JJJP Properties Pty Ltd v Colin Peacock & Ors

1. On 17 April 2024, I gave judgment for JJJP Properties Pty Ltd ("JJJP") against Colin and Tracey Peacock (collectively, "the Peacocks") and Mr Alpaslan Cimen ("Mr Cimen") and dismissed Mr Cimen's counterclaim and the Peacocks' third party proceeding against Mr Frank Giummarra ("Mr Giummarra").[1]
2. I invited the parties to prepare draft orders to give effect to my reasons, noting that any issue as to costs would be determined on the papers. The parties were unable to reach agreement on the issue of costs and prepared written submissions.
3. JJJP submits that the most appropriate costs order should be that Mr Cimen and the Peacocks be jointly and severally liable for the payment of JJJP's costs.
4. The Peacocks contended that:

(a) They pay 25% and Mr Cimen pay 75% of JJJP's costs of the proceeding on a standard basis, including reserve costs. Alternatively, the defendants pay JJJP's costs of the proceeding on a standard basis, including reserve costs, and Mr Cimen pay 75% of the costs required to be paid by them to JJJP;

(b) Mr Cimen pay the Peacocks' costs of the proceeding on an indemnity basis, including the costs of the third party proceeding. Alternatively, Mr Cimen pay the Peacocks' costs of the proceeding on an indemnity basis and the costs of the third party proceeding on a standard basis until 14 February 2023 and thereafter on an indemnity basis; or

(c) The Peacocks pay the third third party's costs of the third party proceeding on a standard basis, including reserve costs and Mr Cimen pay the Peacocks the costs required to be paid by them to Mr Giummarra.

(a) The Peacocks pay JJJP's costs on the standard basis to be taxed in default of agreement and Mr Cimen bear his own costs in the head proceeding. Alternatively, if apportionment is ordered, then Mr Cimen should pay 10% of those costs and the Peacocks should pay 90%; and

(b) In respect of the counterclaim, each party bear their own costs.

1. Mr Giummarra agreed that the Peacocks should pay the third third party's costs on a standard basis.
2. For the reasons set out below, the appropriate costs order is:

(a) The Peacocks and Mr Cimen are jointly and severally liable for JJJP's costs of and incidental to the proceeding, including any reserved costs, on a standard basis to be taxed in default of agreement.

(b) Mr Cimen is to contribute and indemnify the Peacocks for 75% of the costs they are ordered to pay to JJJP as plaintiff.

(c) Mr Cimen pay the Peacocks' costs of and incidental to the proceeding, including any reserved costs and the third party proceeding, but excluding costs attributable to their defence that JJJP was not ready, willing and able to perform the JJJP contracts, on an indemnity basis to be taxed in default of agreement.

(d) The Peacocks pay Mr Giummarra's costs of the third party proceeding, including any reserved costs, on a standard basis to be taxed in default of agreement and Mr Cimen pay the Peacocks' costs required to be paid by them to Mr Giummarra.

1. JJJP contends that there is no reason to depart from the usual order as to costs and Mr Cimen and the Peacocks should be jointly and severally liable for the payment of JJJP's costs.
2. JJJP argues that it should never have had to bring this litigation, and that it would not have been necessary had the Peacocks performed their legal obligation under General Condition 10 of their sale of land contract with JJJP, and done all things necessary to enable JJJP to become the registered proprietor of the land and have vacant possession, which included, relevantly, procuring the removal of Mr Cimen's caveat.
3. JJJP submits that the Peacocks were in breach of their contractual obligation and common law duty as vendor in neglecting to have the caveat removed. JJJP contends that the Peacocks could have discharged these obligations and duties by bringing the proceeding, but instead they left it to JJJP to do so. JJJP argues that the Peacocks' role in the proceeding was purely defensive, and notes that while the Peacocks were unsuccessful in their defence of JJJP's claim for specific performance and successful in their defence to Mr Cimen's counterclaim, they still did not take any steps to remove Mr Cimen's caveat despite it being incumbent on them to do so as vendors.
4. JJJP submits that the Peacocks hedged their bets and abdicated the responsibility for the removal of Mr Cimen's caveat to JJJP. They, therefore, allowed themselves a luxury. On this basis, JJJP says that it is not fair and just that the Peacocks' pay only 25% of JJJP's costs.
5. JJJP points out that Mr Cimen was wholly unsuccessful both in his defence of JJJP's claim for the removal of his caveat, and his counterclaim for the removal of JJJP's caveat.
6. Finally, JJJP says that Mr Cimen extended the duration of the trial resulting in increased costs for JJJP due to his running of an entirely unsuccessful counterclaim.

