Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor (Costs and Interest)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2019 05638

BETWEEN:

ROSSI RECYCLING PTY LTD (ACN 056 188 562) (AS TRUSTEE FOR THE ROSSIGNOLI PROPERTY TRUST)	Plaintiff
v
BUCKLAND VALLEY PTY LTD (ACN 059 814 961) (AS TRUSTEE FOR THE ROSSIGNOLI TRUST NO. 3 AND THE HEATHERDALE PROPERTY TRUST)	First Defendant/First Plaintiff by Counterclaim
PAUL ROSSIGNOLI	Second Defendant/Second Plaintiff by Counterclaim
v
ROSSI RECYCLING PTY LTD (ACN 056 188 562) (AS TRUSTEE FOR THE ROSSIGNOLI PROPERTY TRUST)	Plaintiff/First Defendant by Counterclaim
GLEN ROSSIGNOLI	Second Defendant by Counterclaim

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JUDGE:	Connock J
WHERE HELD:	Melbourne
DATE OF HEARING:	24 October 2023
DATE OF JUDGMENT:	24 October 2023 (Ex tempore; revised 26 October 2023)
CASE MAY BE CITED AS:	Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor (Costs and Interest)
MEDIUM NEUTRAL CITATION:	[2023] VSC 628

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JUDGMENT — Determination of issues regarding costs and interest following judgment — Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor [2022] VSC 467 — Supreme Court Act 1986 (Vic) s 60.

INTEREST — Supreme Court Act 1986 (Vic) s 60 — Whether interest should be awarded on damages — Pre-judgment interest — Rate at which pre-judgment interest should be fixed under the Penalty Interest Rates Act 1983 (Vic) — Absence of discretion regarding award of interest unless good cause is shown to the contrary — Discretion regarding rate of interest — Period over which interest to be awarded — Whether mandatory to award interest under s 60 of the Supreme Court Act 1986 (Vic) — Whether ‘good cause is shown to the contrary’ so as not to award interest under s 60 of the Supreme Court Act 1986 (Vic) — Whether necessary to claim statutory interest in the statement of claim — Alleged delay.

PRACTICE AND PROCEDURE — Costs — General principles regarding costs — Apportionment of costs — Costs and relief from forfeiture — Alleged mixed success — Pragmatic approach to costs — Who is the successful party? — Usual practice regarding costs on relief from forfeiture application — Insufficient material to form a satisfactory evaluative assessment of proportion of costs — Various costs items to be excluded from costs award.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff and Defendants by Counterclaim	Mr J Barber SC	Dunemann Sutherland
For the Defendants and Plaintiffs by Counterclaim	Mr D Farrands KC	Walter Grant Legal

HIS HONOUR:

Introduction and Summary

These reasons address the questions of costs and interest following the determination by judgment of the liability and quantum phases of the proceeding. Hopefully for the parties this will be the last chapter in their long-running and acrimonious familial dispute between members of the Rossignoli family that has played out in various proceedings over many years.

The reasons also address an isolated issue regarding an order made by Macaulay J against the defendants on 13 December 2019 (Quiet Enjoyment Order) following the plaintiff’s (Rossi Recycling or plaintiff) successful relief from forfeiture application against the first defendant (Buckland Valley) made by summons filed on 11 December 2019 (Forfeiture Application).

The trial of this proceeding was split in two parts. Part one of the trial addressed questions of liability on the plaintiff’s claim and the defendants’ counterclaims. Part two of the trial was to address the quantum of any loss suffered by the plaintiff in respect of its claim and any loss suffered by the second defendant (Paul) in respect of his counterclaim.[1]
[1]The relief sought by Buckland Valley in its counterclaim did not include a claim for loss or damage but included seeking a declaration that Rossi Recycling and Glen had repudiated the Settlement Deed, which was accepted by the defendants.

Part one of the trial concluded some time ago and on 18 August 2022 I delivered reasons regarding liability (Liability Reasons).[2] These reasons assume a familiarity with, and should be read together with, the Liability Reasons. Unless otherwise stated, defined terms in the Liability Reasons have the same meaning in these reasons.
[2]Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor [2022] VSC 467 (Rossi Recycling).

On 7 September 2022, judgment was given in favour of the plaintiff on liability in the terms set out in the judgment, and the defendants’ counterclaims were dismissed (Liability Judgment). For ease of reference, a copy of the Liability Judgment is attached as Annexure A to these reasons.[3]
[3]But excluding the documents comprising the annexures to the Liability Judgment.

As is apparent from the terms of the Liability Reasons and the Liability Judgment:

(a) various declarations were made in favour of Rossi Recycling in connection with: the terms and construction of the Settlement Deed between the parties; breaches of the Settlement Deed by Buckland Valley and Paul; Rossi Recycling’s entitlement to specific performance of the Settlement Deed; and some related matters;

(b) Buckland Valley and Paul were ordered to specifically perform their respective obligations under the Settlement Deed and, to that end, undertake the various steps referred to in the Liability Judgment so as to bring into existence, and compel the execution by Buckland Valley of, the New Lease of the New Lease Premises to Rossi Recycling;

(c) Buckland Valley’s counterclaim was dismissed;

(d) Paul’s counterclaim was dismissed; and

(e) the question of costs of part one of the trial was reserved.

Part two of the trial did not proceed to a contested hearing. Following the completion of the steps the subject of the specific performance orders of the Liability Judgment (Specific Performance Orders), which included the obtaining of an independent valuation of the market rental for the New Lease Premises (Market Rental) and the entry into the New Lease by Buckland Valley and Rossi Recycling, the parties informed the court that it would not be necessary to have a contested hearing for part two of the trial. This was because the parties had agreed that the quantum of the plaintiff’s damages should be calculated by reference to overpaid rent[4] and be fixed at $269,735.06.
[4]Being (broadly) an amount equal to the rental paid by Rossi Recycling under the 2016 Lease during the relevant period that exceeded the Market Rental for the New Lease Premises under the New Lease as determined by the independent valuer pursuant to the Specific Performance Orders.

On 9 August 2023, judgment for $269,735.06 by way of damages (Damages Amount) was given in favour of Rossi Recycling, with the questions of statutory interest and costs being reserved to be determined on a date to be fixed (Damages Judgment). For ease of reference a copy of the Damages Judgment is annexed as Annexure B to these reasons.

For the reasons that follow, and subject to addressing the precise form of orders with counsel, I have concluded that:

(a) Buckland Valley should pay Rossi Recycling damages in the sum of $50,656.63 (Total Interest Amount) by way of statutory interest pursuant to s 60 of the Supreme Court Act 1986 (Vic) (SC Act), being interest calculated at the 10% per annum interest rate (relevantly) prescribed under the Penalty Interest Rates Act 1983 (Vic) (Penalty Rates Act).

(b) Interest is to be paid in respect of the period commencing on 11 December 2019 and ending on the date of the Damages Judgment, and is to be calculated by reference to the date of each payment of ‘overpaid rent’ by Rossi Recycling in the manner agreed between the parties and addressed later in these reasons.

(c) Subject to the qualification in sub-paragraph (g) below, Buckland Valley and Paul should pay Rossi Recycling’s and Glen’s costs of and incidental to the proceeding, to be assessed on a standard basis if not agreed, but those costs shall not include any of Rossi Recycling’s or Glen’s costs of or incidental to the following:

(i) Rossi Recycling’s Forfeiture Application;

(ii) Rossi Recycling’s claim for $25,343 by way of damages for the alleged business interruption (Business Interruption Claim) referred to in the particulars to paragraph 16 of the third further amended statement of claim dated 17 May 2021 (Third FASOC);

(iii) subject to sub-paragraph (d) below, the plaintiff’s proposed fourth amended statement of claim (Proposed Fourth FASOC), and its foreshadowed application to amend its statement of claim and re-open its case that was raised with the court and the parties at the directions hearing on 17 March 2023 and subsequently (2023 Foreshadowed Application).

(d) The excluded costs referred to in paragraph 9(c)(iii) above shall not include the costs of Rossi Recycling’s and Glen’s solicitors and counsel appearing at or attending the directions hearings on 17 March 2023, 19 April 2023 and 20 September 2023, and any mediation. These costs are intended to, and shall, remain as part of Rossi Recycling’s and Glen’s costs to be paid by the defendants.

(e) Rossi Recycling should pay Buckland Valley’s and Paul’s costs of and incidental to the Forfeiture Application, to be assessed on a standard basis if not agreed.

(f) Rossi Recycling should pay Buckland Valley’s and Paul’s costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application, to be assessed on a standard basis if not agreed, but those costs shall not include any of the costs of Buckland Valley’s and Paul’s solicitors and counsel appearing at or attending the directions hearings on 17 March 2023, 19 April 2023 and 20 September 2023, and any mediation.

(g) The defendants shall pay 50% of Rossi Recycling’s and Glen’s costs of and incidental to their application for interest and costs, including 50% of their costs of the hearing held on 24 October 2023.

As to the discrete issue regarding the Quiet Enjoyment Order made against the defendants on 13 December 2019, I propose to make an order to the following effect:[5]

If and to the extent that paragraph 2 of the orders of Macaulay J made on 13 December 2019 (Quiet Enjoyment Order) remains operative and has not already been vacated by the operation of the order of Connock J in paragraph 9 of the liability judgment delivered by Connock J on 7 September 2022, then the Quiet Enjoyment Order is vacated, nunc pro tunc, with effect from 28 July 2023.[6]
[5]Subject to discussing the precise form of the order with counsel for the parties.
[6]Being the date of exchange of executed counterparts of the New Lease as referred to in paragraph E of the ‘Other Matters’ section of the Damages Judgment.

Submissions and Evidence Relied Upon

Rossi Recycling and Glen relied upon their written submission dated 29 August 2023 and a reply submission dated 16 October 2023, which were addressed orally by their senior counsel. Buckland Valley and Paul relied upon their written submission dated 18 August 2023 and their reply and supplementary submission dated 5 October 2023, which were addressed orally by their senior counsel. An agreed schedule of interest calculations was annexed to Rossi Recycling’s and Glen’s 29 August 2023 submissions (Interest Schedule), a copy of which, for ease of reference, is annexed as Annexure C to these reasons.

