Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 12)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2019 04430

TIMELESS SUNRISE PTY LTD (ACN 126 299 634) as trustee for DAVINA FAMILY TRUST & ORS (according to the Schedule)	First Plaintiff
v
BIGJ ENTERPRISES PTY LTD (ACN 084 199 084) as trustee for JASON BRANDI FAMILY TRUST & ORS (according to the Schedule)	First Defendant

S ECI 2021 04644

DAVID BRANDI AND TINA BRANDI	Plaintiffs
v
ZIGAROO PTY LTD	Defendant

S ECI 2020 01675

TANIA BRANDI	Plaintiff
v
DAVID BRANDI	Defendant

S ECI 2020 04804

DAVID BRANDI	Plaintiff
v
JASON BRANDI	Defendant

---

JUDGE:	Delany J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	20 September 2024
CASE MAY BE CITED AS:	Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 12)
MEDIUM NEUTRAL CITATION:	[2024] VSC 588

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PRACTICE AND PROCEDURE – Costs – Multiple proceedings – Issues based approach to costs – Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115, Marriner v Australian Super Developments Pty Ltd [2016] VSCA 141 cited – Offer of compromise in accordance with the Rules rejected – Recipient not legally represented at the time – Failure to accept offer not unreasonable – Rule 26.08(4) Supreme Court (General Civil Procedure) Rules 2015 (Vic).

PRACTICE AND PROCEDURE – Indemnity costs – High handed pursuit of claims then abandoned – Undue prolongation of trial which failed – Claims pursued directly contrary to earlier evidence of plaintiffs witnesses – Orders for indemnity costs – Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 cited – United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2) [2018] VSC 501, AGC v de Jager [1984] VR 483, Palmer v Premiair Aviation Maintenance Pty Ltd [2022] FCA 185 referred to – Non-party costs order – Knight v FP Special Assets Ltd & Ors [1992] HCA 28 applied – White v Woodward (Costs) [2020] VSC 593 – Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348.

PRACTICE AND PROCEDURE – Calderbank offer – Offeree achieved a less favourable outcome than if that party had accepted the offer – Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298 applied.

S ECI 2019 04430

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs by Original Proceeding and First Defendant by Counterclaim	Frenkel Partners
For the First to Third Defendants by Original Proceeding and Plaintiffs by Counterclaim	Self-represented
For the Fourth Defendant by Original Proceeding	Aitken Partners
For the Second Defendant by Counterclaim

S ECI 2020 01675

APPEARANCES:	Counsel	Solicitors
For the Plaintiff by Original Proceeding and First Defendant by Counterclaim
For the Defendant by Original Proceeding and Plaintiff by Counterclaim	Frenkel Partners

S ECI 2020 04804

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Frenkel Partners
For the Defendant	Self-represented

S ECI 2021 04644

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Frenkel Partners
For the Defendant	Aitken Partners

TABLE OF CONTENTS

A.. Background................................................................................................................................... 1

The four proceedings.................................................................................................................... 3
The October 2023 final orders..................................................................................................... 8

B.. Agreed Costs Orders.................................................................................................................. 16

C.. Costs: Principles......................................................................................................................... 16

D.. Costs orders sought by the David Brandi parties................................................................ 24

E... Costs orders sought by the Jason Brandi Parties................................................................. 26

F... Settlement offers and correspondence relied on................................................................. 27

The 25 November 2019 letter to Tina....................................................................................... 27
The Jason Brandi parties’ 6 May 2021 offer............................................................................. 29
The Jason Brandi parties’ 2 February 2022 offer..................................................................... 34

G.. The costs consequences of the Jason Brandi parties’ Calderbank offers........................ 38

Submissions................................................................................................................................. 38
Consideration: The First Offer.................................................................................................. 40
Consideration: The Second Offer.............................................................................................. 42

H.. The Jason Brandi parties’ application for indemnity costs............................................... 43

The Jason Brandi parties’ submissions.................................................................................... 43
The David Brandi parties’ submissions................................................................................... 45
Consideration.............................................................................................................................. 47
Costs to 2 September 2022................................................................................................ 47
Costs to 7 September 2022................................................................................................ 53
Costs after 7 September 2022........................................................................................... 55

I.... Joint and several indemnity costs orders.............................................................................. 56

Consideration.............................................................................................................................. 57

J.... Costs of other issues in the Timeless Sunrise Proceeding after 7 September 2022...... 59

The David Brandi parties’ breach of trust claims................................................................... 60
The appointment of an independent trustee to the PDJ Crew Trust................................... 60
The conduct of Zigaroo under Jason’s control........................................................................ 61
The Secure Funding Loan.......................................................................................................... 62
The beneficiaries of the MK No 13 Trust and removal of the trustee................................. 63
Claims relating to the PDJ Crew Unit Trust Deed (‘Trust Deed’) and the PDJ Crew Trust 63
The $593,532 loan........................................................................................................................ 64
The ITM personal guarantee claims......................................................................................... 64
The CEG and Atida mortgages................................................................................................. 65
Leaning Back................................................................................................................................ 65
The deletion by Jason of the contents of his laptop............................................................... 65

K . Costs of the former VCAT proceeding.................................................................................. 66

L... David’s 1 July 2022 offer of compromise: to Tania.............................................................. 66

M. The August 2022 offers by David and Tina to settle the Zigaroo proceeding............... 70

The offers and Tina and David’s submissions........................................................................ 70
The Administrators’ submissions............................................................................................. 74
Consideration: Zigaroo 1 and Zigaroo 2 offers....................................................................... 77

N.. Costs of the Zigaroo proceeding............................................................................................. 79

O.. Non-party costs orders against Tania..................................................................................... 79

P... Disposition.................................................................................................................................. 80

HIS HONOUR:

A Background

On 4 September 2023 I delivered reasons for judgment in four proceedings relating to members of the Brandi family (‘trial reasons’).[1] Delivery of the trial reasons followed a trial that commenced on 15 August 2022, occupied 28 sitting days and ended with the last set of written submissions on 20 December 2022. These reasons deal with the costs of the four proceedings. They should be read in conjunction with the trial reasons including the sections in the trial reasons describing the course of the trial.
[1]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 10) [2023] VSC 524.

On 20 October 2023 I made final orders disposing of the substantive issues in each of the proceedings. At the same time I made orders referring disputed costs questions to mediation by the Costs Court and failing an agreed resolution, for determination by this Court.

On 25 March 2024 and 7 June 2024 the parties mediated as to the liability for and the quantification of costs. On 8 July 2024 the parties informed Judicial Registrar Conidi that agreement had not been reached in relation to costs issues.

The substantive proceedings involved a number of disputes concerning entitlements to various properties, the administration of trusts and other issues between David Brandi (‘David’) and his wife Tina Brandi (‘Tina’) on one side, and David’s brother Jason Brandi (‘Jason’), and their sister Tania Brandi (‘Tania’) on the other side. By the time of trial Zigaroo Pty Ltd (‘Zigaroo’), trustee of a discretionary trust set up many years ago at the instigation of Erminio Brandi, the father of David, Tania and Jason (‘Ernie’), for the benefit of the family (‘MK No 13 Trust’), was in administration. Michael Carrafa and Fabian Kane Micheletto were appointed as joint and several administrators of Zigaroo on 11 July 2022 (‘Administrators’).

In these reasons, as was the case in the trial reasons, with no disrespect intended, for clarity and convenience, I will refer to the parties by their given names. I will otherwise adopt definitions adopted in the trial reasons.

For the purposes of determining disputed costs questions I have had regard to my factual and other findings in the trial reasons. I have considered the draft costs orders proposed on behalf of David Brandi and the companies associated with him, Timeless Sunrise Pty Ltd (‘Timeless Sunrise’) and Mr Landlord Pty Ltd (‘Mr Landlord’) (together the ‘David Brandi parties’), and the draft costs orders proposed on behalf of Jason Brandi and the companies controlled by him, BigJ Enterprises Pty Ltd (‘BigJ’) and PDJ Crew Pty Ltd (‘PDJ Crew’) (together, the ‘Jason Brandi parties’). I have considered written submissions including reply and responding submissions in relation to costs filed on behalf of the David Brandi parties and the Jason Brandi parties and submissions on behalf of David and Tina in proceeding S ECI 2021 04664 (‘Zigaroo proceeding’). I have also considered an outline of submissions on behalf of the Administrators.

In support of the costs orders for which they contend in the Zigaroo proceeding David and Tina rely on an affidavit of their solicitor, Mr Cristian Fuenzalida, dated 29 July 2024.

I note that Jason Brandi is no longer legally represented. The submissions on behalf of the Jason Brandi parties were submitted by Jason personally.

The parties have provided copies of correspondence relevant to disputed costs questions, offers on behalf of the Jason Brandi parties dated 6 May 2021 and 2 February 2022, an earlier letter on behalf of the Jason Brandi parties to Tina dated 25 November 2019, an offer of compromise from David to Tania dated 1 July 2022 and letters of offer dated 23 and 26 August 2022 on behalf of David and Tina to the Administrators.

I have read and considered the affidavit of Mr Fuenzalida and the correspondence relied on by the parties.

Just as there was complexity and a multiplicity of substantive issues across the four proceedings, there is complexity in relation to costs, including because of the manner in which the main proceeding, proceeding S ECI 2019 04430 (‘Timeless Sunrise proceeding’) was conducted.

Reproduced below are some limited extracts adapted from the trial reasons describing the proceedings.

The four proceedings

At the start of the trial, the David Brandi parties were the moving party in the Timeless Sunrise proceeding. The Timeless Sunrise proceeding was commenced by originating motion on 26 September 2019. The initial plaintiffs were Timeless Sunrise and David. The third plaintiff, Mr Landlord, was added pursuant to an order made on 3 December 2020. The defendants who counterclaimed in the Timeless Sunrise proceeding are the Jason Brandi parties.

A key issue in the Timeless Sunrise proceeding at the outset of the trial was the claim by Timeless Sunrise to an entitlement to 50% of the units in the PDJ Crew Unit Trust (‘PDJ Crew Trust’) and on that basis a claimed entitlement to 50% of the proceeds of sale of 9 Newsom Street, Ascot Vale (‘Newsom Street’). Newsom Street was sold for $10.5m in June 2020. The Jason Brandi parties denied the David Brandi parties or any of them ever had an interest in the PDJ Crew Trust, in Newsom Street or in the sale proceeds.

In the course of the trial, Timeless Sunrise abandoned all of the claims made by it in the Timeless Sunrise proceeding. A short time later David also abandoned his substantive claims in that proceeding to an interest in the PDJ Crew Trust and in Newsom Street.

Amongst the counterclaims against David in the Timeless Sunrise proceeding were claims by the Jason Brandi parties to enforce personal guarantees allegedly given by David in favour of Jason and PDJ Crew of loans made to Independent Tube Mills Pty Ltd (in liquidation) (‘ITM’), a company associated with David and claims against David for breach of fiduciary duty. David denied the existence of the loans and the personal guarantees alleged. He denied the other claims against him, including the claims for breach of fiduciary duty.

The Jason Brandi parties counterclaimed against Childs Play International Pty Ltd (‘Childs Play’), a company that operates an accounting practice called ‘Brandi & Co’. After closing addresses, the Court was informed the disputes between the Jason Brandi parties and Childs Play had been resolved. On 20 January 2023, an Order was made by consent dismissing Jason and PDJ Crew’s counterclaim against Childs Play.