1. The Peacocks request that the Court not award costs against all defendants jointly and severally, and instead apportion the payment of JJJP's costs such that Mr Cimen pays 75% and they pay only 25%. In the alternative, the Peacocks submit that the defendants pay JJJP's costs jointly and severally, but that Mr Cimen pay 75% of the amount paid by them to JJJP.
2. The Peacocks submit that it is in the interests of justice that the Court depart from its standard orders in which the defendants pay the plaintiff's costs jointly and severally for the following reasons.
3. The Peacocks note that in their amended statement of claim, JJJP brought two different claims against the two defendants. First, seeking specific performance or damages in lieu against the Peacocks, and second, the removal of Mr Cimen's caveat and the assertion of a priority interest over Mr Cimen.
4. The Peacocks admitted the contract with JJJP, but included in their defence that they were unable to complete the contract only because of Mr Cimen's caveat. The Peacocks joined JJJP in opposing Mr Cimen's defence that he had an enforceable contract giving him a caveatable interest over the property. For this reason, the Peacocks say that in resisting Mr Cimen's defence they should be thought of as one party.
5. Despite the "one party" claim, the Peacocks acknowledge that they had initially put on a separate defence that JJJP was not ready and willing and able to perform the contract at the due date. However, the Peacocks abandoned this defence at trial and contend that this did not cause significant costs to be incurred. The Peacocks note that there was also the contested issue of JJJP's damages in lieu, but submit that this dispute only arose on the premise that Mr Cimen had an enforceable contract. For these reasons, they accept that a fair apportionment of their liability is 25%.
6. The Peacocks argue that they did the bulk of the heavy lifting in -advancing JJJP's claim for a removal of Mr Cimen's caveat. The Peacocks note that they were entirely successful in this regard, and that had Mr Cimen not engaged in litigation, they would have settled with JJJP, and the claim of specific performance would have fallen away.
7. The Peacocks observe that, in assisting JJJP's claim, and in furtherance of their defence to counterclaim, they went as far as to offer Mr Cimen a return of his deposit of $87,500 and the additional sum of $250,000.00 for him to withdraw his caveat and settle the entire proceeding.
8. The Peacocks rely on a number of cases in support of their assertion that, in certain circumstances, it is appropriate for the Court to deviate from the norm and apportion damages. The key principles derived from these cases can be summarised as follows:

(a) Apportionment of costs may be appropriate "where two or more parties should be considered as in effect one" (as per Gino Dal Pont extrapolating from Pagone J in Morris v Riverwild Management Pty Ltd[2]).

(b) Apportionment may be appropriate "if a significant portion of the plaintiff's costs were incurred in relation to an issue raised by only one defendant" (ACN 115 918 959 Pty Ltd v Hoeys Lawyers Pty Ltd (No 3)).[3]

1. Mr Cimen agrees with JJJP's position that this litigation was not required. Mr Cimen submits that this is because if the Peacocks had taken steps to remove the Cimen Caveat in a more efficient and cost effect way, the protracted litigation would not have occurred.
2. Mr Cimen contends that the Peacocks omitted to refer to the overarching principles of the Civil Procedure Act 2010 (Vic) ("the CPA"), and that in determining costs, the Court should take into account s 7(1), being the need for costs to foster "the quick, cheap and effective resolution of the real issues in dispute". Mr Cimen argues that it is incumbent on the Court to consider whether these principles of the CPA have been adhered to.
3. Mr Cimen submits that the Peacocks could have avoided litigation by bringing an application for the removal of his caveat in accordance with the provisions of the Transfer of Land Act 1958 (Vic) ("the TLA"), or via an application for a summary determination of the counterclaim under the provisions of the CPA.
4. Mr Cimen contends that, had the Peacocks applied to the Supreme Court of Victoria for removal of his caveat, it is possible that the Supreme Court could have concluded that Mr Cimen's contract had been repudiated by him such that he did not have a caveatable interest. Mr Cimen asserts that this would have limited costs to a one-day hearing.
5. Mr Cimen submits that the Peacocks were "hedging their bets" by choosing to operate a defence on two fronts, which included a defence to JJJP's specific performance claim (which was ultimately abandoned at trial). Mr Cimen contends that the fact that the Peacocks resiled from this defence "at the 11th hour" does not absolve them of their strategy of defending their position on two fronts and should not result in them taking the benefit of Mr Cimen having to pay 75% of JJJP's costs. Mr Cimen argues that, if there is any apportionment of JJJP's costs, such apportionment should be considered by the Court in light of the long-standing presumption, reflected in r 63A.15 of the County Court Civil Procedure Rules 2018, that the party who discontinues or withdraws a proceeding shall pay the costs of the other party to whom the withdrawal related at the time of the withdrawal.
6. Mr Cimen asserts that the fact that the Peacocks attempted to defend "on two fronts" means that the Peacocks submission that they and JJJP were, in effect one party, should be rejected.
7. Mr Cimen submits that the Peacocks were not as sure of their defence as they outwardly portrayed. The Peacocks' instituting of third party proceeding against Mr Giummarra and the real estate agents prompted this scepticism.
8. Mr Cimen contends that, due to the fact that the Peacocks could have applied for a removal of his caveat and avoided trial, the Peacocks ought to pay JJJP's costs on a standard basis to be taxed in default of agreement and that Mr Cimen bear his own costs of the head proceeding.
9. Alternatively, Mr Cimen argues that, given the question of the Cimen Caveat was a minor cause, if an apportionment is ordered, the proportions of JJJP's costs should be in the realm of 10% to Cimen and 90% to the Peacocks given that the Peacocks defended JJJP's claim on two fronts up to the day of trial and then in respect of damages during the trial.

