Kim v Lee (No 2)

[2025] VCC 750

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
(Not) Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-23-03586

JUNGHUN KIM	Plaintiff
V
BYOUNGHWA LEE	Defendant

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JUDGE:	HER HONOUR JUDGE A RYAN
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers - written submissions received 29 May, 4 and 5 June 2025
DATE OF RULING:	13 June 2025 (revised 16 June 2025)
CASE MAY BE CITED AS:	Kim v Lee (No 2)
MEDIUM NEUTRAL CITATION:	[2025] VCC 750

RULING
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Subject:PRACTICE AND PROCEDURE - COSTS

Catchwords: Application of s570 of the Fair Work Act 2009 - whether costs should be apportioned or there be no order as to costs

Legislation Cited:      County Court Civil Procedure Rules 2018; Fair Work Act 2009 (Cth); Corporations Act 2001 (Cth)

Cases Cited:Kim v Naum BBQ Pty Ltd [2024] FedCFamC2G 1418; Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68; Northern Territory v Sangare (2019) 265 CLR 164; APN Funds Management Ltd v Australian Property Investments Strategic Pty Ltd (Costs) [2012] VSC 365; Chen & Chan & Ors costs [2009] VSCA 233; Nom De Plume Nominees Pty Ltd v Fingal Developments Pty Ltd [2016] VSCA 233

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P S Noonan	Mann Lawyers
For the Defendant	Mr J Fetter	Murati Lawyers

HER HONOUR:

1On 22 May 2025, I delivered reasons for judgment (‘the principal reasons’). These reasons assume familiarity with the principal reasons and adopt the same terminology.

2The plaintiff succeeded in his claim that he was entitled to 50 per cent of the shares in Naum. However, his claims against the defendant for reimbursement of expenses he paid towards the joint venture and amounts claimed under a written loan agreement failed.

3The parties were directed to file and serve submissions regarding the form of orders to be made consequent upon the judgment, including costs, if agreement could not be reached. The parties filed submissions dated 29 May, 4 and 5 June 2025.

4The issues that arise for determination are:

(i) whether the Court lacks power to order costs due to the operation of s570 of the Fair Work Act 2009 (Cth) (‘FWA’); alternatively

(ii)   whether costs should be apportioned on issues or there be no order as to costs.

(i) Costs under the FWA

5The defendant argues this Court has no power to order costs due to the operation of s570 of the FWA. In support of this argument, the defendant relies on the pleadings in this proceeding and in the related Federal Circuit Court proceeding.

6Section 570 provides that where proceedings are taken in a State court, in relation to a matter arising under the FWA, then the parties may “only” be ordered to pay costs in prescribed circumstances. The starting position is that it is a no costs jurisdiction. None of the prescribed circumstances are relevant here according to the defendant. As a Commonwealth law, the defendant contends this provision prevails over the County Court’s usual discretion regarding costs sourced in State law due to s109 of the Australian Constitution.

7The question identified by the defendant is whether the present proceeding relates to a matter arising under the FWA. This in turn raises three issues, namely:

(i)    what is the matter in question;

(ii) does the matter arise under the FWA; and

(iii)   does this proceeding relate to the matter.

8The defendant contends that issue (i) has already been answered by the Federal Circuit Court.[1] That Court found there was a single matter lying between the County Court and the Federal Circuit Court proceedings, being the parties’ joint involvement in the establishment and operation of a Korean restaurant. This conclusion was correct and should be followed by this Court.

[1]Kim v Naum BBQ Pty Ltd [2024] FedCFamC2G 1418, [39]

9It was also submitted that the Federal Circuit Court decided issue (ii). That Court only had jurisdiction to hear claims arising under the FWA and it was satisfied that the matter in issue did so arise.

10Issue (iii) is whether this proceeding sufficiently relates to the overall matter so as to be caught by s570. It clearly does according to the defendant given its component part of the single matter. In any event, the connection required by s570 is only a loose one and it does not matter that no relief under the FWA was sought in this proceeding.[2]

[2]Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68, [6]

11In reply submissions dated 4 June 2025, the plaintiff argued the defendant’s reliance on s570 was misplaced for the following reasons. First, s570 expressly provides that it applies in “relation to a matter arising under the [FWA]. Second, there was no matter arising under the FWA in this proceeding. No party made any claim under the FWA or even referred to the FWA. The FWA and the ambit it covers was not relevant to this proceeding at all.

