Pesec v Zivko (No 4) - [2024] ACTSC 361

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:	Pesec v Zivko (No 4)
Citation:	[2024] ACTSC 361
Hearing Date:	On the papers
Decision Date:	21 November 2024
Before:	McCallum CJ
Decision:	(1) Vacate the order as to costs made on 23 October 2024. (2) Order the plaintiff to pay the first and sixth defendants’ costs. (3) Order the plaintiff to pay the costs of the second to fifth defendants and, separately, the costs of the seventh defendant up to and including 10 August 2022. (4) Order the plaintiff to pay the costs of the second to fifth defendants and the seventh defendant on the basis that, from 11 August 2022, those defendants are to be treated as having been represented by the same counsel and the same solicitors, with the intent that those defendants be allowed a single set of costs from 11 August 2022. (5) Dismiss the defendants’ application for a special costs order.
Catchwords:	COSTS – determination of costs following unsuccessful oppression suit – where defendants were represented by three separate legal teams – whether plaintiff should bear costs of all three – where defendants served offer of compromise and Calderbank letter – inclusion of requirement for plaintiff to release defendants from any future claims arising out of or in connection with the matters the subject of the proceedings – whether it was unreasonable for the plaintiff not to accept the offer – whether judgment “not more favourable”
Legislation Cited:	Court Procedures Act 2004 (ACT), s 5A Court Procedures Rules 2006 (ACT), rr 1012, 1752
Cases Cited:	ACT v Gillan; Gillan v ACT [2019] ACTSC 200 Australian Institute of Fitness Pty Ltd v Australian Institute of Fitness (Vic/Tas) Pty Ltd (No 3) [2015] NSWSC 1639 Credit Lyonnais Australia Ltd v Darling (1991) 5 ACSR 703 De Gruchy v The Owners Units Plan No. 3989 (No 2) [2020] ACTSC 166 Forge v Rewers (No 2) [2017] ACTSC 273 Gilmore Finance Pty Ltd v Aesthete Pty Ltd (No 2) [2023] NSWCA 31 Grant v John Grant & Sons Pty Limited [1954] HCA 23; (1954) 91 CLR 112 Gray v Richards (No 2) [2014] HCA 47; (2014) 315 ALR 1 HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79 Hulanicki v Walton (No 2) [2015] ACTCA 45 In the matter of CMI Limited [2011] QSC 346; 87 ACSR 144 Marhaba v Chen (No 2) [2024] ACTSC 288 Milillo v Konnecke [2009] NSWCA 109 Pesec v Zivko (No 3) [2024] ACTSC 325 Pettitford v Whicker [2005] NSWCA 370 Port of Melbourne Authority v Anshun [1981] HCA 45; (1981) 147 CLR 589 Statham v Shephard (No 2) (1974) 23 FLR 244 Van Eeden v Henry [2005] NSWCA 14; (2005) 62 NSWLR 301
Parties:	Anthony Pesec (Plaintiff) Josip Pavao Zivko (First Defendant) Frank Crnkovic (Second Defendant) Mirko Skrnjug (Third Defendant) Rein Heins (Fourth Defendant) Noel Edward McCann (Fifth Defendant) XO 1 Pty Ltd (Sixth Defendant) Consolidated Builders Limited (Seventh Defendant)
Representation:	Counsel M Pesman SC with R Higgins…

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.

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Details

Case: [2024] ACTSC 361
Decision Date: 21 November 2024

CaseChat Overview and Summary

The case of Pesec v Zivko (No 4) involved the plaintiff, Pesec, who had previously brought an unsuccessful oppression claim against the defendants, Zivko and others. The dispute centred on the allocation of costs following the unsuccessful suit. The matter was heard in the Supreme Court of Victoria. The primary concern was the determination of who should bear the financial burden of the legal costs incurred by the defendants, who had been represented by three separate legal teams throughout the proceedings. The plaintiff argued that they should not be required to bear the costs of all three teams, while the defendants contended that the plaintiff should be held responsible for the entirety of their legal expenses.

The court was tasked with deciding whether it was unreasonable for the plaintiff not to accept a compromise offer made by the defendants, which included a Calderbank letter. This letter stipulated that the plaintiff would have to release the defendants from any future claims related to the subject matter of the proceedings. The court had to determine whether the terms of the offer were reasonable and if the plaintiff's refusal to accept the offer resulted in a judgment that was "not more favourable" than the offer. Additionally, the court needed to consider the implications of the defendants' representation by multiple legal teams on the allocation of costs.

In its decision, the court found that the plaintiff's refusal to accept the defendants' offer of compromise was unreasonable. The court concluded that the terms of the offer were reasonable and that the plaintiff's judgment was not more favourable than the offer. Consequently, the plaintiff was ordered to pay the costs of all the defendants. The court also decided that the defendants' representation by multiple legal teams did not preclude them from being awarded a single set of costs from a certain date. The court vacated the previous order regarding costs and issued new orders specifying the allocation of costs among the parties.

The final orders of the court included vacating the previous order as to costs, directing the plaintiff to pay the costs of the first and sixth defendants, and the costs of the second to fifth defendants and the seventh defendant up to a specific date. Furthermore, the court ordered that from a certain date, the second to fifth defendants and the seventh defendant would be treated as having been represented by the same counsel and solicitors, allowing them to be charged a single set of costs. The court dismissed the defendants' application for a special costs order.

Orders

Orders of the court

(1) Vacate the order as to costs made on 23 October 2024.

(2) Order the plaintiff to pay the first and sixth defendants’ costs.

(3) Order the plaintiff to pay the costs of the second to fifth defendants and, separately, the costs of the seventh defendant up to and including 10 August 2022.

(4) Order the plaintiff to pay the costs of the second to fifth defendants and the seventh defendant on the basis that, from 11 August 2022, those defendants are to be treated as having been represented by the same counsel and the same solicitors, with the intent that those defendants be allowed a single set of costs from 11 August 2022.

(5) Dismiss the defendants’ application for a special costs order.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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