Plaintiff v Defendant

1. On 20 November 2025, I delivered reasons in Re Syndicate 13 Squared Pty Ltd (in liq),[1] refusing the plaintiff, Mr Kevin Shari ('Mr Shari'), leave to proceed against the defendant company, Syndicate 13 Squared Pty Ltd (in liquidation) ('Syndicate 13').
2. Following delivery of those reasons, I invited the parties to make any submissions on the question of costs of the application. As with the substantive application, Mr Shari continued to represent himself. The parties filed written submissions and I have determined the question of costs on the papers.[2]
3. These reasons assume familiarity with my reasons on the leave to proceed application. The basis upon which leave was refused was summarised at paragraph [96] of my reasons as follows:

1. I am of the view that leave for Mr Shari to proceed against Syndicate 13 should be refused because:

(a) the claims that Mr Shari makes in the County Court Proceeding are claims which are more than capable of being the subject of adjudication as a proof of debt in the liquidation. Mr Shari has not demonstrated a good reason to depart from that procedure; > > (b) whilst there may be a serious question to be tried, both the proceedings and liquidation are at an early stage and the Liquidators themselves cannot attest to the substance of Mr Shari's claims. The complexities associated with investigating the LPG Companies (both as a group, individual special purpose vehicles and a managed investment scheme) and tracing investors funds, give rise to difficult legal issues and make investigations time consuming and costly. The investigation and adjudication of these claims is best placed with the Liquidators who have the statutory powers, skills and experience to do so; > > (c) the Liquidators' attention and resources should not be diverted into spending funds on defending the County Court Proceeding when the proof of debt procedure is available to Mr Shari. That is a cheaper and more efficient way of resolving Mr Shari's claims; and > > (d) the cost of the County Court Proceeding will be disproportionate to Syndicate 13's resources. Syndicate 13 is likely insolvent and, in particular, the burden of discovery will fall to the Liquidators.

4. The liquidators of the defendant company, Mr John Lindholm and Ms Emily Seeckts ('Liquidators') submit that as Mr Shari was unsuccessful on his application costs should follow the event. The Liquidators say the defendant is entitled to its costs of defending the application and seek that those costs be assessed on a standard basis[3] and a gross sum costs order made. The defendant relies upon a bill of costs attached to the written submissions filed with the Court on 26 November 2025 ('Bill of Costs').
5. The Liquidators submit that when exercising its discretion to make a gross sum costs order, the Court should take into account the following factors:

(a) Mr Shari's application for leave to proceed advanced a position which was untenable;

(b) Mr Shari brought the application in the context of a highly complex, specialised area of the law and did not engage legal counsel in the bringing and conducting of the application;

(c) Mr Shari's supplementary written submissions relied upon after the hearing did not advance his position and caused the defendant unnecessary cost and expense; and

(d) the defendant will still have to incur the costs of finalising proceedings against it in the County Court of Victoria.

1. The Bill of Costs shows that all legal work (including an appearance at the hearing of the leave to proceed application) has been carried out by Mr Mark Pennini, a solicitor of nine years' experience under the supervision of Ms Katherine Payne, a solicitor of 20 years' experience. Their rates have been calculated in accordance with the Supreme Court scale of rates[4] in the amounts of $640 and $850 respectively.
2. The work carried out by the defendant's solicitors is itemised as follows:

