P K Riddell Investments Pty Ltd v Onwards Up and Gone Pty Ltd (No 2)
[2024] VSC 210
•2 May 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2023 05334
| P K RIDDELL INVESTMENTS PTY LTD (ACN 622 442 728) | Applicant |
| v | |
| ONWARDS UP AND GONE PTY LTD (ACN 166 276 277) | First Respondent |
| OWNERS CORPORATION PS725889 | Second Respondent |
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JUDGE: | Waller J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers following receipt of written submissions from the Applicant and the First Respondent both dated 18 April 2024 |
DATE OF RULING: | 2 May 2024 |
CASE MAY BE CITED AS: | P K Riddell Investments Pty Ltd v Onwards Up and Gone Pty Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 210 |
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PRACTICE AND PROCEDURE – Costs – Referral of question of law by Victorian Civil and Administrative Tribunal – General rule that costs follow event ought not apply – Neither party wholly successful – Default position in VCAT that each party bear their own costs – Where a party appears only as an observer – Justice lies in each party bearing own costs – No order as to costs – Supreme Court Act 1986, s 24(1) – Victorian Civil and Administrative Tribunal Act 1998, ss 96, 109(1) – Thurin v Krongold Constructions (Aust) Pty Ltd (No 2) [2022] VSCA 252.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr F Brimfield | Johnston Construction Lawyers |
| For the First Respondent | Mr D Triaca | Strongman & Crouch |
| For the Second Respondent | Ms R Berman (solicitor) | R Berman Lawyers |
HIS HONOUR:
A. INTRODUCTION
On 4 April 2024, I published my reasons in this matter[1] and made orders answering the question of law referred to the Court pursuant to s 96 of the Victorian Civil and Administrative Tribunal Act 1998 (‘VCAT Act’) (‘Referral’) as follows:
Question: Does the Deed of Company Arrangement entered into by the First Respondent on 28 May 2021 (‘DOCA’) release or otherwise bar the Applicant’s claims in VCAT proceeding BP 1522/2022, or any part thereof?
Answer: The DOCA extinguishes all of the Applicant’s claims against the First Respondent in VCAT proceeding BP 1522/2022 alleged in its Points of Claim dated 3 September 2020.
[1]P K Riddell Investments Pty Ltd v Onwards Up and Gone Pty Ltd [2024] VSC 159 (‘P K Riddell Investments’).
At [116], I said:
If the parties are unable to agree on an appropriate order as to costs, then by 4.00 pm on 11 April 2024, each party is to file and serve submissions of no more than three pages on the question of costs. Any unresolved issues as to costs will be determined on the papers.
The parties have been unable to agree on appropriate costs orders and have filed submissions identifying the costs orders they seek.
B. APPLICANT’S SUBMISSIONS
The Applicant, P K Riddell Investments Pty Ltd (‘Applicant’), contends that the Court should make no order as to costs or, in the alternative, that costs of the Referral be reserved, either:
(a) until after the determination of the Applicant’s proceedings against the First and Second Respondents; or
(b) to VCAT to determine (in effect, a ‘costs in the cause’ order).
The Applicant submits that there should be no order as to costs for three reasons.
First, the Applicant submits that both parties have had mixed success.
The Applicant submits that the Referral was made to the Court because the First Respondent pleaded that the DOCA extinguished ‘any and all claims made against the First Respondent’.[2] The Court ultimately found that, notwithstanding the invalidity of cl 12.3.1,[3] the Applicant’s claims against the First Respondent as pleaded were extinguished by cl 12.3.2.[4] However, the Court held that if the Applicant’s Points of Claim in VCAT were ‘amended to include a claim for loss and damage by reason of something done or omitted by the First Respondent after the date on which the administration commenced, then the DOCA would not operate to extinguish such a claim’.[5]
[2]First Respondent’s Points of Defence, [14].
[3]P K Riddell Investments (n 1) [91]–[92].
[4]Ibid [113] (emphasis added).
[5]Ibid [112].