No affidavit material was filed or relied upon by any of the parties in relation to the subject matter of these reasons. Rossi Recycling and Glen tendered four ‘without prejudice save as to costs’ communications passing between the solicitors for the parties during the period 21 to 28 March 2023 (March Agreement and Costs Letters), which also recorded an agreement that acknowledged, among other things, that Rossi Recycling was entitled to be reimbursed land tax that it had paid on behalf of Buckland Valley. This land tax had been the subject of one of the two claims that had been pleaded in the Proposed Fourth FASOC.

I have read and considered the written submissions of the parties, the March Agreement and Costs Letters, the Interest Schedule, the Liability Reasons, the Liability Judgment, and the Damages Judgment and considered the oral submissions made at the hearing on 24 October 2023. Whilst it is not necessary to extract the detail of the submissions here, they are addressed in various ways later in these reasons when separately considering the topics of costs, interest and the Quiet Enjoyment Order.

The Issue of Costs
Rossi Recycling’s and Glen’s Submissions on Costs

Rossi Recycling and Glen contended that there should be no order as to the costs of and incidental to Rossi Recycling’s Business Interruption Claim; that Rossi Recycling should pay the defendants’ costs of and incidental to the Forfeiture Application, to be assessed on a standard basis if not agreed; and that Buckland Valley and Paul should otherwise pay Rossi Recycling’s and Glen’s costs of and incidental to the proceeding, to be assessed on a standard basis if not agreed.

In support of this position, and in substance, Rossi Recycling and Glen contended as follows:

(a) Rossi Recycling and Glen had enjoyed complete success in respect of the main issues and failed only on a handful of fairly peripheral matters.

(b) The counterclaims of the defendants had been dismissed.

(c) The attempts of the defendants to ‘downplay’ the extent of Rossi Recycling’s success should be rejected, noting also that this was not a case where it was being contended that costs should be reduced because of alleged misconduct.

(d) The defendants’ contention that Rossi Recycling’s and Glen’s driving motivation was to achieve a $200,000 annual rental figure was misplaced for various reasons, and ought not to impact the costs outcome in any event. Rossi Recycling’s principal objective and claim in the proceeding was to obtain specific performance of the Settlement Deed, and it achieved this objective.

(e) The defendants failed in their main contention that the Settlement Deed had been terminated as a result of it being repudiated by the conduct of Rossi Recycling and Glen and that repudiation being accepted by the defendants.

(f) The defendants’ submission that the Damages Judgment merely brought forward a rent review under the 2016 Lease by 18 months was without merit, and made no difference in any event.

(g) It had always been open for the defendants to make an offer of compromise or send a Calderbank letter on terms more favourable than the Damages Judgment, but they did not.

(h) Putting to one side the Forfeiture Application, the issues upon which Rossi Recycling did not succeed were (variously): not material; bound up with the other allegations; occupied a small part of the case; did not add to the length of the trial or costs in any material way; and were not discrete or clearly defined issues that would warrant a proportionate award of costs.

(i) Consistent with authorities such as APN Funds Management Pty Ltd v Australian Property Investments Strategic Pty Ltd (APN Funds)[7] and McFadzean v CFMEU (McFadzean),[8] the Court should be reluctant to seek to divide up the remaining issues in the way proposed by the defendants, which, so it was said, was not possible in any event. During the oral submissions, senior counsel for Rossi Recycling placed emphasis on the observations in APN[9] and McFadzean[10] regarding the court’s reluctance to deprive a successful plaintiff of its costs even if it was not successful on all issues.

[7][2012] VSC 365.

[8](2007) 20 VR 250.

[9][2012] VSC 365.

[10](2007) 20 VR 250.

It was further submitted that the trial having been split between liability and quantum, and Rossi Recycling and Glen having succeeded in part one of the trial, they should each have their costs of the whole of part one of the trial irrespective of what transpired subsequently.

In the alternative, it was submitted that if there was to be an order that the defendants pay only a proportion of Rossi Recycling’s costs, then there should be no simultaneous order going the other way. It was contended that this would not be a ‘pragmatic approach’, would double the cost of taxations, and would unfairly reduce the proportionate recovery of Rossi Recycling’s costs. In this context, it was noted that the defendants had engaged junior and senior counsel and, so it was said, this would operate unfavourably against Rossi Recycling and Glen.

In reply to the defendants’ submissions regarding the 2023 Foreshadowed Application, Rossi Recycling submitted that there should be no order as to costs of the foreshadowed application. Alternatively, it was submitted that the issue could be addressed by the plaintiff recovering a lesser proportion of its costs for the period 8 March 2023 to 28 April 2023.

When making these submissions Rossi Recycling referred to its claimed partial success in connection with the 2023 Foreshadowed Application because the parties reached agreement about the land tax claim that was referred to in the proposed Fourth FASOC. It was said that the March Agreement and Costs Letters revealed the agreement between the parties and that this reflected Rossi Recycling’s success, leaving only the indemnity claims in the Proposed Fourth FASOC that were not pursued. It was submitted that it would therefore be unfair to award all costs of the 2023 Foreshadowed Application to the defendants.

Rossi Recycling emphasised that the court does not strive for arithmetical precision when awarding costs but awards costs primarily as a matter of impression and evaluation, consistent with s 24 of the Civil Procedure Act 2010 (Vic) (CP Act). In this context, reference was made to the nature and extent of the tasks and time involved, which, so it was said, supported the contention that each party should bear their own costs of the 2023 Foreshadowed Application. In the alternative it was submitted that, given the modest costs involved and limited time frame, the court may consider it appropriate that Rossi Recycling recover 50% of its costs for the period 8 March 2023 to 28 April 2023. The 8 March 2023 date was said to be the date the drafting of the Proposed Fourth FASOC commenced.

In addition, reference was made to a number of the well-rehearsed principles and observations in the authorities addressing the question of costs and related matters, various aspects of which are addressed later below.

Buckland Valley’s and Paul’s Submissions on Costs

The defendants submitted that:

(a) There should be no order as to costs in respect of Rossi Recycling’s Business Interruption Claim.

(b) Rossi Recycling should pay the defendants’ costs of and incidental to the Forfeiture Application, to be assessed on a standard basis if not agreed.

(c) Rossi Recycling should pay the defendants’ costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application.

(d) Otherwise, the parties should bear their own costs of the proceeding.

(e) Alternatively, the defendants submitted that they should pay two-thirds of Rossi Recycling’s and Glen’s costs of the proceeding and that Rossi Recycling should pay one-third of the defendants’ costs of the proceeding, to be assessed on a standard basis in default of agreement.

In the context of the defendants’ primary position, it was contended that Rossi Recycling and Glen had at all times ‘resolutely alleged and maintained’ that the rental paid under the 2016 Lease for the 2016 Lease Premises had been excessive and that a fair market rental was approximately $200,000 per annum, or $16,666 per month. It was submitted that this rental amount was sought or agitated by Rossi Recycling and Glen at all stages and was the driving force behind the claims made. Emphasis was placed upon the fact that the independent determination of the annual Market Rental the subject of the Specific Performance Orders was $248,000 in the first report and $240,000 in the revised report, with the current rental for the premises said to be $24,039.99 per month. This, so it was said, meant that the amount of damages recovered was materially less than what it was said had been driving Rossi Recycling and Glen to make the claim against Buckland Valley.

In this context, it was said that Rossi Recycling and/or Glen were not relevantly successful on any substantive basis because of the amount of damages recovered that represented overpaid rent.

In addition, it was submitted that whilst it was correct that Rossi Recycling obtained the New Lease as a result of the proceeding, it was said that if it had not pursued the proceeding Rossi Recycling would have held, and would have continued to hold, the 2016 Lease with four options to renew, and with a rent review to occur under the 2016 Lease by October 2021. It was contended that all the proceeding did was bring forward the rent review period by 18 months, resulting in the saving of only about $126,000 in rental.

The defendants submitted that Rossi Recycling had failed to achieve an amount of damages that was justified by the length and cost of the proceeding. They also contended that:

(a) The plaintiff had failed in its allegations that there had been a breach of the Settlement Deed as a result of Buckland Valley demanding rent and issuing notices of breach in October, November and December 2019.

(b) The plaintiff had failed in its allegations that the taking of possession of the 2016 Lease Premises, consequent upon the notices of breach, was wrongful or unconscientious.

(c) The plaintiff had failed in its estoppel claims.

(d) The plaintiff was found to have breached the 2016 Lease by not paying rent due and owing under the 2016 Lease in October, November and December 2019.

(e) The plaintiff and Glen were found to have committed trespass on 9 December 2019 by jemmying the locks to the 2016 Lease Premises.

In connection with the defendants’ alternative two-thirds/one-third submission, reference was made to the observations in some of the authorities, including observations of the Court of Appeal in Chen v Chan[11] and Paragreen v Lim Group Holdings Pty Ltd (No 2) (Paragreen).[12]
[11][2009] VSCA 233.
[12][2020] VSCA 97, [5].

In the context of taking a ‘pragmatic approach’, it was submitted that the emphasis should not be placed upon any alleged procedural misconduct of the parties to disentitle a party from a costs order being made in their favour, but should be upon whether Rossi Recycling failed on particular issues. It was submitted that the defendants should have the costs of and incidental to the plaintiff’s failed claims, and that these matters represented approximately one-third of the defendants’ trial costs. This was said to represent a pragmatic approach to the issue of costs of the character referred to by the Court of Appeal in Chen v Chan.[13]
[13][2009] VSCA 233.

The defendants addressed the Proposed Fourth FASOC and the 2023 Foreshadowed Application in their supplementary written submission and at the hearing. They recited relevant history, also emphasising that the 2023 Foreshadowed Application was opposed, not ultimately pursued and involved complexity and difficulty. It was further submitted that the March Agreement and Costs Letters did not reflect any ‘success’ and that it recorded a broader agreement between the parties. It was submitted that the defendants should be awarded their costs of the Proposed Fourth FASOC and the 2023 Foreshadowed Application.

The defendants also referred to a number of the well-known authorities and other cases, aspects of which are addressed below and later in these reasons.

Principles and Observations – Awarding Costs

There was no relevant disagreement between the parties regarding the court’s discretion with respect to the awarding of costs.

As the parties observed, in the frequently cited decision of Chen v Chan,[14] the Court of Appeal addressed relevant principles in the following terms:
[14][2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA). Although the Court was addressing the costs of an appeal, as others have noted, such observations apply generally to costs questions arising at trial.