1. As previously stated, the appropriate costs order is that the Peacocks and Mr Cimen are jointly and severally liable for JJJP's costs of and incidental to the proceeding, including any reserved costs, on a standard basis to be taxed in default of agreement for the following reasons.
2. It is common ground that, as a general rule, the Court will order costs to be taxed on the standard basis.[4] The discretion to make a special costs order is an unlimited one, though it must be exercised judicially and not unreasonably, and the circumstances should be "special".[5] The usual order as to costs is that costs follow the event, and the successful party is entitled to an award of costs in its favour.[6]
3. In relation to the main proceeding, JJJP has succeeded against the Peacocks and Mr Cimen. Those parties concur that JJJP having been successful on its claims is entitled to an order for its costs on the standard basis. In the usual course, where a plaintiff has been successful against more than one defendant, the cost order would be against all defendants jointly and severally.
4. First, I agree with JJJP that the Peacocks were afforded a luxury by letting JJJP commence the head proceedings. By taking on the burden of suing to achieve settlement/specific performance in seeking the removal of Mr Cimen's caveat, JJJP were effectively cleaning up the Peacocks' contractual mess.
5. It was open to the Peacocks under their contractual obligation as well as under the common law as vendor, to seek to have Mr Cimen's caveat removed and be the moving plaintiff against Mr Cimen. Such an application would not involve JJJP. However, the Peacocks took no proactive measures to achieve the removal of Mr Cimen's Caveat, instead taking on a purely defensive stance in this proceeding.
6. Although I accept that the Peacocks did much of the heavy lifting in defending Mr Cimen's counterclaim to achieve the removal of his caveat, in circumstances where they did not take the initiative to do so initially, JJJP has incurred costs of issuing these proceedings. For this reason, I will find that both Mr Cimen and the Peacocks will be jointly and severally liable for JJJP's costs of and incidental to the main proceeding.
7. Second, as to whether the Peacocks should be required to pay JJJP's costs and recoup those costs (or a portion of those costs) from Mr Cimen (a Bullock order)[7] or where JJJP's costs ought to be paid directly by Mr Cimen (a Sanderson order)[8] ought to be made, I base my decision on who should bear the risk of not being able to recover from Mr Cimen.
8. The authorities state that it must be reasonable and just for such orders to be made.[9] The circumstances of the present case requires an assessment of the conduct of the defendants during the course of the litigation.
9. In my view, Mr Cimen ought to be liable to reimburse the Peacocks for 75% of the costs paid by them to JJJP. In reaching this conclusion, I find that the principles relating to apportionment apply to the question of reimbursement, and therefore which party bears the largest burden in covering JJJP's costs.
10. The Peacocks submit that Mr Cimen should pay their costs of the proceeding, excluding costs attributable to their defence that JJJP was not ready, willing and able to perform the JJJP contracts of sale. The Peacocks contend that the real contest in the proceeding was between them and Mr Cimen on his counterclaim and note that they were wholly successful in their defence. The Peacocks argue that the costs expended in advancing JJJP's claims overlapped with those incurred in respect of the counterclaim.
11. I am persuaded that the Peacocks and JJJP were effectively joined as one party for the bulk of the proceedings, and I am not dissuaded by the fact that the Peacocks had initially put on a separate defence to JJJP's claim for specific performance (which they ultimately abandoned at trial). It was in both the Peacocks' and JJJP's interests that Mr Cimen's counterclaim asserting that he had both a valid caveat and contract fail, and in this respect the Peacocks did do the bulk of the heavy lifting in defeating the counterclaim.
12. Justice Pagone in Morris[10] sets out that it is relevant where two or more parties form a united front and effectively become "one", stating:

"The apportionment of costs between parties should bear some relationship to the part played by the parties in the overall proceeding however imprecise that relationship must be in any given case. A measure based upon the number of parties (with appropriate adjustments where two or more parties should be considered as in effect one) may be inexact but is rational."

1. Given my finding that, for the purposes of defending the counterclaim JJJP and the Peacocks were effectively one party, the Peacocks should also enjoy the benefit of having their costs paid, as they were successful and were ultimately arguing from the same vantage point as JJJP.
2. I further rely on the case of Ajaimi v Giswick Pty Ltd (No 2)[11], in which M Osborne J held that the costs may follow the "event" of each separate issue. His Honour cited the decision of John Dixon J in Smith v Gould[12], where his Honour outlined that costs might follow each separate issue or cause of action where the successful party:

(a) contested a number of issues which it failed;

(b) required the losing party to contest issues that it abandoned at trial;

(c) took unnecessary technical points;

(d) inappropriately prolonged litigation;

(e) pressed substantially exaggerated claims;

(f) caused the real issues to be obscured or unnecessary evidence to be led; or

(g) facilitated the loss of opportunity to expeditiously dispose of the case.

