PRACTICE AND PROCEDURE Costs sought by defendants against plaintiff’s solicitors, indemnity costs; Cohen v State of Victoria & Ors (No 3) [2011] VSC 229 (2 June 2011)

June 7, 2011 |

In Cohen v State of Victoria Nos 3 (“Cohen”) Forrest J ordered indemnity costs against solicitor for the plaintiff, Oldham Naidoo, arising out of the application by the defendants in Cohen v State of Victoria No 2 which resulted in the proceedng being struck out as an abuse of process (which I reviewed here).


The relevant conduct upon which the court exercised its discretion is set out at [5]:

(a) the issuing of the proceeding on 24 December 2008 in the name of Dr Cohen without obtaining his instructions or authorisation to do so;

(b) the maintenance of the claim (for nearly two years) in the name of Dr Cohen without any communication to him advising that he was the named representative plaintiff and therefore the subject of a number of obligations including that imposed by s 33ZD of the Supreme Court Act 1986 (Vic);

(c) the incurring of a number of costs orders against Dr Cohen – none of which were brought to his attention;

(d) the making of an allegation in the statement of claim central to Dr Cohen’s “claim” which, upon any reasonable investigation, was demonstrably false.



The key issues for consideration was whether there should be an award of costs against a legal practitioner acting without the authority of the client and, if so, whether to grant those costs on an indemnity rather than a party/party basis. In support of the former proposition Forrest J referred to the English  case of Fricker v Van  Glutten where his honour quoted, with emphasis added, the reasoning as follows:

As regards Mr Toppin, he has done what he ought not to have done. He got this informal consent, and acted on it, and occasioned the trouble that we are asked to set right; and following the course adopted in Nurse v Durnford and Newbiggin-By-the-Sea Gas Co v Armstrong we must order him to pay all Mr Weller’s costs, and all costs which he has been ordered to pay, and he must also pay to the defendants their costs so as to indemnify them. He must pay Mr Weller’s costs as between solicitor and client, and the costs as between solicitor and client, and the costs of the defendants as between party and party; and such costs must include the costs of this application both here and in the Court below. Mr Weller’s name should be struck out for the purpose of all future proceedings [emphasis added].

In determining whether the circumstances warranted the grant of indemnity costs rather than on a party/party basis his Honour’s specifically referred to Colgate Palmolive v Cousins and Ugly Tribe Company Pty Ltd v Sikola, extracting at [10] the special circumstances identified by Harper J in Ugly Tribe, inter alia:

(i) The making of an allegation, known to be false, that the opposite party is guilty of fraud: Fountain Selected Meats (Sales) Pty Ltd v. International Produce Merchants Pty Ltd.

(ii) The making of an irrelevant allegation of fraud: Thors v Weekes

(iii) Conduct which causes loss of time to the Court and to other parties: Tetijo Holdings Pty. Ltd v Keeprite Australia Pty Ltd.

(iv) The commencement or continuation of proceedings for an ulterior motive: Ragata Developments Pty Ltd v. Westpac Banking Corp.

(v) Conduct which amounts to a contempt of court: EMI Records Ltd v Ian Cameron Wallace Ltd.

(vi) The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law: J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA) Branch (No. 2).

(vii) The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: National Australia Bank v Petit-Breuilh (No. 2).

and, (providing emphasis):

The position changes where a litigant acts dishonestly in the litigation, or where the rights and privileges of a litigant are flouted or abused. Then, the rationale for refusing to order that the losing party indemnify an opposite party against that party’s costs is less compelling. Indeed, costs are more frequently if not invariably awarded on an indemnity or like basis (such as that of solicitor/client) where findings of dishonesty or serious misconduct have been made against the party ordered to pay. (citations omitted and emphasis added)


The court awarded indemnity costs against Oldham Naidoo, finding special circumstances, being:

  1. but for the actions of Oldham Naidoo, this proceeding, in all probability, would not have been commenced and, so it must follow, the defendants would not have incurred costs in defending the claim. There was never  a realistic prospect of a plaintiff (properly informed of his or her obligations and responsibilities) taking on this case [15]
  2. Between the time of issue and February 2011 Dr Cohen was kept in the dark as to the role Oldham Naidoo had created for him as representative plaintiff, despite a number of pieces of correspondence between himself and Oldham Naidoo. Oldham Naidoo did not attempt to enter into a costs agreement with him; it had no retainer (oral or in writing) from him. During the time he was the named representative plaintiff, four costs orders were made against him – none of which he was informed of. He only learnt that he was the representative plaintiff when informed in October 2010 by his son. [16]
  3. Oldham Naidoo’s  conduct was deliberate [17].
  4. The conduct of Oldham Naidoo amounted to a serious breach of its ethical obligations and arguably  a contempt of court [18]
  5. the court rejected taking into account Oldham Naidoo’s acceptance of responsibility for its actions and the making of appropriate concessions. Its position was indefensible. [19]
  6. this is a case involving a patent abuse of process by Oldham Naidoo [20]


This decision is not notable in setting out any new principles regarding the award of indemnity costs. It is however useful, when read with Cohen (No 2), in setting out the methodology and factors relevant in the award of indemnity costs in those rare cases  involving legal practitioners. The scope for such orders is arguably greater under the Civil Procedure Act 2010 than previously was the case.

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