Virtus Property Group Pty Ltd v Joanne Kosmopoulos (security for costs)

[2024] VCC 1505

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
(Not) Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-23-03490

Virtus Property Group Pty Ltd (ACN 163 632 620)	Plaintiff
v
Joanne Kosmopoulos	Defendant

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	30 September 2024
DATE OF RULING:	2 October 2024
CASE MAY BE CITED AS:	Virtus Property Group Pty Ltd v Joanne Kosmopoulos (security for costs)
MEDIUM NEUTRAL CITATION:	[2024] VCC 1505

RULING
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Subject:SECURITY FOR COSTS

Catchwords:              Practice and procedure – security for costs – calculation of quantum of security to be provided

Cases Cited:Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293; Javanovic v Magri [2017] VSCA 373

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R L Moore	Sanicki Lawyers
For the Defendant	Mr C Twidale	TM Collins

HIS HONOUR:

1Peter Fountas was in a personal relationship with the defendant during the period 2022 to 2023. In December 2022, he transferred a set of car number plates to the defendant. After the relationship broke down, Mr Fountas asked for the number plates back. The defendant refused, saying that Mr Fountas had made a gift of the plates to her.

2On 3 July 2023, Mr Fountas commenced the present action in his own name against the defendant. He claimed in his statement of claim that that he had:

“agreed to lend the number plates to the defendant on a temporary basis … to allow the defendant to temporarily display the number plates on her 2021 Porsche motor vehicle [and that she] would return the number plates to the plaintiff … on demand of the plaintiff”.

3The relief sought was the return of the number plates and damages, although the amount of damages sought was never quantified.

4The defendant’s solicitors conducted searches and suggested in correspondence with Mr Fountas’s solicitors that a company Virtus Property Group Pty Ltd (“Virtus”) had been the owner of the number plates and not Mr Fountas. On 5 October 2023, Virtus was substituted as the plaintiff for Mr Fountas and an amended writ and statement of claim was issued.

5Mr Fountas is a director and shareholder of Virtus. Whilst Mr Fountas appears to have significant personal assets, Virtus does not.

6In a further amended statement of claim, Virtus alleged that:

“in return for the [defendant] promising to return the Plates when requested by the plaintiff, the plaintiff agreed to lend the Plates to her so she could temporarily display the Plates on her Porsche motor vehicle” and for this purpose agreed “to temporarily assign the display rights to the defendant”.

7By the further amended statement of claim, the return of the number plates was still sought, although the claim for damages was dropped.

8The trial of the dispute will commence on 14 October 2024, although the parties were, in a recent pre-trial hearing, ordered to return to mediation. I was told that the mediation may commence as early as Friday, 4 October 2024.

9The issue which I must determine is an application for security for the defendant’s costs of the proceeding since the commencement of the amended claim, including the upcoming trial. The defendant’s solicitors claim security in the total sum of $168,726.70, $92,759.70 as the defendant’s pre-trial costs including the costs of this application, and $75,967.00 as the estimated costs of the trial set to run for at least 5 days.

10Plaintiff’s counsel, Mr Moore, informed the Court that when the proceeding was issued, Mr. Fountas believed that the “historic” number plates were worth about $200,000.00. Now they have a value of about $70,000.00, apparently as a result of market forces.

11There was no issue between the parties that Virtus is required to provide security for the defendant’s costs. The only matter for the Court to determine is the amount of the security and in what form it should be provided.

12Mr Moore submitted that the Court should pay particular regard to s24 of the Civil Procedure Act 2010 (Vic) that imposes an obligation on the parties that they, “must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to - (a) the complexity or importance of the issues in dispute; and (b) the amount in dispute”. Mr Moore also submitted that, “the amount sought for security [by the defendant] is exorbitant, unjustified and totally disproportionate to the value of the subject matter of the plaintiff’s claim and the issue in dispute”.

13Mr Moore further submitted that the defendant was tardy in bringing the present application during part of the period between 5 October 2023, when the writ and statement of claim were amended, and 21 May 2024, when the defendant’s summons was issued.

14Some of the correspondence between the solicitors was marked “without prejudice save as to costs”. Defendant’s counsel, Mr Twidale, relied upon this correspondence as indicating that the parties were attempting to resolve the issue of security during this period. Mr Moore referred to some “open” offers that were made by the plaintiff to provide security. On 17 October 2023, Mr Fountas had offered to personally provide security in the form of an undertaking not to deal with certain real property until the litigation was completed and any order for costs in the defendant’s favour had been met. This offer was, apparently, later withdrawn.

