Michalakellis v LMM Holdings Pty Ltd & Ors [2025] ICQ 31 | Case summary

Industrial Court of Queensland|2025-12-12|Before: O'Connor VP

INDUSTRIAL LAW - QUEENSLAND - APPEAL TO INDUSTRIAL COURT - HUMAN RIGHTS - DISCRIMINATION LEGISLATION - where the appellant filed a complaint in the then Anti‑Discrimination Commission Queensland alleging contraventions of the Anti-Discrimination Act 1991 (Qld) - where the Queensland Industrial Relations Commission dismissed the complaint - where appeal to the Industrial Court of Queensland dismissed and parties ordered to file submissions on costs - where respondents sought costs - whether costs should be awarded - whether amount of costs as sought be determined on an indemnity basis or on a standard basis according to the Supreme and District Court scale

Queensland Civil and Administrative Tribunal 2009 Act (Qld), s 102

Industrial Relations (Tribunal) Rules 2011, r 70.

Board of Examiners v XY [2006] VSCA 190

Carlton v Blackwood [2017] ICQ 001

Premier and Cabinet) [2021] QIRC 436

Di Carlo v Dubois [2002] QCA 225

Health Ombudsman v du Toit [2024] QCA 235

Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534

Magill v Queensland Law Society Inc [2019] QCAT

Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164

Patrick v Capital Finance Corporation (Australasia)

Pty Ltd [2004] FCA 1249

Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412

Roberts-Smith v Fairfax Media Publications Pty Ltd

Scott v Secretary, Department of Social Security (No. 2) [2000] FCA 1450.

Wentworth v Rogers (No 5) (1986) 6 NSWLR 534

Mr C. Massy of counsel, instructed by Franklin Athanasellis Cullen Lawyers for the Respondents.

[2] This is the determination of costs consequent upon the decision of the Industrial Court of Queensland ('the Court') released on 2 December 2024 in which the appeal was dismissed.

[3] In my decision of 2 December 2024 an order was made that costs be determined on the exchange of written submissions. Each party was provided with the opportunity to file and serve an application in existing proceedings to make oral submissions on costs by Friday 24 January 2025.

[4] Pursuant to the order, written submissions were filed by the respondents on 20 December 2024. The appellant filed submissions in reply to the respondents' submissions on 17 January 2025.

[5] On 24 January 2025 the respondents filed an application in existing proceedings to make oral submissions to supplement their written submissions and to respond to the Appellant's written submissions. The matter was listed for hearing on 21 February 2025.

[6] The appellant submits the respondents' application for a costs order should be denied in its entirety. If the Court considers it in the interests of justice to award costs, such costs should be awarded on a standard basis.[1]

[7] It is submitted by the respondents that the appellant pay all the costs of the respondents for the appeal on an indemnity basis or in the alternative that the appellant pay the costs of the respondents to be assessed on a standard basis on the Supreme and District Court scale.[2]

[8] The respondents seek costs of the appeal incurred for the period 20 September 2023 to 13 December 2023 in legal fees totalling $89,916.20.[3]

[9] Costs before the Commission are determined in accordance with s 545 of the Industrial Relations Act 2016 ('the IR Act'). Section 545 provides as follows:

(1) A person must bear the person's own costs in relation to a proceeding before the court or commission.

(2) However, the court or commission may, on application by a party to the proceeding, order -

(a) a party to the proceeding to pay costs incurred by another party if the court or commission is satisfied -

(i) the party made the application or responded to the application vexatiously or without reasonable cause; or

(ii) it would have been reasonably apparent to the party that the application or response to the application had no reasonable prospect of success; or

(b) a representative of a party (the represented party) to pay costs incurred by another party to the proceeding if the court or commission is satisfied the representative caused the costs to be incurred -

(i) because the representative encouraged the represented party to start, continue or respond to the proceeding and it should have been reasonably apparent to the representative that the person had no reasonable prospect of success in the proceeding; or

(ii) because of an unreasonable act or omission of the representative in connection with the conduct or continuation of the proceeding.

(3) The court or commission may order a party to pay another party an amount reasonably payable to a person who is not a lawyer, for representing the other party.

