COSTS — application for costs against solicitor and law practice under ss 98 and 99 of the Civil Procedure Act 2005 (NSW) — where proceedings commenced and conducted in company’s name without authority — where interlocutory process challenging authority successful at time of hearing — where company subsequently ratified and adopted acts of solicitor and purported instructing agent with retrospective effect — where solicitor did not act dishonestly or knowingly without authority — costs order not made
Quick Take
1Where proceedings are commenced in a company's name without authority but the company subsequently ratifies the solicitor's agency with retrospective effect, the ratification removes the principal basis for ordering costs against the solicitor personally, because the company becomes exposed to costs liability as the 'natural party' from whom costs should be sought.
2The jurisdiction to order a legal practitioner to pay costs under ss 98–99 of the Civil Procedure Act 2005 (NSW) must be exercised with care and discretion, and only in clear cases; where the solicitor acted without authority due to neglect rather than dishonesty or knowing absence of authority, and the client has ratified, a costs order against the solicitor is not warranted.
3A party who compromises its costs claim against the ratifying principal cannot then recover those costs from the solicitor who acted without authority, as the proper target of the costs order was the principal.
