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Re Richflow Pty Ltd (in liq) (Costs)

Re Richflow Pty Ltd (in liq) (Costs)

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Case Copied 26 June 2025 34 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2021 01796

IN THE MATTER of RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886)

BETWEEN:

JONATHON COLBRAN in his capacity as liquidator of RICHFLOW PTY LTD (IN LIQUIDATION) (ACN 007 094 886) & ANOR (according to the attached Schedule)	Plaintiffs
v
NAZIF DARDOVSKI & ORS (according to the attached Schedule)	Defendants

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JUDGE:	Hetyey AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	3 April 2025 and 9 May 2025
DATE OF JUDGMENT:	26 June 2025
CASE MAY BE CITED AS:	Re Richflow Pty Ltd (in liq) (Costs)
MEDIUM NEUTRAL CITATION:	[2025] VSC 375

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CORPORATIONS – Corporations Act 2001 (Cth) – Section 90-15 (Sch 2, Insolvency Practice Schedule (Corporations)) — Application by liquidator for directions from Court as to beneficial ownership of large semi-rural property — Where Court made various declarations, including that company holds property on trust for third defendant.

PRACTICE AND PROCEDURE — Costs — Trust dispute — Competing costs applications by defendants against each other —Whether sixth defendant acted as contradictor in proceeding for judicial advice about existence of trust and beneficial ownership of property — Whether adversarial inter partes proceeding — Whether ordinary rule that costs follow the event applies — Where third and fifth defendant did not succeed on all claims and third defendant abandoned adverse possession claim during trial — Whether rr 25.03, 25.05 and 63.15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) apply to withdrawal of adverse possession claim — Apportionment of costs.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Kohn	Dimos Lawyers
For the Third and Fifth Defendants	Mr N Paterson	Jem Lawyers Pty Ltd
For the Sixth Defendant	Mr N Jones (only for hearing on 3 April 2025)	DSA Lawyers (only for hearing on 3 April 2025)

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Procedural history.............................................................................................................................. 2

Costs issues......................................................................................................................................... 5

Legal principles and provisions...................................................................................................... 6

Costs in judicial advice proceedings.......................................................................................... 6
Costs discretion generally and in adversarial proceedings.................................................... 8
Costs rules relating to discontinuance and withdrawal of claims....................................... 11

Submissions and analysis.............................................................................................................. 12

Proper characterisation of proceeding and role of each party............................................. 12
Application of rr 25.05 and 63.15.............................................................................................. 15
Relevant event or ultimate outcome of proceeding............................................................... 16
Extent of Feim and Julie’s success in the proceeding............................................................ 16
Whether to differentiate between Feim and Julie in relation to costs................................. 19
Extent of Jelena’s success in the proceeding........................................................................... 20
Disentitling conduct................................................................................................................... 21

Conclusion......................................................................................................................................... 23

HIS HONOUR:

Introduction

On 10 October 2024, the Court delivered its substantive judgment[1] in this proceeding. The proceeding was brought by the first plaintiff (‘liquidator’) for directions as to the beneficial ownership of the property located at 1665 Mount Cottrell Road, Mount Cottrell, Victoria (‘property’). The background and procedural history of the matter are set out in the substantive judgment and need not be repeated. For convenience, I adopt the definitions used in the substantive judgment.
[1]Re Richflow Pty Ltd (in liq) [2024]…

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: [2025] VSC 375
Decision Date: 26 June 2025

CaseChat Overview and Summary

In the matter of Re Richflow Pty Ltd (in liq), the court was asked to provide directions regarding the beneficial ownership of a large semi-rural property and make various declarations. The case involved the liquidator of Richflow Pty Ltd, a company that had entered liquidation, and several defendants who were interested in the property's ownership. The liquidator sought to determine the true beneficial ownership of the property and whether it was held on trust for any of the defendants.

The court had to decide several legal issues, including whether the sixth defendant acted as a contradictor in the proceeding for judicial advice about the existence of a trust and beneficial ownership. Additionally, the court needed to determine whether the proceeding was an adversarial inter partes proceeding, and whether the ordinary rule that costs follow the event applies in this context. The court also had to consider whether rules 25.03, 25.05, and 63.15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) applied to the withdrawal of an adverse possession claim, and if so, how the costs should be apportioned among the defendants.

The court found that the sixth defendant did act as a contradictor in the proceeding for judicial advice, and that the proceeding was adversarial in nature. However, the court held that the ordinary rule that costs follow the event does not apply in this case, as the third and fifth defendants did not succeed on all of their claims and the third defendant abandoned their adverse possession claim during the trial. The court determined that rules 25.03, 25.05, and 63.15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) applied to the withdrawal of the adverse possession claim and ordered the costs to be apportioned accordingly. The court made various declarations, including that the company holds the property on trust for the third defendant.

As a result of the court's decision, the liquidator was directed to take certain steps to determine the beneficial ownership of the property, and the third defendant was declared to be the beneficial owner. The other defendants were ordered to pay the costs of the proceeding in accordance with the court's apportionment order.

Orders