The relationship between certain of the claims made in the Timeless Sunrise proceeding at the outset of the trial and the family members and entities associated with them were the subject of an aide memoire prepared on behalf of the David Brandi parties prior to trial. Part of the aide memoire is reproduced below:

The aide memoire makes no reference to Mr Landlord whose claims at the outset of the trial were claims in the alternative only to the claims by Timeless Sunrise.

Proceeding S ECI 2020 01675 was initiated by Tania against David (‘Tania’s proceeding’) seeking to enforce an alleged personal guarantee by David of a debt of ITM to Tania. David denied the existence of the alleged debt and of the guarantee.

In reliance on the alleged personal guarantees by David of the ITM’s debts, each of Tania, Jason and PDJ Crew lodged caveats against the title to land owned by David at 111 Wellington Parade South, East Melbourne (‘Wellington Parade’). David sought orders for the removal of those caveats in the Timeless Sunrise proceeding and in Tania’s proceeding.

David is the plaintiff and Jason is the defendant in proceeding S ECI 2020 04804 (formerly VCAT proceeding BP908/2019) (‘the former VCAT proceeding’). When initiated, the relief sought included orders pursuant to ss 230, 232, 233 and 245 of the Property Law Act 1958 (Vic) (‘Property Law Act’) for the sale, alternatively for Jason to transfer to David his share, of 86 Cooper Street, Essendon (‘Cooper Street’) and of 48 Holmes Road, Moonee Ponds (‘Holmes Road’) (properties of which the brothers were the registered proprietors as tenants in common in equal shares) in consideration for half the value of each property.

Fernanda Brandi (‘Fernanda’), the mother of David, Tania and Jason, who in the litigation sided with Jason and Tania, continues to reside at Cooper Street.

Holmes Road was sold by the mortgagee of that property prior to trial. The net proceeds of sale, $1,072,906.60 were paid into court.

David and Tina are the plaintiffs in the Zigaroo proceeding. They were represented by separate counsel and solicitors in that proceeding. David and Tina claimed that Zigaroo holds the property at 306 Ascot Vale Road, Moonee Ponds, Victoria (‘Ascot Vale Road’), on trust for them. Ascot Vale Road was sold prior to trial. Settlement took place on 21 December 2021. Following settlement $623,452.68 was applied to discharge the mortgage to the ANZ and $614,851.39 was paid into Court.

Immediately prior to the appointment of the Administrators Fernanda was the sole director of Zigaroo.

On 20 July 2022, an Order was made granting David and Tina leave to proceed with their claims in the Zigaroo proceeding. That Order was made on the premise that the defence of the claims against Zigaroo would be undertaken by the Jason Brandi parties and that the Administrators would play no active part in the trial.[2] That is what occurred.
[2]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 2) (Unreported, Supreme Court of Victoria, Delany J, 22 July 2022) and see recital H in Other Matters in the 2 August 2022 Order in the Zigaroo proceeding.

Leave to proceed against Zigaroo was also given to the David Brandi parties in the Timeless Sunrise proceeding.[3] The David Brandi parties pursued claims against Jason including claims for accessorial liability for breach of duty by Zigaroo from 24 April 2015.
[3]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 2) (Unreported, Supreme Court of Victoria, Delany J, 22 July 2022).

David and Tina control, or have from time to time controlled, or been closely associated with the following corporations and entities:

·Timeless Sunrise Pty Ltd (‘Timeless Sunrise’) as trustee of the Davina Family Trust.
·Davtin Pty Ltd (‘Davtin’), deregistered 22 October 2006.
·Melbourne Property Group Pty Ltd (in liquidation) (‘MPG’), previously trustee of the Brandi Family Trust, liquidator appointed 25 February 2019, deregistered 6 December 2019.
·Sleepless Nights Pty Ltd (‘Sleepless Nights’), deregistered 16 January 2019.
·Mr Landlord Co Pty Ltd (‘Mr Landlord’).
·Independent Tube Mills Pty Ltd (in liquidation) (‘ITM’), liquidator appointed 30 June 2014.
·Australian Steel Assets Pty Ltd (‘Australian Steel Assets’) incorporated 16 May 2018 and Australian Steel Manufacturing Pty Ltd (‘Australian Steel Manufacturing’).
·Sputnik Pty Ltd (in liquidation) (previously called Australian Pipe and Tube (‘APT’) Pty Ltd) (‘Sputnik’), wound up by order of the Federal Court made 21 December 2018.

·Leaning Back Pty Ltd (‘Leaning Back’), deregistered 12 May 2021.
·Childs Play International Pty Ltd (‘Childs Play’).
·Midnight Express Group (in liquidation) Pty Ltd (‘MEG’) deregistered 6 September 2017.

Jason controls and has previously controlled or been associated with the following corporations and entities:

·PDJ Crew, as trustee for the PDJ Crew Trust.
·BigJ, as trustee for the Jason Brandi Family Trust.

JAG Group Holdings Pty Ltd (‘JAG Group’) is the trustee of the JAG Group Unit Trust (‘JAG Unit Trust’). Prior to his death, Ernie, who was sometimes known within the family as ‘Jag’, was the sole director of JAG Group. 50% of the units in the JAG Unit Trust are owned by BigJ as trustee of the Jason Brandi Family Trust. In the pleading relied on by the David Brandi parties current at the end of the trial the other 50% of the units were alleged to be owned by Mr Landlord in its capacity as trustee of the Brandi Family Trust.

JAG Investment Group Pty Ltd, deregistered on 9 November 2007, is a company that had been intended to purchase and undertake an apartment development at 155-157 Epsom Rd, Ascot Vale (‘Royal Ascot’). Ernie was the sole director and shareholder of that company.

The Little Man Holdings Pty Ltd (‘TLMH’) was the company that purchased the land and undertook the Royal Ascot development. Fernanda is both the sole shareholder and the sole director of TLMH.

The October 2023 final orders

On 20 October 2023 final orders were made in each of the proceedings. Those orders are relevant to the determination of the contested costs issues. It is convenient to reproduce the substantive parts of those orders.

In the Timeless Sunrise proceeding I made the following declarations and substantive orders:

THE COURT DECLARES THAT:
PDJ Crew Unit Trust and Brandi Family Trust
1. The PDJ Crew Unit Trust was established by about March 2008 and is constituted by a unit trust deed, with the Second Defendant [PDJ CREW] as trustee, and with Melbourne Property Group Pty Ltd in its capacity as trustee of the Brandi Family Trust and the First Defendant [BIGJ] as the first unitholders each holding 60 units out of a total of 120 issued units.
2. The Third Plaintiff [MR LANDLORD] is the current trustee of the Brandi Family Trust and the assets and undertaking of the Brandi Family Trust have vested in the Third Plaintiff.
3. All proceeds of property identified by Certificates of Title Volume 10718 Folio 273 and Volume 11557 Folio 945 (together, the Newsom Street Property) are an asset of the PDJ Crew Unit Trust.
MK No. 13 Trust
4. The Specified Beneficiaries of the MK No. 13 Trust are David Brandi, Jason Brandi and Fernanda Brandi.
Lot 28/157 Epsom Road, Ascot Vale
5. The property identified in Certificate of Title 10458 Folio 618 (Lot 28) is held on trust by the Eighth Defendant [TLMH] (and any replacement trustee) for the Second Plaintiff [DAVID] as to 50% and the Third Defendant [JASON] as to 50%.
THE COURT ORDERS THAT:
PDJ Crew Unit Trust
6. The Second Defendant [PDJ CREW] be removed as trustee of the PDJ Crew Unit Trust and Michael Carrafa and Fabian Kane Micheletto (Messrs Carrafa and Micheletto) be appointed as trustees of the PDJ Crew Unit Trust, and the assets and undertaking of the PDJ Crew Unit Trust vest in the new trustees jointly subject to the terms of the trust.
7. Messrs Carrafa and Micheletto be appointed as the joint and several receivers and managers, without security, of the assets and undertakings of the PDJ Crew Unit Trust.
…
MK No. 13 Trust
11. The Second Plaintiff [DAVID] has leave nunc pro tunc to bring all claims in section C of the fourth further amended statement of claim dated 27 September 2022 in his own name on behalf of the MK No. 13 Trust.
12. The Third Defendant [JASON] pay to the trustees of the MK No. 13 Trust compensation in the sum of $255,000 together with interest at the rate of the loan, including if interest has not been paid, at such higher rate as applicable, for knowing assistance in breach of fiduciary duty by the Fourth Defendant [ZIGAROO].
13. The Fourth Defendant [ZIGAROO] be removed as trustee of the MK No. 13 Trust and Messrs Carrafa and Micheletto be appointed as trustees of the MK No. 13 Trust and assets and undertakings of the MK No. 13 Trust vest in the new trustees jointly subject to the terms of the trust.
14. Messrs Carrafa and Micheletto be appointed as the joint and several receivers and managers, without security, of the assets and undertakings of the Fourth Defendant [ZIGAROO] and the MK No. 13 Trust.
JAG Group Unit Trust, Tarwin Group Unit Trust and Tarwin River Holdings Unit Trust
15. The Fifth Defendant [JAG] be removed as trustee of the JAG Group Unit Trust and Messrs Carrafa and Micheletto be appointed as trustees of the JAG Group Unit Trust, and the assets and undertaking of the JAG Group Unit Trust vest in the new trustees jointly subject to the terms of the trust.
…
18. The Sixth Defendant [TARWIN] be removed as trustee of the Tarwin Group Unit Trust and Messrs Carrafa and Micheletto be appointed as trustees of the Tarwin Group Unit Trust and the assets of the Tarwin Group Unit Trust vest in the new trustees jointly subject to the terms of the trust.
…
21. The Seventh Defendant [TARWIN RIVER] be removed as trustee of the Tarwin River Holdings Unit Trust and Messrs Carrafa and Micheletto be appointed as trustees of the Tarwin River Holdings Unit Trust and the assets of the Tarwin River Holdings Unit Trust vest in the new trustees jointly subject to the terms of the trust.
…
Lot 28/157 Epsom Road, Ascot Vale
27. The Eighth Defendant [TLMH] be removed as trustee of the trust over Lot 28 and Messrs Carrafa and Micheletto be appointed as trustees of the trust over Lot 28 pursuant to s 48 of the Trustee Act 1958 (Vic) (“Trustee Act”).
28. Lot 28 and the assets and undertaking of the trust over Lot 28 vest in the new trustees jointly subject to the terms of the trust.
…
ITM & East Melbourne Caveats
31. The Ninth Defendant (Registrar of Titles) is ordered pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) to remove the caveat in dealing no. AS961763E from the land identified by Certificate of Title Volume 10935 Folio 015.
32. The Ninth Defendant (Registrar of Titles) is ordered pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) to remove the caveat in dealing no. AS961759U from the land identified by Certificate of Title Volume 10935 Folio 015.
CEG Caveat and Atida Mortgage
33. Judgment for the Second Plaintiff by Counterclaim [PDJ CREW] against the First Defendant by Counterclaim [DAVID] in the sum of $61,831.07 plus penalty interest pursuant to the Supreme Court Act 1986 (Vic).
Leaning Back
34. An account be taken before an Associate Judge of the Court pursuant to Order 52 of the Supreme Court (General Civil Procedure) Rules 2015 to determine the amount owing by the First Defendant by Counterclaim [DAVID] to the Second Plaintiff by Counterclaim [PDJ CREW] in accordance with these orders and the reasons delivered on 4 September 2023, such account to be taken in accordance with the directions set out in the Schedule hereto (with relevant dates to be agreed).
Statement of claim
36. Save for the orders made in paragraphs 1 to 32 above, the claims in the fourth further amended statement of claim dated 27 September 2022 otherwise be dismissed.
Counterclaim
37. Save for the orders made in paragraphs 33 to 35 above, the third further amended counterclaim dated 7 November 2022 otherwise be dismissed.

