Appellants v Respondent

2 The parties agreed upon the orders giving effect to the principal reasons, namely that:

(a) the appeal be dismissed; and

(b) by 4:00pm on 20 June 2025, the first and second defendants produce to the plaintiff the documents referred to in the order of the Honourable Associate Justice Barrett made on 6 March 2025.

To account for the timing of the delivery of this judgment, I will extend the deadline for the production of documents to 4:00pm on 25 June 2025.

3 On the question of costs, Ma (who succeeded in the appeal) seeks orders that:

(a) the first and second defendants pay the costs of and incidental to the appeal, such costs to be taxed on an indemnity basis in default of agreement; and

(b) pursuant to r 63.20.1 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ("Rules"), the costs to be paid to the plaintiff be taxed immediately.

4 The Qin defendants seek an order that they pay the plaintiff's costs of and incidental to the appeal, such costs to be taxed on a standard basis in default of agreement.

6 First, Ma says the appeal was bound to fail because the notice of appeal did not challenge the Associate Judge's exercise of discretion to inspect documents, which would have been necessary to impugn his Honour's finding that the Contested Documents were subject to common interest privilege. Therefore, the appeal was misdirected. The plaintiff says that the pursuit of an appeal which the party ought to have known was hopeless justifies the awarding of indemnity costs.

7 Second, Ma submits that the Qin defendants' decision to pursue the appeal has hindered his ability to progress his case to trial or early resolution. The plaintiff referred to various events that occurred prior to the appeal which delayed the plaintiff's ability to inspect the Contested Documents and noted that the appeal extended that already significant delay by a further three months. He says that even with the expedition with which the appeal was heard and determined, the further delay brought about by the Qin defendants' misguided pursuit of the appeal was inconsistent with their overarching obligations under the Civil Procedure Act 2010 (Vic) ("CPA").

8 The Qin defendants submit that the preliminary view expressed at paragraph 106 of the principal reasons reflects the appropriate costs outcome (namely, that the Qin defendants pay the plaintiff's costs of the appeal on a standard basis in default of agreement).

9 The Qin defendants contend that there was nothing exceptional in their conduct of the appeal which would justify the making of an indemnity costs order. The appeal was conducted in an orthodox and timely manner. They referred to LPY Investments Pty Ltd v JY Property Pty Ltd (No 2),[2] where I had previously observed that the cases in which indemnity costs had been ordered usually involve a scenario in which the losing party has engaged in inappropriate conduct (such as where that party made a false allegation of fraud, engaged in misconduct which caused loss of time to the Court and the opposite party, or commenced or continued a proceeding for an ulterior motive or in wilful disregard of known facts or law). It is said that none of these features are evident in the Qin defendants' conduct of the appeal.

10 Section 24(1) of the Supreme Court Act 1986 (Vic) and Part 4.5 of the CPA (which deals with the Court's powers as to costs) provide that the Court has a broad discretion in determining questions of costs.

The power and discretion of the Court as to costs under section 24 of the Act shall be exercised subject to and in accordance with this Order.

12 Generally, a successful party in litigation is entitled to an award of costs in its favour.[3] Costs are taxed on a standard basis, unless provided otherwise by the Rules or an order of the Court.[4]

13 The issue of whether to award costs on other than the standard basis - that is on an indemnity basis or some other basis - is a matter that is in the discretion of the Court.[5] The discretion to depart from the usual order as to costs will not be exercised unless there is some special or unusual feature in the case, or the justice of the case so requires.[6] The categories of case in which it might be appropriate to do so are not closed.[7]

14 When considering how to exercise its discretion as to costs, the Court is entitled to have regard to the conduct of the respective parties in the litigation.[8] An award of costs to the successful party over and above the ordinary or usual basis is generally reserved for those cases where the losing party has engaged in unmeritorious or improper conduct or where the pursuit of the action was "a high-handed presumption" (to adopt Tadgell J's description in Australian Guarantee Corp Ltd v De Jager)[9] such as to warrant the Court expressing its disapproval and doing what it can to ensure the successful party is not out of pocket over it.

15 An award of indemnity costs may be appropriate where it appears that an applicant has commenced an action that they should have known had no chance of success.[10] In such a case, it must be presumed that the action was commenced for some ulterior motive, or because of some wilful disregard of the known facts or clearly established law.[11] This is a high bar,[12] and such cases are rare.[13] In Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd, Bromwich J said:

While none of these characterisations of "no chance of success", or "hopeless", or "foredoomed to failure", or references to some kind of impropriety in the commencement or conduct of a case, are any kind of fixed test or threshold to be surmounted before favourably exercising the discretion, they assist in making clear the unavoidable pejorative conclusion of unreasonableness on the part of a party against whom indemnity costs are to be awarded. The unreasonableness must be not only present, but sufficient to warrant a departure from the ordinary award of costs, whether that be in the commencement or continuation of the proceeding, or the way in which it was conducted, or in declining to settle the proceeding, or in some other way. This is a high hurdle to surmount.[14]