[10] Section 548 of the IR Act provides that the provisions for costs under Schedule 2 of the IR Act apply in proceedings under the Anti-Discrimination Act 1991 Qld ('the AD Act'), including an appeal to the Court. Section 548 provides the following:

(1) The provisions for costs in schedule 2 apply to a proceeding -

(a) heard by the commission under the Anti-Discrimination Act 1991; or

(b) for an appeal to the court under part 6 against a decision of the commission in relation to a proceeding mentioned in paragraph (a).

(2) If a provision of schedule 2 is inconsistent with any other provision of this Act, the schedule prevails to the extent of the inconsistency.

[11] Schedule 2 of the IR Act relevantly provides:

Schedule 2 Costs provisions for proceedings under Anti-Discrimination Act 1991

commission, for an appeal to the court under chapter 11, part 6 against a decision of the commission in relation to a proceeding heard by the commission under the Anti-Discrimination Act 1991, includes the court.

proceeding means a proceeding mentioned in section 548.

Other than as provided under this schedule, each party to the proceeding must bear the party's own costs for the proceeding.

(1) The commission may make an order requiring a party to the proceeding to pay all or a stated part of the costs of another party to the proceeding if the commission considers the interests of justice require it to make the order.

(2) In deciding whether to award costs under subsection (1) the commission may have regard to the following -

(a) whether a party to the proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding;

(b) the nature and complexity of the proceeding;

(c) the relative strengths of the claims made by each of the parties to the proceeding;

(e) the financial circumstances of the parties to the proceeding;

(f) anything else the commission considers relevant.

5 Costs against representative in interests of justice

(1) If the commission considers a representative of a party to the proceeding, rather than the party, is responsible for unnecessarily disadvantaging another party to the proceeding as mentioned in section 4 (2)(a) of this schedule, the commission may make a costs order requiring the representative to pay a stated amount to the other party as compensation for the unnecessary costs.

(2) Before making an order under subsection (1), the commission must give the representative a reasonable opportunity to be heard in relation to making the order.

The rules may authorise the commission to award costs in other circumstances, including, for example, the payment of costs in the proceeding if an offer to settle the complaint or other matter that is the subject of the proceeding has been made but not accepted.

(1) If the commission makes a costs order under a provision of this schedule, the commission must fix the costs if possible.

(2) If it is not possible to fix the costs having regard to the nature of the proceeding, the commission may make an order requiring the costs to be assessed under the rules.

(3) The rules may provide that costs must be assessed by reference to a scale under the rules applying to a court.

[12] Rule 70 of the Industrial Relations (Tribunal) Rules 2011 provides:

(1) This rule applies if the court or commission makes an order for costs under section 545 of the Act.[4]

(2) The court or commission, in making the order, may have regard to -

(c) for a proceeding before the court - the costs payable on the scale of costs for the Supreme Court under the Uniform Civil Procedure Rules 1999, schedule 1; or

(3) The court may order that costs be assessed by the registrar and, in assessing costs, the registrar may have regard to the Uniform Civil Procedure Rules 1999, chapter 17A.

(a) whether an order for costs should be made in the interests of justice; and

(b) if an order for costs should be made, the amount of costs to be ordered.

[14] The starting point is a consideration of whether or not the interests of justice require an order for costs to be made against the appellant. The question must be considered by reference to the matters prescribed by paragraph 4(2) of Schedule 2 of the IR Act.

[15] Paragraph 2 of Schedule 2 is made subject to other provisions of Schedule 2 of the IR Act by use of the words "Other than as provided under this schedule, each party to the proceedings must bear the party's own costs for the proceeding."

[16] Paragraph 2 is made subject to paragraph 4. Paragraph 4 grants to the Court a discretion to make a costs order other than that contemplated by paragraph 2 of Schedule 2.

[17] The discretion afforded the Court under paragraph 4(1) of Schedule 2 is wide. The fact that there is a discretion is indicated by the use of the word "may". The width of the discretion is apparent from the use of words "if the Commission considers the interests of justice require it to make an order."