Relevant principles
[10] The contentions of the parties raise a number of questions relevant to costs orders on appeal. The principles relevant to these questions can be summarised as follows:
(1)The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.[15]
(2)The Rules of Court[16] permit significant flexibility in determining questions of costs. In particular, the court is entitled to examine the realities of the case and will attempt to do ‘substantial justice’ as between the parties on matters of costs.[17]
(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties,[18] a 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. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.[19]
(4)A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5)Where a court determines to make an order apportioning costs, then it does so primarily as ‘a matter of impression and evaluation,’[20] rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
(6)Where a number of parties have had the same representation, there is a ‘rule of thumb’[21] as to the apportionment of costs, namely that, where some of those parties have been successful and others have not, each successful party is only entitled to his or her proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on his or her behalf. The primary issue for determination in such a case is that of fairness as between the parties, having regard to the manner in which the trial, or appeal, has been conducted.
(7)Usually, an order for costs will be made on a party/party basis.[22] But an order for costs on a solicitor/client or indemnity basis may be made where special or unusual circumstances have been demonstrated,[23] for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding. Special circumstances may also include the making of an allegation of fraud which is not proved.[24]

[15]Ritter v Godfrey [1920] 2 KB 47; Oshlack v Richmond River Council (1998) 193 CLR 72, 97-8 (McHugh J); 124 (Kirby J).

[16]Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 63.04 at first instance and r 64.24 on appeal.

[17]Spotless Group Limited v Premier Building and Consulting Pty Ltd and Northern Suburban Properties Pty Ltd (Spotless) [2008] VSCA 115, [14].

[18]McFadzean v Construction Mining and Energy Union (2007) 20 VR 250 (McFadzean) [157]–[158].

[19]Spotless [15]; Hughes v Western Australian Cricket Association Inc (1986) 8 ATPR 40–748, 48, 136; Pricom Pty Ltd v Sgarioto (Unreported, Supreme Court of Victoria, Eames J, 24 April 1995), McFadzean [2007] VSCA 289, [152].

[20]Major Engineering Pty Ltd v Helios Electroheat Pty Ltd (No 2) [2006] VSCA 114, [5].

[21]Currabubula Holdings Pty Ltd and Paola Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232, [90]. For a comprehensive analysis of the development of the ‘rule of thumb’, see [91]–[104]. See also Ellingsen v Det Skandinaviske Compani [1919] 2 KB 567, 569.

[22]PCRZ Investments Pty Ltd v National Golf Holdings Ltd [2002] VSCA 24, [34].

[23]Spencer v Dowling [1997] 2 VR 127; Bass Coast Shire Council v King [1997] 2 VR 5, 29.

[24]Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177. See also Re Talk Finance and Insurance Services Ltd [1994] 1 Qd R 558 and Niml Ltd v Man Financial Australia Ltd (No. 2) [2004] VSC 510.

In Nom De Plume Nominees Pty Ltd v Fingal Developments Pty Ltd,[25] these observations were succinctly reinforced by the Court of Appeal in this way:

[13] The relevant principles for the resolution of the question as to the costs of the appeal, and in respect of any apportionment of the costs of the trial, are those set out by this Court in Chen v Chan.[26] In short, for present purposes, while the general rule is that costs should follow the event, where there is a multiplicity of issues and mixed success has been enjoyed by the parties, the court may take a pragmatic approach in relation to costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Such an approach will be primarily a matter of impression and evaluation.

[25][2016] VSCA 233, [13] (Tate and McLeish JJA and Ginnane AJA). See also Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 169, where Maxwell P, Niall JA and Macaulay AJA, cited with apparent approval the observations of Tate and McLeish JJA and Ginnane AJA in Nom De Plume Nominees Pty Ltd v Fingal Developments Pty Ltd regarding a court taking a pragmatic approach in relation to costs where there is a multiplicity of issues and mixed success enjoyed by the parties.

[26][2009] VSCA 233 [10] (Maxwell P, Redlich JA and Forrest AJA). See also Spotless Group Ltd v Premier Building and Consulting Pty Ltd (recs apptd) [2008] VSCA 115 [14] (Redlich JA).

The well-settled guiding principle that the successful party is generally entitled to his or her costs was a point emphasised by the High Court in Northern Territory v Sangare (Sangare)[27] as follows:
[27](2019) 372 ALR 117, 122; [2019] HCA 25, [24]–[25] (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).

The discretion as to costs
[24] It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.[28] While the width of the discretion ‘cannot be narrowed by a legal rule devised by the court to control its exercise’,[29] the formulation of principles according to which the discretion should be exercised does not ‘constitute a fetter upon the discretion not intended by the legislature’.[30] Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.[31]
[25] A guiding principle by reference to which the discretion is to be exercised – indeed, ‘one of the most, if not the most, important’ principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party.[32] The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action.[33] But in the present case, there was nothing of this kind in the conduct of the appellant in relation to the litigation that might have weighed against the exercise of the discretion in its favour.[34] There was no suggestion of any conduct on the part of the appellant, whether by unreasonable delay or a want of the cooperation required of litigants to ensure the ‘just resolution of the real issues in civil proceedings with minimum delay and expense’,[35] that might have been taken into account to justify refusing the appellant an order for its costs.

[28]Donald Campbell & Co v Pollak [1927] AC 732, 811–812; Latoudis v Casey (1990) 170 CLR 534, 539–540, 557, 561–562, 569; Oshlack v Richmond River Council (1998) 193 CLR 72, 96 [65], 120–121 [134].

[29]Norbis v Norbis (1986) 161 CLR 513 [537]; [1986] HCA 17. See also [533].

[30]Latoudis v Casey (1990) 170 CLR 534, 541–542, see also 558‑559; Oshlack v Richmond River Council (1998) 193 CLR 72, 96 [65], 121 [134].

[31]Norbis v Norbis (1986) 161 CLR 513, 519; Latoudis v Casey (1990) 170 CLR 534 [541]–[542], see also [558]; Oshlack v Richmond River Council (1998) 193 CLR 72, 96 [65], 121 [134].

[32]Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481 [1484]; [1953] 2 All ER 1588 [1590]. See also Harold v Smith (1860) 5 H & N 381, 385 [157 ER 1229, 1231]; Oshlack v Richmond River Council (1998) 193 CLR 72, 96‑97 [66]–[67], see also 86 [35], 120–121 [134].

[33]See, eg, Bostock v Ramsey Urban District Council [1900] 2 QB 616, 622, 625 and 627; Ritter v Godfrey [1920] 2 KB 47, 53, 60 and 66; Scottish Gympie Gold Mines Ltd v Carroll [1902] St R Qd 311, 315–316; Stewart v Moore [1921] St R Qd 182, 190; Redden v Chapman (1949) 50 SR (NSW) 24, 25.

[34]Anglo‑Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, 874; Oshlack v Richmond River Council (1998) 193 CLR 72, 97–98 [69].

[35]Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, 210 [90]; [2009] HCA 27. See Supreme Court Rules, r 1.10.

Subsequently, in Diakou v Rouse,[36] the Court of Appeal observed that:

[48] Section 24(1) of the Supreme Court Act 1986 confers on the Supreme Court a wide discretion in deciding questions of costs.[37] However, that discretion must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.[38] There are well-established principles that provide guidance for the exercise of the discretion and avoid it being exercised in an arbitrary or inconsistent manner.[39]
[49] One such well-established principle is that costs usually follow the event, that is, that the unsuccessful party is usually ordered to pay the successful party’s costs. Recently, in Northern Territory v Sangare, the High Court said the following about that principle:
…[40]
[50] Consistent with this principle, where the outcome of the proceeding is such that it cannot be said that one party has been successful and the other has been unsuccessful, it may be appropriate that there be no order as to costs.[41] That is also the case in a proceeding where its subject matter or the relief sought are such that neither party can be said to have succeeded.[42] However, the conduct of one of the parties in relation to the litigation may be such as to warrant an order for costs being made against that party.

[36][2019] VSCA 199, [48]-[50] (Kyrou, McLeish and Emerton JJA).

[37]See also Civil Procedure Act 2010 (Vic) s 65C(1).

[38]Sangare [2019] HCA 25 [24] .

[39]Sangare [2019] HCA 25 [24].

[40]The passage omitted from the extract is the quote from Sangare set out in the previous paragraph above.

[41]See, eg, National Australia Bank Ltd v Horne [2011] VSCA 414 [3]; Apostolidis v Kalenik [No 2] (2011) 35 VR 563, 612 [59]–[60]; Amalgamated Engineering Union v The Metal Trades Employers’ Association (1935) 53 CLR 658, 664; Chiarella v Accident Compensation Commission [1992] 2 VR 103, 108.

[42]See, eg, Board of Examiners v XY (2006) 25 VAR 193, 201–3 [17]–[22], 208–9 [37]–[38]. Although the respondent in that case succeeded in overturning the decision of the Board of Examiners that she was not a fit and proper person to be admitted to legal practice, the Court held that the nature of the proceeding was such that no order as to costs should have been made.

The defendants also referred to Paragreen,[43] where the Court of Appeal said:

[5] The well-established general rule is that, ordinarily, costs should follow the event. Accordingly, in the usual course, a successful party should recover its costs even in a case in which it has not succeeded on all of its heads of claim or arguments. On the other hand, it is recognised that where multiple issues have been agitated, and the successful party has only enjoyed mixed success in respect of some of them, a court may, in an appropriate case, adopt a pragmatic approach by which it awards the successful party a proportion of its costs, but not the full amount.[44]

[43][2020] VSCA 97 (Tate, Kaye and Niall JJA).

[44]See, eg, Pricom Pty Ltd v Sgarioto (Supreme Court of Victoria, Eames J, 24 April 1995) 8; McFadzean v Construction, Forestry, Mining and Energy Union (2007) 20 VR 250, 289–92 [152]–[159] (Warren CJ, Nettle and Redlich JJA); Chen v Chan (No 2) [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).

The importance of seeking to do ‘substantial justice’ was underscored in David Thurin & Lisa Thurin v Krongold Constructions (Aust) Pty Ltd[45] in the following terms:

[12] Pursuant to s 24(1) of the Supreme Court Act 1986, the Court has a broad costs discretion.[46] 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.[47] 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.[48]

[45][2022] VSCA 252 (McLeish, Niall and Walker JJA).

[46]Major Engineering Pty Ltd v Helios Electroheat Pty Ltd [No 2] [2006] VSCA 114, [5] (Chernov and Ashley JJA and Mandie AJA).

[47]Swindells v Victoria [2016] VSCA 77, [9] (Warren CJ, Tate and Santamaria JJA).