In Tania’s proceeding I made the following substantive orders:

1. The Second Defendant by Counterclaim (Registrar of Titles) is ordered pursuant to s 90(3) of the Transfer of Land Act 1958 (Vic) to remove the caveat in dealing number AT004101M from the land identified by Certificate of Title Volume 10935 Folio 015.
2. The proceeding is otherwise dismissed.

In the former VCAT proceeding I made the following substantive orders:

86 Cooper Street, Essendon
1. Subject to order 2 below, pursuant to sections 225, 232 and 233 of the Property Law Act 1958 (Vic), upon:
a. payment by the Defendant [JASON] of $315,661.69 to the Plaintiff [DAVID]; and
b. the removal of the Plaintiff [DAVID] from liability associated with the loan from Perpetual Trustee Company Limited secured by a mortgage over the property (including but not limited to the Defendant [JASON] obtaining refinance of that loan),

the Plaintiff [DAVID] must transfer his interest in 86 Cooper Street, Essendon (being the property identified by Certificate of Title Volume 5738 Folio 448) and the Defendant [JASON] must do all things necessary to give effect to the transfer, including to pay all duty on the transfer.
…
3.Subject to her withdrawing the caveats in dealing numbers AU280178U and AU280230V on the title thereto, Fernanda Brandi is granted a right to reside at and occupy 86 Cooper Street, Essendon on the same terms and conditions of her occupation at the said property as at present, for as long as and until the earlier to occur of:
a.   Fernanda Brandi permanently ceases to reside at the said property and accordingly ceases occupation of the said property, freely and voluntarily; or
b.   Fernanda Brandi otherwise permanently ceases to reside at the said property because she is no longer physically capable of residing independently and/or being cared for at the said property as a resident; or
c.   Fernanda Brandi dies.

48 Holmes Road, Moonee Ponds
4.Pursuant to sections 225, 232 and 233 of the Property Law Act 1958 (Vic), section 69(1) of the Trustee Act 1958 (Vic) and rule 79.02(2) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), the funds held in Court in Common Fund No. 1 be paid as follows:
a. $558,706.70 to the Plaintiff's solicitors, Frenkel Partners; and
b. $202,097.35 to the Defendant's solicitors, Strongman & Crouch.

In the Zigaroo proceeding I made declarations and orders including the following:

THE COURT DECLARES THAT:
1. The Defendant holds its interest in the sale proceeds from the sale of 306 Ascot Vale Road, Moonee Ponds, Victoria being the land described in certificate of title volume 10619 folio 169 (Property) in the sum of $615,231.43 (Funds in Court), less any land tax referable to the property on a single holding basis in the hands of MK No 13 Trust from 30 June 1998 (Land Tax Amount), on trust for the Plaintiffs.
THE COURT ORDERS THAT:
2. Upon the determination of the Land Tax Amount pursuant to orders 3 to 5 below, the Funds in Court, less the Land Tax Amount, be paid to the Plaintiffs.

Orders subsequently made in the Zigaroo proceeding include an Order made on 2 November 2023 including in the terms below:

Other matters
A.Paragraph 1 of the Orders dated 20 October 2023 (Orders) provided that the Defendant [ZIGAROO] holds its interest in the sale proceeds from the sale of 306 Ascot Vale Road, Moonee Ponds, Victoria being the land described in certificate of title volume 10619 folio 169 (Property) in the sum of $615,231.43 (Funds in Court), less any land tax referable to the property on a single holding basis in the hands of MK No 13 Trust from 30 June 1998 (Land Tax Amount), on trust for the Plaintiffs [DAVID AND TINA].
B.Paragraph 2 of the Orders provided that upon the determination of the Land Tax Amount, the Funds in Court, less the Land Tax Amount, be paid to the Plaintiffs.
C.The Plaintiffs and Michael Carrafa and Fabian Micheletto, in their capacity as the joint and several administrators of the Defendant (Administrators), have agreed to the total Land Tax Amount.
D.The Administrators have obtained advice that CGT is payable in respect of the Property.
E.The question of whether or not CGT is payable, and if so by whom, is not an issue which was raised or fell for determination at the trial of the proceeding.
F.The Administrators’ preliminary estimate of CGT payable in respect of the Property if payable by Zigaroo Pty Ltd in its capacity as trustee of the MK No 13 Trust (Trust) is estimated at $570,308.01.
G.The Administrators have given notice to the Plaintiffs [DAVID AND TINA] and the Court of their intention to seek directions from the Court in relation to the whether the CGT liability ought to be borne by the Plaintiffs [DAVID AND TINA] or by the beneficiaries of the Trust, or by any other person. The Plaintiffs’s [DAVID AND TINA] position is that the Court is functus officio save for the question of costs, and have foreshadowed that they will oppose any application by the Administrators to seek directions as to CGT.
H.Paragraph 1 of these orders is made on the Court’s own motion without prejudice to the rights of any person to contend that such orders should not have been made.

THE COURT ORDERS THAT:
1.Paragraph 2 of the Orders dated 20 October 2023 is stayed until 4:00pm on 15 December 2023 or further order.
2.By 4:00pm on 8 December 2023, the Administrators are to file and serve any application, whether in this proceeding or by any other proceeding, concerning the CGT liability in relation to the Property and any application to restrain the release of the Funds in Court.
3.In the event the Administrators file and serve such an application, it is to be listed for directions and for any further or other orders on 15 December 2023, before Justice Delany.

On 1 March 2024 further orders were made in the Zigaroo proceeding including a notation in Other Matters concerning funds previously paid into Court:

Other Matters:
A. Further to the Order of the Honourable Associate Justice Matthews made on 17 November 2021 in proceeding S ECI 2021 04142, the sum of $614,851.39 was paid into Court by Zigaroo Pty Ltd on 21 December 2021. The funds were paid into Common Fund No. 1 and credited to account No. 86310.
THE COURT ORDERS BY CONSENT THAT:
1.The following sums be paid from Common Fund No. 1 and debited to Account No. 86310:
(a) to the Defendant [ZIGAROO], by payment to their solicitors, the sum of $16,678.31; and
(b) to the Plaintiffs [DAVID AND TINA], by payment to their solicitors, an amount equal to the balance of the said Account, but subject to the retention of a sum sufficient to cover any taxation liability.
2.Upon payment of a sum equivalent to the balance of the said Account, in accordance with paragraph 1 of this Order, there also be paid to the Plaintiffs [DAVID AND TINA], by payment to their solicitors, from Common Fund No. 1 and debited to Account No. 10, an amount equivalent to interest accrued on the balance of Account No. 86310 from 1 June 2023 at the rate last fixed in respect of Common Fund No. 1.

…

On 29 May 2024 an Order was made in the Timeless Sunrise proceeding including as follows:

THE COURT ORDERS THAT:
1. …
Zigaroo and the MK No 13 Trust
2. The Applicants are justified, pursuant to clause 90-15 of the Insolvency Practice Schedule and/or section 66 of the Trustee Act 1958 (Vic) and/or rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (Rules), in treating and shall treat:
a.all of the assets and property of Zigaroo as assets and property of the MK No. 13 Trust;
b.all of the debts and liabilities which are provable in the winding up of the Zigaroo as having been incurred in the conduct of a business as trustee of the MK No. 13 Trust; and
c.all of the assets and property of Zigaroo and/or the MK No. 13 Trust realised by the Applicants in any of their capacities as:
i.Administrators;
ii.Liquidators;
iii.MK Administrator Trustees;
iv.MK Replacement Trustees; and/or
v.MK Receivers and Managers;

(MK Capacities)
including the proceeds of assets realised by the Applicants, as being subject to an indemnity in favour of the Company as to its power to exonerate the debts and liabilities provable in the winding up.
3. The Applicants are justified pursuant to clause 90-15 of the Insolvency Practice Schedule and/or section 66 of the Trustee Act 1958 (Vic) and/or rule 54.02 of the Rules in paying:
a.expenses and disbursements incurred in the MK Capacities …
b.remuneration approved in accordance with the Corporations Act by creditors of Zigaroo in their capacity as Administrators and/or Liquidators …

from the assets and property of the MK No 13 Trust.
4. Pursuant to rules 39.06 and 39.09 and/or 54.02 of the Rules and/or the inherent jurisdiction of the Court and/or section 66 of the Trustee Act 1958 (Vic), the Applicants are entitled to pay from the assets and property of the MK No 13 Trust as MK Receivers and Managers and MK Replacement Trustees:
a.expenses and disbursements incurred in their capacity as MK Receivers and Managers and/or MK Replacement Trustees in the sum of $19,279.33; and
b.themselves, remuneration as follows …

5. To give effect to paragraphs 2 to 4 above, and for the avoidance of doubt, the Applicants are justified in applying the assets and property of the MK No 13 Trust:
a.in the payment of the amounts required by paragraphs 3 and 4 above; and
b.in payment of creditors afforded priority under s 556 of the Corporations Act in the order of priority afforded under that section including thereafter in respect of any remaining amount in payment of a dividend to unsecured creditors of the Company.

PDJ Trust
6. Pursuant to rules 39.06 and 39.09 and/or 54.02 of the Rules and/or the inherent jurisdiction of the Court and/or section 66 of the Trustee Act 1958 (Vic), the Applicants are entitled to pay from the assets and property of the PDJ Trust as PDJ Receivers and Managers and PDJ Replacement Trustees:
a.expenses and disbursements incurred in their capacity as PDJ Receivers and Managers and/or PDJ Replacement Trustees in the sum of $35,457.47; and
b.themselves the sum of $11,014.85 as remuneration.

…
9. Liberty to apply be reserved to the Applicants for such further or other orders in relation to the MK No 13 Trust and/or PDJ Trust in respect of future remuneration and expenditure.

B Agreed Costs Orders

A limited number of costs issues are agreed in the Timeless Sunrise proceeding. Where in the agreed costs orders or elsewhere in these reasons reference is made to issues, for example ‘Issue BA’ those references correspond to paragraphs in the joint statement of issues updated on 8 November 2022 (‘joint statement’).

The agreed costs orders are as follows:

JAG Group Unit Trust, Tarwin Group Unit Trust and Tarwin River Holdings Unit Trust (Issue BA)
1.The parties’ bear their own costs of the proceeding relating to this issue.

Lot 28/157 Ascot Vale Road (Issue BB)
2.The parties’ bear their own costs of the proceeding relating to this issue.

The East Melbourne Caveats (Issue BC)
3.Each of the Jason Brandi Parties and Tania Brandi be jointly and severally liable to pay David’s costs of the proceeding relating to this issue on a standard basis.

The ITM and PDJ Crew loan claims (Issues C2 and C3)
4.PDJ Crew pays David’s costs of the proceeding relating to these issues on a standard basis.