1. Many of these elements set out above are interrelated, and many were present in these proceedings. In this case, Mr Cimen contested JJJP's claim for specific performance and brought an unsuccessful counterclaim, pressed substantially exaggerated claims and therefore inappropriately prolonged the trial by advancing arguments which should have been plain would fail, namely, that he was able to settle the transaction despite clearly not being able to obtain finance (or only on the basis of misleading lenders), and by advancing these flawed arguments facilitated the loss of opportunity to expeditiously dispose of the case.
2. It is also relevant that disputing Mr Cimen's counterclaim took up the bulk of the trial. The Supreme Court of Victoria decision in Hoeys Lawyers[13] is authority for the position that apportionment may be considered in circumstances where "a significant portion of the plaintiff's costs were incurred in relation to an issue raised by only one defendant". In this case, it was clearly Mr Cimen's counterclaim that comprised the bulk of the costs.
3. The main proceeding was broken up into eight discreet issues for determination. The presence of these discreet issues influences my decision to apportion costs issue by issue in favour of the Peacocks.

1. The Peacocks note that they abandoned their defence that JJJP was not ready, willing and able to settle, and that otherwise the costs incurred in relation to issue 1 were the same as 4-8. The Peacocks assert that these costs are separate and can be readily distinguished without need to make apportionment in this costs order. In my view, the Peacocks ought to be liable for the costs attributable to their defence that JJJP was not ready, willing and able to perform the JJJP contracts.

1. The Peacocks contend that apportionment should not apply to their contest of the appropriate damages in lieu, as they say the same expert evidence and the same method of quantification was used across their and JJJP's submissions. They submit that the additional costs to the Peacocks caused by JJJP's separate claim for the value of plant and equipment was negligible. The Peacocks argue that the same witnesses were relevant and the cross-examination by JJJP's counsel did not add to the length of the trial. While JJJP and the Peacocks' witnesses substantially agreed with each other, the real contest was with Mr Cimen's expert who was a substantial outlier. In my view, there are separate costs caused by the Peacocks' separate defence on the quantum of damages in lieu. There was a contest in relation to the value of the business in the sum of $300,000.00, the interest rate sought in opening submissions and the value of the plant and equipment.

1. The Peacocks did not oppose and took no position on the contest between JJJP and Mr Cimen in respect of priority for the caveat. I accept that any costs which the Peacocks may have incurred in relation to issue 3 were therefore the same as in relation to issues 4-8, as it remained their position that Mr Cimen had no caveatable interest.

1. The Peacocks note that they were wholly successful with regards to all these issues, and as a result JJJP was successful in its issues 1-3. I accept that the fact that by reason of the Peacocks' success on issues 4-8, JJJP was successful in issues 1-3. These issues were raised by Mr Cimen against the Peacocks.
2. Although the claim for specific performance was not pressed by the Peacocks at the hearing, they raised issues in their defence that JJJP was not ready, willing and able to perform the contracts of sale and contested JJJP's claim for damages in lieu. These two issues are separate to the six issues pursued by Mr Cimen's defence and on which he lost. As such, I find that a fair apportionment for the Peacocks' separate defences is 25%.
3. Mr Cimen's arguments against apportionment, and by extension against the reimbursement, are premised on his position that the Peacocks breached their obligations under the CPA by failing to bring these proceedings to a close in a more efficient manner, specifically, by bringing the matter before the Supreme Court of Victoria for a one-day hearing to determine the validity of the caveat.
4. In my view, this argument assists JJJP in relation to its claim for the usual order for costs as it should have been unnecessary for it to bring these proceedings. However, this assertion that, had the Peacocks brought a Supreme Court application to remove Mr Cimen's caveat, the proceeding would have been limited to costs of one-day and the caveat successfully removed is purely speculative.
5. Although s90(3) of the TLA permits any person adversely affected by a caveat lodged under s89 of the TLA to "bring proceedings in a court against the caveator for the removal of the caveat", s 90(3) of the TLA empowers a Court dealing with such an application to "make such order as the court thinks fit", whereby the caveator must satisfy a two limb test.
6. The relevant principles with respect to an application under s 90(3) of the TLA were summarised by Warren CJ in Piroshenko v Grojsman & Ors[14] as follows:

"Caveats under the Torrens system are treated by the courts as analogous to applications for interlocutory injunctive relief. In so far as their registration is an administrative act, it is when application is made for their removal that the onus falls on the caveator to satisfy the two-stage test used by the court when deciding whether to exercise its discretion to grant injunctive relief."

1. This two-stage approach requires the caveator to establish that there is a serious question to be tried that they have the estate or interest which they claim in the land in question, and having done so, to establish that the balance of convenience favours the maintenance of the caveat on the Register of Titles until trial.
2. In order to establish the first limb, the caveator must establish:

"... a prima facie case with sufficient likelihood of success to justify the maintenance of the caveat."[15]

1. As to balance of convenience, Warren CJ applied the approach described in Bradto Pty Ltd v State of Victoria[16]. This has been expressed in terms of where the lowest risk of injustice lies regardless of whether the relief sought is prohibitory or mandatory:

"In our view, the flexibility and adaptability of the remedy of injunction as an instrument of justice will be best served by the adoption of the Hoffman approach. That is, whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial."