[48]Chen v Chan [No 2] [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA); McFadzean v Construction, Forestry, Mining and Energy Union (2007) 20 VR 250, 291–2 [157]–[158] (Warren CJ, Nettle and Redlich JJA); [2007] VSCA 289.

The need for a ‘broad evaluative judgment of what justice requires’ was again recently referred to in Vanta Pty Ltd v Mantovani:[49]

[15] The principles involved in determining whether to make an award of costs to a successful (or unsuccessful) party — whether at trial or on appeal — are well known and apart from reference to a couple of relevant matters do not necessitate repetition.
[16] The rationale for an order for costs is that ‘it is just and reasonable that the party who has caused the other party to incur costs of litigation should reimburse that party for the liability incurred’.[50]
[17] The standard rule is that, in the absence of special circumstances, a successful party is entitled to an award of costs.[51]
[18] The rule is not absolute and there are exceptions which commonly arise where the conduct of a party may affect its entitlement to costs. However, the making of a costs order is subject to the Court’s discretion which must be exercised judicially and not punitively.[52]
[19] Where there are competing considerations as to the question of the entitlement to costs, the disposition of the application requires a ‘broad evaluative judgement of what justice requires’.[53]

[49][2023] VSCA 74 (Kyrou and Sifris JJA, J Forrest AJA).

[50]Latoudis v Casey (1990) 170 CLR 534, 567; [1990] HCA 59 (McHugh J).

[51]Ritter v Godfrey [1920] 2 KB 47, 52 (Lord Sterndale MR); Donald Campbell & Co Ltd v Pollak [1927] AC 732, 809, 811; Swindells v Victoria (No 2) [2016] VSCA 77, [9] (Warren CJ, Tate and Santamaria JJ).

[52]Allplastics Engineering Pty Ltd v Dornoch Ltd [2006] NSWCA 33, [34] (Tobias JA, with Santow JA agreeing at [1]).

[53]Gray v Richards (No 2) (2014) 315 ALR 1, 2 [2]; [2014] HCA 47 (French CJ, Hayne, Bell, Gageler and Keane JJ); Chen v Chan [2009] VSCA 233 [10] (Maxwell P, Redlich JA and J Forrest AJA).

In Luxmore Pty Ltd v Hydedale Pty Ltd,[54] the Court of Appeal commented on the desirability, in the ordinary case, of the question of costs being dealt with at the conclusion of argument:

In the ordinary case, it is both appropriate and desirable that a costs question be decided at the conclusion of argument. Rarely will it be necessary for a judge to give detailed reasons for decision adverting to every matter debated in argument. This court will assume, as should the parties, that every matter addressed in argument on costs has been considered. This court will set its face against any proposition which would require judges disposing of questions of costs to give elaborate reasons.[55]

[54](2008) 20 VR 481 (Maxwell P and Kellam JA).

[55]Ibid [12].

In the interpretation and exercise of the court’s powers, including in relation to costs, the court must seek to give effect to the overarching purpose in s 7 of the CP Act,[56] and seek to further that purpose by having regard to the objects referred to in s 9(1) of that Act. In so doing the court may take into account, among other things, the matters referred to in s 9 (2) of the CP Act.
[56]See s 8 of the CP Act.

Costs – Consideration and Disposition

As a result of the conclusions reached and orders to be made regarding the Forfeiture Application, the Business Interruption Claim, the Proposed Fourth FASOC, and the 2023 Foreshadowed Application, Rossi Recycling and Glen will not recover all of their (assessed) costs. I address these matters first below and then turn to the more general costs order otherwise to be made in favour of Rossi Recycling and Glen.

Forfeiture Application

Rossi Recycling observed that the usual practice of the court where relief against forfeiture is granted is to order costs of the application against the successful applicant, and senior counsel for Rossi Recycling responsibly submitted that such an order was appropriate in the circumstances. Unsurprisingly, senior counsel for the defendants agreed, which effectively meant that the position on this issue was addressed by consent between the parties.

Even if the position had not been agreed, the result would have been the same. It is to be remembered in this context that:

(a) the payment to Buckland Valley of all the rent that had not been paid by Rossi Recycling for October, November and December 2019 under the 2016 Lease was a condition of granting relief from forfeiture;

(b) it was concluded in the Liability Reasons that notices of breach issued by Buckland Valley under the 2016 Lease were valid;[57] and

(c) in the Liability Reasons it was also concluded that Buckland Valley and Paul did not breach the Settlement Deed by taking possession of the 2016 Lease Premises (other than the upstairs of Unit 27).[58]

[57]Rossi Recycling [2022] VSC 467, [620]–[622].

[58]Ibid.

Consequently, an order will be made requiring Rossi Recycling to pay the defendants’ costs of and incidental to the Forfeiture Application. I note in this context that Glen is the second defendant to counterclaim, was not a party to the proceeding at that time, never became a plaintiff, and did not bring any claim against either of the defendants.

Reserved Costs

Subject to consideration of any submission to the contrary when addressing the precise form of orders with senior counsel for the parties, I do not propose to include any reference to reserved costs in the Forfeiture Application context, or in relation to the other costs issues addressed below, because this is taken care of by the operation of r 63.22 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules). That rule provides that, where by order of the court the costs of any interlocutory or other application, or of any step in a proceeding, are reserved, the reserved costs are the parties’ costs in the proceeding, unless the court otherwise orders.[59] Senior counsel for each of the parties confirmed during the hearing that they considered this to be appropriate.
[59]I refer also to r 63.20 of the Rules, which addresses a similar situation where no order is made on an application or the order made is silent as to costs.

Costs of the Business Interruption Claim

Prior to the hearing, the parties had agreed that each party should bear their own costs of and incidental to the plaintiff’s Business Interruption Claim seeking damages of $25,343.

As was the case with the costs of the Forfeiture Application, the parties did not refer to or provide me with any sufficient evidence or submissions that would enable me to make a satisfactory evaluative judgment regarding what proportion of the plaintiff’s costs of the proceeding the costs of the Business Interruption Claims would be.[60] In those circumstances, and unless the parties can agree on the appropriate proportion, I propose to order that the costs award that is to be made in favour of Rossi Recycling and Glen exclude any of their costs of and incidental to the Business Interruption Claim.
[60]Which is said by way of observation, not criticism.

I do not propose to make a similar order in relation to the defendants’ costs of and incidental to the Business Interruption Claim because there is no relevant costs order being made in favour of the defendants from which such costs need to be or would be excluded.

Proposed Fourth FASOC and 2023 Foreshadowed Application

Putting to one side for the moment the costs of attendance and appearance at the directions hearings and mediation in 2023, it is in my view appropriate and just that Rossi Recycling and Glen otherwise bear their own costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application.

Consequently, and subject to the qualification that follows, I propose to make orders excluding from the costs order to be made in favour of Rossi Recycling and Glen their costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application. The qualification is this: those excluded costs will not include any of the costs of Rossi Recycling’s and Glen’s solicitors and counsel attending or appearing at the directions hearings on 17 March 2023, 19 April 2023, 20 September 2023 and at any mediation.

On the flip side, and except for the costs of Buckland Valley’s and Paul’s solicitors and counsel attending or appearing at the directions hearings on 17 March 2023, 19 April 2023, and 20 September 2023, and at any mediation, Rossi Recycling should otherwise pay Buckland Valley’s and Paul’s costs of the Proposed Fourth FASOC and the 2023 Foreshadowed Application, to be assessed on a standard basis if not agreed.

I elaborate briefly below regarding the above conclusions.

The Proposed Fourth FASOC and the 2023 Foreshadowed Application sought to introduce new claims by Rossi Recycling — being a land tax reimbursement claim not related to the Settlement Deed and indemnity claims under the Settlement Deed — after part one of the trial had concluded. The application was foreshadowed very late in the proceeding, being many months after the delivery of the Liability Reasons, and after the handing down of the Liability Judgment.

Rossi Recycling prepared and served various documents, which had been prepared by solicitors and senior counsel. These included affidavits, a draft summons, an outline of submissions, and more than one draft of the proposed Fourth FASOC. Some of the issues were not without some complexity.

These materials had to be read and considered by the defendants and their advisers, which they were. The defendants made it clear from an early stage that the 2023 Foreshadowed Application would be opposed, which was a reasonable position for the defendants to take in the circumstances.

Even putting to one side the jurisdictional issue that was raised by the parties in relation to the proposed land tax claim, it is and was apparent that the 2023 Foreshadowed Application faced some material challenges given, among other things, its timing and the fact that the liability hearing had concluded and the Liability Judgment had been handed down. That said, it is not now appropriate to hypothetically determine what the ultimate outcome would have been.

Significantly, Rossi Recycling did not ultimately press or pursue the Proposed Fourth FASOC or any aspect of the 2023 Foreshadowed Application. No summons was filed, no amendments were sought to be made to the Third FASOC, and no re-opening application was made.

In these circumstances, and also taking into account the overarching purpose and the courts obligations in relation to the same under the CP Act,[61] it is just and appropriate that:

(a) subject to the qualification mentioned above regarding attendance and appearance at directions hearings and mediation, Rossi Recycling and Glen bear their own costs of the Proposed Fourth FASOC and the 2023 Foreshadowed Application; and

(b) Rossi Recycling pay Buckland Valley’s and Paul’s costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application, except for any of the costs of Buckland Valley’s and Paul’s solicitors and counsel attending or appearing at the directions hearings on 17 March 2023, 19 April 2023, and 20 September 2023, and at any mediation.

[61]As I have done in relation to all of the issues under consideration in these reasons.

It is appropriate to carve out the costs of the appearance and attendance at directions hearings and mediation because these directions hearings and the mediation would have taken place anyway, and appearance and attendance costs would have been incurred in any event. This was also appropriately acknowledged by senior counsel for the defendants during the hearing, although the result would have been the same if this was not so.

A review of the transcript of the directions hearings also reveals that the directions hearing dealt with a number of matters, albeit including the 2023 Foreshadowed Application. The other matters dealt with included, for example, a proposed agreed process for obtaining a further report from the independent valuer that provided each party with a further opportunity to make submissions, which they did.

This ultimately resulted in the provision of a revised report from the independent valuer that determined a lower Market Rental to be paid by Rossi Recycling for the New Lease Premises than had been determined by the independent valuer in the first report. It also enabled the parties to address the issue of damages between themselves and agree the Damages Amount and the terms of the Damages Judgment.

