His Honour also noted that the Supreme Court of New South Wales in McKerlie v State of New South Wales (No 2) [2000] NSWSC 1159 had expressly held that an offer to settle a case by dismissing it with no order as to costs did not carry with it the consequences of a Calderbank letter.
13 Even if the view was taken that the respondent's offer in this matter was of the nature of a Calderbank offer, the rejection of this offer would be but one factor to be taken into account in the exercise of the Court's jurisdiction as to costs; see Australian Competition & Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 163; John S Hayes & Associates Pty Limited v Kimberly-Clark Australia Pty Limited (1994) 52 FCR 201.
14 In his written submissions the applicant submits that the orders as to costs previously made in the proceeding should stand and should not be revisited. The applicant also submits that, "there is nothing unusual or peculiar in relation to this matter which would warrant payment of costs on an indemnity basis." With respect to the respondent's amended notice of motion, the applicant submits that any costs order made against the applicant ought to be made on a party and party basis. The applicant goes so far as to say that he consents to paying the respondent's costs of the motion on this basis. In his written submissions it is further submitted that no costs should be ordered against the applicant's solicitor.
DECISION
15 As previously noted, the respondent already has the benefit of a number of costs orders in this matter. Pursuant to O 62, such costs are party and party costs. I am not minded to grant the respondent an order for indemnity costs for the entirety of these proceedings. I am not persuaded that the history of this matter, woeful though it may be, discloses such special or unusual features as to warrant such an order for the whole of the proceedings. If that had been the case one might have expected the respondent to seek indemnity costs in relation to the interlocutory issues at the relevant time. No such requests were made.
16 However, in my opinion, there are special or unusual features that warrant an indemnity costs order for at least part of the proceedings. One might have thought that from 22 December 2000, the date of the second judgment (see [2] above), the applicant properly advised, should have known that he had no chance of success in the proceedings. Nevertheless he persisted with his claim and was given the benefit of the doubt and allowed to replead. In my reasons for dismissing the proceeding I made the following comment (at [5]):
"On 24 September 2001, in giving leave to the applicant to amend his pleadings I said that it was my impression that much of the delay in this matter stemmed from the applicant's lack of clear vision of what he was trying to achieve. Because of those delays and because there had already been four attempts to finalise the pleadings, I put the applicant on notice that I would give sympathetic consideration to any motion by the respondent to strike out the statement of claim if it was not properly pleaded."
17 Despite the warning, the fifth statement of claim prompted me to make these comments:
"The fifth statement of claim indicates that my lack of confidence as to the utility of further amendments to the statement of claim … was well-founded. A brief comparison between the fourth and fifth statements of claim should assist in understanding the scope of the difficulty. The fourth statement of claim consisted of twenty nine paragraphs of which seventeen were rendered obsolete as a result of my orders of 22 December 2000. In addition a number of the remaining twelve paragraphs required amendment for the same reason. Quite apart from these consequences, the statement was noticeably lacking in particulars and suffered from the defects to which I earlier referred; ….
The fifth statement of claim was considerably expanded. It consists of forty-six paragraphs of which twenty deal solely with issues that have already been decided. For example, paragraphs 30 - 46 seek to reinstate the proceeding as a representative proceeding despite my express order of 22 December 2000 …. Paragraphs 15 - 17 raise issues relating to the terms of the applicant's insurance policy with the respondent that have already been decided. Paragraphs 2 - 10 consist of entirely new material. Most of the remaining paragraphs also contain some new material and/or claims that have already been decided.
It is totally unacceptable for the applicant to seek to reagitate issues determined adversely to him in my judgments of 21 November and 22 December 2000. If the applicant wished to challenge decisions already made the appropriate course would have been to seek to appeal from my orders. Such appeal would, of course, have required leave and, at this late stage, would also require an extension of time.
