extend the time for compliance with the orders made on 21 July 1999 albeit after the event. He referred to the decision of the High Court in FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. He said that the exercise of the Court's discretion is dependent upon all relevant facts being put before the Court and that the prospects of the applicants succeeding in their application would be affected by the circumstances in which events in the past had occurred. 9 Mr Murdoch then submitted that it would be appropriate to adjourn both motions in order to enable the applicants' solicitors to inform their clients of the current circumstances and give them advice that in the circumstances they ought to seek independent legal advice about their position. 10 Mr Newman, on behalf of the third respondent, said that he was instructed that the third respondent neither consented to, nor opposed, a short adjournment to allow the applicants to place before the Court whatever affidavit material they felt was appropriate. Ms Hannon on behalf of the first and second respondents did not wish to be heard on these matters. 11 I then gave my reasons for deciding to adjourn the motions to enable the applicants to be informed fully of what had occurred and to give them the opportunity of obtaining independent legal advice. 12 Subsequently a notice of change of practitioner was filed on behalf of the applicants and they are now represented by Anderson Rice. On 17 September 1999 that firm, on behalf of the applicants, filed a motion seeking orders that pars 1, 2, 3 and 8 of the orders made on 21 July 1999 be vacated and that the costs of the parties in respect of the hearings on 21 July 1999, 3 September 1999, the third respondent's motion and the applicants' motion be paid by Messrs Pryles & Defteros on a solicitor‑own client basis. The new solicitor for the applicants has filed an affidavit in which he says that his firm received instructions from the applicants on 10 September 1999 and obtained the applicants' files from the former solicitors on 13 September 1999. Mr Frank Russo, a director of the applicants, says that he was not aware of the hearing that occurred on 21 July 1999, nor the orders made that day, nor the third respondent's application to have the proceeding against the third respondent dismissed. The first notification that he received from the applicants' former solicitors of the hearing on 3 September 1999 was after the hearing had occurred. He only became aware of these matters on receipt of a letter from his former solicitors dated 6 September 1999. 13 It is not in dispute that the Court has the power to extend the time within which the applicants are to comply with the self‑executing orders made on 21 July 1999 notwithstanding that the time for complying with those orders has passed and the self‑executing orders have crystallised: FAI General Insurance Co Ltd v Southern Cross Exploration NL (supra) at 283‑284. It is also not in doubt that the Court has the power to make the order sought by the third respondent dismissing the proceeding: Federal Court Rules O 10 r7; Lenijamar Pty Limited v AGC Advances Limited (1990) 27 FCR 388 at 395‑396. The third respondent submitted that in exercising jurisdiction in these areas the Court should take into account: · the existence and adequacy of any explanation for the failure to comply with the orders; · the existence in any delays and breaches of orders in the past by the applicants; · any prejudice to the applicants by dismissing the proceeding; · any prejudice to the third respondent by permitting the proceeding to continue; · the standing of the Court. 14 In the light of these submissions it is necessary to identify the procedural steps which have occurred in the proceeding since the application and statement of claim were filed on 27 June 1997. Put shortly, there have been numerous occasions on which the applicants have failed to comply with orders of the Court. There have also been a number of successful applications challenging the statement of claim and seeking to have it struck out. In all, the applicants have filed six statements of claim and the allegations have been narrowed progressively through those documents. Many of the failures to comply with procedural orders in the past have not been the subject of adequate explanation. It is not necessary to set out in detail each and every default of the applicants relied upon by the third respondent. However, they are sufficient in number that in the absence of an explanation for the failure to comply with the orders made on 21 July 1999 I would have refused the applicants' motions to extend the time for compliance with, and to vacate, those orders and would have granted the third respondent's motion for dismissal of the proceeding. 