[18] With respect to what constitutes "the interests of justice", this will vary according to the circumstances of each case. As it has been judicially considered, however, the term is capable of wide application. In the High Court decision of Deputy Commissioner of Taxation v Shi,[5] Kiefel CJ, Gageler and Gleeson JJ observed:[6]

What the interests of justice require in a particular case is to be weighed having regard to the proceeding in which the question arises.

[19] Paragraph 2 of Schedule 2 of the IR Act should be construed in the context of s 530(1)(a).

[20] Section 530(1)(a) of the IR Act identifies the circumstances in which a party to a proceeding may be represented and relevantly provides:

(1A) This section applies in relation to proceedings other than a proceeding for a public service appeal.

(1) A party to proceedings, or person ordered or permitted to appear or to be represented in the proceedings, may be represented by a lawyer only if -

(iii) the proceedings are for the prosecution of an offence;

[21] Section 530(1) gives a party to proceedings in the Court an entitlement to be legally represented where all parties consent or the court gives leave.

[22] In considering whether to make an order for costs, the Court may have regard to the matters set out in paragraph 4(2).

[23] In dealing with an analogous provision under s 102(3) of the Queensland Civil and Administrative Tribunal 2009 Act (Qld), Daubney J in Magill v Queensland Law Society Inc[7] referred to the factors under s 102(3) to which the Tribunal may have regard when considering the interests of justice:

These factors, individually and collectively, are not determinative, and go only to informing the exercise of a broad discretion, the touchstone of which remains the Tribunal's assessment of the interests of justice in a particular case. The discretion to award costs will only be exercised when the interests of justice in a particular case outweigh the prima facie "no costs" position under s 100. In that regard, Alan Wilson J, when President of the Tribunal, said in Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2):

Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase 'the interests of justice' point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.

[24] In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2),[8] A Wilson J, awarded costs. His Honour wrote:

[29] Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase 'the interests of justice' point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.

[25] However, Judicial Member McGill SC in Marzini v Health Ombudsman (No 4)[9] wrote:

The formulation of A Wilson J has subsequently been widely accepted as stating the correct approach to these provisions, but the wording is curious. There is nothing in the terms of s 100 to show a 'strong contra-indication' against costs orders. Leaving aside the reference to a provision of another Act, when s 100 and s 102 are read together, the position is that no order for costs is to be made unless the Tribunal considers the interests of justice require it to do so. This is in essence the interpretation attributed to the terms of the earlier Act in Tamawood at [28]. The QCAT Act provisions could have been drafted to entrench that approach. The terms of the sections make it clear that the starting point is that no order for costs is to be made, but authorises a costs order if the interest of justice require it. The use of the word 'require' suggests that the interests of justice must clearly support a costs order; but to say that they must do so 'compellingly', and to treat s 100 as having 'a strong contra-indication against costs orders', is to read into the statutory discretion restrictions which are not based on the terms of the Act."

[26] In Health Ombudsman v du Toit[10] Flanagan, Boddice and Brown JJA agreed with the approach taken by Judicial Member McGill SC in Mazini. The Court wrote:

[64] While it is correct that provisions should be construed consistently with the objects and purposes of an Act, it should not be accepted that the Tribunal, in exercising its discretion under s 102(1) and in considering whether the interests of justice require the making of a costs order, must have specific regard to s 100. This construction does not give effect to the introductory words of s 100, namely "other than as provided under this Act or an enabling Act." Those words contemplate that a favourable exercise of discretion under s 102(1) will necessarily result in a departure from the usual position as to costs contemplated by s 100. This is simply the consequence of s 100 being made subject to other provisions of the QCAT Act including s 102.

[27] Let me turn to the matters identified in paragraph 4(2) of Schedule 2 of the IR Act.

(a) whether a party to the proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding;

[28] The respondents advance three grounds as to why it is in the interests of justice to make an order for costs in this matter:

(a) the appellant's conduct, and his representatives conduct, concerning the capacity in which the appellant was represented;

(b) not seeking leave to appeal on grounds other than those in s 557(1) of the IR Act and pressing these grounds; [11] and

Conduct in relation to the capacity in which the appellant was represented

[29] At first instance, the appellant was self-represented. On 20 September 2023, the appellant filed in the Industrial Registry a Form 34 - Lawyer's notice of address for service. The form recorded that "Kirk S Bond", a lawyer with the Maritime Union of Australia ('MUA') division of the CFMEU, New South Wales Branch would represent the appellant.

