JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	16 November 2017, further written submissions dated 11 December 2017, 18 December 2017, 29 January 2018, and 31 January 2018
DATE OF JUDGMENT:	10 May 2018
CASE MAY BE CITED AS:	Gabelich v Donaghey
MEDIUM NEUTRAL CITATION:	[2018] VSC 184

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COSTS – Application by defendant for relief under r 63.23 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), s 29(1) of the Civil Procedure Act 2010 (Vic) (‘CPA) and the Court’s inherent jurisdiction – Plaintiff had issued proceeding in respect of alleged breach of agreement involving transfer of title of houseboat to defendant as security for a loan – Receiver appointed to plaintiff’s income and personal property prior to issue of proceeding – Defendant communicated intention to seek indemnity costs on basis plaintiff was not entitled to issue proceeding – Plaintiff discontinued proceeding forthwith, without notice – Defendant alleged he was unable to settle the sale of houseboat as a result of plaintiff’s issue of proceeding – Plaintiff’s solicitor passed away after defendant’s application filed – Whether plaintiff’s solicitor’s estate ought be jointly and severally liable with the plaintiff to pay those costs – Whether defendant should be denied any entitlement to legal costs by reason of a term of a Deed which prescribes priority in which proceeds of houseboat sale are to be applied – Whether there is sufficient evidence to establish that any financial loss was caused by the conduct of the plaintiff or his solicitor – Whether an order ought be made in favour of the defendant for financial losses arguably suffered by his company – ‘Wasted costs’ jurisdiction – Dura (Australia) Construction Pty Ltd v Hue Boutique Living Pty Ltd (No 5) [2014] VSC 410, referred to – Gatto Corporate Solutions Pty Ltd v Mountney [2016] VSC 752, referred to – Held plaintiff’s solicitor jointly and severally liable for defendant’s costs of proceeding up to date of discontinuance of proceeding – Manner in which defendant applied proceeds of houseboat sale irrelevant to exercise of discretion to award costs in defendant’s favour – Plaintiff and plaintiff’s solicitor ordered to pay defendant’s costs of the proceeding up to the date of discontinuation on an indemnity basis.

PRACTICE AND PROCEDURE – Whether defendant’s application under s 29(1) of CPA is statute barred – Meaning of the term ‘finalisation’ in s 30(2) of CPA – Whether application under s 29(1) of CPA permitted to be made after finalisation of proceeding – 1165 Stud Road Pty Ltd v Power & Ors (No 2) [2015] VSC 735, distinguished – Kenny v Gippsreal Ltd [2015] VSC 284, distinguished – Gippsreal Ltd v Kenny [2016] VSCA 319 – Talacko & Ors v Talacko [2017] VSC 804, referred to – Yara Australia Pty Ltd v Oswal (2013)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Gabelich v Donaghey

Details

AGLC: Gabelich v Donaghey [2018] VSC 184
Case: [2018] VSC 184
Decision Date: 10 May 2018

CaseChat Overview and Summary

In the matter of Gabelich v Donaghey, the dispute revolved around an alleged breach of an agreement concerning the transfer of title of a houseboat as security for a loan. The defendant sought relief under the relevant procedural rules and acts, as well as the court's inherent jurisdiction, following the plaintiff's issuance of proceedings. The defendant contended that the plaintiff's action caused difficulties in settling the sale of the houseboat, resulting in financial losses to his company. The plaintiff discontinued the proceedings immediately after being served, and their solicitor passed away before the defendant's application was filed. The court was required to determine whether the plaintiff's solicitor's estate should be held jointly and severally liable for the defendant's costs, whether the defendant's entitlement to legal costs should be affected by a term in a Deed, whether sufficient evidence existed to establish that any financial loss was caused by the plaintiff or their solicitor, and whether an order should be made in favour of the defendant for the alleged financial losses.

The court examined the application for indemnity costs under rule 63.23 of the Supreme Court (General Civil Procedure) Rules 2015 and section 29(1) of the Civil Procedure Act 2010 (Vic), as well as the court's inherent jurisdiction. The court found that the plaintiff's solicitor's estate was jointly and severally liable for the defendant's costs up to the date of discontinuance of the proceedings. The manner in which the defendant applied the proceeds of the houseboat sale was irrelevant to the exercise of the court's discretion to award costs. The court awarded indemnity costs to the defendant but found no evidence that the financial loss claimed was personally suffered by the defendant. Consequently, the defendant's claim for financial loss was unsuccessful.

The court also addressed the issue of whether the defendant's application under section 29(1) of the Civil Procedure Act 2010 (Vic) was statute-barred, the meaning of the term 'finalisation' in section 30(2) of the same act, and whether such an application could be made after the finalisation of the proceeding. The court found that the application was not statute-barred and that the issue of the proceeding amounted to a breach of an overarching obligation or other conduct which justified the award of indemnity costs in the defendant's favour. The plaintiff's lack of standing to issue the proceeding and the failure of the plaintiff's solicitor to file a 'proper basis' certificate further supported the award of indemnity costs.

The final orders required the plaintiff and the plaintiff's solicitor's estate to pay the defendant's costs of the proceeding up to the date of discontinuance on an indemnity basis. The defendant's claim for financial loss was dismissed.

Orders