In the legal world, we often come across situations where allegations are made that should never have been made, and personal attacks are directed at lawyers. Such actions can have serious consequences, not only for the parties involved but also for the legal system as a whole.
In this blog post, I discuss the importance of indemnity costs and the potential consequences of lawyers making personal attacks, with a focus on a recent Supreme Court of the Australian Capital Territory (Court of Appeal) decision, Michael Wilson & Partners Ltd v Nicholls (No 10) [2023] ACTCA 13.
Indemnity costs are awarded in cases where a party has acted unreasonably or in bad faith, thereby causing the other party to incur additional costs. These costs are ordered in circumstances where allegations are made "which ought never to have been made," the case is "unduly prolonged by groundless contentions," or where "the applicant, properly advised, should have known that he had no chance of success" or "persists in what should on proper consideration be seen to be a hopeless case" (Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd (No 2) [2017] FCAFC 116 at [5]).
In the case of Michael Wilson & Partners Ltd v Nicholls (No 10) [2023] ACTCA 13, the Court ordered indemnity costs against the applicant for reagitating issues that had previously been determined adversely by the Court. The applicant, properly advised, must have been aware that he had no prospects of success in the application. The sixth respondent, in this case, was entitled to indemnity costs for the unwarranted allegations and groundless contentions made by the applicant.
Moreover, the applicant in this case had a propensity to advance personal attacks directed at counsel for the sixth respondent and the instructing solicitor. Allegations of this kind should not be made by admitted practitioners against other admitted practitioners without clear and compelling evidence. As no such evidence was advanced before the Court, the sixth respondent should not be put to any cost in respect of agitating those allegations. This matter formed an independent basis for ordering indemnity costs.
It is important to note that lawyers who make personal attacks or unwarranted allegations may face consequences beyond costs orders. In Michael Wilson & Partners Ltd v Nicholls (No 10) [2023] ACTCA 13, the Court considered whether it was appropriate to restrain the applicant's representative, Mr. Wilson, from continuing to act for the applicant. This decision was based on the potential finding that Mr. Wilson was not in a position to give impartial and independent advice to the applicant and was acting as a mere mouthpiece for his personal interest and grievance against the sixth respondent and their legal advisors.
The Court has inherent powers and powers under the Legal Profession (Solicitors) Conduct Rules 2015 (ACT) (rr 17.1 and 27.2) to make such orders. However, in this case, the Court decided not to make such an order due to the exceptional nature of the remedy and the lack of submissions on the issue by the parties.
In conclusion, it is crucial for legal practitioners to maintain professionalism and avoid making unwarranted allegations or personal attacks. Such actions may result in indemnity costs being ordered against their clients and potential consequences for the practitioners themselves. The case of Michael Wilson & Partners Ltd v Nicholls (No 10) [2023] ACTCA 13 serves as a reminder of the importance of upholding high standards of conduct in the legal profession.