Cook v Pasminco Ltd [2000] FCA 1819

FEDERAL COURT OF AUSTRALIA

COOK V PASMINCO LTD (No 2) [2000] FCA 1819 N 132 OF 2000

SUMMARY In accordance with the practice of the Federal Court in certain cases of public interest, I have prepared this brief summary to accompany the Reasons for Judgment that are being delivered today. But the only authoritative pronouncement of my reasons is that contained in the full Reasons for Judgment. This summary is necessarily incomplete. The issue presented for decision involves a tension between two important and valued features of the legal system. First, lawyers must be at liberty, without fear of intimidation, to undertake cases that appear to have little prospect of success. Second, lawyers must not commence a proceeding irresponsibly, in particular, without any, or any proper, consideration of the question whether the proceeding has any prospect of success at all. The applicants sued Pasminco for, relevantly, injury to their health alleged to have been caused by noxious emissions from Pasminco's smelters at Cockle Creek in New South Wales and Port Pirie in South Australia. On 12 May 2000 I ordered that the application be dismissed as incompetent, because it was beyond this Court's jurisdiction. The reason was that the federal claim relied on to attract jurisdiction was "colourable", "not genuine" and designed to "fabricate" jurisdiction. The federal claim on which the applicants relied was that for the purposes of Part VA of the Trade Practices Act 1974, the noxious emissions were goods manufactured by Pasminco which Pasminco was supplying in trade or commerce, to the applicants who were injured in their health because the emissions had defects. Pasminco seeks an order that the applicants' solicitors, as distinct from the applicants themselves, pay Pasminco's costs on an indemnity basis. The applicants' legal representatives formulated the Trade Practices Act claim. They have not filed affidavit evidence that they believed the claim had any chance of success or that they acted on the advice of counsel. I have concluded that the solicitors should pay Pasminco's costs on an indemnity basis, for the reason that the solicitors gave no consideration, or no proper consideration, to the question whether the federal claim had any prospect of success at all. If they had done so, they would have appreciated that it had none. "Indemnity costs" means costs actually incurred except costs unreasonably incurred or costs unreasonable in amount. In this respect, perhaps Pasminco's own position involves an inconsistency. Pasminco's submission, which I accepted, is that a mere reading of the applicants' pleading demonstrates that the federal claim was colourable. Yet in order to convince me of this, detailed written submissions were prepared, senior counsel from Sydney and junior counsel from Melbourne appeared, at least one representative of Pasminco's Melbourne solicitors attended court to instruct counsel, and three lever arch files of photocopied cases were provided to the Court. All this tends to suggest that the federal claim was not obviously and necessarily doomed to fail after all, or at least that Pasminco thought it was not. Yet it was plain to me on a mere reading of the statement of claim that it was. The notion of indemnity costs may well exclude as excessive some of Pasminco's costs to which I have referred. In the circumstances I will keep the question of costs before me rather than make the usual order which would allow Pasminco to tax its costs at this stage. If the parties cannot agree on the amount of the costs to be paid by the applicants' solicitors, the matter may be restored on 24 hours' notice. Although I am making an order that the applicants' solicitors pay Pasminco's costs, the circumstances are extraordinary and are of a kind unlikely to recur. Solicitors remain free to undertake risky litigation, whether of a class action kind or otherwise.