The Applicant submits that the First Respondent was seeking to have the whole of the Applicant’s claims dismissed, not simply that the claims as pleaded be struck out with a right to re-plead.
The Applicant submits that where no party is wholly successful and where there are ‘clearly practical difficulties in awarding costs on an issue by issue basis’, it is well established that the Court may take a ‘pragmatic approach’.[6] In such an approach, the primary issue for the Court to determine ‘is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted’.[7]
[6]Spotless Group Ltd v Premier Building and Consulting Pty Ltd & Anor [2008] VSCA 115, [15] (Redlich JA, Dodds-Streeton JA agreeing at [47]).
[7]David Weiping Chen v Kim Man Chan (No 2) [2009] VSCA 233, [10(6)] (Maxwell P, Redlich JA and Forrest AJA).
The Applicant submits that there should be no order as to costs as the issue has been resolved against the Applicant on only a very narrow semantic point about its pleadings in VCAT and the First Respondent has not succeeded in its ultimate aim of having the Applicant’s case disposed of once and for all.
Secondly, the Applicant submits that the ultimate fate of the Applicant’s claim against the First Respondent is unknown.
The Applicant submits that it considers itself unable to amend its pleadings in VCAT as contemplated by the Court,[8] because:
(a) by raising the DOCA (being federal subject matter), VCAT has lost jurisdiction with respect to the Applicant’s claims against the First Respondent and cannot exercise judicial power;[9] and
(b) the amendment of a pleading is the exercise of judicial power, rather than administrative power.[10]
[8]P K Riddell Investments (n 1) [112].
[9]Thurin v Krongold Constructions (Aust) Pty Ltd(No 2) [2022] VSCA 252 (‘Thurin v Krongold Constructions No 2’).
[10]Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216; Thurin v Krongold Constructions (No 2) (n 9).
Accordingly, the Applicant has:
(a) commenced a fresh claim in VCAT against the First Respondent with points of claim which plead damages only after the DOCA;
(b) applied directly to the President of VCAT for urgent orders that the fresh proceeding be consolidated with the existing proceeding; and
(c) sought that the trial date of 3 June 2024 be maintained in order to prosecute its case both against the First Respondent (in the freshly filed proceeding) and the Second Respondent (in the existing proceeding).
The Applicant submits therefore that the question on the Referral was not a final determination as to the merits of the Applicant’s claims and the Applicant may yet ultimately succeed against the First Respondent.
Thirdly, the Applicant submits that primacy should be given to the default position in VCAT which is that each party bear their own costs.
C. FIRST RESPONDENT’S SUBMISSIONS
The First Respondent, Onwards Up and Gone (‘First Respondent’), seeks an order that the Applicant pay the First Respondent’s costs of and incidental to the Referral, including reserved costs, and the costs of the dispute as to costs.
The First Respondent contends these orders should be made because of the usual rule that costs follow the event.
The First Respondent submits that the Referral to the Court was answered in the affirmative such that the First Respondent was wholly successful in the matter before the Court. That the Court found certain clauses of the DOCA to be invalid does not detract from the First Respondent’s success on the Referral and no justification arises in this case for an ‘issues based’ assessment of costs.
The First Respondent submits that the costs of the Referral are not better left for either VCAT or until the resolution of the overall proceeding for two reasons.
First, the First Respondent submits that it is doubtful that VCAT has jurisdiction to determine the costs associated with the ‘separate question’ referred to the Supreme Court and, even if VCAT has jurisdiction, it is more appropriate that the issue of costs be determined by this Court which heard and determined the Referral.
Secondly, the First Respondent submits that the resolution of the overall proceeding is likely to be many months away and it is wholly inconvenient to revisit this question of costs at some uncertain future time.
The First Respondent further submits that its costs ought to be taxed and paid forthwith as the Referral was a separate ‘proceeding’ within Supreme Court (General Civil Procedure) Rules 2015 r 1.13 such that r 63.20.1 does not apply.
