Liden v Musumeci & Anor (Ruling)

[2025] VCC 1088

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

BUILDING CASES LIST

Case No. CI-20-04862

EFFI LIDEN	Plaintiff
V
CONNIE MICHELLE MUSUMECI	First Defendant
and
COMMERCIAL FITOUT SERVICES PTY LTD (ACN 107 989 677)	Second Defendant

---

JUDGE:	HER HONOUR JUDGE A RYAN
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers – written submissions filed 11 July 2025
DATE OF RULING:	6 August 2025
CASE MAY BE CITED AS:	Liden v Musumeci & Anor (Ruling)
MEDIUM NEUTRAL CITATION:	[2025] VCC 1088

RULING
---

Subject:COSTS

Catchwords:              Whether costs should be ordered on indemnity basis pursuant to a deed of settlement – whether parties should bear their costs for a certain period and costs be apportioned thereafter

Cases Cited:LDY Pty Ltd & Anor v GE & L International Investment Pty Ltd & Ors (No 6) [2024] VSC 810; Chen v Chan & Ors Costs [2009] VSCA 233; Taree Pty Ltd & Ors  v Bob Jane Corporation Pty Ltd & Anor [2008] VSC 228; Shepparton Projects Pty Ltd v Cave Investments Pty Ltd (No 2) [2011] VSC 384; Chen v Kevin Mcnamara & Son Pty Ltd  VSCA

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr L P Wirth	Rothwell Lawyers Pty Ltd
For the Defendants	Mr R A Harris	MGA Lawyers

HER HONOUR:

1I handed down reasons for judgment in this matter on 24 June 2025 (“the principal reasons”). The parties were directed to confer and agree, if possible, on minutes of orders to give effect to the principal reasons, including costs. 

2The parties were able to agree on the form of orders to be made save as to costs. On 7 July 2025, I made orders in the terms submitted by the parties on 4 July 2025. 

3By paragraph 5 of those orders, the parties were directed to file and serve submissions on the remaining question of costs by 11 July 2025. The parties filed submissions in accordance with the order made. Each proposes a different basis upon which the costs of the hearing should be determined. 

Legal principles

4As frequently stated, the Court has a broad discretion on the issue of costs. The discretion, however, must be exercised judicially and not capriciously. The only immutable rule about costs is that there are no immutable rules, but there is a general principle that, subject to limited exceptions, a successful litigant is entitled to an award of costs in their favour. In the absence of disqualifying conduct, costs generally follow the event. The successful party usually recovers its costs even if it does not succeed on all heads of claim or defence (as the case may be).[1] Where opposing parties have enjoyed success at trial some principles have developed:

(a)   because the Court’s discretion is broad and flexible regarding costs, the Court could examine the realities of the case and strive to do substantial justice between the parties;

(b)   where there are multiple issues and the parties enjoyed mixed success, the Court can take a pragmatic approach on costs and consider the success enjoyed on an issues basis. Generally, if such an order is made, the successful party will receive a proportion of its costs; and

(c)   if the Court decides to make an order apportioning costs, it does so primarily as a matter of impression and evaluation rather than with arithmetical precision. The Court can, for example, consider the importance of the issues on which a party was successful, the time occupied with issues, the submissions made about them and any other relevant matter.[2]

[1]LDY Pty Ltd & Anor v GE & L International Investment Pty Ltd & Ors (No 6) [2024] VSC 810 [5]

[2]Chen v Chan & Ors Costs [2009] VSCA 233 [10]

The Plaintiff’s submissions

5The plaintiff seeks an order for her costs on an indemnity basis. In support of this order, the plaintiff refers to the Deed of Settlement (“the Deed”) entered into by the parties dated 28 April 2023. Pursuant to this Deed, the defendants were required to carry out various works as defined in clause 1.1 of the Deed. These were respectively the cut-off drain, the cleaning of the cavity and the requirement to rectify existing flashing on the boundary between the properties in question.

