Industrial Court of New South Wales CITATION: Berwick and Ors v Kennett [2010] NSWIRComm 41 Dr John P Berwick (Appellant in IRC 09/1200) PARTIES: Katarina Muc trading as G H Healey & Co. Hurstville (1st Appellant in IRC 09/1286) Gregory Harrison Healey trading as G H Healey & Co Sydney (2nd Appellant in IRC 09/1286) Keith Franklin Kennett (Respondent in IRC 09/1200; IRC 09/1286) FILE NUMBER(S): IRC 1200 and 1286 of 2009 CORAM: Boland J President; Walton J Vice-President; Haylen J APPEAL - UNFAIR CONTRACT - COSTS - cross-appeal by counsel for applicants in s 106 proceedings - appeal by solicitors for applicants in s 106 proceedings - at first instance costs orders made against counsel and solicitors for applicants for costs thrown away by their default and conduct of the applicants' case - costs orders made on motion filed by applicant in s 106 proceedings - illness of counsel leading to withdrawal from case at stage of submissions - case unable to be concluded - whether illness of counsel leading to withdrawal from case a "default" within the meaning of r 209 of the Industrial Relations Commission Rules 1996 - requirement for blameworthy or culpable conduct for which legal practitioner responsible for operation of rule - illness of counsel alone not a "default" within meaning of rule - cross-appeal upheld - costs order against counsel set aside - solicitors for applicants found responsible for costs thrown away as result of expert witness resiling from earlier opinions expressed - inadequacy of material briefed to expert witness - issue of liability for costs of counsel and instructing solicitors determined without deciding question of costs relating to applicants' motion seeking costs against his legal representatives - oversight drawn to attention of Court - supplementary judgment delivered imposing costs on counsel and solicitors without hearing or fully hearing from counsel and solicitors as to appropriate costs orders on motion - applicants' costs motion partially successful - legal representatives denied procedural fairness - cross-appeal and appeal upheld - costs order against counsel set aside - order substituted for applicant to bear costs of motion against counsel - costs orders against solicitors set aside - order substituted for applicant and solicitors to bear own costs of applicants' costs motion CATCHWORDS: COSTS - APPEAL - UNFAIR CONTRACT - cross-appeal by counsel for applicants in s 106 proceedings - appeal by solicitors for applicants in s 106 proceedings - at first instance costs orders made against counsel and solicitors for applicants for costs thrown away by their default and conduct of the applicants' case - costs orders made on motion filed by applicant in s 106 proceedings - illness of counsel leading to withdrawal from case at stage of submissions - case unable to be concluded - whether illness of counsel leading to withdrawal from case a "default" within the meaning of r 209 of the Industrial Relations Commission Rules 1996 - requirement for blameworthy or culpable conduct for which legal practitioner responsible for operation of rule - illness of counsel alone not a "default" within meaning of rule - cross-appeal upheld - costs order against counsel set aside - solicitors for applicants found responsible for costs thrown away as result of expert witness resiling from earlier opinions expressed - inadequacy of material briefed to expert witness - issue of liability for costs of counsel and instructing solicitors determined without deciding question of costs relating to applicants' motion seeking costs against his legal representatives - oversight drawn to attention of Court - supplementary judgment delivered imposing costs on counsel and solicitors without hearing or fully hearing from counsel and solicitors as to appropriate costs orders on motion - applicants' costs motion partially successful - legal representatives denied procedural fairness - cross-appeal and appeal upheld - costs order against counsel set aside - order substituted for applicant to bear costs of motion against counsel - costs orders against solicitors set aside - order substituted for applicant and solicitors to bear own costs of applicants' costs motion PRACTICE AND PROCEDURE - r 209 Industrial Relations Commission Rules 1996 - whether illness of counsel leading to withdrawal from case a "default" within the meaning of the rule - requirement for blameworthy or culpable conduct for which legal practitioner responsible for operation of rule - illness of counsel alone not a "default" within meaning of rule Federal Court Rules s 43 ,O 62, r 9 Industrial Relations Act 1996 LEGISLATION CITED: Industrial Relations Commission Rules 1996, r 209, r 209(2) Supreme Court Act 1970, s 76 ,s 76C Supreme Court Rules 1970 Pt 52A, r 43,r 43A Bagley v Pinebelt Pty Ltd [2000] NSWSC 655 Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544; 114 ALR 708 Ex Christmas Islanders Association Inc and ors v Attorney-General (Cth) (No 2) (2006) 233 ALR 97 Kennett and anor v Mayrana Pty Ltd and ors (No 11) [2009] NSW IRComm 99 Kennett and anor v Mayrana Pty Ltd and ors (No 12) [2009] NSWIRComm 116 CASES CITED: Kennett and anor v Mayrana Pty Ltd and Anor, Berwick v Kennett and Muc and Anor v Kennett (No 13) [2010] NSWIRComm 29 Leicester v Walton [1995] NSWCA 258 Lemoto v Able Technical Pty Ltd and ors (2005) 63 NSWLR 300 Myers v Elman [1940] AC 282 Saraswati v The Queen (1990 - 1991) 172 CLR 1 at 21 Weisser v Spur Group Pty Ltd (2003) 121 IR 89 at [51] Wentworth v Rogers [1999] NSWCA 403 HEARING DATES: 8 March 2010; 9 March 2010 DATE OF JUDGMENT: 1 April 2010 Mr G P Craddock SC for Appellant in IRC 09/1200 McCabe Terrill Lawyers Pty Ltd LEGAL REPRESENTATIVES: Mr R J Darke SC for1st and 2nd appellants in IRC 09 /1286 Middletons Lawyers Mr A J McQuillen of counsel for respondent in IRC 09/1200; IRC 09/1286 Mitchell Lawyers JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES FULL BENCH CORAM: BOLAND J, President WALTON J, Vice-President HAYLEN J Thursday, 1 April 2010 Matter No IRC 1200 of 2009 DR JOHN BERWICK v KEITH FRANKLIN KENNETT Application by Dr John Berwick for leave to cross-appeal and cross-appeal from the judgments and orders of Justice Schmidt given on 29 June 2009 and 24 July 2009 in Matter No IRC 3679 of 2003 Matter No IRC 1286 of 2009 KATARINA MUC and Anor v KEITH FRANKLIN KENNETT Application by Katarina Muc and Anor for leave to appeal and appeal against a judgment and orders of Justice Schmidt given on 24 July 2009 in Matter No IRC 3679 of 2003 JUDGMENT OF THE COURT [2010] NSWIRComm 41 1 The Court has previously given leave to appeal in two appeals brought by legal practitioners concerning costs orders made against them in representing applicants in s 106 proceedings. The issues concerning leave were dealt with in the Full Court's judgment delivered on 9 March 2010 in Kennett and anor v Mayrana Pty Ltd and Anor, Berwick v Kennett and Muc and Anor v Kennett (No 13) [2010] NSWIRComm 29. 2 While the facts are sufficiently set out in the Full Court's judgment on leave to appeal, for present purposes the necessary background can be shortly stated. Professor Kennett and Mr Pak were applicants in the s 106 proceedings. They jointly owned an English Language College and sold it to the respondents in circumstances where the applicants were dissatisfied with the sale price (as not reflecting the true profitability of the College) and the unfairness of continuing consultancy work with the College after its sale, as proposed under the sale arrangements. The applicants were successful in establishing the unfairness of the consultancy contracts, but failed in a substantial part of their case relating to the alleged unfairness of the sale contract. In considering the making of money orders in favour of the applicants, account was taken of money held by the applicants that was properly money to be paid to the purchasers of the College (the respondent purchasers): this approach resulted in Professor Kennett obtaining nothing by way of a money order in relation to the unfairness of the consultancy arrangements and Mr Pak receiving the modest sum of $1,700 in relation to his consultancy arrangement. Those results and circumstances led the trial judge, Schmidt J, to embark upon hearing extensive submissions as to costs. In the course of the costs hearing, her Honour received submissions on behalf of Professor Kennett claiming wasted costs against his legal representatives, namely, Dr Berwick of counsel and his instructing solicitors, Ms Muc and Mr Healey. It became clear to her Honour that, by his motion for costs, Professor Kennett was seeking the entirety of the costs of his case (including the potential payment of indemnity costs sought in the same proceedings by the respondent purchasers against the applicants in light of the manner in which the case had proceeded and the limited success achieved by the applicants). 3 In her Honour's judgment as to costs, so far as is relevant to the present appeals, her Honour ordered that the costs between Professor Kennett and Dr Berwick were to be disallowed in relation to the proceedings on three days in February 2008 and Dr Berwick was to repay Professor Kennett the costs the Professor must pay to the respondent purchasers in relation to the costs of the proceedings on those three days in February 2008. In relation to the solicitors acting for the applicants, her Honour ordered that Mr Healey was to repay Professor Kennett the costs that the Professor was to pay the respondent purchasers in relation to the costs thrown away as the result of the expert resiling from opinions expressed in his first reports submitted for the applicants and that costs between Professor Kennett and his former solicitors thrown away in the same circumstances were to be disallowed. It is to be noted for completeness that the applicants were ordered to bear the respondent purchasers' costs of the proceedings on an indemnity basis from the date of an offer of a settlement made on 13 September 2007. 