[30] On 27 September 2023, the respondents' solicitors wrote to Mr Bond seeking confirmation whether he was acting for the appellant in his own capacity, or whether the MUA was representing the appellant.

[31] On 29 September 2023, Mr Bond sent to the solicitors for the respondents the following email:

Your clear attempt to put in jeopardy my employment with the MUA because of your baseless assumption that I am acting outside of my role as a National Legal Officer is unethical and in clear violation of the Queensland Law Society Australian Solicitors Conduct Rules. Rule 34.1 provides that a solicitor must not in any action or communication associated with representing a client:

34.1.3 use tactics that go beyond legitimate advocacy and which are primarily designed to embarrass or frustrate another person.

By copying MUA Sydney Branch Secretary, Paul Keating, into the email, you were unmistakably trying to leak to him the fact that I'm representing someone, Mr Michalakellis, who you are aware is not a member of the MUA. Since you don't know me, personally, I can only assume that you snitched on me in hopes that Mr Keating would prohibit me from representing Mr Michalalkellis so that your firm could once again take advantage of an unrepresented, mentally ill litigant as it did in a five-day hearing before the QIRC.

Rest assured that your bullying tactic will not work with me, Mr Keating, or anyone else associated with the militant MUA. Mr Keating fully supports my decision to represent a member of the working class whose life has been decimated by your clients' abysmal treatment of him. And the only people Mr Keating despises more than bosses who bully, harass, and discriminate against their workers and contractors are the lawyers who defend their clients' assault on workers' rights, and who attempt to intimidate lawyers who have dedicated their lives to protecting the rights of the working class.

By copying Mr Keating into your passive-aggressive email to me, you demonstrated your complete ignorance of the values of a Union that exits for the sole purpose of bettering the lives of the working-class people. While there is no chance that Mr Keating would ever attempt to prevent me from representing Mr Michalakellis, there is every chance that he would set up a rally in from of Brisbane BMW to highlight for the public how your clients mistreat its workers and contractors. For that matter, I have no doubt that Mr Keating would consider a demonstration in front of your firm to educate the public on how you use bullying tactics to try to prevent injured workers from having a fair go in enforcing their workplace rights in the Queensland Industrial Court.

In short, it's none of your business the capacity in which I'm representing Mr Michalakellis, I'm a lawyer, just like you, and that's the capacity in which I'm representing Mr Michalakellis. That's all that you're entitled to know.

Finally, please provide me by close of business on Tuesday, 3 October 2023, any legitimate basis that you say you had for copying Mr Keating into the email that you sent to me. Should you fail to do so, I will promptly file a complaint against you with the Legal Services Commission asserting a breach of Solicitor Conduct Rule 34.1.3.'

[32] On 3 October 2023, the solicitors for the respondents sent an email to Mr Bond in response to the above email. In a measured response, the email explained reasons for seeking clarification from Mr Bond as to the nature of his representation of the appellant. Moreover, the email clearly identified the reason for including Mr Keating in the correspondence, namely to satisfy rule 38(b) of the Rules of the CFMMEU, The Maritime Union of Australia Division which provides that the Branch Secretary is to receive and conduct all correspondence of the Divisional branch. Mr Bond did not respond.

[33] The respondents submit that the conduct of Mr Bond, presumably acting on instructions from the appellant, unnecessarily disadvantaged the respondents by requiring them to incur costs of considering the various legal issues arising from the failure of the appellant to respond to issues dealing with the appellant's representation. [12]

[34] In his written submissions, Mr Bond defends his correspondence by arguing that the solicitor's for the respondents embarked on a campaign designed to intimidate him, interfere with his employment with the MUA, and bullying him into withdrawing his representation of the appellant. [13]

[35] In an exchange during oral argument in the cost's application, Mr Bond conceded that in hindsight he would have been more responsive to the request of the solicitors for the respondents.[14]

[36] Putting to one side the unprofessional nature of the correspondence engaged in by Mr Bond, I accept that his lack of response to the legitimate requests of the solicitors for the respondents unnecessarily disadvantaged the respondents.