15 For the reasons to which I shall refer, I consider that the present default (failure to comply with the orders made on 21 July 1999) falls into a different category and should not be seen as a continuum of a pattern of dilatory behaviour and inability to comply with Court orders. What occurred on 11 August 1999 was not a wilful disregard of the orders of the Court nor was it contumelious in the sense in which that expression is used in Re Jokai Tea Holdings Ltd [1993] 1 All ER 630 where at 637 Browne‑Wilkinson VC said: "In my judgment, in cases in which the court has to decide what are the consequences of a failure to comply with an unless order, the relevant question is whether such failure is intentional and contumelious. The court should not be astute to find excuses for such failures since disobedience to orders of the court is the foundation on which its authority is founded. But, if a party can clearly demonstrate that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances, such failure to obey is not to be treated as contumelious and therefore does not disentitle the litigant to rights which he would otherwise have enjoyed." It is apparent that Mr Pryles made a mistake which was at the least careless. He could only say that what occurred was inexplicable. Nevertheless, on 11 August 1999 he attempted to comply with the orders made on 21 July 1999. He had prepared and finalised the relevant documents. He sent them to the wrong solicitors. Should the applicants be penalised for such an inadvertent error? In my opinion, the answer is in the negative notwithstanding the litany of complaints made by the third respondent about the applicants' inability to comply with procedural orders in the past. 16 The third respondent relies on the joint judgment of Wilcox and Gummow JJ in Lenijamar Pty Limited v AGC Advances Limited (supra). At 396‑397 their Honours said: "The discretion conferred by O 10 r7 is unconfined, except for the condition of non‑compliance with a direction. As it is impossible to foresee all of the circumstances under which the rule might be sought to be used, it is undesirable to make any exhaustive statement of the circumstances under which the power granted by the rule will appropriately be exercised. We will not attempt to do so. But two situations are obvious candidates for the exercise of the power: cases in which the history of non‑compliance by an applicant is such as to indicate an inability or unwillingness to co‑operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period and cases - whenever the applicant's state of mind or resources - in which the non‑compliances is continuing and occasioning unnecessary delay, expense or other prejudice to the respondent. Although the history of the matter will always be relevant, it is more likely to be decisive in the first of these two situations. Even though the most recent non‑compliance may be minor, the cumulative effect of an applicant's defaults may be such as to satisfy the judge that the applicant is either subjectively unwilling to co‑operate or, for some other reason, is unable to do so. Such a conclusion would not readily be reached; but, where it was, fairness to the respondent would normally require the summary dismissal of the proceeding. In the second of the two situations we postulate, a significant continuing default, it does not really matter whether there have been earlier omissions to comply with the Court's directions. Ex hypothesi the default is continuing and is imposing an unacceptable burden on the respondent. But the continuance of the non‑compliance is of the essence of this situation. If, when the court looks at the matter, the direction has already been complied with, the defaulting applicant may be ordered to pay any wasted costs; but it would be difficult to justify the dismissal of the proceedings solely because of that default." Although there has been a history of non‑compliance by the applicants, the most recent non‑compliance which is the subject of the present motions does not disclose an inability or unwillingness to co‑operate with the Court but rather discloses carelessness. Although it is important that "legal business be conducted efficiently": Bomanite Pty Ltd v Slatex Pty Ltd (1991) 32 FCR 379 at 387, that is only one matter to be taken into account and I should bear in mind that the ultimate aim is to do justice to all parties: Sali v SPC Limited (1993) 116 ALR 625 at 636; State of Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 at 155. 17 Although it may be open to the applicants to issue a fresh proceeding if this proceeding was dismissed it would, in my opinion, be a misallocation of resources having regard to the torturous path along which the proceeding has presently travelled. Although there is still a way to go before the matter can be set down for trial, there would be unnecessary duplication of procedural steps if a fresh proceeding was to be commenced. 18 The third respondent submits that the prejudice which it will suffer by the proceeding continuing extends to matters other than costs because of the lapse of time since the relevant events under investigation occurred: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551‑552. Notwithstanding McHugh J's observations in that case, the third respondent does not identify any specific prejudice it will suffer if the proceeding is left to continue. 