C Costs: Principles

The Court has a wide discretion in relation to costs. Section 65C of the Civil Procedure Act 2010 (Vic) (‘CPA’) within Part 4.5 of the CPA relevantly provides:

65C Other costs orders
(1)In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.

(2) Without limiting subsection (1), the order may—
(a)make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding;
(b)order that parties bear costs as specified proportions of costs;

(c) award a party costs in a specified sum or amount;
(d) fix or cap recoverable costs in advance.

Section 65E(1) of the CPA states that nothing in Part 4.5 of the CPA limits any power a court might have to award costs in a proceeding under s 24 of the Supreme Court Act 1986 (Vic) or any other rules. Section 24 relevantly provides:

24 Costs to be in the discretion of Court
(1)Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

Rule 63.04(1) of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) is in the following terms:

63.04 Costs of question or part of proceeding
(1) The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.

There are four key issues relating to costs that arise from the submissions and the draft costs orders provided by the parties.

The first concerns an issues based approach to costs rather than a proceeding based approach. An issues based approach by reference to the joint statement is reflected in the draft costs orders for which both parties contend.

The power to award costs on an issues basis is not in doubt.

The David Brandi parties’ submissions contain the following discussion of what those parties contend to be the relevant principles:

2.The power to award costs pursuant to s 24(1) of the Supreme Court Act 1986 (Vic) is discretionary. In Chan & Ors v Chen & Ors, the Court of Appeal observed at [10] that: The Rules of Court 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.
3.As a general principle, the usual rule is that costs follow the event. Respectfully, the David Brandi Parties generally adopt the “starting point” taken by the trial judge that “where a party has succeeded … within a proceeding upon a cause of action of substance, then that party should be awarded its costs”. The making of costs orders in accordance with the broadly measured outcomes of substantive issues at trial is the most just, efficient, timely and cost‑effective mechanism to do ‘substantial justice’ as between the parties on matters of costs.
4.In identifying the relevant “event” for the purposes of assessing costs, there is nuance in as to approaching costs on the basis of “issues” or “causes of action”. The former is the more appropriate approach. As the learned author Dal Pont states, in assessing costs on an issues basis, the assessment is not done “as a precise issue in the technical pleading sense, but as any disputed question of fact or law”. It is submitted that it is appropriate to frame the costs orders in this proceeding by reference to those issues in dispute at trial, and the outcome of them.
5.Where the outcomes of individual issues yield mixed results, it is appropriate to take a pragmatic approach to those issues on a holistic level and to order a proportion of costs in favour of a party (or parties). That approach does not delve too deeply into the minutiae of each and every aspect of that issue in a technical pleading sense, but rather has regard to the overarching disputed question of fact or law.

Turning to the authorities, in Spotless Group Ltd v Premier Building and Consulting Pty Ltd, the Court of Appeal said:[4]

In certain cases it is apposite for a trial judge to apportion costs having regard to the multiplicity of parties, actions, issues and the mixed success enjoyed by the plaintiffs. Under r 63.04, the judge may award costs in relation to particular questions or parts of the proceeding. The rules of court are wide enough to permit an apportionment of costs according to issues or causes of action, which enable a court to look at the realities of the case and attempt to do substantial justice.

[4]Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115 [14] (citations omitted).

In Marriner v Australian Super Developments Pty Ltd the Court of Appeal said:[5]

It is a well-established principle that costs follow the event, that is, that the unsuccessful party is usually ordered to pay the successful party’s costs. This is so even if the successful party failed in establishing all its claims. However, where the successful party made multiple claims and failed in respect of some of them or pursued distinct issues upon which it achieved mixed success, in an appropriate case, the court can award that party only part of its costs or make an order that reflects the measure of success achieved by each party on the issues in dispute.

[5]Marriner v Australian Super Developments Pty Ltd [2016] VSCA 141.

Earlier, in McFadzean v Construction, Forestry, Mining and Energy Union[6] the Court of Appeal referred with approval to the position as to costs where a party has been partially successful as summarised by Eames J in Pricom Pty Ltd v Sgarioto:[7]

As a general rule costs should follow the event, and a successful party should obtain all of the costs of the action even although it failed to establish some of the alternative heads of its claim…However, in the exercise of its discretion the court may decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim, or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim.

[6]McFadzean v Construction, Forestry, Mining and Energy Union [2007] VSCA 289 [152].

[7]Pricom Pty Ltd v Sgarioto (unreported, Eames J, 10 April 1995) [9] (citations omitted).

The second issue concerns the circumstances in which indemnity costs orders are appropriately made.

Rule 63.31 of the Rules states that except as provided by these Rules, or any order of the Court, including the Costs Court, costs shall be taxed on a standard basis. The usual order for standard costs may be departed from in appropriate circumstances including so as to order indemnity costs. The factors that may enliven the discretion to make an indemnity costs order are not closed. In Colgate Palmolive Company v Cussons Pty Ltd Sheppard J said:[8]
[8]Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225; (1993) 118 ALR 248 [257]-[258].

It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-
1.….
2.The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis.…. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
…
4.In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course…. The tests have been variously put. The Court of Appeal in Andrews v. Barnes said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require.” Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston. ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed similar views in Ragata.
5.Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise… and an award of costs on an indemnity basis against a contemnor... Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

In United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2),[9] Elliott J said:

17.There are several established circumstances that may warrant an award of indemnity costs. First, it may be appropriate to award indemnity costs against a party who should have known it had no real prospect of succeeding in its claims. Such circumstances give rise to a presumption that the relevant proceeding was “commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law”. Secondly, indemnity costs may be appropriate in cases involving “the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions”. Thirdly, it may be appropriate to award indemnity costs where genuine offers of compromise have been made and imprudently or unreasonably refused.

[9]United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2) [2018] VSC 501 [15]-[17] (‘United Petroleum’).

In Palmer v Premiair Aviation Maintenance Pty Ltd Yates J observed:[10]

The applicant has simply abandoned his case without explanation. Such an abandonment is a relevant factor in considering an application for indemnity costs.

[10]Palmer v Premiair Aviation Maintenance Pty Ltd [2022] FCA 185.

That indemnity costs orders may be made in circumstances where documentation relied on to substantiate a claim is a forgery was confirmed by Tadgell J in AGC v de Jager.[11] In that case Tadgell J said:[12]

The Court may order costs on a solicitor/client basis, or on an indemnity basis, whenever a party has been subjected to high handed and unmeritorious conduct and it is just that the innocent party not be out of pocket thereby.

[11]AGC v de Jager [1984] VR 483.

[12]AGC v de Jager [1984] VR 483, 489.

The third issue concerns the reliance by various parties on offers expressed to be Calderbank[13] offers in support of orders for indemnity costs.
[13]Calderbank v Calderbank [1976] Fam 93; [1975] 3 WLR 586.

In Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2),[14] the Court of Appeal held the rejection of a Calderbank offer is a matter to which the Court should have regard when considering whether to order indemnity costs.[15] The critical question is whether the rejection of the offer was unreasonable in the circumstances.[16] In Hazeldene the Court of Appeal said:[17]
[14]Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 (‘Hazeldene’).
[15]Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [20].
[16]Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23]-[24].
[17]Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [18]-[20] (citations omitted).

18One of the seminal contributions to the law on indemnity costs was the judgment of Sheppard, J. in Colgate Palmolive Company v Cussons Pty Ltd. Amongst the circumstances listed by his Honour as having been thought to warrant the exercise of the discretion to award indemnity costs was:
…an imprudent refusal of an offer to compromise.

So widely has this been accepted that the proposition has been advanced that a Calderbank offer gives rise to a presumption that the party rejecting the offer should pay the offeror’s costs on an indemnity basis if the offeree receives a less favourable result.
19In OCBC, however, Redlich J rejected the notion of any such presumption, holding that the weight of authority:
…strongly points to an approach that involves no preconceptions about when the rejection of a Calderbank offer should lead to the making of a special costs order. It will do so where it is concluded that the rejection of the offer was unreasonable.

We respectfully agree with his Honour’s conclusion. We note, as did his Honour, that the notion of such a presumption has been decisively rejected by the New South Wales Court of Appeal (most recently in Brymount Pty Ltd v Cummins (No.2)), by the Federal Court and by the Queensland Court of Appeal.
20The correct approach, in our view, is to treat the rejection of a Calderbank offer as a matter to which the Court should have regard when considering whether to order indemnity costs. As Gyles, J.A. stated in SMEC Testing Services Pty Ltd v Campbelltown City Council:
…In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rules as to costs…

The Court of Appeal made the following observations relevant to assessing whether the rejection of a Calderbank offer was unreasonable:[18]
[18]Hazeldene’s Chicken Farm v Victorian Workcover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [25].

The discretion with respect to costs must, like every other discretion, be exercised taking into account all relevant considerations and ignoring all irrelevant considerations. It is neither possible nor desirable to give an exhaustive list of relevant circumstances. At the same time, a court considering a submission that the rejection of a Calderbank offer was unreasonable should ordinarily have regard at least to the following matters:
(a)       the stage of the proceeding at which the offer was received;
(b)       the time allowed to the offeree to consider the offer;
(c)       the extent of the compromise offered;
(d)the offeree’s prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree’s rejecting it.

The fourth costs issue concerns costs orders against non-parties.

In White v Woodward (Costs)[19] John Dixon J discussed the relevant principles, beginning with reference to the decision of the High Court in Knight v FP Special Assets Ltd & Ors.[20] In Knight, the High Court identified the circumstances that may enliven the jurisdiction to make a non-party costs order:[21]

For our part, we consider it appropriate to recognise a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.

[19]White v Woodward (Costs) [2020] VSC 593 [7]-[10].

[20]Knight v FP Special Assets Ltd & Ors [1992] HCA 28; (1992) 174 CLR 178 (‘Knight’).

[21]Knight v FP Special Assets Ltd & Ors [1992] HCA 28; (1992) 174 CLR 178 [34].

In White v Woodward, Dixon J said:[22]
[22]White v Woodward (Costs) [2020] VSC 593 [8]-[10] (‘White v Woodward’).

8.I have also taken account of a number of more recent cases that have considered the Knight principle.[23]
[23]Bischof v Adams [1992] VR 198; FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340; Permark International Interiors Pty Ltd v Amoveo Pty Ltd & Ors [2013] VSC 563; 1165 Stud Road v Power & Ors (No 2) [2015] VSC 735; Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348.

9.        It is relevant to first note that:
(a)    it is accepted that the jurisdiction to make a costs order non-party against a non-party is to be exercised in exceptional circumstances;
(b)   it is primarily a question of examining the criteria identified in Knight; and
(c)    those criteria are not separate and independent factors, but are directed to the overall question of whether, in the circumstances of a given case, it is in the interests of justice that a non-party costs order ought to be made.

10.      The primary criteria to consider are:
(a)    whether the unsuccessful plaintiff is insolvent or otherwise capable of being described as a person of straw;
(b)   whether the unsuccessful party was a moving party to the proceeding rather than the non-party against whom relief is sought;
(c)    whether, and to what extent, the non-party played an active part in the litigation;
(d)   what the source of funds was for the unsuccessful party’s involvement in the litigation;
(e)    whether the conduct of the litigation was unreasonable, improper or lacked a proper basis; and
(f)     whether the non-party had an interest (financial or otherwise) that was equal to or greater than that of the unsuccessful plaintiff.

