Thurin v Krongold Constructions (Aust) Pty Ltd [No 2]

[2022] VSCA 252

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0051

DAVID THURIN

First Applicant

and

LISA THURIN

Second Applicant

v

KRONGOLD CONSTRUCTIONS (AUST) PTY LTD

(ACN 103 839 49) (AND OTHERS ACCORDING TO THE ATTACHED SCHEDULE) [NO 2]

Respondents

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JUDGES:	McLEISH, NIALL and WALKER JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	Determined on the papers
DATE OF JUDGMENT:	18 November 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 252

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PRACTICE AND PROCEDURE – Costs – Referral of questions of law by Victorian Civil and Administrative Tribunal – Parties enjoyed mixed success on referral – Whether referral akin to interlocutory application – Justice lies in parties bearing own costs – Practical issues with costs being in cause of VCAT proceeding – General public importance in answering questions of law – No order as to costs.

Supreme Court Act 1986, s 24(1).

Major Engineering Pty Ltd v Helios Electroheat Pty Ltd [No 2] [2006] VSCA 114; Swindells v Victoria [2016] VSCA 77; Chen v Chan [No 2] [2009] VSCA 233, referred to.

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Counsel
Applicants:		Mr MG Roberts KC with Dr COH Parkinson KC and Mr N Guenther
First Respondent:		Mr JAF Twigg KC with Dr K Weston-Scheuber, Mr M Hosking and Mr CFE Dawlings
Second Respondent		Mr AE Klotz
Third Respondent		Mr KJ Naish
Attorney-General of the Commonwealth		Mr G Hill SC with Ms S Zeleznikow
Attorney-General for the State of Victoria		Ms RJ Orr KC with Mr OM Ciolek and Mr L Chircop
Solicitors
Applicants:	Herbert Smith Freehills
First Respondent:	Krongold Group
Second Respondent	Meridian Lawyers
Third Respondent	DLA Piper
Attorney-General of the Commonwealth	Australian Government Solicitor
Attorney-General for the State of Victoria	Victorian Government Solicitor’s Office

MCLEISH JA
NIALL JA
WALKER JA:

1. On 20 October 2022, following a referral of six questions of law to this Court from the Victorian Civil and Administrative Tribunal (‘VCAT’), we published our reasons in Thurin v Krongold Constructions (Aust) Pty Ltd.[1] We made substantive orders but reserved our decision on costs. In our reasons we noted that our inclination was that, because each party had had a measure of success, and because the ultimate fate of any referral application under s 77 of the Victorian Civil and Administrative Tribunal Act 1998 (‘VCAT Act’) remained unknown, there should be no order as to costs.[2]

   [1][2022] VSCA 226 (‘Reasons’). These reasons concerning the costs of the proceeding in this Court assume familiarity with the Reasons.

   [2]Reasons, [166].

2. At the request of the parties, orders were made for the filing of submissions on costs. In summary, those submissions were as follows:

   (a)the applicants (‘the Thurins’) contended that costs should be costs in the cause of the VCAT proceeding or, alternatively, that costs should be reserved until the outcome of the VCAT proceeding is known;

   (b)Krongold Constructions (Aust) Pty Ltd (‘Krongold’) submitted that there should be no order as to costs;

   (c)Swan Hardware & Staff Pty Ltd (‘Swan Hardware’) sought an order that Krongold pay its costs of the referral; and

   (d)Casper Architecture and Design Pty Ltd (‘Casper’) opposed the orders sought by the Thurins and did not oppose the Court’s inclination that there be no order as to costs.

3. Having considered the parties’ submissions, we have concluded that there should be no order for costs. Our reasons for that conclusion are set out below.

The parties’ submissions

1. It is necessary to say something more about the basis for the costs orders sought by the parties.

2. The Thurins submitted that, since the questions of law arose directly in the VCAT proceeding, ‘the process to answer them should not be divorced from the ultimate outcome in that proceeding.’ They likened the proceeding in this Court to a form of interlocutory application, submitting that the referral is not an independent proceeding in substance, nor is it an appeal from a decision of VCAT.[3] As such, it is not possible for the Court to determine where the justice of the case lies between the parties in any costs order at a time where the overall proceeding remains undetermined.[4] Thus, they submitted, the costs of the proceeding in this Court ought to be costs in the cause in the VCAT proceeding.

   [3]If that submission were accepted, the Thurins noted that it is common in interlocutory applications for parties’ costs in the application to be their costs in the proceeding or cause; this being the default position provided by r 63.20 of the Supreme Court (General Civil Procedure) Rules 2015.

   [4]Relying on Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd [2013] VSC 92, [28] (Davies J); Dale v Clayton Utz [No 3] [2013] VSC 593, [13] (Hollingworth J).

3. In contrast, Krongold submitted that the referral of the questions of law was appropriate, and that the answers to those questions are of public importance. It submitted that, as we observed in the Reasons, the parties had enjoyed mixed success. It thus submitted that there should be no order as to costs.

4. In response to the Thurins’ submission that the referral is akin to an interlocutory application, Krongold submitted that a referral is a separate process resulting in final orders, and that it is therefore appropriate that any orders as to costs be made by this Court. It also submitted that this Court would not be better informed by deferring the question of costs pending the outcome of the VCAT proceeding, and that whatever orders the Tribunal (or any other body) makes are inconsequential to the orders made by this Court on the referral.

5. Swan Hardware sought an order that Krongold pay its costs of the referral. This was on the basis of our conclusion that the VCAT order of 29 August 2018 joining Swan Hardware to the VCAT proceeding was beyond power and void[5] — and it was Krongold that had sought to join Swan Hardware to the VCAT proceeding, which led to its involvement in the referral. Swan Hardware pointed to the procedural history, namely that Krongold proceeded with its joinder application despite Swan Hardware objecting to being joined (its objection being on the basis that VCAT lacked jurisdiction), and despite Krongold admitting in subsequent pleadings that VCAT had no jurisdiction in respect of claims brought under the Trade Practices Act 1974 (Cth).

