I acted for the Plaintiff in Steven Pugh Investments Pty Ltd v Mossensons Pty Ltd [2020] WASC 225. The decision is here.
The overall case involved my client seeking to set aside a costs agreement he signed with a previous Law Practice.
This particular decision was about the Defendant Law Practice’s application for security for costs.
This was a novel application in Australian legal history.
There were no previous published decisions where a Law Practice opposing a setting-aside application had applied for security for costs.
What is a Security for Costs application?
In litigation, the purpose of an order for security for costs is to protect a defendant or respondent in whose favour the court has made an order for costs from having that order wholly frustrated by the inability of the plaintiff or appellant to satisfy it. [1]
In the context of a setting-aside of costs agreement application, the Law Practice submitted that the Court should order its former client (the Plaintiff) to provide security in the form of a payment of money into Court as a pre-condition for the application being progressed to a final hearing.
Public Interest
Master Sanderson, relied on the case of Westonia Earthmoving Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2013] WASC 57, in which Edelman J pointed to ‘public interest’ as a factor in deciding whether to exercise the court’s discretion in cases such as these.
Master Sanderson ruled that there could be no doubt that when a party seeks to set aside a costs agreement with a solicitor, it is in the public interest that the application ought to be heard.
Application of the Legal Profession Act
I relied on the Legal Profession Act 2008 (WA) in order to bring the setting aside application.
Section 260 of the Act details what disclosures of costs must be made to clients, and section 262 dictates how and when disclosure must be made.
If these sections are not complied with, then a client may apply under section 288 for the costs agreement to be set aside.
Decision
The Supreme Court dismissed the application for security of costs.
Master Sanderson stated that an order shutting out a client from attempting to establish a failure of statutory/legal obligations in a client/solicitor relationship ran contrary to the public interest and as such should not be allowed.
[1] Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248 at 255 per Hill J, Fed C of A; Idoport Pty Ltd v National Australia Bank Ltd [2001] NSWSC 744 ; BC200105623 at [52] per Einstein J; Talwar v Sharma [2018] FCCA 483 ; BC201802738 at [6] per Judge Obradovic.