16 As to the issue of delay, mere prolongation of a matter, without more, does not usually justify a special costs order.[15] Conduct which results in delay and waste may trigger a special costs order where it amounts to an abuse of process (for example, if the lodging of an appeal was pursued only for the apparent purpose of causing delay).[16]

17 I do not find that the Qin defendants' appeal should be categorised as a hopeless case. Although the grounds of appeal were ultimately found to have been misdirected, such error was, to a degree, understandable. There was some ambiguity in both the way the findings in the Ruling were phrased and the precise basis upon which the Associate Judge determined that common privilege interest existed. This gave rise to differing interpretations. In my view, the grounds of appeal were not so unmeritorious that a special costs order is warranted. Nor did the Qin defendants conduct the appeal in an unreasonable manner.

18 Having made the above finding, I also do not consider that the delays leading up to, and resulting from, the appeal are alone sufficient to provide a foundation for indemnity costs. Whilst it is true that the Qin defendants have resisted producing certain documents on the ground of privilege since October 2022, there is no evidence that this was a deliberate strategy to prolong the litigation or that the delay amounts to an abuse of process. In general, the issues in this proceeding appear to be hotly contested and the Qin defendants left no stone unturned in resisting the production of the Contested Documents. Although the overarching purpose and obligations in the CPA[17] must always be borne in mind, I do not think that the defendants' conduct was so reprehensible that a special costs order is justified. In addition, as already acknowledged by the plaintiff, not all of the delay that has eventuated was directly caused by the Qin defendants.

19 The plaintiff presents the following reasons why the Court should order that the costs of the appeal be taxed immediately.

20 First, the plaintiff has already paid a total of $280,000 into Court as security for costs. He argues that it is unfair that he should be required to maintain that security through to judgment (which will now be delayed) while having to defer his entitlement to recover the costs against the Qin defendants without interest accruing on those costs or security for payment of the same.

21 Second, the plaintiff says that the fact that he voluntarily surrendered his right to apply for security for costs of the appeal (in order to expedite the hearing of the appeal) lends weight to his request for the costs to be taxed immediately.

22 The plaintiff notes that one of the factors relevant to the exercise of the Court's discretion is the likely delay before final completion of the proceeding.[18] On this point, he says that it is presently unclear whether it will be necessary to adjourn the trial which has been provisionally fixed for 2 February 2026. In these circumstances, the plaintiff requests that, if the Court is not satisfied that an order for immediate taxation is justified, the Court refrain from dismissing his application under r 63.20.1 so that he may supplement the application if it becomes appropriate to do so.

23 The Qin defendants' position is that there is no basis for the Court making an order for the immediate taxation of costs. In Setka v Abbott (No 2) ("Setka"),[19] the Court listed various circumstances where, depending on the circumstances, the usual rule under r 63.20.1 may be modified. The Qin defendants say that those factors are not evident in respect of this appeal, which was pursued in a prompt and considered fashion and, on account of being heard and determined expeditiously, will not delay the trial of the proceeding. They further say that the fact that the plaintiff has paid security for costs is not a factor that has been recognised as supporting a departure from the usual position.

If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.

25 The policy considerations underlying this rule include:

• avoiding multiple taxations, and the attendant costs;
• avoiding interlocutory applications being used as a means to exhaust the funds of an opposing party; and
• avoiding unfairness in a case where, for example, a party who is ultimately successful is unable to set off their judgment against an earlier liability to pay costs.[20]

There is an access to justice aspect in this. Impecunious litigants who have a meritorious claim or defence should not be forced out of court because of an inability to meet interlocutory costs orders.[21]

26 The Court may exercise its discretion to order that the costs be taxed immediately if the demands of justice require it.[22] In Setka, the Court of Appeal noted that the discretion to order that the default position not apply is confined only by the principle that the discretion must be exercised judicially and will depend upon the circumstances of the particular matter.[23] However, courts have recognised that the demands of justice may require a departure from the ordinary rule where:

(a) there is a prospect of considerable delay in the completion of the proceeding;

(b) the issue the subject of the interlocutory order was separate or discrete from what will finally require determination; or

(c) the party against whom the substantive order was made was guilty of unsatisfactory conduct - described variously as "unreasonable" or "reprehensible", or as involving a want of "competence and diligence".[24]

27 At the heart of the first ground is the likelihood of there being a considerable lapse of time between the interlocutory application and the final determination of the proceeding, making it unfair to deprive the successful party of the benefit of their costs order for a lengthy period.[25] The delay does not necessarily need to be caused by the interlocutory application.[26]

28 A period of approximately one year between the determination of the interlocutory application and the finalisation of the matter has been found to be a sufficiently long amount of time to justify an order that costs be paid forthwith. In Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 13), the Full Federal Court, in considering the costs of an interlocutory appeal, noted that the litigation was complex and final judgment was unlikely to be given for at least one year.[27] The Court held that it "would be wrong if the successful parties do not enjoy the fruits of their order for costs for such a long time".[28] Similarly, in Horrobin v Australia & New Zealand Banking Group Ltd, the hearing date was at least a year a way and the trial was likely to take at least six weeks.[29] This was a factor in Priestley JA ordering that the costs of the summary judgment proceedings be payable forthwith.