[37] A person who is aggrieved by a decision of the Commission may appeal against the decision on the ground of error of law, or excess, or want of jurisdiction.[15] A person aggrieved may appeal to the Court on other grounds but only with the leave of the Court.[16]

[38] No leave was sought by the appellant. Therefore, the appeal was limited to grounds alleging an error of law or excess, or want, of jurisdiction.

[39] By letter dated 11 October 2023, the solicitors for the respondents wrote to Mr Bond drawing to his attention that as the appeal filed on 20 September 2023 purported to raise mixed grounds, including errors of law, that leave may be necessary under s 557(2) and s 557(4) of the IR Act.

[40] The correspondence from the respondents' solicitor was sent prior to the filing of the appellant's submission to the court.

[41] Mr Bond responded to the correspondence dated 11 October 2023 in the following terms:

"Thank you for your correspondence. I am acting for Dimitri in both matters".

[42] I accept that the respondents were put to the unnecessary disadvantage of incurring the expense of notifying the appellant of the requirements of the IR Act and having to respond to grounds of appeal for which leave had not be sought or granted.

[43] On 16 October 2023 and 8 November 2023, the appellant made an offer to discontinue the appeal and the proceedings below on the basis that the respondents did not seek costs in the appeal and the proceedings below. The offers were rejected by the respondents.

[44] On 8 November 2023, the respondents made an offer to settle the matter on the basis that the appellant withdraw the appeal, and the respondents would not seek the costs thrown away in the appeal.[17] The appellant did not respond to the offer.[18]

[45] It is unsurprising that the respondents refused the appellant's offer. The respondents had the benefit of the judgment below and strong prospects of defending the appeal.

[46] What is submitted by the respondents is that the offer, made at a time after the respondents had filed their submissions, gave the appellant the opportunity to consider the legal arguments against him. Moreover, the appellant was put on notice that they would seek the further costs incurred by them in defending an unmeritorious appeal. The offer would have spared the time and expense of the hearing, would have placed the appellant in no worse a position, and avoided the prospect of an adverse costs order should his appeal fail. [19]

[47] I accept the argument that in refusing to accept was a reasonable offer to settle the appeal proceedings, the respondents were unnecessarily disadvantaged by incurring the expense of defending the appeal.

(b) the nature and complexity of the proceeding;

[48] The Court is a superior court of record, established to hear appeals in relation to an error of law or excess, or want of jurisdiction, and with leave, a question of fact.

[49] Anti-discrimination law is by its very nature complex, both in terms of substance and procedure. Whilst some cases of discrimination might be objectively self-evident, most cases are not simple.

[50] Complexity arises in these proceedings by reason of Mr Bond's application to appeal which did not clearly identify the basis upon which it is contended that the Court's appellate jurisdiction is enlivened.

[51] There was a disconnect between the notice of appeal and the submissions filed by the appellant. The appellant's case has to be known before the appeal starts. The respondents were placed in position of having to contend with the "shifting sands of an undefined argument".[20] If an appellant wishes to advance a different case, then that should be done by seeking leave to amend the notice of appeal. The appellant's failure to seek that leave and advancing a case which did not reflect the notice of appeal unnecessarily disadvantaged the respondents.

(c) the relative strengths of the claims made by each of the parties to the proceeding;

[52] Only those cases to reach the adjudicative stage let alone the appellate stage are those matters wherein the law and/or the facts would be sufficiently finely balanced as to reach the threshold of having reasonable prospects of success. It is important to draw a distinction between a genuinely hopeless case and one that is weak.

[53] The respondents submit that the appellant advanced weak grounds of appeal. It is submitted that the appellant should have known after receiving the respondents' submissions that his grounds of appeal were doomed to fail.

[54] Under paragraph 4(2)(c) of Schedule 2 of the IR Act, I am required to assess the relative strengths of the claims made by each of the parties to the proceeding. I was critical of the arguments advanced by the appellant, the criticism stems, in part, from what was an ill-defined and poorly articulated appeal. An appellate court will conduct a review of the proceeding below and will substitute its own view for that of the primary decision maker if it is persuaded that the primary decision maker erred.