6The plaintiff refers to clause 2 of the Deed, which deals with default on the part of any of the obligations by the defendants under the Deed. The plaintiff refers in particular to clause 2.1(b) of the Deed which provides as follows:

“(b) Liden will be entitled to immediately commence a proceeding in a court of competent jurisdiction or apply to reinstate the Proceeding (Enforcement Proceeding) and obtain judgment against the Defendants for:

i. the balance of the Settlement Sum that is unpaid, plus interest calculated in accordance with clause 2.4 of this Deed;

ii. specific performance by the Defendants of any of their obligations under this Deed which they have failed to comply with; and

iii. Liden’s costs of and incidental to the Enforcement Proceeding and the default giving rise to the Enforcement Proceeding both on an indemnity basis (including her legal costs) on a full indemnity basis.”[3]

[3]Court Book (“CB”) 16

7The plaintiff submits that it is well established that, where parties have agreed to the payment of costs on a basis different to the usual standard basis, the Court will ordinarily exercise its discretion to give effect to the parties’ agreement.[4] In the statement of facts and contentions earlier provided, the plaintiff contended that the defendants ought to pay her costs of the proceeding from 9 November 2024 (the day after the judgment was entered) on an indemnity basis. It is submitted there is no basis upon which to depart from the agreement in clause 2.1(b). The plaintiff has succeeded and in any event ought never have needed to bring the application.

[4]Taree Pty Ltd & Ors  v Bob Jane Corporation Pty Ltd & Anor [2008] VSC 228, [38] –[44] (‘Taree’)  see also Shepparton Projects Pty Ltd v Cave Investments Pty Ltd (No 2) [2011] VSC 384 [24] – [27]

8As for the three issues which were the subject of the hearing on 26 March 2025, the plaintiff notes the cut-off drain issue only resolved by the late production of photographs from the defendants after hours on the day before trial. Had they been produced earlier, a claim in respect of that issue would probably not have been pursued. 

9Furthermore, the defendants were obliged pursuant to paragraph 4 of the judgment to file evidence confirming they had complied with paragraph 2 of the judgment.  The evidence filed did not do that which led the plaintiff to be left without any evidence it had been done properly.  Her expert witness had reported on the concerns about the cut-off drain which was only dispelled by the late produced photographs.

10As for the remaining issues dealing with the cavity and the flashing, the plaintiff submits she was wholly successful on these issues. 

The Defendants’ submissions

11The defendants submitted that the appropriate order for costs be:

(a)   the parties bear their own costs for the period of 9 November 2024 to 20 March 2025;

(b)   the defendants pay 50 per cent of the plaintiff’s costs from 21 March on a standard basis to be taxed in default to agreement. 

12The defendants submit that the mechanism in clause 2, in particular 2.2 of the Deed was not followed. Pursuant to the Court’s orders made on 14 December 2023, the defendants were required to file and serve any material in opposition to the plaintiff’s application and the plaintiff’s proposed orders. The defendants complied with these orders and the matter proceeded as a contested hearing. For that reason, clause 2.1(b)(iii) is not applicable to the outcome of this hearing. Further, the Court has exclusive control over its own jurisdiction, including the power to award costs. It can be accepted that this jurisdiction cannot be fettered or ousted and that there are no immutable rules as to costs.

13The defendants submitted the parties should bear their own costs for the period of 9 November 2024 to 20 March 2025. While it is unclear whether the plaintiff has incurred any costs during this period, the defendants argue that any costs order made ought to exclude costs for this period. 

14On 18 December 2024, her Honour Judge Kirton made orders which concerned the orders she had made previously on 8 November 2024 (“November Orders”). The November Orders contain specific costs orders pertaining to the application made on 12 December 2023. In “Other Matters” of the Orders made on 18 December 2024, it was noted that the plaintiff had not identified the factual or legal basis of the allegation she would make at trial and the remedy she would seek, and as a consequence the defendants have not considered whether its defence will be factual, legal or both. Paragraph 3 of the December Orders provided for the plaintiff to file and serve lay and expert witness evidence in support of her assertions by 26 February 2025. An affidavit was filed on behalf of the plaintiff from an expert retained, Mr Brown, dated 5 February 2025 which was served on 3 March 2025. The plaintiff filed an affidavit in support of her application on 20 March 2025 without any explanation for the delay. The defendants say that until the plaintiff’s affidavit there was no evidence before the Court to refute the materials filed by the defendants and to support the then unsubstantiated allegations made by the plaintiff’s solicitor in a letter dated 16 December 2024. For this reason, there should be no order for costs until after 20 March 2025.

15As for apportionment, the defendants note that the plaintiff succeeded in two of the three defects the subject of paragraph 2 of the November Orders. The most significant of these defects was the cut-off drain which was ultimately resolved in the defendants’ favour. They said it was open to the Court to apportion costs and that in this instance it would be just and equitable to find the defendants liable for 50 per cent only of the plaintiff’s costs on a standard basis.

