Pesec v Zivko

Pesec (the appellant) appealed to the Full Court of the Supreme Court of Victoria against costs orders made by a primary judge. The dispute concerned whether the primary judge had erred in concluding that at the date of an offer of compromise, there was no possibility of conflict between the interests of the appellant and the respondent, Zivko. The appellant argued that a joint offer of compromise made by them and the respondent indicated a commonality of interest, which should have been considered in the costs assessment.

The central legal issue before the Full Court was whether the primary judge had correctly exercised their discretion in making the costs orders, specifically in relation to the assessment of whether a conflict of interest existed between the parties at the time the offer of compromise was made. This involved determining whether the primary judge's finding that no conflict was possible was erroneous, and consequently, whether the costs orders should be set aside or varied.

The Full Court dismissed the appeal and the cross-appeal. Their Honours held that the primary judge's finding that there was no possibility of conflict between the interests of the appellant and the respondent at the date of the offer of compromise was not erroneous. The Court reasoned that the discretionary nature of costs orders meant that the primary judge's decision should not be overturned unless there was a material error of law or fact. The fact that a joint offer of compromise was made did not, in itself, establish a commonality of interest that would preclude the possibility of future conflict. The Court found no basis to interfere with the primary judge's exercise of discretion.