That said, and for the avoidance of doubt, the excising of the attendance and appearance costs from the costs award in favour of the defendants regarding the Proposed Fourth FASOC and 2023 Foreshadowed Application is not intended to exclude from recovery by the defendants the defendants’ preparation costs for the said hearings and mediation that are properly to be characterised as their costs of and incidental to the Proposed Fourth FASOC or the 2023 Foreshadowed Application.

Although I have taken into account the agreement regarding land tax that is evidenced by the March Agreement and Costs Letters, whether considered alone or in any combination with the other circumstances, I do not consider that it materially assists Rossi Recycling’s position on this topic. I add that the reaching of an agreement between the parties regarding the matters referred to in the letters, including the land tax issue, says little or nothing about the prospects of success of the 2023 Foreshadowed Application, or any part of it. It is also to be noted that the March Agreement and Costs Letters evidence a broader agreement involving elements favourable to each of the parties and is not limited to the land tax issue. So much is apparent from the express terms of the communications.

In any event, the fact remains that the defendants incurred costs in connection with the belatedly proffered Proposed Fourth FASOC and the 2023 Foreshadowed Application, which application faced many challenges and was not ultimately pursued. Whilst that appears to have been an appropriate course for Rossi Recycling to take, in all of the circumstances it is just and appropriate that a costs order be made in favour of Buckland Valley and Paul in the way that I have addressed above.

To the extent that Rossi Recycling pressed its alternative submission referred to in its reply submissions that the 2023 Foreshadowed Application should be addressed by allowing Rossi Recycling to recover a lesser proportion of its costs for the period 8 March 2023 to 28 April 2023, it will be apparent that I do not consider this to be the preferable or just outcome in the circumstances and having regard to the matters that I have referred to above.

I observe without criticism that the parties did not refer to or provide me with any sufficient evidence or submissions that would enable me to make a satisfactory evaluative judgment regarding what proportion of Rossi Recycling’s costs of the proceeding the defendants’ costs of the Proposed Fourth FASOC or the 2023 Foreshadowed Application would be. In these circumstances, and unless the parties can agree an appropriate proportion, I propose to order that the costs award that is to be made in favour of Rossi Recycling and Glen exclude any of their costs of or incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application (except for the directions hearings and mediation attendance and appearance costs that I have earlier referred to). Whilst I accept that this is not ideal from a potential costs assessment perspective, I regard it to be the just outcome because to do otherwise in the circumstances would involve too much speculation on my part.

The end point regarding the Proposed Fourth FASOC and the 2023 Foreshadowed Application is as follows:

(a) except for the costs of Rossi Recycling’s and Glen’s solicitors and counsel attending or appearing at the directions hearings on 17 March 2023, 19 April 2023, 20 September 2023 and at any mediation, Rossi Recycling and Glen should bear their own costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application; and

(b) Rossi Recycling should pay the defendants’ costs of and incidental to the Proposed Fourth FASOC and 2023 Foreshadowed Application, but those costs shall not include the costs of the defendants’ solicitors or counsel attending or appearing at the directions hearings on 17 March 2023, 19 April 2023, 20 September 2023, and at any mediation.

Otherwise, the Costs of the Proceeding Should be Paid by the Defendants

As is apparent from the Introduction and Summary above, and subject to excluding the various costs that I have earlier referred to, an order should otherwise be made that the defendants pay Rossi Recycling’s and Glen’s costs of and incidental to the proceeding.

Contrary to the submissions of the defendants, and subject to the costs issues addressed above, it is in my view clear that Rossi Recycling and Glen were the substantively successful parties in the proceeding. Rossi Recycling succeeded in its main claims, which were claims seeking relief from forfeiture, orders against the defendants requiring them to specifically perform the Settlement Deed, a claim that the defendants breached the Settlement Deed, and a claim for damages calculated as an amount equal to rent paid in excess of the Market Rental. So much is evidenced from and supported by a review of the pleadings, the written and oral closing submissions at trial, the Liability Reasons, the Liability Judgment, and the Damages Judgment, to which I refer but do not propose to detail further in these reasons.

It is similarly clear that, subject to the costs matters addressed earlier in these reasons, the defendants were the substantively unsuccessful parties. Among other things: their resistance to the claims for relief from forfeiture and for specific performance failed; their defence of the damages claim failed; their defence and counterclaim that the Settlement Deed was at an end because it was repudiated by Rossi Recycling and Glen, which was accepted by the defendants, failed; Buckland Valley’s counterclaim failed; and Paul’s counterclaim failed. That Buckland Valley and Paul were the substantively unsuccessful parties is also plain from a review of the pleadings, the closing submissions at trial, the Liability Reasons, the Liability Judgment and the Damages Judgment, to which I again refer but will not detail in these reasons.

That being so, and subject to the other costs related issues that I have referred to earlier, the costs of the proceeding should otherwise follow the event. Consequently, and noting the defendants’ responsible acknowledgement that the defendants should be dealt with collectively together for these costs purposes, the defendants should otherwise pay Rossi Recycling’s and Glen’s costs of and incidental to the proceeding, to be assessed on a standard basis if not agreed. I will address the precise form of the orders with senior counsel for the parties, which will also need to ensure that the order dealing with this aspect of the costs includes Rossi Recycling and Glen in their capacity as plaintiff and defendants to counterclaim respectively.

It will be apparent that I do not accept the defendants’ submissions that the parties should otherwise bear their own costs of the proceeding or, alternatively, that the defendants should pay two-thirds of the costs of Rossi Recycling and Glen, with Rossi Recycling paying one-third of the defendants’ costs. In this context, I make the further brief observations that follow.

In the costs context, and to the extent that they were pressed, the defendants’ submissions regarding the claimed focus of Rossi Recycling on a rental of $200,000 per annum are without relevant force and, in my view, mischaracterise the true and substantive nature of Rossi Recycling’s claim.

At its core, by its claim Rossi Recycling was seeking specific performance of the Settlement Deed so as to obtain the New Lease of the New Lease Premises from Buckland Valley at an independently determined Market Rental, which is what in substance the relevant terms of the Settlement Deed provided for. As I have found in the Liability Reasons, that process stalled because of Buckland Valley’s and Paul’s breaches of the Settlement Deed by not cooperating so as to allow the process to be completed in a timely way or at all. So much is evident from the terms of the Liability Reasons and the Liability Judgment.

The fact that during part of the dispute the plaintiff proposed that the reduced rent of $200,000 be paid pending determination of the issues in the proceeding does not change that position, and nor does the fact that this had been addressed previously in communications between the parties. Whether considered alone, or together with any other circumstances in any combination, the communications that passed between the parties at any time regarding the proposal or Market Rental does not provide any legitimate basis for depriving Rossi Recycling or Glen of their costs, or for awarding costs to the defendants.

To the extent that it was submitted that the claim was disproportionate and that this should reduce the costs to be awarded to Rossi Recycling and Glen, I do not accept that submission. The Settlement Deed required the parties to cooperate so as to bring about, among other things, the independent valuation of Market Rental so that the New Lease could be entered into at that Market Rental, rather than what turned out to be the higher rental under the 2016 Lease. As I have said, that process stalled and was delayed as a result of the breach by the defendants of the Settlement Deed in circumstances where it was plain that Rossi Recycling wanted to proceed with the process contemplated by the Settlement Deed. In the context of the stalling of the process, Rossi Recycling ceased to pay some rent on legal advice which resulted in Buckland Valley locking Rossi Recycling out of the 2016 Lease Premises, alleging that the 2016 Lease was at an end, and alleging that the Settlement Deed had been repudiated by Rossi Recycling and Glen, which had been accepted by the defendants. That is to say, the defendants were contending that the 2016 Lease and the Settlement Deed were at an end in December 2019.

Rossi Recycling commenced and pursued urgent proceedings seeking relief from forfeiture and specific performance of the Settlement Deed so as to allow the Market Rental procedure to proceed and to facilitate the entry into the New Lease at whatever market rental was to be determined. As is apparent from the terms of the Liability Reasons and the Liability Judgment, that was an appropriate and an understandable course for the plaintiff to take in the circumstances. If that step was not taken one might ask rhetorically: what was Rossi Recycling then to do given that it had been locked out of the 2016 Lease Premises and it was being asserted that the 2016 Lease was at an end and that the Settlement Deed had been terminated?

The commencement and pursuit of the proceeding to obtain the Specific Performance Orders was not in my view at all disproportionate and does not provide any sound basis for reducing or depriving Rossi Recycling or Glen of any of the costs that are proposed to be ordered in their favour.

Further, in my view the defendants’ narrow or limited focus on the amount of damages in aspects of their submissions was somewhat misplaced as it ignores to a material extent the true substantial nature of the claim sought to be pursued by Rossi Recycling. It is to be remembered in this context that a central component of the terms of the Settlement Deed was to bring about a New Lease between Buckland Valley and Rossi Recycling at an independently determined Market Rental, whatever that was determined to be. It was always going to be the case that the damages outcome would be determined by reference to the amount of any ‘overpaid rent’ above the Market Rental for the relevant period, if any, and whatever that turned out to be.

The short point is that the most central and substantive questions in the proceeding related to relief from forfeiture; whether the Settlement Deed had been repudiated and was at an end; whether the defendants were in breach of the Settlement Deed; whether orders for specific performance should be made; whether Rossi Recycling was entitled to damages; whether Buckland Valley’s counterclaim should succeed; and whether Paul’s counterclaim should succeed.

Rossi Recycling and Glen were substantively successful in relation to all of these claims. The orders made and relief given resulted in the Settlement Deed being specifically performed and the entry into the New Lease of the New Lease premises at the determined Market Rental as contemplated by the Settlement Deed. It also resulted in a material award of damages in favour of Rossi Recycling calculated by reference to overpaid rent, albeit not as large an amount of damages as Rossi Recycling would have wished for.

In the context of damages, it is also to be remembered that part one of the trial dealt solely with liability and no time was taken with respect to damages, which was to be addressed in part two of the trial. This did not need to occur for the reasons earlier referred to.

The upshot is that neither the commencement nor the pursuit of the proceeding was in my view in any way inappropriate or disproportionate, and the fact that the damages achieved were ultimately less than that which Rossi Recycling would have hoped for (but were in the Damages Amount) does not provide a basis for reducing costs to be awarded to Rossi Recycling or Glen, whether considered alone or in combination with any other circumstances.

Insofar as the defendants pressed the contention that, in reality, all the proceeding did was bring forward a rent review under the existing 2016 Lease, I do not accept that submission, or consider that it assists the defendants in the context of costs even if it was assumed to be the fact. It also does not change the fact that, subject to the matters earlier addressed, Rossi Recycling and Glen were otherwise the successful parties and that costs should follow the event.