Earlier, in Gdanski v Palms Court Management Pty Ltd,[24] the Court of Appeal referred to the Knight principles, identified at first instance in that case, including:
[24]Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348 [33] (‘Gdanski’).

(a)Making a costs order against a non-party requires exceptional circumstances. In the vast majority of cases it would be unjust to make an award of costs against the non-party;

…
(d)A real, direct and material connection with the principle litigation must be established such that the non-party can be described as a ‘real party’ to the litigation. For this purpose, it is sufficient to establish an ‘active role in the conduct of the litigation’ if the non-party is sufficiently closely connected with the prosecution of the litigation and can be fairly described as a ‘real party’ in ‘critical’ or ‘important’ respects;
(e)For there to be an interest in the subject of the litigation, a direct financial interest is not required. It is not enough that the fruits of success in the litigation either belong to the non-party or were substantially within his gift;
(f)It may be appropriate to exercise the power against a person who may be characterised as no more than a real party to the litigation in ‘critical’ and ‘important’ respects, albeit not the only such party. It is not necessary to demonstrate that the relevant non-party exclusively control the conduct of the proceedings. It is enough if the role of the non-party is sufficiently closely connected with the prosecution of the litigation, so that the non-party may fairly be described as one of the actors ‘important’ and ‘critical’ respects;

(g)As the breadth of the concept confirms, there are numbers of factors which may be taken into account in determining whether the interests of justice call for an order to be made… They include:

D Costs orders sought by the David Brandi parties

In the Timeless Sunrise proceeding, the David Brandi parties seek the following orders:

PDJ Crew Unit Trust and the Newsom Street property (Issue A)
1. Subject to the order 2, the Jason Brandi Parties pay 75% of the David Brandi Parties’ costs of the proceeding relating to this issue on a standard basis, excluding those claims abandoned by Timeless Sunrise during trial.
2. Timeless Sunrise pays to PDJ Crew costs thrown away by reason of the claims abandoned by it during trial on a standard basis in relation to this issue.
Zigaroo and the MK No. 13 Trust (Issue B)
3. Jason and Zigaroo be jointly and severally liable for 50% of David’s costs of the proceeding relating to this issue on a standard basis.
4. Further to order 3, as to Zigaroo, David’s costs relating to this issue be costs in the administration of Zigaroo.
…
The ITM personal guarantee claims & the East Melbourne Caveats (Issues BC, C4 and C5)
7. Each of the Jason Brandi Parties and Tania Brandi be jointly and severally liable to pay David’s costs of the proceeding relating to these issues on a standard basis.
CEG Caveat and Atida Mortgage (Issue C1)
8. David pays PDJ Crew’s costs of the proceeding relating to this issue on a standard basis.
…
Leaning Back claims (Issue C6)
10. David pays PDJ Crew’s costs of the proceeding relating to this issue on a standard basis.
11. The costs of the taking of accounts process to be determined when it concludes.

In the Zigaroo proceeding, David and Tina seek an order that their costs be paid by Zigaroo:

(a) up until 26 August 2022, on a standard basis to be taxed in default of agreement; and

(b) from 27 August 2022, on an indemnity basis to be taxed in default of agreement.

They also seek an order that Jason pay their costs on a standard basis to be taxed in default of agreement.

In Tania’s proceeding, David seeks an order that Tania pay his costs of the proceeding, including the counterclaim, on a standard basis up to 11:00am on 3 July 2022, and on an indemnity basis thereafter, with such costs to be taxed in default of agreement. He also seeks a further order that Jason be jointly and severally liable with Tania to pay David’s costs of the proceeding.

In the former VCAT proceeding, David seeks an order that Jason pay his costs of the proceeding to be taxed on a standard basis in default of agreement.

E Costs orders sought by the Jason Brandi Parties

In relation to contested costs issues in the Timeless Sunrise proceeding, Jason contends for the following orders:

Issue A: The PDJ Crew Unit Trust and the Newsom Street Property
1. David Brandi Parties pay ‘Jason Brandi Parties’ Costs of the proceeding on a standard basis until 25 November 2019 and full indemnity basis thereafter.
2. Further to Order 1, due to special circumstances of fraud/forgeries, each of the David Brandi Parties including Tina Brandi & David Brandi, be jointly and severally liable to pay Jason Brandi’s costs.
Issue B: Zigaroo and the MK No. 13 Trust
1. Jason and Zigaroo be jointly and severally liable for costs on a standard basis of David’s One Zigaroo claim regarding (‘Secured Funding Loan’).
2. Further to order 1, David liable for costs on a Standard basis relating to all other Zigaroo claims that failed.
…
Issue C: Retainer and fiduciary duties claims
Issue C1: CEG Loan and Atida Mortgage claims
1. David pays PDJ Crew’s costs of the proceeding relating to this issue.
2. Further to order 1, due to special circumstances of fraud/forgeries, David Brandi is liable to pay PDJ Crew’s Indemnity costs of the proceeding.
Issue C4: PDJ Crew ITM Loan / personal guarantee claim
PDJ Crew to pay David’s costs of the proceeding relating to this issue on a standard basis.
Issue C5: Jason’s ITM Loan / personal guarantee claim
Jason Brandi Parties to pay David’s costs of the proceeding relating to this issue on a standard basis.
Issue C6: Leaning Back Pty Ltd claims
David pays PDJ Crew’s costs of the proceeding relating to this issue on a standard basis.
The costs of the taking of accounts process to be paid by the David Brandi parties.

Jason seeks an order that the parties bear their own costs of the Zigaroo proceeding.

In Tania’s proceeding, he seeks an order that Tania pay David’s costs of the proceeding, including the counterclaim, on a standard basis.

In the former VCAT proceeding, Jason seeks an order that David pay his costs of the proceeding relating to this issue on a standard basis until 6 May 2021 and on an indemnity basis thereafter.

F Settlement offers and correspondence relied on
The 25 November 2019 letter to Tina

On 25 November 2019, the solicitors for PDJ Crew and Jason sent a letter to Tina. The Jason Brandi parties rely on this letter in support of a non-party costs order against Tina:

Our clients: PDJ Crew Pty Ltd and Jason Brandi Fraudulent mortgage procured by David Brandi and forgery of signature
We act for PDJ Crew Pty Ltd (PDJ Crew) and Jason Brandi (Jason), the sole director and shareholder of PDJ Crew.
Allegations of fraud against David Brandi
Our clients allege that David Brandi fraudulently obtained the sum of $4,430,000 by placing a mortgage over an Ascot Vale property owned by our client. The money was then paid to David or David’s companies and associates without our client’s knowledge.
Our client alleges that David forged or had forged multiple signatures to obtain this money, including a lawyer’s signature.
David has not denied this allegation. Copies of the letters explaining the background are enclosed.
Legal proceedings commended by PDJ Crew also outlined the fraud alleged. A copy of the Statement of Claim filed in the Supreme Court are enclosed.
David’s lawyers have provided us with two documents with your signature to support David’s case. One of your signatures has clearly been forged.
Aiding and abetting of fraud
We have been served with a copy of an affidavit sworn by you. In that affidavit you swear at paragraph 8 that the signature (of 1 July 2014) is yours. This document is exhibited to your affidavit as TB-4.
At TB-5 you exhibit further documents said to evidence a transfer of units, including a document purportedly signed on 1 July 2014 by David being “Minutes of a Meeting of the Unitholder(s)” which was said to have taken place at Level 2, 534 Church Street, Richmond on 1 July 2014.
We note further:
1. You and your family were in America on 1 July 2014. You arrived back in Australia in or around mid-July 2014 and after your birthday. It would have been impossible for a meeting of unitholders to be held on 1 July 2014.
2. A handwriting expert has confirmed the forgery of your signature.
There may be very serious personal consequences for you including aiding and abetting of a fraud committed by David.
Our client reserves all of his rights without limitation, including joining you as a defendant to the proceeding on the basis that you have aided and abetted David Brandi’s knowing receipt of financial advantage in breach of his fiduciary obligations to our client.
We strongly suggest that you obtain independent legal advice before responding to this letter.
We enclose for reference a copy of the following correspondence for your consideration:
…
5 Statement of Claim dated 23 September 2019.

The Jason Brandi parties’ 6 May 2021 offer

On 6 May 2021 the Jason Brandi parties sent a Calderbank offer to the David Brandi parties to settle both the Timeless Sunrise proceeding and the former VCAT proceeding (‘First Offer’).

BigJ Enterprises Pty Ltd and PDJ Crew Pty Ltd ats Timeless Sunrise Pty Ltd
Supreme Court Proceeding No. S ECI 2019 04430
We confirm that we act for the first, second and third defendants in these proceedings.
The purpose of this letter is to make an offer of settlement to your clients to avoid the time and cost of litigation.
The Plaintiffs’ Claims
In proceeding S ECI 2019 04430 (Timeless Proceeding), the first plaintiff (Timeless) alleges that it holds units in a purported unit trust and that the property at 9 Newsom Street Ascot Vale (Newsom Street Property) is an asset of that unit trust. In the alternative, and only in the event the claim by Timeless fails, David Brandi (David) alleges a joint enterprise between himself and Jason with the result that the Newsom Street Property (or a portion thereof) is held on constructive trust for David.
The claims made by your clients will be unsuccessful at trial and we raise the following relevant matters:
1. The Newsom Street Property was bought by PDJ Crew in 2007 for $330,000. It was sold in June 2020 for $10.5 million yielding a significant profit. The Newsom Street Property is the only asset of PDJ Crew, which is owned entirely by Jason’s family trust. The funds for Jason to acquire the Newsom Street Property were provided to Jason by Jason and David’s parents, Fernanda and Erminio Brandi for Jason’s sole benefit.
2. The Newsom Street Property was purchased on 17 December 2007. Documents produced on subpoena reveal that David’s accounting practice, Brandi & Co, did not place the order for the purported Trust Deed with Castle Corporate until 11 February 2008. Timeless and David allege, however, that the Trust Deed was brought into existence on 1 July 2007. Plainly this assertion is wrong.
3. The purported Trust Deed is purportedly signed by Erminio Brandi on behalf of PDJ Crew as trustee. But Erminio Brandi was only a director of PDJ Crew between 22 October 2007 and 4 February 2008. Erminio Brandi could not have validly entered into the Trust Deed on behalf of PDJ Crew as trustee in circumstances where it was not brought into existence, much less signed, after 11 February 2008.
4. As noted above, at the time the purported Trust Deed was brought into existence David handled all of Jason’s financial affairs and structured his property investments (and had done for some time). David is Jason’s older brother and a professional accountant. Jason has no tertiary qualifications and placed his complete in trust in David to manage his financial affairs. Jason signed documents at David’s direction without asking questions. Even if Jason did sign the Trust Deed, he did not understand what a unit trust was or that the Trust Deed conferred a 50% interest to David’s family trust. Jason never had had a discussion with David about setting up the trust on the basis that Timeless or David allege. While Jason believes he signed the 2009 and 2010 tax returns on the same understanding, he denies that it his signature on the tax returns for the PDJ Crew Unit Trust from 2011 to 2016.
5. Timeless and David allege that on or about 1 July 2014, Melbourne Property Group Pty Ltd, the former trustee of David Brandi’s family trust, transferred its units in the PDJ Crew Unit Trust to, Timeless (the new trustee). As noted in paragraph 8 of the amended defence, the purported Trust Deed prescribes that steps that must be satisfied to effect a valid transfer of units. The purported transfer to Timeless: (i) was not the subject of written notice to PDJ Crew; (ii) was not the subject of a request that PDJ Crew register a transfer; and (iii) was not validly registered by PDJ Crew given that Jason, as sole director of PDJ Crew, did not sign, pass a resolution or otherwise take a step to register the transfer. This raises doubt as to the standing held by Timeless to bring the proceeding. The former owner of the alleged 50% interest has been deregistered.
6. David comes to Court with unclean hands. The allegations of fraud made against David in the amended defence and amended counterclaim will disentitle both him and Timeless Sunrise (whom at all relevant times he was the directing mind and will) from the relief they seek in respect of the Newsom Street Property.
7. The amended statement of claim brings two further issues into play:
(a) Mr Landlord Pty Ltd as now a party to the proceedings. On any view, this party has been included only to attempt to counter the difficulties we have identified in paragraph 5 above and to get around the deregistration of the alleged former unit holder. This claim is put in the alternative only, but in so doing, further erodes the constructive trust alleged and discussed in paragraph 6 above.
(b) The Amended Statement of Claim also makes allegations against Jason in his capacity as a director of Zigaroo. These allegations are doomed to fail as:
(i) David was aware of the loans in question and indeed helped facilitate some of them; and
(ii) David has gone on oath in the Family Court and explained how the trust in fact operated and the loans in question were allowed in circumstances that was entirely consistent with your client’s evidence in that forum.

