DECISION NO:184/97 CATCHWORDS COSTS - Costs order against solicitor - Principles in determining whether to order solicitor to pay costs - Whether conduct of solicitor was serious professional misconduct Workplace Relations Act 1996 s 170EA, s 170EHA, s 347, s 377 Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 Da Soussa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708 Re Bendeich (1994) 126 ALR 643 Cassidy v Murray (1995) 124 FLR 267 Ridehalgh v Horsefield [1994] 3 All ER 848 No. NI 1955R of 1996 GLEN ROBERTSON v CSR READYMIX MOORE J SYDNEY 5 June 1997 IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1955R of 1996 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: Glen ROBERTSON Applicant AND: CSR READYMIX Respondent JUDGE: Moore J PLACE: Sydney DATE: 5 June 1997 ORDER OF THE COURT THE COURT ORDERS THAT: 1. The order of 19 March 1997 ordering McGrath, Dicembre & Co to pay the costs of CSR Readymix is set aside. 2. The respondent has liberty to apply. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS ) ) COURT OF AUSTRALIA ) No. NI 1955R of 1996 ) NEW SOUTH WALES DISTRICT REGISTRY) BETWEEN: Glen ROBERTSON Applicant AND: CSR READYMIX Respondent JUDGE: Moore J PLACE: Sydney DATE: 5 June 1997 REASONS FOR JUDGMENT On 19 March 1997 a Judicial Registrar ordered that a firm of solicitors acting for an applicant pay the costs of a respondent in proceedings brought under s 170EA of the Workplace Relations Act 1996 ("the Act"). The solicitors, McGrath, Dicembre & Co, have sought a review under s 377 of the Act of the determination of the Judicial Registrar. No issue was raised about the competency of the application for review having regard to the fact that McGrath, Dicembre & Co was not a party to the proceedings before the Judicial Registrar. The right to apply for a review is only conferred on a party: see s 377(1). However, even had the point been taken, I would have, in the circumstances, exercised the power to review of my own motion: see s 377(2). The costs order was made in proceedings brought by Mr Glen Robertson against CSR Readymix. I assume the respondent is a corporation. The relevant facts may be stated briefly. The application under s 170EA was filed on 27 July 1996. In the application, Mr Robertson indicated he had been employed by CSR Readymix as a precast concrete labourer and that his employment terminated on 18 April 1996. The Australian Industrial Relations Commission was not able to settle the matter by conciliation and on 16 August 1996 issued a certificate to that effect. The proceedings were listed before a Judicial Registrar on 3 September 1996 for directions. Counsel appeared for CSR Readymix but there was no appearance for the applicant. The Judicial Registrar made a self-executing order, to take effect on 6 December 1996, dismissing the application unless Mr Robertson applied to the Court to relist the matter. The Judicial Registrar noted that the applicant was "under the control of the New South Wales Department of Corrective Services". On 26 November 1996 a notice of motion was filed by McGrath, Dicembre & Co seeking to have the matter restored to the list. It was and on 5 December 1996 a hearing date was set for 19 March 1997. In mid February 1997 Mr Pervais Buttar, a senior associate of McGrath, Dicembre & Co, gave the file in the matter to Mr Anthony Philip Thurn, solicitor, who was then to have carriage of the matter. On the cover of the file was a note headed "URGENT". The import of the note was that Mr Robertson had been in gaol, he was now gone, he had been written several letters and particulars should have been filed by 31 January 1997. The note concluded that the "other side should be informed that the client is uncontactable". Mr Thurn, in an affidavit filed in the review, deposed that he then set about trying to contact Mr Robertson through Mr Robertson's brother. Mr Thurn deposed that he contacted a doctor who had been treating Mr Robertson's brother on 13 February 1997. Mr Thurn spoke to the doctor's secretary who said she would look up the file of the brother and "will call him and ask him to call us". Thereafter, no contact was made with McGrath, Dicembre & Co by either Mr Robertson or his brother. On Monday 10 March 1997, Mr Thurn dictated two letters indicating that the firm had been unable to contact the applicant and had been unable to obtain further instructions. The letters went on to indicate that a "Notice of Ceasing to Act" would be filed. It was intended that one letter would be sent to a firm of employee consultants, Fisher & Cartwright, which had been acting for CSR Readymix, and the other would be sent to the Registrar of this Court. For reasons that remain unexplained, the letters were not sent until Tuesday 18 March 1997. They were sent by facsimile at approximately 1.00pm that day. Later that afternoon Ms Jessica Fisher, from Fisher and Cartwright, rang McGrath, Dicembre & Co and spoke to Mr Thurn. While there was a divergence in the evidence as to what was said, the general import of the conversation was, in my opinion, that Mr Thurn indicated to Ms Fisher that Mr Robertson was likely not to attend Court. Counsel had been briefed to appear for CSR Readymix at the hearing fixed for 19 March 1997. I assume he had been briefed directly if, as I understand to be the case, Fisher & Cartwright were not a firm of solicitors nor employed a solicitor who might brief counsel. From a memorandum of fees in evidence it appears that the brief in the matter was first read by Mr Wilson, who was the counsel briefed to appear for CSR Readymix, on 18 March 1997. While the evidence does not make plain when Mr Wilson started to prepare the matter on that day, it is likely to have been some time before late afternoon when he was contacted by Ms Fisher and they discussed the conversation Ms Fisher had had with Mr Thurn. The order made