19 The third respondent contends that the applicants have failed to explain who is responsible for the defaults which have occurred in the past. If the former solicitors were responsible for the defaults I would take the view that the applicants ought not to be prejudiced in those circumstances and should be allowed to continue the proceeding. If the applicants themselves were responsible for such defaults in the past I consider that the present default is one for which they are obviously not at fault; they did not know about the self‑executing orders made on 21 July 1999 and had no part in bringing about the defaults which occurred. 20 It is also submitted by the third respondent that the particulars provided on 26 August 1999 are not an adequate response to the request and are deficient. That complaint may have substance but I do not consider it relevant to the present motions. Having regard to the fact that the applicants have now changed solicitors I consider that they should be given an opportunity to rectify any inadequacy in those particulars. 21 As I have noted earlier the discretion of the Court in this area is extended and substantially unfettered. As Wilson J said in FAI General Insurance Co Ltd v Southern Cross Exploration NL (supra) at 283‑284: "it [the New South Wales Supreme Court Rule similar to O3 r 3] is a remedial provision which confers on a Court a broad power to relieve against injustice. The discretion so conferred is not readily to be limited by judicial fiat. The fact that it manifestly is a power to be exercised with caution and, in a case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case. It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non‑compliance." 22 I gave Pryles & Defteros, the applicants' former solicitors, leave to appear on the hearing of the motions as it was their conduct which was in question and orders were sought against them that they pay the costs of the applicants' second motion. Mr McGarvie, who appeared for Pryles & Defteros, submitted that the consent given by Pryles & Defteros to the orders made on 21 July 1999 was within the scope of the authority of Pryles & Defteros pursuant to their retainer to conduct the proceeding on behalf of the applicants and to do all things necessary and proper for the conduct of the proceeding. It was submitted that it was not essential that a solicitor refer any question arising in an interlocutory matter in the course of a proceeding to a client for specific instructions. Reliance was placed on the judgement of Roper CJ in Eq in Re a Bill of Costs; Ex parte Maxwell (1955) 72 WN (NSW) 333 where at 336 his Honour said: "It appears that a consent order was obtained for the administration of interrogatories in the equity suit, and interrogatories, in particular, were administered on the plaintiff's behalf. Those interrogatories were settled by counsel and advised by counsel, and the appellant now objects to the allowance of the costs in respect of them because he says that the solicitors had no instructions at all from him for the administration of interrogatories in this suit. The solicitors, however, did have instructions from him and were retained to conduct this particular equity suit. That retainer, to my mind, covers many things, in fact all things which are necessary and proper for the conduct of the suit and, in particular, the question whether interrogatories should be administered is one for the legal advisers. It was in fact advised by counsel in this case, and it is not essential that the solicitor should refer such question, or any such question arising in an interlocutory matter in the course of the suit, to the client for specific instructions. There is nothing to show, or at least the taxing master must have taken the view that there was nothing to show, that it was wrong to administer interrogatories or that that course was in any sense unnecessary in the circumstances of this suit." (See also Cordery's Law relating to Solicitors 8th ed. 1988 at p. 76‑83). Mr McGarvie submitted that there was no basis on which to order Pryles & Defteros to pay the costs of the hearing on 21 July 1999 as there was no material to suggest that Pryles & Defteros were guilty of either professional misconduct or negligence in consenting to the self‑executing orders on 21 July 1999. It was also submitted that there was no basis for ordering that Pryles & Defteros pay the costs of the third respondent's notice of motion filed 23 August 1999 or the applicants' notice of motion filed 17 September 1999 and that if any such costs were ordered they should only be ordered on a party/party basis. 23 At the hearing on 21 July 1999 the solicitor from Pryles & Defteros who appeared for the applicants stated that she was instructed to consent to the self‑executing orders. To the extent to which the solicitor was stating that she had specific or express instructions to consent, I am satisfied that she did not have such specific or express instructions. Mr Russo has sworn that he was not advised of the hearing that occurred on 21 July 1999 nor the orders made that day and he was not challenged on that evidence. Further, when Mr Murdoch appeared on 3 September 1999 it was implicit in what he said that the applicants had not given specific or express instructions to Pryles & Defteros to consent to the self‑executing orders. 