15A later offer by the plaintiff was to provide security in the sum of $17,029.00 for pre-trial matters and $58,368.00 for the trial costs. I have not read the correspondence headed “without prejudice save as to costs”. I will defer making any decision on the costs of the application until I have made my determination on the other issues raised by the application. The parties will then have the opportunity to make oral submissions about the costs of the application.

16At my suggestion, the parties very helpfully prepared a “Scott Schedule” setting out the disputed items with each party’s suggestion as to the appropriate quantum of security and the relevant references to where those items were dealt with in the parties’ materials.

17The parts of the schedule setting out the items and the respective quantum figures were as follows:

Item no.	Item description	Defendant’s estimate	Plaintiff’s estimate
1	Costs incurred prior to the issue of the summons seeking security	$10,136.65	$Nil
2	Costs of plaintiff’s summons dated 20 August 2024 to file further amended SOC (costs ordered on 28 August 2024).
2a	Solicitors’ costs	$4,403.85	$4,403.85
2b	Counsel’s costs	$1,540.00	$1,540.00
3	Costs thrown away by further amended SOC (costs ordered on 28 August 2024)
3a	Original pleadings – solicitors’ costs	$3,708.00	$Nil
3b	Original pleadings – counsel’s costs	$3,300.00	$Nil
3c	Discovery – solicitors’ costs	$710.40	$385.60
3d	Mediation – solicitors’ costs	$3,000.00	$Nil
3e	Mediation – mediator’s fees	$2,475.00	$Nil
4	Defendant’s security for costs summons dated 23 May 2024
4a	Solicitors’ costs	$14,261.80	$Nil [$5,784.00]
4b	Counsel’s costs	$16,320.00	$Nil [$6,000.00]
4c	Disbursements (filing and printing)	$Nil [$1,592.50]
5	Witness outlines
5a	Solicitors’ costs	$4,241.60	$1,928.00
5b	Counsel’s costs	$2,720.00	$800.00
6	Court books and trial aids
6a	Solicitors’ costs	$12,342.40	$9,642.00
6b	Counsel’s costs	$13,600.00	$5,000.00
7	Trial
7a	Solicitors’ costs	$26,999.00	$19,285.00
7b	Counsel’s costs	$48,968.00	$20,000.00
$62,984.45
[$13,376.00]
$168,726.70	$76,360.45

18In Trailer Trash Franchise Systems Pty Ltd v GM Fascia & Gutter Pty Ltd [2017] VSCA 293 at [64] and [65] (omitting footnotes), the Court of Appeal provided the following guidance in the task of assessing appropriate security:

“In determining a sufficient amount for security for costs, the court does not undertake precise mathematical calculations. Rather, it adopts a ‘broad brush’ approach involving ‘guesstimates as much as estimates’. However, the broad brush approach does not involve an abstract process. It must have an evidentiary basis. The court must have regard to the evidence adduced by the parties as to quantum — whether in the form of an affidavit by an experienced litigation lawyer or an expert report by a costs consultant — although it is not bound by the parties’ estimates. The court may scrutinise the individual items in the parties’ estimates, but not to the extent of minute examination akin to a taxation.

The amount ultimately fixed by the court must not be so low that it fails to provide any real protection to the party seeking security, or so high that it is oppressive to the party required to provide the security. The amount must be ‘just and reasonable’ in all the circumstances of the particular case.”

19The analysis of the estimates by both counsel was similar. The estimates were based on the hourly rates for solicitors and counsel set out in the Supreme Court scale reduced to 80% for application in this Court. The dispute was occasionally about what was said to be a misapplication of the incorrect hourly rate. Generally, however, the issue was principally about the hours allegedly worked by the defendant’s lawyers, or the number of hours that were estimated for future work.

20Each counsel explained the nature of the evidence that would be called at the trial. The plaintiff will have five witnesses and the defendant a few more. Apart from the parties, the witnesses are mainly family and friends of each party and they will apparently attest to discussions they took part in where the critical issue of whether the plates were loaned or gifted was either discussed directly or indirectly.

21In my experience in this type of case, the Court is presented with a number of separate incidents and discussions over the period of the relationship and ultimately must assess the voracity of the witnesses and attempt to draw inferences from the evidence. See for example, Javanovic v Magri [2017] VSCA 373.