1. Given the low threshold in establishing a prima facie case of any equitable interest in the property and that it is an exercise of a discretionary power, it is not a forgone conclusion that, had the Peacocks issued an application to remove Mr Cimen's caveat, it would have been removed without the need for a trial on the issues in dispute. Mr Cimen did have an equitable interest in the property while the contracts were on foot. There was a triable issue as to whether the contracts had been repudiated or terminated. It was entirely possible that the vendors' application for removal of Mr Cimen's caveat be dismissed, and directions be made in that proceeding for setting the matter down for trial.
2. Similarly, I do not find Mr Cimen's argument that it was open to the Peacocks to apply for summary judgment to be compelling. This Court cannot predict whether the Peacocks would have been successful if they made an application for summary judgment against Mr Cimen, particularly in circumstances where s64 of the CPA provides that a Court may order that a civil proceeding proceed to trial despite there being no real prospect of success in certain circumstances.
3. For the foregoing reasons, I find that Mr Cimen ought to contribute and indemnity for the Peacocks for 75% of the costs they are ordered to pay JJJP as plaintiff.

1. The Peacocks submit that if Mr Cimen had been properly advised he would never have made an application to the Court, he would have known that his application had no prospects of success. The Peacocks point towards Mr Cimen's own evidence as proof of his inherently frivolous claim that:

(a) Mr Cimen was never in a position to obtain finance as any agreement to obtain finance was premised on him ceasing operating the poultry farm, but he plainly had no intention to cease operations as he already signed the pullet supply contract with the supplier.

(b) Given his inability to obtain finance, Mr Cimen was not prepared and unable to pay the deposit. In addition, his inability to obtain finance resulted in him breaching the condition imposed by Mr Giummarra's letter on 2 August 2021. Mr Cimen remained unable to demonstrate to the Peacocks' solicitors in November and December 2021, or to the Court at trial, that he had finance on the due date.

(c) Mr Cimen's claim that he would have obtained finance and have been able to perform the contract was premised on misleading the financiers, including by statutory declaration, that he would cease operations of the poultry business. The Peacocks say that these improper arguments also fall within the parameters of a special costs order, as an exceptional case where there is evidence of delinquency, abuse of process, ulterior purpose or unreasonableness, where the Court may wish to indicate its disapproval of Mr Cimen's conduct in the litigation.[17]

1. The Peacocks submit that their claim for indemnity costs is supported by the fact that Mr Cimen lodged the Cimen Caveat without justification. The Peacocks note that on the date that he lodged the caveat on 25 June 2021, he knew that he had not paid the deposit, that the Peacocks had sold the property to a third party and that he did not have the finance and could not obtain the finance unless he misled the financiers as outlined above. The Peacocks assert that, because the claimed caveatable interest was insupportable as outlined in Weingarten v Fletcher[18] the conduct of the caveator can properly be described a delinquent Love v Kempton[19].

Alternative - indemnity costs from 14 February 2023

1. The Peacocks' solicitors sent a letter to Mr Cimen's solicitors on 24 January 2023 with a Calderbank offer.[20] The Peacocks submit that the failure to accept this offer was unreasonable in the circumstances and entitled the Peacocks to their costs against Mr Cimen on an indemnity basis. As explained by the Victorian Court of Appeal in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)[21], the Peacocks have regard to the six matters referred to in Hazeldene's as relevant to the decision whether an offer of compromise was unreasonably rejected:

(a) The offer was made at a time when all pleadings in the main proceeding had been filed, discovery was complete, and the parties had completed two mediations. It does not matter that the Peacocks amended their third party claim against Mr Giummarra, as at this time Mr Cimen had all the issues he needed to consider and the evidence before him. To the extent expert evidence on valuation was necessary, Mr Cimen had ample opportunity to take the advice he needed to complete the mediations.

(b) Mr Cimen had sufficient time to consider the offer and take any further advice, as the offer was made after the holiday period and provided 21 days for acceptance.

(c) The offer of compromise was generous and exceeded even the best outcome he could have achieved had the Court found for him on his counterclaim for damages in lieu of specific performance.

(d) Mr Cimen should have appreciated that his claim was not strong as of 24 January 2023, as the analysis put to him by the Peacocks' solicitors in various letters was ultimately substantially the same the Court's reasons for decision.

(e) None of the terms in the offer were ambiguous or obscure, and the offer of $250,000.00 was supported by a valuation of the property.

(f) The letters foreshadowed that this indemnity costs application would be made if it was rejected, and clearly set out the applicable principles now relied on.

1. Mr Cimen submits that, despite being successful in resisting his counterclaim, the Peacocks are not entitled to their costs due to misconduct. Mr Cimen refers to the decision of Oshlack[22], where McHugh J outlined that disentitling misconduct means:

"... in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute."

1. Mr Cimen says that the majority took an even broader view of the circumstances giving rise to a departure from the normal rule where Gaudron and Gummow JJ in Oshlack[23] held:

"[t]here is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party."15 (citations omitted)."

1. Mr Cimen also relies on the views of the New South Wales Judicial Commission Civil Bench Book's definition of disentitling conduct as any conduct "calculated to occasion unnecessary expense" and need not amount to "misconduct" nor even amount to "a most exceptional case, or a strong or exceptional case."[24]
2. Mr Cimen does not suggest that the misconduct alleged is such that it would be referrable to the Victorian Legal Services Board and Commissioner but says that it does fit the above definitions of misconduct outlined by previous Courts. That is, that where a successful party was lax in the way in which it conducted itself to effectively invite the litigation and/or protract the litigation, a departure from the general principle may be warranted.
3. Mr Cimen relies on the argument that the present matter went to trial when there were other more cost effective and expedient alternatives open to the Peacocks such as an application to remove his caveat which gives rise to a finding of disentitling conduct.

