If there is no legal liability to pay legal costs then this is likely to be contrary to the Australian Solicitors' Conduct Rules 2023 (Qld) (‘ASCR’). Rule 4 details various ‘fundamental ethical duties’ including being honest in all dealings in the course of legal practice. Rule 34.1.1 states that a solicitor must not make any statement to another person which grossly exceeds the legitimate assertion of the rights or entitlements of their client, and which misleads or intimidates the other person. Rule 8 states that a solicitor must follow their client’s lawful and proper instructions.
Solicitors need to be especially careful how they word their letters following the case of Australian Competition and Consumer Commission v Sampson [2011] FCA 1165 (‘Sampson’). The issue in that case was misleading and deceptive conduct contrary to s 52 Trade Practices Act 1974 (Cth) (now s 18 of the Australian Consumer Law). You must make sure that you do not misrepresent or overstate the consequences of non-payment of an alleged debt.
The courts have rarely had cause to consider whether conduct by a lawyer has amounted to misleading or deceptive conduct. However, in Sampson a solicitor was found to have made misleading or deceptive representations in four debt collection notices.