Australia - Costs Update – Court Extends Costs Order To Solicitor Propounding Hopeless Last Minute Application.
Legal News & Analysis - Asia Pacific - Australia - Dispute Resolution
29 April 2020
What you need to know
The decision in Coulthard v State of South Australia  FCA 76 relates to a rare exercise of the Federal Court's power to order costs against a solicitor personally in relation to an unsuccessful interlocutory application by his client in native title proceedings. A costs order was also made against his client.
Costs may be awarded against a solicitor personally where the Court is satisfied that the solicitor's conduct is unreasonable. This may include failing to provide objective and considered advice or proceeding with a course of action which has almost no prospect of success.
What you need to do
Be cautious! Courts are generally very unsympathetic to last minute attempts to postpone native title determination hearings. Adverse costs orders are a real risk for the applicant, even if they are relying on their solicitor's advice as to process.
Solicitors in native title claim proceedings need to ensure that they comply with their legislative duties to act "as quickly, inexpensively and efficiently as possible" to facilitate the just resolution of the dispute, or risk an adverse costs order.
Division in native title claim groups can be destructive to achieving the group's main goal. Signing people up to authorisation agreements or, in the proponent space, agreements to agree, will not ensure their support over the longer term. The hard work of consensus building needs to be ongoing, and that can require giving unhappy group members the time and space to speak out.
Costs order made against member of native title claim group and her solicitor in native title claim proceedings
For some years we have been following native title costs cases in our Native Title Year in Review to identify new principles and trends. We have seen an increasing number of costs applications both by and against native title parties, considered most recently in our 10 April 2019 Costs Update.
In Coulthard v State of South Australia  FCA 76 (Coulthard), this issue took on a new dimension. In addition to an application for costs against a member of a native title claim group, the Court was asked to consider whether a costs order should be made against her solicitor.
Three days before the Federal Court scheduled an on country consent determination in the Adnyamathanha, Ngadjuri and Wilyakali Overlap Proceedings, a member of the Adnyamathanha applicant brought an unsuccessful interlocutory application for leave to be heard as an amicus curiae and for the determination date to be vacated.
The three native title claim groups and the State of South Australia applied for orders that the applicant and her solicitor pay their costs, on a solicitor and client basis, of the interlocutory application. The State ultimately withdrew its application against the applicant but pressed its application against her solicitor.
Considerations for awarding costs against the applicant
Section 85A applied even though the applicant was not a party to the proceedings in her own right
The first issue in this case was whether the general position that parties in native title proceedings should bear their own costs applied, given that the applicant was not, in her own right, a party to the native title proceedings.
The Court expressed the view that the general position did apply, because the parties seeking costs were parties to the native title proceedings. However, it was not necessary to express a conclusive view on this issue because the Court was satisfied that it was appropriate to make the costs orders in any case.
Federal Court ordered costs against the applicant because her conduct was unreasonable
In considering whether to depart from the general approach, the Court noted that the question of whether the applicant acted unreasonably was to be determined objectively having regard to all the circumstances. The matters to take into account were not confined to the applicant's personal circumstances or reliance on her solicitor's advice.
The Court held that a costs order was appropriate because of the following unreasonable conduct by the applicant:
the applicant should have known that her severely late application would prejudice the other parties (she had been aware of the determination date for at least several weeks); and
the applicant had been advised of the possibility that costs could be ordered against her.
Solicitor/client costs were not appropriate in this case
The Court noted that costs on a solicitor and client basis may be ordered where some special or unusual feature of the case warrants an exercise of the discretion in that way.
This argument was not strongly pressed by the parties and the Court was not satisfied that such an order was appropriate. The applicant was ordered to pay the costs of the native title parties on a party/party basis.
Considerations for awarding costs against a solicitor
The Court noted that, in deciding whether to award costs against a solicitor, it must take into account any failure of a party or their solicitor to comply with the duties imposed by the Federal Court of Australia Act 1976 (Cth) to act "as quickly, inexpensively and efficiently as possible" to facilitate the just resolution of the dispute.
The Court noted that the power to award costs against solicitors should be exercised with due caution as doing so may disincentivise solicitors from taking on unpopular matters due to the risk that personal costs may be awarded against them. This was particularly pertinent in Coulthard as the applicant's solicitor was acting in a pro bono capacity.
The principles which guide the Court when exercising this discretion were summarised in Mitry Lawyers v Barnden  FCA 918 at  as follows:
whether proceedings were started or continued which have no, or substantially no, prospects of success;
whether there was any "unreasonable conduct" in the circumstances; and
whether the circumstances involved or resulted in a "serious dereliction of duty owed to the court, or serious misconduct in promoting the course of, and the proper administration of, justice".
Adverse costs order made against solicitor because he had acted unreasonably
In Coulthard, the Court identified a number of factors which contributed to its finding of unreasonable conduct on the part of the solicitor, including:
the solicitor's failure to inform his client that a similar application to be heard as amicus curiae, which had been brought by his firm approximately two months earlier on behalf of another member of the same native title party in the same proceeding, had been unsuccessful;
the solicitor's failure to provide considered advice regarding the strong likelihood that the amicus curiae application would fail due to its unexplained lateness, the significant delay in bringing it, its inappropriateness in the circumstances and the vexation it would cause the other parties;
the solicitor's failure to inform his client of communications from the State clearly setting out why the application would almost certainly fail;
the solicitor's proposal to apply to be heard as amicus curiae without first seeking specific instructions from his client about her concerns or her reasons for seeking legal advice;
the solicitor's incorrect assumption as to what his client sought to achieve and his failure to clarify what she actually wished to "say to the Court"; and
the solicitor's failure to consider more appropriate alternatives (such as sitting down with the native title parties to inform them of the stories and history which she wished to share with them to safeguard those matters for the future).
Costs ordered on a party/party basis
In light of the above, the Court found that no solicitor of ordinary competence acting reasonably could "sensibly" have thought that it was necessary or appropriate for such an application to be brought to achieve the client's objective. Therefore, the Court ordered that the solicitor personally pay the costs of the native title parties and the State on a party/party basis.
For further information, please contact:
Leonie Flynn, Ashurst