While the majority of the points set out above have been made previously in open correspondence, they are worth reiterating and they should not take your clients by surprise.
The Counterclaim
The central feature of the counterclaim is the special position of trust and confidence David held vis-à-vis Jason. David knowingly abused that trust, culminating in the frauds committed by David in 2018 and for which he has recently been arrested. To the extent necessary, we refer to and repeat the matters set out in paragraph 7 above.
The amended counterclaim includes the following matters:
1. Breach of Fiduciary Duty/Fraud
Our clients’ claims regarding the two frauds at Newsom Street are irrefutable. David seeking to invoke the privilege against self-incrimination merely reinforces this view.
2. PDJ Crew loan to David
The basis of this claim was clearly set out via correspondence dated 30 April 2020, which went unanswered by your client. The loan in question is set out between paragraphs 12B and 12J of the amended statement of claim. The defence to this claim acknowledges that loans were taken out, but otherwise does not set out any meaningful defence to the claim made.
3. ITM Loans
Jason and PDJ Crew both loaned the sum of $250,000 and $500,000 to Independent Tube Manufacturers Pty Ltd (ITM) in 2010. Our clients (including in the Tania Brandi proceedings) allege that this loans were made pursuant to loan agreements which included personal guarantees. Our clients recall the circumstances of these documents being signed by the parties, including your client, and your client taking the documents. The documents have never been seen since, including by the liquidator of ITM. Your client has been sued twice in relation to similar agreements in other litigation and faces three separate claims across two proceedings. Given the credit issues surrounding your client, your client’s denials and belated and contradictory use of Midnight Express will not be believed.
The total amount outstanding, based on the schedule of interest accrued as set out to the Amended Counterclaim, is $9,425,021.
4. Leaning Back
The claim in respect of Leaning Back is set out between paragraphs 26B and 26I of the amended statement of claim. Your client has elected to plead the privilege against self-incrimination in response to these claims. This response speaks for itself.
Your client’s conduct in respect of Leaning Back is also relevant to the issues raised in the VCAT Proceedings, which we will discuss further below.
The VCAT Proceedings
The VCAT Proceedings were commenced by David in May 2019 and in the face of a request for an accounting by our client. While David’s claim in VCAT was set out in simplistic terms, as our clients gathered evidence of your client’s conduct (including the frauds alleged) it became readily apparent the issues in dispute in the VCAT Proceedings were closely linked to the issues in dispute in the Timeless Proceedings, including the counterclaim. The VCAT Proceedings were then transferred to the Supreme Court.
The sequence of events regarding the Cooper Street and Holmes Road properties is set out in our letter to you of 30 April 2020. Since that letter was written Jason has assumed liability for payment of the mortgage on Cooper Street, the Holmes Road property has been sold by the mortgagee in possession and there is currently over $1,000,000 that has been paid into court following the sale of this property.
For the reasons set out in our letter of 30 April 2020, on any view the financial position between David and Jason in respect of these properties favours Jason and the proceedings commenced by David against Jason will ultimately result in a net financial loss to David.
Our clients’ Offer
Despite the shortcomings in your clients’ case against our clients and the very significant amount that David owes as a result of him guaranteeing the ITM loans, commercial expediency and a desire to resolve long running disputes between family members justifies an attempt to resolve these proceedings. In the circumstances, our clients are prepared to make the following reasonable offer of settlement in full and final settlement of the claims made by our respective clients in the proceedings:
PDJ Crew/PDJ Crew Unit Trust and 9 Newsom Street Ascot Vale
1. Timeless Sunrise Pty Ltd (as trustee for the Davina Family Trust) (Timeless) agrees to sell to Big J Enterprises Pty (as trustee for the Jason Brandi Family Trust) (Big J) its units in the PDJ Crew Unit Trust for the sum of $1 million.
2. On the transfer of the units referred to in paragraph 1 above, Timeless, David and Mr Landlord Pty Ltd (as trustee for Brandi Family Trust) acknowledge they have no further right or entitlement to the PDJ Crew Unit Trust or the property at 9 Newsom Street Ascot Vale (Newsom Street).
3. David agrees to pay PDJ Crew the sum of $50,000 in full satisfaction of PDJ Crew’s legal costs to investigate and take action on David’s frauds against PDJ Crew.
4. David agrees to repay to PDJ Crew his loan in the sum of $593,532.
Leaning Back
5. David agrees to pay Jason the sum of $300,000 for any profit that he or any of his entities earned by using Leaning Back Pty Ltd to lend money to our clients without our clients’ knowledge.
Augusta Estates
6. Jason does not require any payment as part of this offer in respect of the Augusta Estates claim.
VCAT Proceedings
7. In full and final satisfaction of the VCAT Proceedings, including any costs thereof, David agrees to:
a. sell his 50% interest in the Cooper Street Property to Jason or his nominee at its current market price as determined by an independent expert appointed by the parties or, in the event no agreement can be reached as to the identity of the expert, appointed by the Court;
b. prior to the transfer of his interest in the Cooper Street Property, remove any encumbrance over his share of the Cooper Street Property save for the joint loan from Perpetual Trustee Company Limited (Joint Loan);
c. pay to Jason half of the outstanding balance of the Joint Loan from Perpetual Trustee Company Limited;
d. divide the proceeds of the sale of the Holmes Road Property paid into Court (Holmes Road Proceeds) equally between Jason and David; and
e. pay to Jason the sum of $600,000 to reflect the additional amounts that David has borrowed against the Cooper Street and Holmes Road Property as compared to Jason.

ITM
8. David agrees to pay to PDJ Crew $526,083.47 in full and final satisfaction of PDJ Crew’s claim against David in relation to the David Brandi ITM Loan and David’s breaches of fiduciary duty, as described in paragraphs 12K to 12O of the Counterclaim.
9. Our clients do not require any payment in relation to the guarantees given by David in relation to the loans from Jason and PDJ Crew to ITM.
Documents
10. David will, in his capacity as the Principal of Brandi & Co. and/or as a director of Child’s Play International Pty Ltd, procure the transfer all files and other relevant financial documentation of Jason, PDJ Crew, Big J Enterprises and Big J Corp Pty Ltd to Hall Chadwick Melbourne.

The offers and Tina and David’s submissions

David and Tina made two offers to the Administrators to settle the Zigaroo proceeding. Both offers were made after the trial commenced, the first offer on 23 August 2022 (‘Zigaroo 1’) and the second offer on 26 August 2022 (‘Zigaroo 2’). At the time the offers were made the Administrators were not active participants in the proceeding. On 2 August 2022 they had been excused from taking an active role.

David and Tina rely on the Zigaroo 1 and Zigaroo 2 offers in support of orders that Zigaroo pay their costs of the Zigaroo proceeding on a standard basis until 26 August 2022, and thereafter on an indemnity basis.

David and Tina seek an order that to the extent necessary they be granted leave under s 500(2) of the Corporations Act 2001 (Cth) (‘Corporations Act’) to proceed with an application for costs against Zigaroo. I accept that it is appropriate to grant leave in accordance with the principles discussed by Halley J in ZOLL Medical Australia, in the matter of Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd (in liq).[97]
[97]ZOLL Medical Australia, in the matter of Cardiac Defibrillators Australia Pty Ltd (in liq) v Cardiac Defibrillators Australia Pty Ltd (in liq) [2022] FCA 167 [25].

Both the Zigaroo 1 and the Zigaroo 2 offers were expressed as Calderbank offers.

The Zigaroo 1 offer contained the following offer:

(a) The sum of $500,000 of the proceeds of sale from the Property situated at 306 Ascot Vale Road, Moonee Ponds, Victoria, being the land described in title volume 10619 folio 169 (Proceeds) be paid to the First Plaintiff;
(b) The balance of the Proceeds be released to Zigaroo;
(c) The counterclaim filed 3 May 2022 be dismissed;
(d) Within 2 business days from the date of acceptance of this offer, the parties do all acts and things necessary to cause consent orders to be filed with the Court giving effect to the terms of the offer.
(e) Each party bear their own costs.

The Zigaroo 1 offer letter referred to the service of evidence in support of David and Tina’s claim on 10 August 2022. It asserted the Administrators should have had adequate time to consider that evidence. It included a link to written outlines of opening submissions, the list of issues and chronology together with a link to the current version of the court book and the court book index as at 16 August 2022.

The Zigaroo 1 offer asserted that ‘to date our client’s evidence is not in dispute’. It asserted that for the reasons set out in the opening submissions, David and Tina’s claims in the proceeding were likely to succeed in full resulting in the amount held in Court representing the proceeds of sale of Ascot Vale being ordered to be paid to David and Tina with nothing being paid to Zigaroo.

The Zigaroo 1 offer was expressed to be open for acceptance until 5:00pm on Friday, 26 August 2022.

On 26 August 2022, David and Tina together with their solicitors and counsel attended an informal settlement conference with the Administrators and their solicitors. Later that day David and Tina’s solicitors sent the Zigaroo 2 offer to the Administrators’ solicitors. The Zigaroo 2 offer must have been sent after 5:00pm on 26 August 2022. That is so because the letter noted that the time for the acceptance of the Zigaroo 1 offer had now expired.

After referring to the settlement conference and providing a link to witness statements of Jason filed on 24 August 2022 and Fernanda filed on 26 August 2022, and after referring to the expert report of Dr Dewhurst dated 3 November 2021 filed on behalf of the Jason Brandi parties and advising that objection would be taken to that evidence, the letter set out a number of reasons why in the opinion of David and Tina their claim was likely to succeed in full.