by the Judicial Registrar was made in circumstances where there had been no appearance on 19 March 1997 for Mr Robertson. No notice was given to McGrath, Dicembre & Co that a costs order might be made against them and that is one of the grounds relied upon in the review. However the review is a hearing de novo in which a judge must consider afresh whether to exercise the power to order costs. Nothing, in my opinion, turns on the fact that McGrath, Dicembre & Co received no notice of the application made by CSR Readymix that led to the order for costs against it. Plainly, however, that firm should have received notice of the application that CSR Readymix intended to make. The circumstances in which this Court can order costs in matters arising under the Workplace Relations Act 1996 are limited: see s 347 and 170EHA. However s 347 only constrains the Court insofar as a party might be ordered to pay costs. In Nicolson v Heaven & Earth Gallery Pty Ltd (1994) 1 IRCR 199 at 202 Wilcox CJ concluded that s 347 did not limit the Court's power to order costs against a non party. It was submitted on behalf of McGrath, Dicembre & Co that s 170EHA was a code in relation to costs in proceedings arising from an application under s 170EA. However it is plain from s 170EHA(2) that this is not so. Thus the Court has an unfettered power to order that a third party pay the legal costs of one or all of the parties in proceedings before the Court, though I doubt that the power extends to ordering the payment of the costs of industrial relations or employment consultants such as Fisher & Cartwright. I raised this matter with Mr Wilson in the review and invited him to make written submissions on this issue if he wished. No submissions were made and I infer that no costs are sought in relation to the costs of Fisher & Cartwright. Thus the only issue is whether an order should be made requiring McGrath, Dicembre & Co to pay legal costs incurred by CSR Readymix which, from the evidence, appear only to be counsel's fees. It is necessary to consider the principles that should guide the Court in determining whether a solicitor acting for a party should be ordered to pay the costs of another party. This issue has been considered recently in two judgments in the Federal Court of Australia: see Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 114 ALR 708; Re Bendeich (1994) 126 ALR 643; by a Full Court of the Family Court Cassidy v Murray (1995) 124 FLR 267 and by the English Court of Appeal in Ridehalgh v Horsefield [1994] 3 All ER 848. There is a limited divergence of judicial opinion about the appropriate principles. However two matters are clear. The first is that the power to order a solicitor to pay costs in circumstances such as the present is not exercised to punish the solicitor. Rather it is exercised to compensate the party who is the beneficiary of the order for wasted costs occasioned by the solicitor's conduct. In that respect, it is a power that is also exercised to protect the party for whom the solicitor is acting from the burden of a costs order that might otherwise be made against that party. The second is that the conduct of the solicitor must, at the least, amount to serious professional misconduct. In the present case that latter element is, in my opinion, lacking, at least as it concerns conduct affecting CSR Readymix. It is true that McGrath, Dicembre & Co was tardy in informing those acting for CSR Readymix that it intended to file a notice of ceasing to act. I have reservations about whether McGrath, Dicembre & Co was in a position to file such a notice at all though that may depend on the terms upon which it was retained: see Riley F, New South Wales Solicitors Manual (Sydney Butterworths) para 2015, a matter I know nothing about. However they were plainly not able to file the notice without having served a copy on Mr Robertson or having sought and been granted the leave by the Court: see O45r7(2). Neither was done before 19 March 1997. If it was not contrary to Mr Roberton's interest to do so, it may well be that as a matter of professional courtesy, McGrath, Dicembre & Co should have informed Fisher & Cartwright (which Mr Thurn thought was a firm of solicitors) well before 18 March 1997 that there was a real likelihood that the matter would not proceed by way of full hearing on 19 March 1997 because Mr Robertson would not appear. But that was something that could not have been said with any certainty, in the absence of instructions that would have permitted it to be said, during the week concluding 15 March 1997. However I am not aware of any basis upon which it can be said that, by failing to inform Fisher & Cartwright that it was likely the matter would not proceed on 19 March 1997, before the conversation on 18 March 1997 between Mr Thurn and Ms Fisher, that Mr Thurn committed an act of serious professional misconduct. Indeed it may have been in Mr Robertson's interests for CSR Readymix not to be informed, if McGrath, Dicembre & Co had instructions that would have permitted it to settle the matter on Mr Robertson's behalf and there was some prospect of it settling. However these matters were not canvassed in the evidence and in any event, legal professional privilege may well have constrained McGrath, Dicembre & Co from canvassing them. In my opinion, McGrath, Dicembre and Co should not be ordered to pay the costs of CSR Readymix. I order that the order of the Judicial Registrar be set aside. I have given CSR Readymix liberty to apply if it wishes to seek a costs order against Mr Robertson. I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. Associate: Alexandra George Dated: 30 May 1997 APPEARANCES Counsel for the Applicant: Mr G Niven Solicitor for the Applicant: McGrath, Dicembre & Co Counsel for the Respondent: Mr S Wilson Dates of Hearing: 2 May 1997 Date of Judgment: 5 June 1997