1. Mr Cimen submits that it is unmeritorious for the Peacocks to claim that they are entitled to indemnity costs from the time Mr Cimen filed his defence and counterclaim, on the basis that he should have known that there was no chance of success.
2. Mr Cimen submits that the Calderbank[25] offer of January 2023 does not amount to everything that could have been done to resolve the dispute, as the Peacocks ultimately made the decision to defend the claim on two fronts, persisting in defending the matter and issuing third party proceedings.
3. Mr Cimen contends that the Peacocks could not have truly thought that his claim has no chance of success as they did not try and bring any form of summary judgment application. Mr Cimen argues that, rather than applying for a summary resolution, the Peacocks chose to put on a defence to counterclaim, filed a rejoinder, issued a third party notice, served a Calderbank[26] offer, participated in mediation, filed an amended defence to counterclaim, filed an amended third party notice, filed further and better particulars of the amended third party notice, settled the third party proceeding with Ms Kathie Pollock and Mr Adam Hanley and ultimately actively participated in litigation against Mr Cimen, JJJP and Mr Giummarra.
4. Mr Cimen asserts that despite the findings of the Court, up to and including 29 December 2021, the Peacocks continued to press Mr Cimen to take active steps to settle his contracts. Mr Cimen submits that the Peacocks also did this to JJJP and wanted one of the parties to settle their contract. Mr Cimen contends that this conduct allowed them to hedge their bets throughout 2021, and therefore invited Mr Cimen to make a claim.
5. Mr Cimen argues that, in looking at the factors at Ugly Tribe Co Pty Ltd v Sikola[27], it cannot be said that he conducted himself in a way to cause loss of time to the court or other parties, commenced or continued his counterclaim for an ulterior motive or brought proceedings with wilful disregard of known facts or clearly established law. Mr Cimen submits that the Peacocks' conduct in participating in the litigation induced him to believe that he had a legitimate claim and therefore he should not be punished for doing so.
6. In relation to the Calderbank[28] offer, Mr Cimen contends that, at the time of the offer, the circumstances of the case were markedly different to those faced at trial. Mr Cimen notes that given his rejection of the offer, it is incumbent on him to demonstrate that his rejection of the offer was not unreasonable.
7. Mr Cimen claims his rejection was not unreasonable, specifically because at the time of the offer the Peacocks had not abandoned their defence of JJJP's claim. Mr Cimen asserts that the decision to not advance the JJJP's specific performance argument fundamentally altered the landscape of the proceeding.

1. As stated above, I am not persuaded by Mr Cimen's argument that the Peacocks are to blame for this litigation due to their failure to bring a more efficient resolution to the dispute. It was not a fait accompli that either an application to remove caveat or a summary judgment application would have resulted in an earlier finalisation of the issues between the Peacocks and Mr Cimen. The only difference would be the moving party. By extension, I do not agree with Mr Cimen's assertion that in failing to resolve the dispute prior to trial the Peacocks engaged in disentitling conduct.
2. In addition, I do not accept Mr Cimen's arguments that the Peacocks induced him to believe he had a legitimate claim by reason of their letters made on a without prejudice basis to comply with the earlier rescission notices. As stated in my reasons for judgment, the Peacocks had made the decision to resell the farm which is an acceptance of repudiation. As I observed in my previous reasons, the letters were sent for a commercial purpose to provide Mr Cimen with a window to obtain finance and complete the transaction in light of the dispute between the parties. The letters did not amount to an endorsement of Mr Cimen's contracts.

1. I amfurthernot persuaded that indemnity costs ought to be awarded from the date Mr Cimen filed his defence on the basis that he had a hopeless case. I do not accept that the hopelessness of the case was obvious from the very beginning, indeed the Peacocks would not have brought a third party proceeding against Mr Giummarra to cover their liability if they were of the opinion that Mr Cimen's case was utterly hopeless.
2. I am, however, persuaded to order indemnity costs from the date a defence was filed on the basis that Mr Cimen's application was premised on iniquitous behaviour and dishonest assertions. Here, I rely on the case of Ugly Tribe[29], where it was noted that:

"The position changes where a litigant acts dishonestly in the litigation, or where the rights and privileges of a litigant are flouted or abused. Then, the rationale for refusing to order that the losing party indemnify an opposite party against that party's costs is less compelling. Indeed, costs are more frequently if not invariably awarded on an indemnity or like basis (such as that of solicitor/client) where findings of dishonesty or serious misconduct have been made against the party ordered to pay." (emphasis added)

1. Mr Cimen stated in his evidence that he only signed the various statutory declarations and made the numerous promises to lenders that he would not continue to operate the chicken farm for the purposes of obtaining finance. He stated that it had always been his intention to continue to operate the chicken farm, and even planned on ceasing operations for a brief period of time to give off the impression that farming had ceased, and then recommence at a later date.
2. As further evidence of his consistent intention to operate the farm, Mr Cimen even signed a pullet supply contract with the supplier. Mr Cimen was only able to claim to be ready, willing and able to perform his contracts on the basis that he misled the financiers and made false representations, including in the form of statutory declarations. Mr Cimen did not come to the Court with clean hands. For these reasons, I find that Mr Cimen acted dishonestly in the lead up to and throughout the course of the proceedings. As per Ugly Tribe, such iniquitous conduct is a compelling reason for the Court to indicate its disapproval of Mr Cimen's conduct and to order that he pay the Peacocks' costs of the proceeding on an indemnity basis from the date of the filing of defence.