The Zigaroo 2 letter noted that oral openings in the Zigaroo proceeding had not yet occurred and that no witnesses had yet given evidence in that proceeding. The Zigaroo 2 letter made reference to a request by the Administrators that they might consult with the Jason Brandi parties in respect to the terms of the offer. It agreed to such consultation taking place. The Zigaroo 2 letter made the following offer:

(a)The administrators of Zigaroo shall apply forthwith to Court for orders under s 90-15 and 90-20 of the Insolvency Practice Schedule Corporations and / or under the Trustee Act and / or under the general law for directions that they are acting reasonably and justified in giving effect to the settlement set out below (application for directions), with the application for directions being filed no later than Tuesday, 30 August 2022.
(b)In the event that the application for directions is refused, and in the event that the administrators are unable to recover in the administration of Zigaroo their remuneration, costs and disbursements incurred in connection with the application for directions, then the plaintiffs agree to indemnify the administrators of Zigaroo for the unrecovered portion of that remuneration, costs and disbursements, with such indemnity capped in the amount of $50,000.
(c)Upon the administrators of Zigaroo obtaining the directions from Court referred to in paragraph (a), the administrators of Zigaroo and the plaintiffs shall give effect to the settlement set out below.
(d)The sum of $353,815.39 of the proceeds of sale from the property situated at 306 Ascot Vale Road, Moonee Ponds Victoria being the land described in title volume 10619 folio 169 (Proceeds), together with any interest accrued on the Proceedings, be paid to the plaintiffs.
(e)The balance of the Proceeds in the amount of $261,000 be paid to Zigaroo.
(f)The claim and the counterclaim be dismissed with no order as to costs.
(g)The plaintiffs, the Administrators, and Zigaroo release each-other from all claims in connection with and arising out of the claim and the counterclaim, save for existing costs orders.
(h)The plaintiffs, and their related entities, are free to lodge proofs of debt in the administration of Zigaroo for voting purposes only.
(i)The plaintiffs, and their related entities, agree that they will forgo any dividend payable to them in the administration of Zigaroo.
(j)For the avoidance of doubt, if Zigaroo is placed into liquidation, the plaintiffs, and their related entities, are free to lodge proofs of debt in the liquidation of Zigaroo for voting purposes, and for the purposes of obtaining any dividend in the liquidation of Zigaroo.
(k)Subject to execution of a deed of settlement giving effect to the above terms.

The Zigaroo 2 offer did not specify a time for acceptance. It said:

The Offer may be accepted in writing, following which we will proceed to prepare a deed of settlement giving effect to the terms of the Offer, with a view to executing the deed of settlement over the coming weekend.

Although no party has made submissions directed to this issue, it appears to me the offer was intended to expire, at the latest, at the end of the weekend. The trial resumed sitting on Monday 29 August 2022, having adjourned part heard on Thursday, 25 August 2022. The offer was not accepted prior to 29 August 2022 and no application for directions was filed by the Administrators on or prior to 30 August 2022 as was a requirement of acceptance of the offer.

When Zigaroo pleaded to David and Tina’s claims to be entitled to Ascot Vale Road the property was mortgaged to the ANZ Bank. In its counterclaim Zigaroo pleaded that Fernanda’s signature on the Zigaroo mortgage was a forgery. It sought an order that the whole of the net proceeds of sale be paid to it. In the alternative, that $712,000 or alternatively $623,334.55 be paid by David.[98]
[98]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 10) [2023] VSC 524 [1574]-[1575].

On 25 October 2021 Zigaroo contracted to sell Ascot Vale Road for $1.27m.[99] At settlement on 21 December 2021, $623,334.55 was paid to discharge the ANZ mortgage and $614,851.39 was paid into Court. In the Zigaroo proceeding David and Tina sought an order the money paid into Court together with interest be paid to them.
[99]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 10) [2023] VSC 524 [494], [10(b)].

On 2 September 2022 allegations in David and Tina’s pleading in the Zigaroo proceeding that in 2013 a loan previously from the CBA was refinanced with a loan secured by a mortgage in favour of the ANZ were withdrawn by David and Tina. Until the withdrawal of those allegations on 2 September 2022 the plea in the defence that Fernanda’s signature on the ANZ mortgage was a forgery was maintained. As recorded in the trial reasons, I determined that David should not be required to answer questions concerning the ANZ mortgage.[100]
[100]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 10) [2023] VSC 524 [140].

The affidavit of Mr Fuenzalida relied on by David and Tina in support of the costs orders for which they contend exhibits a company search of Zigaroo which establishes that it was placed into liquidation on 17 November 2023.

On 20 October 2023 I ordered payment of the funds representing the proceeds of sale of Ascot Vale Road to Tina and David, less any land tax referable to the property on a single holding basis. On 2 November 2023 I made orders recording advice obtained by the Administrators that Capital Gains Tax (‘CGT’) is payable in respect of the property. The orders made on 1 March 2024 provided for payment to David and Tina of the proceeds of sale of Ascot Vale Road after allowing for the payment of land tax but subject to the retention of a sum sufficient to cover any taxation liability, being a reference to any liability for CGT as the Administrators had been advised is payable.

The Administrators’ submissions

On 27 October 2023 I made an order appointing the Administrators to act in a number of different capacities in relation to various trusts the subject of the proceedings. The Administrators submit that in light of those appointments it is inappropriate for them to take any position on costs orders. That is so because apart from actions taken by them in their capacity as the administrators of Zigaroo, prior to 27 October 2023 they did not act or hold authority to act in relation to the trusts to which they have been appointed as proposed by me in the trial reasons. The Administrators submit that since this was a family dispute and all issues were appropriately advanced addressed and contested by the family members, the costs consequences are most appropriately dealt with in the same manner.

In response to the submissions of David and Tina who seek an indemnity costs order in their favour in the Zigaroo proceeding from 26 August 2022 relying on the Zigaroo 1 and Zigaroo 2 offers the Administrators have raised a number of matters for consideration.

With respect to the submission referring to their ‘decision not to participate in the trial of this proceeding on behalf of the Defendant’, they submit:

(a) they did not make a decision to not participate in the trial of the Proceeding. As Timeless Sunrise (No 2) records, that decision was made by the Court; and[101]

(b) the offers relied on were made only about one month after their appointment as voluntary administrators of Zigaroo.

[101]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 2) (Unreported, Supreme Court of Victoria, Delany J, 22 July 2022) (‘Timeless Sunrise (No 2)’).

While the offers were made shortly prior to the trial on 22 July 2022, the Court had ruled that the issues in the proceedings were appropriately put forward and contradicted by the family members.[102] The Administrators submit the Court should take into account whether or not having regard to that circumstance it was realistic that the offers relied on by David and Tina could be practically assessed and accepted by them. That is the case albeit only they were capable of accepting such an offer given division 3 of part 5.3A of the Corporations Act.
[102]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 2) (Unreported, Supreme Court of Victoria, Delany J, 22 July 2022).

The Administrators also drew attention to the application concerning CGT issues relating to Ascot Vale Road made on 8 December 2023 seeking orders and declarations that:

(a)the Ascot Vale Road Property was held by the defendant upon constructive trust for the plaintiffs, with the Court to determine the date upon which that trust arose;
(b)subject to the defendant filing an application with the Commissioner for Taxation for a Private Ruling in relation to any tax liability arising from the sale of the Ascot Vale Road Property, a stay of the Court’s Order to pay land tax referable to the property on a single holding basis in the hands of MK No 13 to the plaintiffs;
(c)any amount for which the defendant is assessed by the Commissioner for Taxation to be liable for arising from the sale of the Ascot Vale Road Property in respect of any tax, interest or penalties be deducted from the sum of $615,231.43 paid into Court; and
(d)that the sum of $16,678.31 to be paid from Common Fund No. 1 and debited to the solicitors for the liquidators of ZIGAROO PTY LTD (In Liq).

The Administrators submit these complex issues which remained unresolved following the publication of the trial reasons were live issues that required the making of an application at the time that the Zigaroo 1 and Zigaroo 2 offers were made.

The Administrators submit that at the time of both offers they were required to consider two issues, summarised in their submissions reproduced below:

First, the prospects of David and Tina succeeding in their assertion that at the time of their marriage in 1998, David’s parents who purchased the property in 1961, made representation that the property would be theirs.
a.The administrators were conscious of the decision of Ward CJ in E Co [A Pseudonym] v E Co [A Pseudonym] [2019] NSWSC 429, where her Honour notes inter alia at paragraph [128]:
b.Suffice it here to note that I remain of the view expressed in Varma v Varma (2010) 6 ASTLR 152; [2010] NSWSC 786 (Varma), and cited with approval in McNab v Graham (2017) 53 VR 311; [2017] VSCA 352 (McNab v Graham ), that such a trust would be recognised as arising at the time of the reliance on the relevant representation or promise (or in this case on the expectations encouraged by the first defendant in his sons) that makes it unconscionable for the relevant party later to resile from that representation or promise (or to act otherwise than in accordance with those expectations).
c.It is noted that the Plaintiffs’ claim did not seek a declaration that Ernie held the property on Trust for the Plaintiffs, rather they sought a declaration that the company (that is, Zigaroo) held the property or its sale proceeds on trust.
d.Therefore, the administrators had to necessarily consider whether it could be established that an E1 CGT event arose at the time that the Plaintiff arranged for renovations to the property in 1998 and if so, what are the ramifications and who is liable for payment of the CGT arising from the CGT Event. Alternatively, (and noting that no declaration was sought that Ernie held the Property as trustee), will a CGT E1 Event deem to have occurred upon the transfer of the property from Ernie to the company on 14 March 2002? (and if so, what are the ramifications?)

Second, in the event that the Court determined that the Property was held on trust for David and Tina (and therefore, they are the beneficial owners of the same):
a.Was a CGT Event (either E1 or otherwise) triggered at the time such a trust came into operation (noting that either Ernie or subsequently, Zigaroo were the registered proprietor at the time that such a trust came into existence);
b.If such a trust was triggered as at 1998 (whilst Ernie was the registered proprietor), at the time that Ernie transferred the Property to the Company in 2002, was a subsequent CGT Event triggered?
c.At the time Zigaroo sold the property in 2021, noting an A1 CGT event took place, who was liable for such CGT (Zigaroo or David/Tina Brandi)?

Consideration: Zigaroo 1 and Zigaroo 2 offers

It is necessary to evaluate the Zigaroo 1 and Zigaroo 2 offers against the declarations and orders ultimately made in the Zigaroo proceeding. In substance, Tina and David were successful in their claim to be entitled to the proceeds of sale of Ascot Vale Road. I found that it was never part of the assumed state of affairs that David and Tina would not pay all of the expenses relating to Ascot Vale Road. I noted that payment of tax has never been front of mind for the Brandi family, and in particular David.[103] Both the Zigaroo 1 and Zigaroo 2 offers were silent in relation to tax issues.
[103]Timeless Sunrise Pty Ltd v BigJ Enterprises Pty Ltd (No 10) [2023] VSC 524 [1580].

Having regard to the carve out in the 20 October 2023 Order to cover both the obligations to pay land tax and CGT from the money otherwise ordered to be paid in favour of Tina and David and having regard to later orders made in the Zigaroo proceeding concerning tax issues, I am not persuaded that the result obtained by David and Tina in relation to Ascot Vale Road was a less favourable outcome to Zigaroo than either the Zigaroo 1 or the Zigaroo 2 offers.