4 In relation to the wasted costs sought by Professor Kennett against his legal representatives, Dr Berwick, Mr Healey and Ms Muc, reliance, in part, was placed upon the provisions of r 209 of the Rules of the Industrial Relations Commission. At the time of the costs hearing that rule was in the following terms: 209 Barrister or solicitor or agent to repay costs due to delay, misconduct etc (1) Where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Commission that a barrister, solicitor or agent is responsible, the Commission may, after giving the barrister, solicitor or agent a reasonable opportunity to be heard: (a) disallow the costs as between the solicitor or agent and the solicitor's or the agent's client; (b) disallow the costs as between the barrister and that barrister's instructing solicitor or as between the barrister and the client; (c) direct the barrister, solicitor or agent to repay to the client costs which the client has been ordered to pay to any other party; (d) direct the barrister, solicitor or agent to indemnify any party other than the client against costs payable by the party indemnified. (2) Without limiting the generality of sub rule (1), a barrister, solicitor or agent is responsible for default for the purposes of that sub rule where any proceedings cannot conveniently proceed, or fail or are adjourned without useful progress being made, because of the failure of the barrister, solicitor or agent: (a) to attend in person or by a proper representative; (b) to file any document which ought to have been filed, (c) to deliver any document which ought to have been delivered for the use of the Commission; (d) to be prepared with any proper evidence or account, or (e) otherwise to proceed. (3) The Commission may, before making an order under sub rule (1), refer the matter to the Registrar for enquiry and report. (4) The Commission may order that notice of any proceedings or order under this Rule must be given to the client in such manner as may be specified in the order under this sub rule. (5) The term solicitor in this Rule includes the solicitor's agent. 5 It was the consensus of the parties before Schmidt J that, although dealing with the subject of costs being available against a legal practitioner acting without reasonable prospect of success in the context of the provisions of the Legal Profession Act 1987, nevertheless, the approach to that matter was applicable to the operation of r 209 and the applicable principles were those set down by the Court of Appeal in Lemoto v Able Technical Pty Ltd and ors [2005] NSWCA 153; 63 NSWLR 300. That approach has not been departed from on appeal. 6 Although a number of matters were raised by Professor Kennett against the conduct of the proceedings by Dr Berwick as resulting in wasted costs being incurred, her Honour found that only one matter had been established, namely, the wasted costs of three hearing days being 20, 21 and 22 February 2008 during which the matter could not usefully proceed or properly proceed due to Dr Berwick's illness. Her Honour's conclusion on this matter was succinctly set out in two paragraphs of the costs judgment (Kennett and anor v Mayrana Pty Lts & ors (No 11) [2009] NSW IRComm 99): [204] It was argued for Professor Kennett that Rule 209 of the Industrial Relations Commission Rules contemplated that orders could be made in his favour in respect of the consequences of Dr Berwick's illness and his withdrawal from the proceedings. What occurred amounted to a default, where the proceedings could not conveniently proceed, or were adjourned, without useful progress. On Dr Berwick's evidence, the reason why the hearing of the submissions on 20, 21 and 22 February 2008 could not proceed, was the result of the consequences of the illness from which he was suffering. That evidence must be accepted. That being so, it must also be accepted that the order Professor Kennett seeks is available to be made. The Rule in this respect is compensatory, rather than disciplinary. [205] The Rule clearly contemplates that a client such as Professor Kennett may be sheltered from the cost consequences which must inevitably fall upon someone, when such an illness occurs. In the circumstance, I am satisfied that the discretion should be exercised in favour of Professor Kennett, both in respect of Dr Berwick's costs and the costs Professor Kennett has been ordered to pay the respondents, in this respect. Neither Professor Kennett nor Dr Berwick are responsible for Dr Berwick falling ill, but clearly the Rule contemplates that the consequences of such a situation, if it arises, may properly fall on the legal representative, rather than on the client. In this case, that seems to me a just outcome, particularly given the evidence as to how it was that Dr Berwick came to appreciate his illness and to seek treatment and the consequences which resulted for Professor Kennett. 7 Dr Berwick has appealed against the costs orders made relying upon the application of r 209, submitting that, while the rule is not only punitive but is also compensatory, no order can be made under the rule unless there is some dereliction on the part of the practitioner in the conduct of the case. Inability to continue to appear for parties because of illness leading to the adjournment of proceedings was a circumstance that did not fall within the provisions of r 209. 8 After her Honour had delivered judgment on 29 June 2009 on the costs issues, it was drawn to her attention that the costs judgment had not dealt with a costs application made by Dr Berwick in relation to Professor Kennett's motion seeking wasted costs. Her Honour accepted that there had been an oversight and in a short supplementary judgment (Kennett and anor v Mayrana Pty Ltd and ors (No 12) [2009] NSWIRComm 116) her Honour shortly stated her reasons for making the further orders, stating as follows: [4] As for Professor Kennett's motion, they succeeded in part, with an order in his favour against Dr Berwick in relation to proceedings on 20, 21 and 22 February 2009 and orders against the former solicitors in relation to costs thrown away as the result of Mr Prior resiling from the opinions expressed in his first reports. Otherwise the orders sought by Professor Kennett were refused. [5] The ordinary rule is that costs should follow the event. While Professor Kennett was only partially successful on his motion, that was not as the result of any misconduct in relation to the pursuit or hearing of the motions. I can see no basis on which an order for the costs of the motions could be made in favour of either Dr Berwick or the former solicitors, in the circumstances. Orders [6] For the reasons given, I order that Dr Berwick and the former solicitors bear the costs of Professor Kennett's motion, as agreed or assessed and that Mr Pak must bear the costs of his motion as agreed or assessed. 9 Dr Berwick and separately, Ms Muc and Mr Healey, have appealed against these orders primarily claiming that they were not notified prior to the judgment and had not been heard or appropriately heard as to the consequential costs orders to be made on Professor Kennett's costs motion CONSIDERATION 10 In considering these matters, it is necessary to briefly refer to what occurred on 20, 21 and 22 February 2008 and what her Honour said about Professor Kennett's evidence and Dr Berwick in relation to the issue of costs. 11 The substantive proceedings had been adjourned in late September 2007, after 19 hearing days, with the evidence substantially completed but with a requirement to hear one further witness for the respondents. Her Honour made arrangements with the parties to have the matters relisted on the February dates to receive the further evidence and then to hear the parties' submissions. When the matter resumed -on 20 February 2008, however, Dr Berwick made an application that the matter proceed by way of written submissions. Her Honour rejected that application on the basis that it was clearly understood at the September adjournment that the three February days would be available for the taking of additional evidence and the making of final submissions by all parties so that the matter would be concluded in that time frame. In the course of making his submission, Dr Berwick accepted that all of his submissions had not been fully prepared and were not complete and that he would need to examine accounting material in order to be able to properly address the issues for the applicants. Following her Honour's ruling against an adjournment for the purposes of filing written submissions, a further and final witness was called for the respondents. This evidence was relatively brief and Dr Berwick cross-examined the witness. At the conclusion of that evidence, Dr Berwick tended some further material for the applicants and closed the applicants' case. After the morning tea adjournment, Dr Berwick was directed to commence submissions on the basis that he had accepted that they were well advanced although not yet completed and that there were further matters to attend to. Dr Berwick's address continued after the luncheon adjournment and into the afternoon and finally reached the point where Dr Berwick required a further adjournment because of matters that had been raised in exchanges with her Honour and his need to consult the transcript. He sought to have the remaining time used by the other parties. Her Honour declined to call on the other parties at that time and was critical of Dr Berwick for not being able to complete his submissions noting, to the extent that submissions had been made, they had not yet addressed much of the substance of the application. Her Honour adjourned one hour earlier than normal and reserved the costs of the adjournment. 