24 I am prepared to accept, for present purposes, that the retainer from the applicant to conduct the proceeding on their behalf covered all matters which Pryles & Defteros considered necessary and proper for the conduct of the proceeding on behalf of the applicants. In particular that retainer covered decisions to be made in relation to the disposition of interlocutory applications. But I do not consider that the retainer included authority to consent on behalf of the applicants, without their knowledge, or express instructions, to the dismissal of the proceeding if procedural orders were not complied with. In the circumstances, the self‑executing orders were most extreme and severe orders. Although it may be said that a solicitor has authority from a client to carry out such matters as may reasonably be expected to arise in the course of a retainer: Re Newen [1903] 1 Ch 812, 817‑818; Griffiths v Evans [1953] 2 All ER 1364, 1371, I do not consider that it can be said that it is implicit in a general retainer to conduct a proceeding that a solicitor is authorised to consent to a dismissal of the proceeding without the knowledge or express instructions of the client. 25 Although there is authority for the proposition that a solicitor has authority on behalf of a client to compromise a proceeding, unless the solicitor has specific instructions to the contrary: Re Newen (supra); Little v Spreadbury [1910] 2 KB 658 at 663; Wells v D'Amico [1961] VR 672 at 676‑677; Waugh v H B Clifford and Sons Ltd [1982] 2 WLR 679 at 690; Tsangaris v Gaymark Investments Pty Ltd (1986) 82 FLR 269 at 276‑277; Donellan v Watson (1990) 21 NSWLR 335 at 342, I do not consider that these decisions and the principles in them extend to the proposition that a general retainer includes an authority to consent to the dismissal of the proceeding whether as part of a self‑executing order or otherwise. In this respect the observations of Somers J in Thompson v Howley [1977] 1 NZLR 16, are apposite. His Honour said at 25: "When the [client] instructs his solicitor to commence proceedings I find it difficult to suppose he would contemplate that once commenced the solicitor could settle without reference to him and with no recourse by him … If the authority exists it must be something imposed by the law as a necessary concomitant of the relation of solicitor and client in the particular instance. I cannot think there is anything in that relation which could justify it save only the apparent want of logic and cohesion in the disparity between actual and apparent authority. Nor does experience suggest that solicitors, in this country at all events, conduct the practice of litigation on the footing of the possession of such authority." 26 Nevertheless, I do not consider that the outcome of this matter on the issue of costs or otherwise depends upon whether or not it was within the scope of the retainer of Pryles & Defteros to give the consent which they did. The reason why the applicants have been compelled to file their motion of 17 September 1999 through their present solicitors, Anderson Rice, is because of the default of Pryles & Defteros and the conflict of interest which arose on 3 September 1999 when it became apparent that the applicants were not aware of the third respondent's motion for judgment and it was necessary for them to seek independent legal advice and representation in relation to the matter. Further, the third respondent's motion was filed because of the failure to comply with the self‑executing orders, which failure was due solely to the default of Pryles & Defteros. 27 The third respondent was critical of the applicants for not filing any material which explained the manner or circumstances in which the earlier defaults and delays had occurred. It was said that there was no suggestion that the applicants had enquired or sought to inform themselves as to the progress of the proceeding. It is true that there is no material before the Court which explained the earlier defaults and delays. I do not consider that this should deny the applicants the relief they seek as the circumstances which brought about the crystallisation of the self‑executing orders has been explained and has not been shown to be contumelious or wilful. 28 I can see no reason to disturb the order for costs made on 21 July 1999. It was made because of the previous default of the applicants in complying with previous orders of the Court and the circumstances which occurred subsequent to 21 July 1999 do not warrant any variation of those orders. Irrespective of the self‑executing nature of the orders made on 21 July 1999, orders had to be made on that date to ensure the previous orders were complied with and costs were ordered on that date by reference to the events and circumstances prior to 21 July 1999. 