Plaintiff/Defendant by Counterclaim v Defendant/Plaintiff by Counterclaim

(a) The plaintiff have leave to file and serve a further amended statement of claim substantially in the form sent to the defendant on 14 May 2025 within 2 days of the making of those orders.

(b) The defendant was to file and serve any proposed form of order seeking departure from the position provided for in r 63.17 of the Supreme Court (General Civil Procedure) Rules 2015 (Rules)[1] along with a submission in support by 13 June 2025. Further, the plaintiff was to file and serve any submission in opposition within 7 days of the defendant filing any amended pleading or informing the plaintiff that it did not intend to do so, with the question of costs to be determined on the papers. Each of the submissions were to be of no more than 3 pages in length.

1. The 'other matters' section of the 27 May Orders recorded that the parties were to inform my Chambers, in a joint email, when the steps referred to in (ii) above had been completed so that it was clear when the question of costs was ripe for determination on the papers.
2. The following then occurred:

(a) the plaintiff filed its further amended statement of claim on 30 May 2025 (FASOC);

(b) the defendant filed its submission on the costs of the amendment on 13 June 2025;

(c) the defendant filed a defence to the FASOC and counterclaim on 1 July 2025; and

(d) the plaintiff filed its submission on costs regarding the amendment on 9 July 2025.

1. Despite the instruction given to the parties referred to at paragraph 3 above, no such email was sent to my Chambers. On 14 October 2025, it came to my attention that the costs submissions by both parties had been filed and that no joint email had been sent to my Chambers. Upon inquiry from my Chambers, on 16 October 2025 the parties confirmed that a determination was sought.
2. The defendant seeks an order that the plaintiff pay the defendant's costs thrown away by reason of the amendments made in the FASOC. The plaintiff resists that course and contends that the provisions of r 63.17 of the Rules should apply.

1. There is no need for me to repeat all of the parties' submissions here, as their written submissions are on the Court file. Where necessary, I have described aspects of their submissions in the below discussion.
2. Under s 24(1) of the Supreme Court Act 1986 (Vic) (the Act), the Court has a wide discretion as to costs. That discretion is to be exercised judicially and in accordance with the Rules.
3. Rule 63.17 of the Rules relevantly provides as follows:

Where a pleading is amended (whether with or without leave) the costs of and occasioned by the amendment and the costs of any application for leave to make the amendment are the parties' costs in the proceeding, unless the Court otherwise orders.

1. Thus the starting position in respect of the costs of and occasioned by an amended pleading (and the costs of any application for leave to amend) is that these are the parties' costs in the proceeding, unless otherwise ordered. It is up to the party seeking a departure from that starting position to satisfy the Court that some other order should be made, and usually there must be some proper justification, positive ground or good reason for that departure.[2]

1. There is a dispute between the parties in this case as to whether r 63.17 covers only prospective costs of and occasioned by the amendment (the defendant's position) or whether it also includes past costs (being the costs incurred prior to the date of the amendment), sometimes referred to as the costs thrown away by reason of the amendment (the plaintiff's position).
2. The defendant relies on the decision of Mukhtar AsJ in Edelman v Badower[3] for the proposition that r 63.17 applies to prospective, not past, costs. It also refers to Burke v Ash Sounds Pty Ltd (No 2),[4] where McDonald J agreed with Mukhtar AsJ in Edelman that r 63.17 does not confer power on the Court to award costs thrown away by reason of the amendment of a pleading but notes that the Court does have such a power pursuant to s 24(1) of the Act.
3. As the defendant seeks costs thrown away and takes the position that these are not covered by r 63.17, it says that the Court has a discretion to make an order for costs thrown away which is separate to r 63.17.
4. On the other hand, the plaintiff contends that the later case of JC Jarol confirms that r 63.17 also applies to costs thrown away in addition to prospective or consequential costs. The plaintiff says that Edelman is inapposite as it concerned r 63.17 prior to relevant amendments, and that Burke affirmed Edelman without regard to those amendments. The plaintiff says that the amendments to r 63.17 were dispositive to the decision of Irving AsJ in JC Jarol.
5. At the time Edelman was decided, r 63.17 stated that unless the Court otherwise orders, a party who amends a pleading shall 'pay the costs of and occasioned by the amendment'. Accordingly, the only real difference in the form of r 63.17 now is that the costs are the parties' costs in the proceeding, rather than to be paid by the amending party, unless the Court otherwise orders. The phrase 'costs of and occasioned by the amendment' is the same in both.
6. I do not accept that r 63.17 in its current form applies only to prospective costs and not costs thrown away or incurred prior to the date of the amendment. Costs that were incurred prior to the amendment and which are wasted as a consequence of it are costs caused by the amendment. Thus they are costs occasioned by the amendment.
7. I should note that I do not accept the plaintiff's submission that the amendment to r 63.17 was dispositive for Irving AsJ in JC Jarol. True it is that his Honour said that given the change to the wording of the rule he was reluctant to adopt Mukhtar AsJ's comments in Edelman, but Irving AsJ went on to give an explanation for that:[5]

Respectfully, it appears to me that to make an order in terms of the current rule and a separate order in relation to costs thrown away on the basis that one order is intended to look back and one forward would create unnecessary confusion and undermine the policy behind the wording of the new rule. In my view, the phrase "and occasioned by" in the current rule encompasses costs thrown away.