12 On 21 February 2008, Dr Berwick continued to address, but said that he was awaiting the arrival at Court of further submissions that had been prepared and which he required for the purposes of his oral submissions. Dr Berwick continued to address, but her Honour noted that the address was progressing extremely slowly with documents and transcript references being supplied from within and outside the Court by Dr Berwick's instructing solicitor. Her Honour asked Dr Berwick to be candid and to concede that he had nothing further to put until he was in possession of the written submission upon which he was waiting. In response, Dr Berwick sought and was granted an adjournment to ascertain the whereabouts of the document. On resumption, Dr Berwick said that he did not yet have the document but there were matters in it that he did not understand and he would therefore need an adjournment. The document was, in fact, being prepared by the applicant's expert witness, Mr Prior. There was a further adjournment to obtain the document, but when the matter resumed only a précis of it was available and Dr Berwick confessed to not fully understanding the contents of the document. In the circumstances, her Honour, clearly with reluctance, adjourned the proceedings again until the following day, making it clear that upon resumption of submissions, Dr Berwick would not be permitted to canvass matters that he had already dealt with in oral submissions. Her Honour reserved the question of costs. The matter was to resume at a later starting time the following day and the parties were asked to consult their diaries as it was clear that further time would be needed to complete the case. 13 When the matter resumed on 22 February 2008, Dr Berwick announced that a situation had arisen where "for the moment he was unable to continue with the case" as there were issues he needed to address. He needed some assistance and he was about to receive that assistance - he had discussed his position with those at the bar table. It became clear that Dr Berwick was referring to an inability brought about by his own illness. His initial application was that the matter be stood over generally but he did say that it may not be very sensible for him to make any commitment in regard to new dates as he did not want to further inconvenience her Honour or the parties by accepting dates where there may or may not be further difficulties. During discussion her Honour noted that, if the position was that Dr Berwick was unable to continue, the sensible thing was that he should no longer appear at the bar table and ought to withdraw and his instructing solicitor should take instructions from the applicants. Her Honour then adjourned briefly so that the parties could have some discussions and upon resumption, the applicants' solicitor, Mr Healey, appeared. Mr Healey then engaged in discussion as to an appropriate timetable on the basis that other counsel would have to be briefed to conclude the matter. The matter was then adjourned until 11 March 2008. On that day new counsel appeared for the applicants and having filed written submissions, addressed those submissions orally. The other parties then addressed her Honour and the matter was concluded on that day. 14 In her costs decision [No 11] delivered on 9 June 2009, her Honour analysed the evidence on the costs issues given by Professor Kennett and Dr Berwick as well as the evidence of Mr Healey. Her Honour noted the inconsistency of aspects of Professor Kennett's evidence and expressed difficulty in accepting aspects of the Professor's evidence, although she had no such difficulty with Dr Berwick's evidence. There was one aspect of the Professor's evidence that her Honour described as being "implausible" and "contradictory" in face of other parts of the Professor's evidence and the evidence of Dr Berwick and Mr Healey. Her Honour noted that, unlike Professor Kennett, Dr Berwick understood the difficulty of establishing the profitability of the College and that some parts of Professor Kennett's evidence could not be accepted. Professor Kennett complained about Dr Berwick's attention to the case in early 2008 and spoke of his cause for concern and later learning of Dr Berwick's illness and need to withdraw from the case. Professor Kennett had formed the view that Dr Berwick had lost interest in the case but her Honour stated "that was not the difficulty" but rather it was Dr Berwick's illness and the fact that it was not until February 2008 that he realised that he was unwell. Her Honour noted that Dr Berwick had advised, at various times, of the numerous difficulties with the claimed unfairness of the sale agreement and that Dr Berwick had re-cast the pleadings to concentrate on the consulting agreement. Dr Berwick had also written to his solicitors complaining of their inattention to the matter and had urged the applicants to offer a settlement and repeatedly encouraged them to make an offer or to accept offers received, but her Honour noted that Professor Kennett was not interested in compromise. 15 It is against that background that her Honour's orders are to be considered and whether r 209 was available to impose a costs order on Dr Berwick for the wasted costs of the three February hearing days. These matters require the Court to consider the construction of the rule to ascertain its proper reach and application. 16 The Industrial Relations Commission Rules 1996 were introduced following the enactment of the Industrial Relations Act 1996 and the repeal of the Industrial Relations Act 1991. The Rules, in large part, were an adoption or adaptation of the Rules of the Supreme Court. Rule 209 was an adaptation of Pt 52A, R 43 of the Supreme Court Rules 1970 dealing with the liability of solicitors and Pt 52A, r 43A dealing with liability of barristers. At that time the Supreme Court, under s 76 of the Supreme Court Act 1970, possessed a wide power to order costs, subject to the Supreme Court Act and Rules. Section 76C specifically dealt with costs liable to be met by a solicitor where serious neglect, serious incompetence or serious misconduct delayed or contributed to delay in the proceedings. Rule 209, with necessary amendments, substantially reproduced Pt 52A, rr 43 and 43A of the Supreme Court Rules. The Supreme Court Rules contained a further provision, not found in r 209, referring to the rule being in addition to and being intended to operate independently of the provisions of s 76C of the Supreme Court Act and was, therefore, not to apply in circumstances where s 76C of that Act applied. The costs provisions of the Industrial Relations Act were different from those contained in s 76 and s 76C of the Supreme Court Act: pursuant to s 181 of the Industrial Relations Act, subject to the rules of the Commission and any other Act or law, the Commission could award costs and costs were to be in the discretion of the Commission and the Commission was empowered to determine by whom and to what extent costs were to be paid. Special provisions were made in relation to the costs of industrial agents and a distinction was made between the costs orders available when the Commission was sitting in Court Session (now the Industrial Court) and when it was sitting as the Industrial Relations Commission. 17 Given that history, it is appropriate to consider what has been said in the Supreme Court about the operation of Pt 52A, rr 43 and 43A. In Wentworth v Rogers [1999] NSWCA 403, the Court of Appeal gave consideration to the operation of ss 76 and 76C of the Supreme Court Act and the operation of Pt 52A, r 43 of the Rules of the Court. In considering in what circumstances orders for costs may be made against a solicitor, the Court of Appeal stated: Costs orders against solicitors [21] There are two statutory provisions which deal with orders for costs against solicitors. The first is s 76C of the Supreme Court Act 1970 and the second is r 43(1)(c) of Pt 52A of the Supreme Court Rules. So far as relevant, s 76C of the Supreme Court Act says: 76C(1) The Court may, at any stage of any proceedings, make one or more of the following orders in respect of a solicitor whose serious neglect, serious incompetence or serious misconduct delays, or contributes to delaying, those proceedings: (a) disallow the whole or any part of the costs between the solicitor and his or her client; (b) direct the solicitor to repay his or her client the whole or any part of the costs which the client has been ordered to pay to any other party; (c) direct the solicitor to indemnify any party other than his or her client against the whole or any part of the costs payable by the party indemnified. ... (5) Nothing in this section limits the generality of s76 or any other provision of this Act. [22] S 