In my view the defendants’ submission in this regard mischaracterises the position. The fact is that by the terms of the Settlement Deed the parties had reached an agreement to enter into the New Lease at an independently determined Market Rental. They had expressly agreed in writing that the New Lease was to replace the existing 2016 Lease and Rossi Recycling was seeking to hold the defendants to the bargain they had made by the agreed terms of the Settlement Deed, which, as I determined in the Liability Reasons, they were entitled to. Given the terms of the Settlement Deed, it was not the case that the existing 2016 Lease was intended to continue throughout the balance of its term with options to be exercised. Indeed, and noting the determinations that I have made in the Liability Reasons, it was never contemplated under the terms of the Settlement Deed that there would be scope for the rent review under that existing 2016 Lease to take place given what I have determined had been agreed to occur under the Settlement Deed. Again, I refer to the Liability Reasons and the Liability Judgment.

Although reference was made to various authorities where procedural misconduct by a party might deprive a party of its costs or reduce their entitlement to costs, it is not necessary to say anything further on this topic because neither party was suggesting that there was any procedural misconduct of a kind that would engage with such principles. In my view this was an appropriate position for each of the parties to take and I do not consider that any issues of this character were raised against either party that would warrant a reduction (or deprivation) of any awards of costs that are proposed to be made.

It will be apparent from the above that I do not accept that in the circumstances of this case it is appropriate to discount the costs to be awarded in favour of Rossi Recycling and Glen any more than I have done in relation to the other costs issues addressed earlier in these reasons. That is not to ignore that there were some other issues upon which Rossi Recycling did not succeed, which is also apparent from the summary of my conclusions set out in part L of the Liability Reasons, to which I refer but will not set out. However, when looked at realistically, substantively and holistically, it is clear that, subject to the costs matters previously addressed, Rossi Recycling and Glen were the successful parties. That being so, the general principle is engaged and costs should otherwise follow the event.

To the extent that it was suggested that a proportionate reduction ought to take into account any costs associated with the Forfeiture Application, the Business Interruption Claim, the Proposed Fourth FASOC, and the 2023 Foreshadowed Application, that should not occur because it has already been dealt with by the proposed orders I have referred to earlier regarding these matters.

As to the other matters where Rossi Recycling or Glen was not successful, these do not in my view detract from the overall success of Rossi Recycling and Glen, noting also that it is well accepted that it is not necessary for a plaintiff to succeed on all heads of its claim in order to obtain the benefit of a costs order. Whilst all cases must necessarily depend upon their own facts, the present case is one in which it is clear who the successful parties were and who should otherwise have the benefit of the costs order that I propose to make.

In my view it would not be just, fair or appropriate to further discount the costs to be awarded to Rossi Recycling and Glen and it would not well-serve the overarching purpose of the CP Act given Rossi Recycling’s and Glen’s substantive success in the proceeding. That success is further well illustrated by the terms of the Specific Performance Orders and the fact that Rossi Recycling and Buckland Valley are now parties to the New Lease of the New Lease Premises at the independently determined Market Rental, which was the outcome that was steadfastly resisted by the defendants throughout the proceeding.

Although the defendants addressed the issue of a claimed delay between January 2023 and June 2023 in the context of the period over which interest should be awarded, this issue was not pressed as an issue for reducing any costs award. That was an understandable position for the defendants to take. Had it been otherwise, I would have concluded not only that there had not been any unreasonable delay on the part of Rossi Recycling and Glen, but that such delay as there has been does not provide any basis for impacting on the costs orders I propose to make.

It is to be remembered in this context that the further delay that occurred in the first half of 2023 resulted from an agreed process being arrived at for making further submissions to the independent valuer by each party, and that this resulted in the production of a further independent report on 19 June 2023 that revised the Market Rental from $248,000 per annum to $240,000 per annum. It is apparent that these steps, taken through the agreed process, better achieved the object of the Settlement Deed and the Specific Performance Orders because they resulted in an independent determination of the Market Rental to be paid under the New Lease. Such matters do not provide any basis for detracting from Rossi Recycling’s and Glen’s success in the proceeding or reducing any costs that would otherwise be awarded to them.

For completeness, I add that I do not accept Rossi Recycling’s submission that the engagement by the defendants of senior and junior counsel provides a basis, whether alone or in combination with any other circumstances, for not making a costs order in favour of the defendants for a proportion of their costs. It was open to the defendants to engage senior and junior counsel and it will be a matter for assessment by the Costs Court as to what if any impact this should have on any costs ordered in favour of the defendants. That said, nothing further needs to be explored on the topic given that it was raised in connection with the defendants’ ‘two-thirds/one-third’ submission, which I have not accepted.

The upshot from the above is that, subject to the proposed orders to be made regarding the Forfeiture Application, the Business Interruption Claim, the Proposed Fourth FASOC, and the 2023 Foreshadowed Application, the defendants will otherwise be ordered to pay Rossi Recycling’s and Glen’s costs of and incidental to the proceeding, to be assessed on a standard basis if not agreed.

The Interest Issue
Plaintiff’s Submissions – Interest

Rossi Recycling sought interest pursuant to s 60 of the SC Act on the Damages Amount, contending also that it was not necessary to have claimed interest in the statement of claim. Rossi Recycling submitted that interest should be calculated on the damages paid by way of overpayment of rent for the period of overpayment up to the Damages Judgment Date. It annexed the agreed Interest Schedule calculations to its written submissions, which is Annexure C to these reasons.

As to the rate of interest, it was submitted that the settled practice in Victoria is that the statutory maximum is used unless a good reason is otherwise shown, with reference being made to various authorities on the topic, including Hodgson v Amcor Ltd (No 9) (Hodgson),[62] and Weatherbeeta Limited v Hammersmith Nominees Pty Ltd.[63]
[62][2012] VSC 205, [36] (Vickery J).
[63][2019] VSC 713, [24] (Connock J).

It was submitted that no reason had been shown to depart from the settled practice and the statutory maximum rate should be applied, which was 10% per annum for the relevant period. To the extent that reliance was placed by the defendants upon Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No 3) (Johnson Tiles),[64] that case was said to be relevantly distinguishable on the facts, with no parallel circumstances to the present case, and no relevant evidence before the court on the topic. In this context, it was contended that the 5% per annum rate, which the defendants submitted in their written submissions was appropriate, was simply ‘plucked out of the air’ and not supported by any evidence.
[64][2003] VSC 244 (Gillard J).

After the court drew attention to the agreed interest rate in the New Lease annexed to the Liability Judgment (which was the rate under the Penalty Rates Act plus 2%) it was submitted that this showed that the 10% rate was commercial and fair in the circumstances.

Rossi Recycling submitted that under s 60 of the SC Act the court was obliged to give damages in the nature of interest on application in any proceeding for the recovery of damages ‘unless good cause is shown to the contrary’. It was emphasised that the question of whether or not to award interest is not wholly discretionary. It was acknowledged that, if good cause to the contrary is shown, the court then has a discretion whether to award interest and, if so, on what terms.[65]
[65]Provided they are no more onerous than those laid down by the section.

It was submitted that the court always has a discretion as to the rate of interest.

As to the defendants’ contention that interest should be disallowed for the period between 1 January and 9 August 2023 (which was revised by the defendants during the hearing to 19 June 2023), Rossi Recycling submitted that interest should not be disallowed. It was said that the main purpose of statutory interest is to compensate a plaintiff for being held out of its money and that there could be no doubt that Rossi Recycling had been held out of its money for the whole period for which interest was claimed.[66]
[66]Calculated on a running balance basis by reference to rental payment dates as referred to in the Interest Schedule.

It was submitted that the period in respect of which the defendants seek disallowance of interest, which during the hearing became 1 January to 19 June 2023 (Interest Suspension Period), was not a period of undue delay on the part of Rossi Recycling that would incline the court to disallow interest. It was also emphasised that it was clear to the defendants from the receipt of the first Market Rental valuation on 2 December 2022, pursuant to the Specific Performance Orders, that there would be a substantial reduction in the rent with effect from December 2019 onwards, meaning that damages would be payable. It was said that Buckland Valley was content to sit back and continue to hold the whole of the accrued excess rent paid and leave Rossi Recycling under an obligation to keep paying higher rent until the New Lease was entered into, but knowing that it would be required to repay rent overpaid at the conclusion of part two of the trial if the amount was not agreed.

In the context of alleged delay, Rossi Recycling also referred to the various steps undertaken and events that had occurred during the Interest Suspension Period.

When referring to relevant authorities, Rossi Recycling submitted that where interest had been disallowed in other cases it was typically where there had been long periods of inaction by a plaintiff before the issue of proceedings in respect of s 58 of the SC Act, or after the issue of proceedings in respect of s 60 of the SC Act. Reference was also made to judicial observations in other cases to the effect that delay would rarely be a justifiable basis for refusing interest for any period because of the self-evident observation that the defendants have had the use of the money.[67]
[67]Referring, for example, to Johnson Tiles [2003] VSC 244, [51] (Gillard J). Reference was also made to Kalenik v Apostolidis (No 2) [2009] VSC 410, [17] (Hargrave J) (Kalenik) and Ahrkalimpa Pty Ltd v Schmidt (No 4) [2019] VSC 246, [16] (Elliott J) (Ahrkalimpa).

It was submitted that such delay as there had been was neither protracted nor unwarranted. Rossi Recycling contended that it was reasonable for it to take issue with the original valuation and to raise the other matters that it did given that the independent valuer revised its valuation of Market Rental for the New Premises in favour of the plaintiff by an amount that was sufficient to justify the exercise. It was said further that the delay did not cause any injustice to the defendants because they had the benefit of the plaintiff’s money throughout the Interest Suspension Period.

The plaintiff’s end point was that no good cause had been shown for reducing the period over which interest should be awarded and that it should be ordered for the period between the commencement of the proceeding on 11 December 2019 and the date of the Damages Judgment on 9 August 2023 (Full Interest Period).[68]
[68]But calculated by reference to a running balance based on the date of each excessive rental payment in the manner referred to in the Interest Schedule.

Defendants’ Submissions – Interest

In its written submissions and at the outset of the hearing, the defendants submitted that the interest rate payable under the Penalty Rates Act ought not to apply and that the interest should be ordered in an amount reflective of the bank rate of interest, or approximately 5%. The defendants also submitted that interest should only be payable for the period between the commencement of the proceeding on 11 December 2019 and 31 December 2022, which period was shortened during the hearing to the Interest Suspension Period.