29 I am satisfied that the circumstances which brought about the default in complying with the orders of 21 July 1999 and the circumstances which brought the need for the applicants to retain new solicitors are such that Pryles & Defteros should pay the costs of the present motions. Although the default in complying with the order of 21 July 1999 may not have been contumelious or wilful, the previous history of failure to comply with procedural orders warranted particular and careful attention to be given to compliance with those orders. That care and attention was not given and Mr Pryles' only explanation for the error which occurred was that it was inexplicable. The applicants were put into the position of having to retain new solicitors because of the potential conflict of interest which arose as a result of Pryles & Defteros not informing the applicants of the crystallisation of the self‑executing orders made on 21 July 1999, or of the third respondent's notice of motion for an order for dismissal of the proceeding, or of the notice of motion filed by Pryles & Defteros on behalf of the applicants for orders extending the time for complying with the self‑executing orders. In such circumstances I consider that Pryles & Defteros should pay the applicants' costs. 30 Pryles & Defteros submitted that they should not be ordered to pay the costs of any party because there was no evidence that they had been guilty of gross negligence as distinct from mere negligence. They relied on the observations of Drummond J in Re Bendeich (No 2) (1994) 53 FCR 422 at 427 that costs orders should not be made against solicitors unless they have been guilty of professional misconduct or gross as opposed to mere negligence. Ordinarily a costs order will not be made against a solicitor unless the solicitor has committed a serious dereliction of duty: White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169 at 229‑230 and the cases there cited. I consider the circumstances in this case which required the applicants to obtain different representation were such a dereliction of duty as to warrant a costs order against the solicitors. 31 The applicants sought their costs on a solicitor‑own client basis. In Colgate‑Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, Sheppard J at 232‑234 discussed the circumstances in which orders for indemnity costs might be made. Notwithstanding the extent of the discretion I have as to costs, although Pryles & Defteros were in default I do not consider that the circumstances are such as to warrant an order for indemnity costs. As Sheppard J pointed out in Colgate‑Palmolive Company v Cussons Pty Limited (supra) at 233, the "settled practice" and the usual course is to order costs on a party and party basis. I have found that the solicitors should pay the parties' costs and that order of itself is exceptional and I do not consider that the justice of the case warrants the payment of costs on an indemnity basis. 32 As I have decided that the applicants should be relieved from the default of their solicitors the third respondent's motion should be dismissed. The third respondent should have the costs of its motion as the only reason that motion is dismissed is because of the indulgence granted to the applicants relieving them of their default in failing to comply with the self‑executing orders. Those costs should be paid by Pryles & Defteros as it was due to their acknowledged default that the self‑executing orders crystallised. Pryles & Defteros submitted that it should not have to bear the third respondent's costs subsequent to the point of time at which it filed its motion because the third respondent acted unreasonably in making no enquiry as to the reason for the default and because the third respondent unreasonably sought to maintain the advantage of the self‑executing orders. I do not accept these submissions. Having regard to the history of the interlocutory proceedings in this matter it was not unreasonable for the third respondent to file its motion and to seek to maintain the benefit of the self‑executing orders. 33 Although the first and second respondents did not take an active part in the hearing of the motions, they had been served with the third respondent's motion and the applicants' motion filed by their new solicitors. The applicants sought in that motion a vacation of the costs order on 21 July 1999. The first and second respondents therefore had an interest in protecting that costs order. They should have their costs which should be paid by Pryles & Defteros. 34 For these reasons I am of the opinion that the applicants should be given the opportunity to continue the proceeding and that I should extend the time for compliance with the orders made on 21 July 1999. It is not appropriate that I vacate those orders as there is no suggestion that they were not made properly. It follows that I would dismiss the third respondent's application for the declaratory orders sought.