76 of the Act provides, inter alia, that, subject to the Act and the Rules and subject to any other Act, costs shall be in the discretion of the Court and that the Court shall have full power to determine by whom and to what extent costs are to be paid. [23] R 43 of Pt 52A of the Rules is headed, "Liability of solicitor". Rule 43(1) is as follows: (1) Where costs are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Court that a solicitor is responsible (whether personally or through a servant or agent), the Court may, after giving the solicitor a reasonable opportunity to be heard - (a) disallow the costs as between the solicitor and the solicitor's client; (b) direct the solicitor to repay to the client costs which the client has been ordered to pay to any other party; and (c) direct the solicitor to indemnify any party other than the client against costs payable by the party indemnified. Rule 43(2) provides that, without limiting the generality of subr(1), a solicitor is responsible for default for the purposes of that subrule where any proceedings cannot conveniently proceed, or fail or are adjourned without useful progress being made, because of the failure of the solicitor to do one or other of a number of specified acts. None of the acts specified in the subrule have application to the circumstances of the present case. R 43(5) provides that the rule is in addition to and is intended to operate independently of the provisions of s 76C of the Act. It does not, however, apply in circumstances where s 76C of the Act applies. [24] If his Honour's finding of misconduct against Mr Russo be correct, s 76C of the Supreme Court Act empowered him to make an order that Mr Russo pay Mr Rogers' costs. The relevant words of r 43(1) empower the Court to make one or other of the orders specified in the subrule where "costs are incurred improperly or without reasonable cause, or are caused ... by any other misconduct or default, and it appears to the Court that a solicitor is responsible ...". The language used in the rule is wider than the language used in the section, but it includes the words "any other misconduct or default". The two provisions may overlap but any uncertainty that may appear to arise is overcome by the provisions of r 43(5). In cases where misconduct is relied upon as the ground for the making of an order that a solicitor personally pay the costs of a proceeding, it is to s 76C rather than to the rule that regard should be had. [25] Of course it should not be overlooked that the Court has wide powers in relation to costs: s 76. Absent the more specific provisions of s 76C and r 43A(1), there would have been strong grounds for taking the view that the inherent jurisdiction of the Court would have empowered it to act in cases covered by the section and the rule. In the view we take of the matter, this is not an area which needs further to be referred to. [26] The circumstances in which a court may order costs to be paid personally by a solicitor have been discussed in a number of cases both here and in England. A number of these cases have been decided under the inherent jurisdiction or under rules different in terms from those which apply in this Court. Nevertheless, reference to some of the authorities is helpful. But it should be said at the outset that we have found no case which falls into the category of this one. We shall discuss the facts of it in due course. Whilst the authorities are helpful in indicating guidelines as to when and in what circumstances it is appropriate to make an order for costs against a solicitor, in the end this case will have to rest on its own facts and circumstances. [27] The first of the authorities to which we refer is the decision of the House of Lords in Myers v Elman [1940] AC 282 where Viscount Maugham said (at 289): In my opinion the jurisdiction as to costs is quite different. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order [for costs against the solicitor]. The primary object of the Court is not to punish the solicitor, but to protect the client who has suffered and to indemnify the party who has been injured. OLXV sII, of the Rules of the Supreme Court provides the necessary machinery where the person injured is the client of the solicitor. It is a rule supplementary to the summary jurisdiction of the Court. It is not limited to misconduct or default, but expressly extends to costs incurred improperly or without reasonable cause, or which have proved fruitless by reason of undue delay in proceeding under a judgment or order. The jurisdiction to order the solicitor to pay costs to the opposite party is exercised on similar grounds. The principle will be found, clearly stated in Halsbury's Laws of England, 2nd ed, vol XXXI p271, where a number of authorities are cited. It will be found that many of these authorities depend, in cases where the order as to costs has been made, on the negligence or mistake of the solicitor and in that sense only on his misconduct in the proceedings. Some of the cases are those where the solicitor has instituted an action without proper authority, and it may be that they can be supported on the ground that in such cases the solicitor has warranted that he had the authority of his client to act for him in the litigation; but it must be observed that that is not the ground stated by the Court and I think they rest on the jurisdiction of the Court over its officers. [28] His Lordship went on to refer to In re Jones (1870) LR 6 Ch 497, where Lord Hatherley LC said that he thought it the duty of the Court to be anxious to see that solicitors not only performed their duty towards their own clients but also towards all those against whom they were concerned. Jones was a case very different from the present. It was a case where the solicitor had engaged to indemnify the plaintiff against the costs of a "doubtful suit" which failed. [29] In Myers Viscount Maugham later said (at 292): But, although in the view I take it is not necessary to show that Mr Elman has been guilty of conduct which would justify the punishment of striking him off the rolls or of suspending him from practice, I entirely agree with the contention that the jurisdiction in question ought to be exercised only when there has been established a serious dereliction of duty as a solicitor either by himself or by his clerks. [30] In his judgment in Myers Lord Wright said (at 318-319): The cases of the exercise of this jurisdiction [to order costs against solicitors] to be found in the reports are numerous and show how the Courts were guided by their opinion as to the character of the conduct complained of. The underlying principle is that the Court has a right and a duty to supervise the conduct of its solicitors, and visit with penalties any conduct of a solicitor which is of such a nature as to tend to defeat justice in the very cause in which he is engaged professionally, as was said by Abinger CB in Stephens v Hill (1842) 10 M & W 28. The matter complained of need not be criminal. It need not involve peculation or dishonesty. A mere mistake or error of judgment is not generally sufficient, but a gross neglect or inaccuracy in a matter which it is a solicitor's duty to ascertain with accuracy may suffice. Thus, a solicitor may be held bound in certain events to satisfy himself that he has a retainer to act, or as to the accuracy of an affidavit which his client swears. It is impossible to enumerate the various contingencies which may call into operation the exercise of this jurisdiction. It need not involve personal obliquity. The term professional misconduct has often been used to describe the ground on which the Court acts. It would perhaps be more accurate to describe it as conduct which involves a failure on the part of a solicitor to fulfil his duty to aid in promoting in his own sphere the cause of justice. [31] ... [32] A more recent authority is Ridehalgh v Horsefield [1994] Ch 205, a decision of the English Court of Appeal. There Sir Thomas Bingham MR said (at 225) that, if solicitors or barristers failed to observe the standards of conduct required by the Law Society or the General Council of the Bar (as the case may be) they became liable to disciplinary proceedings at the suit of their professional body and to a range of penalties which included fines, suspension from practice and expulsion from their profession. His Lordship said that procedures had changed over the years. The role of the courts in the case of solicitors and the Inns of Court in the case of barristers had in large measure been assumed by the professional bodies themselves. His Lordship continued, "But the sanctions remain, not to compensate those who have suffered loss but to compel observance of prescribed standards of professional conduct. Additional powers exist to order barristers, solicitors, and those in receipt of legal aid, to forgo fees or remuneration otherwise earnt." His Lordship added that solicitors and barristers might, in certain circumstances, be ordered to compensate a party to litigation other than the client for whom they acted for costs incurred by that party as a result of acts done or omitted by the solicitors or barristers in their conduct of the litigation. His Lordship said that it was the scope and effect of this last safeguard and its relation with the others which he had mentioned (and to which I do not refer) which were in issue in the appeals. [33] Bingham MR referred (at 226-227) to Myers v Elman . He remarked that when Myers v