White Industries (Qld) Pty Ltd v Flower & Hart (a firm) [1998] FCA 806 (14 July 1998)


COSTS – application for indemnity costs – whether solicitors should be ordered to pay personally opposing party’s costs – Court’s power to award costs pursuant to s 43 Federal Court of Australia Act 1975 (Cth) – whether respondent unreasonably instituted and continued action on behalf of its client alleging misleading and deceptive conduct, fraud and negligence when it knew there were no or substantially no prospects of success – test to be applied – whether purpose was unreasonable because respondent had an ulterior purpose in instituting the proceeding which was to effect an object beyond what the legal process offers – whether purpose in instituting the proceeding was to give client a “temporary bargaining stance” or “to secure some bargaining position” so as to delay payment due by client under a building contract – abuse of process – whether party used court proceedings and procedures for a purpose unrelated to the objectives for which the court process is designed to achieve when solicitor held the view that his client “could not win any litigation if put to the test” – whether practitioners conducted litigation in a manner designed to obstruct and delay proceeding

LEGAL PRACTITIONERS – solicitors – indemnity costs – whether personal liability for – whether breached duties owed to the Court – whether solicitor protected from liability by reliance on counsel’s advice

PRACTICE AND PROCEDURE – pleading – allegation of fraud – whether statement of claim pleaded fraud with knowledge without any factual basis for making the allegation

EVIDENCE – whether principles in Browne v Dunn apply – whether respondent or respondent’s witnesses were put on notice that statements made in documentary evidence may be used against them or were put on notice that an adverse inference may be drawn against them in order that they may respond to that issue and give an explanation – inference that the purpose in instituting the proceeding was to delay payment of the amount due to the applicant where the respondent had formed the opinion that its client did not have a cause that could be won

EVIDENCE – whether principles in Jones v Dunkel apply – whether adverse inference may be drawn where a witness is put on notice of an issue and the party calling the witness and the witness do not address the issue in their evidence-in-chief – issue in relation to justification for pleading fraud or view that there was a factual basis for alleging fraud