COSTS – duty of solicitor to the court – misleading statements made by solicitor in absence of other party – solicitor to pay costs arising from the need to set aside orders made in absence of the other party
During the course of bankruptcy proceedings in the Federal Circuit Court, an interlocutory hearing date was set to consider a failure by a respondent to pay a sum of money under a varied composition agreement.
Due to an oversight, however, the applicant failed to appear at the hearing. The court subsequently asked the respondent’s solicitor to provide an update on the status of the matter, in absence of the applicant’s appearance.
In the course of discussions with the court, the solicitor for the respondent made a number of assertions, including that payments were being made by the respondent in accordance with the terms of the varied composition, and no communication had occurred in relation to the interlocutory hearing between the applicant and respondent, as the varied composition was being complied with.
On this basis, the court ordered that the costs of, and incidental to, the applicant’s interlocutory application be reserved, and the matter be adjourned to a directions hearing.
The assertions made by the respondent’s solicitor, however, were false. The respondent’s solicitor had in fact received communication from the applicant’s solicitors, informing him that his client had not complied with the terms of the amended composition, and highlighting that, if this was not rectified, an application would be made to the court against his client. The applicant thus applied for the orders of the court made at the interlocutory hearing to be set aside.
There were two issue for consideration by the court:
- Whether the solicitor for the respondent misled the court?
- Whether the solicitor should be personally liable for the costs associated with the application to set aside the orders made at the interlocutory hearing, as a result of the solicitor’s conduct?
With respect to the first issue, the court formed the view that the solicitor made these assertions to the court knowing them to be false.1 Moreover, it refused to accept the explanations offered by the solicitor for making such false statements.2
Considering the significance of the solicitor’s conduct, the court made reference to the work of Professor Dal Pont. It observed that, “[a]s an assistant in the administration of justice, a lawyer must be able to command the confidence and respect of the Court. Central to this is a commitment to not knowingly mislead the Court on any matter. This duty is reflected in the professional rules … and in manifold curial statements.”3
The court also made reference to Professor Dal Pont’s observation that “[l]awyers must eschew statements or conduct that are half-truths or otherwise leave the Court with an incorrect impression”.4
With respect to the second issue, the court found there to be no reasonable explanation for what occurred during the interlocutory hearing. It found it troubling and problematic that the respondent’s solicitor believed he had done nothing, or said anything to the court, that was incorrect or misleading.
This was especially so when, as a solicitor, he appeared for vulnerable people who relied upon him to represent them to the best of his ability; as well, the court relied upon his candour to achieve the proper administration of justice.5
Accordingly, the court formed the view that the costs thrown away by reason of the application to set aside the orders of the interlocutory hearing should be borne by the solicitor personally in his capacity as legal representative for the respondent.6 The court also referred its reasons to the relevant disciplinary body for consideration.
Liam O’Shaughnessy is an Ethics Clerk in the QLS Ethics and Practice Centre. This article has been approved by Grace van Baarle, Manager and Ethics Solicitor, QLS Ethics and Practice Centre.
1 Nelson v Warawita  FCCA 3089, .
2 Ibid .
3 Gino Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 6th ed, 2016) 564 [17.95], quoted in Nelson v Warawita  FCCA 3089, . See especially Australian Solicitors Conduct Rules 2012(Qld) r22.1.
4 Gino Dal Pont, Lawyers’ Professional Responsibility (Thomson Reuters, 6th ed, 2016) 568 [17.115], quoted in Nelson v Warawita  FCCA 3089, .
5 Nelson v Warawita  FCCA 3089, .
6 Ibid .