Elman was decided, the court's "wasted costs jurisdiction" was not regulated by the Rules of the Supreme Court with one exception to which it was unnecessary to refer. He said the rules, however, reflected no general wasted costs jurisdiction. But in 1960 a new rule which later became O 62 r 8(1) was introduced which "did regulate, although not enlarge, this inherent jurisdiction." The rule was not in terms the same as r 43 of Pt 52A of the rules here but the two are to similar effect. [34] In the course of his judgment in Ridehaglh , Bingham MR referred to the changes in the applicable legislation both in Acts of Parliament and in rules of court in force from time to time in the United Kingdom. We do not find it profitable to go into these various changes. He also referred to Orchard v Southeastern Electricity Board [1987] QB 565 where Donaldson MR said (at 572): That said, this is a jurisdiction which falls to be exercised with care and discretion and only in clear cases. In the context of a complaint that litigation was initiated or continued in circumstances in which to do so constituted serious misconduct, it must never be forgotten that it is not for solicitors or counsel to impose a pre-trial screen through which a litigant must pass before he can put his complaint before the court. On the other hand, no solicitor or counsel should lend his assistance to a litigant if he is satisfied that the initiation or further prosecution of a claim is mala fide or for an ulterior purpose or, to put it more broadly, if the proceedings would be, or have become, an abuse of the process of the court or unjustifiably oppressive. [35] Later Bingham MR referred to a phrase "improper, unreasonable or negligent" which appears in the English legislation. He discussed each of these words. We refer to what he said about "improper" and "unreasonable" but not to what he said about "negligent" because this is not a case which involves negligence. Of "improper" and "unreasonable" his Lordship said (at 232): 'Improper' means what it has been understood to mean in this context for at least half a century. The adjective covers, but is not confined to, conduct which would ordinarily be held to justify disbarment, striking off, suspension or other serious professional penalty. It covers any significant breach of a substantial duty imposed by a relevant code of professional conduct. But it is not in our judgment limited to that. Conduct which would be regarded as improper according to the consensus of professional (including judicial)) opinion can be fairly stigmatised as such whether or not it violates the letter of a professional code. 'Unreasonable' also means what it has been understood to mean in this context for at least half a century. The expression aptly describes conduct which is vexatious, designed to harass the other side rather than advance the resolution of the case, and it makes no difference that the conduct is the product of excessive zeal and not improper motive. But conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently. The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting on a practitioner's judgment, but it is not unreasonable. [36] There is much more in the judgment of Bingham MR but, bearing in mind the difference in the statutory language which is in force in England and the particular circumstances of the cases which Bingham MR considered, we do not find it useful to refer further to Ridehalgh . We should mention, however, that the judgment of Bingham MR was the judgment of the Court. [37] Leicester v Walton (22 November 1995, Court of Appeal, unreported) was a decision of this Court concerned with possible prejudice to the appellant's case brought about the late withdrawal of his solicitor, Mr Pike. In the course of a directions hearing, Sheller JA had ordered Mr Pike to file an affidavit explaining the circumstances under which he had purported to cease to act for the appellant and the basis upon which he claimed to have complied with the Rules in that regard. Mr Pike filed an affidavit in which he deposed to the terms of his employment by United Medical Defence that he might only provide legal services to members of the organisation if he had been instructed to do so by his employer. It is unnecessary further to refer to the contents of Mr Pike's affidavit but it is set out comprehensively in the judgment of the Court. The Court then made reference to Pt 66 r 7 of the Supreme Court Rules which deals with the procedure to be followed when a solicitor ceases to act for a party. The Court said (at 9) that one purpose of the rule was to prevent solicitors, without the leave of the Court, ceasing to act for a client within less than seven days of notice in writing to the client. The Court said that Mr Pike, having not applied for and obtained the leave of the Court to cease to act, should, while he remained on the record, have taken steps to ensure that the appellant complied with the Court's orders. The Court added that, while Mr Pike was still his solicitor, the appellant failed to comply with the Court's order to file submissions. [38] The Court went on to discuss the question of what was to be done to overcome the problem which confronted the Court without doing injustice to the parties. It said that the predicament in which the appellant found himself was not of his doing but of the organisation, ie Mr Pike's employer, of which he was a member. The Court made reference to s 76 of the Supreme Court Act and also to s 76C of that Act and Pt 52A r 43 of the Rules. The Court then said (at 15): The Court should not make an order against Mr Pike (the solicitor) for the purpose of punishing him or to demonstrate its disfavour of the way he or his employer has acted in this matter. The grounds for making an order against him must be that his action or inaction led to the incurring of costs which would not otherwise have been incurred or the wasting of costs which would not otherwise have been wasted. Leicester v Walton was referred to by Simos J in Knaggs v J A Westaway Sons Pty Ltd (1996) 40 NSWLR 476 at 484-485. [39] In the course of its judgment, the Court referred to the decision of the High Court in Knight v FP Special Assets Ltd (1992) 174 CLR 178. There, the High Court was concerned with the construction of O 91 r1 of the Rules of the Supreme Court of Queensland which provided that, subject to the provisions of the Judicature Act and the Rules, the costs of and incident to all proceedings in the Court, including the administration of estates and trusts, should be in the discretion of the Court or Judge. It was held by a majority of the High Court that the rule was not confined to orders for costs affecting parties to proceedings. The rule conferred jurisdiction to make an order for costs against the receivers of companies which were unsuccessful parties in proceedings, the receivers themselves not being parties to those proceedings. [40] In their judgment, Mason CJ and Deane J, with whom Gaudron J agreed (at 205), said (at 188) that not all the cases in which orders were made against persons who were not parties on the record could be explained on the footing stated by the Judicial Committee of the Privy Council in Ram Coomar Coondoo v Chunder Canto Mookerjee (1876) 2 App Cas 186, at 212. Mason CJ and Deane J said that it was artificial to attribute the orders for costs against solicitors to an exercise of the disciplinary power rather than to an exercise of the jurisdiction to award costs of the proceedings. The cases awarding costs against non-parties were more readily explicable on the footing that there was no absence of jurisdiction to order costs against non-parties in the strict sense and that the jurisdiction could be exercised against persons who were considered to be the "real parties" to the litigation. Knight v FP Special Assets Ltd is not of direct relevance to the circumstances of this case but the passage from the judgment of Mason CJ and Deane J just referred to exhibits a general consistency in approach with the approach taken in the English cases and with that taken in the decision of this Court in Leicester v Walton . [41] It follows that the Australian cases do not suggest that the general approach taken in England ought not to be followed here. The Australian cases are perhaps not as comprehensive as either Myers or Ridehalgh . But it is clear that there is no difference of substance in the approach taken in the United Kingdom and the approach taken here. Accordingly, the English authorities provide guidance for courts here in a matter such as this. 18 The reference by the Court of Appeal in Wentworth v Rogers to Leicester v Walton [1995] NSWCA 258 was a reference to the factual background and the circumstances in which there was power to award costs against a solicitor in circumstances where the fair resolution of the matter was that costs should be ordered against the solicitor's employer, Medical Defence Union ("MDU"). That course was unavailable because the MDU was not a party to the proceedings and was not covered by the provisions of Pt 52A of the Supreme Court Rules. The Court of Appeal held that the employed solicitor, in not complying with the Rules of Court by giving seven days notice of ceasing to act, did not engage in conduct that amounted to "serious neglect, serious incompetence or serious misconduct" under s 76C of the Act. In relation to the operation of Pt 52A, r 34, the Court stated: The Court should not make an order for costs against Mr Pike for the purpose of punishing him or to demonstrate its disfavour of the way he or his employer has acted in this matter. The grounds for making an order must be that his action or inaction led to the incurring of costs which would not otherwise have been incurred or the wasting of costs which would not otherwise have been wasted. Mr Pike, so far as appears, was entitled to advise his client that he would no longer act for him. Had Mr Pike complied with Pt 66, r 7 and, after due notice, filed a notice of ceasing to act, it is difficult to see how an adjournment of the appeal could have been avoided. It is unlikely that in the few extra days Dr Leicester would have been able to obtain other representation. He would have been compelled to make the application for adjournment that he did and the application would have been successful with the consequence of wasted costs that follows. Earlier notice to the court may have resulted in the court being able to hear another matter on the day vacated. We do not think in this case that costs could be said to have been improperly incurred or without reasonable cause or wasted as a result of any misconduct or default of Mr Pike. Ultimately, the court determined that there should be no order as to the costs of the application for adjournment or as to the costs wasted by the adjournment. 