1. The defendant submits that an appropriate assessment is to fix the amount of recoverable costs at 60% of the total costs incurred by it, making the amount claimed $18,828.60.
2. Mr Shari opposes an order for costs being made against him. He submits that the defendant's claim for costs is misconceived and "represents an attempt to further victimise a legitimate creditor who has already suffered enormous harm through fraudulent conduct".
3. Mr Shari relies on the decisions in Knight v FP Special Assets Ltd[5] and Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd[6] in support of the submission that costs do not automatically follow the event where exceptional circumstances exist. Those exceptional circumstances include, in his view, "documented fraud" against him by the defendant company evidenced in the form of "bank statements and accounting records" of the defendant company moved by him on the application.
4. Mr Shari also submits that in cases of serious criminal conduct, fraud and misappropriation of funds, it is in the public interest that creditors are not deterred from pursuing such claims and should be protected from adverse costs orders. Mr Shari relies upon the decisions of Oshlack v Richmond River Council[7] ('Oshlack'); and South-West Forest Defence Foundation (No 2) v Department of Environment and Planning (No 2)[8] ('South-West Forest Defence Foundation').
5. Mr Shari rejects the submissions made by the defendant that his application was either untenable or that he should have obtained professional legal advice. He relies upon what he says is "evidence of fraud and misappropriation [which] was substantial, documented and compelling" as representing a tenable case. He also submits that self-represented litigants who cannot afford legal fees should be "praised not penalised" for pursuing such claims.
6. Finally, Mr Shari says that he made multiple attempts at resolution which was rejected by the defendant. Mr Shari describes those attempts at resolution as follows:
   1. The plaintiff demonstrated extraordinary reasonableness and patience by making multiple attempts to resolve the matter through discovery processes before resorting to litigation.
   2. The plaintiff repeatedly contacted KMPG requesting their participation in discovery processes, providing them with the same bank statements and accounting evidence that was later filed with the Court.
   3. These multiple pre-litigation communications with KPMG demonstrate the plaintiff's genuine desire to resolve matters efficiently and avoid Court proceedings entirely.
   4. The plaintiff only commenced the section 471B application after KMPG repeatedly failed to engage with reasonable requests for discovery participation, despite being provided with clear evidence of fraud and misappropriation.
   5. This offer was generous and reasonable beyond measure - the plaintiff was prepared to forgo his legitimate rights to pursue fraudsters if proper discovery could occur, showing remarkable restraint and reasonableness.
   6. Under Calderbank v Calderbank [1975] 3 All ER 333 and Leichhardt Municipal Council v Green (2004) 220 CLR 438, such extensive pre-litigation attempts at resolution should result in complete protection from adverse costs orders.
   7. KMPG's failure to engage meaningfully with these repeated reasonable requests, despite being provided with compelling documentary evidence, demonstrates unreasonable conduct that necessitated the Court application
7. Mr Shari submits that:

The defendant chose to engage expensive legal representation rather than address the substantive fraud allegations supported by bank statements and accounting records.

The defendant has shown no remorse or acknowledgment of the documented fraudulent conduct and misappropriation that necessitated these proceedings.

1. Mr Shari also puts an alternative position in the event a costs order is made. He submits that the amount of costs sought by the defendant should be significantly reduced by reason of the above matters and that any costs order should not exceed $2,000 - $3,000.

1. It is evidence that Mr Shari has experienced great frustration from the practical position he found himself in prior to the application for leave to proceed.
2. Mr Shari made multiple attempts over the past 19 months trying to commence proceedings in the County Court against both the defendant company and its directors. It was only following the issuing of subpoenas in the County Court and the assistance of pro-bono counsel that a statement of claim was capable of being filed and accepted by the Court.
3. Having been accepted by the Court, Mr Shari then learned that the day prior to his statement of claim being accepted by the County Court, the defendant company was placed in provisional liquidation and then wound up, requiring him to apply for leave of this Court to continue against the defendant.
4. Furthermore, these events took place in circumstances where the allegations made in the County Court proceeding reflected the allegations made by other investors in the related Supreme Court proceeding, not to mention observations made by Matthews J when appointing the Liquidators that there were matters concerning the conduct of the directors that warranted investigation. Those circumstances led me to the conclusion that there was an arguable case made by Mr Shari and a serious question to be tried in the County Court proceeding.
5. Whilst there can be no doubt that the above events place Mr Shari in a frustrating position vis-à-vis the defendant, it was still incumbent upon him, as the party applying for leave to proceed to understand the nature of the application and assess its merits objectively. It does not, in my view, absolve him from the risk of an adverse costs order should that application be unsuccessful. I say this not to suggest that any costs order made against Mr Shari should reflect the fact that he did not retain legal representation. Rather, and more simply, that Mr Shari, as a plaintiff to a proceeding in this Court, bears the same risk on the question of costs as any other litigant - whether legally represented or not.
6. I am also not satisfied by Mr Shari's submissions that allegations of fraud in the County Court proceedings and the broader public interest should operate against the making of the usual order as to costs of this application.
7. I understand that Mr Shari wholeheartedly believes in the merits of his claims against the defendant and that he believes he has been the victim of fraudulent conduct. I also understand the tenor of his submission that victims of fraudulent conduct should be able to bring such proceedings without the threat of a costs order because it is in the public interest for such conduct to be prosecuted. However, the authorities that Mr Shari relies upon to make good those propositions do not assist him.