Senior counsel for the defendants emphasised that the object of an award of interest was to compensate a judgment creditor for being kept out of funds, referring in part to the observations of Elliott J recently made in Cargill Australia Limited v Viterra Malt Pty Ltd (No 30) (Cargill (No 30)).[69] Relying upon Johnson Tiles,[70] it was submitted that the penalty interest rate includes a penalty component over and above the compensatory function of the award of interest and that the court’s discretion, to be exercised judicially, extends to awarding a lesser amount when the interests of justice so demand.
[69][2022] VSC 80, [6]–[7].
[70][2003] VSC 244, [60] (Gillard J).

In support of the defendants’ position, the matters to which attention was drawn included the following:

(a) what was said to be a drawn out dispute;

(b) the alleged ‘resolute pursuit of a market rental’ approximating the figure of $16,666;

(c) the amount of time that had passed since the commencement of the proceeding, which it was said would then result in an unnecessary and unreasonable amount given the delay, and noting that Rossi Recycling already held an ongoing lease with rent reviews — being the 2016 Lease;

(d) fixing a lower amount of interest would better reflect the compensatory function of an award of interest; and

(e) the inability of the parties to seek to negotiate to resolve the proceeding until the Market Rental had been determined.

As to the period of interest, it was initially submitted that because the independent valuation was concluded on 2 December 2022 and would have enabled the parties to agree consent orders for a final damages judgment amount before the end of the 2022 calendar year, interest should only be payable until 31 December 2022. This was recalibrated so as to not oppose interest after 19 June 2023, being the date of receipt of the second report on the Market Rental.

In this context, the defendants emphasised that after agreement was reached about making further submissions to the independent valuer following receipt of its first valuation, the foreshadowed amendment to the plaintiff’s claim was not made, and that the delay from December 2022 until August 2023 had been unreasonably caused by the plaintiff seeking to better its position by seeking a revised valuation. The defendants contended that the second valuation from the independent valuer came in with only ‘nominally lower’ Market Rental than the first valuation.

As mentioned earlier, during the course of the hearing, and after the issue of the interest rate under the New Lease was raised with the parties at the hearing, the defendants recalibrated their position and submitted that the 10% interest rate under the Penalty Rates Act contended for by Rossi Recycling was appropriate.

Further, the fact that the proceeding has been lengthy is not something that in this case should impact on the rate of interest. I do not consider for present purposes that the length of the proceeding involves misconduct on the part of the parties or that it has been alleged or established that its length was caused by some inappropriate conduct on the part of Rossi Recycling or Glen. Indeed, a review of all the orders made, the transcript of hearings, and the documents filed in the proceeding to date show that the time taken with the proceeding appears not to have involved materially dilatory conduct on the part of either of the parties. In any event, such delay as there has been, and however it is characterised, does not change the fact that Rossi Recycling has been kept out of its money.

The short point is that it has not been shown that the starting point of 10% per annum pursuant to the Penalty Rates Act ought to be departed from, noting also that no relevant evidence was led on the topic. That said, given that the defendants’ position changed during the course of the hearing on the interest rate issue, these matters need not be further elaborated upon.

Period of Interest

Unless good cause is shown to the contrary, the period over which damages is to be awarded by way of interest on any judgment for damages is the period from the date of the commencement of the proceeding until the date of the judgment awarding damages.

The defendants rightfully accepted that interest must be awarded and they initially contended that the period over which interest ought to be awarded should run from the commencement of the proceeding on 11 December 2019 to 31 December 2022, rather than until the date of the Damages Judgment, being 9 August 2023. As mentioned, this was recalibrated during the hearing to a contention that interest should be suspended during the period 1 June 2023 to 19 June 2023, being the date of receipt by the parties of the second report regarding the Market Rental for the New Lease Premises.

I do not accept that submission. That is to say, I do not accept that good cause has been shown for suspending interest in the way contended for, or at all. Interest should be awarded in respect of the Full Interest Period by reference to the date and amount of payments of overpaid rent made during that period. In this context, I make the following further observations.

The fact that this proceeding involved a lengthy and drawn-out dispute does not relevantly assist the defendants on this topic, whether considered alone or in combination with any other circumstances. As earlier mentioned, any slow progress does not rest particularly with one party or the other. In any event, the defendants’ recalibrated position was that interest should be paid until the end of December 2023 and after 19 June 2023. It was ultimately only for the Interest Suspension Period that it was suggested that interest should not be awarded.

The fact that time was taken to obtain a second report does not in my view assist the defendants in any material way. As touched on above, the process undertaken was through an agreed process and allowed each party the same opportunity to make further submissions. It also resulted in the determination of the Market Rental, which was the object of the relevant terms of the Settlement Deed, the commencement and pursuit of the claim, and the Specific Performance Orders.

The fact that it was the plaintiff that initiated or sought to agitate what was said to be the need to revisit the first independent report as a result of what was alleged to be a fundamental error, is not a matter that weighs heavily, if at all, against an award of interest for the Interest Suspension Period. The process undertaken was dealt with by agreement, which appeared to be a proper and sensible approach for the parties to take given its object. Whilst it did have the consequence of some further time passing between entry into the New Lease and the Damages Judgment being agreed, that does not in my view warrant the shortening of the period over which interest should be awarded. The fact remains that Rossi Recycling was kept out of its money throughout the entire period and the process has resulted in a determination of the Market Rental and entry into the New Lease, as was contemplated.

Further, to an extent, it might be said that the extra time that was taken to obtain the second report was to the advantage of Buckland Valley because rent in excess of the Market Rental determined on 2 December 2022 continued to be paid to Buckland Valley in the first half of 2023 until the entry into the New Lease. It followed that Buckland Valley had the use of that money during that time and that Rossi Recycling did not have the use of those funds. In addition, it may be inferred that since the time of the first valuation on 2 December 2022, Buckland Valley has been aware that it was likely, or that there was a real risk, that money was going to have to be repaid by way of damages, but Buckland Valley has retained the use of those funds in the meantime.

Next, in this context there is in my view no persuasive force in the contention that Rossi Recycling already held a lease with ongoing rent reviews. Given the terms of the Settlement Deed, this did not reflect the reality of the situation. Once the parties entered into the terms of the Settlement Deed the world had moved on from the existence of a relationship governed solely by the terms of the existing 2016 Lease. When the Settlement Deed was signed the parties agreed to enter into a New Lease at an independently determined Market Rental through the process provided for in the Settlement Deed, as referred to in the Liability Reasons.

As to the authorities, each case depends on its own facts. In my view the defendants cannot obtain any material assistance from the decision in Johnson Tiles insofar as it relates to the period over which interest is to be paid. The facts were quite different and little more need be said. I do not accept that the facts in the present case are parallel to the facts in Johnson Tiles in the way that was suggested. In any event, even if there had been some parallel with the facts in this case and those in Johnson Tiles, it would not change the position given the circumstances in this case. It would remain the fact that Rossi Recycling had been kept out of its money from the date of payment of each instalment of overpaid rent during the period since the commencement of the proceeding until at least the Damages Judgment date.

To the extent that it was suggested that it was not possible for the parties to negotiate or seek to compromise the proceeding until an independent valuation occurred, I do not find that submission persuasive. Each of the parties was well-resourced and had dealings with valuers, as the evidence in the liability phase of trial revealed. There was nothing stopping the parties seeking to assess their respective positions and explore a potential compromise of the proceeding if they had wished to. It is also noted that this submission was directed more at the dual purpose of an award of interest and the ‘indirect penalty’ aspect of the interest rate — which became academic given the defendants’ shift in position.

The end point is that interest should be calculated by reference to the applicable rate under the Penalty Rates Act, which was 10% per annum, as was common ground. Subject to the qualification referred to in the next paragraph, interest should be awarded in respect of the Full Interest Period, being from the commencement of the proceeding until the date of the Damages Judgment.

The qualification is this. It was common ground and reflected in other matters in the Damages Judgment that the damages awarded reflected in substance what was described as overpaid rent. The amounts paid by way of overpaid rent were paid monthly during most of the period that the proceeding was on foot until on or after the time of the exchange of the executed New Lease for the New Lease premises on 28 July 2023. So much is apparent from the Interest Schedule. That being so, the interest to be paid on such overpaid amounts should not run from the commencement of the proceeding but should run from the date of payment of each of the overpaid rental amounts to Buckland Valley during the period between the commencement of the proceeding and the Damages Judgment Date.

So much was understandably accepted by senior counsel for the parties when I raised the issue during the hearing, and is also reflected in the agreed Interest Schedule.

If it had been contended that s 60 of the SC Act compelled the court to award interest on the total Damages Amount from the date of the commencement of the proceeding to the Damages Judgment date, rather than by way of a running balance taking into account the date of each payment of overpaid rent, I would not have accepted that submission. Even if upon its proper construction s 60 carries with it that interpretation (which is not necessary to decide), the fact that overpaid rent was paid on a rolling basis during that period would have constituted good cause why interest should not be awarded on the total Damages Amount for the Full Interest Period. That is because if an interest award was approached in that way the defendants would be paying interest on amounts of overpaid rent for periods prior to the receipt of any such payments. That would not be just, fair, or well serve the overarching purpose of the CP Act.

As things transpired, nothing further needs to be said on this topic because senior counsel for each of the parties expressly and responsibly agreed with the above, and Rossi Recycling did not contend that interest should be paid on the total Damages Amount for the Full Interest Period.

Quiet Enjoyment Order – Paragraph 2 of the Orders Made by Macaulay J on 13 December 2019 Following the Forfeiture Application

By orders made on 13 December 2019 following the hearing of Rossi Recycling’s successful relief from forfeiture application, Macaulay J granted relief from forfeiture and made other related orders. Paragraph 2 of the orders made, being the Quiet Enjoyment Order, was in the following terms:

2.The defendants are restrained until further order, but subject to the terms of any lease that may subsequently be entered into between the plaintiff and first defendant, from interfering with the plaintiff’s possession and quiet enjoyment of:
a.The top floor of Unit 27, 89 Palmerston Road, Ringwood;
b.That part of the plan attached to the Deed of Settlement marked yellow.

The defendants submitted that given that the New Lease had now been executed and the licence over Unit 27 had expired, the Quiet Enjoyment Order ought to be vacated.