19 That judgment came to be considered further by Hamilton J in Bagley v Pinebelt Pty Ltd [2000] NSWSC 655. This case concerned a barrister not retained in proceedings but who had assisted clients in the lodging of an unsupportable caveat and a question arose as to whether the court had jurisdiction to make a costs order against the barrister arising from proceedings for the removal of the caveat. His Honour made reference to the decision of the Court of Appeal in Leicester v Walton and stated at [16]: ... The central reason given for not making an order against the solicitor in that case was that there was no causal connection between the waste of costs and the solicitor's conduct; the solicitor would not have acted improperly if he had filed a notice of ceasing to act after giving seven days' notice and the abortion of the hearing of the appeal, which was what caused the waste of costs would have occurred in any event; it could not be said to have been caused by the solicitor's inappropriate conduct. It may be that the Court of Appeal also took the view that the nature of the conduct was not sufficient to justify a costs order. ... It also emphasised that, whatever the source of power, the order should always be compensatory, not punitive. His Honour determined that the generality of the rule should not be read down so as to exclude from the costs power counsel not actually retained and appearing in the proceedings, so long as the conduct of the barrister caused the proceedings. His Honour noted that an order under r 43A(1) may be made where costs are "... wasted by undue delay or by any other misconduct ... and ... a barrister is responsible ... ." (Emphasis added). 20 As earlier noted, the parties before her Honour agreed that the principles generally referred to in Lemoto v Able Technical Pty Ltd were appropriate to be applied to circumstances where costs orders were sought against legal practitioners because of alleged wasted costs. In her judgment, her Honour reproduced the lengthy quote from Myers v Elman appearing at [85] of Lemoto (already reproduced extensively in [17] of this judgment) and later referred to at [92] and [93] of the judgment of McColl JA (with whom the other members of the Court concurred). Those paragraphs, taken as providing a guide to her Honour, were in the following terms: [92] The new Div 5C should be construed against the background of the following principles which can be gleaned from the English and Australian authorities which have considered the power to order legal practitioners to pay the costs of proceedings in which they have represented parties: (a) The jurisdiction to order a legal practitioner to pay the costs of legal proceedings in respect of which he or she provided legal services must be exercised "with care and discretion and only in clear cases ": Ridehalgh (at 229); Re Bendeich (No 2) (1994) 53 FCR 422; Deputy Commissioner of Taxation v Levick (1999) 168 ALR 383 at 389 [11]; 43 ATR 621 at 627 [11], per Hill J ; Levick v Commissioner of Taxation (2000) 102 FCR 155 at 166 [44]; Gitsham v Suncorp Metway Insurance Ltd [2002] QCA 416 at [8], per White J (with whom Davies JA and Williams JA agreed); De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41FCR 544; Money Tree Management Services Pty Ltd and Institute of Taxation Research v Deputy Commissioner of Taxation (No 3) (2000) 45 ATR 262; (b) A legal representative is not to be held to have acted improperly, unreasonably or negligently simply because he or she acts for a party who pursues a claim or a defence which is plainly doomed to fail: Ridehalgh (at 233); Medcalf v Mardell [2003] 1 AC 120 at 143 [56], per Lord Hobhouse of Woodborough; White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169; 29 ACSR 21 (affirmed on appeal; Flower & Hart (a firm) v White Industries (Qld) Pty Ltd (1999) 87 CR 134); Levick v Commissioner of Taxation ; cf Steindl Nominees Pty Ltd v Laghaifar [2003] 2 QdR 683; (c) the legal practitioner is not "the judge of the credibility of the witnesses or of the validity of the arguments": Tombling v Universal Bulb Co Ltd [1951] 2 TLR 289 at 297; [1951] WN 247 at 238;the legal practitioner is not "the ultimate judge, and if he reasonably decides to believe his client, criticism cannot be directed to him": Myers v Elman (at 304) per Lord Atkin ; Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation (2001) 179 ALR406 at 413 [34]; 47 ATR 1 at 8 [34], per Callinan J; (d) A judge considering making a wasted costs order arising out of an advocate's conduct of court proceedings must make full allowance for the exigencies of acting in that environment; only when, with all allowances made, a legal practitioner's conduct of court proceedings is quite plainly unjustifiable can it be appropriate to make a wasted costs order: Ridehalgh (at 236, 237); (e) A legal practitioner against whom a claim for a costs order is made must have full and sufficient notice of the complaint and full and sufficient opportunity of answering it: Myers v Elman (at 318); Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at229); (f) Where a legal practitioner's ability to rebut the complaint is hampered by the duty of confidentiality to the client he or she should be given the benefit of the doubt: Orchard v South Eastern Electricity Board (at 572); Ridehalgh (at 229); in such circumstances "[t]he court should not make an order against a practitioner precluded by legal professional privilege from advancing his full answer to the complaint made against him without satisfying itself that it is in all the circumstances fair to do so": Medcalf (at 134 [23])per Lord Bingham of Cornhill; (g) The procedure to be followed in determining applications for wasted costs must be fair and "as simple and summary as fairness permits…[h]earings should be measured in hours, and not in days or weeks… Judges … must be astute to control what threatens to become a new and costly form of satellite litigation": Ridehalgh (at 238–239); Harley v McDonald [2001] 2 AC 678 at 703[50]; Medcalf (at 136 [24]). [93] The authorities concerning the sparing exercise of the jurisdiction to make wasted costs orders against legal practitioners (sub-par (a)) are consistent with cases in which orders are sought that a lay non-party pay the costs of litigation; such an order is exceptional: Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 at 980, per Lord Goff of Chieveley; Taylor v Pace Developments Ltd [1991] BCC 406 at 410; Symphony Group Plc v Hodgson [1994] QB 179at 192–193, per Balcombe LJ; Flinn v Flinn [1999] VSCA 134 at [24]. 21 The passages from Lemoto considered by her Honour looked at both the question of jurisdiction and the exercise of the discretion to make costs orders against a legal practitioner, but in both cases there are references to acting improperly, unreasonably or negligently or whether conduct is plainly unjustifiable. None of the cases cited deal with or contemplate a mere "default", absent some responsibility for failure and/or blameworthy conduct. In Myers v Elman, Lord Wright referred to the matter complained of not needing to be criminal and not needing to involve "peculation or dishonesty": but a mere mistake to error of judgment was not generally sufficient but a gross neglect or inaccuracy of a matter may suffice but it need not involve "personal obliquity". Viscount Maugham spoke of a "serious dereliction of duty". The cases surveyed also refer to: the need for conduct involving a failure on the part of a legal practitioner to fulfil his/her duty; the conduct permitting of a reasonable explanation; and, inappropriate conduct. The significance of these cases and those applied by the Court of Appeal in Wentworth v Rogers as laying the foundation for the jurisdiction to award costs against a legal practitioner is that, over a significant period of time, it has never been suggested that mere default without some basis in dereliction or blameworthy conduct is within the power to award wasted costs against a legal practitioner. There is nothing in the terms of Pt 52A, r 43 or r 43A to suggest a deliberate attempt, by using the word "default", to widen the scope of circumstances in which such orders can be made against a legal practitioner to include blameless conduct such that merely compensatory costs orders can be made. Indeed, the words "... incurred improperly or without reasonable cause, or are wasted by undue delay, or by any other misconduct or default ..." are close to the terms adopted by Viscount Maugham in Myers v Elman (at 289), namely: In my opinion the jurisdiction as to costs is quite different. Misconduct or default or negligence in the course of the proceedings is in some cases sufficient to justify an order [for costs against the solicitor]. The primary object of the court is not to punish the solicitor, but to protect the client who has suffered and to indemnify the party who has been injured. Order LXV s II, are the Rules of the Supreme Court provides the necessary machinery where the person injured is the client of the solicitor. It is a rule supplementary to the summary jurisdiction of the court. It is not limited to misconduct or default, but expressly extends to costs incurred improperly without reasonable cause, or which have been proved fruitless by reason of undue relay in proceedings under a judgment or order. The jurisdiction to order a solicitor to pay costs to the opposite party is exercised on similar grounds. 