Analysis

12Section 570(1) of the FWA provides as follows:

Costs only if proceedings instituted vexatiously etc.

(1)  A party to proceeding (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

13The pleaded claims that were run in this Court were contractual in nature. The Court had to determine the terms of the parties’ oral joint venture agreement. This included whether the plaintiff was entitled to own shares in Naum and should be reimbursed by the defendant for expenses he contributed to the restaurant business. The Court also had to determine the nature and effect of a written loan agreement between the parties. In my view, these contractual claims are distinct and separate from the claims made in the proceedings currently before the Federal Circuit Court. They are clearly not matters arising under the FWA. There was no claim made under the FWA in this proceeding nor was the Act relied upon by either party. I reject the defendant’s submission that because there is a common nexus in respect of the subject matter in the two proceedings that this means the FWA applies – the section clearly states that there must be “a matter arising under” the FWA before costs are payable. There was no matter raised under the FWA in this proceeding. Additionally, it should be noted that the defendant’s application to the Federal Circuit Court in December 2024 for an anti-suit injunction to stay this proceeding was refused.[3]

[3]        Kim v Naum BBQ Pty Ltd [2024] FedFamC2G 1418

14Consequently, I reject the defendant’s argument that this Court lacks power to make a costs order because of s570 of the FWA. I find that s570 has no application to this proceeding.

(ii)  Alternative submissions on costs

15The defendant argues that the plaintiff succeeded only in his claim for the shares, which took up a small part of the trial.  He failed on the other matters. Accordingly, a fair result is that the plaintiff pays 70 per cent of the defendant’s costs with the defendant to pay 30 per cent of the plaintiff’s costs.

16In response to the proposal put forward by the Court in the principal reasons that it may be appropriate to order that the defendant pay 50 per cent of the costs, the defendant submits that such an order would not be fair. The bulk of the plaintiff’s costs would have been directed to the issues on which he failed. If a 50-50 outcome were desired, the better order would be that each party bear their own costs. Coincidently, that would accord with the result required, as the defendant submits, by s570 of the FWA.

17The plaintiff seeks an order that the defendant pay his costs of the proceeding to be taxed on a standard basis in default of agreement. It was submitted that the declaration regarding the shares, and the relief sought to enforce the loan agreement were not two separate things, and that the plaintiff produced the loan agreement as a means of trying to get some formal acknowledgement as “insurance” to protect his investment in the joint venture. It said that this was an alternative means of protecting the very rights upon which the plaintiff has now been vindicated.

18The plaintiff contended there were in fact not two separate claims but they were, more accurately, two means or bases to effect the one claim or outcome, namely the recovery of the plaintiff’s investment in the joint venture. The plaintiff could recover his investment either in shares or in cash. In recovering that investment by either one means or the other, the plaintiff has entirely and substantively succeeded and the defendant has lost.

19The plaintiff referred to the High Court decision of Northern Territory v Sangare,[4] which stated that there was an important principle that a successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not in justice have been visited upon that party. It was argued then, that this principle applies even where a successful party has not succeeded on all heads of claim. Where it is accepted there might be some apportionment in cases where there has been mixed success, this is not always the case. To the contrary, the mere fact that a successful party has lost on one or more issues does not, of itself, normally make it appropriate to deprive them of their costs.

[4](2019) 265 CLR 164, 173

20The plaintiff argued the defendant had no real or genuine success. Whether he had to compensate the plaintiff by transferring the shares or paying cash, the outcome was, in effect, the same. Either way, the plaintiff has won the whole substance of his claim and the defendant has correspondingly lost.

21It was submitted that was a very different scenario to a case where there are generally separate or discrete claims and mixed success on those claims. Here, there has been no success for the defendant or on any counterclaim. Accordingly, the plaintiff having been vindicated and succeeding on the substance of the claim should receive all his costs.