1. In the alternative, I am also persuaded that the Peacocks ought to be entitled to their costs on an indemnity basis from 14 February 2023, being the date after the Peacocks' Calderbank[30] offer window of acceptance expired. I have reached this conclusion on the basis that rejection of the offer was unreasonable in line with the six matters of criteria outlined by the Victorian Court of Appeal in Hazeldene's[31].
2. In my view, Mr Cimen's rejection of the offer was unreasonable having regard to the following factors:

(a) The proceeding was well advanced at the point of the offer, having been on foot for over 2 years. The offer was made after pleadings had been filed and discovery had been made, and parties had attended two mediations. It is irrelevant that the Peacocks ultimately dropped their defence against JJJP in relation to specific performance, as Mr Cimen had all the information that he required to appraise the success of his counterclaim.

(b) The period of 21 days was reasonable.

(c) The offer of an additional $250,000.00 was extremely generous in that it exceeds the best amount Mr Cimen could have achieved had he been successful in his damages in lieu of specific performance argument.

(d) Whilst I did not find that Mr Cimen's claim was so weak that it was unreasonable to bring the claim at all, at the point in which pleadings had been filed, discovery made, and a clear letter provided outlining the many flaws in his case which the Peacocks which were ultimately revealed at trial, Mr Cimen should have been able to appraise that at this point he had low prospects of success. Mr Cimen's prospects of success, assessed at the date of the Calderbank[32] offer, were poor, and the reasons were set out in the offer. That assessment was vindicated in the reasons for decision given by the Court.

(e) The terms of the offer were clear and easy to comprehend.

(f) The consequences of not accepting the offer were foreshadowed.

1. I am not persuaded that, because at the time of this Calderbank[33] offer the Peacocks' defence against JJJP was still on foot, this should have in any way clouded Mr Cimen's judgment as to whether acceptance of the offer was reasonable or not. This defence related to the dispute between the Peacocks and JJJP and was separate and independent to the counterclaim between Mr Cimen and Peacock, or Mr Cimen's position in general.

1. The Peacocks submit that this issue did not arise and fell away, as it was only relevant in the event that both JJJP and Mr Cimen were held to have valid contracts.
2. While the Peacocks acknowledge that Mr Giummarra should have his costs paid, they argue that Mr Cimen should be ordered to pay them, consistent with the general discretion of the Court to award costs against a party to the proceeding the costs of any other party.
3. The Peacocks were prompted to bring the third-party claim because both JJJP and Mr Cimen were claiming that they had valid contracts on foot. The Peacocks note that the Court found that they would have succeeded in the event that Mr Cimen's contract was found to be enforceable. The Peacocks contend that prior to the evidence at trial, Mr Cimen's claim was not so hopeless as to make bringing the third party claim against Mr Giummarra unjustified, as prima facie, there were two contracts on foot.

1. Mr Cimen submits that, due to the unique relationship between client and solicitor, the relationship between Mr Giummarra and the Peacocks is too far removed, such that he should not be liable for the associated costs.
2. Mr Cimen contends that it was open to the Peacocks not to attempt to sue Mr Giummarra and "shift blame". The Peacocks could have simply accepted that if they were unsuccessful, they would bear the costs and the outcome. Mr Cimen asserts that this is another indication that the Peacocks were not so sure about their claim, such that they would attempt to dispose of the matter before trial, and that bringing in Mr Giummarra is another example of bet hedging.