Applying Hazeldene I am not persuaded that the failure or refusal on the part of the Administrators to accept either the Zigaroo 1 or the Zigaroo 2 offer was unreasonable. There are three reasons why that is the case:

(a) First, because neither offer addressed the liability for tax, including the liability for any CGT. To the extent there is a liability for taxation, and certainly one in relation to land tax has been established, neither offer made provision for the payment of those amounts. The 2 November 2023 Order recorded advice received by the Administrators that CGT was payable and referred to their preliminary estimate that the amount payable was $570,308.01.

(b) The evidence does not establish the quantum of CGT payable, the amount David and Tina are required to retain, and to pay, pursuant to the 1 March 2024 orders. In those circumstances not only did the Zigaroo 1 and Zigaroo 2 offers fail to address the potential liability for CGT, the evidence does not establish that after payment of CGT the amount remaining for David and Tina exceeds $500,000 (the amount specified in the Zigaroo 1 offer) or $353,815.39 (the amount specified in the Zigaroo 2 offer).

(c) Second, because at the time the two offers were made, the Administrators were in a difficult position to consider and respond promptly to them. On 2 August 2022 they had been excused from participation in the proceeding and the trial. The time allowed for consideration of both offers was very tight. The tight turnaround time was complicated in respect of the Zigaroo 1 offer by the fact that reply evidence later relied on by the Jason Brandi parties in the proceeding had not yet been filed but had been foreshadowed. In the case of the Zigaroo 2 offer, responding evidence had been filed which made it difficult for the Administrators both as outsiders to the Brandi family and as persons not actively involved in the litigation to form a view about the likely prospects of success of the claims by Tina and David.

(d) Third, Tina and David did not seek a declaration that Ernie, who was alleged to have made representations that the property would be theirs, held the property on trust for them. They sought a declaration that Zigaroo held the property or its sale proceeds on trust. In those circumstances the Administrators acting responsibly were required to consider whether or not a CGT event had occurred in either of the circumstances referred to in their submissions. There was considerable complexity involved in an accurate determination of those questions. To require them to consider those issues and to form a view in the limited time available in the case of both the Zigaroo 1 and Zigaroo 2 offers was unrealistic.

Having regard to those factors I will not make an indemnity costs order by reason of the refusal by the Administrators to accept either the Zigaroo 1 or Zigaroo 2 offers.

N Costs of the Zigaroo proceeding

The claim by David and Tina to be entitled to the proceeds of the sale of Ascot Vale Road was unsuccessfully resisted at trial by Jason standing in the shoes of Zigaroo. However, until 2 September 2022 there were issues on the pleadings concerning the ANZ mortgage and the alleged forgery of Fernanda’s signature on that mortgage which were actively contested by David and Tina until they abandoned the contest relating to that mortgage.

The appropriate costs order is that until 2 September 2022 when David and Tina withdrew the allegations relating to the ANZ mortgage the parties, each party is to pay their own costs of the Zigaroo proceeding. Thereafter Jason must pay David and Tina’s costs of their proceeding against Zigaroo on a standard basis.

I will not otherwise make a separate order for costs against Zigaroo. From shortly after the appointment of the Administrators it was Jason who had the conduct of the defence of the claim by David and Tina and not Zigaroo or the Administrators.

O Non-party costs orders against Tania

The David Brandi parties submit that non-party costs orders should be made against Tania in relation to three issues in the Timeless Sunrise proceeding. The three issues are the caveat removal claim, the claim by PDJ Crew against David relating to the ITM loan and the claim by Jason relating to the ITM loan.

Applying the authorities to which I have earlier referred, including Knight and Gdanski, I am not satisfied that circumstances exist to support the making of a non-party costs order against Tania. I consider that would be unjust to do so having regard to her role and involvement in the Timeless Sunrise litigation.

Tania was not a moving party to the Timeless Sunrise proceeding. She was a moving party in her own proceeding. There was some factual overlap in relation to her claims in her proceeding to maintain a caveatable interest over the East Melbourne property and in relation to the ITM loan. However I do not consider that factual overlap means that she should be ordered to pay costs of those issues in the proceeding in which she was not the moving party and which, if it had been successful, is not a proceeding where she stood to benefit directly or indirectly.

P Disposition

It is important to be clear about the cost consequences that flow both from my findings and from the costs orders that are agreed. To the extent costs orders are made by consent, the effect of those consent orders is to override orders otherwise made.

Because of the unreasonable rejection of the Second Offer, the David Brandi parties, namely, Timeless Sunrise, David and Mr Landlord must pay the costs of the Jason Brandi parties, including reserved costs, of issues A1 – A4 in the joint statement which relate to the PDJ Crew Trust and Newsom Street, on a standard basis until 22 February 2022 and thereafter on an indemnity basis.

Timeless Sunrise must pay the costs of the Jason Brandi parties of and incidental to the Timeless Sunrise proceeding on a standard basis until 25 November 2019 and thereafter on an indemnity basis until Monday, 5 September 2022.

David must pay the Jason Brandi parties costs of 5-7 September 2022 and the costs of dealing with pleading amendments in response to the fourth further amended statement of claim, on an indemnity basis.

Timeless Sunrise, David and Mr Landlord must pay and are jointly and severally liable for the Jason Brandi parties’ costs of the Timeless Sunrise proceeding on an indemnity basis from 25 November 2019 until 7 September 2022 inclusive.

Mr Landlord and the other David Brandi parties must pay the costs of and incidental to the pursuit of Mr Landlords’ claims from 7 September 2022 on an indemnity basis including the costs of the trial relating to the investigation and consideration of issues relating to Mr Landlord’s alleged ‘chain of title’.

I have found that Tina must pay and is jointly and severally liable with the David Brandi parties for the Jason Brandi parties’ costs of the Timeless Sunrise proceeding on an indemnity basis from 25 November 2019 until 7 September 2022 inclusive.

Separately I have found that Tina and each of the David Brandi parties are jointly and severally liable for the Jason Brandi parties’ costs on an indemnity basis of issues relating to the PDJ Crew Trust and Newsom Street from 25 November 2019 until the end of the trial.

Taking the previous findings together I will make the following costs orders in the Timeless Sunrise proceeding:

(a) the David Brandi parties are jointly and severally liable for and must pay the Jason Brandi parties’ costs of the Timeless Sunrise proceeding on a standard basis until 25 November 2019 and the David Brandi parties and Tina are jointly and severally liable for and must pay the Jason Brandi parties’ costs on an indemnity basis from 25 November 2019 until 7 September 2022 inclusive.

(b) The costs liable to be paid in accordance with sub-paragraph (a) shall include the Jason Brandi parties’ costs of 5-7 September 2022 and the costs of dealing with pleading amendments in response to the fourth further amended statement of claim on an indemnity basis.

(c) the David Brandi parties and Tina are jointly and severally liable for and must pay the Jason Brandi parties’ costs of and incidental to the pursuit of Mr Landlord’s claims from 7 September 2022 on an indemnity basis including the costs of the trial relating to the investigation and consideration of issues relating to Mr Landlord’s alleged ’chain of title’.

I will now turn to the other orders required to be made to give effect to my reasons and to orders otherwise agreed between the parties.

In the Timeless Sunrise proceeding the David Brandi parties must pay the Jason Brandi parties’ costs of issues relating to alleged breaches of duty concerning the PDJ Crew trust including issues A6-11 in the joint statement from 7 September 2022 on an indemnity basis.

In the Timeless Sunrise proceeding the parties must pay their own costs from 7 September 2022 concerning the appointment of an independent trustee to PDJ Crew and of matters related to issue A12 in the joint statement.

The David Brandi parties must pay Jason’s costs in relation to the allegations concerning the conduct of Zigaroo under Jason’s control including issues B21-B24B in the joint statement on a standard basis.

David must pay the Jason Brandi parties’ costs of issues relating to the CEG and Atida mortgages on an indemnity basis.

The David Brandi parties must pay the Jason Brandi parties’ costs of their application for declaratory relief concerning a resolution of PDJ Crew’s sole director dated 1 July 2014 on a standard basis.

Jason must pay the David Brandi parties’ costs of the Secure Funding issue on an indemnity basis.

Jason must pay the David Brandi parties’ costs of dealing with and responding to the deletion by Jason of the contents of the hard drive on his laptop on the weekend of 12 and 13 November 2022 including the costs of Ms Balit’s report on an indemnity basis.

To the extent there are discrete costs relating to the removal as Zigaroo as Trustee and related matters, the Jason Brandi parties must pay the costs of the David Brandi parties relating to them on a standard basis.

Until 2 September 2022 each party is to pay their own costs of the Zigaroo proceeding. Thereafter Jason must pay David and Tina’s costs of their proceeding against Zigaroo on a standard basis.

By consent the parties must bear their own costs of the Timeless Sunrise Proceeding relating to JAG Group Unit Trust, Tarwin Group Unit Trust, Tarwin River Holdings Unit Trust (Issue BA) and Lot 28/157 Ascot Vale Road (Issue BB).

The parties must bear their own costs of the former VCAT proceeding.

By consent each of the Jason Brandi Parties and Tania are jointly and severally liable to pay David’s costs of the proceeding relating to the East Melbourne caveats issue (Issue BC) on a standard basis.

By consent PDJ Crew is to pay David’s costs of the proceeding relating to the ITM and PDJ Crew loan claims (Issues C2 and C3) on a standard basis.

By consent David must pay Jason’s costs of the Leaning Back issue on a standard basis. I separately order that David must pay the costs of the process of taking accounts.

Tania must pay David’s costs of Tania’s proceeding on a standard basis.

Where I have ordered that one or more parties pay the costs of another party those costs shall include reserved costs as applicable.

In the case of each of the costs orders, the costs to be paid are to be taxed in default of agreement.

Subject to further orders by the Costs Court, the requirement to file a bill of costs with the summons for taxation in accordance with r 63.39 Supreme Court (General Civil Procedure) Rules 2015 is dispensed with.

SCHEDULE OF PARTIES

TIMELESS SUNRISE PTY LTD (ACN 126 299 634)
AS TRUSTEE FOR DAVINA FAMILY TRUST

First Plaintiff

and

DAVID BRANDI

Second Plaintiff

and

MR LANDLORD PTY LTD (ACN 116 921 834)
AS TRUSTEE FOR BRANDI FAMILY TRUST

Third Plaintiff

and

BIGJ ENTERPRISES PTY LTD (ACN 084 199 084)
AS TRUSTEE FOR JASON BRANDI FAMILY TRUST

First Defendant

and

PDJ CREW PTY LTD (ACN 111 546 519)
AS TRUSTEE FOR PDJ CREW UNIT TRUST

Second Defendant

and

JASON BRANDI

Third Defendant

ZIGAROO PTY LTD (ACN 006 005 401)
AS TRUSTEE FOR MK NO. 13 TRUST

Fourth Defendant

(by original proceeding)

JASON BRANDI

First Plaintiff by counterclaim

and

BIGJ ENTERPRISES PTY LTD (ACN 084 199 084)
AS TRUSTEE FOR JASON BRANDI FAMILY TRUST

Second Plaintiff by counterclaim

and

PDJ CREW PTY LTD (ACN 111 546 519)
AS TRUSTEE FOR PDJ CREW UNIT TRUST

Third Plaintiff by counterclaim

and

DAVID BRANDI

Defendant by counterclaim

(by counterclaim)

[2024] VSC 588

20 September 2024