   [5]Reasons, [64]–[65].

6. In response, Krongold submitted that it is ‘neither necessary nor appropriate’ that Swan Hardware be compensated ‘for the costs it incurred as a spectator to the process’. It submitted that, because Swan Hardware merely attended the hearing of the referral, but did not make any submissions on the questions of law, it did not incur any costs for which it is entitled to compensation. Krongold also noted that when VCAT ordered the joinder of Swan Hardware it had reserved to Swan Hardware the right to apply to dismiss the proceeding against it; however, Swan Hardware has not applied to dismiss the proceeding on the basis that VCAT lacked jurisdiction (or upon any other basis).

7. Casper did not oppose there being no order as to costs. It submitted that the Thurins’ proposed order for costs in the cause of the VCAT proceeding would be inappropriate, because it would leave open the possibility that either Casper or Swan Hardware might contribute to the costs of the ‘active’ parties in the referral, being the Thurins and Krongold. It further submitted that an order for costs in the cause of the VCAT proceeding would raise unnecessary complications that may give rise to further dispute. For example, Casper queried how there could be an assessment of success in the cause of the VCAT proceeding ‘when VCAT cannot determine the merits of the VCAT proceeding’, relying on our earlier finding that the 29 August 2018 VCAT order to join Swan Hardware (and, therefore, Casper) was beyond power and void.[6] For the same reason, it submitted, the Thurins’ proposed alternative of reserving the question of costs until the outcome of the VCAT proceeding is known would be unworkable. Casper also submitted that the referral was sufficiently separate from the VCAT proceeding that there is no need to tie the costs of the referral to the question of the parties’ ultimate liability. Finally, Casper noted Swan Hardware’s submissions and observed that it, too, was wrongfully joined to the VCAT proceeding by the same order that joined Swan Hardware.

   [6]Reasons, [64]–[65].

8. We note for completeness that the interveners did not make any submissions as to costs, and no parties submitted that there ought to be any orders as to costs against the interveners.

Consideration

1. Pursuant to s 24(1) of the Supreme Court Act 1986, the Court has a broad costs discretion.[7] 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.[8] 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.[9]

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

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

   [9]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.

2. As we said in the Reasons, each party in the proceeding concerning the referred questions had a measure of success. That is the principal reason why we consider that there should be no order as to costs.

3. While we accept the Thurins’ submissions that the referral proceeding before this Court was analogous to an interlocutory application, we do not accept that it is not possible to determine where the justice of the case lies between the parties for the purposes of making an order for costs of the proceeding in this Court. That is because the questions raised were substantive questions, arising in a discrete context in a discrete forum. The outcome is that the Thurins cannot maintain the proceeding that they commenced in VCAT — a position which, as they acknowledged in the course of the hearing, was inevitable. However, contrary to the submissions put by Krongold, VCAT has power to refer the Thurins’ application to the Supreme Court. The proceeding will thus be able to be heard in a different forum, if such an order is made. In those circumstances, we consider that the measure of success of each party is equal, and that justice lies in each party bearing its own costs.

4. In addition, there are very real practical issues with the proposal that costs be costs in the cause of the VCAT proceeding. As VCAT is without jurisdiction to hear and determine the proceeding, it is possible that the existence or extent of VCAT’s power to order costs will itself be the subject of controversy. VCAT might, in any event, choose not to deal with costs if it were to refer the matter under s 77 of the VCAT Act. Even if VCAT were to make a costs order, it might be invited to make an order on an ‘issues’ basis, which would involve VCAT deciding what costs should be ordered in respect of the matter in this Court. All of these possibilities weigh against making an order for costs in the cause.

5. We see no reason to take any different approach to Swan Hardware’s costs. We consider that it, too, has had mixed success, in that although the consequence of our judgment is that VCAT lacked jurisdiction to join it to the VCAT proceeding, it will be liable to such joinder if the VCAT proceeding is ultimately referred to the Supreme Court pursuant to s 77. We further accept Krongold’s submission that it is relevant that Swan Hardware has not taken any steps to have the VCAT proceeding dismissed, notwithstanding that the Tribunal had reserved to it the right to do so.

6. Finally, we note that this proceeding arose by way of a referral to the Court from VCAT pursuant to s 96 of the VCAT Act. A feature of such a referral is that it is initiated by VCAT with the consent of its President, as opposed to being initiated by the parties, although the parties may of course seek such a referral. In the present case Krongold sought the referral of the questions going to VCAT’s jurisdiction, and the Thurins sought referral of the questions concerning VCAT’s powers under s 77. The Tribunal then referred the questions. We also accept that, as Krongold submitted, the questions, and the answers to them, are of general public importance. Those circumstances further support our conclusion that there should be no order as to costs.

7. For these reasons, we shall order that there be no order as to costs.

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SCHEDULE OF PARTIES

DAVID THURIN	First applicant
LISA THURIN	Second applicant
and
KRONGOLD CONSTRUCTIONS (AUST) PTY LTD (ACN 103 839 49)	First respondent
SWAN HARDWARE & STAFF PTY LTD (ACN 005 273 165)	Second respondent
CASPER ARCHITECTURE AND DESIGN PTY LTD (ACN 078 809 604)	Third respondent
BICON PTY LTD (ACN 070 741 374)	Fourth respondent
and
ATTORNEY-GENERAL OF THE COMMONWEALTH	Intervener
ATTORNEY-GENERAL FOR THE STATE OF VICTORIA	Intervener