(a) In Knight v FP Special Assets, the High Court was concerned with the question of whether the Supreme Court of Queensland had jurisdiction to make an order for costs against the receivers of companies who were the unsuccessful parties in proceedings but not themselves a party to those proceedings.[9] The question in that case was limited to the power of the Court to make a costs order as against a non-party, not the exercise of the lower Court's discretion to make a costs order on the particular facts of the case concerned. The facts of that case and this matter are not the same and the principles set out in that decision simply do not apply here.

(b) The decision in Fountain Selected Meats considered the circumstances in which the Court would make an order for costs other than on a "party and party" basis. The "special circumstances" considered by the Court were whether there was sufficient basis for making an order for costs payable on a solicitor / client basis. Having read the decision, I suspect Mr Shari has focused on the following passage in the judgment:[10]

Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases where 'there is some special or unusual feature in the case to justice the court exercising its discretion in that way' (Preston v Preston [1982] 1 All ER 41 at 58). It is sometimes said that such costs can be awarded where charges of fraud have been made and not sustained; but in all the cases I have considered, there has been some further factor which has influence the exercise of the court's discretion - for example, the allegations of fraud have been made knowing them to be false, or they have been irrelevant to the issues between the parties.

This passage recites the proposition that solicitor and client (or indemnity) costs might be awarded against a party in circumstances where allegations of fraud have been made either without foundation or unsuccessfully. It does not stand for the proposition that an unsuccessful party can avoid a costs order being made against it in circumstances where that party alleges (in separate proceedings) fraudulent conduct.

(c) The decision in Oshlack is a case where the High Court ultimately determined costs should not follow the event because the prosecution of the litigation was in the public interest. However, the facts of that case are very discrete and not analogous with Mr Shari's circumstances. In Oshlack, the appellant (an individual) commenced proceedings against a local council and land developer, challenging the decision made by the council consenting to a proposed development. The basis for the challenge was that a development would be in breach of environmental laws. The appellant had no personal interest in the outcome of the proceeding; the proceeding concerned significant issues about the interpretation of the statutory framework with future consequences for the council, the developer and the general public. The Court held that in the particular circumstances of this case, that the usual order should not be made.[11]

(d) In South-West Forest Defence Foundation, a decision of the High Court delivered shortly after Oshlack, an unsuccessful litigant made a similar argument that costs should not follow the event on public interest grounds. The majority of the High Court (which included the majority members in Oshlack) determined that costs should follow the event and that the public interest was insufficient to discharge the default position. Notably, in his reasons, Kirby J observed that Oshlack was a unique case and that decision should not encourage courts to develop different costs rules "in the public interest" in every matter.

