By Dora Chan -
A solicitor’s compliance with the court rules and procedures can prevent the wasting of time and costs of the Court and the parties, and avoid the risk of the solicitor being subject to a personal costs order.
The recent case of Abi-Rizk v BB Dundas Pty Ltd in its capacity as Trustee of the BB Dundas Trust[1] (the Abi-Rizk case) discusses the Court’s powers to make personal costs orders against legal practitioners and the factual circumstances in which such orders are likely to be made.
The Court’s inherent and legislative powers
The Court holds inherent jurisdiction to make personal costs orders against a legal practitioner.[2]
In NSW, s 99 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act) empowers the Court to make a personal costs order against a legal practitioner if costs have been incurred:
- by the serious neglect, serious incompetence or serious misconduct of a legal practitioner, or
- improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible.
The wide powers of the Court to award personal costs against solicitors is in accordance with the overarching purpose of the Civil Procedure Act.[3] A solicitor has an ethical duty to assist the client to ensure civil proceedings are conducted efficiently, expeditiously and cost-effectively.
Further, clause 5 of Schedule 2 of the Legal Profession Uniform Law Application Act 2014 (NSW) provides that, if a law practice provides legal services to its client without reasonable prospects of success, the Court may order the law practice or an associate of the law practice to:
- repay the whole or any part of the legal costs ordered to be paid by their client to another party in the proceedings; or
- indemnify any other party for the whole or part of the legal costs payable by the other party.
Under r 40.07 of the Federal Court Rules 2011 (Cth), the Federal Court of Australia may disallow costs to a legal practitioner, or it may order a legal practitioner to pay costs, if those costs were incurred because of the legal practitioner’s misconduct. Rule 40.07(2) details what misconduct may entail.
Chapter 6 of the Law Society of NSW’s Costs Guidebook includes a detailed discussion about these laws and those in other jurisdictions.
The Abi-Rizk case
The Abi-Rizk case clarified the circumstances in which the Court may exercise its power under s 99 of Civil Procedure Act. The case also discussed the consequences of a solicitor terminating their retainer while failing to comply with rr 7.29 and 7.30 of the Uniform Civil Procedures Rules 2005 (NSW) (UCPR), which concern how a solicitor may withdraw from proceedings as solicitor on the record.
Facts
The original proceedings related to a failed joint venture property development between the plaintiffs and the defendants. The second and third defendants were represented by Fast Forward Legal Pty Ltd, and Mr JA was the solicitor on record. In November 2024, Mr JA notified the second and third defendants that he would cease to act for them. On 26 November 2024, the second defendant emailed Mr JA, writing “…did you receive a date, can you please let me know when it is to be heard. I will need to be there given you have ceased to act.” Mr JA did not reply to this email, nor did he file the notice of ceasing to act with the Supreme Court. He remained the solicitor on record. According to Mr JA, this was due to the stress associated with his employer going into administration at the time.
On 28 November 2024, a directions hearing was held, and the hearing date was set for 26 May 2025. Mr JA was aware of the directions hearing via Online Court, but he did not attend it, nor did he notify the second and third defendants of the final hearing date.
In late December 2024, Mr JA commenced work in another law practice. On 31 December 2024, the new law practice emailed the second and third defendants to advise that they had acquired all files from Fast Forward Legal Pty Ltd and offered to act for them in another matter. The second and third defendants did not contact the new law practice between December 2024 to May 2025.
The second and third defendants found out about the final hearing date on 16 May 2025. They applied for various relief, including leave to file further evidence. However, their application was dismissed with costs, and the hearing date was delayed to 18 August 2025. They then applied for a personal costs order against Mr JA to hold him responsible for the wasted costs for the vacation of the hearing date.
Decision
While the Supreme Court held that Mr JA’s failures to notify the Supreme Court of his cessation to act and his failure to notify the second and third defendants of the new hearing date amounted to serious neglect, incompetence and misconduct under s 99(1)(a) of the Civil Procedure Act, it found that the causal requirement in that provision had not been satisfied. The Supreme Court found that the second and third defendants had not taken timely action to take possession of the files and find a new lawyer during the five months after becoming aware that Mr JA had ceased to act for them. The defendants’ unreasonable failure to act constituted a novus actus interveniens, which had broken the causal link between Mr JA’s earlier wrongful act and the costs being sought by the plaintiffs. As a result, the Supreme Court ordered the second and third defendants to pay the plaintiff’s costs for any wasted costs due to the vacation of the hearing date.