[55] It is not for an appellate court to trawl through the appellant's submissions in order to find the claimed error or the reasons why it is said that the primary decision maker fell into error. As it transpired, the appellant's arguments proved unpersuasive. Nothing submitted by the appellant stood in the way of the respondents' submissions.

(e) the financial circumstances of the parties to the proceeding;

[56] I am mindful of the submission of the appellant that he is not in a strong financial position and would find it difficult to pay any costs order made against him.

[57] The affidavit of Murray Procter deposes that searches were undertaken to reveal that the appellant purchased a property in Redlands for $539,000 in 2017 and sold it in 2022 for $850,000.[21] A social media search revealed a Facebook page titled "Stupid Trip". The page reveals that the appellant travelled: to the USA between 11 December 2023 and 17 January 2024; to Western Australia from around 27 June 2023 to 8 July 2023; around Australia for three months from 7 July 2022; and to Greece from 2 June 2022 to 22 July 2022.[22]

[58] The appellant deposed that he no longer owns his 4WD or caravan and the proceeds of the sale of the property at Redlands "was spent elsewhere".[23] He accepts that he had a "healthy sum of money during the 18-month period, but that has since dwindled completely, and we no longer have any savings or assets."[24] The appellant is currently receiving income protection from an insurance policy which he deposes to be $58,331.[25] He has debts with the ATO of $5,299.62 and a debt to Centrelink of $13,865.64.[26] The appellant accepts that he travelled overseas with his family to Greece and the USA.[27]

[59] In exercising the discretion, I have considered the fact that the appellant was represented in a pro bono capacity and was said to have limited financial resources. However, as the authorities suggest, that should not be a basis upon which a successful party should be denied their costs. Indeed, there is a strong body of authority to suggest that the financial position of the parties is not a relevant consideration in determining whether the successful plaintiff should be awarded costs on a party to party basis.

[60] In Scott v Secretary, Department of Social Security (No. 2) [28] Beaumont and French, JJ. did not accede to the submission of the unsuccessful parties that costs follow the event should not be applied because of their impecunious position. It was put on their behalf that since they relied on social security benefits, they would not be able to satisfy any costs order made against them. Their Honours said:

However sympathetic one may personally be to arguments of this kind, inability to meet a costs order or the fact that the losing party has limited financial means has never been a sufficient reason to deny a successful party his costs.

[61] In Northern Territory v Sangare,[29] the High Court observed:

In point of principle, it is basic justice that a successful party should be compensated for expenses it has incurred because it has been obliged to litigate by the unsuccessful party. That consideration of basic justice does not lose its compelling force simply because the successful party happens to be wealthy: the successful party, whether rich or poor, did not ask to be subjected to the expense of unmeritorious litigation. The statutory power to order costs affords the successful party necessary protection against unmeritorious litigation; and unmeritorious litigation is no less unmeritorious because it is pursued by a person who is poor or who is a litigant in person.

[62] The fact that the appellant is said to have little or moderate financial resources and that that he may suffer disproportionately to the respondents does not provide a sufficient reason to deny the respondents their costs of this appeal. As Nettle JA wrote in Board of Examiners v XY:[30]

The notion that a litigant should be accorded special consideration in relation to costs on the grounds of poverty or financial disadvantage has nothing to commend it.[31]

(f) anything else the commission considers relevant.

[63] One matter which is relevant in this proceeding is the entitlement of the respondent to legal representation. The observations of Keane JA in Tamawood Ltd v Paans[32], whilst in a different but broadly similar statutory context, are of assistance in determining whether to exercise the discretion conferred by s 548 of the IR Act.

[64] In Tamawood the critical questions for determination before the Queensland Court of Appeal were the meaning to be attributed to and the scope of operation of s 70 and s 71 of the Commercial and Consumer Tribunal Act 2003 (Qld). Both provisions relevantly dealt in a general way with the awarding of costs by the Tribunal.

[65] The respondent, Ms Paans, was successful in proceedings which she brought against the applicants, Tamawood Limited and Phil Martyn Constructions Pty Ltd before the Commercial and Consumer Tribunal which ordered each of them to pay Ms Paans $10,000 by way of damages for loss suffered by her by reason of the default of Tamawood and Martyn in relation to the construction of a house on land owned by Ms Paans. In a separate decision the Tribunal declined to make any order for costs in her favour on the basis that it was not in the interests of justice to do so.

