Wasted Costs Orders: The Solicitor’s Response

Identify the Power and the Person Exposed

Identify who seeks relief, against whom and under which provision. Australia has different statutory and supervisory powers concerning lawyers’ costs. An English wasted-costs procedure does not supply the Australian court’s test.

In the Federal Court, rules 40.06 and 40.07 address different questions. Rule 40.06 permits disallowance or an inquiry concerning costs improperly, unreasonably or negligently incurred. Rule 40.07 permits a party to seek relief concerning additional costs caused by that party’s lawyer’s misconduct. Its possible orders include disallowance, payment of adverse costs to the client and indemnification of another party.

Rule 40.07 identifies failures involving attendance, documents, preparation and compliance that cause delay, adjournment or abandonment. It also addresses improperly incurred, unnecessary or wasteful costs and undue delay. Match the allegation to the actual limb relied on.

Separately, section 37N of the Federal Court of Australia Act requires lawyers to assist clients to conduct proceedings consistently with the overarching purpose. Failure can affect costs and expose the lawyer personally. The Court’s costs practice note identifies these provisions alongside the general costs power.

Keep these outcomes distinct when reading the application:

• Disallowance changes what costs can be charged or recovered.
• A payment or indemnity order identifies a lawyer’s personal financial obligation.
• Ordinary adverse-party costs concern liability between the litigants.
• A civil solicitor negligence claim raises separate questions of damages and professional liability.

For another court, use its governing legislation and procedure. The Judicial Commission’s NSW costs benchbook discusses Civil Procedure Act section 99 and Muriniti v Kalil [2022] NSWCA 109. That NSW threshold must not be substituted for the Federal Court provisions.

Preserve the Work and Conduct Record

Preserve the records that show what happened before preparing the lawyer’s explanation. Keep original versions and distinguish contemporaneous entries from later recollections.

Collect the relevant order, hearing transcript or available recording, filed documents and any document said to have been omitted. Add instructions, attendance arrangements, correspondence and the work records supporting the claimed costs. Preserve invoices, credits and itemised time, including work that remained useful after the disputed event.

Build a chronology with a source reference for each entry. Record the required step, the person controlling it, what occurred and the additional work alleged to follow. Identify handovers, changed directions and information received too late to act on. Retain contrary evidence alongside the allegation.

For example, a missing affidavit and an unavailable witness can both appear in an adjournment record. Establish which reason caused the adjournment and what the court actually said. A later description of the hearing is weaker evidence of its reasons than the hearing record itself.

Keep the personal response file separate from routine client communications where necessary to manage access and conflicts. Separation does not itself decide privilege or permit disclosure.

Test Causation and the Claimed Amount

Test each claimed item against the work that would have occurred without the alleged conduct. A disappointing litigation outcome alone does not establish that a lawyer caused wasted costs.

Consider a fictional adjournment caused by an alleged failure to file a required affidavit. Assume the opposing party claims the following amounts. These figures illustrate the comparison and are not a court scale or an assessed entitlement.

Claimed work	Assumed amount	Causation question
Attendance at the ineffective hearing	$1,200	How much attendance was wasted because of the identified failure?
Preparation usable at the later hearing	$2,400	What part, if any, had to be repeated?
Fresh attendance at the later hearing	$1,200	Would one effective attendance have been required anyway?
Updating material after the delay	$300	Did the delay require this update, and is the time reasonable?

The claim totals $5,100. If the original preparation remains usable, its $2,400 does not become wasted merely because the hearing moved. If one effective attendance was always necessary, claiming both attendances requires an explanation of the additional burden.

On those assumptions, one wasted attendance plus the update totals $1,500. That is a causation illustration, not a prediction of an order. The court still decides the relevant conduct, recoverable work and amount.

For each item, record the invoice reference, time, rate and explanation of the additional work. Deduct credits and identify amounts already recovered. Distinguish genuinely repeated preparation from preparation carried forward unchanged. Record any costs avoided by the adjournment as well.

Protect the Client and Give the Lawyer a Fair Response

A personal costs allegation requires a fair opportunity for the lawyer to answer the case actually advanced. Identify the conduct alleged, the legal basis, the proposed order and the supporting amount before preparing that answer.

The NSW benchbook discusses notice and procedural fairness, including Lemoto v Able Technical Pty Ltd and Muriniti v Kalil. It also explains the risk of a personal application creating a conflict during the substantive proceedings. Those authorities help identify the fairness problem. The chosen court controls the directions needed in the actual matter.

If the allegation arises orally, seek directions that identify the case and allow a meaningful response. Address evidence, service and a timetable, together with whether a separate hearing is needed. Avoid treating a broad criticism during a hearing as a fully particularised personal claim.

Assess whether defending the lawyer could prejudice the client’s continuing case. Independent advice or representation can be needed where their interests diverge. Check applicable professional obligations and insurance notification terms before taking steps that affect either position.

An opponent’s allegation does not itself waive the client’s privilege. Before disclosing instructions, obtain advice about privilege, confidentiality and any lawful basis for disclosure. If protected material affects the lawyer’s ability to respond, raise that problem through the proper procedure. Do not assume the lawyer can publish the client’s instructions to answer criticism.

Check the Order and Complete the Response

Read the order actually made against the relief sought. Record the identified payer and recipient, the conduct found, the costs covered and whether the amount is fixed or requires determination.

Check the payment direction, conditions and reasons. If a challenge is contemplated, identify the available review or appeal route, its time limit and whether a stay is required. Keep that advice separate from assumptions that a challenge suspends compliance.

The ordinary process for recovering legal costs continues to depend on the relevant entitlement and order. A client invoice and an amount recoverable from another person remain different figures.

Preserve the submissions, evidence, chronology and final item schedule with the order. Have the responsible adviser explain its effect to the client and the lawyer separately where their interests require it. Close the response only after recording payment, the next quantification step or the action taken to challenge the order. Keep a threatened application recorded as a threat until the court determines it.