1. Irving AsJ regarded the policy of the new rule as being that it is not uncommon for pleadings to be amended several times in the course of a proceeding such that it can be difficult to ascertain at the pleading stage what costs order would do justice as between the parties. Further, a trial judge is often best placed to make that assessment at the conclusion of a proceeding, along with the desirability of avoiding multiple taxations of costs within one proceeding.[6]
2. Without commenting on Irving AsJ's description of the policy considerations, which to me speak more about where the costs liability should ordinarily lie rather than to the meaning of 'and occasioned by', I agree with his conclusion as to the breadth of 'and occasioned by'.
3. I am not bound by Burke, and I prefer what I consider to be the ordinary meaning of 'and occasioned by', which is that it includes costs thrown away by reason of the amendment. Costs 'occasioned by' are not just prospective costs.
4. At the end of the day, however, this does not affect the question of power. I clearly have power to make an order in respect of costs thrown away by reason of the amendment, irrespective of the interpretation of r 63.17. All that the preferred interpretation of r 63.17 means in this regard is that costs thrown away by reason of the amendment are costs which under that rule are the parties' costs in the proceeding unless otherwise ordered.

1. The defendant's primary contention is that the plaintiff should pay its costs thrown away by reason of the amendment because the FASOC abandons the allegation of the existence of a 'scheme' whereby Yek Hui Lee would purchase a Toorak property from Linth Two Pty Ltd in substitution for a Brighton property and the allegation of a scheme was central to the plaintiff's case. The defendant submits that as a matter of fairness, it should be compensated for the costs wasted in preparing to respond to that allegation. In this regard, the defendant relies on Gumm v Commissioner of Taxation (No 2),[7] where Derrington J held that where a party raises an issue to be litigated but then abandons it, it is appropriate that the opposing party, who has expended costs in investigating and considering it, should recover the wasted cost of doing so.
2. The defendant submits that the allegation of a scheme was central to the plaintiff's claim prior to its abandonment via the FASOC, that it was never properly particularised, and that the pleading in respect of the alleged scheme was deficient. The defendant says it was left to it to try to work out what the scheme was and the discussions which are said to have given rise to it, and that the plaintiff has now abandoned it after two previous proposed iterations of the allegation were also said by the defendant to be deficient.
3. On the other hand, the plaintiff contends that the amendments are minor, it has not abandoned a major part of its case (contrary to the defendant's submissions), and that the substance of the plaintiff's case remains unchanged whether the defendant's conduct is characterised as a scheme or not. The plaintiff contends that the amendments are so minor that the defendant has not relevantly amended its pleading in response. The plaintiff's position is that the amendment is so minor that no departure from r 63.17 is warranted.
4. I do not accept the plaintiff's submission. In my view, amending the FASOC such that now, certain particularised conduct is relied upon without that conduct being alleged to be 'part of a scheme', is a significant amendment. The wording of paragraph 9 of the pleading prior to the relevant amendment did, as the defendant contends, raise issues such as what was the purported scheme, who was party to it and what conversations are said to have given rise to it, which previously would have fallen for determination but which now no longer need to be considered. As the defendant submits, the allegation in paragraph 9 of the FASOC is now narrower and is confined to the particulars provided.
5. In my view, the amendment is significant and the defendant is entitled to have its costs wasted by reason of the amendment paid by the plaintiff. This is not a situation where the amendment is due to some new matter or supervening event, which may not warrant an adverse costs order, but is due to the plaintiff changing its case based on material which must already have been known to it.
6. As the defendant has sought only the costs thrown away by reason of the amendment, that is the order which I will make. It has not sought other costs occasioned by the amendment, being prospective costs, therefore there is a need to distinguish those costs in the orders which I will make.

(a) The plaintiff is to pay the defendant's costs thrown away by reason of the amendments made in the further amended statement of claim filed 30 May 2025.

(b) Subject to paragraph (a) above, any other costs of and occasioned by the amendment are the parties' costs in the proceeding.

[1] These were the Court rules then applicable, noting that the subsequent new Court rules, the Supreme Court (General Civil Procedure) Rules 2025, did not change r 63.17.

[2] See JC Jarol Pty Ltd & Anor v Novamex International LLC (Costs ruling) [2023] VSC 378, [42] (JC Jarol); Soteriadis v Nillumbik Shire Council [2015] VSC 363, [12], in the context of costs of discontinuance.

[3] [2010] VSC 427 at [30]- [35] (Edelman).

[4] [2019] VSC 290 at [10]- [12] (Burke).

[7] [2024] FCA 72 at [20].