Analysis

22Under r63A.04 of the County Court Civil Procedure Rules 2018, the Court may make an order for costs in relation to a particular question or in a particular part of the proceeding. This power permits orders depriving an ultimately successful party of its costs or part of its costs or awarding an unsuccessful party part of its costs. A successful party may recover only a portion of its costs when that party has been unsuccessful in respect of certain discrete issues, although that should not be done as a matter of course. An issue does not necessarily mean a precise issue in the pleading but relates to any disputed question of fact or law.[5]

[5]APN Funds Management Ltd v Australian Property Investments Strategic Pty Ltd (Costs) [2012] VSC 365 [11]

23The usual practice is for costs to follow the event and a successful litigant receives its costs in the absence of special circumstances. However, where issues can be separated out and a litigant has succeeded only upon a portion of their claim, the circumstances may make it reasonable that they bear the expense of litigating that portion upon which they have failed.[6] Where there is a multiplicity of issues and the parties have enjoyed mixed success, the Court may take a pragmatic approach in framing the order for costs, taking into account the success or lack thereof of the parties on an issues basis. Whatever the approach, the Court is entitled to examine the realities of the case and attempt to do ‘substantial justice’ between the parties on matters of costs.[7]

[6]See paragraph 26 of the defendants’ submissions on costs dated 19 December 2024

[7]See Chen v Chan & Ors costs [2009] VSCA 233, [10]

24In Nom De Plume Nominees Pty Ltd v Fingal Developments Pty Ltd,[8] the Court of Appeal observed as follows:[9]

The relevant principles for the resolution of the question as to the costs of the appeal, and in respect of any apportionment of the costs of the trial, are those set out by this Court in Chen v Chan. In short, for present purposes, while the general rule is that costs should follow the event, where there is a multiplicity of issues and mixed success has been enjoyed by the parties, the court may take a pragmatic approach in relation to costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Such an approach will be primarily a matter of impression and evaluation.

(Footnote omitted.)

[8] [2016] VSCA 233

[9]Ibid [13]

25In this instance, the plaintiff claimed that the defendant had orally agreed to reimburse him for the expenses which the plaintiff had incurred in the business. I was not satisfied that this was a term of the oral agreement alleged and, hence, there was no breach by the defendant.

26The other claim in which the expenses were sought was pursuant to the terms of the written loan agreement. The question of the defendant’s liability to pay, and also the quantum of the expenses sought did take up a substantial part of the hearing. The issue as to the recovery of the shares was not particularly time consuming, either in terms of the evidence led or the submissions made. Although the plaintiff has succeeded on the shares claim, he did not succeed in respect of his monetary claims. The latter claims took up a substantial part of the hearing.

27Given these circumstances, I am satisfied there should be some reduction of the amount of costs which the plaintiff is entitled to recover applying the principles relating to the apportionment of costs, and noting the Court should take a pragmatic approach. Consequently, I am of the view that the defendant should be ordered to pay 70 per cent of the plaintiff’s costs of the proceeding.

28I consider that the plaintiff, having succeeded in part, is entitled to this percentage of his costs, with the result that I reject the defendant’s alternative submission that there be no order as to costs.

Conclusion

29I will make the following declaration and orders:

(a)The defendant holds, and has at all times since the incorporation of Naum BBQ Pty Ltd (ACN 628 027 850) (‘Naum’) on 8 August 2018 held, 50 per cent of the issued shares in Naum, being 50 shares on trust for the plaintiff.

(b)Within 7 days of the date of these orders, the defendant shall prepare and sign, as transferor, a share transfer form in respect of 50 of the defendant’s shares in Naum and provide the executed share transfer form to the plaintiff (care of his solicitor) for countersigning.

(c)The plaintiff shall within 7 days of receipt of the executed share transfer form, sign the share transfer form as transferee and return the fully executed form to the defendant (care of his solicitor).

(d)Within 7 days of receipt of the fully signed share transfer form from the plaintiff, the defendant shall:

(i)    lodge a Form 484 with the Australian Securities and Investments Commission to reflect the change in share ownership;

(ii) update the company register maintained pursuant to s168 of the Corporations Act 2001 (Cth) to record the plaintiff as the holder of 50 shares and the defendant as the holder of 50 shares; and

(iii)   issue a share certificate in the name of the plaintiff for the 50 shares.

(e)The defendant pay 70 per cent of the plaintiff's costs of and incidental to the proceeding on a standard basis to be taxed in default of agreement.

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Certificate

I certify that these 8 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 13 June 2025 (revised 16 June 2025).

Dated: 16 June 2025

Associate to Her Honour Judge A Ryan