Alternatively, if the Court finds that the Referral was an interlocutory application, the First Respondent submits that an order should be made under r 63.20.1 for the immediate taxation of the First Respondent’s costs of and incidental to the Referral.
D. THE SECOND RESPONDENT’S COSTS
Both the Applicant and the First Respondent seek an order that the Second Respondent, Owners Corporation PS725889 (‘Second Respondent’), bear its own costs of and incidental to the Referral.
They submit that the Referral did not concern the Second Respondent and it was not required to take any steps in the Referral. It made no submissions and did not otherwise assist the Court. The Second Respondent’s solicitor attended the hearing ‘in the capacity as an observer’ and confirmed that her client would take no active part in the proceeding.[11]
[11]Transcript of Proceedings (27 February 2024) 1.21–8.
E. CONSIDERATION
Pursuant to s 24(1) of the Supreme Court Act 1986, the Court has a broad discretion in relation to costs.
In Thurin v Krongold Constructions (No 2),[12] the Court of Appeal considered the question of costs in the context of a referral of questions of law from VCAT pursuant to s 96(1) of the VCAT Act.
[12]Thurin v Krongold Constructions (No 2) (n 9) [12] (McLeish, Niall and Walker JJA) (citations omitted).
The Court of Appeal stated:
In exercising its discretion, the Court is entitled to look to the realities of the litigation and it will attempt to do ‘substantial justice’ between the parties. Accordingly, while the general position is that costs should follow the event, such an order may not be appropriate in every case. In particular, where there is a multiplicity of issues, and mixed success has been enjoyed by the parties, the Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis.
The Court of Appeal also accepted that while a referral proceeding was analogous to an interlocutory application, it was nonetheless possible to determine where the justice of the case lay between the parties for the purposes of making an order for costs of the proceeding in this Court ‘because the questions raised were substantive questions, arising in a discrete context in a discrete forum’.[13]
[13]Ibid [14].
The Court of Appeal noted that there were ‘very real practical issues with the proposal that costs [of the referral to it from VCAT] be costs in the cause of the VCAT proceeding’ because as VCAT lacked jurisdiction to hear and determine the proceeding, it was possible that the existence or extent of VCAT’s power to order costs would itself be the subject of controversy.[14]
[14]Ibid [15].
The Court of Appeal further noted that a feature of a referral from VCAT is that it is initiated by VCAT with the consent of its President, as opposed to being initiated by the parties and that the questions referred, and the answers to them, may be of general public importance.[15] The Court of Appeal held that those circumstances, among others, further supported its conclusion that there should be no order as to costs.[16]
[15]Ibid [17].
[16]Ibid [17].
For the following reasons I have concluded that there should be no order as to costs.
First, I do not accept that the First Respondent was wholly successful in the matter before the Court. While I concluded that the claims against the First Respondent as pleaded were extinguished by the DOCA, that was as a consequence of cl 12.3.2 of the DOCA not cl 12.3.1 upon which the Applicant principally relied and which I held to be invalid. I also rejected the Applicant’s argument that the DOCA extinguished non-monetary claims as well as monetary claims.
Secondly, the Referral was initiated by the President of VCAT rather than the parties and the question referred and the Court’s answer may have broader effect beyond the parties.
Thirdly, the Applicant properly commenced proceedings in VCAT against the First Respondent before the First Respondent was placed into voluntary administration and entered into the DOCA in circumstances where the general rule in VCAT proceedings is that each party bear their own costs.[17] The Referral occurred as a consequence of jurisdictional complications that arose outside the control of the Applicant.
[17]VCAT Act s 109(1).
Finally, so far as the Second Respondent is concerned, I do not accept that the Applicant should pay the Second Respondent’s costs. The Second Respondent took no active part in the proceeding in this Court and made no submissions, notwithstanding that its solicitor chose to attend the hearing ‘in the capacity as an observer’.[18]
[18]Transcript of Proceedings (27 February 2024) 1.21–8.
The consequence of making no order as to costs is that each of the parties will bear their own costs of the Referral.
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