Consideration

16Under the Deed, the defendants were required to undertake certain works which were to be completed by particular dates. On 12 December 2023, the plaintiff applied for judgment against the defendants seeking an order for enforcement of the Deed on the basis of non-compliance by the defendants. Subsequent to that, further works were carried out by the defendants which were inspected by the plaintiff’s expert in September 2024. 

17This was the background to the November Orders, which was made by consent and granted specific performance of the Deed. Paragraph 5 of the Orders provided that the defendants were to pay the plaintiff’s costs of the application for enforcement on the standard basis to be taxed in default of agreement.

18There then followed further disputation between the parties as to the nature of the works done by the defendants and whether they had been undertaken in a satisfactory manner. The matter was then set down for trial on 26 March 2025 pursuant to Orders made by her Honour Judge Kirton on 18 December 2024 and 23 January 2025. Costs were reserved under each of these orders.

19The position therefore is that the plaintiff does have an award of costs in her favour for costs incurred up to 8 November 2024. The Orders made on 8 November 2024 were by consent. The plaintiff did not seek indemnity costs and consented to an order that the defendants pay her costs on a standard basis.

20Any contractual rights to claim costs is independent of the court’s ability to make orders under the Rules. As the plaintiff correctly points out, it is well established that the court’s discretion to award costs in cases where there is a contractual right to those costs will ordinarily be exercised consistently with such a right. However, even where the parties have agreed, the court still retains a discretion not to make a special order.[5] The court is not bound to give effect to any extra curial contract as to costs. The court may order otherwise where there is some discretionary consideration that militates against the making of such an order. [6]

[5] Taree [38]

[6] Chen v Kevin Mcnamara & Son Pty Ltd [2012] VSCA 229 [8]

21Clause 2.1(b) of the Deed entitled the plaintiff to commence a proceeding for specific performance and her costs of that proceeding on an indemnity basis. The plaintiff commenced that proceeding in December 2023. Judgment for specific performance was entered on 8 November 2024. Indemnity costs were not sought on that occasion and the plaintiff agreed to an order for costs on the standard basis. Accordingly, the plaintiff’s rights were exhausted under clause 2 in that she obtained judgment for specific performance in accordance with that provision. The matters following on from 9 November 2024 dealt with the procedures for dealing with the alleged non-compliance with the judgment, which proceeded on a contested basis. I am not satisfied as a matter of construction that clause 2 of the Deed has application to events after judgment was entered in accordance with that clause. That being so, I am not persuaded that an order for indemnity costs should now be made from 9 November 2024 onwards.

22I am of the view that any costs orders made should extend from 9 November 2024 to date. I am not persuaded by the defendants’ argument that because the plaintiff was late in filing her materials that this, in and of itself, should deny her an entitlement to costs up to 20 March 2025, being the date that the plaintiff filed her affidavit. While it can be accepted that the defendants were perhaps in the dark as to the precise nature of the complaints made regarding their alleged non-compliance with the works, nevertheless, the fact remains that the defendants did not complete the works relating to the cleaning of the cavity or in respect of rectifying the flashing as had previously been ordered. It was therefore necessary for the plaintiff to bring this application to obtain an order to enforce compliance with the November Orders. The plaintiff was justified in bringing the matter before the Court given the continued non-compliance with the Orders by the defendants. Consequently, I am not persuaded there should be no order for costs until after 20 March 2025. 

23As for apportionment, it is true that the plaintiff succeeded in two of the three defects the subject of paragraph 2 of the November Orders. The issue with the cut-off drain fell away during the hearing after Mr Brown revised his opinion after being shown photographs produced by the defendants the night before the hearing. In an ideal world, had these photos being provided earlier then this issue could have been resolved beforehand. But as things stood, it was still a live issue at the start of the hearing and the plaintiff should not be prejudiced by a reduction in her costs merely because this issue ultimately did not go her way. Overall, it is clear that the plaintiff was justified in bringing the application due the defendants’ continued non-compliance and it is only just that she should recover her costs in doing so. Consequently, I am not persuaded there should be a 50 per cent apportionment in respect of the costs after 20 March 2025, being the order sought by the defendants.

24In all the circumstances, I consider it is appropriate to order that the defendants pay the plaintiff’s costs of the plaintiff’s application to enforce the judgment entered on 8 November 2024 from 9 November 2024 to date, including any reserved costs, on a standard basis to be taxed in default of agreement

---

Certificate

I certify that these 8 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 6 August 2025.

Dated: 6 August 2025

Associate to Her Honour Judge A Ryan