1. The last contentious matter is the Peacocks' application for a Sanderson order[34] so that Mr Cimen will bear the costs of the successful third party, Mr Giummarra. Such orders may be justified where the applicant has reasonably and properly incurred the cost of joining the successful party to establish their claim and it is just that the unsuccessful party should bear the costs of the joinder.[35]
2. It will be just to make a Sanderson order[36] if the conduct of the unsuccessful party has rendered it appropriate to shift the incidents of the successful party's costs. That is the position here. In my view, the Peacocks were justified in joining Mr Giummarra after Mr Cimen filed a defence claiming to have an enforceable contract in place and alleging that the Peacocks by their own conduct or by the conduct of their agents or Mr Giummarra affirmed the Cimen Contracts. That made it inevitable that the Peacocks would join Mr Giumarra and it is equally inevitable that Mr Cimen should bear Mr Giummarra's costs.
3. Additionally in my view, the Peacocks were prompted to bring their third party claim against Mr Giummarra to protect against the possibility of Mr Cimen's success in proving a valid contract and caveat.
4. I accept that it was reasonable and proper for the Peacocks to bring their third party claim against Mr Giummarra in circumstances where both JJJP and Mr Cimen claimed to have an enforceable contract of sale in place. Mr Cimen's position from the outset was not so hopeless as to dissuade the Peacocks from taking steps to achieve indemnity should they fail at trial. Further, as I have already found, Mr Cimen engaged in iniquitous conduct that justifies making a special order.
5. In my view, Mr Cimen should pay the Peacocks' costs of and incidental to the proceeding, including their costs of the third party proceeding, excluding costs attributable to their defence that JJJP was not ready, willing and able to perform the JJJP contracts of sale, on an indemnity basis. I accept that the real contest in the proceeding was between them and Mr Cimen on his counterclaim, and they were wholly successful in their defence. The costs expended in advancing JJJP's claims overlapped with those incurred in respect of the counterclaim.
6. In the reasons for this decision, I further found that if Mr Cimen's contract has been enforceable then the Peacocks would have succeeded in their third party claim. I rely on the decision of McDonald J in Thompson Land Ltd v Lendlease Shopping Centre Development Pty Ltd[37] where his Honour observed:

"In the circumstances of this case, notwithstanding there has been no adjudication on the third party proceedings as it became unnecessary for such tasks to be undertaken, I see no good reason why the normal rule should not be followed and that the third party should have its costs against the defendant. There exists in my view no circumstance as between the defendant and the third party which would warrant an order being made that the costs of the third party to be paid by the defendant should be on a basis other than as between party and party. As referred to, the plaintiffs did not resist an order being made in favour of the third party against them. During the course of submissions, counsel for the plaintiffs also informed the court that should an order be made that the defendant pay the third party's costs the plaintiffs would not resist a "Bullock order" being made in respect of the order for costs made against them in favour of the defendant. The conclusion that I have reached is that it should be ordered that the defendant pay the third party's costs on a party and party basis and that in so far as it is ordered that the plaintiffs pay the defendant's costs it should be further ordered that the defendant's costs include its costs of the third party proceedings and further that the plaintiffs should pay the defendant the costs required to be paid by it to the third party in the third party proceedings." [emphasis added]

1. Applying the principles set out in Thompson Land Ltd[38], the Peacocks' success in defending the counterclaim entitles Mr Giummarra to have his costs paid by Mr Cimen as the unsuccessful party, and not the Peacocks.
2. In the present case, there was an interdependence and in the alternative with Mr Cimen's claims made against the Peacocks and the Peacocks' claims against Mr Giummarra for indemnification for any loss in damages. Mr Cimen's claims against the Peacocks failed which meant that the third party claims against Mr Giummarra were dismissed. However, if I was wrong in the analysis in the primary proceeding, I found that Mr Giummarra would be liable to indemnify the Peacocks for any damages awarded against them. These were not insignificant issues in the trial and arose because of the claims made by Mr Cimen that he had an enforceable contract. In my view, there is conduct of Mr Cimen as set out above that makes it fair that he should pay the costs of the Peacocks directly to Mr Giummarra.
3. I therefore also find that Mr Cimen pay the Peacock's costs required to be paid by them to Mr Giumarra on a standard basis to be taxed in default of agreement.

I certify that these 26 pages are a true copy of the judgment of Her Honour Judge Burchell delivered on 28 May 2024.

Kathie Pollock Real Estate Pty Ltd (ACN 083 194 736) t/a Poultry Farms Australia

[1] JJJP Properties Pty Ltd v Peacock & Ors [2024] VCC 471.

[2] Gino Dal Pont, Law of Costs (5th ed, LexisNexis 2021) at [11.3] citing Justice Pagone in [2009] VSC 439 at [13] ("Morris").

[3] [2021] VSC 215 at [19] ("Hoeys Lawyers").

[4] County Court Civil Procedure Rules 2018 r63A.30.

[5] Aljade and MKIC v OCBC [2004] VSC 351 at [10].

[6] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [97] ("Oshlack").

[7] Bullock v London General Omnibus Company [1906] UKLawRpKQB 151; [1907] 1 KB 264 ("Bullock").

[8] Sanderson v Blyth Theatre Co [1903] UKLawRpKQB 161; [1903] 2 KB 533 ("Sanderson").

[9] Central Goldfields Shire v Haley & Ors (No 2) [2009] VSCA 203 at [8].

[11] [2022] VSC 275 at [12].

[12] [2012] VSC 542 at [11].

[14] [2010] VSC 240; (2010) 27 VR 489 at [7] ("Piroshenko").

[16] [2006] VSCA 89 at [35].

[18] [2003] VSC 448 at [5].

[19] [2010] VSC 254 at [30].

[20] Calderbank v Calderbank [1975] 3 All ER 333 (EWCA) ("Calderbank").

[21] [2005] VSCA 298; (2005) 13 VR 435 at [23] ("Hazeldene's").

[24] New South Wales Judicial Commission Civil Bench Book at [8-0030].

[27] [2001] VSC 189 ("Ugly Tribe").

[35] See generally Gould v Vaggelas (1985) CLR 215 at [230], [247] and [260].

[37] [2000] VSC 140 at [38] ("Thompson Land Ltd").