22This requires reasonably laborious work in the preparation of the case. There is nothing in what I have read in the material or heard from counsel during argument that makes me doubt the professional approach by both sides in the initiation of the proceeding, the dealings between the lawyers and the way in which it is anticipated that the case will be run at trial.

23I note, in relation to defendant’s counsel and the more junior solicitor that each has previously charged less than scale on occasions and some estimates of future costs are calculated on a similar basis.

24The evidence from each party of past charging and future estimates of costs vary, at times quite widely, but not in my view beyond the scope of reasonable variable opinion on these matters.

25In the circumstances, I have taken the approach of generally “splitting the difference” between the parties’ estimates. I have not otherwise attempted to deduct allowances where minor errors in calculation or the application of the appropriate scale may have been made. The only exception has been where the plaintiff has submitted that no allowance should be made. I those cases, I have generally allowed 75% of the defendant’s figures if I were satisfied that an allowance should be made.

26I will defer consideration of the costs of the application until the parties have made further submissions.

27I shall briefly discuss the disputed items where the plaintiff has submitted that no allowance should be made.

28Work completed before the security for costs application was made. I consider that the defendant’s solicitors engaged reasonably promptly and appropriately with the plaintiff’s solicitors. The time taken in this process was not excessive. This is not a case where the plaintiff is without the capacity (through Mr Fountas) to have sufficient means to pursue the case if security were ordered. In any event, delay does not bar security being ordered for work completed before an application is heard. I shall allow 75% of the sum claimed by the defendant as part of the security ordered.

29The plaintiff was ordered to pay the plaintiff’s costs thrown away as a result of the plaintiff’s repleading of its case. It is submitted by plaintiff’s counsel that the amendments to the statement of claim were so minor that no sum should be allowed as costs thrown away in respect of the earlier pleadings. I reject that submission as the plaintiff obviously considered that its amendments were necessary. I shall allow 75% of the amount claimed by the defendant.

30There had been an earlier mediation of the dispute. Judge Pillay, when considering the plaintiff’s amended pleading and other pre-trial matters, ordered a further mediation. This was an obvious step in a case such as this. It did not necessary, or obviously, mean that the earlier mediation was a waste of time. However, any change of pleadings (including the amendments made recently) do affect the dynamics of possible settlement. For the purposes of this application for security, I consider that it would not be inappropriate to allow 25% of the cost of the first mediation.

31The total sum that I consider the plaintiff should provide by way of security for the defendant’s costs of the proceeding is $96,990.24, calculated as follows:

Item no.	Defendant’s estimate	Plaintiff’s estimate	Allowed
1	$10,136.65	$Nil	$7,602.49
2a	$4,403.85	$4,403.85	$4,403.85
2b	$1,540.00	$1,540.00	$1,540.00
3a	$3,708.00	$Nil	$2,781.00
3b	$3,300.00	$Nil	$2,475.00
3c	$710.40	$385.60	$548.00
3d	$3,000.00	$Nil	$750
3e	$2,475.00	$Nil	$618.75
4a	$14,261.80	$Nil [$5,784.00]	[deferred]
4b	$16,320.00	$Nil [$6,000.00]	[deferred]
4c	$Nil [$1,592.50]	[deferred]
5a	$4,241.60	$1,928.00	$3,084.80
5b	$2,720.00	$800.00	$1,760.00
6a	$12,342.40	$9,642.00	$10,992.20
6b	$13,600.00	$5,000.00	$9,300.00
7a	$26,999.00	$19,285.00	$23,142.00
7b	$48,968.00	$20,000.00	$34,484.00
$62,984.45	$96,990.24
[$13,376.00]	[deferred]
$168,726.70	$76,360.45

32This sum should be paid in two sums, firstly $24,990.24 by 3 October 2024 at 4.00pm in a form agreed in writing by the parties, or failing such agreement, by the plaintiff paying that amount to the Registrar of the Court pending further order or the written agreement of the parties, and secondly, $72,000.00 by 10 October 2024  at 4.00pm in the manner specified for the first payment. In default of payment of either amount in full, the proceeding shall be stayed until further order.

33At the time of handing down this decision, I will hear submissions as to the costs of the application and the final form of the orders.

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Certificate

I certify that these 9 pages are a true copy of the ruling of his Honour Judge Anderson delivered on 2 October 2024.

Dated: 2 October 2024

Alexandria Peck

Associate to his Honour Judge Anderson