22 That collocation of words used by Viscount Maugham carried the colour of blameworthy conduct: so do the opening words of r 209. It is to be remembered that r 209 operates on the basis that, where costs "are incurred improperly or without reasonable cause, or are wasted by undue delay or by any other misconduct or default, and it appears to the Commission that a barrister ... is responsible ..." then the Commission may make certain costs orders. The notion that the legal practitioner "is responsible" for the variously identified conduct requires, in this case, Dr Berwick to be responsible for his default in circumstances where her Honour has accepted that neither Professor Kennett nor Dr Berwick were "responsible for Dr Berwick falling ill". If there was no serious dereliction of duty or blameworthy conduct for which Dr Berwick was responsible then there could not be a "default" for which he is liable. Indeed, in Leicester v Walton the Court of Appeal stated that the predicament in which the solicitor found himself was not of his doing, but of his employer. It may, nevertheless, be accepted that a "default" falls short of what might constitute "misconduct" and thus extend the class of conduct in relation to which costs orders may be made against a legal practitioner for wasted costs but that width of conduct was recognised in Myers v Elman. 23 In Lemoto, McColl JA (in a passage cited by Schmidt J) referred to authorities for these propositions: the need to make full allowance for the exigencies of acting in the environment of court proceedings; only when the practitioner's conduct of proceedings "is quite plainly unjustifiable" can it be appropriate to make a wasted costs order; the jurisdiction to make wasted costs order is to be sparingly exercised; and, a wasted costs order is exceptional. 24 McColl JA at [120] then referred to the considerable body of authority confirming the view expressed in Myers v Elman that the jurisdiction to order a solicitor to pay costs was an exercise of the disciplinary power exercised when the solicitor was guilty of professional misconduct that did not warrant being struck off or suspended. Although these were views to the contrary her Honour stated at [121] that there was no doubt that, by inserting Div 5C in the Legal Profession Act, the legislature intended the making of a costs order to involve either an exercise of disciplinary power or the exercise of a power ancillary to a disciplinary power rather than to be merely an aspect of the court's costs jurisdiction. The same may be said about the operation of r 209. 25 Lord Wright in Myer v Elman referred to the jurisdiction to award such costs as "not merely punitive but compensatory". In making the costs order against Dr Berwick, her Honour treated rule 209 as being compensatory: the references from the judgment of McColl JA recounted in the above paragraphs were not weighed in so construing the provisions of the rule. 26 During the course of argument on the appeal, attention was drawn to provisions of the Federal Court Rules and two judgments of French J (as he then was) dealing with the extent of the power of the Federal Court to award costs against a legal practitioner. The terms of O 62, r 9 of the Federal Court Rules are very similar to the provisions of Pt 52A, r 43 of the previous Supreme Court Rules and r 209 of the Commission's Rules. In Da Sousa v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544; 114 ALR 708, his Honour said of the rule that: There has to be something that amounts to a serious dereliction of duty. 27 In that case his Honour found that there was a serious failure by counsel to give reasonable attention to the relevant law and facts that was reflected in both the application and the proceedings instituted in the court. In a subsequent judgment, Ex Christmas Islanders Association Inc and ors v Attorney-General (Cth) (No 2) (2006) 233 ALR 97 at [11], his Honour noted the source of the court's jurisdiction to award costs against practitioners was to be found in s 43 of the Act and in O 62, r 9. His Honour stated that the power was to be exercised with care and in clear cases only in which there had been "conduct on the part of the solicitor which amounts to serious dereliction of duty" citing Da Sousa and further noting that unreasonable conduct in connection with litigation may be sufficient to justify a costs order against a practitioner. 28 In Ritchie's Supreme Court Procedure NSW in relation to the previous Supreme Court Rules and in particular Pt 52A, r 43, it was noted that the power to order costs against a legal practitioner in cases of misconduct was recognised in the provisions of the present rule and that it was probable that the expressions "improperly", "without reasonable cause" and "misconduct" were to be interpreted having regard to the approach taken in Myers v Elman citing the judgment in Wentworth v Rogers. The note continued as follows: On the basis "improper" would include conduct that would justify disciplinary action against the practitioner and extend to any conduct that would be regarded as contrary to proper standards of professional conduct: Ridehalgh v Horsefield [1994] CH 205 at 232. Unreasonable conduct will include conduct that is designed to harass the opposing party rather than to advance the resolution of proceedings: Ridehalgh ... above, at 232. However, it is to be recognised that the words of the present rule are widely expressed and there is no reason to suppose that the powers that exist under the present rule are confined to the jurisdiction that existed at common law : Ridehalgh ... at 231. So far as the present rule extends the power to order costs in favour of the opposing party, and beyond the area of misconduct in its most strict sense, it involves a balancing of two important public interests. The first is that legal practitioners should not be deterred from pursuing their client's interests by fear of personal liability to the opposing party. The second is that litigants should not be left to bear the costs of unjustifiable conduct - whether engaged in by their own lawyers or those of the opposing party ... . 29 The word "default" is described by Butterworths Australian Legal Dictionary (Editors Nygh and Butt, 1997) as "Fr - failure". Among the meanings assigned to the word are: an omission of that which ought to be done; the failure to perform a legal or contractual duty or to observe a promise; a dishonest or wrongful act or omission which brings discredit to one's profession. The Oxford English Dictionary (2nd ed 1989) defines the verb "default" to include the following meanings: to be wanting; to fail; to suffer failure; to fail to fulfil an obligation esp. one legally required, as to appear in court at the proper time; to fail to perform, to omit, neglect. The noun "default" had amongst its meanings the following: failure of something, want, defect; a failure in performance; failure to act; neglect; spec. in law, failure to perform some legal requirement or obligation, esp. failure to attend in a court on the day assigned; a failure in duty, care etc; culpable neglect of some duty or obligation; a failure in duty, a wrong act or deed, a fault, misdeed offence. The Macquarie Dictionary defined the noun "default" to include the following: failure to act; neglect; "law" - failure to perform an act or obligation legally required, especially appear in court or to plead at a time assigned 30 In Saraswati v The Queen (1990 - 1991) 172 CLR 1 at 21, McHugh J stated: Sometimes the purpose of the legislation is expressly stated; sometimes it can be discerned only by inference after an examination of the legislation as a whole; and sometimes it can be discerned only by reference to the history of the legislation and the state of the law when it was enacted. It need hardly be said that a particular Act may have many purposes. Considering the history of r 209, the provisions from which it was taken under the Supreme Court Rules , the history relating to the power to make orders for wasted costs against legal practitioners, and, the ordinary meaning of the word, it seems clear that the word "default" in r 209 involves some culpable conduct or behaviour, falling short of professional misconduct but being behaviour for which a legal practitioner is responsible. Given this meaning of the word "default" in r 209, it was not open to her Honour to make a costs order against Dr Berwick in circumstances where there was no personal failure or blameworthy conduct on his behalf but where the conclusion of the proceedings were delayed because of his illness. On this basis alone the appeal by Dr Berwick should be upheld. 