29 In Bailey v Beagle Management Pty Ltd, the Full Court of the Federal Court held that it was appropriate in that case for the costs to be paid forthwith because the successful parties in the interlocutory appeal should not have to wait for a year or more before being paid.[30] The Court also observed that applications for leave to appeal in interlocutory matters of practice and procedure stand on a different footing and there is a strong public policy against the proliferation of such applications.[31]

30 The trial in the present case is scheduled to commence on 2 February 2026. Given the appeal and the documents which Qin must discover to Ma, it remains to be seen whether there will be pleading amendments or other changes to the proceedings' trial trajectory. Even if the trial date can be maintained, there may well not be a judgment handed down until around this time next year. Assuming this occurs, after making due allowance for arguments about costs (and another judgment) and the preparation needed to conduct a taxation, it is likely to be well over a year before Ma could actually hope to derive some practical benefit from the costs order in his favour. This delay is sufficient to justify an order for immediate taxation.

31 With regard to the Qin defendants' submission that the appeal will not delay the trial of the proceeding, I note that it is not necessary for the appeal to have been the cause of any further delay - only that there be a fairly long time before the proceedings are disposed of.

32 Another factor that supports the making of an order for immediate taxation is that the appeal concerned the discrete question of whether common interest privilege attached to the Contested Documents, and can therefore be regarded as a self-contained part of the proceedings.[32] This means that the immediate taxation of the costs of the appeal should not be unduly burdensome, in terms of identifying the costs which relate to the appeal.[33]

33 In coming to the conclusion that costs should be taxed immediately, I have taken into consideration the policy reasons behind the introduction of r 63.20.1. However, I am satisfied that the demands of justice require a departure from the ordinary rule.

(a) the appeal be dismissed;

(b) by 4:00pm on 25 June 2025, the first and second appellants produce to the respondent the documents referred to in the order of the Honourable Associate Justice Barrett made on 6 March 2025; and

(c) the first and second appellants pay the respondent's costs of and incidental to the appeal, such costs to be taxed immediately on a standard basis in default of agreement.

[1] Ma v Qin [2025] VSC 326.

[2] [2024] VSC 112.

[3] Northern Territory v Sangare [2019] HCA 19; (2019) 265 CLR 164 at [25] ("Sangare"); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67] ("Oshlack").

[4] Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 63.31.

[5] Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 230; Bass Coast Shire Council v King [1997] 2 VR 5 at 29.

[6] Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd [2020] FCA 598 at [16] ("Colgate-Palmolive"), quoting Seven Network Ltd v News Ltd [2009] FCAFC 166; (2009) 182 FCR 160 at [1102].

[8] See Sangare (n 3) at [24]; Oshlack (n 3) at [69].

[9] [1984] VicRp 40; [1984] VR 483 at 502.

[10] Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 ("Fountain Selected Meats").

[12] Colgate-Palmolive (n 6) at [17].

[13] Fountain Selected Meats (n 10) at 401.

[14] Colgate-Palmolive (n 6) at [17] (emphasis in original).

[15] Walton v McBride [1995] NSWSC 17; (1995) 36 NSWLR 440 at 451; Hurstville Municipal Council v Connor (1991) 24 NSWLR 724 at 734.

[16] See GE Dal Pont, The Law of Costs (LexisNexis, 5th ed, 2021) at [16.66]-[16.67] and the cases cited therein.

[17] Civil Procedure Act 2010 (Vic) ss 7, 16-26.

[18] Dale v Clayton Utz (No 3) [2013] VSC 593 at [65(b)] ("Dale").

[19] [2013] VSCA 376 at [27] ("Setka").

[20] Dale (n 18) at [58].

[21] Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at [37] ("Bailey").

[22] Dale (n 18) at [64], quoting Thunderdome Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 at 312.

[23] Setka (n 19) at [27].

[24] Ibid at [27]; Dale (n 18) at [65].

[25] Dale (n 18) at [68].

[26] For example, there is no reference to any causation requirement in Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1134 at [15] ("AMP"); Dale (n 18) at [71], quoting Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1 at [13] ("Fiduciary").

[27] [1995] FCA 1459 at [5].

[29] [1996] NSWCA 251 at 4 ("Horrobin").

[30] Bailey (n 21) at [37].

[32] Fiduciary (n 26) at [11]; AMP (n 26) at [14]; Horrobin (n 29) at 5.

[33] Dale (n 18) at [84].