[66] Keane JA (as his Honour then was) identified three reasons why the Commercial and Consumer Tribunal had erred in failing to award costs. His Honour wrote:

[30] First, the Tribunal found that each party was justified in engaging the services of legal representatives to assist them in the conduct and defence of what the Tribunal recognised to be complex proceedings. That finding alone could be, in my view, a sufficient basis to conclude that the interests of justice warranted the exercise of the discretion to award costs in favour of the successful party, at least in the absence of any countervailing consideration. The Tribunal erred in failing to appreciate the implication of this finding for an understanding of where the interests of justice lay in relation to the costs of the proceedings.

[31] There will inevitably be occasions when the aspirations of the legislature that parties before the Tribunal should not be legally represented cannot reasonably be met having regard to the nature of the issues involved. That this is so is recognised by the terms of s. 73 which deals with the topic of representation. It provides:

'73 Purposes of div 7 The main purpose of this division is to have parties represent themselves and save legal costs unless the interests of justice require otherwise.'

[32] If orders for costs were not to be made in favour of successful parties in complex cases, then just claims might not be prosecuted by persons who are unable to manage complex litigation by themselves. Such a state of affairs would truly be contrary to the interests of justice; and an intention to sanction such a state of affairs cannot be attributed to the legislature which established the Tribunal.

[33] To say this is not to ignore s 71(5)(b) of the Act. There is a clear distinction, in terms of the interest of achieving justice, between the mere fact of having representation and the fact of having reasonably obtained that representation because of the complexity of the case. In the absence of countervailing considerations, where a party has reasonably incurred the cost of legal representation, and has been successful before the Tribunal, it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of the representation which was reasonably necessary to achieve that outcome. ...

[67] It was necessary for the respondents to come to the Court in order to respond to the appeal. The appellant was legally represented, and the respondents had the entitlement, albeit with leave, to be represented. As Keane JA wrote in Tamawood at [33], "it could not rationally be said to be in the interests of justice to allow that success to be eroded by requiring that party to bear the costs of the representation which was reasonably necessary to achieve that outcome." The respondents are entitled to the costs of that representation.

Do the interests of justice warrant an order for costs

[68] By reference to the matters identified in paragraph 4(2) of Schedule 2 of the IR Act, and for the reasons given above, I accept that it is in the interests of justice that a costs order in favour of the respondents is made.

[69] The question now turns to the basis upon which an award for costs should be made. The respondents seek the costs of defending the appeal before the Court on an indemnity basis.

[70] In support of the argument for an order for indemnity costs, the respondents submit:

The respondent warned the appellant they would seek costs of the appeal if it was not withdrawn;
The appellant engaged in conduct which caused the loss of time to the Court and the Respondents;
The appeal ought to have been abandoned and not proceeded to hearing given the groundless contentions; and
The appellant should have accepted the respondent's offer of settlement on 8 November 2023.

[71] The Respondents submit they have incurred considerable expense in responding to the appeal.[33] The respondents seek an order for costs against the appellant to pay all the costs for the appeal on an indemnity basis.[34]

[72] In Golding v Sippel and The Laundry Chute Pty Ltd (No 2)[35] Davis J wrote:

[30] Although the test to apply is the statutory one under paragraph 4 of Schedule 2 of the IR Act, guidance can be taken from those cases that have considered the grant of costs on an indemnity basis in general civil litigation.

[31] There are numerous decisions where circumstances have been identified justifying an award of costs on an indemnity basis. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd and Colgate Palmolive Co v Cussons Pty Ltd, attempts were made to identify categories of cases where the making of an order for indemnity costs is justified. However, the central principle guiding the exercise of the discretion was stated by the New South Wales Court of Appeal in Rosniak v Government Insurance Office and adopted by the Court of Appeal in Di Carlo v Dubois:

[38] ... The court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation. This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity. Any shifts to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule maker.

