White Industries (Qld) Pty Ltd v Flower & Hart (A Firm) [1998] FCA 806

FEDERAL COURT OF AUSTRALIA COSTS – application for indemnity costs – whether solicitors should be ordered to pay personally opposing party's costs – Court's power to award costs pursuant to s 43 Federal Court of Australia Act 1975 (Cth) – whether respondent unreasonably instituted and continued action on behalf of its client alleging misleading and deceptive conduct, fraud and negligence when it knew there were no or substantially no prospects of success – test to be applied - whether purpose was unreasonable because respondent had an ulterior purpose in instituting the proceeding which was to effect an object beyond what the legal process offers - whether purpose in instituting the proceeding was to give client a "temporary bargaining stance" or "to secure some bargaining position" so as to delay payment due by client under a building contract - abuse of process – whether party used court proceedings and procedures for a purpose unrelated to the objectives for which the court process is designed to achieve when solicitor held the view that his client "could not win any litigation if put to the test" – whether practitioners conducted litigation in a manner designed to obstruct and delay proceeding

LEGAL PRACTITIONERS – solicitors – indemnity costs - whether personal liability for – whether breached duties owed to the Court – whether solicitor protected from liability by reliance on counsel's advice PRACTICE AND PROCEDURE – pleading - allegation of fraud – whether statement of claim pleaded fraud with knowledge without any factual basis for making the allegation

EVIDENCE – whether principles in Browne v Dunn apply – whether respondent or respondent's witnesses were put on notice that statements made in documentary evidence may be used against them or were put on notice that an adverse inference may be drawn against them in order that they may respond to that issue and give an explanation – inference that the purpose in instituting the proceeding was to delay payment of the amount due to the applicant where the respondent had formed the opinion that its client did not have a cause that could be won EVIDENCE – whether principles in Jones v Dunkel apply – whether adverse inference may be drawn where a witness is put on notice of an issue and the party calling the witness and the witness do not address the issue in their evidence‑in‑chief – issue in relation to justification for pleading fraud or view that there was a factual basis for alleging fraud Federal Court of Australia Act 1976 (Cth): s 43(1) Caboolture Park Shopping Centre Pty Ltd (In liquidation) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224 – followed Briginshaw v Briginshaw (1938) 60 CLR 336 – applied Myers v Elman [1940] AC 282 – considered Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 - applied Browne v Dunn [1894] 6 R 67 – considered, followed & not applied Jones v Dunkel (1959) 101 CLR 298 – considered & applied Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 – upheld by High Court in Ferrcom Pty Limited v Commercial Union Assurance Company of Australia Limited (1993) 176 CLR 332 – considered & applied Davy‑Chiesman v Davy‑Chiesman [1984] Fam 48 – considered & applied Edwards v Edwards [1958] P 235 – considered & applied Orchard v South Eastern Electricity Board [1987] 1 QB 565 – considered & applied Currie & Co v The Law Society [1977] 1 QB 990 – considered & applied De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544 – considered & applied Ridehalgh v Horsefield [1994] Ch 205, 226 – considered & applied Cahill v Eckstein (unreported, New South Wales, Supreme Court, Smart J, 5 June 1998) – considered & applied Tolstoy‑Miloslavsky v Aldington [1996] 1 WLR 736 – considered & applied Williams v Spautz (1992) 174 CLR 509 – considered Goldsmith v Sperrings Ltd [1977] 1 WLR 478 – considered Minister Administering the Crown Lands (Consolidation) Act and Western Lands Act v Tweed Byron Aboriginal Land Council (1990) 71 LGRA 201 – applied Oldfield v Keogh [1941] 41 SR (NSW) 206 – applied Locke v Camberwell Health Authority [1991] 2 Med LR 249 – applied WHITE INDUSTRIES (QLD) PTY LTD v FLOWER & HART (A FIRM) QG 198 of 1986 GOLDBERG J BRISBANE 14 JULY 1998