Key takeaways
The three-stage approach and causal link requirements
The applicant must satisfy the Court of the following matters for a costs order to be made under s 99 of the Civil Procedure Act:[4]
- The conduct of the solicitor against whom the complaint is made constitutes serious neglect, serious incompetence or serious misconduct;
- The conduct in question caused the applicant to incur unnecessary costs; and
- In all the circumstances, it is just to order the solicitor to compensate the applicant for the whole or any part of the relevant costs.
The applicant must show a causal link between the impugned conduct of the legal practitioner and the unnecessary costs. The impugned conduct must have caused the applicant to incur costs unnecessarily.
The Abi-Rizk case is an example where the unreasonable delay of the applicant constituted a novus actus interveniens, which broke the causal link between the serious misconduct of the solicitor and the wasted costs.
Meaning of serious misconduct and serious neglect
After referring to various decisions in the UK and Australian courts, the Supreme Court adopted the following meaning of ‘serious misconduct’ and ‘serious neglect’:
‘Serious neglect’ includes:[5]
“a substantial omission on the part of a legal practitioner which no member of the profession who was reasonably well-informed and competent would have omitted to do.”
‘Serious misconduct’ includes:
- “a substantial breach by a practitioner of the Professional Conduct and Practice Rules, and a substantial breach by a practitioner of his or her duty to the Court or of his or her fiduciary duties to the client”;[6] or
- “conduct which involves a failure on the part of a solicitor to fulfil his duty to the Court and to realise his duty to aid in promoting, in his own sphere, the cause of justice.”[7]
The power under s 99 of the Civil Procedure Act should only be “engaged by egregious conduct: mere (as distinct from serious) neglect, incompetence or misconduct does not attract it”. It should only be exercised with “care and discretion and only in clear cases”.[8]
Section 56(4) of the Civil Procedure Act
When considering whether to make a s 99 order, the degree to which the legal practitioner failed to comply with s 56(4) of the Civil Procedure Act is a relevant consideration. It provides that a legal practitioner should not by their conduct cause a party to the proceedings to be in breach of their duty in facilitating the just, quick and cheap resolution of the proceedings.
Purpose of a s 99 order
As with other costs orders, the purpose of a s 99 order under the Civil Procedure Act is not to punish the solicitor nor to prove their guilt in professional misconduct. Rather, the order is primarily compensatory for the wasted costs.[9]
Consequences on failing to comply with rr 7.29 and 7.30 of the UCPR
Rule 7.29 of the UCPR sets out the procedure that solicitors must follow when ceasing to act for a party in legal proceedings. Rule 7.30 provides that the withdrawal does not take effect until the notice is filed with the Court and served on the relevant parties.
The Supreme Court held that, while Mr JA’s retainer may have been terminated, his failure to comply with Rule 7.29 amounted to serious misconduct. The failure to comply with Rule 7.29 meant that Mr JA was still the solicitor on record. Hence, Mr JA still had a duty to his ex-clients to inform them of the directions hearing, the hearing date and what his clients were required to do for the hearing date. Mr JA could easily have discovered the results of the directions hearing, even though he had not attended it. While remaining as the solicitor on record, Mr JA also had a continuing duty to the Court to ensure the proceedings were conducted efficiently and expeditiously, including making his clients aware of how to comply with the orders.[10]
Conclusion
The decision in the Abi-Rizk case is a timely reminder to solicitors that they should be aware of the requirements of the rules and directions of the Court and that they should not hinder the just, quick and cheap resolution of proceedings. A solicitor’s compliance with the court rules and procedures can prevent the wasting of time and costs of the Court and the parties, and avoid the risk of the solicitor being subject to a personal costs order.
Further guidance
Solicitors who would like further guidance and support can contact the costs team of the Professional Support Unit (PSU). PSU provides free and confidential guidance to solicitors in NSW who require assistance understanding their regulatory, ethical and professional obligations in legal practice.
- AML/CTF: amlctf@lawsociety.com.au, (02) 9926 0249
- Costs: costs@lawsociety.com.au, (02) 9926 0116
- Ethics: ethics@lawsociety.com.au, (02) 9926 0114
- Regulatory Compliance: regulatory.compliance@lawsociety.com.au, (02) 9926 0115