31 In the course of argument, Professor Kennett's counsel accepted that a legal practitioner unable to attend court because of being involved in an accident on the way to court would not constitute a "default" within the meaning of r 209 but submitted that the circumstances of Dr Berwick's conduct was not of the same quality. However, that submission was contrary to the approach adopted by her Honour that illness (and probably an accident occurring on the way to court) was a default and that the client should be protected from the costs consequences by a compensatory costs order against the practitioner pursuant to the provisions of r 209. That approach to the operation of the rule is untenable. The words in context all deal with blameworthy conduct: It might be noted here that r 209(2), without limiting the generality of sub-rule (1), refers to legal practitioners being "responsible" for a "default" because of a "failure" to perform five specified professional duties. Again, the rule emphasises responsibility for the conduct and failures of duty. It is difficult to see how, in normal circumstances, a legal practitioner, in the relevant sense, can be "responsible" for an accident or illness. It may well be that the ejusdem generis rule applies and that the word "default" is restricted to the class of blameworthy conduct and does not add an entirely different class of blameless conduct for which a practitioner may be liable in costs to his/her clients, but the application of that rule of construction is not necessary in deciding this argument. 32 Counsel for Professor Kennett also attempted to support the costs order made against Dr Berwick by reference to other aspects of Dr Berwick's conduct of the case that were submitted to be blameworthy. Her Honour had rejected those submissions but it was argued on appeal, although no Notice of Contention had been filed to support her Honour's conclusion on other grounds, that course had not been adopted because a search of the Commission's Rules did not provide a means for pursuing such a course. The Rules of the Commission applicable at the time of appeal, however, in r 89(5) adopt the provisions of the Supreme Court Rules: where there is no relevant provision or there is no established practice or procedural usage in the Commission, the practice and usage for the time being of the Supreme Court is to be adopted: Weisser v Spur Group Pty Ltd (2003) 121 IR 89 at [51]. Rule 85 also allows an application to be made to the Commission where a difficulty arises or doubt exists as to the procedure to be followed. The new rules operative from 1 February 2010 make specific provision for a Notice of Contention in Pt 8, r 5. Bearing these provisions in mind and the fact that her Honour rejected arguments that Dr Berwick's general conduct of the case warranted him bearing the burden of a costs order, it is not appropriate to permit this argument to be pursued again on appeal in the absence of a Notice of Contention and/or a cross-appeal with the identification of all the conduct that would warrant such an approach (see Weisser at [52]). 33 In relation to the appeals against her Honour's costs order made against Dr Berwick and Mr Healey for the hearing of Professor Kennett's motion for costs against his legal advisors, it is clear that the legal practitioners were not given the opportunity to address, in full, as to what costs orders should be made. It is clear that no opportunity was provided to Ms Muc and Mr Healey in this regard, although for Dr Berwick a submission was made at the end of argument that a costs order should be made in his favour. Little could be usefully submitted until it was known on what basis her Honour proposed to make orders for costs against the legal practitioners. The failure to hear the practitioners as to these costs orders, being a denial of procedural fairness, is of sufficient seriousness to warrant the upholding of both appeals and the setting aside of the costs orders made by her Honour on 24 July 2009. 34 An issue, therefore. arises as to what appropriate costs orders should be made on Professor Kennett's motion. In this regard it is to be recalled that, at its highest, Professor Kennett sought that, in effect, all of his costs should be met or repaid by his legal representatives. Professor Kennett made wide-ranging allegations and instanced numerous occasions on which the legal practitioners he had engaged had wasted costs but ultimately her Honour found two discrete matters warranted a costs order: firstly, in relation to the three days where Dr Berwick's illness impeded completion of the case and secondly, the costs thrown away by the solicitors by not properly briefing the expert as to the profitability of the College, resulting in the expert resiling from his original reports and providing further reports constructed on a different basis. In Dr Berwick's case, as can be seen from the summary contained earlier in the judgment, while he was clearly suffering a disability in the presentation of submissions in February 2008, nevertheless, he had cross-examined the respondent's last witness and had addressed her Honour for some time as to the basis of the applicants' claims to the extent that it is difficult to see how, even under the difficulties with which he was dealing, Dr Berwick wasted three days' hearing. In any event, on the confined basis that the only warrant for making a costs order was to compensate Professor Kennett under r 209, a rule the Court has found not applicable in the circumstances, it appears that Dr Berwick was entirely successful in resisting Professor Kennett's motion. It is therefore appropriate that he should have his costs of Professor Kennett's motion. 35 In relation to Ms Muc and Mr Healey, the written submissions filed on appeal have frankly accepted that, if they had been able to make submissions to her Honour as they have now placed before the Court on appeal, they would have submitted that the appropriate order as between the solicitors and Professor Kennett was that each party should bear their own costs of the motion. Having regard to her Honour's description of Professor Kennett's evidence on the motion as well as the conduct of the solicitors in relation to the expert's report, it appears to the Court that the appropriate costs order is that proposed by the solicitors in their written submissions. 36 As a result of these findings there remain a few loose ends that need to be addressed by the parties. The outstanding issues appear to be: (a) what orders, if any, should be made in relation to the costs of the three February days in 2008 (an issue primarily arising between Professor Kennett and the respondent purchasers)?; (b) what costs orders should be made in relation to the appeals in this Court in which Professor Kennett has been unsuccessful and Dr Berwick, Ms Muc and Mr Healey have been successful? 37 If the parties are in agreement the Court is content to deal with these matters by way of written submission only, in which case all parties should file and serve their written submissions within fourteen days of the date of this judgment and all replies should be filed and served within a further seven days. Should any party wish to orally address these or other matters said to arise, a convenient but short amount of time shall be set aside for that to occur. ORDERS 38 The Full Bench makes the following orders: (a) In relation to the appeal by Dr Berwick, IRC No 1200 of 2009: (i) the appeal is upheld; (ii) the costs orders numbered 4 and 5 made by her Honour, Schmidt J, against Dr Berwick in Kennett and anor v Mayrana Pty Ltd and ors (No 11) delivered on 29 June 2009, are set aside and otherwise quashed; (iii) the costs order made by her Honour, Schmidt J, against Dr Berwick in Kennett and Anor v Mayrana Pty Ltd and ors (No 12) delivered on 24 July 2009 is set aside and otherwise quashed; (iv) in substitution for her Honour's order in Kennett (No 12) concerning the appellant, there shall be an order that Professor Kennett pay the costs of Dr Berwick on the motion in a sum as agreed or, in the absence of agreement, as assessed. (b) in relation to the appeal of Ms Muc and Mr Healey in Matter No IRC 1286 of 2009: (i) the appeal is upheld; (ii) the costs order made against the appellants by her Honour, Schmidt J, on 24 July 2009 in the matter of Kennett and anor v Mayrana Pty Ltd & ors (No 12) is set aside and otherwise quashed; (iii) in substitution for her Honour's order in Kennett (No 12) concerning the appellants, there shall be an order that each party is to pay its own costs of Professor Kennett's motion. (c) in relation to Professor Kennett's appeals in matter No IRC 2189 of 2008 and Matter No IRC 1050 of 2009, the cross-appeal of Dr Berwick in Matter No IRC 1200 of 2009 and the appeals of Ms Muc and Mr Healey in Matter No IRC 1286 of 2009: costs orders in all appeals to the Full Court are reserved except as otherwise dealt with in these orders and are to be the subject of further written submissions. 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