1. This Court's power to award costs is found in s 24(1) of the Supreme Court Act 1986 (Vic) and r 63.02 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic). The discretion is an absolute one but one which must be exercised judicially. The starting position is that a successful party is entitled to its costs unless there is some disentitling conduct. That course is known as the "usual order as to costs" or "costs following the event".
2. I am not satisfied that the disentitling factors relied upon by Mr Shari warrant departure from the usual order.
3. Dealing first with the question of fraud as an "exceptional circumstance." The allegations of misconduct are allegations made by Mr Shari in the County Court. Despite my finding that there is an arguable case, that does not amount to a proven case of fraud and does not form the basis upon which Mr Shari brought this application. To that end, the application for leave to proceed is one step removed from the primary claims of misconduct.
4. The claims of public interest also carry no weight. Mr Shari commenced this application in his own capacity for his own benefit to continue the proceeding against the defendant in the County Court. That proceeding is also brought by Mr Shari personally. It is not brought on behalf of other investors and it does not seek relief beyond compensating Mr Shari for his alleged loss. To the contrary, one of the deciding factors in refusing Mr Shari leave to proceed against the defendant was that such investigations and proceedings were better left to the Liquidators who have the benefit of statutory powers of inquiry and act in the interests and for the benefit of all creditors. That is the public interest that is being served and to that end, it weighs against Mr Shari.
5. Finally, whilst I consider Mr Shari's lack of legal representation as being a neutral factor, his submissions on this application further reveal his tendency to conflate the application for leave to proceed with his substantive application. Having determined there was a serious question to be tried on Mr Shari's application, I nevertheless formed the view that other discretionary factors weighed against Mr Shari being granted leave. It is those discretionary factors that placed Mr Shari at risk of a costs order if unsuccessful.
6. There is one further matter I should address. Mr Shari has referred to "offers to settle" the application with the defendant and in particular the principles set out in Calderbank v Calderbank.[12]
7. I have not been provided with evidence of the offers of Mr Shari but infer from the submissions those offers were to resolve the application (and perhaps avoid litigation in the County Court) if the defendant made discovery of documents to him.
8. The decision in Calderbank v Calderbank and the authorities that have followed it stand generally for the proposition that if a party to a proceeding makes an offer to settle the proceeding, which is rejected, he or she may be entitled to present evidence of that offer to the court on the question of costs. The precise terms of the offer made have not been placed into evidence however Mr Shari's evidence is that the offer was dependent upon the Liquidators making "discovery to avoid the need for litigation." In all of the circumstances of this case, rejection of such an offer by the Liquidator is likely not unreasonable given the company is in liquidation; the County Court proceedings were stayed either generally or as against it once the liquidation commenced; and the costs of any such discovery would likely be expensive and borne by creditors at large.
9. For the reasons I have set out above, I am satisfied that costs of the application should follow the event.
10. I have reviewed the itemised costs provided by the defendant in support of its application. Having regard to the items described in that table and the filed material relied upon at the hearing of the application, I am satisfied the costs sought are reasonable. The majority of the work, including the advocacy at the hearing of the application, was performed by the most junior legal representative, Mr Pennini. The defendant has not expended unnecessary funds on counsel for its defence of the application.
11. I am also satisfied a gross sum costs order should be made. The application is a discrete one and capable of being assessed on a gross sum basis. A detailed taxation will only cause the parties further time and expense: something of which is in the best interests of all parties, but in particular the Liquidators and by extension the defendant's creditors, to avoid.
12. I am also satisfied that the discount of 60% applied by the defendant is an appropriate discount having regard to the nature of the application and the submissions required.
13. The defendant's application for costs paid fixed in the sum of $18,828.60 is granted.
14. I will make the appropriate orders.

[1] [2025] VSC 717.

[2] At the hearing of the substantive application, Mr Shari sought leave to rely upon written submissions rather than make some of his legal submissions orally. I am therefore satisfied that he is comfortable presenting his argument by way of written submissions.

[3] Supreme Court (General Civil Procedure) Rules 2025 (Vic), rr 63.07(2)(c) and (d).

[4] Supreme Court (General Civil Procedure Rules) 2025 (Vic), see Appendix A - Supreme Court Scale of Costs, s 1, items 1.1(a) and (b).

[5] (1992) 174 CLR 178 ('Knight v FP Special Assets').

[6] (1988) 81 ALR 397 ('Fountain Selected Meats').

[7] [1998] HCA 11; (1998) 193 CLR 72.

[8] (1998) 154 ALR 411.

[9] Knight v FP Special Assets, 181 (Mason CJ and Deane J).

[10] Fountain Selected Meats, 400 (Woodward J).

[11] The High Court decision in Oshlack was split 3:2 in favour of no adverse cost order being made.

[12] [1975] 3 All ER 333.