Rossi Recycling contended that no such order was necessary because it was ‘provided for’ by paragraph 9 of the Liability Judgment given on 7 September 2022.

As is apparent from Annexure A, paragraph 9 of the Liability Judgment was in the following terms:

Upon the delivery to the plaintiff’s solicitors of an executed copy of one of the New Lease Documents at the Service Address as referred to in paragraph 5(g) above, paragraph 2 of the orders of Macaulay J dated 13 December 2019 shall be vacated with effect from the date and time of the said delivery.

Quiet Enjoyment Order — Consideration and Disposition

It is apparent from the terms of the Quiet Enjoyment Order that Macaulay J did not intend the restraint to interfere with any rights that the defendants may have pursuant to the terms of any new lease that was to be subsequently entered into between Rossi Recycling and Buckland Valley. So much is evident from the express terms of the chapeau to the Quiet Enjoyment Order.

Further, the terms of the order in paragraph 9 of the Liability Judgment reveal that the order was intended to have the effect of vacating the Quiet Enjoyment Order with effect from the date upon which Buckland Valley complied with the requirements in paragraph 5(g) of the Specific Performance Orders, which included the execution and delivery to Rossi Recycling’s solicitors of an executed copy of the ‘New Lease Documents’.

It is also evident from both the Quiet Enjoyment Order and the order in paragraph 9 of the Liability Judgment that the Quiet Enjoyment Order was not intended to operate after the time at which Rossi Recycling and Buckland Valley entered into the New Lease. So much is unsurprising and was not then, nor now, in issue between the parties.

It is in this context that senior counsel for Rossi Recycling submitted that no further order is required because the Quiet Enjoyment Order either no longer operates or has been vacated by the order in paragraph 9 of the Liability Judgment.

Whilst there is force in that submission, it is possible that, given the manner in which the exchange of documents leading to the execution of the New Lease by the parties occurred, it might one day be contended by a relevant party that the Quiet Enjoyment Order, or aspects of it, still operate. That being so, the defendants seek to put the matter beyond doubt.

I accept the defendants’ submission that it is desirable to make a further order addressing the Quiet Enjoyment Order to ensure that the matter is put beyond doubt. I am also conscious of the existence of this and previous proceedings between the parties, connected with the long-running family dispute, and that in the past the parties appear to have had little difficulty finding matters and issues to disagree about.

If, as I consider to be the case, the Quiet Enjoyment Order has been vacated by the operation of the order in paragraph 9 of the Liability Judgment, then a further vacation order will have no work to do. However, this can readily be addressed by qualifying the terms of the order to be made so that it operates only ‘if and to the extent’ the Quiet Enjoyment Order is operative and was not previously vacated by paragraph 9 of the Liability Judgment. Senior counsel for Rossi Recycling and Glen did not object to this course.

Consequently, and subject to discussing the precise terms of the order with counsel for the parties, it is appropriate to make an order to the following effect:

If and to the extent that paragraph 2 of the orders of the Macaulay J made on 13 December 2019 (the Quiet Enjoyment Order) is operative and has not already been vacated by the operation of the order of Connock J in paragraph 9 of the liability judgment delivered by Connock J on 7 September 2022, then the Quiet Enjoyment Order is vacated, nunc pro tunc, with effect from 28 July 2023.

I have used the date of 28 July 2023 because, as recorded in paragraph E of ‘Other Matters’ in the Damages Judgment, the court was informed that a final executed form of the New Lease was exchanged between Rossi Recycling and Buckland Valley on 28 July 2023. This means that if the order proposed above has any work to do it will vacate the Quiet Enjoyment Order from the time of entry into and exchange of the New Lease between the parties. This is consistent with the terms of the Quiet Enjoyment Order and the order made in paragraph 9 of the Liability Judgment.

Other Matters
Costs of the Interest and Costs Application

After delivering my reasons ex tempore on 24 October 2023 and addressing the proposed form of orders with senior counsel for the parties, I raised with the parties the question of the costs associated with Rossi Recycling’s and Glen’s costs and interest application, and the hearing on 24 October 2023. In so doing, I informed the parties that, subject to hearing submissions from them, my preliminary view was that it may be appropriate for each party to bear their own costs.

The defendants submitted that this was the appropriate course. Rossi Recycling and Glen disagreed, submitting that Rossi Recycling had been successful in its claim for interest and that Rossi Recycling and Glen had had a good measure of success regarding costs.

The defendants acknowledged the position regarding interest but contended that the costs position was more evenly balanced, also placing emphasis on that which was involved in connection with the issue of costs regarding the Proposed Fourth FASOC and the 2023 Foreshadowed Application. Rossi Recycling submitted otherwise, contending in substance that these matters were not integral to the costs and interest dispute.

Having heard and considered the submissions, I concluded that it was not just for each party to bear their own costs and that, in the circumstances, it was just and appropriate that the defendants pay 50% of Rossi Recycling’s and Glen’s costs of and incidental to their application for costs and interest, including 50% of their costs of the hearing on 24 October 2023.

With respect to the interest claim, the defendants resisted the interest rate proposed by Rossi Recycling and the period over which it was to be paid. Although their position on the interest rate changed during the hearing, they continued to contest the period issue. The defendants were unsuccessful on this issue and Rossi Recycling was successful.

As to the question of costs, and looked at substantively and holistically, I accept that the position was more evenly balanced. This is because a number of issues needed to be addressed between the parties and with the court. As the above reasons record, some of these issues became common ground, the defendants had a measure of success, and Rossi Recycling and Glen had a measure of success. So much is apparent from the above reasons regarding the costs issue.

In addition, it is also straightforward to divide the issues between interest and costs in a pragmatic way because they were discrete issues and approached in that way in the written and oral submissions by the parties.

To the extent that it was submitted that the issues relating to the Proposed Fourth FASOC and the 2023 Foreshadowed Application were peripheral or minor (or something similar) in the context of the interest and costs hearings, I do not accept that submission. This is reinforced by a review of the written and oral submissions, the above reasons, and the transcript of the hearing on 24 October 2023.

In addition, it was in my view appropriate for the defendants to raise the issue regarding the Quiet Enjoyment Order given the history of the proceeding and the agreed variation of the process contemplated in the Specific Performance Orders that followed from the obtaining of a further independent valuation report of Market Rental by an agreed process between the parties. As earlier noted, the defendants sought a further order vacating the Quiet Enjoyment Order and I have determined that it is appropriate to make such an order.

As I have said, in all of the circumstances it is in my view just and appropriate that the defendants pay 50% of Rossi Recycling’s and Glen’s costs of and incidental to their application for interest and costs, including 50% of their costs of the hearing on 24 October 2023, to be assessed on a standard basis if not agreed.

Opportunity to Agree on a Simplified Proportionate Costs Order

When addressing the precise terms of the proposed orders, I informed the parties that I would allow them an opportunity to seek to agree on the terms of a simplified proportionate costs order that would make any subsequent costs assessment more straightforward and cost efficient before I would make final orders embodying the more complex regime referred to above. To proceed in this way well serves the overarching purpose under the CP Act. The parties embraced this opportunity and requested that final orders to the effect referred to in these reasons not be made before 30 October 2023 so as to give them an opportunity to explore whether agreement can be reached.

Conclusion and Proposed Orders

As is apparent from the above, I have reached the conclusions regarding costs referred to in the ‘Introduction and Summary’ and concluded that interest should be awarded and calculated on the Damages Amount at the rate prescribed by the Penalty Rates Act throughout the Full Interest Period, being from the date of the commencement of the proceeding on 11 December 2019 until the date of the Liability Judgment on 9 August 2023. Interest is to be calculated in the manner earlier referred to and addressed in the agreed Interest Schedule.

Subject to addressing any proposed agreed simplified proportionate costs orders that may be raised by senior counsel for the parties on or before 30 October 2023, I propose to make orders to the following effect:

1.There be judgment for the plaintiff against the first defendant for $50,656.63 by way of statutory interest pursuant to section 60 of the Supreme Court Act 1986 (Vic).
2.Subject to paragraphs 3 and 7 of these orders, the defendants shall pay the plaintiff’s and defendants by counterclaim’s costs of and incidental to the proceeding, except for the plaintiff’s and the defendants by counterclaim’s costs of and incidental to:
a)The plaintiff’s relief from forfeiture application made by summons filed 11 December 2019 (Forfeiture Application).
b)The plaintiff’s claim for $25,343.00 by way of damages for the alleged business interruption referred to in the particulars to paragraph 16 of the third further amended statement of claim filed 17 May 2021 (Business Interruption Claim).
c)The plaintiff’s draft summons dated 12 April 2023 seeking an order for leave to file and serve a fourth further amended statement of claim (Proposed Fourth FASOC), the Proposed Fourth FASOC, and the plaintiff’s foreshadowed application to amend its statement of claim or re-open its case that was raised with the court and the parties at the directions hearing on 17 March 2023, and subsequently (2023 Foreshadowed Application).

3.The costs referred to in paragraph 2(c) of these orders shall not include the plaintiff's and the defendants by counterclaim’s costs of their solicitor and counsel attending or appearing at the directions hearings on 17 March 2023, 29 April 2023, 20 September 2023, and any mediation.
4.The plaintiff shall pay the defendants’ costs of and incidental to the Forfeiture Application.
5.Subject to paragraph 6 of these orders, the plaintiff shall pay the defendants’ costs of and incidental to the Proposed Fourth FASOC and the 2023 Foreshadowed Application.
6.The costs referred to in paragraph 5 of these orders shall not include the defendants’ costs of their solicitor and counsel attending or appearing at the directions hearings on 17 March 2023, 29 April 2023, 20 September 2023, and any mediation.
7.The defendants shall pay 50% of the plaintiff’s and defendants by counterclaim’s costs of and incidental to their application for costs and interest, including 50% of their costs of the hearing held on 24 October 2023.
8.The costs referred to in paragraphs 2 to 7 of these orders shall be assessed on a standard basis if not agreed.
9.If and to the extent that paragraph 2 of the orders of Macaulay J made on 13 December 2019 (Quiet Enjoyment Order) remains operative and has not already been vacated by the operation of the order of Connock J in paragraph 9 of the liability judgement delivered by Connock J on 7 September 2022, then the Quiet Enjoyment Order is vacated, nunc pro tunc, with effect from 28 July 2023.

Annexure A

Annexure B

Annexure C

[2023] VSC 628

24 October 2023 (Ex tempore; revised 26 October 2023)