…
The fifth statement of claim does nothing to clarify the issues between the parties. It goes well beyond the scope and purpose of the leave to amend that I gave on 24 September 2001. It contains much irrelevant material. It does not identify the causes of action on which the applicant relies and it completely fails to particularise the applicant's claims. It would be virtually impossible for the respondent to put on a comprehensible defence to this pleading. It is embarrassing in the extreme and, in my opinion, it is an abuse of the process of the Court. It should be struck out in its entirety."
18 The respondent should never have had to incur any costs responding to such a seriously flawed document and should therefore be indemnified in respect of the costs incurred since 8 October 2001, the date on which the fifth statement of claim was filed. This gives rise to the question whether the applicant should bear the whole of those indemnity costs, or whether they should in whole or in part be the responsibility of his solicitor.
19 In my opinion both the applicant and his solicitor are responsible for the debacle. There is no suggestion that the applicant has not been fully involved in this proceeding at all relevant times. His affidavit, sworn on 5 October 2001, is attached to the fifth statement of claim. The applicant swears that he has personal knowledge of the facts set out in the statement of claim and that they are true and correct. The applicant must take some responsibility for the way in which this proceeding has been conducted.
20 However, the most remarkable aspect of the fifth statement of claim, namely the way in which it seeks to reagitate issues that had previously been decided in considered decisions of this Court, must be the responsibility of the applicant's solicitor.
21 In Levick v Commissioner of Taxation (supra) the Full Court reviewed the authorities concerning the circumstances in which it is appropriate to make an order against a party's legal adviser rather than against that party. It is fair to say that in all of those authorities the courts were conscious that such an order should not be made without careful consideration and with extreme caution. These concerns were endorsed by the Full Court which continued (at [44]):
"Having said that, it is equally important to uphold the right of a court to order a solicitor to pay costs wasted by the solicitor's unreasonable conduct of a case. What constitutes unreasonable conduct must depend upon the circumstances of the case; no comprehensive definition is possible. In the context of instituting or maintaining a proceeding or defence, we agree with Goldberg J [in White Industries (Qld) Pty Ltd v Flower & Hart (1998) 156 ALR 169] that unreasonable conduct must be more than acting on behalf of a client who has little or no prospect of success. There must be something akin to abuse of process; that is, using the proceeding for an ulterior purpose or without any, or any proper, consideration of the prospects of success."
22 In Cook v Pasminco Ltd (No 2) (supra), Lindgren J said (at [65]) that the solicitors in question:
"were not entitled to commence the proceeding in this Court irresponsibly, recklessly as to whether the federal claims had any prospect of success. Yet it seems to me that this is precisely what they did. If they had responsibly considered the matter, they would have appreciated that the federal claims had no prospect of success at all."
23 These comments (substituting "previously decided claims" for "federal claims") are applicable here. The applicant's solicitor could not seriously have considered that the claims that had been previously decided had any prospects of success. In the circumstances it is fair and just that, subject to previous orders, the applicant bear the party and party costs of the whole proceeding and that the applicant's solicitor be personally liable to pay to the respondent the difference between this amount and the amount of costs, assessed on an indemnity incurred . A similar approach was adopted by Drummond J in Re Bendeich (No 2) (supra). His Honour (at 427) held that before he could order that the solicitor pay any of the costs he had to be satisfied that the solicitor:
"has committed a breach of his duty to the Court to conduct the litigation on behalf of his client … with due propriety; secondly, that that breach involves conduct more than mere negligence and amounts at the very least, to gross negligence; and, finally, I must also be satisfied that the result of any such dereliction of duty … has been to occasion useless costs [to the other party]".
24 It is clear from my account of this proceeding that these conditions have been met. Accordingly, subject to previous costs orders that have been made, the applicant must pay the costs in this proceeding on a party and party basis and the applicant's solicitor must pay the difference between the respondent's costs from 8 October 2001 assessed on a party and party basis and the amount of those costs assessed on an indemnity basis. By "indemnity basis" I mean all of the costs actually incurred by the respondent except those costs unreasonably incurred or unreasonable in amount.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.