[73] There is a discretion in relation to the costs of proceedings that extends, in an appropriate case, to an award of indemnity costs. Such an order is not punitive but compensates the opposing party for the costs associated with litigation misconduct of the kind described by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd.[36]

[74] In Roberts-Smith v Fairfax Media Publications Pty Ltd (Costs)[37] Perram and Kennett JJ wrote:

Colgate-Palmolive requires this Court to ask whether the appellant conducted his appeal in wilful disregard of known facts, or by the making of allegations which ought never to have been made or the undue prolonging of the appeal by groundless contentions.

[75] As my decision reveals, some aspects of the appeal could be said to be objectively hopeless. Other grounds were arguable even if poorly articulated on appeal. However, mere weakness of an arguable case is insufficient to warrant an exercise of the discretion to award indemnity costs.[38]

[76] By letter dated 8 November 2024, the respondents warned the appellant that:

7 If you have encouraged your client to commence, or encourage your client to continue this unmeritorious appeal after considering our clients' written submissions, in our view the interests of justice will require a costs order to be made against you personally.

8 Accordingly, should the appeal not be withdrawn, and your client is unsuccessful, we will seek orders that either your client, or you personally, pay our client's costs thrown away.[39]

[77] Whilst it is correct that the respondents put the appellant on notice that they would seek their costs should the appeal fail, the respondents did not seek in that correspondence a costs order on an indemnity basis.

[78] I am not convinced that I should exercise my discretion to make a costs order against the appellant on an indemnity basis.

[79] Under Schedule 2, paragraph 9 of the IR Act, the Court should fix the costs if possible. The affidavit of Murray Procter swears that the total costs of the appeal are $89,916.20.

[80] The material before the Court only has evidence to enable it to fix costs on an indemnity basis. No evidence is before the Court to allow it to make a proper assessment on the scale of costs for the Supreme Court and District Court under the Uniform Civil Procedure Rules 1999, Schedule 1. Moreover, there is likely to be some dispute as to the appropriate quantum of any award.

[81] The discretion to make an order for costs must be exercised judicially by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.[40] The award of costs recognises that a successful party should not be obliged to bear its own costs in the circumstances.[41]

[82] I see no discretionary reason to withhold the making of an order for costs in favour of the respondents and accordingly, an order for costs. In my view, it is in the interests of justice that such an order be made.

The appellant pay the respondent's costs of the appeal to be assessed on the scale of costs for the Supreme Court and District Court under the Uniform Civil Procedure Rules 1999, Schedule 1 as if it were a matter brought in the Supreme Court.

If the parties do not agree upon the costs within 14 days of this decision, then:

(d) the respondent is to file in the Industrial Registry and serve on the appellant its schedule of the costs claimed within 14 days of the date of this decision;

(e) the appellant is to file and serve any objection to those costs within 14 days of being served with the schedule of costs; and

(f) the Industrial Registrar is to assess the costs upon receipt of the claim and any objection.

3. The costs to be paid by the appellant, whether agreed or assessed, are to be paid within 30 days of agreement or assessment.

[1] Appellant's costs submissions filed 20 January 2025, [102]-[103].

[2] Respondents' costs submissions filed 20 December 2024, [45].

[3] Affidavit of Murray Procter affirmed 20 December 2024.

[4] By force of Schedule 2, the Rules also apply to s 548.

[11] Respondents' costs submissions filed 20 December 2024, [13].

[12] Respondents' costs submissions filed 20 December 2024, [18].

[13] Applicant's costs submissions filed 20 January 2025, [26].

[15] Section 557(1) IR Act.

[17] Affidavit of Murray Procter affirmed 20 December 2024, [31].

[19] Respondents' Costs Submissions filed 20 December 2024, [30].

[20] Carlton v Blackwood [2017] ICQ 001, [18].

[21] Affidavit of Murray Procter affirmed 20 December 2024, [40].

[23] Affidavit of Dimitri Michalakellis affirmed 17 January 2024, [21].

[30] [2006] VSCA 190 (Chernov, Nettle and Neave JJA).

[33] Affidavit of Murray Procter affirmed 20 December 2024, [36].

Michalakellis v LMM Holdings Pty Ltd & Ors

At a glance

Court

Decision date

Before

Source

Judgment (207 paragraphs)

Parties

Cases Cited (9)